The Pomp Podcast - #754 Build An Amazing Life By Owning Boring Businesses w/ Nick Huber

Episode Date: December 14, 2021

Nick Huber an Entrepreneur, Investor and the founder of Sweaty Startup. He's built a great portfolio of self-storage facilities and service businesses. In this conversation, we discuss real estate, inflation, cash flow businesses, and how young people can get started today. ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp ======================= Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Compass was founded with the goal of making it easy for everyone to mine bitcoin. Visit compassmining.io to start mining bitcoin today! ======================= Crypto is all about democratization and freedom of choice. But many companies limit their offerings to centralized trading products. The crypto companies leading the pack in terms of innovation are those that extend access to the industry's cutting-edge products and services — bridging CeFi and DeFi. If you're searching for a platform that reflects crypto's promise of a more open and less restrictive financial future, look no further than OKEx. On OKEx now you can easily switch over to the new DeFi mode, connect OKEx's bespoke Web 3.0 wallet via browser extension and start exploring opportunities at the bleeding edge of crypto. From the DeFi Dashboard, you can monitor your portfolio of self-custodied assets across a range of blockchain networks and generate passive income from yield-farming with top DeFi protocols. In the NFT Marketplace, you can participate in exclusive drops and trade nonfungible tokens without secondary market fees. Meanwhile, the GameFi section is your portal to the latest and greatest in play-to-earn and blockchain gaming. Venture to the forefront of crypto innovation and connect with OKEx DeFi today. =======================

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Nick Huber is an entrepreneur and investor. He's built a great portfolio of self-storage facilities and he's also run a number of service businesses. In this conversation, we talk about everything from real estate to inflation, cashflow businesses, and how you, if you're young person or not can think about building a career as an entrepreneur. I really enjoyed this conversation with Nick, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is LMAX Digital, the number one

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to the new DeFi mode. Connect OKEx's bespoke Web3 wallet via browser extension and start exploring opportunities at the bleeding edge of crypto. From the DeFi dashboard, you can monitor your portfolio of self-custodied assets

across a range of blockchain networks and generate passive income from yield farming with top DeFi protocols. In the NFT marketplace, you can participate in exclusive drops and trade non-fungible tokens without secondary market fees.

Meanwhile, the GameFi section is your portal to the latest and greatest in play to earn and blockchain gaming. Venture to the forefront of crypto innovation and connect with OKX DeFi today. Again, go check them out at OKX. That's where you can find OKX DeFi. All right, let's get in this episode. I hope you guys enjoy this one. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should

not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Nick's here with us. How are you? Doing great, man. Thanks for having me, boys. Awesome. We got a lot to talk about. It's a great city. Yeah. You like this city? Great. Where you live in Athens, Georgia? Athens, Georgia. Yeah. All right. I don't know if you noticed, my wife went to Georgia. Okay. And I've been to Athens. Sorry for your loss. Yeah, I know.

Damn, bro. I wasn't even going to go there. We got another chance. It's not over. It's not over. My car. Just let's get the college football thing out of the way. They're in the playoffs, but they are the four seed?

Yeah, we play Michigan first, yeah. Okay, and then if they win, they go to the national championship. Play Alabama. All right. Are you going to come here to watch the game? Was it December 31st or January 1st? No, I got a pregnant wife and two kids, so I try to keep travel. Thank you.

I moved to the suburbs already. All right. Let's start first with, uh, you took Twitter by storm and you started talking about real estate, self-storage, all this stuff. Uh, I think some people may know your story, but some people may not. You in college, I think, uh, had other businesses kind of service-based businesses and then eventually got into the self-storage, but just walk us through quickly, kind of, how did you start getting cashflow to actually go ahead and buy some? Yeah, we bootstrapped a small business pickup storage for students, um, grew that over the course of 10 years, sold that in January of this year, um, use the cashflow from that business to build a

self-storage facility in 2017. Um, and then it went really well. It was life changing event and we've refighted a couple of times and now we're building a real estate private equity company with a lot of help from Twitter, um, building a team. And we have about 30 folks now. And we, on January 15th, we'll close on, we'll own about 42 self-storage facilities. So, okay. Um, we're growing quick. Take me back to college first. There's a lot of young people that watch this and i think that uh there's an allure and a almost a um uh sexy aspect of like let me build the next facebook let me build the next app etc which and also let me start in real estate they want to jump right in and get started in real estate and you guys started a business and

i don't want to make assumptions but i'm assuming you just like got a truck or one of you had a car or something and that's how you started and you just started picking people's stuff up or like how did you actually start this business yeah we had no website no business plan no we used yeah i had a big car, had a room, we stored some stuff in it and made some cash. Like we just went out and made five grand in a weekend. Um, and we're like, damn, let's, let's give this a go. And it wasn't about calling ourselves entrepreneurs. It wasn't about startup mentality. It was just like, Hey, let's be scrappy. Let's be entrepreneurs who find an opportunity and go and go make a little bit of cash. Um, and I learned a lot over those five years, right? We've built a business,

a lot of hiring, a lot of management, a lot of, um, basically giving me the entrepreneurial chops to now do and go on to do bigger things. And that was it. So when you're doing this as a college student like i i think of businesses and phases to some degree so like uh my brothers and i have done plenty of things where it's like let's just go get cash like whether shoveling snow whatever especially when you're young you don't have uh the vision the resources the experience whatever to do anything but at some point you go from like hey i'm using my car and my time uh to go pick stuff up and go ahead and store it in that to oh i should hire somebody maybe i should buy a truck like walk us through that transition and like what were the things that you saw where you're like

okay, bam, now it's time to actually go do this rather than you guys doing it yourself as a side job. Business is about momentum. People think that they can just go in and leverage all these tools that they don't really have yet, right? We had nothing. So we had to go first, make a little bit of cash.

And then we leveraged that cash to hire a couple of people. And then we grow to a couple of new schools and you do those basic, you know, unsexy, sweaty things for five years. And before you know it, you have a couple hundred grand to start to put to work. You have more leverage, you have a lot more skill. And that's when, you know,

you can do bigger and better things. So people think it happens quick And, you know, Zuckerberg is the story of getting rich really quick. Most entrepreneurs, most of the wealthy people around us, even your guys' media company, it's been a slog, right? You spend a lot of time, you learn a lot and take steps forward every day for five or 10 years. And so when you're doing this, at what point do you realize like, oh, I could be the service business, which is like I can go pick stuff up and go bring it to a storage facility versus like what if we owned one or we built one? So in my mind, it's all about working your way down to easier businesses as you get more leverage.

as you get more talent, as you get a better network, it's finding a way to, okay, I'm going to be like water and I'm going to chase opportunity down the mountain. And I'm going to go the easiest route possible to accomplish my financial goals. That's what entrepreneurship is about. And once you hit your financial goals, then it's about living your dream. Too many people start with, oh, I'm going to, I'm going to go do something I'm really passionate about because I love it. And then they realize that all business is the same. You got to market, you got to sell, you got to hire, you got to fire. And if you're just tinkering inside your business, it's, it's not really going to work. But I think, yeah, the point was we were in a shitty business at

first. It was tough. It was hard. We were driving around box trucks. We had part-time employees. We were getting calls that they were driving in Boston on Sturro Drive and hitting the box truck and ripping the whole top of it off, you know, putting diesel fuel in a gas engine. It's real life. Nightmares. Yeah, it's nightmares. We were in a hard business, but we learned a lot. And yeah, by the time 2016 came around, we had half a million bucks of our own capital sitting aside. It's like, let's put this to work and let's get into an easier business, which is, hey, I looked around a room and I said, okay, what are a lot of dumb people making really good money? Real estate. So yeah, it was self-storage facilities in these small towns where the owner doesn't really have

a website. They don't answer the phone all the time. They're cranked. They're making a lot of money. They're doing well. And they don't really, they're not sophisticated operators who want to get better. Walk me through the legacy businesses in terms of a legacy self-storage facility. Like when you say they're making a lot of money, what are they doing? How many employees? Like what's like the quintessential our target yeah our target market is a facility with 20 to 30,000 square feet maybe they spent a half million dollars to build it over the years and it generates 20 to 30 grand a month in cash for that family and it's not that much work you got tenants you got tenants in it and um you know no website they hang out the country club they live their life and it's just

a great family business with 500k to build it it makes 20 to 30,000 well you know they built it over the years. So a long time ago. So it costs a lot more to build a big self-storage facility today, but yeah, then we come along and say, Hey, would you rather have 20 to 30 grand a month? Or would you rather have, you know, three to $4 million now and we'll buy it and we'll optimize it. We'll, you know, increase the revenue, you know, do some good marketing and turn it into a business. What are the things you guys do to increase the revenue and stuff? You talked to me a year and a half ago, and I'm really excited about cutting costs and the fact that we can operate it with a team from the Philippines and do a lot of these tech forward things in a small,

sweaty business where nobody else is really doing a lot of that work. Nowadays, we go into a small market and we realize that, hey, you can't rent a storage unit in this town. The whole town is full and they're charging $30 for a 10 by 10. Whereas over in Chattanooga, 30 minutes away, they're charging $130. Something's off here. Like they haven't done the work to find true market where the market should be, where you have some units available. You know, maybe you're operating at 92, 93%. So revenue management has been a huge opportunity for us. We'll buy a facility that's doing 20 grand a month and do the work to like find the market rent. And that's where. Double the price, have a few more open units. It's not always about doubling the price. It's because

some of the people who look for cheap units, like they'll go, they'll go find a cheap unit somewhere. We, you know, offer them to pay online. They can rent all the time and we're going to make it easier for the customer. And yeah, some leave, but then we replace them. And six or eight months later, a year later, you're doing, you know, you bought it at 20 grand a month in revenue and you're doing 35. Yep. And how do you come up with the valuation? So 2030 a month? So yeah, I heard you talk. I heard you guys did a great job explaining inflation and how a house, you know, it's all about what other houses sell for. It's not really based on income. But when you move over into commercial real estate, it's about how much money that house makes. Yep. It's about NOI. It's

about that building, the revenue minus the expenses called net operating income. And it's all based on that net operating income. So when you buy something that's doing $100,000 a year net operating income and you can turn that into 150 or even 200 you've essentially doubled the value so if you come in and you have a system a well-oiled machine to come buy a storage facility it's worth two million do these things to it and now it's worth four million um that's how the value is really created and is that 20 times uh noi is basically the way that you would value yeah so we use these things called cap rates which is dividing um the purchase price or the value buy that net divide the net operating income by that five cap is 20 times earnings that's pretty

standard yeah that's about where the market is now in the in the towns that i shop in in miami you know it's it's uh 25 or 30 times earnings on some nice assets but we buy in small towns so that's about right yeah and then what are people putting in these self-storage facilities like i think of self-storage facilities everyone i've ever been to uh there's a whole different group of people there right i mean it's literally people who are like storing their home goods all the way to like it's some professional business thing or whatever yeah we have businesses we have a lot of amazon sellers we have a lot of uh retailers that have different things and we have a lot of hobbyists who collect things oh interesting and then you have people the the d's the divorce the

the death the you know getting laid off like you need you get downsized uh you come in and you need a storage unit so yeah it's it's it's just people's stuff man america america buys too much what about like uh what's the show storage wars i was just gonna say wait that's the show where They go and they, like, pop it open. Is that, like, a real thing? How does that work? No, that's dramaticized, or however you say it. Yeah, yeah.

Yeah, it's, we found some decent things in abandoned units, but it's almost all junk. What's the craziest thing you found? We found a Mint 1968 Camaro that we're trying to figure out what to do with up there. What? Yeah, we think the guy passed away because he paid, he paid, he paid.

We have records of the previous owner. We bought it, and then the unit hadn't been paid on for six months. We did a lot of research on the person, and their family couldn't really find anybody. couldn't find an obituary. We're doing a lot of detective work to figure out who owns that car because it's worth 20 or 30 grand. What happens when someone stops paying? Yeah, there's a lien law. So you have to auction it off. You can't go in the unit. We're kind of custodians. It's

like somebody's renting from us. It's really their space, right? So we open the door, we take pictures of it. We have to go through a lien process. Then we let it, let people bid on it and buy it from, you know, but it's not nearly as sexy as storage wars. And then when you think about uh building this type of business right uh walk us through um you're going you're buying assets that already exist they have some sort of cash flow to them you can put a valuation on it what's like the science of the deal right so like do you put down cash you're taking debt from a bank and you're able to buy it that way and you're just paying it back off where do you get the i'll do my best to explain the capital stack real estate private equity is very complex yep where

the money comes from. That's why we have you here to explain it. Yeah. Yeah. We can do, we can do it. So I, you know, when the real estate is changing quick, as you guys know, values are going crazy. It's really tough for an operator like me to keep deploying capital when things are 25% more expensive than they were a year ago. Is it the top? Are we, you know, are we going to be over leveraged? What's going to happen? Is it going to be a crash? The last crash, a lot of people like me went broke. So we've reduced our leverage a little bit. So every building that we buys 50 to 60% bank debt. And then the rest of it is through what we call limited partners, LPs. They put in cash. They don't want to be involved, but they want the tax benefits and they want

somebody like me to manage it. And I'm called the sponsor. I'm the GP. So there's LPs, limited partners who are basically passive investors. And there's GPs that run the show. They have the investors, you know, they manage the deal, they operate the deal. And who gets the money when the income comes out, the LPs is generally, it's called a preferred return. When you give money to a deal, you get a preferred return, meaning you get money 7%, 8%, 10% a year before the GP starts to make money. And then there's a promote, which is the split beyond that. So all the cash flow first goes to that preferred return. And imagine it like a water falling bucket. That first 8% fills up, they've become whole in their preferred return. You get to the promote, which

is where the sponsor, me, starts to get a cut of everything above that that's made. And so when you think about this, uh, banks are lending this money because it's a hard asset that they can underwrite easily. You're not putting a ton of leverage on it. Like they feel pretty good about, Hey, if the prices fell 20%, we're still going to get our, uh, cash back in terms of we can, you know, confiscate the assets, sell it, whatever. Is that generally? Yeah. And so there's all different types of risk in real estate. You can, you can buy development, you can buy raw land that makes no money that you're speculating that may be worth a lot of money later on. That's a covered land play. There's developers who may buy a piece of land and three to four years later,

it becomes profitable. You know, it's, it's a, it's a big risk adjusted return game where you need to be adequately compensated in real estate for the amount of risk that you take. And banks see that too. So yeah, we, we're buying right now what we consider to be a frothy real estate market. We're focusing on year one cashflow. So every deal we buy, we want to have six, seven, 8% year one cash return on the money we're investing to kind of keep our risk down, right? because we finally have something to lose now. If the real estate market really goes bad, we need to be able to ride that out.

So I have a rule. I don't do public math, but I'm going to try. Yeah, it's tough. I find myself all the time in this situation. So if you buy something for $2 million, if you're putting 50%- Want me to give you an example deal? I'll try to be the one to do public math.

You guys get your phone back. Power talk. It was a trick. Yeah, so we bought a rural Pennsylvania self-storage facility that was doing $13,000 a month in revenue and about $8,000 a month in expenses. So it's at $7,000 a month of what you call net operating income.

7,000 times 12, I'm going to try to do some rough math, about 80 grand, between 80 and 90 grand, somewhere in there. And you value that times 20 times earnings. Anybody got their phone out? 20 times 80 grand.

What's that worth? About, you know, 2 million bucks maybe around that. But then we drive revenue. 1.6 million. 1.6. Okay, so it's worth 1.6. We actually paid 1.3.

So the market, it was maybe six cap. So 18 or 15 times earnings with what we paid. But we increased revenue through amenities and finding the top of the market to $20,000 a month while the expenses stay the same. So we go from 13 to 20. The expenses are still seven.

So 20 minus seven is now how much monthly net operating income? 13,000 times 12. That's the annualized. 156. So now we're at 156,000 of net operating income. And divide that by the 0.06, divide by 0.06. that's basically like an 18 times multiple what's it worth now 2.6 yeah 2.2 2.6 million so we buy it for 1.3 work our magic increase revenue increase net operating income then we go back

to the bank this is where it gets fun we go back to the bank and say hey bank this is a lot more profitable now it's a lot less risky and it's a lot more valuable like everybody can agree that this piece of property is a lot more valuable why don't you give us a new loan based on that 2.6 and we say okay let's get 70 leverage so what's 70 of that 2.6 uh 1.8 so we get 1.8 million dollars of debt out where they send that cash into our checking account remember we only paid 1.3 maybe we financed about 1 million of it originally we put 300 grand in that's that's what you call a cash out refinance that's the that's the holy grail of what i do that's the holy grail not every deal goes that well so i want to make sure that

people understand this because it's really important so uh you buy for 1.3 you take a million dollars worth of debt you put 300 cash or 1.3 you go you buy the facility you then increase the value of it and that's now 2.6 but you go back to the bank you take out another loan a portion of that money you're using to pay off the first loan all the lps get their money back correct you pay out all of your lps and then the leftover capital what do you do with that that's the fun part that's where that's where we get to buy a house in the suburbs no no i'm just kidding well we that's where we our team is going to grow and buy more storage yep um maybe make hires invest in our company to and honestly in our business you have to keep a lot of cash on hand because the number

one rule of what i do is do not run out of cash if i run out of cash it's game over so how much cash is the target based on the value of the portfolio do you like look at it as hey if we have 20 million dollars of real estate we should keep two million dollars in cash or how do you it's a little bit of a moving target uh we we invest where you're young um and we also have buildings that are producing some cash flow so we get to get maybe a little bit more aggressive but right now we want to keep about three million liquid um a million of that's in you know investments that are easily become easily made liquid. And then the rest of it's in, uh, cash reserves. It really sucks to keep 2 million bucks liquid because it's, you know, it's losing 25% of

its value a year right now with inflation, but you kind of have to do that. It's just the cost of doing business. He said the 25% inflation. And I actually did officially say it's only 6.8, but what do we know? When we talk about inflation, you, you, you were making really good points earlier about how it really hurts the lower class. And I'll kind of, I'll kind of argue that I'll challenge you. Whereas the wealthy people who have assets that's making money, like we're operating at a surplus. So our expenses are going up 25%, but also our income's going up 25%. So we only need to go up about 7% to cover that 25% expense because we're operating at an expense ratio that's much lower. We have a surplus. So it just creates a lot more profit. The wealthy get a

lot wealthier. Correct. The bottom class, let's say the service folks, I'm hanging out over in Miami Beach right now. There's 10,000 people that work there, work those hotels. They already spend everything that they make. Yep. They make it and they spend it all, almost all. Well, many of them can actually earn a lot of money at some of those places. But let's say that they were making 15 to $20 an hour. Their income goes up 25% as well. They're doing really well right now. I've been talking to bartenders.

They all got 25% mandatory service charges on a lot of the stuff that we're buying over there. They're actually paying 25% more for their goods and they're making 25% more. They're in the same situation. The people who get really roasted are the middle class. The people who are working for corporate America, they've got that $60,000 a year job.

Who's going to go in with a $60,000 a year job and say, I need a 25% raise because my expenses are up that much. Those are the people that get toasted. My response to that, I guess, that would be a lot of them don't own investable assets, right? Which is where they'll see the real benefit from.

So even if they're getting more money and spending more money, the rich are still benefiting much more because of those investable assets, right? Yeah, but they've never, like it's just statistics that the lower third, like the poorest 30% of America has never had investable assets.

They never will, right? To make your way up, you got to start a business. And some of them are, like some of them are saving and like buying assets And they're getting there, working their way up. But the people who really get killed

are maybe the family renting the home that their income's not able to grow 25%. Walk me through, for the young people that are watching, they want to get into real estate, commercial, residential, flip homes, whatever it is. If you were starting all over again right now, what exactly would you do? I would tell them to start a business first

and forget real estate right now. I'd first ask them how much cash they have. And if they say they have no cash, I'd say find a better business right now because it's a really frothy market. You got to have a lot of cash to play and you got to take a lot of risk, right? That's just the bottom line.

But if you have a small business, if you have operational chops, if you have a half million sitting aside, I would try to find a business with an operational advantage. That would be my advice. Like find a business where you can go in and you can do some things,

pull some levers like we do with self-storage to make that asset more valuable. Because a lot of people just buy it. They think passive. They think real estate is about cashing checks. Like I'm going to sit back, I'm going to play golf and I'm going to cash checks.

Mailbox money. Yeah, they think mailbox money. I don't need to do anything. is passive. The real value and the way you can generate a lot of wealth very fast in real estate is if you have some levers to pull to out-operate other people to get that competitive advantage. Can you talk about your process for acquisitions and like how you find a building? Yeah, we've had to build out. So our evolution 18 months ago when we met, we had six buildings. We were very small. We had three full-time people on the self-storage side. One of them was me.

Now we have 30 people focused on self-storage. So we've had to build out a business and we're really running a real estate private equity company that's funding the deals finding the deals and we're also running a management company to actually answer the phone collect the rent keep these buildings clean and safe right that's our job so acquisitions is a division and it's honestly the hardest part right now because everybody wants to buy real estate it's tough to buy so we devote a lot of money and energy into acquisitions so yeah it's a lot of pounding the phones we have three full-time cold callers they call self-storage facilities they build relationships with with the owners and we we say hey look like let us make you an offer try to get

an offer out to as many self-storage facilities as possible so behind the scenes there you have to be able to underwrite a lot of deals and figure out what this storage facility is worth because we might make 10 offers and only get to buy one of them um so we got to do a lot of work it's it's building a lot of processes are you guys still building self-storage facilities or you're just acquiring older ones now um built that building that first self-storage facility was a life-changing deal i mean we built it for 2.9 million and we refied out at 5 million and now it's worth about eight and a half so it's like it's it's been the thing that has really fueled our growth um but no it's it's the thing about development is from the time you spend your first dollar to the time you

make your money is three years it's a lot of risk to take in an environment like this and development costs are going way up it's really hard to find people to build it's getting harder and harder to find land to build on and towns don't like storage much so we have focused on hey where can we use our operational advantage to just get instant yield and reduce the risk a little bit we may build sometime when it makes sense right now we don't have the risk appetite for development walk me through the tax advantages of real estate. I don't think people really understand this. Yeah. So any type of real estate, just walk me through, like, what are the things that real estate owners do from a tax perspective that drastically changed their financial position? So the, so the leverage

is the, is the key here. I mean, the bank is going to help you buy anywhere from 50 to 80% of a piece of real estate. So when you're going in and you, we put that $300,000 down on that $1.3 million deal. Let's just keep playing with that deal. Um, there's this thing called depreciation and cause that building is an expense. We, we, we bought the building and most business expenses. Like if we go out to dinner tonight and we, and we have a business meeting and we pay for that meal, you can write off that entire a hundred dollar meal right now. It's an expense, but a building, they don't let you write off the whole $1.3 million right away. They say it has a useful life. A building has a useful life in commercial real estate. It's

almost 40 years. It's 39 years. So you get to straight line and deduct a little bit. What's 1.3 million divided by 39 years, right? We'll try to get some math here for some bulls. Johnny Calculator. It's $33,000 a year. So about $33,000 a year of a tax deduction. Remember, we only made about $80,000 in net operating income when we bought it. So that $33,000 is a deduction against your $80,000 of net operating income that you make. So that shields your income. But then there's something called accelerated depreciation and bonus depreciation, because we say, hey, look, IRS,

yeah, we bought this self-storage facility, but the landscaping, that doesn't, that's not worth, that's not going to last 39 years. The windows, that's not going to last 39 years. The improvements, the driveway, the security cameras, the HVAC systems, the roof, that's all got a shorter lifespan. So let's accelerate that stuff faster. So we have an engineer come in, they look at it and say, okay, of that $1.3 million you spent, let's say 300,000 of it, about 20% is, has a shorter lifespan, we can write off all that stuff a lot quicker. This is the cost segregation study. We're getting in the weeds now, but it's a really important part because, and then there's something called bonus depreciation, which in 2017, the big tax act, they allowed you to bonus depreciate

anything that had a shorter than 15 year timeframe. You got to write off all in year one, all in year one. So when you buy the $1.3 million facility, remember we put 300 K in. Yep. How much do you think that you guys get to write off in year one on a general deal like 300 K? So 300 K is a tax deduction so all the cash we use to buy that building is a write-off year one yep a deduction and remember we only made 80k so you then carry the loss forward and so out of the 300k you wrote off in year one it shields your 80k in actual profits so you don't pay any taxes there's a little more because we have a million dollars of debt and on that interest rate about four percent we have another 40 grand in interest so even if we did straight line depreciation and no bonus it

would be 33 000 in depreciation and you have another 40 000 in interest yep that's 70 of you're 80 yep you're almost break even right then so yeah when you get that three hundred thousand dollar write-off on year one plus that interest so it's like 340 yeah it's about 340 thousand dollars of deductions year one to offset 80k of income so basically you wipe the 80k from a tax perspective and now you carry forward what is that 260 or so into future years and so if you just ran it at 80k right again i don't do public math but you could basically run it for years almost four years and your first four years of income would be completely shielded from income tax because you were able to write off all the, uh, absolutely right. And if you have a real estate private

equity company that buys a hundred million dollars of storage a year, which is our, what we'll do in about in 2022, um, you know, if we buy a hundred million dollars worth of storage, we'll get to write off $20 million of bonus depreciation. You wrote off that interest? Yeah. The interest and also part of that cost of all those buildings we bought. You're right. So it, uh, it gets pretty crazy from a tax perspective yeah and then help me understand from an lp perspective uh they basically get their prorata share of the tax deduction right so there's there's something called real estate professional status meaning like if you guys would never be able to buy a building and say i'm a real estate guy now and i'm going to use that depreciation to offset what i

make here on this podcast or in your w-2 job if we had if we had w-2 jobs but then there's something called real estate professional status if you spend more than 700 hours a year focused on real estate, you're classified in the eyes of the IRS as a real estate professional. So I do a lot of media like you guys. I have a podcast. I do a lot of stuff online, sell a lot of courses. And since I'm a real estate professional, I get to carry those real estate losses over into my normal income from my, essentially my W-2. So 700 hours, 50 weeks a year. Trying to figure out how much you have to pay. 15 hours a week, right? Yeah. Yeah. It's like sounds like what we do 13 hours a week but yeah yeah it's basically what we do right yeah and

look the government does this for real estate because they realize that it's a it's a it's necessary infrastructure we spend 97 americans spend 97 of our time inside of buildings so they want to tax incentivize people like me people like you guys whoever wants to go out and buy real estate all right we're gonna make it pretty tax efficient to do this because it's pretty good for our society to have buildings that work yeah uh talk to us about all the media stuff that you're doing? Cause you have the podcast and a bunch of this other stuff, like walk me through. Yeah. Building this business has been really fun. Um, I'm a pretty frugal, humble guy, so I don't need a lot of money from a month to month standpoint to live the life I like. So I've been spending a

lot of time over the past year, really the past three months, I've been doing a lot of work. I'm here in Miami with some guys we're getting together as kind of a mastermind group to think and talk about this stuff. Like, what do you want to be doing with your life? Like what, what really makes you tick what makes you excited and um teaching and sharing and uh you know challenging myself to grow and learn through spreading ideas just like what you're doing with your media companies is really fun it makes me feel alive to get in here and meet people like you and uh and help people get smarter hopefully and challenge them at least to if they disagree with me then they'll at least become a little bit more firm in their opinions yeah uh we have some of your

tweets that we want to talk about. Let's do it. Which, uh, John got excited. Yeah. I'll tell you a lot about how Twitter works for me. I mean, Oh yes, let's do this first. So we can even talk about some of the tweets as we do this, but look, I mean, I have a lot of loose opinions. I changed my mind often, but I'll Twitter's a great place because you have a lot of smart people there that will make you smarter if you have an open mind. So a lot of my tweets are like loosely held opinions that I'm, I'm thinking about something. I'm not really sure about it. I'm going to, I'm going to take a hard stance. I'm going to tweet this

because I know that smart people will challenge me. And that's a great way to learn and get better. It's one of the best ways to use Twitter. It's a great way to learn and get better. You have to have thick skin in order to face any sort of blowback, controversy, challenging, et cetera. But if you're looking at it from a,

I'm trying to learn, and I have thick skin, so if you tell me I'm an idiot, I'm not going to get offended. It's one of the best ways to use Twitter. And I think clear and concise communication is one of the most important skills that you can have. I mean, some people would come onto this podcast

with you guys and it would have taken me, what are we, 20 minutes? and it would have taken me 20 minutes to tell you my story of how I started my company. But now we're already deep into hopefully adding some value to people because Twitter forces me to think in character limits. So I can't talk and talk and talk and talk and talk

on Twitter. Yeah. So it makes me better at communicating. One of the best things Twitter did and everyone forgot about it is when they went from 140 to 280, I was very against it. I was like, oh, this is stupid, whatever.

It's probably one of the best feature updates that a company has done in a long time because it allowed people just enough room to write. It's all about, so writing copy on Twitter is all about like making a statement that not everybody agrees with. They're like, oh, I'm not sure about that. And then following up with like a definitive statement

that's related that, okay, I agree with that. And then spending the rest of the thread or the tweet teasing the nuance. It's all about nuance. Nuance is lost on almost everybody on Twitter. But I think that's a beautiful, that's a feature, not a bug. Correct.

All right, what's the first tweet, John? No one's always gonna agree with you on Twitter, no matter what. You have to have things again. Great thing is you can block jerks. I mean, I spend a lot of time on Reddit and on Reddit, people would just brutalize me being super mean and I couldn't do anything about it.

Yeah, but on Twitter, you can. At least the jerks. Like if people are going to respectfully disagree with me, I love those engagements, but unfortunately a giant chunk of the population is very just hateful. What is your policy on that early and often? Basically, if you say something like stupid, disrespectful,

like egregious, you just block them? Yeah, definitely. Block right away. I have 3,000 plus people that I've blocked. I would have more followers. I agree with you. I would have more followers than this guy. I'm just kidding.

I completely agree on that. It's the only way to manage it. I mean, people are mean, right? Yeah. So the first one we'll talk about is your, I believe, just viral tomato comments about tomato farms and passive income. Hold on, hold on. What is the tweet though? Do you have it?

I'll tell you. A side hustle guy said like, I would rather have $50,000 a month or $50 a month for the rest of my life than a million dollars right now. Like passive income, baby. Somebody on Twitter, some guy, very few followers. And he was just getting roasted by everybody. He said, I'd rather have $50 a month for the rest of my life than a million dollars right now because I understand passive income.

He left out a zero. He's like, I would rather have $5,000 a month for the rest of my life. And people were just going nuts on him. Like he was getting quote tweeted everywhere. This guy doesn't understand compounding. Like that's a 0.000. Like obviously pretty silly to have $50 a month

instead of a million bucks. and i was like all right well i'm gonna just troll here i'm gonna troll and i and i commented i responded and i said we leave your comment here read it to me you don't understand scale use fifty dollars to buy ten tomato plants no no we were missing the one before that oh is there one before so my response was just like fifty dollars he's right like i agree you can rent a power washer you can go make a bunch of money like fifty dollars is like having that the rest of your month you can buy a cell phone think about how powerful a cell phone is i was goofing and then parikh patel like the troll he trolls me he didn't know i was kidding or maybe he did i

think i got him i think i trolled him and he trolled me right back and said sir this is horrible math you're doing a very bad job and that's when i did the oh and that's when you said the tomato thing so the whole idea was you don't understand scale use 50 to buy 10 tomato plants in six months you have 250 tomatoes plant those into into 250 plants six months you have 6 250 plants plant them six months you have 156 000 tomatoes plant them six months later you have 3.9 million tomatoes sell them for one dollar each all right so your original tweet was what people don't understand is half a million half that million will be paid in taxes 50 a month can be used to pay my cell phone bill which i'd use to make more money or my internet bill which i'd use to get smarter and

make more money or rent a power washer each month to make more money so the whole idea is basically that i was sticking up for this guy in a funny way everybody started piling on me and i'm like i'm gonna get even more ridiculous to see if they find out that i'm joking and that tomato tweet i thought was the most absurd thing everybody's gonna know that i'm kidding yeah and they didn't it went over it was the farmers were very upset like you don't understand the nitrogen mix for growing tomatoes where's where is the water coming from like this guy doesn't understand anything about farming and then people screenshot it went over to facebook these farmer groups and they were just calling me the biggest idiots my family was calling me ben shapiro retweeted me

they're all like ben shapiro retweeted you saying what he's just i don't know he was trolling we have some dm comments that you sent back to people oh what is it if you think you're so someone dm this to you uh and they said if you think your tomato idea would give you 3.9 million dollars in two years why don't you try it and show the results honestly bro that is the most elementary retarded i don't go outside and i know nothing about reality shit i've ever seen do it man document it show the hard math and have two independent auditors confirm the 3.9 million dollar results you arrogantly lecture us telling us we don't understand scale yes we do a couple curse words you don't understand agriculture and then you responded you're wrong you're a crappy

farmer obviously and here's another one what's this one say you don't even know the proper nitrogen mixture for tomatoes you fraud in fact you didn't even know that this was a thing until i just told you you you have soft like bitch hands yeah you've never farmed a goddamn thing in your life and then you responded saying i think you were jealous of my idea so it was my chance to troll the whole internet and i had fun with it i mean when the thing about this twitter to to get serious for saying twitter it's it's such a a herd mentality and like when things start going poorly there's nothing you can do you can you you can let people just continue to shit on you you can delete the tweet or you can have fun with it and the only real way is to

either delete the tweet or have fun with it you can't fight them so another question i have for you is uh when you think about a business like farming or uh power washing comes up quite a bit like how do you think about actually trying to start like a business like hey i'm gonna put sit down i'm gonna create a company name i'm gonna uh you know create a website i'm gonna have a brochure like all that versus no i'm just gonna go get a power wash i'm gonna walk around the neighborhood i'm gonna find somebody who's willing to pay me 50 bucks and i'm gonna do it for two hours like like how do you think about actually starting yeah all the wealthiest people that I know started what you would consider small, boring businesses that aren't even really

entrepreneurship. They didn't go to their family gatherings and their uncles say, this is a great idea. Like, I can't believe I didn't think of that. It's, that's not what entrepreneurship is. It's almost always somebody seeing an opportunity to make some cash. Yeah. Getting out, washing people's driveways. I mean, there's just such a shortage of people willing to maintain and work on our homes that a hundred dollars an hour is pretty feasible in almost anything you do for somebody. Can you talk about, so you had a great thread about how people are spending more money on their homes and kind of the power washing business in specific. Can you talk about that? Do you guys own homes now? Nope. So when you own a home, you learn that it's very, very hard to

find people who want to come and help you maintain that home. If you don't value your time and you don't want to mow your lawn and wash, you know, clean your house and maybe do the plumbing. It's a generational thing, right? My grandpa knew how to do all that stuff. My dad still knows how I do almost all that stuff. So when I have a problem with my house, I'm going to call my dad. I'm going to say, dad, you know, the doorknob is messed up or whatever it is.

And he'll be like, yeah, you know, you got to do this and that. Our generation is not that way. And we're not going to be that way. We pay people to do things. 15 years ago, no, 20 years ago, like 10% of people paid to have their lawn mowed. And today it's 43% of people.

Whoa, that's a big jump. And do you think it's going to go the other way? 20 years ago, 10% of people paid someone else to mow their lawn. and now it's 43%. Yeah, I definitely don't think it's going the other way either. It's going to continue to go up, if anything. I mean, it makes perfect sense.

You can make $60,000 a year out there and get home tired and try to hang out with your kids and value your time, or you can pay somebody who's really good $50 an hour, $50 to show up, zip around your lawn, and head out and do it efficiently and do a better job than you. It's a no-brainer. Specialization is the future. People who are really good at marketing, media, management,

they're going to hire out all this stuff. I have a friend. I don't want to say whose name it is because I don't know if he'd be comfortable with me kind of identifying him. But he has what I'd call kind of a private equity type business. And one of the big plays that they've made over the last couple of years is they have acquired a lot of electrical kind of operations. And his theory was basically three things.

One, young people have no clue how to do it. It's a very specialized type of job. It's not, you know, mowing your lawn to some degree is an effort thing, right? You don't have to be a genius to know how to mow the lawn. uh fixing the electrical uh components of your home is the second thing was uh lots of young people do not go to trade schools and instead they want to go build the apps or you know go to some other type of school more creative type stuff and so the trade schools have seen a decrease in the number of uh applicants and also attendees and therefore they're churning out less uh kind of

electrical engineers to go do this and then the third thing is that uh there's not a lot of competition. So in a given city, there might be two or three electrical providers. If you have their relationship with somebody, it's really, really hard to screw it up. It's just like self storage. I mean, we looked at people who didn't really, they weren't innovators in their business. And we said, we're going to go compete with them. They're not, we don't think they're very good at business. We're going to compete with them. Would you rather do a tech startup and compete against Stanford grads and Harvard grads with venture capital money and big data? Or would you rather compete with the plumber down the street who does not even know how to send an email and has a

pretty darn successful business. I mean, it's not easy. I, one of my fears is that I talk people into this stuff. It's so easy. It's really not, it's, it's, everything's hard. It's hard to make money in life, but like the way that this stuff is going, it's really easy in a Twitter echo chamber. And as we get more influential and as we build wealth, it's really easy to forget that this entire city is full of buildings and electrical and HVAC and things that need to be done that robots will never be able to do. There's just this, this entire economy that the Twitter bubble misses yep in my opinion and i think i forget the exact numbers i think it's like 50 percent of all businesses from like a gdp standpoint are in what we would consider more of the

kind of blue collar industries right and that we're still a service economy we're still a service economy yeah and people don't realize that yeah if you think of that like that that's uh pretty interesting and then also i think that there's a world where uh a lot of those service businesses like i would think a lot of things that we did as kids were very much service business but we never thought of them as a business in the sense of like hey here's the name of the business like i don't think that any of us ever had like a business card with a company name on it whatever instead it was like yo i'm gonna take my dad's lawnmower that is like i'll push lawnmower and the guy next door needs somebody to do it like will you pay me 25 to come do it yeah okay can

i come every week oh you only want me to come every other week like okay fine and that was like quote-unquote business but it was never uh let's go scale this and I think that uh young people it's easy to get started like from a let me just do this one guy's lawn I think the hard part for them is how do I go from that to no now I have a business where like I hired two people now they cut the lawn I go and I just try and find new customers that's why I think of it in like phases it's hard yeah it is the scale part I think is where people they they either give up or they're not they don't know to be aspirational enough to go chase well what if I don't spend the time to mow the lawn? Or what if I don't do the power washing? What if I hire somebody to do it

and then I pay them less than what I'm charging. And then therefore I can just play this game over and over again. Understanding leverage. I mean, it's hard, but service businesses are very hard to scale. It's, we're in a very tight labor market. So you have to spend almost all your dollars recruiting workers instead of recruiting, like marketing to customers. But like, you don't have to scale. My brother is a perfect example. He's not wired like me to want to take a lot of risk. He loves enjoying his life and fishing. Honestly, he's happier, probably he'll end up happier than I am. He has a little lawn care company in Bloomington, Indiana, where it's him and one other guy. He has his book of 200 customers that he services. And every year he just raises

his prices and gets a couple of new clients and then raises his prices and gets a couple of new clients. And he's in his third full year out of school and he'll net 150K and spend 20 weeks in the Florida Keys fishing. Yeah. Guys, that's a pretty darn good life. Yeah. Yeah. Yeah. It's not bad at all. What, what is the biggest mistake you see young people making when they're leaving school and they're trying to get into business or, uh, uh, try to make money or any of that type of stuff? I think the people in entrepreneurship that we idolize, the Elon Musk, the Mark Zuckerberg, all these business books that we read, all this business content that we put out, even I'm a, I'm a victim of it is it's very, it's got a severe survivorship bias. You hear from the people who

win but you don't hear the story of how hard it actually is and what your odds are of success i don't i think of business you should think of business as a poker player thinks of winning a hand where can i put my resources with the best odds of accomplishing my goal first of all nobody even knows what their goals are i know what my goal is i need 20 grand a month if i have 20 grand a month coming in i can live a damn good life and anything above that's butter people don't start with a goal to realize actually okay that's pretty darn attainable in some other ways that don't involved starting a unicorn business. And then, you know, they, they may not think about the odds of, of success when they try these moonshots. When you're in a, when you're in a passion,

a passion business, like you're doing something that's fun, you're competing with other people who are interested in it. They're passionate about it. They're not making wise financial decisions. You're not competing with a true market of like, Hey, I'm passionate about business. I don't care what it is. I'll, I'll start a business hauling garbage around if that's where the opportunity for me to add value to the world is in separating, separating your passion from business. Like the point of business is to earn financial freedom and then spend your time doing what you want to do. Why do you need your selfish entrepreneur? If you think, Hey, I'm passionate about this. So that's what I'm going to do to make money. That's a pretty selfish way to think,

right? Make your money, add value to the world, and then spend your time doing what you want. Yeah. I feel like I've seen one of your tweets before about the idea of donating money, basically are like trying to make a change in the world and your whole idea i think or you can correct me if i'm wrong is basically to go out make your money and then focus on that kind of stuff because you can't do much without money maybe people the people who change the world are the people with money that's just the the sad facts i mean you can be you can be super caring you can have the best intentions you can do special things you can be a special person with a lot of talent and if you don't have resources behind you capital behind you it's really hard

you're one person you can only do an hour of work to make an hour of impact but if you're well if you say all right i really want to figure out how i can have the biggest impact on the world if you had a lot of money and the network and influence that's when you can go do some really special things so make the money and then change the world yeah it makes sense what what is uh what is your investment portfolio look like is it all real estate or do you have other assets some crypto um i don't understand it but a lot of a lot of really smart people do and i i'm i I understand that I have 24 hours a day of life and I have so much brain power

that I can devote to so many things. I punt in a lot of areas. Like I'm going to get good at what I'm good at and I'm going to trust other smart people in a lot of other areas. So yeah, some equities. I love Apple. I can't really talk about stocks on here.

This is not a recommendation. I personally like Apple, Facebook, Google, and Microsoft. I don't think there's four companies that are better than those. I think investing outside of that right now is a waste for me. Do you buy indexes or you just buy the four? I buy those stocks, yeah.

Those four. and how do you think about um every month when you get cash flow in you're like okay i need x dollars for expenses and the rest goes to investing or do you have like uh do you think of like um like a rainy day fund just just yeah and numbers aren't as important as just like how do you conceptually think about as cash flow comes in uh in terms of a lot of people i think are like okay cool this all sounds awesome but like what do i tactically do and everybody's situation is different but i think that the concept of uh you gotta pay your expenses right um you should have some sort of like cash fund or emergency fund and then everything else like it's just i think of it

as like a savings account just keep saving into investments and then just hey i'm never going to sell them yeah it's it's i think there's two types of people there's entrepreneurs and there's um w2 workers as an entrepreneur my goal is to build a machine that is an asset that can create capital in cash and once you have that machine you feed it as necessary and it continues to create what you can in a media brand is that a business is that it can be whatever um but yeah i have what i need to live on and the rest of it gets invested the best that i can into different buckets equities cash and and the majority of my net worth is in my real estate portfolio and uh on crypto talk to me about that like what you say you don't understand it uh what do you think about it do you

think it is viable? Is it more of like a lottery ticket in your opinion in terms of like maybe it works, maybe it doesn't? Yeah, I don't think Jeff Booth and this, the price of tomorrow and the deflationary environment, I don't think that those people understand this big aspect of our service economy and how much work it's going to be to actually for humans to maintain and build our world. And that technology advancing can only do so much to decrease the cost of everything. Some people believe that technology is going to take over the world and it's going to do everything and humans won't really have a role. That in that case, a deflationary environment where you use something like bitcoin to spend and earn and buy works but if your currency is getting more and

more valuable and everything else is getting cheaper in relation i don't think it encourages spending and growth and people to enjoy their lives so i look at it as a store of value and uh and it's it's definitely something really serious that i i know great things will come from it um i don't know what they'll be so yeah and uh you just have bitcoin or you have other cryptocurrencies I don't have much Bitcoin, a little, and then Ethereum and Solana. I'm a Solana fan because I've toyed around with some NFT projects and some crypto projects, and it's a great learning experience. What did you do with the NFTs?

You sold a lot of these. You're like, oh, I put it around there. You sold a lot of them. The tomato meme has just been something that follows me around Twitter and people, everything I write, they comment on it about tomatoes and understanding scale, right? So we did a tomato token crypto on Ethereum. We learned a lot about Ethereum.

It was a yielding coin, so we learned a lot about that. It was a massive failure because nobody understood the yield part of it and staking is kind of complex for me and my crowd. And then we built a Bromado NFT project where there's 4,000- We had some of them that we're pulling up now. Yeah, 4,000 Bromados.

We had an artist, a really cool artist that we're going to disclose after we finish all the other projects that we're going to do with it. But I looked at it and said, hey, I'm an influential member that's not inside of crypto. I'm not an insider. I say a lot of ignorant things.

I'm really thankful for the crypto folks on Twitter that are patient with me as I learn, as I put these soft opinions online on Twitter and get better and smarter. But yeah, we've released a bunch of these Bromados and we use it as a philanthropy area and also a community building tool to get a lot of new people into Solana.

Going from Ethereum to Solana was excellent because the gas fees, there was no errors. The gas fees were nothing. We didn't waste hundreds of thousands of dollars on gas. Like the constitution DAO was millions drained, right? And it was great, man. we're building a fun community and we're going to release like female uh we're going to call them babe mados and then they're going to spawn like we're trying to airdrop them like uh bro babies

like baby bromeados once a year we're as as solana continues to advance we're going to do more cool things with this nft product what do people get when they buy these uh tomatoes uh right now just to hear me hear me goof off in the discord but i think it's it's uh like so 10 we have a 10 percent royalty so when they're traded we get 10 of the funds and that's been 100 soul so far and all of half of it is going to buy more brumettos that we basically put on ice and half of it is buying brumettos that are then auctioned off on twitter to raise a bunch of money which was really fun where you know some big name folks i'm not going to disclose have some with the plans of like auctioning them off to raise a bunch of money for their favorite charity we've raised over 50

grand so far um that's been a cool angle and i think solana has a lot of potential so as it gets new tools we'll do some fun things with it can you talk about your strategy with it like did you just hype it up on twitter release them all at once like how do you know so so you have to prepare for a mint we actually had to invest about twenty to thirty thousand dollars to get the project we had to do all the art we had to get um you know all the different attributes we had to build them on the chain and then we had to build the website and and actually mint them which was just a little bit of hype but we made them really cheap like 20 bucks each no gas again and so we sold them all out for 80 grand in like 32 minutes which was which was fun it was like that was a success for

us and then the market took over and it went from 0.1 soul i think what's the floor now 0.3 soul or something so people we didn't nobody lost any money so far so that's that's cool i like i like it when the people who follow me don't lose a bunch of money by the way when i tweeted it we were live with you people are already responding saying bromados understand scale so quite literally they follow it's cool because in that discord a community is growing of like a bunch of real estate people that it's their first ever crypto it's their first they had to buy solana and they bought a bromato and it's it's kind of like their intro to the wall it's how it works the technology which i'm doing my part i think to kind of advance the community is uh is the point of the discord

for the bromados or was it a real estate one and then you just also did this with no the discord is a bromato community the people own them we trade them in there um it's just people getting to know each other yeah but most of them end up being real estate because i'd say it's half it's half crypto enthusiasts that are artists some artists some crypto enthusiasts and then half real estate people who have never owned an nft and they're trying to figure out how the hell this all works yeah we pulled one up matt i don't know if you can pull up the one that's got the straw hat and the goatee kind of look like john a little bit we'll send you one we'll send you guys some well with the one that we uh we pulled up earlier this one looks just like john

it probably looks good do you think any nick do you think any of this uh these crypto related things or decentralized systems will roll over to like the real estate world like take a uh the constitution dow for example would a dow ever go purchase self-storage facilities or anything like that so the this decentralized nature does not lend itself well to for-profit endeavors if there's not a leader if there's not somebody in yeah centralization plays it needs to be centralized but i think the future is like we're we're building our real estate portfolio we're thinking about the long-term plans going public on the new york stock exchange does not seem necessary in 10 years when we can tokenize ownership shares that then our owners can trade like nfts right yeah maybe it's

maybe it's stable coin just because real estate needs to be more stable. We're paying debt, we're collecting cash, but maybe it's a tokenized ownership across our entire portfolio and people can trade them 24 seven, just like they trade in FTs. I don't know. It's,

it's gonna be really exciting to see what happens. And I think I'll be, I'm, I'm just curious enough and I'll take a lot of these stupid chances that we're going to have some fun with it for sure in real estate and see what happens. What's your daily routine? Like you get,

you get a lot of stuff done and I'm always interested in terms of like what time do you wake up what do you do in the morning what time you go to sleep yep so um like all of us i have social media addiction that i've been managing and trying to figure out the best way to get away from that um first rule of uh of an addiction is admitting it so yeah yeah and for the year where my twitter account was going nuts i was getting to meet people i came on your show it's like a whirlwind of like okay this all happened in the last six months it's kind of cooled off and i've down to two hours a day or so on twitter but it's a job it's an important part of what I do, but, um, I'm all, I'm all about leveraging my time and really saying no to a lot

of opportunities and, uh, doing what's Matt, what matters to me, which is try to be a good husband, try to be a really good dad. Those are really hard problems for business people. Like we're, we're so driven and you have to be so obsessive to be good at business and to be good at media and, and, um, getting better at other areas of life is, is hard. And it's something that doesn't come natural to me and something that I'm putting a lot of work in. So I wake up, um, um try to do some right before input like before i roll over and check twitter my phone's not in my room i'll i'll take some notes and i'll do some try to do a little bit of deep thinking on like uninterrupted on input like just output like just organizing my thoughts some of that

turns into really valuable two-hour stretches where i'm revolutionizing a part of my business or having new ideas and some of it's pretty worthless and the kids get up and i start playing with the kids um by 10 a.m i'm in the office and i try to have focused work from 10 to one and then uh you do the focused work uh that is like external you're doing calls and stuff like that or just so i the way i think about building my business and again i'm in a much easier business now real estate is simpler um it's still hard but it's simpler than the student storage business where it was always coming at us um my mindset over the past three months is if i'm getting an email that requires action from me that's a problem i want to be getting emails in my team

that are, I'm just kind of observing my business work. Does that make sense? So I've never understood the person. You push the system and then you're just overseeing the system. So if I find, I'm constantly figuring out what in my business makes me the bottleneck, what depends on Nick Huber to happen?

And if that depends on me, then I don't have a business, I have a job. So I'm really trying to leverage myself out of those things. And so a lot of my effort right now is spent on chasing talent, trying to hire talent, searching for discovering and then solving problems in the business and the operations of the business and um and then yeah i do have to you know i'm alive i'm a human so i have to

take care of a lot of things that you just can't delegate so can you talk about when you're scaling a business like do you just look for example the um the storage business what in college that you started did you just like find anyone that was willing to do it and just kind of give them direction say hey i need you to or power washing like i need you to power wash this driveway like go do it? Yeah. So I think the, the, that's a great question. And the one shift that we made, it was like in 2013 that really ramped up our business and like allowed us to actually, it clicked was when we simplified, we, we, we spent the first three years of our business complaining about our employees. Our employees are making mistakes. Like they're, they don't

know how to do it. Like it's, it's always the employee's fault. And eventually my partner and I look at each other and like, these other companies are doing it. It's our fault. Like it's on us. It's, it's me. It's, it's our management. It's our system. So we try to simplify the job to the point where an average employee who doesn't think like Nick or care about the company like Nick could deliver a good product to a customer. So we're going to simplify it to the point where the job can be done pretty easily and efficiently. So like we took extreme ownership of like, we realized our drivers had like 20 jobs. They had 20 jobs out on the truck. They had to call customers. They were making schedules. They were. And so when you have that

many jobs, you can't do any of them well. So we said, how can we simplify this to where they get to focus on the five things they need to do? And then from there, like it clicked and like, that's how you leverage because i i thrive on chaos i'm an entrepreneur i love making decisions i love solving problems but it took me a long time to realize that the average person does not not everybody's like me not everybody likes chaos people like to show up to a job know exactly what's expected of them know exactly how to do it and how to like add value to the team like that is not me but the overwhelming majority of people like want structure and that is a hard for entrepreneurs to figure out what is your process for learning new things right say you find a

subject or something you want to go dive deep into and learn more about how do you do that i mean it started with college i had to find a way to get through the ivy league with all these other interests so i figured out what 20 of work i needed to do that was going to get me 80 of the way there so like i'm trying to get good at golf right now for example and i know that just getting out and hitting drinking beers with my buddies and smacking the ball around is not going to make me better at golf i have to do it the right way i have to focus on the right things so um yeah it's it's an 80, 20 process for me. Like what 20% of work is going to achieve me 80% of the results.

And I'm going to attack that first until I can get competent. And then it's about figuring out the intricacies. Tuning from there, fine tuning. Where do you, and what do you consume like content wise, just to learn? Man, I love listening to podcasts and audio books and taking notes. I think content, it's almost all in how you apply it to your life. Your content, the stuff you guys put out, people think it's only about the things you're interested in,

but you can apply the concepts to anything. So I love listening to people who are in totally different situations, how they think, how they apply frameworks, and then taking that and doing the work to apply it to my life. That's the important stuff. So, and then I can reframe it and repurpose it

and present it to my people, my followers, on how to apply it to real estate or small business. It's fun. Yeah. The thing I think about real estate, a lot of people don't realize, is there's a science to it, but there's also an art. And the science part of it,

people don't recognize like i don't know if you look at the forbes 400 as a kind of a proxy how many people on there are there because of real estate probably a lot of them right i don't know the exact number i bet you more of them are there for real estate and owning cash flowing assets than let's say uh wall street traders would be my guess right i don't know that for a fact but if i had to guess i don't know let's say maybe 20 of the force 400 is there because of real estate and the business they own in their real estate, how many traders, like actual hedge fund managers are in the top, I don't know,

400 richest people in the world? Yeah, it's about leverage, right? It's about working your way into high leverage situations where things that you've done in the past earn you money. If you have to continue to do things like do deals, if we were buying and selling, for example, instead of like holding onto these assets for a long time, then we have to buy and sell to make money.

Like we gotta buy, we gotta sell, we gotta buy, we gotta sell, we're a service business. And if we stopped that, we would stop making money. So like finding high leverage activities where you can do work once, like you guys record this show once and you repurpose the content 10 different ways. You're going to have pages

and like you do this for a couple of years and it's going to be an asset, right? It's going to be a long-term asset that's going to continue to build the brand. That's the way that most people should think about their little niches. And the thing about business is like, there's thousands of ways to win.

It's an art, like you said, there's no one way to win. It's like, you're making so many decisions every single day about what to do and how to do it that that's what makes it kind of fun, right? It's uncertain. I have two last questions for you. One is, have you guys won a deal yet because of the Twitter following?

Twitter has totally changed my life. I mean, we've raised over $20 million of outside capital. 99.9% of it has come from people that I met on Twitter. I can't advertise for investments, right? But I meet people, they get to know me, we get to know them. I've done consulting on self-storage deals and those people are out deal hunting

and they find a lot of deals and send them to us. So yes, we have. and we've made hires through Twitter. Twitter has accelerated my career 20 years. Yeah, 20 years. I could easily see that. And then the other one is, talk about the relationship with banks.

Like, do you guys try to optimize one relationship? Do you try to have many? And I think a lot of people don't realize how important the banking relationships and the access to capital markets is for obviously a real estate investor. Yeah. Like, how do you think about that?

It's the same applies to LPs, investors. Like, there's different types of banks and there's different types of investors. There's institutional investors that want to do a lot, big deals, and maybe they don't want to give a sponsor as much. Then there's retail investors that maybe want to put 25 grand in

and they just want somebody that they can trust and they need high returns and so on, but there's different types. So, and then there's different types of banks. There's banks that lend on small deals. There's banks that lend on big deals and there's different types of debt. And it's a really important job for me as a leader

to nurture all those relationships so that in a changing environment, if shit hits the fan in real estate and it's time to go buy, I have some institutional investors that have more cash. Maybe they're ready to deploy. I have different banks. So real estate is a roller coaster.

You have ups, you have downs, and the environments are changing consistently. So it's my job as a leader to build and nourish a lot of different relationships that maybe they can't help me right this second and I can't help them right this second, but we can begin to build trust with each other. They can get to know me, I can get to know them

so that when it makes sense to work together, we can do that. And that's all types of business, but it's pretty, it's a tough thing. Got it. John's got one last question for you before we let you go. this is one of my favorite questions so if you wanted to make money this weekend basically starting with nothing what would you do do i have a so i have no capital you can have a hundred

dollars or twenty year old me scrappy scrappy person it's a thousand dollars thousand dollars you gotta make a thousand bucks but i would uh i would make a this this is what i was thinking i find a i don't look enough like santa claus i would find a friend uncle whoever that looks like Santa Claus. I have an uncle that's kind of chubby. He's got a white beard, a real ripe white beard, and he's Santa Claus in the malls. I would find somebody who could spin up a quick app that allows me to pay five or $10 a minute to have my kid FaceTime with Santa Claus. Like I can say like, Hey, you're going to fill out this little form of what time you want me to call this number. And this is my kid's name. And then I'm going to let my kid FaceTime with Santa Claus,

a real life Santa Claus and pay 10 or $20 a minute. And I think we could, we could do eight hours on saturday and eight hours on sunday and with one tweet um you could make you could i'd find a guy like somebody with influence and say hey let's split the profits you make one tweet for me i'll you know pay you half the santa claus money that comes in and i'd make a little app where you can pay 10 bucks a minute to have your kid facetime with santa claus because my kids love santa claus but like they only get to go see him once they talk about him and think about him every day so if before bed one night they could call him and facetime santa claus that'd be pretty cool that hits for sure that's a good idea definitely hits also it's gonna do that also

that's loki a parent hack you're like tell sam what you want so i can hear my friend i was talking to a friend last any last night and he pulled up this little app that is just a recording it's a really low budget recording but he's like my kids have done this a hundred times and they don't know this is not the real santa and he pulls it up and it's like a app where santa claus is like Clayton, what do you want for Christmas? You know what I mean? But if you had a real person that could ask them some questions,

it would make your kids so happy to be worth it to throw 50 bucks at that. If somebody builds it, will you do it with us? Let's do it. We got to hurry though, because we got 12 days to Christmas. No, doing it on Christmas Eve is the big winner. It's Santa, get ready to work.

You're going to need a lot of coffee. yeah listen we ain't got we got commentator coffee for you it's perfect but we don't you just drink some water shut up sit down talk to the kids be quiet uh no but i think that people are literally saying uh okay you santa shillers or people have a problem with everything i don't think you can patent that i think i think that would bring kids joy so it would of course and some santa that has to sit in a mall they to earn a couple hundred bucks could earn a couple thousand bucks damn it my idea was to go caddy for the weekend oh i love that stuff too i mean yours sounds that's an easy one much more lucrative if you if you don't have the ability to make the

app or network to to spin it up it'd be real hard to get traction so in that case i would i'd hang christmas lights or go do some fall cleanup fall cleanup is big people have leaves all over the lawn i'd get rid of them yeah fall cleanup i feel like it's like a super easy just uh effort-based like i love the effort-based ones where it's like look dude grab a rake shut up and start raking right and like i mean a thousand dollars a thousand dollars is right in that realm of like if you do physical labor for the weekend you can you're gonna do it hanging christmas lights is a phenomenal a growing i don't won't say it's phenomenal business but it's it's a growing business i mean there are wealthy neighborhoods in athens which is a small town where every single house

has spent five grand to have them come in and people come in and put up a little tree in the front lawn and put like it's not much that you pay five grand to get christmas lights five thousand dollars to hang christmas lights i feel like that's a lot that's all y'all could do the show so you go put it up and then take it back down and have the lights for next year and you storm in my storage unit yeah i mean if you really think about it like somebody's paying five thousand dollars to get their christmas lights hung up right you could run through a neighborhood let's say a family they're both lawyers they both make 300 grand a year is it really wise to get up on a ladder and try to figure out hanging up christmas lights and risk going to the orthopedic

surgeon with a messed up back like if you want your house to look really nice for a whole month like it's it's worth it right yeah same thing as the lawn almost and then there's a then there's these like the botanical gardens at uga i took my kids there and and they spent like seven hundred fifty thousand dollars to bring a company in to outfit the entire botanical gardens full of christmas lights and it's an awesome spectacle like it was great to take the kids it was worth the fifteen dollar entry fee but some company got contracted for 750 grand to set up a ton of christmas lights in about a five acre uh garden yes someone in the chat said they just charged someone twelve thousand dollars to hang up lights on a restaurant in new york now we're talking out

of curiosity how do you know it was 750 grand did you like publicly available well i'm i feel like you like went around asking people you're like yeah what company did this i'm like i drive my wife nuts because everywhere we walk down any town i'm like how does that business make money like we're staying at one we're staying at one miami the hotel one hotel and i'm we're trying to figure out we're sitting around trying to figure out how much revenue that place does in a day and we think it's over a million dollars a day of revenue because they have 850 nights it's $1,000, 850 rooms, it's $1,000 a night. Then they have three bars.

They have all these little coffee shops. It's like a huge operation. Yeah. That's a great thinking process though. Hotels. That's how you spot opportunities. Walk around learning to think about how businesses work and you'll spot opportunities quickly.

It's fun. Yeah. All right. Where can we send people to find you on the internet? I have substack, sweatystartup.substack.com. I send out a lot of deal breakdowns on self-storage. Like if you want to hear about that one in greater detail of how we negotiated the debt, how we raised the equity, how we found it, what we did with rents after we bought it,

what it's worth now, I send out these deal breakdowns that are really popular on my sub stack and on Twitter at sweaty startup. And then I mess around and make a couple of podcasts and YouTube videos too.