Epic Real Estate Investing - 20 Trends for Maximizing Sales and Profits for 2020 - Joel Block | 747

Episode Date: August 17, 2019

This Saturday, Matt is joined with Joel Block, a former CPA at PricewaterhouseCoopers, the owner of a real estate syndication firm, and a good friend of Epic Real Estate. These gents discuss the “alarming” 2020 recession and Joel’s 20 trends for maximizing sales and profits in the upcoming year. Tune in and find out more! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Success in real estate has nothing to do with shiny objects. It has everything to do with mastering the basics. The three pillars of real estate investing. Attract, convert, exit. Matt Terrio has been helping real estate investors do just that for more than a decade now. If you want to make money in real estate, keep listening. If you want it faster, visit R-E-I-Aase.com.

Here's Matt. Hello, welcome to the Epic Real Estate Investing Show. I am joined today by a guest that, and we haven't had a guest on the show for a really long time, so I'm really actually excited about today. And it could be also excited because it's one of my favorite people in the whole wide world. So please help me welcome back to the show for a second, third, maybe fourth time, Mr. Joel Block. Hey, Matt, how are you? Nice to see it.

Thank you very much. Very complimentary. And you've done such awesome work. I'm really happy to be here with you. Awesome, yeah. So I was just getting off the plane last night, and I got a text message from you, and you had sent me a little link to a report that you just wrote,

and you said you wanted me to read it first, the 2020 Trend Report. And I was very interested in it, but I know myself that I'm probably not going to read it, regardless of how well my intentions are, you know, I'm just kind of that kind of person. I've got so much stuff going on. I said,

you know what would be even better? Let's just have you on the show and let's talk about it. And then you can tell me all about it. That way we can kill two birds with one stone. You know, man, you got to give you credit. At least you're honest. Yeah. To a fault sometimes.

Whatever. No, but I am genuinely interested in it. And I just know that I've got a stack of things that I intend to read at some point. And that stack just gets bigger and bigger. And I was like, you know what? Let's talk about it because I think it would be a good feeling. Let me give you just a little bit of background.

You know, I've been in the money business for my whole career between venture capital and hedge funds. In fact, you know, well, that's how we know each other is. I run a hedge fund. I help you get in the hedge fund business. I've put probably 100 other guys in the syndication and the fund business. And guys that are in the money business are just by the very nature of what we do, we're insiders. Because we really kind of have our ear to the grindstone. We're hearing things before other people.

We're seeing things before other people. I have a lot of connections into Wall Street. Wall Street finances, all these big companies. And so I just hear a lot of stuff. And a lot of this material that I hear, maybe that you hear, it just doesn't filter down into the middle market and into the smaller companies and into the entrepreneur world. So my objective is always to move what I know

into the hands of entrepreneurs who can really go do some good with this. And there are some really big things happening as we speak that are affecting big companies. big companies are getting this Fortune 500 intel, they're getting the inside track, that littleer companies are not. So that's what you and I are here to do, is give that intel to them.

Awesome. Yeah, and by the time it does, the information does make it down to the crowd that might not be in the know, or this might not be their main focus on a daily basis, just general population, really. It's either diluted or it's been twisted or it has an agenda behind it,

and it confuses people. people don't know what to do. And I see a lot of people get frozen into inactivity, which I think might be the worst thing that you could do in times like this. So let's do some good work here today. Okay, Joel? You know, listen, and the other thing is frequently by the time people get it, it's just too late. Yes, I was just too late. That was on my mental list.

I just stuck over that one. But I agree. It's too late. So, yeah, so as we're recording this, and I think this is just going to come out of day or two after we do record it. you know, the stock market has had its a huge fall, an 800 point fall, and the talk of global recession has proliferated or proliferated. It's been disseminated throughout all media sources, and it's what everybody's talking about. On my YouTube channel this morning, I think there's like 19 brand new videos in the last hour that have been talking about the 2020 recession. And so you actually, I mean, you obviously wrote this report before this news yesterday, but you obviously see something.

income. So tell me what inspired the writing of it. Well, you know, first of all, exactly what I just said, you know, is that little or companies don't get the intel that big companies get. But let's talk about this recession, first of all, for a second. And I spent a lot of years in the media business. I own many different media companies and that's where I got started in venture capital, really. But here's the thing you got to understand about media, is that media gets paid for selling newspapers. They don't get paid for, you know, reporting about how Boy Scouts take old ladies across the street. So they generally like things that are more exciting, more whatever. They also in the last 20 years have really gotten really political. They really have an agenda that is, I don't think

it belongs in the media. And this isn't, regardless of my personal opinion or your personal opinion, it doesn't matter. I'd like the newspaper to just tell us what's going on and not tell us how we should be thinking about it. So there's a lot of agenda here. And you always have to ask yourself. The first question that you always have to ask is, what's the hidden agenda? What's the backstory? What's somebody trying to promote or hide or do so that I take an action? It's like, what are they trying to sell? You always have to wonder what they're trying to sell. So here's what happens. When the media tells you that there's going to be a recession, they say the bond curve is inverted, which means that the short bond is paying better interest rates than the long bond. And what

that means is that people don't have a lot of confidence in the long term. They prefer the short term. You know, those are all real things. It's real. But it's not real emergency the way that the media makes it. So what the media ends up doing is they tell you this stuff. And it's almost like a self-fulfilling prophecy. The media tells us something is terrible. They don't really explain a lot of details. You just tell us it's terrible. We get nervous. We start selling stocks. And then it becomes terrible. So what they tell us, makes it worse by the fact that they tell us. And I always wonder, are they telling us this

because no president has been reelected in a recession? You know, one time in like 100 years it's happened? Is that the reason or is it, you know, some other reason? But you always have to wonder, is there some reason that the media is spreading this information the way they are? It's not that it's inaccurate information, but it might be distorted. Yeah, no, totally.

You know, Bill Maher made his way around the headlines. it just came out and says he hopes we do go into a recession just so Trump doesn't win. Well, and that's the agenda that the media has. The media has an incentive to give this really terrible news, and I wouldn't put it past some people to try to put us in a recession to change presidents. To me, that's just, you know, it's a shocking thing that people would go that far. But you have to think what is behind them dumping all this news right now? And that's part of the hidden agenda.

Yeah. You know, you can go to CNN or Fox at any given moment and their top five headlines never match. You know what I mean? They're both covering global news and they have different headlines completely. Because these companies have an agenda. Right. And the word agenda and media doesn't really go in the same sentence. I mean, the way that we've always thought about it, they don't belong together. But that's kind of where we are. So as far as, you know, what happened to the stock market the other day, that's my assessment. It was something. It's only three. We're not talking about a big crushing amount of decline as a percentage of the total doubt. It's not that bad. Remember, these are our big companies and so forth. Totally. Okay, so the title of your report, competing on capital 2020.

So what does that mean? First of all, so understand that capital is not just money. Most people think about money, you know, that's like the main thing. And most people think about money like poker chips, like, you know, let's just the more let's get more and more and more. But the truth is that money is only one kind of capital. Capital is much bigger. And as professional investors, the one thing that we always have to remember is that I use money like a tool.

To me, it might as well be a shovel or a hammer. I mean, I use money to make more money. To me, money is not poker chips. It's not like I don't get emotional about it. It's just the thing. It's a tool I use to make more. But that's not the only tool I have in my business. I have intellectual property ideas.

I have brands. I have human capital. I have people that I work with. I have social capital, reputational capital, relational capital. There's all these different kinds of capital, including invisible capital, things, attitudes, and things that you can't even see. And all of these kinds of capital are the things that companies compete on. So in a very funny way, we don't just compete on money.

We don't just compete on our product. We compete on the whole range of things, which I call competing. capital. Got it. Okay. So we've got 20 trends, the subheadline, 20 trends for maximizing sales, profits, and company value in the next decade. So give me a trend or two where in the next decade presents great opportunity for people. So let's take a look at this to trend number one. I call it fruit trees, topple treadmills. What does that mean? We all, most businesses live on the treadmill. They live gig to gig to gig to gig. They're just, they're selling. They'll sell something. Then they'll run to the next customer. They'll try to sell something. They'll run. They'll sell to the

next customer. That's an old style way of selling. It's what everybody's grown up used to doing. It's not working that great. And Wall Street doesn't like it. So Wall Street, you know, they gather all their people. They, you know, they have a big meeting or, you know, a variety of meetings. And they start telling the CFOs of companies, hey, you know what, we don't like the unpredictability of this kind of gig-digate revenue, even though you've got a sales force that's devoted to doing this all time. We like the idea of regular recurring income, like on a subscription basis. And, you know, people in the internet marketing business have been talking about this for years, but Wall Street has caught on to this. So let me give you an example of one. In 2011,

Microsoft converted. They stopped selling software. Now, they've always been in the software selling business and people are thinking, well, what do you mean? They don't sell software. You can't even buy Microsoft software anymore. You got to rent it. They rent their software to you on a subscription basis, either monthly or annually. So in 2011, Microsoft converted to Office 365. They took their office suite and they started selling it on a subscription basis. And nothing really happened for a couple of years. 2013-14 is really when they kind of hit the, they really hit their stride and they kind of, that inflection curve where it starts really ramping up and really going great, where that hockey

stick bends, you know, and that that's what kind of think about. That is when they really started selling a lot and their stock price at that moment started to explode. Now, in the last five or six years, the stock market's up about 20 or 30 percent, give or take, Microsoft is up 400 percent. Now, you tell me if that's a coincidence. And there are one example after the next. But Wall Street values recurring subscription style revenue more than they like this treadmill style gig-to-gig-dig-to-gig business. And they value it higher, they give it a higher multiple, and therefore companies not only get the benefit of the better sales, but they also get the better valuation. And that's a really important one. So for us, in fact, I just saw something just in the last day or two.

Other brands, Nike's trying to put their customers on a shoe contract where they'll sell you just every year, they'll just drop you a pair of shoes. And you know, in a certain way, it's kind of a good idea because I probably should replace my shoes every year, but maybe I go 15 months, 18 months. And Nike's saying, hey, let's get you on, let's get you clicking here, man, every 12 months. It's not good for your feed. It's not good for this or that, whatever it is. Whatever your cycle is, they put you on a cycle. All the big brands want to do the same thing because Wall Street has said, get off the treadmill.

We like fruit trees better. Got it. I'd sign up for that. Probably save me some money, actually. It probably would. With my expensive shoe habit, particularly Nike. Okay. Then it was made to order for you.

Yeah, right? I'm going to go search that right after we're done. Where do I sign up? All right, so 20 trends, so that's a trend, right? That's shifting from the treadmill to a fruit tree. Right. So moving towards subscription revenue was a trend. And the way that listeners benefit from this is, I'm not saying stop your gig-to-gig

stuff, but figure out ways to make your revenue. predictable, dependable, contractual. You know, listen, real estate is a contractual business. Tendants pay rent every single month. Make your business like you make your real estate. That's what Wall Street wants. That's what the best businesses are doing. It works.

It's good for your retirement. It's good for whatever you do. And if you want to sell your business, all the better. I'm going to start playing old clips from my first podcast episodes more than 10 years ago now. Not more than almost 10 years ago. where the whole intro of my show was shipped your focus from making piles of cash to creating streams of cash. Well, then you were 10 years ahead of everybody. I mean, this has been going on for a while.

And I'm not saying that this is brand new, like revolutionary material, but I'll tell you that large companies are just catching on to how this works. Entrepreneurs always know things 10 or 20 years in advance, but it's becoming very mainstream. And I'm going to tell you, if you don't do it now, you're going to miss the boat. Yep, got it. You know, another thing I was right on the nose with and someone, stealing my thunder and getting all the credit for it as Grant Cardone. But right in the very

beginning, I was just talking about how your personal residence is just a terrible investment. And now it's everybody's believing it. And I was like, yeah, I'm a tangent. Nevermind. It's a different subject. But I was just thinking of all these things that I was right on. A lot of things I was wrong on though, too. I forgot about those. What's that? One of us are pretty smart and we just, we don't have the microphone that some other people have. And that's, you know, it's easy to look smart when you got a big microphone. phone. That sounds like a tweetable right there.

Especially when you steal other people's stuff, like your ideas and other stuff. That's right. You've been listening to me the whole time, built this whole career off of this podcast. All right. So, okay, there's one trend, shifting from the treadmill to the fruit trees. I like it. I like that analogy or the metaphor. What's another one that the general population can use?

Just go schmoh. Let's talk about Uber. Okay. Uber is not only about cars and taxis and grocery delivery. Uber is really, think of it as a verb, asset Uberization, where you're going to Uberize assets. If you have an underutilized asset, a bedroom in your house, think about Airbnb, what they've done.

So millennials and other people have grown up in a different era than some of us who are a little bit older. the idea of wasting resources, it just doesn't make sense to younger people. They don't have the same need for, you know, wasteful, lavish spending that a lot of us have kind of grown up with. And I'm not even saying real lavish, but just wasteful. So if they've got, you know, let's say, for example, your car, you know, just the idea of your car, the car companies years ago convinced us, like, you lease your car, I lease my cars, you know. So let's say you lease your car, you get 12,000 miles a year.

12,000 miles a year probably takes you 20 or 30 hours a month to drive, let's just say. So your car, you're using your car about 5% of the month. That's all. And you're paying a lot of money to own the car for 5%, and 95% of the time and sitting not being used. And so when you think about what Uber is, Uber is really about using the car of the other 95%. So some people own no car. and the rest of the people just share one car and they just use what they need.

And that's what Uberization is. And anything that you have, if you have a swimming pool, you can Uberize the swimming pool. There are people that have backyards and they like dogs and they let other people that live in apartments that don't have backyards

come and use their backyard. So any asset that you have can be shared with other people and the cost spread across many people. And this applies to companies. If you have underutilized space, if you have extra office space, I mean, think about most companies.

They're open from, what, eight to five or six? Well, what about the whole night? I mean, is there anything they could do with their asset at nighttime? Companies need to be thinking about this because we need to squeeze the juice a little bit better out of these assets. And this is, it's a huge trend that wasn't possible 10 years ago because we didn't have the, the apps and the internet to connect people together the same way we do now. But now that we have it, you can't overlook it. Yeah. Mercedes just got back from a trip.

And she did that service Turrell for the very first time. What is it? Oh, well, someone, you on an app, you say, I would like to rent your car, and they come up and meet you at the airport. They give you the keys, and off you go. And you're using somebody else's car. She got a, I think, believe it was a Corvette. And she got her for 75 bucks a day.

Oh, my God. So they're taking a direct hit right straight at Hertz. Right. And these big companies, right? They're hurting hurts. and these, you know, do not underestimate the power of this because people have gotten in the habit of Uberization. The idea of sharing assets, one person owns the asset, they're going to make a profit on it. The rest of us don't have to own the asset, you know, and that's it.

Personally, if I didn't have any car ever, I'd be fine with that. I just wouldn't mind be dreaming around. I just, I don't really care about driving. It's, and I think a lot of people have kind of come to agree with that. Yeah, I have a buddy, very close buddy, that does not own a car anymore. He Uber's everywhere he goes now. Yeah. Well, if you stop and think about it, my kids live in San Francisco. It costs 500 bucks to park your car, 500 bucks to have the car,

probably three, four, five hundred bucks to insure the car. So a car is 1,500 bucks. That's a lot of Uber trips. Yeah. Go anywhere. You know, you can have somebody to drive you around all the time, you know, for the price of your car and makes it very difficult mathematically to justify a car. Now, you still may want to have a car because you just like to have a car.

But mathematically, it's getting, harder to justify some of these kinds of things. And this applies to absolutely everything. If you set up a studio and you spent a bunch of money on cameras, microphones and all the green screens, why should I set up one? If you live next store and I could just pay you, you know, some number of dollars an hour to go use yours though once a while. Yeah. Right. I used to have one. And someone asked me that. Can I come in and rent it from you at night? I was like, no, I don't want you to touch in my stuff. Okay, well, you know, that's you. But that's, yeah. No, I'm putting it together.

Okay, but you get what I'm saying. Yeah, 100%. These concepts are really substantial. Right. They're really substantial. Sweet. So, Joe, running funds. I mean, you help me set up my fund and thank you for that.

And you've been a great advisor to me in that regard. And I know you work with a lot of other real estate investors, people in the real estate arena. What do you hear? What's the scuttle? But what's the murmuring of what people are doing moving forward as everyone's expecting a shift in the economy? Well, listen, this is really important.

I mean, these questions are starting to come in now, you know, about recession. Here's the thing. Professional investors react differently than retail investors. Retail investors, 98% of Americans are retail investors. They don't know what they're doing. They just, they kind of hope everything goes okay. Professional investors, guys like us, we do not hope things go, okay. We control what happens as best we can.

We have a very good sense about it because we know a lot. We tend to have the inside track on things. not illegally, just that we know because we're paying a lot of attention and other people don't really know. So if a recession comes, here's what happens. That means that the stock market's going to go down. That means the yields and pricing and returns and the stock market are probably going to go down. People are going to start moving money out of the stock market. They're going to be looking for somewhere else to put it. Well, number one, they already have some percentage of their money in alternative assets and real estate's an alternative asset to the stock market. But more people are

going to be looking for safer, better kinds of deals. Now, if you've already got a whole portfolio of stuff, the price might go down. This is an opportunity for you to start something brand new and start aggregating capital and buying opportunistically as prices start falling. So you can average down the cost of your portfolio. So you might have one portfolio that's starting to lose a little bit of money, but you can build another portfolio that's going up because you bought at the bottom. So you just have to structure your arrangements and really rethink your strategy in a different way. And that's what people, don't be afraid of this.

Just structure your strategy accordingly. Be smart, be intellectual, get into mastermind groups, talk with other people, see what other people are doing, and be around people who know what the hell the score is, because unfortunately that's not an awful lot of people. Right. I think that's fantastic advice, taking control of your environment. In other words, that you use there that I've used before,

and I think this is really key. is to take control of your situation and not be so reactionary and fear-based and, you know, regress and go hide and wait and watch and see what's going to happen while the world is happening around you. So be the person that makes it happen. You know, look, because here's the thing. There's that 98% of people are looking for leadership.

You're the leader they're looking for. They're willing to get involved. They're willing to take some chances. They just need to know and feel confident that they're with people who know what they're doing. Mm-hmm. Mm-hmm. So, Joel, and you might have already answered already, but how is the new economy that's emerging?

If it even is, let's just talk about the new news of it being imminent. How is it changing? Or what's one thing that you're doing differently now than say you were doing six months ago? When you say the new economy, are you talking about just the talk of recession? What are you talking about? Yeah, I'm just talking like recession might not even happen. We don't know what we don't really know. I'm just saying that this talk and this information that's now available to us

and becoming more popular, is that changing the way you're doing things during the day? Yeah. The biggest change is that I am putting more information into the marketplace, trying to put better information into the marketplace and other people. We put a great amount of information out for people to follow us, for people to understand. Because what happens is we really do live in an environment of fake news.

Now, I'm not saying that ABC, CBS, NBC, that's not where the fake news is coming from. The real issue of fake news is that it's not that we have, you know, 100 TV stations, which we do, but there are 5 million people like you and me doing podcasts. It's not news, it's opinion, but it's frequently taken as news. Right. So you really have to be careful who you're taking your news, your information, your opinions from. You have to get really good at understand the difference between what's news and what's opinion. And so I've been really trying to put a lot of material into the marketplace to help people get really, really clear about, you know, what's going on in the marketplace, what's fact, what's fiction, and really help people be on the right track.

And that, in the long run, ends up enduring people to me, bringing people to me, and that builds my business. So, you know, I built my business by putting out really good information that would help people because it's become very cloudy out there about what's really true. And again, when I ask questions like, what's the backstory? What's the hidden agenda? You know, what's really behind what's going on? That's the kind of stuff that I want people to start. I want people to ask those kinds of questions. So that's what I've been doing.

And that's probably something that's a strategy that I've done very deliberately, is put more information in the marketplace to help people. And that brings people back to me. Very good. So of the 20 trends, we got two of them that I couldn't agree with more. So thank you for sharing that. So if people wanted to get the other 18, what would be the best way for them to go get that? They can go on, take out their texting app and text to the number 72,72 with 300,000,

text the word trend. And we'll send you right out. We'll send you the trend report. The other thing they can do is the same number of 72,000. If they want access to our syndication, hedge fund, real estate video series, we've got like 90 different videos. this library, libraries free, text word asset, ASS, ET, and both to 72,000. So either trend to 72,000 or asset to 72,000, and they'll get all this information. And if they want to go to the next level like you have and so many other guys,

then they can just be in touch with me directly. Fantastic. All righty. So I'm really anticipating a lot of pessimism, cynicism, fear-mongering, and bad news coming our way over the next six months. I'm just expecting. you know what, and there might be. And the truth is, the more bad news, the more opportunity for professional investors. Because as things start falling, be ready with your cash in hand to start buying

because prices are going to start going down and we're going to be standing there ready to buy. So that's why professional investors make more money in five days than other people make in five years because we buy going down and we buy going up. And we understand the difference. We just have to get our strategies in order and we have to be proactive and we have to take a leadership position and we have to just posture ourselves correctly and not stand in the corner like you said and shiver. Well, that is answered my next question because I was going to say, let's end with some good news.

So I think that is the good news. That is good news for the public is good news for the investors. Well, but it's not bad for the public either because if the public aligns themselves with the right money guys, then they can ride the ship the right way. So position yourself that way. if you don't have a syndication or a fund or a structure, you know, then be in touch with Matt, be in touch with me. Talk about, you know, how these things work and we'll get you organized because this is really,

it's a powerful, a very powerful tool. Got it. Well, I like that. Align yourself with me. That's good. There you go. Listen, you can't go wrong with that, man. Right.

You know, I meant with the bad news. We're expecting bad news over the airwaves. Yeah. Listen, take it with a grain of salt and ask, what's the hidden? agenda. Always ask what's the hidden agenda, you know. And the last thing, hang with Matt because he's a sharp dude. Yeah, see, that's our agenda, but it's not hidden. That's the distinction. Right. That's an overt agenda. That's, and there's not an overt agenda. There's nothing wrong with saying, do business with me. That's fun. But you don't want to be sneaky about it and do all sorts

of things like the people were around that they all do. Yeah, right. All right. Well, Joe, it's been a pleasure. Have a good one. And we'll talk soon. All right, buddy. Thanks for being in touch. You bet. Take care. we got the cash flow. Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. You didn't know, home board, we got the cash flow. This podcast is a part of the C-suite Radio Network.

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