BiggerPockets Real Estate Podcast - 378: A $500M Syndicator's View on Today's Market and How to Succeed as a "Hands-Off Investor" with Brian Burke

Episode Date: April 16, 2020

With a recession already underway, we're turning to an investor with 30 years of experience, 3,000-plus multifamily units acquired, and one of the sharpest minds in real estate. Brian Burke is back today, and he sits down with Brandon and David to offer his interpretation of current events and to guide our audience through how to invest passively without violating Warren Buffett's No. 1 rule: "Never Lose Money!" Brian explains how his firm Praxis Capital is navigating COVID-19 and shares a few tips everyday investors can use to fortify their portfolios. We also discuss leverage, how lending practices are changing, and techniques you can use today to safeguard your investments against vacancy and drops in valuation. In the second half of the show, Brian speaks to those interested in becoming "hands-off" investors—whether you want to focus on making money in your day job or just don't want to deal with being a landlord. After all, BiggerPockets has 10-plus books on how to actively get deals done... but none (until now) on how to evaluate passive investment opportunities. We go over how to meet syndicators, what red flags to look for, how to diversify your investments... and the absolute No. 1 quality to look for in a passive investment (hint: it's NOT the deal itself). This episode is packed with deep insights into the current market shift, but it's also a timeless lesson in evaluating syndication opportunities. For more info, check out Brian's new book, The Hands-Off Investor: An Insider's Guide to Investing in Passive Real Estate Syndications, and all the great bonus content, too. In This Episode We Cover: How Brian got his start raising capital from his cop buddies "Bulletproof vests" investors can use to survive right now Brian's definition of "over-leveraged" Why Brian is currently more focused on operations than acquisitions How government stimulus $ may affect the real estate market How and where passive investors meet syndicators The #1 quality passive investors should look for in a syndicator Why the deal sponsor is more important than the deal itself Diversifying your passive investment portfolio Red flags to look for when evaluating syndicators Why "alignment of interests" is overrated The lesson he learned from a friend who lost her life savings Links from the Show BiggerPockets Forums BiggerPockets Webinars BiggerPockets Business Podcast Real Estate Rookie Podcast BiggerPockets Money Podcast BiggerPockets Radio Podcast 003: Getting Started in Real Estate and Raising Money with Brian Burke BiggerPockets Podcast 076: Growing Your Real Estate Company Into a $30 Million Dollar Business with Brian Burke BiggerPockets Podcast 152: Building Wealth and Passive Income with Rental Properties with Ben Leybovich, Brian Burke, and Serge Shukhat BiggerPockets Podcast 315: How to Read Human Nature to Succeed in Life with Bestselling Author Robert Greene BiggerPockets BRRRR Guide BiggerPockets Bookstore Check the full show notes here: http://biggerpockets.com/show378 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 378. The most important, most critical factor in evaluating a syndicator to invest with is their moral character. And that's also the hardest thing to quantify. I mean, it's really easy to see how many deals have they done or how many units they own. But it's really difficult to quantify someone's character. But that really is what the whole thing comes down to. You're listening to Bigger Pockets Radio. real estate for investors large and small. If you're here looking to learn about real estate investing

without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. What's going on? Everyone, this is Brandon Turner, host of the Bigger Pockets podcast with my co-host, Mr. David, drinking soda while trying to talk green. What's up, man? Not soda. That's a zero calorie energy drink. Those are still bad. I'm going to get so much hate about I should. Zero calorie. Yeah. Called it out. Terrible for you. Why don't you get like that sparkling water? I'm doing like zero calorie and like no nothing in it. Because I don't think they have caffeine in them. And I'm so dedicated to giving a good performance on the podcast that I need to be caffeinated to be at my best. You could do what most people do and drink coffee. Just saying. Oh, but coffee just tastes disgusting, man. I can't get that bitter coffee taste. I'm the only cop I ever met that didn't like coffee.

Yeah, so I had to weed myself onto it. Like, I didn't like it, but I forced myself for social reasons to like it. I was like people like to go out for coffee. I want to be able to go out to coffee with people. So I'm going to learn to like it. So what I would do is I would get a big cup of coffee, or I get a cup of coffee, empty half it out, fill the other half with milk and sugar, just tons of it.

And so it was like coffee flavored milk and sugar. And then over the course of about a month or so, maybe a couple months, I just slowly drop the sugar and the milk down until now I just do a little bit of cream and coffee and now I like it. So I was very intentional about my desire to be a coffee drinker. And speaking of intentionality, as you are with everything else. As I am with pretty much everything else in life. As speaking of intentionality, I have no idea how that transition is going to work, but I'm going to say it anyway, I want you guys to be intentional about today's you did not know that was coming. I tossed that up.

on you like a bucket of cold water. So today's quick tip. Well, there's a back story to this. Can we tell people why you did that? You mind? Because I basically just mimicked Brandon's entire intro and now he's trying to prove to me that he's not predictable. So he changed the quick tip without telling me to make me look stupid and a passive aggressive way to give you back. And frankly, I think that was genius. Like, well done. I would not even think of all. You embarrass me in front of all of our guests. Oh, I'm sure you did. Not even a talk. That's how good you are. You don't have to think about it. No, David, you give me credit. All right. So today's quick tip. is to go out and pick up a new copy or a copy of the new book from Brian Burke, who's our guest today,

he got a new book that came out today called The Hands Off Investor and Insider's Guide to Invest in Passive Real Estate Syndications. And here's the deal. We're going to talk a lot about this later in the show. The first half of the show is really about the economy and the market and the meltdown that we're seeing and have been seen for a little while now. We talk a lot about that. With Brian is one of the smartest people I know. When it comes to advice about the world of real estate, he's the guy I go to, which is why we wanted him on. But also, he wrote this book. And so the second half of the show, we talked more about the specifics of putting your money into other syndication deals. And this is a thing, though, even if you don't want to invest money into a syndication,

this is still a super valuable conversation because if you ever plan to raise money, you're going to want to listen to this. If you ever plan to invest in somebody else's deal passively, you're going to listen to this. If you just care about avoiding losing money and you want to diversify your investments, Like, this is a valuable podcast today. So for all those reasons, do that. But the quick tip is pick up a copy of the book at BiggerPockets.com slash syndication book. Again, BiggerPockets.com slash syndication book.

Here's the thing about traveling. If you buy food at the airport, a burrito, salad, bag of peanuts, you start wondering if you should have opened a savings account for snacks. So wouldn't it be great if you could actually earn money while you're traveling?

Well, you can. Airbnb has something called the co-host network. While you're away, you can hire a vetted local co-co-co- host with hosting experience to help take care of things. Communicating with guests, preparing your space, managing reservations, everything runs smoothly while you're off making memories. Your home might be worth more than you think. Find out how much at Airbnb.com slash host. Managing properties can feel like a full-on circus. You're juggling vendors, tracking payments, chasing approvals across multiple

properties, and maybe a few HOAs, all while trying to keep tenants happy and owners confident. One delay can throw everything off, and suddenly your day is all clean up, no progress. That's why hundreds of property managers rely on bill to streamline their finances. Bill for property management lets you add all your properties, assign permissions, pay bills, and receive payments quickly and efficiently without the usual bottlenecks. It syncs with platforms like QuickBooks, Zero, NetSuite, and Sage intact, so your accounting stays aligned. You can automate bulk payments across properties and H-OAs. Choose flexible payment methods like same-day ACH, international wires, card, or check, and set custom roles in approval policies. There's even a dedicated bill inbox for each property

to keep everything organized. Ready to simplify your workflow, book your free demo at bill.com slash bigger pockets, and get a $100.com Amazon gift card. That's bill.com slash bigger pockets. A lot of property managers think their job is answering tenant emails and coordinating That's not the job. The job of a property manager is protecting and growing your operating income and earning your trust while they do it. And that comes down to three numbers, occupancy, delinquency, and net promoter score. If those numbers slip, your income slips, and your trust slips too. And most PMs don't hold themselves to performance standards. They focus on activity, not outcomes. Mind is different. They obsess over the metrics that,

actually grow your cash flow. Go to mine.co slash show me to see how mine performs and get a month of management for free. Because if you're going to hire a property manager, hire one that manages your investment like an investment. I think that's all we got. This is a long show. So I want to get right into it. Anything you want to say before we jump in with our interview with Brian Burke? Yeah, just when we recorded this, we were a couple weeks into the COVID crisis and we wanted to give people something to listen to that isn't just Corona, Corona, Corona, Corona, right? The news is starting to look like a bar in Mexico, just a lot of corona. But when it's released, we don't know what the current environment is going to be like.

So if there's been a real big breaking change in the last couple of days and you're listening to this and we're not addressing it, please don't think we're trying to be insensitive. Please don't think we're not aware of what's going on. When the time we recorded this, that problem we hadn't happened yet. And we wanted to get people something else to think about. This is a really good show. This is one that if you're someone who likes meat and potato stuff, you just want knowledge about how real estate works, how real estate cycles work.

how syndications work, how to protect your investments. You're going to get a ton out of this. Brian did a great job. Very, very true. Very true. So with that, let's get to the show. This is our interview with Mr. Brian Burke. Mr. Brian Burke, welcome back to the Bigger Pockets podcast.

So good to have you here. So good to be back. Thanks for having me again. Yeah, though I got to say for months now, since I heard you were coming back on the show, and I heard you were going to do it live in my seashed. and we're going to be sitting across to each other, you know, drinking coffee, laughing, having a good time. And then I hear that you decided to abandon me and because of this whole, you know, social distancing things, staying in California. So I'm a little offended right now,

but I'll get over it. Yeah, you know, it was a bummer. I was hoping to be there. And, uh, but, you know, they closed all the restaurants. So that would have meant I would have had to eat dinner at your house every night for two weeks, brother. And that would be, that would be not fun. We play a lot of games, though, around dinner time. I could teach you some games. I get you to eat anything. Like, I'm really good at that now with my three-year-old. So no matter what it was, you would eat it. It would have been Candyland.

With that said, it would have been amazing. All right, so let's talk about real estate investing. I mean, the elephant in the room, of course, is everything just changed. I mean, we're still in the middle of it. We don't know what's going to come out of this thing. We don't know where things are headed. So first of all, can we get, before we get into that, let's get even before that. For those who haven't heard any of the episodes of the podcast that you were on,

can you explain who you are, what you do, and a little bit about your background. Yeah, I'd be happy to. So I started investing in real estate in 1989. So I've been through, I don't even know how many these odd market cycles. And we're in another market cycle right now with this coronavirus issue that has just recently come up.

So it's kind of a history repeating itself in some ways. But yeah, 30 years in real estate, I started out as a single family house flipper. I had no money, no connections, no knowledge, no absolutely nothing. I was working in a grocery store making like, $12 an hour and I bought my first property and it was a rental and I didn't even own my own house. From there, I just grew a business into one where now I've bought I think 730 properties.

A lot of them, single family homes and about 3,000 multifamily units. So last year, I just crossed a milestone actually last year, a half a billion dollars in real estate. And, you know, I look back on my old grocery store self and think I never could have imagined I would ever say that. Yeah. That's crazy. Half a billion dollars. It's not a small amount.

I had somebody the other day. I made a video and I said I currently, you know, own or, you know, control 500 units. And somebody said, that's just unfair. Nobody should own that many units in America because there's not enough to go around or something like that. Like, you know, I was like, interesting. That sounds interesting. I was like, well, I mean, I've got like partners and like, you know, well over 100

investors and it's like not just me, but it was just like a weird statement like, like, you've got enough. Stop. It's a group effort though, right? I mean, it's not just you. If you divide it up and all of your investors, you know, how do many units does each of everybody have if you divided them up, right? It's not a big number then. You know, it's a team sport.

So it may seem like a lot, but, you know, when you really break it down, it's not. Brendan, did you offer to let that person take over some of the responsibility for the payments right now that wanted some of your units? I did not offer that. but I thought about it. I was going to argue like, well, you know, Walmart has a lot of toilet paper right now. They have too much. They shouldn't have so much so we should probably get, you know, like they have a lot of everything, right? Like Walmart shouldn't have a lot much stuff. Like, let's give that back. So anyway, not to go there, but you've been doing real estate for

why. I've seen a lot of cycles, a lot of ups and downs. What does this look like for you right now? Like in the economy today, in the world today, like what are you seen? Some people might be listening to this two years in the future. Some people may listen to it the week it comes out. So what are you seen right now? Yeah, so what I'm seeing right now, and this is, you know, end of March 2020, right? So, you know, things will look a lot different. I think if somebody's listening to this six months from now, probably look a lot different than it does today. You know what I'm seeing today reminds me a lot of what I went through after Hurricane Harvey in Houston.

So we had a property, 276 units in Houston, Texas. Hurricane Harvey hit. At the time, we were like 93% occupied and, you know, most of the tenants were paying and things were going pretty well. And then all of a sudden, instantly, the whole city shuts down. Their infrastructure is damaged. People were losing jobs. People who didn't lose their jobs lost hours. The courthouse was damaged so they couldn't perform any evictions.

And now you look at today and here we are where people have lost jobs, people have lost hours. There's eviction moratoriums. It was very similar, except this is just a much, much larger scale. So it reminds me a lot of that. And it took about 18 months to recover from that. We saw occupancy's fall. We struggled to stay in the mid-80 percentile on occupancy. We were giving away all sorts of concessions, a month free, month and a half free, just to get people to lure it in to move in. It was tough to collect. Our bad debt went up to, you know, between five and 10 percent, which is

enormously high in multifamily real estate where you really want to stay below 1 percent. So we saw a lot of that stuff happen. And, you know, it took, it took quite a while for it to, to, to, to, to, bounce back and still even after that for the following two years we didn't have any rent growth whatsoever. So, you know, I expect that's a lot what things are going to look like in our near future where we're going to have falling occupancy, we're going to have increasing bad debt, we're going to see a lot less rent growth than we did before and, you know, eventually it'll work its way out, but that's kind of the way these things seem to go down. I think this won't look much different than that. Yeah, that makes a lot of sense. So what does that look

look like as a syndicator? You know, as somebody who invests other people's money, you know, like, what does that look like for you? Like, are you pulling back from buying more stuff right now? Are you contacting your investors saying, hey, guys, it's going to be a rocky, like, what does that even look like? What are you doing? Yeah, you know, one of the key things about being a, syndication sponsor is we're responsible for other people's money. And that's a tremendous responsibility. And David knows this story pretty well. But, you know, when I was, uh, uh, uh, first getting started in this business after after my grocery store job I went into law enforcement and in that industry you know character is everything I mean you have to pass background checks

and all kinds of stuff and when I left I uh I set up a investment syndicate with a bunch guys I worked with at the department so I use that money to go out and buy a real estate so all of my investors were carrying guns it's like they were all cops and and I knew like if I lose these guys money, I am a dead man. And they'll get away with it too. So, you know, it was ingrained in me from the very early start that capital preservation is key. And this is a time where that's really important to remember because my first job, and I tell people this all the time, my first job is to not lose your money. My second job is to make you money. And so here we are in the throes of COVID-19, the coronavirus and all the things that are going on in the world right now. So

So we're highly focused right now on not losing people's money. If we make a money, that's a plus, but we just don't want to lose people's money. So we're really focused on operations, collections. We're a lot less focused on acquisitions. I think there's going to be opportunity here in the near future. But right now, there's a little bit too much uncertainty and financing is all over the place where it's not the time I'd want to be buying. And it pains me to say that because, you know, as a real estate investor, we're, we're, we always

want to be buying stuff, right? But sometimes you just have to sit back and wait. That makes sense. All right. So let's let's go back a little bit because a lot of our investors today are, are nervous. They're saying, what should I do? I've got all these properties that, you know, that I wanted to buy. Do you think even a new investor right now, would you advise people, like, wait a little while? Like, what should people be doing right now if they're just getting started in this game. Well, how many times have you seen a post on bigger pockets where somebody says, I'm waiting for the next downturn? I've got all my cash ready. I'm waiting for the next downturn. And then I'm jumping in. Well, let me tell you, if you don't jump in right now,

then we know that all of that you've been saying, you're just full of it. Because, you know, this is the time. If you're really waiting for a downturn, this is the time to do it. But I think people are going to be pretty disappointed that the downturn isn't going to be what they think. This isn't going to look like 2008 where values fall 50 or 60 percent. We're just going to see some minor glitches in the market in the short term. And that's going to be different than what it looked like back then. Now, that's a really good point. I like that you mentioned that just the fact that not all downturns are the same, you know,

the human brain finds comfort and familiarity. And so I've heard a lot of people talking about the next downturn will look like the last downturn and there's deals everywhere. so I'll just go grab one because it was it was kind of like that if you had cash and you could get a loan at least where I lived you could just drive down the street every three or four houses had a for sale sign you could just call offer 25% what was already really low and eventually you'd probably get one but that I wouldn't assume that it's going to look the same way different things cause different downturns you've been through a lot of real estate cycles right and and you've invested a lot of

different kinds of real estate at every part of the cycle can you share a little bit about what causes different downturns and how to position yourself to succeed in different types, different environments? Yeah, and it's funny you say that, David. And, you know, one thing that I hear a lot and I've heard a lot over the years is people will say, you know, multi-family is recession-resistant or class B and C properties are recession-resistant. You hear all kinds of stuff like that. And I've said it all along that it's absolutely not recession-resistant. Multi-family real estate will suffer just like anything else in a downturn. In this case, so let's back up and look at 2008, for example.

In 2008, real estate caused the downturn. It was bad financing that was available out there, you know, what they call the liar loans and the ninja loans, no income, no job, no assets, and you still get a loan. You know, they had all that stuff and people were way over leveraged. And as a result, it all came collapsing down. When it collapsed, it brought real estate or real estate brought the whole economy down with it. This one is different because here it's an outside factor that's bringing the economy down and the economy, the decline in the economy is what's going to bring real estate down. So real estate wasn't fundamentally broken, which was different than in 2008.

But remember back in 2000, the dot-com collapse, right? And in that downturn, you know, I had rentals and I was buying and selling and doing flips and my flips were selling, my rentals were full, residents were paying. So I barely felt the 2000 recession, the 2008 one hurt like hell. This one, again, it looks different than all those others. So everyone has a little bit of a different character to it. And it all really comes down to what caused it. Yeah. Yeah, I don't think anybody expected, you know, a virus to cause this one. And who know, maybe we won't see a recession. I mean, I don't know. Maybe six months in the future will look back and be like, yeah, we just had like a bad quarter because of the recession, but we recovered just fine.

or maybe it's going to do something horrible. I don't know. I don't know that the virus even caused it. I think it was our response to the virus that caused it. And that's something I keep pointing out to people is this isn't something that happened to us. Like, oh, who could have, you know, seeing this coming, this crash. This is something we did to ourselves. And that doesn't mean, you know, we should be punished for it or something.

We knew, as in the government, that in doing this shelter in place to stop the spread of the virus would impact our economy. So when I hear people talking like the conspiracy theories or, oh my God, we're going to recession. We're never going to come back. You got to remember that like we did this to ourselves. We can lift that shelter in place. People can go back to work.

Will there be an impact? Of course, absolutely. But if we're talking about are we heading into a depression like what we were staring down the barrel of in 2008, this is very different. Brian, obviously no one has a crystal ball. So no one's going to hold you accountable if what your opinion is doesn't come to place. In fact, just for the listeners, this is something that's.

Brandon and I and whoever we're talking to, we always worry. Because we can tell you what we think and you all want to know what we think, but there's no way any of us can ever know what's going to happen. So it's very easy to kind of skirt the issue when people ask questions of what do you expect. But I'm curious, Brian, what you think? What are some ways you see this playing out as far as what we can expect over the next couple months and then maybe long term? Yeah, you know, a lot of it depends on how long this goes on. And you're absolutely right, David. I mean, it wasn't the virus that created this. It was the response to the virus. There's no question. And that doesn't mean the response is incorrect.

I mean, you know, we, I think that as a society, we're doing what we think is the right thing to prevent people from dying. And I think that's the right call. Having said that, it's going to cause some damage. Having said that, the government recognizes that too, right? And, you know, they don't want that damage to be any deeper than it has to be, especially in an election year. So, you know, they're doing everything they can to try to reduce the damage, which I think is also the right call. So what happens? Well, let's assume a base case where it's relatively short-lived. And this goes on for, you know, a few weeks and, you know, maybe around, you know, May 1st or so, we start to ease our way back into a normal functioning society. Then I think we're going to recover just fine. You know, there's a lot of backstops in place. There's going to be a lot of people that are going to be really hurt by this. There's no question about it. But I mean, in a macro scale, I think we're going to come out of it fine.

It'll take six months maybe before we start to see growth again. But we'll see that growth. Now, if this continues on for three or four or five months, on the other hand, well, the damage is going to be far more severe. And then it's going to depend upon how much more stimulus is introduced and to what extent and how long that stimulus goes on. So my prediction is, and that's all this is, and I may turn out to be completely wrong,

is that this will probably be with us for 30 to 45 days, and then we'll get back to business. It's going to take time to ramp back up. And most real estate sectors will recover in, you know, six to 12 months. I think hotels, entertainment, sporting venues, and those kinds of places have a longer road to recovery. But us and the multifamily or call it maybe the office market

are probably going to have a little bit less long-term impact. You know, as a realtor, one of the things that I'm seeing, because what I'm eventually going to ask you is, what do you say to the person who says, should I buy or should I wait? But I want to preface it with most people's understanding of how real estate works is as simple as supply and demand of the houses. If everybody else doesn't want to buy a house,

then a seller has to sell it to me for really cheap. If everybody else does want to buy a house, then the seller will sell it to me for a lot of money. And that is absolutely a foundational piece of how real estate prices are determined. But nobody's buying houses with cash. Almost everybody has to use a loan of some sort. So now you've got a whole bunch of new variables to get introduced into it. If interest rates are lower, people can afford to pay more for the same house.

If banks are going to lend on higher loan to value ratios, then people can't afford to borrow more so they can buy real estate without having to save up as much money. One thing that I've seen is that liquidity in the mortgage market is, is changing quite a bit. It's up and down all the time. And I'm curious to get your take on it because I know that you have a lending company. I believe you guys probably do hard money loans. If there's more, let us know. But can you explain how this is in fact impacting the lending industry and how that then indirectly impacts the actual real estate market? Yeah, availability of capital is a critical component of real estate prices. And that's, you know, this kind of dovetails back to our conversation

from a little bit ago where I said, you know, a lot of people say that when there's a downturn, they're going to run in and go buy all this real estate. And the part that they forget is when things become uncertain, and that's usually what happens in a downturn is, you know, there's a lot of uncertain macro level factors. Capital becomes constrained. And, you know, lenders will pull back or, you know, they might lower loan to value ratios. They might increase interest rates to make their investment return more attractive. You know, they might stop lending altogether. There's a lot of things that happen on the debt side, you know, as an apartment syndicator, you know, we raise money from high net worth individuals and family offices to fund purchases, right? And so when things

are uncertain, investors also don't want to put money out. So, you know, when the economy goes down, availability of capital across the whole spectrum, both equity and debt, becomes constrained. So it's really easy to say, I'm going to go buy up stuff. If you have the cash, then, you know, and knock yourself out, but if you're relying on cash from anyone else, whether that's a lender or an equity partner, it becomes infinitely more difficult. And that's why, you know, real estate prices can become constraints. You're absolutely right, David, you know, when there's when there's less availability of capital or that capital is more expensive, it's going to have an impact on home prices. Can you share a little bit about what you've, can you share a little bit about what you've

seen as far as how it's being impacted right now, both in the short term and then what you might expect to see if it continues where people aren't going to work and maybe how the forbearance part of the stimulus package that had everybody excited could actually be bad in some ways for buying real estate. Yeah. So you have this issue right now where when a crisis like this first happens, nobody really knows what's going on. So they all kind of panic, right? And when the crisis first happened, you saw people out panic buying toilet paper and, you know, weird stuff like that, right? Well, lenders are doing the same thing. They're panicking and they're saying like, gosh, you know, what interest rate do we have to charge

to be able to sell our loan on a secondary market or, you know, what other kind of factors do we need to have, do we need to consider? And they don't know the answer. So they take a guess and sometimes they overshoot. And these things are like a pendulum where, you know, the pendulum always swings too far in both directions. And right now, when, you know, when this first happens, things shift outside of the range where they probably should really be.

So it's difficult in that first couple weeks. So you'll have people who are in an escrow and they're about to close on a property, whether it's a single family home or an apartment complex. It doesn't matter. The lenders all of a sudden, you know, just before closing, are starting to get nervous and they might be changing people's loan terms or maybe denying the loan altogether. And that's going to impact a lot of those escrows. Now, if everybody just calmed down for a minute and waited for a while,

you'll probably find you can get through to the other side and, you know, the loan terms are going to be a lot more predictable. and that's going to make it easy. So, you know, how to the second part of your question about how the stimulus, you know, might negatively impact real estate, you know, I think probably the biggest thing is that when you have all this introduction of new capital coming in, again, the lenders don't know what to make of it. Is that going to create an inflationary environment?

And inflation mean that we now have to increase our interest rates because, you know, we won't be able to sell in the secondary market and get a worthwhile return or, you know, how does that really work? So it does introduce a little bit of uncertainty in that respect. But the flip side is, is that it introduces a lot of liquidity and a little bit more surety that maybe loans or mortgages might get paid. So, you know, there's a there's always a plus side and a minus side to everything like that. Yeah, and that's a really good thing to point out is that you shouldn't be in this mindset

of, well, this is the way it's supposed to work. Interest rates are always supposed to go down. I should be able to buy a house with 2% down. This is just the way it should be. Prices should always go up. And the minute we have a deviation from that, people feel like somehow they were slighted or they didn't get what they deserved.

It's normal for this type of stuff to happen, for prices to go up and down. And one of the things I think that helps me to keep a more clear head than others is I noticed from like our law enforcement career, as a police officer, you are frequently dispatched to a call where you are told details about a scenario

that would lead you to believe it's a certain type of a call. Okay? There's a person with abdominal. pain who is in a crowded area and they're asking for medical help. And you go there thinking, okay, this is a person with a stomach ache or, you know, maybe some kind of preexisting medical condition. And then you get there.

And there's a whole lot of people that are really worked up and everybody's looking in the same direction. And that abdominal pain turns into a stab wound in somebody's stomach. And there's somebody with a knife running around and you're like, oh, okay, now I'm looking for an attempted homicide suspect. And I'm trying to set up a perimeter. And I'm trying to get a description. and I'm trying to let the medical guys know you can't come in yet.

I have to get this clear. And then in the middle of that, you realized that it was a self-defense move, and your suspect is actually the real victim. And the guy you have is your, that happens all the time. And one of the things I noticed with the majority of police officers was that every time there was a change in information you were given, the status quo changed, your first response was usually to freeze. Let me stop.

Let me reevaluate this new information because I don't want to make a mistake. I don't want to do the wrong thing. It takes a lot of experience before you get comfortable quickly analyzing the new information and establishing a new course of action. It is human nature, the point I'm making, to freeze when something changes. And that's what we see. Every single time the stock market drops or the president says this is what we're going to do or the news says some new piece of information or the numbers of unemployment come out or

the mortgage market changes, everybody's initial response is freeze and don't move. They don't want to put their money into the market. now we don't know how much money is going to be available. They don't want to put their house on the market. That changes apply. Maybe they don't want to close the escrow. It's normal for everything to change. So when people keep asking what's going to come, what's going to come, you almost never get

to the answer of that because every time something changes, everybody freezes. And you got to be comfortable existing in that kind of an environment. Do you want to comment on that concept? Yeah, I think that's exactly right, David. That's a great analogy to exactly what happens on a lot of police calls and stuff. and, you know, having been there, you know, I've lived through that too. And the difference is, is that that whole sequence of events unfolds, the one you described, that whole sequence of events unfolds in the course of maybe 15 seconds, maybe 30 seconds, maybe 90 seconds, maybe two or three or five minutes. And, you know, an economic calamity is kind of similar, except instead of, you know, 15 seconds, it might be 15 days or it might be 15 weeks or it might be 15 months, that it takes to regroup. and kind of figure out what's going on. But once you know what you have,

it's a lot easier to make a decision. When you don't know what you have, you know, in a case of, you know, your scenario, you don't know who to arrest or you don't know who to contain or, you know, who to put in handcuffs and detain so they are no longer a threat. You know, once you figure out where the threat is, then you can kind of calm down and everything is a lot more predictable

from that point forward. We're in that same exact scenario now where, you know, they identified the viral threat, but we haven't identified the economic threat yet. And so therefore, everybody's kind of trying to figure out who to detain and who to contain, right? That's so good. Once we figure it all out, then, you know, things are going to move ahead just like normal. The call will complete. Everybody will clear and it's on to the next one, you know, and that's how it's going to be there.

And while we're looking for where's the threat, who's the threat, people tend to just bunker down where they are. You don't like moving when you don't know, right? As they should. Yep. So it's normal. That's what we're getting at. Yeah. Whoever pops up is the most at risk, right?

You know, if there is an assailant on the loose, whoever pops up and is probably the next victim. And everybody realized that. Same thing with real estate. You know, if you jump in too fast, you might be the next victim. Although you might also be the one that got the one that got away. That's what I was getting at. You could be the hero that ends up catching the threat. That's exactly right.

You could be. And right now, you know, that's a risk. And, you know, law enforcement officers take that risk because they're paid to. They also wear a bulletproof vest. Most investors don't have a bulletproof vest to protect them if they make that bold move and they shouldn't have. So I'm going to let Brandon jump in here. But when he's done, I want to ask you, what are some things that investors can do that will function as a bulletproof vest with their investment? But Brandon, before we do, what do you think about that? Yeah, I just wondering, what are some things that investors can do that would serve as a bulletproof vest, Brian? That was a good question. You know, you should get a speech writer, like, you know, maybe somebody write your script for you. I might have to do that. Yeah, I might have to do that. Yeah, I might have to do that. Yeah, I might have to do that.

Yeah, it's just like, we're sharing the same mind. Well, you know, it would be great as if David would kind of hint what the answer is supposed to be, then I'll take the next. That would be good. Hey, David, what are some things that, what are some bulk proof vests that investors can be wearing today? So, so here's, here's probably my, uh, my most. surefire bulletproof vests. Now some, you remember, some bulletproof vests have a steel plate in the

chest too. So they also protect you from stab wounds. So I'll give you that one because that's the most versatile. You can get shot or stabbed and you might live. And that is don't over leverage. That is the big killer that took everybody out in 2008. You wonder why there were properties in foreclosure, you know, to be picked up at pennies on the dollar back in that last recession. It was because those owners, the vast majority of them, were over leveraged. So if you don't over leverage, you'll have a good chance of surviving, even if things continue to go in the wrong direction for a while, you can survive to get to the other side. And this is really important, you know, in apartment syndications or any syndicated real estate

offering, too, when people are investing in those. You know, you've got to look at what kind of leverage is the sponsor proposing to use, what loan to value ratio, what interest rate, what, you know, when's the maturity, all of that sort of stuff. So, you know, that's probably the big one is not getting too much leverage. How would you define over leveraged? How would I define over leveraged? Well, like, is it a loan of value that you're looking at? Is it enough in reserves? Yeah, it's both. It's really, the loan to value ratio is the big one. there's another ratio that I use called the default ratio.

And the default ratio is where you take your effective gross income. And let me see if I can remember the formula off the top of my head because you caught me off guard. You take the effective gross income and you divide it by the debt service. The effective gross income, you divide it by the debts or effective gross income. Now I've got to go look at my formulas. I'm going to have to look at this up and we're going to put it in the showdown. Usually we have that stuff saved into a spreadsheet. So you don't have to know it.

But can you describe what the formula is helping you calculate? Yeah, exactly. So I do. I haven't saved a spreadsheet. So I wrote the formula, but then I never have to think about it again. That's why I love spreadsheets. So that the default ratio tells me is it tells me how far can income fall below my projection before I reach a one-to-one debt coverage ratio,

which means, in other words, I'm bringing in just as much money as I have to pay out for my loan payment. So, you know, if I have a default ratio of 75%, it means my income can fall 25% before I'm going to get to a break-even point. So that one is a really good one. Loan to value ratio is another good one. You don't want to be too high. On a single-family home, totally different idea, right? If you're buying a house to live in,

the loan-to-value ratio that's appropriate for you is whatever down payment you can afford. But if you're buying investment property or rental property, you want to make sure that you're not getting too high. I like to stay at, you know, 70 to 75% if I can do 65 and still deliver a good return. I like to be there. It just makes me feel really good. And now that's for your multifamily real estate, correct? Yeah.

Okay. And what's the benefit of having a lower loan to value when it comes to multifamily? It's particularly and specifically in a syndication. Two things. One is with a lower loan to value ratio. Generally, that means you're going to have more cash flow. It's going to mean your default ratio is a lower number. you're going to have more of a safety cushion. Your income can fall more before you get into trouble.

The second thing is, is that if you had to sell, you can sell. One of the things that really hurt a lot of people when the market started going down is you had owners that were in negative equity. Their property fell in value by 20 percent, and they had an 85 percent loan to value before they started. They're at a 110 percent loan to value at the new value. And so they can't even sell and get out. At least if you're a loan to values low enough, if you had to sell, you could sell and not have to come up

with cash out of pocket just to do that. And I'm making the distinction because Brandon and I, and I'm going to ask him about this in a minute, we get criticized about how the Burr method is often over leveraging. And we don't think it is. Or I believe or agree with that assessment. But I

do believe that over leveraging is bad. What you pointed out was that leverage is not always just how much debt you have on a property versus what it sells for. There's other things you can do like keeping your cash flow lower because you borrow more money so you could go buy new stuff or have plans to put a huge rehab together on a property so you can jack up the rent later, but that's still a bit of a gamble. And in a syndication specifically, because you're using other people's money, you're going to have to sell that property or at minimum refinance it to be able to pay them back at a certain period of time that's usually spelled out on paper. It's not the same as

the person who wants to buy a single family house and house hack, and they don't ever have to sell it. As long as they can make their payment, they can hold it forever. So it's important that we point out the distinction with these models. But the reason we have guys like you on the show, Brian, is that you prepare for situations like this. You do your underwriting with worst case scenarios in mind. It's kind of the aspect of just being a cop that we're always looking at what could go wrong. Cops never sit down and talk about the awesome day that we're going to have and how we're going to prepare for like, you know, an awesome shit. full of fun and jokes. We're always like, well, what's going to happen if that building catches on fire,

falls into the river, pollutes the river, people get sick, turned into zombies. How are we going to contain that scenario? That's one of the reasons that you became a mentor of mine is I really like that you're always preparing for the worst case. You know, I think that's right. And preparing for the worst case, you know, in part is watching your leverage. But there's also another part, and that's having adequate reserves and not getting in over your skis, you know, have some cash set aside for emergencies and things that could go wrong because you might find you need it. And I've been criticized before for raising too much money in some apartment syndication deals because I like to have a large cash cushion.

And people sometimes wonder, well, isn't raising so much cash going to lower the return? And well, yes, it is. But, you know, this isn't a race to see who gets the highest return. This is a race to see who survives. And you can't deliver any return at all if you don't survive whatever adversary materializes it gets in your way. So first got to survive and then you can, you know, the rest will kind of sort its way out. So, you know, I came up to be using the burr method before it was even called that.

I think, you know, Brandon was probably still in middle school when I started doing something. Hadn't invented the word burr, it didn't even exist. But that's what I was doing. You know, I was buying something and renting it out and refinancing it and buying something else. And when you're first getting started in this business, that's what you have to do. you know, if you don't have your own resources. You do what you have to do. And that's what I did. And yeah, it's risky and it's riskier. And, you know, something, you know, an adverse economic event might wipe you out. But that's part of the risk that you take. And when you've been doing this for 30 years and

we've already kind of, we've been there and done that and bought a half a billion dollars in real estate, you know, it's not my goal to see how much more I can buy. It's my goal to make sure that I'm still here tomorrow and next week and the month after, and that so are my investors. So, you know, our priorities have to shift and change a little bit. But again, you have to do what you have to do sometimes, right? Yeah. Did you know, you can go on vacation and actually earn money? Because while you're out exploring new horizons, your home is sitting there, dark, silent, and wildly underemployed. And it could be making you extra cash. And Airbnb makes that possible with something called the co-host network. If you're away for a while or you live far from your place,

you can hire a vetted local co-host with real hosting experience to help take care of everything. They handle guest messages. They prep your space, manage reservations, and they keep things running smoothly so you don't have to constantly check your phone between activities. That means fewer logistics, less stress, and more time actually enjoying your trip instead of thinking about what's happening back home. You can relax, knowing guests are taking care of, and your place is in good hands. So instead of your home just existing in the dark, it can be quietly earning its keep while you're off making memories somewhere else. You travel, your house works, everyone's happy. Your home might be worth more than you think. Find out how much at Airbnb.com slash host.

All right, rental property investors, listen up. Our friends at Dominion Financial already have some of the best DSCR rates in the industry. Now they're the fastest, too. They just launched 10-day DSCR closing. That's right, 10 days. And there's still the only lender with a DSCR price beat guarantee. That means faster closing, the best terms, zero guesswork, that's Dominion Financial. Check them out at biggerpockets.com slash dominion. Again, that's biggerpockets.com slash dominion. Tax season reminder for all the real estate investors listening. If you own rental properties, short-term rentals, commercial buildings, basically anything that's not your primary residence, you need to know about cost segregation. It's an IRS-compliance

that lets you accelerate depreciation on your properties, which means you're paying less in taxes this year and keeping more cash in your pocket for your next deal. Cost Segregation Guys is the go-to firm, having done over 12,000 of these studies, with $500 million in total depreciation identified. Head to Costsegregationguise.com slash BP to get a free proposal and see your potential tax savings.

Well, Brian, so that brings us to, one of the things I want to make sure we cover today is you have a book coming out at Bigger Pockets. I believe it's actually today it comes out. It's a book on investing in syndications, like putting your money to work. And I know a lot of our investors right now are people who are sitting at home going, I've got some extra cash right now or I have a ton of equity in my property. I'm thinking about putting into something.

So I'm wondering if we can talk about that just for a little bit, this idea of investing with people like you, like me, like David. David, are you going to do a syndication eventually? Oh, I'm sure I will. Yeah, when the time is right. All right. All right. So people like me and you and Brian and there's tons of syndicators out there. So I'm wondering, like in writing this book, I mean, you looked at a lot of like a lot of

syndicators, I'm sure what was working with doesn't. Are there things you can specify like that people can, that you can help people, I guess, weed out what a maybe a good syndicator from a bad syndicator would be? Like, are there like tell tell signs of like, you know, that's a red flag of I wouldn't put my money with that person? Yeah. And you know, one thing you're always been really good at, Brandon, is breaking things down and making it really simple. Unfortunately, when you're looking at syndication sponsors, that's really difficult to do. Because the most important, most critical factor in evaluating a syndicator to invest with is their moral character. And that's also the hardest thing to quantify.

I mean, it's really easy to see how many deals have they done or how many units they own or how many markets they're in or how long they've been doing it. But it's really difficult to quantify someone's character. But that really is what the whole thing comes down to. And I spend a lot of time in the book talking about things to look for in a syndication sponsor and a syndication offering so that people can, you know, at the end of the day, they can make an opinion about that person's character. That's what you're really trying to get at. So, you know, we're looking at things like the obvious, how long you've been in business, how many deals you've done, and what kind of results you've produced, but also, you know, the not so obvious about how do you

issue your reports and what do you say in your reports and, you know, how does that compare to what you promised you were going to do? And what kind of a brand do you have to protect? And how many investors do you have? And what do they have to say about you? And, you know, there's just so many different factors that go into forming an opinion. It's very subjective. But, you know, there's always this age-old question of what's more important, the deal or the deal sponsor. And, you know, I've always said, and I will always say, the most important factor is who you're investing with. Because, you know, let's face it, what a syndication is, is we've all heard about the concept of investing with other people's money. And in a syndication investment,

when you're investing in a syndication deal, what you are is you're now that other person. So if you think about all the people that are out there that have said, I want to invest with other people's money or you should invest with their people's money or late night TV with guys on boats surrounded by women in bikinis going like, you know, hey, this is investing and, you know, this is what it's all about. If that's what you think that it is, it's really not. But it's always talking about investing using other people's money. What I'm aiming to do is to show the other people, the people who have the money, what to look for and, you know, what are warning signs when you're making that investment in somebody else that's looking for other people's money.

Yeah, that makes a lot of sense. The character thing is so important. And I've said this before in the podcast and I'll say it again now in case people haven't heard it. I have a lot of friends who want to invest in syndications. And they will grab the, they will get the, you know, the PPM or the executive summary or whatever, you know, like all about the deal. And I'm sure you've seen this as well.

And they'll go line by line by line through every piece and ask a hundred questions. Like, you know, I see you have a bit here for painting. for 18,000. That seems a little light to me. I think it would be more like 18,000. And like they criticize every single point of this thing.

And then at the end of the day, like, when I've talked to those people, I'm always like, look, you didn't go to, you know, Betty Johnson's house at 814B or her apartment and knock on her door and ask her how much rent is. Did you?

No, I know. Well, like, so you're trusting the syndicator at least that far because they could have just made up the entire rent numbers. Like either you trust them or you don't trust them. And like if they say it's 18,000 for painting and you think it's 20, I'm going to go with the syndicator who's there, who's got the bids, who's been to the project, not like the armchair quarterback who's like, I don't think that's quite right. So anyway, to me, like it's all character. It's got to match what I want to do.

If I'm going to put money with somebody, it's got to match like my investment philosophy, I guess. But I'm going to do it or not do it based on character. There's two ways that I would support what you just said. And Brian, that was brilliant to say. And this is coming from the guy who's smarter than almost. everybody who's listening to this. Brian's super smart. He knows the line items and the details better than most people do that I've come across. And he's saying, even though I'm really good at this, I'm still telling you it's better to go by a character. The first is what Brandon said

is you can look at a deal and have no idea if the information that you're being provided is actually legit. And no one ever does back it up. I've heard arguments about people saying this is a 14% IR, this one's 19%. You should go at the 19% one. And I'm looking at like, you guys are arguing over something that you can either of you can ever prove. How do you know? And the second part I would want to point out is I'm going to leave out the name, but I know a person who was doing basically a syndication, but rather than buying real estate, they were raising money for a company that they were starting. And the idea behind the company was really, really good. It was in an industry that was prime to explode when marijuana was legalized. It was tied to that. That from the outside looking in,

this deal looked really, really good and probably would have been really, really good. What ended up happening was through a series of unfortunate events, the sponsor who raised the money was outmaneuvered by his business partner, kicked out of, or made irrelevant as far as his decision making goes. The business partner then basically went on a spending spree with all the investor money, didn't put it into the company. The sponsor that I knew wasn't allowed to do hardly anything to save the company. So all the knowledge and connections and everything they had became useless. And everybody who put their money into that deal lost pretty much all of it. And there was no way you could have seen it coming. If you looked at the private placement memorandum and everything else,

it would have looked really, really good. If you did your due diligence, it would have looked really, really good. You could not from the outside looking in have seen that happening. Now, the problem was this sponsor then went on to invest in a bunch of other businesses and post repeatedly about how much money they were making and how successful they were in those other businesses, but all the people that invested in that first one got nothing. There's a lot of unhappy people that feel like, hey, if you're doing so great, why don't you pay us back our money since you're the one that lost it? And that's the perfect example of the personal character, not the business skills, not the deal itself, not everything that can be measured is what blew this thing up. Had that

had that sponsor had a different mindset where they felt responsible to pay everybody back, they would have got their capital. But the character wasn't there. And what we're trying to get at here is you cannot account for that. You can't see that coming. That's why character's so important. Character is really all you have. That really is all you have. So tell you a story about one of the reasons why I wanted to write this book. I have a friend of mine that I worked with in the grocery store way back when I was 16 years old. And she owned a couple of fourplexes. And I looked up to that, I think, like, wow, that's pretty cool.

You know, you're a grocery checker and you've actually bought some fourplexes. That's really amazing that you were able to do that. And over the years, they went up in value quite a bit. And she sold them, and she invested in a syndication. She took the money. It was a 1031 exchange. And she invested in what was called a TIC syndication, a tick syndication, which is a method of syndicating where you can use 1031 exchange money. It's kind of a dead concept now,

but it used to be pretty popular. She invested the whole thing in this TICS syndication and a senior housing project that fundamentally was actually quite good. I'm sure that the concept made a lot of sense. Senior housing, you know, you think there's an expanding senior population. It's assisted living. There's going to be a need for it. This company had been in business for a while and had been doing a number of these and at that point in time was really active. So she invested in it her entire life savings. And as it turned out, the guy that was responsible for the whole company, their CEO, was a crook. He literally was a convicted felon that had previous charges for wire fraud and who knows who knows what. And he literally stole all the money. And, you know, all the properties went into

foreclosure, the whole thing turned into this huge mess. There was multiple lawsuits. Every investor lost 100% of their investment, and including my friend, lost her entire life savings. Now she's in her 70s and she drives for a ride sharing service just to put food on her table. And she was set for life if she didn't lose her life savings. So really it all came down to the character of the sponsor. It wasn't the real estate. It was just the character of the sponsor. And there's another thing. that I hear a lot where people say, I'm looking for an alignment of interest, right? This is probably the most common misconception out there is if the syndicator is investing money in the deal, that means that if the deal is good enough for them, it's good enough for me, and they have a vested interest

in the outcome, and they're going to want to make sure that I make money because that means they make money. And what people forget, and David, you know, having exposure to some of the criminal element, you know, you'll know exactly what I'm talking about here. If someone has a character flaw that says, I'm going to skip out on this deal, they probably also have a character flaw that says, I'm in control of the bank account. I'm going to skim out of the bank account, all the money I invested in this deal so that I don't lose a penny, and then I'm skipping. And so, you know, this whole concept of investing money in a deal to create alignment of interest is all just a hoax. And it really means nothing.

What really means something is how long they've been in business, what their moral character is, what their results have been. And if it's a partnership, how long have the partner's been working together? Because to your point about the other story, you know, when guys haven't been working together for very long, partnerships break up all the time. And where does that leave you as an investor? It leaves you holding an empty bag. So, I mean, there's so many of those little nuanced style factors that you have to keep in mind. that there's no bright line test. You can't just say, oh, you got money in the deal, check the box.

You have to be able to really dig down to what the moral character is of that operator to know if you're at more or less risk. Do you have any tips on getting to know somebody's character? I mean, how do you build that relationship with somebody? You build it over time. I have a funny story about a guy that he actually heard me on one of my early BP podcast. I've been on, you know, three times now, show three, show 76 and show 152. And I don't remember which show he heard me on, but he heard me on one of the BP

podcast. He calls me and he said, you know, hey, I really like what you had to say about what you're doing in real estate. And, you know, he's like, I'm interested in investing with you and things and stuff. And we ended up chatting for like an hour. And, you know, and finally at the end, I'm like, well, tell me about what you do. You know, I want to learn more about you. And he says, well, I manage the finances for, you know, basically a Fortune 100 family in the

country. And we're interested in making some investment. he said, so why don't you put me on the list because what I want to do is I want to see your next offering. And he's like, you know, I'm going to watch your offerings. I'm going to watch you for a couple of years. And then we'll decide if we want to invest with you. And it was so funny because he's like, I'm like, a couple of years. I just want to underscore what he said there, a couple of years. I mean, he was going to just sit back and watch for a couple of years to see what is the product, you know, what does the written documentation that we put out look like? And then he was going to

he can reflect on how those investments did and if we're still around in a couple of years. And it's just, it's like, it's like dating, you know, you're not going to go, oh, hey, nice to meet you. I want to get married? It's more like you're going to get to know each other over time and maybe you'll correspond back and forth a little bit. You'll kind of watch and observe and just take your time. There's no reason to rush into anything.

Just wait it out and you'll learn someone's character over time because they'll show you. It's so hard to not show your true character. We had Robert Green on the podcast, and man, he was so good. He talked about this concept of micro-expressions and how people will give away how they really feel in a moment like when you tell a joke and you want to see what they laugh at. Or you make a political statement or you hear someone else. Probably a better example would be someone else makes a political statement and I immediately look at everybody's face in the room. and I can tell from a frown or a joke or a very slight head nod where that person stands before they realize, oh, God, people might see me and then they get rid of it.

It's a very, very quick flash. And as cops, we just learn to read that all the time because everybody lied to us all the time, right? So the minute, like the word warrant would come up during an attention, I'd look at all the suspect's faces. And if some of them were like, right, their eyebrows went up. I'm like, okay, that's the one I'm paying more attention to. Yeah, you got a warrant. There you go.

And so, like, learning to read that behavior taught us a lot about human psychology. And the reality is anybody can pretend to be a certain way for a short period of time, right? And usually the people who either don't know what they're doing or know they have dishonorable intentions will try to overcompensate by that by overselling the deal, making the return look better than it normally could be. But if you just wait, like that guy's smart. He knows. My job is to not lose this family's money, like what you said. It's not just to make them money. It's to manage their fortune and not lose it.

So he's going to make you wait for three years. And what made me, what I thought about when you were saying is, what if everybody got married using that same method of I'm going to know this person really good for two to three years before I ever even say like, okay, let's go do this? What percentage of those relationships don't work out because the person wasn't what you thought? I would bet you it's almost always the people that dated for a month or two and just assumed it would be fine and jumped in the situation. and what you're saying is absolutely right. Like when you're choosing your syndicator, has the person done it for 15, 20 years, 10 years even?

If they have been, that tells you a lot about their character. If they've done it for two years, they could be great, but how could you ever know? Yeah, how could you? And it is really difficult to know. But they always leave breadcrumbs behind, right? I mean, you can always find somebody that has ill will or ill intentions. There's always some kind of a signal that's left behind. And really that's what this is all about.

I mean, you're just looking for somebody that you can trust. And I think trust is one of the biggest things. And sometimes you can tell just by looking in their written materials, right? Because, you know, people, one of the first things you'll do is you'll ask, well, you know, send me a, you know, a slide deck on the, on the deal that you have. And then you look at the slide deck and you see like all this just, just ridiculous. I mean, first you'll see, you know, spelling and grammatical errors, you know, it's like, so they don't even take the time or the care to make sure that what they're putting out, you know, looks good. And then you start seeing a lack of information. Like, you know, there's very little financial exhibits.

So you can't really trace the money from the rent payment all the way to the investor distribution because the chain of cash is broken. You know, they're only showing you part of it. They're showing you huge returns that just aren't achievable. One of the things I look for, I can tell the mindset of a syndicator usually in about 30 seconds. All I have to do is open up their offering and look at their first year projected income and compare that to the, the last year projected income. And if you see a huge jump, you know they either don't know what they're doing or they're just flat out lying to you because you're not going to get that huge jump in reality.

There's just no way that happens. So that's another thing that you look for. I mean, you just, you know, one of the things I do in this book is I break down forensically an income statement to show these are the things you need to be looking for. And you'll find clues along the way that tell you that this person isn't really exercising due care. what they're trying to do is they're trying to show you that they have the highest returns that you'll invest with them. And that's not really what you should be looking for.

You're not looking to invest with the one that offers the highest return. You're looking for the one that offers a return that makes sense that's underwritten on assumptions that makes sense. And it has a good risk-adjusted return, not just the biggest number. Was it Warren Buffett that said the first rule of building wealth is don't lose capital or something like that? I don't know who said it, but it's a true statement. I think that's the first rule of fight club is we don't talk about. Don't talk about fight capital. I'm pretty sure it said like how to build wealth.

Rule number one. Don't lose capital. Rule number two, see rule number one or something like that, right? And it's very easy like Brandon and I've been saying for years now, when the tide is rising to get really greedy and not think about risk. I mean, I can't remember the last time vacancy was even an issue in my entire portfolio. You don't have it.

The tenant moves out. another one to be coming in. Rents one up every single year. You know, the tenant ruining the property was my biggest concern. Well, now you get this little brief flash of fear and all of a sudden, you're looking really smart, Brian, whereas you might have been looking like people said, why are you raising so much money? Why do you need so much in reserves? We could get a better return if you would reinvest that money or you would leverage it harder. And Brendan, I'm curious with Open Door Capital, are you guys set up on the aggressive side or you set up more on the conservative side or is just your asset class alone kind of so conservative that it that it protects

your investors more than other ones would? Yeah. I mean, so our entire model is different than like a syndication, like a, I mean, in two ways, it's different than what Brian would do, for example. But our projections are based on infill almost entirely. And so like it's just a different, like you with an apartment, you don't just go and add a bunch of units, but we're adding a bunch of units. So it's a different, it's a different business completely. I would say that I like, I mean, everyone says they're conservatives. I can say it all. day long. Yeah, we're being conservative on our projections. I like to think that we are. I mean, I think our entire year of what we budgeted for one of our parks, for example, we're going to

infill eight houses or 10 houses in the first year, and we did that in the first month. And so, like we're 12 times ahead of schedule right now. And so, like, I like to think that because we're just starting this thing. I mean, we don't own 40 of these things. Like Brian's been doing this for 40 years now, 50 years now, Ryan, 70? Yeah, about half. So like that. 80? Yeah, okay. And so like, you know, Brian's been doing this for almost 90 years now. And so I like to think again, I'm being conservative, Mine's built almost entirely on infill. So I don't know if I'd answer that question, but that's why, like, that's why I like mobile home parks a lot right now.

That's why I'm a big fan of them and I've been for the last couple years, just because, like, I believe that when the economy struggles, as it is and it is going to, my hope is that, and we're going to see here in the next few weeks, like, my hope is that tenants can still come up with $225 for a lot rent, if it means losing their, you know, the alternative is losing their house versus having a rental where they're, their rent on their apartment, their posh apartment is $4,500 a month,

that would worry me a little bit more right now. But at the same time, I mean, the mobile home part people, they're going to lose their, they're losing their jobs just like everyone else is at that level. And so there's going to be some struggling people. So, yeah. Yeah, there's a bottom up challenge in this, in this particular economic situation that we're in,

where it's hurting, you know, some of the line level workers, the hardest. And some of your like white collar and medium blue collar or still they're working from home or, you know, still have some limited work or maybe even fully employed, whereas your restaurant employees, entertainment, travel, some of those folks are the ones that are taking it the hardest. And many of those are mobile home park residents. So it's going to be really interesting to see how that plays out. You know, there's always a theory that this asset class or that asset class is more recession resistant. But the truth is,

is with every recession looking different, you know, it's really difficult to say, right? They all will handle it a little bit differently each time. The key is if you're properly structured and you're properly capitalized, you'll be there to survive. And really, that comes down to, you know, again, it's character. If you have the character such that you're defensive about your investor's capital and your focus really is in preserving your investor's capital, you'll be adequately capitalized. If you're out there just trying to buy up real estate with as little money as you can cobble together, that those people are potentially going to suffer.

And I have a feeling that we're going to see a lot of kind of either newer or more aggressive syndication groups. They're going to flounder in this economic climate. And some of them may fail altogether. And it's going to be really interesting to see how all that shakes out. That's really what's concerned Brandon and I over the last year and a half, maybe two years, we've talked a lot about the overwhelming number of brand new investors who went and bought two properties as a syndication.

or maybe three, or maybe bought a four unit and then a 10 unit and then a 50. And now they're like creating a course to teach somebody else how to raise money and how to buy property. And they have not seen enough or or had to operate in an environment that isn't anything but wind at your back, downhill road makes it really easy to go that are out there coaching people and teaching people. This is how you do it. Whereas someone like you, I think you said you started investing in 89, you've seen a lot.

You've had a lot of experience. You're that police officer that can make. decisions quickly because they've done this for 25 years. They've seen thousands of scenarios start off a certain way and turn differently. So their mind has all this data in it that it can go to and say, oh, no, when this happens, that's likely to happen where everybody else freezes. And when you're giving somebody else your money, it is a very good way to build wealth when it's safe, when you're giving it to someone else. In fact, I think for a lot of people that are interested in being an investor, the better method is to continue making good money at your job

and investing in other people's deals through syndication and growing your wealth that way, rather than quitting your job, trying to learn how to become a full-time real estate investor, taking five years before you ever get any good at it and then start making money again. That's a hard way to go. That's a tough road to help. My wife's been telling me for probably the last, I don't know, at least 10 years that I should write a book. And I always resisted it saying, like, I don't know enough yet. I don't feel like I have enough experience yet, even though I've done like, you know,

at that time, like 10 years ago, I'd done, I don't know, 300 or 400 deals, right? And I just, I need to do this a little bit longer. Then you see somebody pop up and they're on their third deal and they've got a book and a course and a boot camp and you're like, oh my gosh. But, you know, the truth is, is that I've been busy running my business, not creating an educational empire. And it's how do you focus your time? And, you know, I think that's another thing that you should look at as an investor in a syndication is how is that person spending their time? Are they really? really spending their time on an educational business and maybe not spending so much time on on the syndication business? Or are they at least, I want to know that they're, they're adequately

watching over my capital. That's what I'd want to know as an investor. And I think it's an important component. And some people really aren't that focused. There's guys out there that are doing all sorts of things, but not spending any time on their, on their syndication business. And that might work when it's small and you've got a little bit fewer properties. But as you grow and get big, it just can't sustain itself that way. Eventually, you know, you have to be all in. There's actually, you know, like a systemic threat to investing with somebody who also is making money through coaching. Even if they have the best of intentions, it's hard for them to make the right business decision when it comes to buying property. If they know if I stop buying property,

I can't sell as many courses or programs. Yeah, that's a, that's a great point. And I, and I I think you'll see a lot of that out there. And for us, thank God, those also own a lot of property. I'm glad that those guys are out there because they make great buyers for the stuff we're selling. So I suppose there's one piece that's good about it. In fact, I think we've probably sold as many properties to boot camp style graduates as we have to larger, larger operators, because there's a lot of money floating around in that circuit. And, you know, some of them are great and they'll do just fine.

And, you know, others will flounder and struggle. And, you know, we'll find out over time which is which. And this is usually, you know, it's times like this when you have some kind of a challenge that's inserted into the mix when you figure out who's who's who, right? As they say, when the tide goes out, you learn who's swimming naked. Uh-huh. Yeah. Yeah. I've been, I've been, I mean, we've talked about this a number of times on the show, but I've been very, I've been concerned for the last few years.

Like, like David, you said, we've been talking about these syndicators who, I mean, I see these. I see these projections where it's like, yeah, we don't expect to make any cash for the first six years. But trust me, after year seven, like, your IRA is going to be 22 percent because, like, this thing's going to be worth so much more because the cap rates. So, like, all these projections are so, like, based on best case scenario and based on, you know, just these rose-colored glasses with everything that people are doing. Brian, how do you separate those people? And what I'm, I want to actually go bigger than that, but just like, how do you, first of all, meet syndicators in general? Do you talk about that in the book?

like how do you how do you get to know a bunch of syndicators so you can start building those relationships and then again and then any final tips on how you can pick the one that you should go with or the or should you pick multiple ones should you i'll ask that question after but i'll pose it now so you can get to it if you had 500 grand should you put 100 grand with five different syndicators or 500 grand with one but let's start with how do you find the investors in the first place yeah so so how does if you have money to invest this syndication how do you even find syndications and this is a tough question because they're not just you don't find out on a billboard right and even if you do that's probably not the group you want to invest with so this is a very relationship centered business

where you know because of the securities laws of the way they are most syndicators cannot advertise now you can advertise some offerings if you limit yourself only to accredited investors which means people with a certain level of income or net worth you can advertise but most. Which, by the way, which is what I did. I did a 50. So I can only take a credit money. But here's this funny. Whenever I talk about it on podcast or on my Instagram, I always get a bunch of people jumping in going, you're breaking the law, Brandon. You're breaking the law. You can't talk about that. I'm like, yes. Like there are exceptions. And I chose that route for a reason because I have a big audience. And so I went that route. But just everybody knows I am doing this correctly. I have attorneys. I can talk about it.

But anyway. Yeah, you can. And that's absolutely true. And so a lot of people think like, oh, I'm going to do a 506C off. So I can advertise, but really it doesn't make a lot of sense for most people because advertising, nobody invest because they saw a magazine ad, right? So they only invest because they trust you. That's the reason why people invest. And we can get into three trust curves here in a minute, but they invest because they trust you. And Brandon, for your example, you know, they trust you because they feel like they know you,

they've seen you on podcasts, they've seen the articles that you've written, they know how you think as an investor, and that's why they trust you. you. So if you already have an audience, a 506C makes a ton of sense. If you don't have an audience, a 506C makes no sense. So a lot of people are out there saying like, oh, I'll just do a 506. I don't know any investment piece like I can advertise. Generally speaking, that doesn't really work. So most people choose the 506B because it allows you to accept investments from accredited and non-accredited investors. The difference is you can advertise, but you can network. And so most of the time, syndication sponsors are discovered because they're networking, maybe

there, hey, have a presence online where, like, you know, I'll just use me as an example. And here's how I did it. And then, you know, there's a lot of other people who do something similar. You know, I'm on bigger pockets just answering people's questions. I'm not advertising or talking about what, you know, I'm doing. I'm just answering people's questions and people say, like, wow, that was a smart answer. So this guy knows what he's talking about. That's one step. So, you know, look around and see who's making, you know, good comments, who's posting good answers to questions. Another one is, you know, I attend conferences and I'll speak at conferences. So you might go to conferences and you'll see a speaker up there that does apartment syndication.

You'll go, that guy really sounds like he knows what he's talking about. So that's another way that you can discover. Now, if you really want to get down to it, I mean, I have a like a whole section in the book about how to find syndications to invest in, but like some of them really require a lot of work, you know, and one of them is, is you go to the websites of the major brokerages, that sell the type of property you're interested in investing in. So let's say you want to invest in multifamily assets in Phoenix. So you would go to who are the biggest brokers selling the most multifamily in Phoenix? And you go to those brokers' websites.

And sometimes you'll find a report on there about sales activity. And that sales activity might say, here's the top 10 buyers in the Phoenix market. It's this guy and this guy and this guy. And generally, those guys are usually syndicators. So you can learn using those reports who some of the syndicators are. And then you go to their website and you do research on them. So there's a number of different ways, you know, podcast guests. You listen to podcasts, a lot of syndicators or guests on various podcasts and you might like what somebody had to say.

So it's really about figuring out who's in the industry and then you go to them rather than then coming to you trying to sell you. It's generally how this is done. That makes a lot of sense. So let's go to that question then. If you have, you got 500 grand, do you put 100 grand with each syndicator, five different syndicators? or should you, you know, pick your horse and just go all in on one? Well, I believe that you got to diversify. And diversifying means a lot of things to a lot of people.

But to me, it means that there's a lot of different ways you can approach diversification. If you have 100,000 to invest, and that's the only 100,000 you have, diversification becomes a little bit less, a little bit harder to achieve. So one way that you can achieve some level of diversification of a smaller investment is to invest in a fund where the fund might be investing in a number of assets or might be investing with a number of syndicators that are investing in a number of assets. So sometimes fund investments can provide you with some diversification. If you have more capital than that and you actually have the ability to handle the diversification yourself, I recommend diversifying amongst geographies.

So you might invest in offerings that are purchasing real estate in different. markets like maybe they got, you know, you've invested in a apartment deal in Atlanta and another one in Phoenix and another one in Florida or, you know, whatever markets you're most interested in. Also, investing across different product types can make sense for people. You might put some money in a mobile home park syndication, like with what Brandon's doing, and then you might put some money in a multifamily offering, and maybe those two are even in different geographies, or maybe they're even in the same geography and you achieve geographical diversification some other way. And having sponsor diversification is another one and investing across multiple sponsors.

What you're really trying to do is you're trying to eliminate any single point of failure. And if you invest all your money with one operator, that's your single point of failure. If you invest with multiple operators, but it's all multifamily in Phoenix, then Phoenix is your single point of failure. If it's multifamily only, and maybe it's a variety of markets with a variety of syndicators, your single point of failure is multifamily. So if you spread it around, you can hedge yourself a little bit and get a little bit more diversification and safety that way. That is so good. I've never heard anybody explain diversification in terms of like that single point of failure. But I really like that a lot.

That makes a ton of sense. So let me make one point about what I like about what Brian said. You can do this. Let's say you just love real estate. Because what I hear a lot of people say is, hey, I want to get out of my job and I want to get in a full-time real estate. And I'll say, okay, what does that mean to you? well, I want to do wholesaling and I want to flip and I want to buy rentals and I also think I want to get my real estate license.

That is trouble when you start to spread yourself thin, okay? But there is a way that you can diversify risk using that same principle, which is pick like one form of investing, active investing, one form of investing that's passive, such as investing in somebody else's deal, and one form of earning money through real estate, like a job. That would be being an agent, being a loan officer, providing. some service to people that do that, being a wholesaler, whatever the case may be. And why I like that method, that's very similar what I'm doing, is I don't worry what the market

does. I do not care. When the market goes up, I sell more houses. When the market goes down, I buy more houses and I work with more investors. When the market stalls, I look for creative ways to be able to make deals work. I never feel the fear that other people have of, oh, my God, what I was doing doesn't work anymore. Now what do I do?

And then they panic. you can diversify with like your vocation when it comes to real estate as well. So that could look like making a bunch of money in this upmarket, not a bunch of money, but making money as an agent, investing it with with Brian when you don't know what to be buying. And then when the market stalls, you're not making as much money, looking for seller financing deals or buying rental properties for yourself and kind of managing those. And then helping other people to buy investment property and earning a commission off of that, buying more property with that commission.

and then the market starts to get good. The deals go away. You give the money to Brian again. There's always something you can do that doesn't put you in a position. And by the way, this is not me saying, you know, Brian, Brian, Brian, give all your money to him. He represents just, you know, investing with someone that you trust. But when you're diversified with how you earn money through real estate,

you don't make bad decisions nearly as easily. That's the point I wanted to get. Yeah, I think that's true. And one of the reasons why that is so true is because you've got multiple streams of income from a bunch of different ways, right? And I've always said throughout my career that real estate is kind of like a meandering stream through a meadow. It curves left and it curves right as it makes its way through the meadow. And if you're rowing down that stream, the only thing you cannot do is row in a straight line.

Because I guarantee you you'll run a ground. You have to be flexible enough to, you know, swing left and swing right because as things shift, you need a way to survive and to keep going. So that's why in my business over the years, I've done so many things as I have. I've flipped. I've done rentals. I've built homes from the ground up. I've done hospitality, self-storage. I actually built a self-storage facility.

I feel like I've touched all these different sectors in real estate. And I've done that because at the time, that was what was working at that particular moment. And so I think what you mentioned there, David, is really on point. that there's a lot of different ways to make money from real estate. It's not just one thing or doing one specific thing. It's being flexible and doing a lot of different things so that there's never too much pressure to only do the only thing you know how to do. Yeah. Yeah, that makes sense.

Well, Brian, tell us what is the book? What's it called? Where can people get it? And tell us a little bit about it. Well, the book is called The Hands Off Investor. And you can get it, of course, on the BiggerPockets.com store. The book is just now coming out. And the subtitle of the book is it's an insider's guide to investing in passive real estate syndications. And what I'm really trying to do here is fill an unserved need that really hasn't been out there so far.

You know, I related the story to you about the friend of mine who lost her whole life savings. And that was a motivator for me to write this book. If I could prevent that from happening to just one person, I'll have felt like I've done my job. But the other reason I did it is because we get so many questions. from investors when they're talking about our deals and and I thought gosh, you know, so many of these people are just asking the wrong questions. There's harder questions they should be asking than the ones that they're asking or they're, you know, they're just barking up the wrong tree. And and the reason I finally figured out why that was is because there's no place for people to go and educate themselves on how to be a passive investor. There's tons and tons of books out there on how to buy real estate or how to buy real estate with other people's money or no money down. There's a guy named Brandon Turner. wrote this No Money Down book. I mean, there's, there's all kinds of books out there on how to buy a real estate. You can even, you know, David Green wrote a book on investing out of state of all things. I mean, my gosh, you can do anything. But the one thing you can't learn how to do is how to invest

passively as a passive investor. There was no book out there to teach how to do it. I thought, this really needs to be done so that people know what to ask. So that was kind of my motivation behind it. And, you know, it's on the BiggerPockets.com store. And I'm, I'm really proud of it. I thought when I first got down this road, I wasn't sure if it was going to be any good. But now that it's done, I'm actually, I'm pretty proud of the way it came out. Your book might be the most important of all of them, because theoretically, you could let other people learn how to do all the other investing that you just talked about through the books that we wrote and invest with all those people.

You just find the best ones and give them your money and you can sit on the, I mean, that's truly hands off, right? I'm on the beach sipping of Mai Tai while David Green, Brandon Turner, Brian Burke is out there working to earn me a living. I mean, that's the most form of passive investing that you can possibly have. As passive as it gets, you know, but having said that, passive investing is really anything but even in a lot of ways because it's not like you just said it and forget it. And it's not like you just start writing checks to people and they go out and start investing your money. I mean, there's a lot of active component in the beginning because you've got to figure out who you want to

invest with and make sure you've thoroughly bedded them. Because if you're going to go buy a house or an apartment complex or something like that, that's the one element you have to underwrite, right? Is you got to underwrite that real estate. But when you're investing passively, you've got an additional component that's introduced into the mix that you have to underwrite. And that is the sponsor themselves. So initially there's some upfront work to figure out, you know, hey, do I want to invest with this person? And then you can press the go button.

But there's a little bit of work you got to do up front. All right, man. That's awesome. Well, I'm excited to get this book. I haven't actually got a physical copy and I'm waiting for it to be sent to me so I can read it. I like reading physical copies more than I do. But in addition to the physical, you also have an audiobook version and an ebook version of it. So digital, I know you can get all of those at BiggerPockets.com slash syndication book. Again, biggerpockets.com plus syndication book. You can also get the ultimate edition, which includes the audio, the ebook and the physical, all of that for like 49 bucks total. And there's a bunch of other cool bonuses that come with it, including knowing the bad.

backstory of a deal. It took a bonus chapter. And then a little, this is awesome. You just mentioned asking the wrong questions. So you actually include as one of the bonus content when you buy it through bigger pockets, a list of questions to ask a sponsor. And then of course, a live Q&A with the author of the book, Mr. Brian Burke himself. So very cool. All right, dude. Well, yeah, everybody, go pick it up right now. Last question I have about the book. Is this book only really good if you are already an accredited investor and you're super wealthy and you got a lot of money. No, I actually think that this book has multi, multi purposes. And you know, when I, when I wrote it, I originally was kind of going down one road of even focusing on its multi-purpose

ability, but I decided to downplay it, but it's still there. So the multi-purpose is, if you're an accredited investor, it's obvious. You want to make passive investments and you want to learn how to do it right. This book is going to help you. If you're not an accredited investor, yet you still want to invest in passive real estate opportunities, you really need to read this book. so that you can learn what to look for and how to analyze these opportunities and what to expect. Because one day you're going to be an accredited investor. And there's also a lot of syndication sponsors that take investments from non-accredited investors. So it makes sense for the non-accredited investor.

And you know, there's one more segment of the real estate population that this book makes a lot of sense for. And that is for the person who wants to be a syndication sponsor. And that's kind of the unsung part of this book that I didn't really. emphasize very much, but I look at it this way. If you're about to take a college course and you know at the end of the course you're going to be graded and you're going to be graded by a test, how much better do you think you would do at that test if you had all the questions and all the answers ahead of time? Yeah. And that's what this book does because your investors are going to be the ones that grade you. And if you know ahead of time what questions your investors

are going to be asking you and what you should be doing, you'll do a lot better for your investors. So there's that element that will also benefit from this book. Smart. That's a great point. I really, really like that. I mean, that principle works with so many things. If you want to run a big, great business, be in touch with what your consumer or your customer wants.

And when you're raising money, that's basically who your consumer is, is the person investing in your deal. It's like for me, you know, taking a listing in real estate, we do so well with that because I know what buyers think. I know what they're looking for. it turns them off. And the people who just sell homes and that's all they do, it's very easy to lose touch with how buyers think. And they just think about what house sellers think. So that's a great principle for life in general. If you want to be good at something, start with what your end result is and work backwards. And for you, that's knowing what does your investor care about. You've got to know your customer. And that's really important. And if you know what your customer is

your investor, and people don't always think of it that way. You know, they think of this as a real estate business, but as a syndication sponsor, this is not a real estate business at all. This is a financial services business. And what we offer is we offer investment products for investors. And that's really what this is. And it's not about real estate. Real estate just happens to be the vehicle that we use to use in those investments. This is a financial services business. And that's how it should be run. And some people, they miss that point. So, yeah, know what your customer wants and be sure that's what you're providing. I think that's enormously important. One of the thing I go through in this book is I talk a lot about analyzing real estate. So even if you're just a

real estate investor that wants to buy real estate for yourself, there's a whole section of this book on analyzing real estate that you'll benefit from because I talk about things like cap rate. There's so many misconceptions about cap rate that almost everything you've ever read about cap rate is wrong. And I'll point it all out in this book. And you'll learn a lot about how to analyze real estate. And I do that because as a passive investor, you need to know how to analyze real estate the same way a building inspector needs to know about construction techniques. And I don't do it in the book with the intent of teaching you how to buy real estate, but more just about understanding how to analyze it properly. But everybody that invests in real

estate can benefit from that section of the book, if nothing else. Very cool. Very cool. Well, as with most of our books of Bigger Pockets, what I always say is, look, if you can read this book and pick up one more tip tactic, you know, some kind of strategy that you didn't know about before, it helps you in a conversation, helps you get an investor down the road 10 years from now, like, what's 50 bucks for a package or, you know, it's one of those like, it's no brainers. That's why Bigger Pockets Publishing is one, you know, I don't know, like one of the biggest publishers in the world in terms of real estate books that is. Like it's because these books are just they pay for themselves. So anyway, pick it up you guys, Bigger Pockets.com's a syndication book. And now I want to actually, because this is such a long show, I want to bypass our deal deep dive and the fire round and move right into the world famous. All right, this is the part of the show.

We've gone through this already three times with you, Brian, but we're going to go one more time today, the part of the show where we ask the same questions to every guest every week. You ready for this? Hit me up. All right. Well, before I hit you up with the questions,

let's hear from some of the other podcast hosts to see what's going on. week on the Bigger Pockets podcast network. Hey there, Brandon and Bigger Pockets real estate podcast listeners. This is Jay Scott, your co-host for the Bigger Pockets Business Podcast. And this week on the business podcast, we have Laura Spalding. She is a former police officer who started a crime scene cleanup business that did so well that she ended up franchising it all around the country.

On this episode, she tells us all about franchising, and she even gives us some of her most interesting crime scene cleanup stories. So check us out this week on the Bigger Pockets business podcast. Now, back to your famous four. All right, all right, all right. Well, make sure you guys are checking out those other podcasts as well. When we get finished with this episode today, make sure you click over to one of those and listen to one of the other shows in our network. With that, Mr. Brian Burke, what is your current favorite real estate related book? Oh, favorite real estate related book.

It's been a long time since I've read a real real estate related book because, you know, when you've been doing this for so long. It's like that's the last thing. It's like the cops watching cop shows, right? The cops don't watch cop shows. Because they're like, I do this every day. So I don't Brian, you'll agree. When we do watch it, we just point out all the mistakes that they're making. What are you doing? What? Yeah. That's the same way. That's bad officer safety. Yes. Why did you get that close? And when we read a book, it's the same thing. Why did you say it like that? That's not the way to do it. Yeah, it's so true. But okay, but I still got to give you one. So I'll give you one. I read this book recently called Upside. It's by a Kenneth.

drawn back. And it was a really good book. The book is actually on demographics, but it's really, to me, real estate related because everything that we do in real estate, especially at a large scale apartment complexes, that sort of thing, is all related to demographics and learning how to analyze demographics and how those demographics are going to impact your investment is enormously important. And it was a great book that taught me a lot about things that I'm looking for when I'm looking it demographic. So it's called Upside, really good book. Awesome. Awesome. Okay, what about your favorite business book? My favorite business book, you know, let's, you know, there's always the old obvious ones, right? You know, the ones that we've all read, Rich Dad, Porta, and that sort of

stuff was a big influence to me early on. But my, the most recent business book I read, which I really enjoyed was a book called TED Talks by Chris Anderson, the guy in charge of TED Talks. I've been doing a lot of public speaking lately. And, And it was a great book to teach some techniques on being a good public speaker so that you don't put people to sleep. And I really enjoyed that book. So a great, great business-related book. You know, I need to read that. I'm actually scheduled to do a TED Talk or TEDx Talk in Sacramento.

And I believe David Goggins and Gary Vaynerchuk are both on the card as well. So I'll have to read up on that. But TED Talk is really cool. I like to, I mean, I listen to those all the time. They're really, really good. especially if you want to raise money, being able to communicate and articulate thought and paint a picture for people is so important. You could have the best deal out there, but if you can't communicate that to people, it's kind of useless. Well, that's why these two books kind of are so great.

I mean, when you think about it as a syndication sponsor, you have to be able to communicate your idea and your business. And you also need to make sure you're making the right investments. And so a combination of those two books go a long way. Very cool. All right. So when you're not flaking on Brandon when you're supposed to be visiting in Hawaii, or buying hundreds and hundreds of properties. What are some of your hobbies?

Really, the only hobby I have other than working is aviation. I'm a licensed pilot. I got my pilot's license when I was in high school using the money I earned for my grocery bagging job. And I went to flight school and learned how to fly airplanes. So first time I was ever in an airplane in my entire life, never had my feet off the ground. I was actually flying it. So it was kind of a surreal experience.

experience. And, you know, I've been, I've been flying ever since. And now I've been instrument-rated airplane pilot, student helicopter pilot. And just I love going out and exploring the, the blue skies. That's awesome, man. Very, very, very neat. Well, with that said, last question from me, what do you think separates successful real estate investors from those who give up, fail, or never get started? Oh, it's just perseverance. I mean, I could have given up a hundred times that in all the years I've been doing this. And man, I've tell you, I, when the 2009 or 2008 and recession came along, there's a lot of real uncomfortable conversations around the dinner table. It was a very difficult, difficult time. It would have been so easy to just say enough of it.

I'm throwing in the towel. I'm going to go back to work. But I didn't. I did what was really kind of crazy and kept going and actually grew. I used an adverse situation to exponentially grow. and I think that's really what sets people that are successful apart from those that aren't. Usually when there's adversity, they tend to recoil and go into hiding or shrink. And instead, I expanded and that really made the difference. Oh, that's really good. And guys, as you're listening, just expect that, anticipate that, prepare for that. You're going to get hit with wave after wave of fear.

And then you're going to think, is it finally over? You're going to poke your head up and then boom, more uncertainty. team's fear is going to hit. Just hang in there. It's okay. We can weather this storm. It's just like a fighter who's got his opponent that's just a flurry of strikes that are coming at him and they're just ducking and covering and like you don't get knocked out. That's the goal. Because when they're done, they're tired. And that's when your opportunity to go back is. And that's very similar in this market. We're getting hit with lost rent and uncertainty and loans going away and how long is this going to last. And we haven't even seen in America at the time

we're recording this. We haven't had a ton of people getting sick, but that's probably going to be coming soon too. Just prepare for this, right? Like expect and anticipate this is coming and don't give up. Keep listening to podcasts. Keep reading books. Keep talking to investors. Keep your hope alive. Because when that storm is over, you're going to see rays of sun. And if you're ready to get out there and start making progress, like Brian said, you're going to make a lot of progress. That's really, really good. Brian, my last question for you is where can people find out more about you? Well, you know, I was out in Hawaii a couple months ago and Brandon showed me how to use Instagram.

That's right. I guess you could find me at Investor Brian Burke on Instagram or on the Bigger Pockets forums. I'm on there all the time answering people's questions, writing for the Bigger Pockets blog. I've got a series of articles I've written that's going to hopefully come out soon for the Bigger Pockets blog. And of course, our company's website is praxcap.com. It's Praxis Capital is my company, and the website is Praxcap.com. P-R-A-X-C-A-P-C-A-P.com.

Very cool. Well, thank you, Brian Burke. I'm excited to have you back here on the island of Maui eventually, and we'll get some dinner, and I'll make you eat some good food. So it'll be good times. Looking forward to it. All right, and that was our show with Brian Burke. Awesome, awesome stuff today from one of the people that I look up to more than anybody in the entire

real estate world, Mr. Brian Burke. That was very cool. Yeah, Brian's one of those people that every time he's on, he's better than he was the time before. In fact, he was kind of talking about how it's only been seven years since the first show. But between this one and the last one he did, he's almost doubled his deal volume. And it kind of shows that once you hit a certain level of success, you start to scale so quickly that you just learn at amplified rates and your success comes at amplified rates.

As long as you get through that initial learning process of the curve, he's in a pretty sweet spot now. Yeah, it's very true. Well, thanks for joining me today, David. Stay safe. Get out there. Go make some deals happen. We'll talk to you later. You want to take us out? That's exactly what we're planning on doing.

Just keeping the keep pushing forward just like everybody else can. You don't know what's coming, but that's okay. You can adapt to whatever comes your way, and that's what this is all about. Just like a cop. Thank you, Brandon. I thought you also. Just like a cop. Yeah, somebody should do the, our producer Kevin was like,

hey, you guys think we can get another cop analogy in there? You think you can add another one? rounded up to an even 100. So that's actually how Brian and I met actually, is we both before I was ever, you know, the host of the podcast or even writing blog articles on BP. He was just another police officer that was investor like me. And that's how we connected.

And here we are today. All right. So let's get out of here. This is David Green for Brandon. I promise I'm not breaking the law. Turner signing off. You're listening to Bigger Pockets Radio. Simplifying real estate for investors large

and small. If you're here looking to learn about real estate investing, without all the height, you're in the right place. Be sure to join the millions of others who have benefited from BiggerPockets.com. Your home for real estate investing online. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host, an executive producer of the show, Dave Meyer. The show is produced by E.N.K., copywriting is by Calicoe content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com.

The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Bigger Pockets LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.