Podcast Episode 57 Transcript

Episode 57: Generating Passive Income: How To Achieve Financial Freedom For Your Family

Participant #1:
There's three legs to a stool of capital preservation the way we see it. First of all, cash flow, cash flow is King, right? While the property is cash flowing or the business is cash flow, you don't really care what happens to the value of it as long as you're holding it because it produces an income for you. The value of the property only matters when you're going to sell or refinance it if you have the right debt in place, meaning you have long term debt longer than what your business plan is. That allows you to come in and don't put yourself in a position where you are forced to sell or refinance. If you have a three year loan and you have a three year business plan, everything needs to go perfectly and right. You need to execute perfectly. Nothing can go wrong, because on year three, you might find yourself in a scenario where maybe you didn't add enough value. You can't really refinance because of whatever the environment at that point doesn't make. People are not lending, and the property has maybe lost some value. Even then, you're done. You're doomed. You lost money.

Participant #1:
Welcome everyone to the Prendamano Real Estate "PreReal" Podcast. We're joined today by Stoney Stonebreaker and Lennon Lee. They are the owners of Placebo Real Estate Investments. They're based out of Miami. These are two entrepreneurs in every sense of the word that have pretty remarkable stories. Guys, thanks for taking the time to join us today. Thanks for having us, man. Glad to be here. Well, it's our absolute pleasure. You guys are going to talk about your journey. You're going to talk about this investment vehicle that you're using before we went live. I asked the guys in one or two sentences to describe what placebo real estate investments means to them. And the response was it's a vehicle to achieve financial freedom for their families, which I think is amazing. It's a genuine mission. It's something that I'm working very hard personally to try and achieve. And I know a lot of the folks out there in the audience are working hard to try and achieve financial freedom, especially with the backdrop of Coronavirus. Things are changing in the real estate world, and they're changing pretty quickly. So the audience likes to get a flavor of who we have on and just a little bit of background. So I don't know, Stoney, if you want to go first or Lenin, can you just talk to us a little bit about your life before real estate and how you ended up where you are today? Sure. I'll go ahead and get that started because I started life before my partner here did. And I think you did, too. Yeah. I got my electrical engineering degree, undergraduate at Georgia Tech. And while there, I had a couple of fortunate experiences. I built an electric car, which we drove from Boston to St. Louis. And then I also was able to work on the Saturn V on the Apollo program. And that was a great experience as well. But in my career I got into a W two job in telecommunications field. So I ran telecommunications departments for some Airlines and then for electric utility and also was able to help in some diversification efforts that they had to write some business plans and to help establish some companies in fiber optic transmission and so forth. And then I was always entrepreneurial in nature and was able to kind of scratch that itch with some other companies that I started and ran on the side, but also found early in my career book about real estate investing and the Advantages of Income Producing real estate book by William Nickerson. Some people might have read how I turned $1,000 into 3 million in real estate in my spare time. And that was kind of one of the rich dad before rich dads and all the advantages look great. So I did some investing during my career, although I would spend most of my time on my job and just didn't invest in a whole lot of real estate. But vacation condos, some land, single family properties in North Carolina and Florida primarily. Then I retired in 2002 to spend some time summers with my son. And I did that and also got into some other activities, helping to some startup companies and early stage companies by consulting with them. And then I kind of refound my love for real estate or my interest in income producing real estate. About five or six years ago, started looking into that, interviewing friends and so forth and talking to people about it, looking at reading books and watching podcasts or watching videos and YouTubes and podcasts and so forth. And then through that I met Lennon and we have invested together, and I'll let him talk about some of that journey from there on. But that's kind of what got me to here. So you were never really a nine to fiver. I mean, you've been involved. It seems like an entrepreneurial spirit adventures from Jump Street. I think it's fascinating you worked on. I believe the instrument unit for the Saturn rocket. Is that correct? That's right. That was the brains of the Saturn Five. I have to ask, how does that even come to come about how into this? Were you? That's awesome. That's cool stuff, right? It was. Yeah. I didn't realize at the time how cool that really was. I guess I was going to school at Georgia Tech, and they have a co op program which offers the capability to work for companies. It's more than just internships. It's real work. They offer some students their opportunity to work for different organizations and entities. And I just happened to be available for I wanted to get into co oping and working for somebody. They offered me one job, but that was a government agency that couldn't follow up, and they lost the position. And so I kind of fell into this opportunity where IBM had the contract with NASA to build this ring that's 3ft high and about 21ft in diameter. It has all of the instrumentation, the computers, such as they were and the communications, the air, ground communications on the Saturn V Rockets for the Apollo missions. And so I went over there. I tested equipment that went on the instrument units that went on some of the missions from Apollo seven through 13 and also wrote some software programs and did some testing and verification of flights, vehicle launch angles, and the actual first Apollo eight lunar mission. So it was a lot of different things going on there with that. And it was just a very young crowd working on Saturn Five at the time. That's wild and amazing. Everyone has kind of in their moment, it seems when they start to make the shift into real estate. And today I say this all the time on the show. We have so many resources available today at our fingertips, just jumping on the podcast and YouTube, the Internet. There is so much information that's available out there, and folks like yourselves are willing to share some of the secret sauce and try and help those of us who haven't made the leap to make the leap. So I think that's fascinating. And, Lennon, you've got quite a story here as well. Why don't you just give us a little background? Sure. Well, it's been a little bit over eleven years since I moved to the US. I'm originally from Venezuela. I'm also an engineer. I graduated in Venezuela for telecommunications engineering. I never really worked on telecommunications or anything like Stony, but then moved to Miami when I did my Masters in engineering management and started working for a label Sprinting company down here for a couple of years, doing supply chain and logistics for them. Never really liked it. My boss hated me. I hated my boss. I didn't really pan out, but all that time, actually, before I moved in 2009, when I say we that's my family and I, we bought a portfolio of properties here in Miami. We had a piece of land. We had some single families condos as well, and I was basically managing the portfolio for the family. While I was working, that was roughly late 2015. I started seeing that the portfolio was not really performing that well anymore. And we had a lot of equity sitting there. Basically, it just made sense to look for something else. We knew we wanted to be in real estate, state in real estate. My family has been in real estate for a while. Actually, we built a few townhouses down there in Venezuela, and we've always been in real estate one way or the other. So, yeah, we wanted to stay in the real estate space, but we wanted to look for something obviously a little bit more profitable. But more importantly, we were looking for that time freedom, especially for my mom and dad. They had all this. They had this money sitting there and they didn't really want to be active on the management or anything, which I was doing. But we all thought, Well, how can we find something that is going to perform better than what it is right now but actually allow us to be passive? And then also, we wanted to diversify because we thought that was smart at the moment and still is obviously. So basically, with that in mind, I got my real estate license, and I started selling some of the properties in the portfolio I found out about commercial real estate. To me, it caught my attention on how different it was from residential real estate, just in the basic sense of how it's valued. That made a lot of sense to me, because it seems like now you could have some control over the value of your property if you went in and you implemented some sort of business plan or whatever strategy you wanted to implement. So that made a lot of sense to me. We then found within commercial real estate, multi family properties. There's different reasons why that make sense to us. But really, at the moment, it was more about. Well, we understood it better, right? We didn't really know how industrial or retail properties operated and works versus an apartment complex. It's pretty straightforward, right? We actually lived in one. I still do. So with that. We wanted to be in that asset class. And then how can we be as passive as possible to really passive? Well, we found out about real estate syndications. We started where I actually started traveling and studying and meeting and building relationships in the space until I found an operator or sponsor that we trusted that we liked, and we started investing with them immediately. I said, Well, I don't want to be doing the realtor job. I don't like. I don't enjoy the conversation myself, so I want to do what these guys are doing, the people that I'm investing with. So that started the journey of building a company where I started raising capital and working with them on the general partnership and putting together this private offerings and talking to investors and basically educating people like my family that didn't know or understood that they could be part owners or partners in a multi million dollar deal without being a multi millionaire or anything like that. Right. I found Tony in an event, we invested together in one deal, then a second deal, third deal. We did a few deals together, and then we started placebo real estate investments about a year ago to basically formalize our partnership. So pretty remarkable. Right. Fast forward. Eleven or twelve years after you've come to this country, and now you're sitting on a company that includes between LP and GP investments. From what I understand, more than 2000 units in a portfolio that's pushing 200 million. Yes. That's absolutely remarkable. So you said you guys met at an event. What type of an event was it was CCAM luncheon down here in Coral Gables? I think it was. So you guys meet, you connect, you kind of hit it off and you start investing together. And here you are. Yes. I was raising capital at that point for a deal. So it was going to be the first deal that I was raising capital for in partnership with this other group that I had invested with. That I started investing with before it was there. He was already interested in commercial real estate. He liked the multi family space. And we hit it off. And we invested together in that deal. We raised capital together for some other deals. And then we did another deal in Jacksonville, 138 units with another partner. And we recently closed under piecebo. We just closed on our first deal, 262 unit apartment complex in Houston. Absolutely remarkable, guys. So I've got a million questions. So I'm just going to start firing them out and you guys can answer, I guess, wherever it hits home more. So raising capital for syndications, you're sourcing the deal first, or are you cultivating investors on the prospect of a deal to come right at placebo? We have a unique approach to a little bit different than your regular real estate investment or syndication company, where, on one hand, you have sourcing deals, talking to brokers and obviously analyzing the deals, making sure that you identify an opportunity. And then, on the other hand, you raise all the capital for that deal. And then maybe you are investing in different markets, right. For us, our model we look at, like I always say to everyone, we are passive investors or limited partners first before anything else. And that's how we look at everything that we do. And that's how we're trying to build our company around the understanding that we are passive investors. And that's what we want to be again, above everything else. So one of the biggest risks in commercial real estate, specifically in the type of deals that we do, at least a controllable risk is the execution of a business plan. How well can you execute what's the business plan and who's the team behind it? What's the track record? The team is very important. So we thought, well, we know we can diversify across different markets, even asset classes. But the most important thing to do as a passive investor is to build relationships and spend a lot of time and effort building relationship with different teams, meaning different sponsors or syndicators. And we're going to be using those terms interchangeably as we go. So what we did with Facebook is, well, if we want to build a network of different sponsors that we want to invest with as limited partners ourselves, that has to have value to other investors like us and families like us that don't necessarily have the interest, the time that we have to spend all the efforts. Maybe because they have another business, maybe because they're already retired. They're not interested in actually or actively continuing to exchange their time for money. They just want to invest. So for those people, we built placebo, that is a company where we on one hand, yes, we're raising capital from accredited and some non accredited investors. And then, on the other hand, our deal sourcing. It's not directly from us. What we're doing is we're partnering up with other operating partners or other sponsors in the markets that we want to be in. So they source the deals, they identify the opportunities. They put it in front of us and say, hey, guys, we have this deal under contract or under loi. We've been awarded the deal or whatever. And do you guys want to join forces on this? We look at the deal. We do our own third party with our team underwriting, and we analyze the opportunity. If it's something that we would invest in as limited partners and as passive investors, then we would say to them, okay, cool. We like the deal. Let's join forces. And at that point, we become one with them. And it's one big sponsor team. But that allows us to diversify. And then on the day to day operations, when we close on the deal, we allow them to run point on the actual day to day operations, because that's the reason why we partner up with them. They're local experts, right. So that allows us to tackle more deals, better quality and more quantity eventually. Okay. So you're investing alongside the GPS or operators? They're sourcing it. They're doing their own internal underwriting. They've got a vision for the property they come to you guys. You run it through your process, you measure up and make sure that the returns are going to work for your investors. Now, how does the partnership get split? Who's the controlling partner is it a true 50 50? Are you setting up a new parent, LLC, who's calling the shots right at the end of the day, markets change things. There's diversification decisions need to be made. Who's actually running the day to day? Right. Well, it depends on the deal, right. We have deals where we are running the day to day operations. We're doing the asset management. We found the opportunity and we brought other groups like ours to join forces with us. Maybe they brought their investors and we are calling the shots and running point on the day to day. Some other deals. It's the other way around. We are basically supporting the operations. We definitely 100% are general partners on these deals. That's something that's very important to us because it allows us to be on the so we have a seat on the table. We are involved in the asset management. Somehow, we're providing our own expertise in our own set of value depending on the deal. Right. Some sponsors that we partner up with, maybe they find value in us trying to drive more traffic to the property. Right. We know a little bit. For example, we have some practices in one of our properties that have driven a lot of traffic to that property, and we implement that or can implement that on other deals. So it's on a deal by deal basis. Ultimately, like I mentioned at the beginning, it's one big general partner team that everyone has their own responsibilities. Obviously, we're running all the investor relations and investor communications with our investor base, and they are doing whatever they do best. But it changes from deal to deal. Typically, how much capital are you requiring? Let's say you're working with an operator where they found the deal. They brought the business plan, they brought the real estate transaction, they tied the deal up. How much capital, if any, are you requiring from that partner in these transactions? Well, actually, what we like to do is to be all the general partners to be invested in the deal as limited partners as well. And this is something our investor that's very important for our investors as well. How much skin in the game do you guys have? Obviously, these are large deals. They vary depending on the deal size, but it could be from 1% to 5% of the equity comes from the sponsors, meaning our team and our partners.

Participant #1:
Okay. So you're then going out and you're securing traditional leverage. You're going out and seeking non recourse or recourse debt. All non recourse. Typically, it's going to be long term debt. I would say half of the portfolio have fixed rate debt and the other half it's floating. But we typically finance around 75% loan to value. And we're again, typically going with long term debt provided by Fannie Mae or Freddie Mac, for example, the latest loan that we got 75% loan to value on the Houston property that was four years interest only that we got. We got a floating rate

Participant #1:
five altogether, plus two point 44 plus two point 44, which is pretty good when we have floating rate on the loans. We typically buy a cap on the interest rate so that if the environment goes up, then we are safe under a certain percentage. In this case, it's 5%. We can't go above 5%. So we're pretty happy with that type of debt. It's all non recourse. We do have some rich loans on one of the properties that we're selling right now, and I think another one as well, but yeah, typically we like to go with long term debt, fixed rate and some years of interest only. That allows us to provide a little bit more of a healthier cash flow on the first few years while we stabilize the property. So I might add that the term of the debt is longer than the business plan calls for. It might be a three to five year or three to seven year life that we look for in the business plans in the project. And so our debt might be ten years like this past Houston deal. So what are the metrics that you're using in first determining where you want to invest? Right. We read about and we hear about these emerging markets. I've been screaming from the top of the mountain for four or five years now the decentralization of real estate is coming, and now we're seeing it. But there's a lot of markets. There's a lot of opportunities. Right. What are some of the metrics you're looking at when you decide? Let's put a pin in the map here. Here's where we want to be. Yeah. Well, Tony can get into more details, but like, big picture, it's honestly pretty straightforward. There's a few ingredients that definitely for multifamily real estate. But I think for all real estate in general, tell you what makes a good market. It's just where are people moving to, right. People and jobs. Of course. You want people coming in into the market and you want quality jobs to obviously support them and their lifestyle. Right. So those markets well, Texas and Florida. I've seen an influx of people crazy. Well, from New York, California, and we like those markets primarily. But we are interested in a few other markets in the Southeast that, again, have had population growth and job growth. And we also like to see diversified markets, meaning the economies are no one industry has more than, say, 20% to 25% of the whole economy. Again, pretty intuitive stuff, right. You don't want to be in a market where it's all tech jobs and maybe all the tech companies moved to some other city just for whatever reason. Right. Tax reasons or whatever. And now you find yourself in a town where no one's left and no one has good jobs. So obviously, no one can buy or rent your products. So again, that's pretty straightforward stuff. Then we look at some other stuff as well. Sony, I don't know if you have some other stuff in mind that you want to share. Well, I think that's the basic demographics that we like to see. And we also like to see a good tax climate, the business tax climate and landlord friendly laws, not necessarily against tenants, of course, but because we like to make sure that our communities are welcoming to tenants, and we try to do a few extra things there. But we certainly don't want to get caught up somewhere where we have very strong restrictions on the laws for landlords. So we stay out of those places. Generally, it takes us in the Southeast, and we prefer not to go out west. There are places like Tucson, Phoenix, Scottsdale, and things that people like even Boise and Salt Lake City, are popular these days and in Colorado, but that's a little further away. We'd like to be able to get to our properties, to be on site, to have some surprise visits, and also to have some scheduled visits to see the property and make sure, especially early in the days of the ownership, where we're executing a business plan that is typically trying to improve the property, which is one of the real benefits of having multifamily by having a controllable asset there that you can add to the value of it. So Stoney the number one reason that I was citing the decentralization of real estate out of all the major cities again years ago was the traditional metrics we used to look at when evaluating the deal were primarily centered around just the business terms of the deal. Right. There were some outside factors about job growth. But when you're in the major cities, that was for a long time, fairly consistent growth. Right. So what I started to see was the legislative threats. That was something that nobody was talking about and our investors, we started telling them, get out of multi families. The legislation is changing very quickly. The way that you can invest and take deductions in New York has changed significantly just today, I got word that up in Albany, I believe it's called the good cause legislation. In Albany. They passed legislation today that in that city, it's a city ordinance for now. But I'm hearing that other cities in New York are already looking to adopt it. Essentially, if a tenant leases up, you no longer can remove them from the apartment. They have rights to the apartment after the lease, and they're capping what you can raise them. And we're not talking about 50 unit buildings. We're talking about four families and upwhile tenant protections is something that I think any decent human has got at the top of mind. And we all want to be responsible. And we all want to make sure that we're providing a nice place for people to live. At some point, the legislative threats start to cut against the investor so much that it's just tough to pencil these things out anymore. I think that's in large part why you see difficult West Blackstone buying a billion 2 billion, $3 billion in single family residences now because they're trying to get away from those legislative threats. So I applaud you guys for getting ahead of the curve there and recognizing that these were I wish we could have talked a few years ago because nobody was listening to me back then. But those are real challenges. So as you're picking these properties, can we talk a little bit about what you're looking for? Cash on cash returns or the overall cap rate? What are some of the metrics that are important to placebo as you guys kind of refine your investment strategy? Sure. Really, at the core of what we do, we have capital preservation, right. So everything we do, the way we structure the deals, the markets that we invest in the type of deals that we invest in the asset class, everything comes with capital preservation in mind. Basically, I always tell the story, but it's like my mom once told me, hey, listen, you do your thing, but just don't lose my money. Right? Then you can talk about how you're going to grow it, how you're going to manage it all that good stuff. I don't care, but just don't lose my money. I'm not working any longer. So with that, Sony basically shared that vision with me. Okay, how can we, first of all, don't lose money or family's money? And then how do we, of course, have it work for us? And how do we grow it and try to build a legacy for future generations? So with that in mind, the type of deals that we look for before we get into the actual numbers of metrics that we want to see, we want to see a deal that it's a stable property, cash flow and property. We typically are investing in workforce housing. We like to call it sometimes we call it Gray color, which is, well, not blue, not white, just somewhere in the middle. Workforce, house and class B properties typically built in the 80s or 90s. On average, we have 2000 plus properties, and we have 70 properties as well, but typically on that range. And we want a business because ultimately we're buying a business that is cash flowing from day one, but that might be underperforming or at least has the potential for some value to be added. Okay, with that in mind as well, then we want to have the right financing on the debt side, and we want to make sure. So there's three legs to the stool of capital preservation the way we see it. First of all, cash flow cash flow is King, right. While the property is cash flowing or the business is cash flow, you don't really care what happens to the value of it as long as you're holding it because it's producing income for you, then the value of the property only matters when you're going to sell or refinance it. Right? Well, if you have the right debt in place, meaning you have long term debt longer than, like Sony mentioned, longer than what your business plan is, then that allows you to come in. And don't put yourself in a position where you are forced to sell or refinance. If you have a three year loan and you have a three year business plan, everything needs to go perfectly and right. You need to execute perfectly. Nothing can go wrong, because on year three, you might find yourself in a scenario where maybe you didn't add enough value. You can't really refinance, because whatever the environment at that point doesn't make sense. People are not lending, and the property has maybe lost some value even. Well, then you're done. You lost money, right? You lost the property, basically. And then the third leg of the stool is even at the expense of some returns suffering a little bit. We like to go in with more equity than typically necessary, not only in reserves, but if we want to implement and add value to a property, we want to have the equity from day one to be able to do it and not have to do it out of cash flow. Because again, you don't want to put yourself in a position where maybe covet hits vacancy increases. Cash flow suffers, then you don't really have the money to add the value because, well, the cash flow is not there. If you can't add the value, if you can't implement the business plan, you can't add value. If you can add value, you can refinance, then you're done as well. So that's the way we would think about the type of deals that we want to do. Cash flowing the right depth. And we want to go in with enough research and money to implement our plans in terms of numbers. We always look at it from the investors perspective. We want to be able to offer our investors somewhere between 6% to 8% on a cash on cash return. On average, you say, per year, we're typically above that so far, but we are kind of adjusting expectations for everyone at this point. It's a little bit tighter right now, and so 6%. But overall, we're aiming at least 15% IRR for the investors. We're typically holding this deals for five years. Well, honestly, right now we're averaging closer to four, but our pro forma on all the deals, it's typically five years. So yeah, that's why we want to see Sony. Do you want to share some other metrics that you like to see? Yeah, I like in particular, is the breakeven occupancy. We want to make sure that when a property does suffer, if it does suffer, that it's still profitable, and that's all part of one of those legs on that three legged stool that Lincoln was talking about. And the break even occupancy for most of our deals that we look at is around 70%. Now, when we buy a property, it's stabilized property, which by definition is 90% or higher occupancy. And also when we start to execute a business plan early in the first year, maybe for the first 18 months or even 24 months of the property, we're going to be might be turning over some of the units and renovating them. So we have a little bit more higher occupancy or vacancy at that point in time. But we still like to stay above 90% at that point in time. But we like to have a real good margin of error. Therefore, the occupancy and the breakeven occupancy especially. But that's one I really like, and that I think is one of the key ones that I certainly look for. So just from a transactional perspective. Right. Let's say I have a deal. And let's say it's worth using standard metrics. Conservative, a seven cap, at least up here, a seven cap is very conservative, right. And at a seven cap, she's worth $10 million. And their stabilized value is 14. 15 million. There's some vacancies for a number of different reasons. There's some capex that has to go into the deal, but it's really a restructuring of just how the asset was handled. Candidly, I come to you guys and I say, hey, I've got this deal. It's worth ten stabilized. It's worth easily 14. 15 million. I need 24 to 36 months to stabilize. I want to do a deal with you guys. How does that work? You guys are raising the capital on your side. Are you now going to come and invest alongside with me and I'm going to be the operating partner. And what are my contributions have to be at that point. If you're talking about 70% LTV, we need $3 million in cash. Right. So out of the $3 million, it's cash flowing today with debt service, the debt service ratios are pretty high, way outside the norms. And I want to do this deal with you. How much money do I need to put into this deal in order to make it happen? Well, actually, out of pocket money, you don't necessarily have to bring money like you can identify the deal. Maybe you have the opportunity. I mean, if you have it under contract already, then you probably have some money out of pocket and earnest money that you might have to put like or risk capital that we like, how we call it. But other than that, it's more about who are you and who is your team. Because if you are going to be operating and implementing the business plan, or at least calling the shots on the day to day operations, we want to see a track record. We want to be doing business with someone. That again, doesn't matter if you don't have the liquidity to invest in that particular deal. Maybe that's why you came to us. We can bring the $3 million from our investors. We'll bring all the equity, and we really want to see that you are capable of running the operation honestly, because that's the part that we want our operating partners to do, right. So that we can focus on raising more capital and finding more deals. But, yeah, that would be something that we would do honestly, for us. The main thing is the relationship with the operating partner and the sponsor. All the deals that we've done have been with operators that we've long for typically more than a year. At least we've had a relationship. We've been following their journey and all the other deals. And ultimately, we trust that again, that your team and you are capable of doing that. We get a lot of offers or people calling us, hey, I have this deal. We can partner up. We can bring my Masters to bring yours, and we can run the operations together and whatever different structures that they offer us. And we don't really do it because we don't know who these people are. So it's not just the money. Sure. So you guys are looking to be true passive. So let's assume we've got a rock star team in place, right? Me, for example, I've got a track record 2025 years. I alone have been involved in over a billion dollars in transactional real estate. Right. We've got a full team. Are we able to keep 50% of the deal? 20% of the deal? Is it a 50 50 relationship? I'm trying to speak to some of the folks out there because deal pipeline. Some of us have great pipelines, and we're looking for folks like you to bridge the gap. Yeah. So depending on who the operator is going to be, we could say that somewhere around, like, let's say, for example, if we co sponsor a deal, you run the operations, we take care of the investors and all the other stuff or whatever other value we're going to bring. Yeah. 50 50 would make sense. We bring all the capital from our investors. You bring the deal, you run it. And then, of course, we have different responsibilities, but mainly big picture wise. That would be somewhere around that 40. I mean, if you're a super experienced operator, Rockstar team that we really want to work with you, then we might say, well, we bring all the capital instead of 50%. We'll take 40 or 35. Well, it depends on the deal again. Right. But something like that, something like that what makes sense for us. And now do you guys want to be at that point? So let's say I had told you it's 24 to 36 months to stabilize. We go ahead and we hit our marks. We stabilize year five rolls around. Is there a point at the end of the fund where you guys want to be cashed out and you want to refi cash out or you want to sell the property or if it's performing, do we want to stay in this thing at the end of the day? There has to be an end date for your investors to recoup their initial capital. So what does that look like? Yeah. So we found that for the type of deals that we do and the type of business plans that we have for these deals, five years allows us for maximum IRR. Okay. So after year five, we typically add or implement the plan and add all the value that we can add in maybe 18 months to 24 months, maybe a little bit more, sometimes depending on how big the property is. But, yeah, roughly two and a half years, we've added all the value we're going to add. So then we hold it for another two and a half years to obviously take advantage of the cash flow at that point, it's obviously better. And by year five or after year five, we see that the IRR. I mean, it's still a good performing deal, solid cash flow, which is important for some people, but we also want to maximize IRR. We found that at year five, it's when that happens close to that Mark. And then, of course, not only that, but as general partners in the deal. Yes. We've told our investors that we're going to get out by a certain date, roughly, it's not fixed, but roughly five years. So they're expecting that. But us as general partners, we make the bulk of our money when we sell or rebuild property, typically when we sell the property. So we're also looking to sell the property eventually, not necessarily hold it long, long term. Got it. So when we hit that four five year Mark feels optimized. We're enjoying the upside. Then it's time to either refi cash out, make everyone whole and just kind of see where things take us or let's go ahead and sell it and recapture that capital and then go do another one. Yes, I love it. I love it. So how do folks submit deals or submit? I guess not submit deals. Right. You've got to build the relationship first. So what's the best way for people to find you to make these connections and to start? I want to do it being quite candid. I want to get to know you guys more. We've got access to a constant pipeline being that we're on the commercial side and we've got full service brokerage. So for that next step, we're always looking for partners like this. How do you grow the relationship? Where do people go to make an introduction? How does this kind of go from an initial chat like this to an investment opportunity downstream?

Participant #1:
Sure. Certainly, our website is available for people to take a look at and see what some of our backgrounds are. Some of our portfolio is, and that's a Placeborei. Com placebo is spelled with two S's, and we have an ebook on site there that explains basically our investment criteria. Our strategy, what we think is important in investing. And that ebook is called The Four Investing Rules for the New American Dream. And you can go to the website. It's Placeborei. Comdream where you can find it and download it. It's a free book for anybody, and we try to also educate our investors. We want to make sure that they are financially literate and they're making smart decisions for themselves. And that just helps make smarter investors for us and helps us have better relationships with them to make sure that we are helping them in a variety of other ways. We don't need to get into that now, but we think that that's the best way, and you can also schedule a call with us. We have our Invest with us buttons on our website where anybody can register in there and schedule a call as well as take a look at inside our investor portal and take a look at the deals that we've done in the past in a little more detail and also see if we have anything particular to offer at that particular time. So, folks, I went ahead and downloaded the ebook. I loved it. It's pretty straightforward, but it covers everything from investment goals to tax strategy and depreciation how you can really optimize your investment. I love what you guys are doing. I think that there's a big void in the market for this as the big banks are dumping hundreds of billions of dollars into the overnight because they're afraid to lend. This provides a nice opportunity to help bridge the gap. To get to that 75% I wish you guys all the success in the world. Stony and Lennon, thanks so much for joining me today. Really. Best of luck. This is a great platform and nothing but success is for you in the future. Thank you, man. Thank you for having us. Thank you. Same for you. Yeah, I appreciate it. Enjoyed it. Absolutely. Everyone out there. Please stay safe.