https://youtu.be/wzgh0fPwlyg

What’s up investors! On today’s podcast, we’re going to be talking to a Canadian investor that it’s going to answer the question on, how can Canadians or folks outside the United States invest in the United States. Now we’re going to be going into just some investing and entity structuring ideas, and we’re not advocating for any of this type of stuff, but it gives a good insight into what it takes for some other folks that, we have to have some international investors in the group, but they have to go through and, it might also expand your mind to thinking, to get an outside of the United States.

 

And this is a typical topic for a lot of high net worth investors when their net worth goes over three or four or $5 million. A lot of people might have a lot of distrust in the United States government, or just want to diversify over the United States. Now I personally believe that the United States is the best nation out there because we have the best military. But it might be prudent to get outside of the United States for other reasons like taxes, or maybe just having another passport to be able to get out of town. If you’re in the United States and you love the United States, today’s podcast probably isn’t going to be too much value for today.

 

But before you go, I just wanted to go over a couple of thoughts or lessons I like to share with you guys before you guys take off to the podcast. Now somebody introduced to me this idea of an incubator group out there, and this is really not in the world of real estate, but in the world of venture capital.

 

And I’ve spent a couple of years, I spent a lot of my time looking into venture capital because here we have all these investors looking for ways to grow their money, which ultimately just ended up coming back to real estate, mainly for the taxes and the stability. 

 

Especially when you go into stabilized apartments or stabilize properties that it’s already occupied and it’s more of a cash flow model, really. You’re very conservative in your investment and you can really sleep at night or venture capital projects, very, asymmetric type of returns where you might hit it big the 5% of the time. Sure, maybe the overall return when you average all the losers might be a little bit higher than real estate, but personally, that’s just not the way I like to invest. I’d rather hit a high percentage of singles doubles and also get the tax benefits  from it, which you don’t get from all these other asset classes.

 

But somebody brought me to one of these incubator groups and what I’ve learned. And I could be wrong because this is outside of the realm of real estate as there’s a lot of these incubator groups put forth by these influencers, or you can call them mini gurus  if you want. But a lot of these guys, they just couldn’t hack it as venture capitalists, actually doing the thing.

 

And as the same goes, those who can’t teach. So in this world, those who can’t make freaking companies. What they do is they’ll create these incubator programs, where they get a bunch of other mini startups and they give them the resources. They give them some general education, coaching, mentoring, and they create this kind of greatly branded and marketing incubator where they will go out and possibly raise capital from them.

 

And it gives some legitimacy to the venture capitalists, but really this is all just a fabricated business model for the group creator to extract money from these diamond doesn’t venture capitalists to join their incubator group and also to make possibly big money. All the fact that they have this group and some unsuspecting high net worth ultra high net worth person coming along.

 

Just thinking that group is legit when it’s just not, it’s just put on by somebody who could do their thing. And they’re pretty good at internet marketing. So just be in the world, that’s out there. I ran into a lot of folks like that. And then the second teaching today is, I think we’re in a very unusual time or in a bull market folks, if you have it realize, and if you think that the market is going to be cooling off anytime, I would disagree. A lot of the stuff I’m reading is, we’re really not going to hit any Rocky times until the year 2026. Now you may disagree with that. You are probably going to miss out on the best bull market run that you ever did see even more than the time, 2012 to 2016, which was known as the age of the apartment.

 

Now is the good market’s, it’s a bull market. The tide is coming in. And it’s potentially not a good time to be doing more of a duck and cover strategy or what I’ve called a strategy part of the end game strategy. When you have a lot of money, you just want to get a little yield.

 

One of those strategies in particular is the triple nets, right? When you go into a commercial real estate property and your tenant pays off all the expenses for you, it’s lower risk, lower return. But it may not be the best thing in this type of environment right now with inflation running rampant, a lot of your tenants, which on the marketing cereal box, they tell you triple net deals, you have corporate back, very strong tenants, but that can also have a double-dip because very sophisticated tenants they know what’s happening in inflation and they can just tell you to go screw off when it’s time to they can drop their lease, or they’re a lot more aggressive and a lot more sophisticated in terms of negotiating with you, the landlord in the triple net deal or the triple net arrangement each you have with them. 

 

Think of it like a lot of mom and pop investors got kinda rocked with the pandemic  because they weren’t able to fully capitalize on the rent’s going up and they bent over just giving away rent concessions to the tenants, thinking that yeah. It made sense in a pandemic, but the professional landlords, the kind of the way we do, we’re not hugely impacted by rent moratoriums, eviction moratorium, and we know how to play.

 

Our vendors know how to play the game to extract the whole amount of rent that is due, and that rents are going up over time. And that’s just something that the mom and pop investor that the amateurs just don’t have the ability to do. And that’s just making the comparison, which triple net  it’s two.

 

And you combine that with the fact that like Walgreens, these types of stores are closing. Possibly because of Amazon coming and taking over the pharmacy sector too. And again, I’m just bringing up this concept. You may agree or disagree, but it might be a time to be more aggressive in times of vocal bull market.

 

And when you should be aggressive and huddle and ducking cover into these more conservative triple net type arrangements that are traditionally lower return, lower risks, and just be cognizant of what other large families are doing. Large families, what they do is they go into those asymmetric risk plays with a certain amount of their net worth while also playing it safe.

 

Not saying that  you have to have the same strategy with your entire portfolio, or another idea would be to be bipolar, which a portfolio potentially being very risk tolerant with a smaller portion going after more asymmetric risk returns and maybe being more conservative with a majority or portion, or maybe even a minority or portfolio if you’re in the beginning, wealth building stages under $5 million net worth.  And to go into deals that are more conservative with that portion of your portfolio. Now everybody’s different and this is where I talk to a lot of new investors. We have our onboarding call, which you guys can still do. If you sign up at simplepassivecashflow.com/club, we only do one per person these days for people.

 

After that, you’ve got to join the family office ohana  mastermind, get around other folks, just like yourself doing this and start to build relationships with other high net worth families. If you’ve been around the circuit, dumpster diving in the free Facebook groups, the free online forms, and even worse, the free meetup groups out there with a bunch of house flippers and lower net worth guys. Just join the family office ohana mastermind, right?

 

You got to get to a point where you pay to play. And that’s what I personally did in 2015, when I had 11 rentals and I saw the light and I got around other high net worth folks. And I realized that was what you do to get your net worth up, to be about a quarter million, half a million dollars.

 

But when you become an accredited  investor, it’s about investing in good deals where you get the tax benefits. You start to learn how to play the game of passive activity losses. You pay less taxes, a little bit infinite banking, and that’s the way that the passive accredited investor invests. 

 

And unless you get it around a community like our family office ohana mastermind, you do not get that. So apply, go to simplepassivecashflow.com/journey and hope to see you out. At a future event, we were doing a meetup in San Francisco and we’re also going to be doing a tour in Houston  but you guys can check out all future events at simplepassivecashflow.com/events. All right, here’s the show.

 

Hey, simple passive cashflow listeners. Today, we are going to be talking about investing from a different country and in this case, Canada. So we’ve got one of our experienced investors here. I’ll do the disclaimer right now. We’re not lawyers, not CPA accountants. We’re just a couple of guys who are real investors and use professional advice from our professional advisors. And this is how we do it. Not saying it’s right or wrong, but hopefully it’ll just give you some ideas as this podcast is just for your entertainment out there.

 

But thanks for coming, Quentin appreciated it. Oh, no problem Lane. Give people a quick overview of some of your wide range of experience. I think people need to understand that you’re quite a big dog there in Canada.

 

Thanks man. I hang out with big dogs, so I feel like this small dog with them, but I’ve been investing since 2004. By the end of August, I’ll have $80 million of assets under management. The smallest amount of equity I own in any project is 25% and that’s about 30% of my real estate portfolio is 25% like personally owned by me not shared and the other 75%, I own 50 to a hundred percent of.

 

So I’ve got a large stake in my portfolio. I have single family homes with up to 40 unit apartment buildings. We’ll have 15 apartment buildings across Southern Ontario. I do invest in the US. And I’ve got some reasons for that. I’m sure we’ll talk more about it. I’ve written five books. I run a real estate investment club in Ontario which is a Durham REI. I was a teacher for a long time and I left teaching to be a full-time investor in 2014. And I haven’t looked back since I flipped like a dozen houses. I’ve done a whole bunch of other strategies and you know what, I really love investing in real estate, not for the fact that it’s investing.

 

I just like being a transaction engineer. Like I like putting things together. Making deals happen refinancing projects, I love all that sort of stuff. And I understand the asset class. And that’s why when I looked at what I considered diversification, as, moving money outside of the area of where I mostly control, which is Southern Ontario and looking at the U S as a way to expand it. 

 

On this show, I have a loose policy where it’s a no gurus, Quintin fits in that category. We’re going to try and bring some real value, which is, how do we invest from Canada and I was really interested in investing outside of the country at one time. And we’re going to talk a little bit about that, but just, so your main business, you’re an operator in Canada morons more importantly, more than Eastern side of Ontario, maybe describe your portfolio, like just percentage, like what percent in Canada then versus a United States and anywhere else, just give people like a real quick macro view.

 

I would say that I’ve got to all of my, like I’ve got a, like an $80 million portfolio just in Southern Ontario. And I would say that 75% is in multi-family the other 25% would be in one to four unit properties. In the U S I don’t have very much, I got probably about a million invested in the year.

 

About maybe 550 K worth in like I’ve got four single families in Tampa or five single families, one one’s a duplex. I actually gotta go back and look, I can’t remember, but then I’ve got to have visited it. I’ve been there. I’ve been to like when I went down, I went, I’ve been down to Tampa a couple of times.

 

I actually like to visit the places that I invest in. So I was there and I looked at the properties that I purchased at least the first two. And then No, I’ve been doing syndications in the U S. I have invested in an ATM fund down there. I do other things too.

 

I’m like on the board of directors for a company called rental , which is they basically do bank account checks for tenancies and stuff like that. I’ve got private placements. I’ve invested in different companies too. So I’ve got my, I’ve got funds in different places, but on the real estate side, I would say like about a million down in the US as a hedge.

 

Like I understand real estate and that’s why I want to continue to invest. And I like the fact that I get to invest in an asset class I understand with other operators down there and what I like is that I’m not depending on the Canadian economy now I’m looking at the US economy and different demographics in different areas as well.

 

I’m getting paid in US dollars, so I get some currency hedge there, which is useful for me. I think that’s really great for myself and also like everywhere we go, when we go on vacation, we spend US dollars. That’s what we like. I’m going to Costa Rica and spending US dollars.

 

I go wherever. And so it’s handy to be able to have those US dollars already converted for me. And having the proper structure is really important. Cause you can get slammed. Especially Canadian investing in the U S with double taxation. That’s the worst.

 

It’s two hands coming into your pocket at the same time, taking your money and pulling it out. And I don’t want to do that. Having the structure is important and taking the time to get it right to avoid doing that. But I’ve, I’ve enjoyed everything I’ve done up to this point and my experiences I’ve had.

 

Some experiences with property management in the U S like it’s like with the rental properties that I’ve had. And having to deal with that. But I think overall my experience has been really good and I’ve really benefited from real estate over the last, I dunno, two decades.

I’m really happy with doing it and I’m continuing to do it, right? 

 

So I’d like to point out for the folks, like in this lens of diversification, I like Quentin  and cut on myself. We’re considered operators, which you guys are not, you guys listing are mostly passive investors. And, I. I think of operating, where we eat our own cooking. We’re going to be heavily into our product through Quentin and it’s going to be up in Ontario for me, that’s going to be apartments that I run. I personally feel like I’m in like 80% of my own stuff. And it seems like the same thing for Quentin, very heavily that side, the analogy I, or the similarity.

 

I see it like people used to live back in the day where they buy their own company stock that they work for. We all know that’s dumb, but people used to do that pretty religiously until things like Andra started to happen and woke people up. But that’s what we do. So people always ask me like what should I do?

 

How should I diversify my portfolio? That’s the first question? Are you an operator or are you just a passive investor  of your passive investor You’re more likely to diversify a lot. But I personally came to this epiphany where I was like going into a lot of deals by myself, I got a lot of my own equity in there.

 

I probably want to have this new site idea of having 20% of deals where I’m not the operator and a totally different asset class, not apartments as just being prudent. And I don’t know, maybe for Woody, how did you come with the same thought process too? Is that what kind of led you to come into America?

 

One of the things that I’ve looked at over the time is Robert Kiyosaki’s, where you have employees, self-employed business owners, and investors. And so for me, I’m trying to focus on that right side in Canada, I’m the business owner in the U S I’m the investor. That’s the way that I see myself and by doing that, I’m able to use my experience in the asset class as a way to get involved in different projects down there.

 

I’m also learning how to do this stuff, right? Like it’s also part, I enjoy learning all the time, but I’m able to see what the projects are like. And then I can look at different projects and invest in different projects that I want to and yes, I can diversify across different projects, but at the same time, like my concern is that I’m not a big enough player in a particular project in order to affect change in that project. Whereas here I’m an operator. If something needs to change, I’m going to make it happen. That’s my role. I make things happen. I make nos into, yes, right. In a project where I’m a small player, I don’t have the ability to do that.

 

So when you have an operator, that’s also an investor in a project, it makes it a little bit more comfortable for that person, because then, you have quite a few people that are brought together and then they have a little bit more control, a little bit more control than most.

Like you were explaining before your analogy there, but that, that gives some comfort and it gives you some diversity because then you can be in different like different projects in areas that you like, maybe it’s Arizona, maybe it’s Texas, maybe it’s Alabama wherever it is that gives you still that geographic diversity.

 

But for me, like I’m getting into being more on the investor side of things, rather than the business owner side of things. Yeah, it’s because you’re used to driving your car and your family around all the time. It’s nice to get into an Uber once in a while. Just relax and play with your phone, enjoy the scenery outside.

 

But for some people it’s very difficult to turn that off. Yeah. Oh, yeah, my son just started driving. So now I’m in the passenger seat and I’m not, it’s not like being in an Uber. I’m like, you’re conscious of what the heck is happening. The nuances that are going on behind the scenes when a certain message comes out.

 

But then I don’t know, I do this. I kinda enjoy it. Like a little. Then we’ll talk about this at the end. I’ve been in deals with the passive that haven’t gone as smoothly and things I’ve blown up and I just find it entertaining and being on the other side to just be a passive investor on that. Before we move on, let’s talk about this. Some similarities or differences. With Canada rather than the US, you see both sides of any quick things that come off to the top of your head, just, just for investors out there, just for a general, broad understanding of differences between the two.

 

The structures, the way that we buy stuff, like the syndication model is very similar. Sometimes it’s structured differently. So like when I’m putting a bunch of people together to buy a building in Ontario if I have less than 10 people, I’m probably just going to use a corporate structure.

 

We’ll have a corporation and we’ll have shares and Instructure. If. No more than 10 people. I’ll probably do an LP-GP structure, which is pretty much the same as the syndication model than the U S you have. You have the second  just a different way that it’s set up, but big picture wise, they’re very similar.

 

So from the multi-family side it’s quite the same, just some nuances that are different on the residential side, you get, you have this beautiful product in the US it’s called the 30 year mortgage, 30 year term. We don’t have that. Like it’s not there’s no.

 

The longest that you can get is a 10 year term. And I don’t even think you’d want to have that. So you know, you have this 30 year  term, like a super low. It is really awesome. And you’ve got some more, I would say, innovative products on the financing side, particularly in the one to four unit space.

 

We don’t have those sorts of things, but what we do. Is on the financing side for the multifamily units, we do have the ability to get higher loan to value, which I don’t think I’ve really seen in the U S but we have like CMHC financing that can get us up to 85% to 90% loan to value with the 

sub 2% rates. Which is a pretty different outcome you’d have to, you’d probably. You’d know around the multi-family side, whether you have what you have for financing in multi-family buildings. Yeah. So that’s the big piece there. And so that probably means you guys don’t cashflow a lot on a lot of the deals just because the amateurization is wasted.

 

No one, the amortization can be like, you can get it up to 30, per 30 year AMS for the multi-family side. Typically their 25 year AMS on the multifamily. But if you’re going to CMHC financing, amp Amery will go up too. So it actually works out really well. On the resi side. So one to four units, you’re like, it’s typical to get 30 year amortizations.

 

And right now Rezi rates are probably around, I would say 2% to, probably, depending on your qualification rate and all of those things. But it’s, I would say it’s around that, cashflow wise, like I would compare Toronto to like Like a New York or somewhere in California and the landlord laws are like in California too.

 

So it’s pretty nuts when it comes to that. It’s tough. Like you get a lot of appreciation. So my, the way that I’ve been able to do really is I don’t buy anything that doesn’t have cash flow in my market and I make it work. And I, we work to do value add, we do turnover units. We do a lot of different things to make it work and make it cash flow and then refinance and do it again. And pay back the investors funds and continue to own it. And that’s why I liked the syndication model in the U S. Where we were doing exactly the same thing, except I didn’t have to worry about financing.

 

If I try to get financing as a Canadian in the US it sucks like it, like I’ve I spent almost a year and a half getting financing for those rental properties in Tampa a year and a half. It was brutal. And just at the point where I was about to get financing, it was like, Martin. 2020, and then, COVID but they got rid of all the foreign national lending.

 

So it was a real pain. So what’s nice for me as a Canadian investing in the US is I get to take advantage of leverage, which I wouldn’t necessarily be able to do if I were to invest directly in the projects myself. Now you would have asset-based lending for multifamily buildings in the US but you still don’t as a foreign national, unless I partnered with somebody else who is a national in the U S I wouldn’t be able to take advantage of it in the same way.

 

So it’s interesting that I’m able to take advantage of that. Through investing in syndications in the US yeah. And just to a side note, the key principles, the loan guarantors in American syndication, before we go get that Fannie Mae Freddie Mac, I don’t think you can be a foreign national.

 

I’ve seen it done sometimes if you have a green card, but then I’ve seen it happen sometimes, but it just takes an act of God. And people are like, lenders are just really confused when it does happen. But yeah, that’s up for Americans, but I guess going back to your investing in Ontario, it’s a primary market.

 

So you focus on things like the more outskirts, the more rural areas of Ontario or. I focus on the 401 corridor, which is from Toronto to Kingston. It’s a major highway corridor there and it’s where a lot of the population in Canada is along that 4 0 1 corridor. I stick to the bigger cities and the bigger locations within there, but on the outskirts. So the suburbs are low. So I’m not in Toronto, but I’m in the outskirts of Toronto, but not in, not rural. So suburban, I would say. So Pickering, Ajax would be Oshawa Kingston and I work hard to buy properties directly from owners. When I buy it.

 

All the buildings that I bought have never been listed on the MLS system. It’s always, I always worked directly. I have a good reputation. I like people who know me. I do what I say I’m going to do. If I say, I’m going to close, I’m going to close. And my reputation is really important. So that’s how I do a lot of the work that I do in Ontario and I, and I’m what I’m hoping for. Those same relationships through the people that I’m investing in the U S with. So they’re like me in the U S and that’s what I want one to be able to do.

 

To be able to invest in an asset class that I understand. And be a little bit more hands-off but still, I can read the numbers, I can see what’s going on. I like it, and I have no problem putting people’s feet to the fire if I think something’s a problem. Yeah. And I think what I like about our relationship is, you understand what’s going on and it’s, for some people you need to tell them something like we just had a fire at one property.

 

And detailed unsophisticated investors, they freak out right where you’re going to ask the right question. All right, what’s the deductible, the cover or the kind of anomalies fine, got it. I’ve had it. I had a total loss on a building. I’ve had to start from scratch.

 

Took me two years to rebuild. Like I went through the whole process. Actually, what I did was a little bit different from that. I hired an independent adjuster, so that they fought on my behalf. For me against the adjuster of the insurance company in order to get me a little bit more, we do that every time too.

 

And one time we did it, we got I think three times as much as the first offer. If you’re on a little residential property may not be worth it. Cause I had rental property that I owned outright myself and I just got steamed real. It was just the biggest, it wasn’t big enough.

 

Nobody would work. And I just got screwed over by the insurance company, but that’s why the bigger stuff it’s better, but let’s get into the question at the top, so a Canadian wants to invest in America in a syndication. How do you structure it? Again, you’re not a lawyer, but how do you do this yourself?

 

There are a bunch of different ways to do it. And you have to be careful because some of the advice that you see on the internet is old and it doesn’t work anymore. Like some of the things that you hear are like buying it as a Canadian, you hear buying an LLC. If you buy in an LLC as a Canadian, you’re going to be double taxed.

 

The Canadian government doesn’t see that as an independent entity and you’ll be double taxed on that. And if you earn a dollar and you get taxed 20 cents there and 30 cents here what do you have left? Yeah. Why did you do it in the first place? It’s important that you get a structure that avoids double taxation.

 

So the way that I do it in the U S is I use a limited partnership where the general partner is an LLC and the general partner owns 0.5% ownership of the LP and 99.5%. Is owned by the limited partner and that can be a corporation and that can be owned by a Canadian corporation, or it could be owned personally.

 

The idea is that when you are doing your taxes in the US you’re going to try to take as many. Deductions as possible so that you get to a zero tax rate and you’re not bringing anything back. And what’s nice is that they have so many differences, the other difference is depreciation.

 

Like your depreciation is super awesome. The US I can take the sum of that depreciation upfront because you can segregate it. You can. There’s just so many more benefits. I can get zero every year and I’ve got, and I’ve got like a backup from previous years because I’m able to do that.

 

But with having that limited partnership And doing my taxes in the U S when I take the, whatever I’ve finally made and bring it back to Canada, it’s usually zero. And then that way I’m not double taxed on that, on the income that I’ve made in the U S there are other ways to do it.

There’s, S-corp, let’s recap the first way. So I think some people, they get confused cause we throw around the terminologies that LP and LP, which is a different thing. It’s a position within a larger deal partner. But there’s no soul, the entity LP lP or the entity and LLC.

 

So you’re creating a Canadian LP US. So I’m creating a US LP that has so in every US LP, this is the legal structure. There is a GP and an LP within that, right? The limited general partner and eliminated partner within the limited partnership. So the general partner in this case owns another structure that I own.

 

Which is 0.5%. It’s an LLC, right? So I’ve got my LLC that owns 0.5% of the LP. And then 99.5% of the LP can be owned by me. It’s a limited partnership, or it could be owned by. A corporation can be a U S corporation like an S Corp or whatever you do, whatever you want to do as, I, I can just, for me, it’s just personal.

 

Then, that’s one option for structuring. So it’s like you have control, you’re the thing that you can. Through is your LP within this energy and you have control over it. I think a lot of people do this in America, where they have a family management company, a holding company where they own a piece of it LP.

 

They have control over that. So that way it’s like a, it’s like all this kind of like an LP works in a syndication, but you’re doing this all on your side. And so this entity goes into all these other deals. So I just want to. Break that out for folks, because now they’re thinking like, do you make an LP for every deal?

 

Now this is all of your institution. That’s right. It could be your base structure. And then that’s what goes into investing in like these other projects or owns the property in the U S right in Canada. What you’re talking about would be like a family trust, right? Like it would be like that type of arrangement.

 

But within a bunch of other structures, but for, in the U S the way that I have it is that I know other people that have done it differently, right there. There’s the right thing. Like I stay out of the gray area. Okay. I’m not into it for, to, to hide my money somewhere or to avoid taxes. I’m okay with paying my fair share of taxes, whatever, but there are other ways to do it that I’ve heard that people do that are Canadians, who are investing in the U S yeah. Yeah. So this is like me personally. I’m not a lawyer. But I’m not a huge fan of series

 

People use them, but these are like the similar things that other people do. And just, we’re just talking about it here, just to give you guys different ideas, because I think this helps people learn too when you start to get creative with this stuff, but yeah. So how are some of the ways that people get around?

 

Yeah. So there are, what’s interesting about the U S is that every state has different types of if you form a corporation and in some states there, it gives you additional privacy that you may not get in other states. So that’s one of the things that. It is like the Nevada Corp, right?

 

So people may want to invest in, or create a corporation in a place where it’s hard to get details on who owns the actual structure. And so if you were to use a Nevada Corp as a Canadian, you move money into there, then you buy whatever assets you want with the Nevada Corp. That’s somebody who’s probably trying to avoid it.

 

Taxes now we’re not giving anybody advice. I feel like I’m doing something right? No. This helps us understand this. Like what are some of the pros and cons between different states? So correct me if I’m wrong. But I think Wyoming similar, whether you have that anonymity where like you put it in the LLC and you have this anonymity, but to me that enemy’s kind of stupid because any halfway decent lawyer can figure out what it is and subpoena what’s in it.

 

But in this case, we’re going off the thread that countries are clunking and dumb and they can’t really do that unless they have a reason to uncloak the the entities. So we’re saying, we’re not saying this, but what people do is like they throw into the Nevada thing that kind of cloaks it and then if you can’t see it, you can’t tax it.

 

But I don’t here in America. You’re supposed to self, self Self do your taxes right in your, in the best way that you can. And what’s right based on your understanding of the taxes. To me. Yeah. This is a little shady, right? This is an up and down to you. Yeah. And that’s why I stay out of that sort of stuff.

 

I’ve got an ITIN number. I follow the US tax return, as part of what I need to do. And I filed my, take my US taxes, take it to my accountant and make sure that it’s filed in Canada too. So that’s just to be clear, that is not me. I’m not doing that at all. No magician tricks here.

 

This Pelosi of this. Yeah. I bought that. I think that’s, I’m aggressive, but to hide it behind something, knowing it’s there that’s to me, that’s not. No, and you’re just inviting to, to get into more trouble for something else. Like I, it’s just, you don’t want people to just keep looking at everything that you do just, for something like a, a small portfolio or wherever else you are, you just.

 

I think that you have to weigh the risks when you do something like that. It just doesn’t make sense to me. And I think there are lots of different ways to structure yourself properly and you just need to find an accountant and a lawyer. Who are familiar with both the US side and the Canadian side at the same time and get their advice.

 

Cause there are like I’ve heard of structures where there’s a Canadian corporation that owns an S-corp in the US and then the S-corp is what purchases properties. There’s lots of different ways to do it. What year? Trying to avoid double taxation. That’s as a Canadian. That’s what I’m trying to avoid.

 

I don’t mind paying taxes, but I only want to pay it once. I don’t want to pay taxes, like two countries’ taxes on the same dollar. It doesn’t make sense. Then what’s the point? And that’s all that I’m really trying to do. And then the other piece for me, Hedging against what I’m doing in Canada and the US and then, having that diversity of currency, as something that I find appealing to me. So when I’m diversifying in an asset class, I understand, but not necessarily in a whole bunch of others. Yeah. Yeah. Going back to the whole. The other nefarious type of entity structure, but you see it, the hard thing is like passive investors out there.

 

You don’t know who to believe, right? Everybody’s shape-shifters out there. And a lot of lawyers who haven’t built up their firms yet, or are young and hungry. What they’ll do is they’ll put their whole business on this kind of aggressive strategy. And they’ll run around and say, Hey, I got this magic trick where we hide all your assets in Nevada and there you don’t pay taxes. If you do, we’ll tell all your friends and yeah. Their professional license and everything, but they’re hanging their hat on something. That’s a trick. And in my opinion not really the right way to do things. So it’s hard for people, right? And this is where I keep coming through.

 

You can’t just trust licensed professionals. This is where you have to build your network with other capacity investors here, all the different pros and cons of different options, understand it yourself and B become the architect. But then of course go to the right professional, the referral that you deemed the right strategy, and then go and implement it.

 

Just like taxes, right? There’s guys who like the same thing. There’s all these different strategies out there. Some in my opinion are very nefarious and aren’t right. I think you as investors need to take ownership over that. Yeah, absolutely. Like I, what I do is I’m always looking for peers who are either at the same level of being, but, or just above where I am at and, talk to them about how they do their structures and what they’re doing.

 

Not necessarily the. Like I’ll ask different professionals about how they would structure it, but, and then I’d go, I’m going to go that extra step and talk to other people that I know who are already doing what I want to do and talk to them about how they’ve got it structured. And not just one person, two or three people that are doing the same sort of thing, to be able to figure this out and then make a decision.

 

Based on that and what you get from the professional, because in the end, like you’re paying somebody, and when you pay somebody, there’s going to be some bias there, no matter what you do. And they’re going to want your business. So you have to make an educated opinion. And I like mine.

 

I’m always trying to hang out in a room where I’m not really the smartest person in the room and, I don’t want to sound egotistical or anything, but I think I’m pretty bright and I’ve got some experience, so I need to find like rooms that have those types of people and, I’ve joined different, like coaching, like I’ve I was part of strategic coach and I’m part of the entrepreneurial organization which I really enjoy.

 

In that group, there are real estate investors from across Canada and I’m able to be in a room with them and like they are, they make me, he looks small and that makes me feel good. Cause I feel like I’m learning all the time. So find that room and they don’t have to be like 20 years in front of you, even if it’s just a year or two in front of you.

 

That’s probably the best thing, especially if you’re just getting started because. It’s easier for them to want to share with you. If you’re going to ask me questions, I don’t mind talking to you Lane, but if I get a new person who’s starting investing, asking a bunch of questions, I’m going to go say, go talk to your lawyer or go talk to you.

 

Like, why are you talking to me? Read it, read the basic primer book on this stuff, guys. Like why are you bothering me? So at the same time, though, if you had somebody who just went through the process, they’re going to want to share that knowledge with you. Because they’re like, they’re proud about going through it.

 

I did great last year, great. Then that’s the person that cheated that you need to find. Groups like yours, like your tribe, right? Like that’s the type of thing that will help people. Get from where they are to the next step, because they’re interacting with other people who have already done it. And that’s what we want to do. And I think this is where you get in the right groups that people pay for. They help out here’s exactly what I’m doing to print it right now. I’m picking his brain on this Canadian thing and we’ll get to my.

 

Selfless question here at the end. But he helps me out because he knows that the person that he’s helping, if they’re the right person will reciprocate, and not only is it the right thing to do and he enjoys it, this is when you get into these types of worlds, these masterminds, like these are the magical things that happened.

 

But so here’s my myself, as the question went in it, because you’re a little bit further along the road as I am. And I just kinda liked that I respect your opinion. Not saying I would follow it. But getting these different opinions from people on the same level is important. So it’s a question about diversification.

 

If I understand it right. You and I are in different situations. You’re in Canada coming to the US. I’m using Canada, maybe one of them for diversification from a real estate standpoint, or maybe a currency standpoint. I don’t know what side of the fence I’m on at this point, but so if I understand what you’re doing, most of your stuff is in Canada.

 

You take a little small chunk and in us, is this just some place to fund for you? Or is this like a true hedge? Cause you have no intention of really assigning this money back to Canada and you don’t need it. You don’t need the money to survive, put food on the table. So what is like the, is there, it’s just a, something a hobby, give me some insight.

 

That’s hard. That’s a hard question for me. I would say that for me there’s a couple of different things. It’s again, moving to that investor side rather than the business owner side. You’re right. It’s not a lot of funds for me to be able to. To put it in and invest in different projects.

 

It’s also, I think I don’t intend to bring the funds back, but I do like the idea of being in the unit. For quite a few months of the year. Particularly as I get older. So I’m thinking that it probably would be good to have all of these things set up. I’m a planner.

 

So  I tend to think 10 years down the road and getting all of these things set up we’ll set up. And my family up in the future, for the things that I intend to do in the U S in the future. There is a, there’s a little bit of that. There’s a lot of just being able to have us dollars for different things that I’d like to do.

 

And it you’re right. It’s not a lot of my net worth that’s going in there, but it’s it’s it’s enough that I think will be useful for me, for my future goals and plans. So it’s not like you’re not like a prepper kind of mentality then by no means. And you’re not thinking about the Canadian dollars.

 

No. And I’ve had many people ask about investing with me in Canada and from the US and I’m like, why would you do that? It doesn’t make any sense for me because the state of California is the population of Canada, right? Come on. Instead of coming to Canada, just go to a different state.

 

You’ve got so many different opportunities in the US instead of going to Florida, going to Arizona or going to Texas, you’ve got a lot more of that. We have some of that in Canada with provinces, but the population is so small. If you were to, if I were to say if someone were to ask me that I would say hedge against it, Asset classes in the U S do like storage or do something else, mobile homes, or do do something else that if you’re comfortable in the real estate space, there are other ways that you can do that in there, but you don’t necessarily have to go out.

 

And Like there, there’s so many different types of investments out there that you can do that are, I feel like better than putting money in the stock market. If you can do private placements in companies, that’s another way to do it, especially if you understand who they are and what they do. That’s something you could do. But come to Canada. I’m not going to say, I’m not going to tell you to do it. W it would serve me well, but I like to have investors invest in my projects, but I’m. Okay. I think for what I would suggest for Canadians to definitely do, to consider it and to do it and to do it properly and structure it correctly and stay outside of do it.

 

Don’t do the legal stuff, like just do it right. But don’t worry about what I say, an American co investing in Canada. I don’t think that’s necessary, you can do what you need to do from a diversity perspective in different states. Two, two common mistakes that come to mind that new investors do all the time is, they think that the grass is greener on the other side. They’re in the US, but they think Canada is the untouched proverb, the opportunity. And then the second lead, like shiny object syndrome, a lot of investors get this there, they start to open up into this world of alternative investing and then it becomes like a Las Vegas buffet.

 

They’re going after the Asian food, the seafood that deserved the Italian food. Which is a multi-family self storage, mobile home park. And then they want to go off to Canada too. I was still able to just focus on one thing. Residential multi-family, I think it’s the start or the basis of it all, but, I think people spread themselves too thin and they don’t earn anything, spend at least a couple of years into one asset class first or that before you branch off to something else.

 

Because the biggest thing is investing with the right people that aren’t going to steal your money. It doesn’t matter what asset class. For sure. And you have to figure out what your goals are too. So some people, like when I first started, I needed to replace my income. That’s what I needed to do to leave my teaching job.

 

By 2012, I had enough funds to be able to do that. I didn’t leave my job until 2014. And then I just kept building and building that one type of residential. Real estate where I was getting cash flow from it until I did really well with that. I had really solid cash flow coming from that.

 

And then I moved away from that into multi-family because multi-family is not as great on the cashflow at the beginning, but it’s great for your net worth. So it was more of a net worth plate. Stabilize the asset, get the property refinance and into longer term financing. Then we started to get cash flow from those assets, but it takes three to five years, at least you can get a home run maybe once in a while, then you can do it in one or two years, but mostly it’s three to five years.

 

And once you do that, then you start to get the cash flow that comes to that. But people have to first figure out what their goal is, right? Is it cashflow or net worth? Because some people don’t want to quit their jobs. They don’t want to do that. And they don’t, then they need to just focus on, okay.

 

Let’s not go to the buffet. Let’s find out where the ribs are. Okay. Let’s find the ribs. I’m a meatatarian so I don’t know. Yeah. My cell phone went through it. When I go to a buffet, I love crab legs and bone marrow, that’s all. I’m big on ribs. So that’s where I would go. But you gotta find what that is, and then get enough of that, so that it’s substantial. And then you can worry about the desert and the salad and the, whatever. Yeah. Go have your pizza then, and then your noodles. Just gotta build that up first and then, and you’re right. 

 

The shiny object syndrome is a problem. Like I see so many different people that have been really successful in real estate only to sell it too early. And then get into something else. The analogy that I use as a hockey stick while I’m Canadian, I gotta use a hockey stick. Great. So you got the base of the shaft, you got the base of the stick where you hit the puck and then it goes up the shaft of the stick. What ends up happening is most people. Actually sell their property, probably just a little bit up on the shaft of the stick and they missed the full shaft, right?

 

Because of whatever reason they got distracted, oh, this is going to be the next big thing. I have to solve this. I got to get into this and they miss all of that. And I think that you got to watch out for that shiny object syndrome. So you can get that big lift that happens, with properties over time.

 

And that comes with mortgage paydown. It comes with appreciation and it comes with cash flow and value add repositioning those assets. Even if you can take a single family home, And give it to its highest and best use. Maybe get it to the place where that could be like a triplex or fourplex by rezoning, doing whatever you can do.

 

You can make that thing make you money. There’s no tomorrow, if that’s what you want it to do. So like you got to figure out what your goals are, but don’t. Don’t get distracted and then sell that asset, especially if it’s just some tenant that’s causing you, whatever problem it is, you get too emotionally attached and that’s why you sell it.

 

You can’t do that. Don’t let somebody else affect the way. The reason why you sell an asset. That’s not a good thing. That means you just got to hire the right people. You’ve got to find out who the, who is. That’s going to help you to manage that asset better and take yourself out of the thinking process, because then you’ll get too, you’re too emotionally involved and then you’ll sell it, right there at the bottom of the shaft rather than at the top. So once I close up here, All right. So you’re a Canadian citizen. You don’t have the protections of the SEC. What if something bad happened in a deal? And then, your general partners you decided to invest with across the country line border, goes haywire. What would you do as a GP?

 

So I would make sure I have the address of the GPs home. I’d find it in my truck and get my baseball bat and say hello. No, you know what? I think that The thing is that you can do as much due diligence as you can, but it depends on a lot of the things that you can foresee coming, especially if you’re not getting numbers from somebody.

 

Having experience in this business is really helpful, but there are some things that happen that we have no control over. We’d get A hurricane or, there’s a flood or whatever it is, but the thing is, did that person have the right insurance in place that the people have? And as a LP, you can ask a GP, that sort of stuff, right? That’s what you should be doing. You’ve got to advocate for yourself. And hopefully if you’re with a group of people together who are in an LP, you get the ability to be able to move that GP forward a little bit just by asking the right questions and staying on top of it.

 

But as a Canadian investing, I have less protection than somebody else, but you got to remember too. It’s just, it’s not just me and not as an LP. I got all these other guys who are SEC protected and you know what they’re going to do. They’re going to complain more than me. Yeah. Like a class action lawsuit, where you’re usually going to have, you’re going to have that one guy out of the LP of 20 guys or even 150 guys, there’s always going to be a leader that emerges. I call it like the lord of the fly. There’s always one guy that’s going to take command of the mutiny and charge things ahead.

 

Hire the lawyer, just the nature of these people in these deals. They may or may not know what the heck is happening, but there’ll be a leader that usually arises. This is why I enjoy being an LP sometimes. Cause I’ve seen this happen a couple of times where a deal has gone sidewards and. I’m a GP, so I know what’s happening. I’m not, I’m a GP, so I know I’m not a GP, this kind of deal, but I know what the GPs are going through, but I see it from what the LPs are doing. And sometimes it could be overboard and too much and really annoying. And that would really upset me if I was a GP. This is, I think, what happens.

 

And I think this is why it’s nice to invest in a group like that, that maybe you are the person that I don’t care about. There’s somebody else that probably cares more than you. That’s going to carry the metaphoric baseball bat. That’s great. It’s all metaphorical and that’s what I’ve said.

 

But yeah, but the other piece there too, is that this really isn’t a significant amount and might not be worth as well. For some people that it may be, but like it’s not really a significant amount. Saying that I wouldn’t be upset if I lost it, but I’m not going to eat tomorrow because of it.

 

Like it’s not, and that’s traditionally the type of investors I like to work with anyways. Like I’m an ideal investor for myself because I know that I I don’t like to invest with people who are bringing 50 K or 75 K like I’m usually looking for people to bring 200 K or 250 K to any project that I do because I’m dealing with a different person.

 

I don’t like to see people take money from lines of credit, and invest with me. I’m looking for other types of people. Like my last, the last couple of buildings I had my last building I had 700 K one person. Brought two. And then I’ve got a 16 unit where I have 900 K that one person brought. I would rather deal with those people and be in a partnership with them, a 50-50 partnership and get the deal done rather than have 10 or 20 people with 50K each.

 

I just find that the people who have 50 K are usually the biggest pains. Take the guy’s 25 grand, cause he needs it more than the other guy. No blast though. The worst is the last 20, 20 grand the person with the last 20 grand I’ve. I turn many people away from investing in my projects because I just, I met a point in my investing career where I would rather not deal with pain in the right.

 

And this is why I tell people like, if somebody is willing to take 50 grand or less, they’re desperate for cash for their project, because if not, they will just pull it out of their own pocket because most general partners, their net worth is well over $5- $10 million. And they’ll just feel it personally, if I take a guy’s 30 grand. Yeah. It’s a little sketchy. You want to be careful with those types of deals for sure. 

 

Great insights. I. I read between the lines with your little us. You’re not going to be domiciled. I see it. I don’t know if you’ve thought about it this way in your head, but I see it.

 

I think I see you doing it as an envelope system, people’s budget, and they have like their little play money fund. I feel like you’re using your US  money as you’re playing money. So when you go on vacation outside of Canada, you just feel like you can just blow it off. Maybe just don’t tell your wife, I’m neither confirming nor denying what you’re saying. It seems whimsical, but this is what people at the end game do. And I think this is what kind of keeps it fun, just bigger  envelopes.  And I love learning, right? For me, this is new learning.

 

The US for me is new learning. It was almost like starting from scratch again, like investing directly in going through the process and, and I enjoy it. So I like to continue to learn. I’m going to keep doing this until I can’t anymore. This has been a fun conversation and I really appreciate it.

 

Folks, once you guys get Quentin’s  book the title is The Action Taker’s Real Estate Investing Planner. Yeah. The Action Taker’s Real Estate Investing Planner, it’s on Amazon. Yeah. And last name D S O U Z A. It’ll probably pop up to the top of Amazon and pick it up. Yeah, thanks for coming on Quentin. No problem and one thing too, is they can reach out to me on Instagram at QMANREI. That’s my Instagram handle and trying to get my followers up on there. So yeah. Cool. There you go. Consolidate your channels, right? I can only focus on one. I’m not really that good at multitasking on multiple social media things.

 

Thanks everybody for joining us today. We’ll see you guys next time.

https://youtu.be/tJ35PBYyIfo

Today, we’re going to be talking to George Newbury, get the latest on his newest AHP fund. The guests that come on, or I would say in any podcasts that you listened to, a lot of people will just go on podcasts, track record and verification, isn’t there like how it is with George, I’m actually investor with him. I’ve been investing in his fund for the past three, four years Monthly dividends like clockwork but just be aware of that.

We bring in people that I trust I think a lot of people listen to a lot of podcasts. You jot down some names and numbers and you feel like not some random person off the street, but in actuality, you are totally investing some off the street that happens to be able to email the podcast calls, to get an opportunity to pitch an audience out there.

So if you’re one of those persons, don’t do that, guys, you will probably win the financial Darwinism award b y doing this, it is not smart. Build the right people around you, organic relationships with other accredited investors. Unfortunately, a lot of these people, they’re not at the local area.

They’re not on the free forms some Facebook groups are not the places to find other pure passive accredited investors, but they are out there. If you guys are looking to join our inner circle, join the family office Ohana mastermind. Go to simple passive cashflow.com/journey.

Thanks for all you guys. Who’ve been reaching out to me. The daughter is about four months old now. Very happy and healthy. We’re very glad of that. For some of you guys who are not parents yet . Oh boy, boy’s life going to change for your guys.

Something that I’ve been thinking about lately is I’m actually deathly afraid of passing down the wealth to the next generation. 90% of wealth leaves families in two to three generations, most likely because I don’t know what it’s, because either there’s no motivation to do anything or.

There is no need to do a thing to get off the ground and moving. But that is why I surround myself with my family office, Ohana mastermind as we source the best practices for not only finding deals, who to stay away from taxes, legal, infinite banking, but more of the soft stuff, right? Like how do you teach your kids?

You give them an allowance, how you teach them about money investing, et cetera, and what actually works. A lot of that stuff just isn’t written out there. And I also feel like a lot of the events that we put together you bring the kids, they see other people different age ranges. I never listened to my parents and I don’t really think that, if you have a voice to your kids who consider yourself lucky, but maybe if you have somebody else in your inner circle that can help translate, investment financial literacy, I think that’s going to be your best shot.

So you guys want more of these legacy building ideas, go to simple passive cashflow.com/legacy. And thanks for those of you guys who showed up to our Saturday cram school to learn about syndication. We posted the video at simplepassivecashflow.com/syndication and enjoy the show.

 

Hey simple passive cashflow listeners today, we are going to be talking to George Newbury, CEO of Pre REO, or as you guys know, it also as AHP.

We’re gonna be talking about pre REO one of the new opportunities and then the next fund that George is going to be taking you guys keep asking why does the name keep changing?

A lot of these funds there’s just a sunset date on them in terms of sec can only raise money for a certain amount of time. But I guess George maybe take us up to the top. Cause I think a lot of people have been investing in AHP from back in the day, what, 2017-18, and then the names get confusing.

Yeah. So they’re different , I appreciate that lane so yes each fund is a different fund, a completely distinct separate company, and that we raised money for. And you’re right, the sec allows you to raise money for two years or allows us or anyone to raise money for up to two years, if it’s a regulation A-plus offering.

So each of these are raised in the regulation A+ over two year period, then we have to close the fund. And typically we make the funds a total of five years from the date of the original investment. So our target has always been, Hey, if you invest today, we’ll get your money back in approximately five years.

And that’s been our goal and we did for 5 0 6 C funds, which are accredited investors only, although all those investors have been paid back and then we Now we’re working on we have to close funds that are active. One is AHP 2015 A+ and one is AHP servicing.

And now we’re just launched recently launched the pre REO fund and they will have one more coming up. That’s actually should be going Very soon, which is AHP title. Right now today, as we speak, there’s two close funds that are still have investor money in 2015 A+ and AHP servicing and then investors can today invest in pre REO and AHP title.

Yeah. So some of you guys are aware of the A-plus offering. It’s unlike the 506 B and 506 C and you guys probably scratch your head. Why are they talking about deals on an openly advertising podcast ? It’s because the A-plus offering allows you to do it.

And the second reason why we’re talking about is I’ve invested in the first fund myself. I trust George and that’s why I’m willing to have him on the podcast. And I know you guys listen to a lot of podcasts and a lot of these podcasts, they just get whoever your Brony to come up on the podcast and try and sell whatever random fun.

But not bananas in Guatemala or whatever in some other random country. If you guys are going on podcasts, trying to look for your next investment, dude that is not what you want to be doing. You want to be building relationships with real accredited investors instead of trolling up podcast land, because there is little due diligence.

And by honestly, don’t do that guys. You guys will win the financial Darwinism award by doing it and the funny thing is when you don’t know anybody, you got nobody to tell that the deal went south and you got your money stolen from you. And then you feel, you want like one of these people with, no peer group and we’ll just complain on Biggerpockets or something like that.

But anyway, I trust George and this is why we’ve brought him. Several times and I’ve invested my own money with them. And I put enough to initially you guys paid my car loan for quite some time, but getting a new car, maybe I got to put more money into the next fund to make that car payment.

Let’s talk about pre REO crowdfunding.

Sure. Let me backtrack real quick to give people an update. Cause I know a lot of investors have invested in AHP 2015 A+ and AHP servicing

Actually that’s me I’m interested. So exact money in that one in 2017-18.

Exactly and the market everyone knows it’s not news to anybody that the market is just red hot right now and that includes for mortgages. We have millions of dollars in modified mortgages. These are families who we’ve modified their loans for that we are now selling and we’re selling them at a at 90- 92 cents of unpaid principal balance, which historically we would sell these in the sixties and seventies.

So it’s just a dramatic uptick. So we are selling everything we can we have enough money right now to catch up on all the redemptions from the COVID era. So it will be completely up to date with the redemptions. We expect to the next few weeks to announce to investors that we’re going to start redeeming all the first investors in both funds.

And we expect to redeem on an accelerated schedule over the next several months. And my goal is to, and we expect to do it is in 2022 that both the existing funds, 2015 A+ and AHP servicing will be all those investors will be fully paid off. My concern in the market right now is it is very hot, but that won’t last forever.

And I don’t want to be looking, a year from now. It could be looking back and say, oh, if only we had dispose of our loans in the first quarter of 2022 or the fourth quarter 2021. We could’ve made this and today we’re going to have to settle for this. So I’m trying to avoid that.

I may be getting out a little bit early, but we do have an opportunity to take advantage of the market that it exists today and repay all the investors. And that is our goal over the next late fourth quarter, 2021 through 2022. So that’s an update. So people should expect their money back early, earlier than the five years in most cases.

The good news is we have pre REO and another fund upcoming AHP title, which they can invest, roll that money into if they so choose.

 

We talked about this on the last time you’re on the podcast, but to the financial audit, you took us to the audit and then you, at that time, I think that might’ve been half a year ago.

And I think that the climate is still the same in a way, right? You are talking about selling off assets to take advantage. So it’s not much change there, but for the pro tip for folks as if you’re in the fund that it’s going to be exiting soon. It makes sense if you want to stay within the AHP family is to get it out now before George is forced to give it back to you in the fund closes and perhaps get it into the next fund that’s coming.

And the good news is the two new funds we just opened up. They’re open for two years. So whether you’re out in two months or in six months when you get redeemed, it you’ll still get your arm. You’ll still have the ability if you choose to roll them into one of the two new funds.

Your team just sent me an email saying, Hey man, like if you want us to put the dividends and roll the dividends over into the new one that’s another idea.

Yeah, absolutely. This is one which we didn’t do before. We can just now do it, is that if you aren’t a best from 2015 A+ or AHP servicing, then you can’t reinvest those dividends any more because the funds are closed.

However, you can direct us to reinvest into pre REO or AHP title, if you choose. So you can, have the option of making that selection. If you don’t choose either, then you continue to get them in cash.

And at one time it was difficult to do it, because people had to resigned docs every single time. It wasn’t that hard but now

It’s a one-time yes. They go in and sign the new investment docs one time and then we’ll continue to do that until they tell us that an investor chooses not to do it anymore. Okay so let’s talk about pre REO, I think is an interesting, probably to your audience for two reasons.

One is as a crowdfunding investment opportunity, and two is as an investment opportunity just to buy pre Oreos, which we now have people who have bought. And I know we’ve talked about this before. You were actually one of the first to share the news about pre REO, but we now have a lot of repeat investors.

We’re getting a lot of sellers on there and we have some investors who have made, because many times they bought, in the last year and some have exited already. Some of them are doing extremely well with pre REO. So I’ll share how this works, how pre REO works and then talk about how people can participate, whether it’s crowdfunding or directly in pre REO.

I’m sharing some slides that often do to you too. I utilize to introduce pre REO and a brief history. Many of you know this, but in 2008 I founded American homeowner preservation, which was a 5 0 1 C3 nonprofit, which had a mission of keeping families at risk of foreclosure in their homes.

Now we had thousands of families come to us. We were only able to help a modest percentage. And what we did is we found that many banks, mortgage holders, servicers were not receptive to solutions that really made a lot of sense. So we changed our approach and we started buying the faulted mortgages at discounts, and then sharing those discounts with families typically in the form of favorable modifications.

Is where the investment opportunity began. Hey, we can we money to buy these mortgages and we need investors. And 2013, we started crowdfunding. But one asset typically performed the worst out of these pools that we bought. And these were first mortgages secured by vacant properties that were in judicial foreclosure states.

Now we could connect with the homeowner and pay them cash for Edina loo. We could do well Coleman or was PA had passed away or there was no one we couldn’t reach the homeowner, then we’d have to go through foreclosure. And the problem with a first mortgage secured by a vacant property is that we would need to maintain the home.

We can’t, the homeowner’s gone. So the city looks to us or whoever the mortgage holder is to maintain the home. And this is as simple as cutting the grass or shoveling the snow. But also if the property is broken into or falls out of compliance, the city can actually require us to bring the property up to code.

And sometimes we were doing all the work to these properties and making them essentially rent ready. And then they’d sit there for six months a year, sometimes two years a while it went through the foreclosure process. And typically some states that are non-judicial like Texas or California, Arizona, the foreclosures move pretty fast.

You can get them done in six months, but in other states where you have to go through the court system, which is like New York, New Jersey, Florida where I am Illinois, Ohio, and states like. It can take a year and sometimes in, and the extremes will be New York and Hawaii which can take 2, 3, 4 years to complete a foreclosure.

Right now my latest research I saw Hawaiian Yorker kind of neck and neck is the longest foreclosure states to the longest and most expensive states to complete a foreclosure in so this property. think about that. We’ve now the city has ordered us to bring a vacant home, into compliance, make it essentially rent, ready, a home that we don’t own.

We just own the mortgage. So we came up with the idea of, Hey What about if we appointed a local real estate agent as a receiver and they could get a court order, which allows them to do any repairs that are still needed and rent the property during the foreclosure term. And if we could do that, then the rent that’s collected will help offset the costs of any maintenance taxes, insurance go be applied to the loan.

To the extent there was excess. And most importantly it’s a lot easier to maintain an occupied than a vacant one is much less susceptible to vandalism and things like that. And also the the insurance is cheaper, just so many benefits that we can get it occupied. So we started doing that and we had some success with it.

But one challenge we had or one concern was because we’re in Chicago and these properties, mortgages and properties are scattered across the country. We would sometimes think we weren’t sure if we were getting the best prices on, contractors, sometimes they take advantage. We felt like they were taking advantage of us a little bit because we were, a thousand miles away.

So in my mind, I thought, Hey, the ideal solution here is to have a local partner. Somebody who knows the market knows contractors and can help and can have a financial interest in the outcome of this, and they could be our partner on these mortgages. And that was the vision that created pre REO in 2020.

And the goal was to get first mortgages secured by vacant homes, into the hands of local investors during the foreclosure process, instead of waiting till it becomes REO, they could actually get control of the property during foreclosure and that was the original vision.

We’ve talked about this in the past and just to connect the dots for people like the large institutions, they bought a whole bunch of little rental properties back in 2010, and now they’re doing a lot of this build for rent things.

And in my opinion, they’ll probably go through a lot of groaning cranes because large institutions just they’re not good at operating stuff there. People don’t care. They’re just people in suits in Chicago and New York just clicking buttons. And they barely want to go to a lot of these flyover states and we’ll buy a lot of these properties from insurance companies or these kind of more institutional sellers.

Because they don’t have too much skin in the game from a management perspective. So this is exactly like George and his company is like an institution right. They get great deals than the mom and pop investor can’t get access to. And that’s their competitive advantage. If you’re, if somebody’s buying 1, 2, 5, 20 notes, you’re just buying junk from some other guy or with George passed up years, dozens of hand handles and Daisy chain deals over.

But the problem that the institutional guys have is they don’t have foot soldiers. And that’s the kind of the bridge that as an entrepreneur, that’s the segment that you’re trying to cross that gap.

Absolutely. We’re trying to get the institutional seller, provide them a vehicle so that they can connect them with with a local investor. That’s what we’ve done. Right now it’s actually working. We have an institutional seller so originally it was mostly AHP assets on the platform. But right now we have some of the biggest funds that are backed by some of the biggest names on wall street that are posting assets on pre REO. Now the majority of the assets come from third parties from institutional funds rather than from AHP.

So we seeded it to get it going, but now it’s going, which is great. We’re the marketplace and in the middle collecting a fee on each transaction and more we had a one of the keys I’ll get to it as financing and that’s where the crowdfunding comes in. But let’s talk about pre REO the marketplace.

So this is actually, people ask what is pre REO? Pre REO is an online marketplace that connects local real estate investors with lenders. And these are, again, typically institutionals institutions that are looking to sell them. When it first mortgages and REO properties, and these are all over the country.

We’ve had a bunch of Hawaii. We’ve had there we’ve had some million dollar homes. We have some homes that are worth, under $10,000- $20,000 and everything in between across the country. I think we’ve offered in more than 40 states. Originally I envisioned mostly lower value.

But today we just listed to a $4 million homes in in New York, on long island. And there again they’re the first mortgage that’s secured by the formulate our home on long island. So we’re seeing some, and we have some in Brooklyn that are million dollars and all over the country.

Once in a while, you’ll see these million dollar homes. Now pre REO has evolved, that original vision that I shared, it was a first mortgage secured by a vacant property. But now it’s evolved. Now it’s first mortgages that are delinquent secured by vacant properties or occupied properties.

There’s you know, as we talk to more and more institutions, they’re saying, Hey the mortgage is backed by vacant properties. That’s maybe 15% of our portfolio. There’s a whole nother 85% of our portfolio. That’s occupied by owners or tenants. Can you list those? And we started listing those and those were bid on just as aggressively as the vacant ones.

So it’s become a marketplace, right? For simply delinquent first mortgages. And now we actually, next month, we’re listing a, we’re entering a new marketing agreement with a a group that does small balance commercial loans. So these are like strip malls, small office buildings retail, stuff like that.

Tons of defaults in that arena right now. And so that we’ll start seeing creeping up. There’s some hotels, I think, in the first batch that are going to creep into the onto the platform shortly as well.

So here are all the problems that we’re trying to solve with pre REO institutional sellers. They often realize that by selling to the local real estate investor, who would bought, who really would be comfortable owning the property that buyer is most likely the best buyer for the mortgage. But as we talk to sellers, the vision was, Hey if I get to sell my mortgages to a hundred different buyers, then that means we have to do know your customer checks on a hundred different buyers.

The big institutions usually have to do backgrounds on each of their of their buyers. That’s a hundred different KYC checks. It’s a hundred different contracts and they thought there’s no way it’s whatever gain we get by maybe selling for an extra 5 cents or 5%. We’re going to get back with, going back and forth on all these different contracts.

Not worth it. We’re not going to do it. So we came up with a solution and the solution was to put all the loans that are transacted on pre REO into our trust and the trustees U.S.Bank. And so now going to the sellers, okay. The buyer is only one buyer for all these loans. And it’s a trust and it’s U.S. Bank as the trustee.

So they know your customer checks. It’s fine. It’s only one contract. And then we sell a participation interest to each of the local ambassadors, and it’s a participation interest in a specific asset that’s held in the trust. And so that was really the key component that has made this really buyable.

And the other problem that the trust has solved is that about half the states in the union require that you have a license to hold or enforce a mortgage. So I’m in Illinois. If you want to start foreclosure on a mortgage here. You need to have a debt collectors license. And if you don’t, you can’t foreclose.

Now, if you did foreclose , then that could be used as a defense by the consumer to delay or stop the foreclosure and also potentially regulators could find or otherwise provide come after you. I haven’t heard of that happening in Illinois, but I have heard in Pennsylvania, there’s been a number of smaller investors who bought defaulted mortgage loans in Pennsylvania, and they’ve ended up getting fine sometimes substantial.

$50,000 and orders to divest themselves of these mortgages. Some servicers have some smaller servicers and mortgage buyers just aren’t buying in Pennsylvania. Georgia is also enforced this. Massachusetts has enforced this other states. Don’t enforce it proactively, but it is still a big risk.

But the great news is if a loan is held, a mortgage is held in a trust and there’s a national bank trustee. Just like how we have it set up then that compliance, you don’t need a license that complies with all states for the licensor requirements. So it checked that box as well by holding them in a trust.

So now an investor who buys just one loan can be compliant in by holding it in our trust. That’s the other problem that we’ve solved. The other big one is that Difficult historically, to borrow money, to buy mortgages or to against a mortgage. So think about if you like all the properties that you buy Lane, multi-family properties, you oftentimes are getting a mortgage and they record a mortgage when you sell the property or refinance.

The mortgage is recorded there, you gotta pay it. But if you want to get a loan against the mortgage, that has been historically difficult. You’re trying to collateralize a mortgage. By using the trust, now we actually take title to the property, provide the participation interest to the local investor, and that allows us to finance.

And if they were to default, there’s a rapid 30 day forfeiture action that we can take. We basically send a notice to the investor. Hey, you’re in default, you have 30 days to bring the default current or to cure the default. If they don’t do it, then they forfeit their participation interest.

It’s something where we don’t get bogged down in a longterm foreclosure or some other type of court action like that. And all these investors are putting down 25%. So the likelihood, especially in today’s market, if anyone defaulting is very modest. The final problem that we solved as local investors.

Today, our star for deals the REOs with the foreclosure merge moratoriums and all the competition in the market. It has been very difficult to have a steady flow of real estate opportunities if they’re buying the properties, but if we move them up the food chain and start buying defaults and mortgages, there are a lot of opportunities and at significant discounts, the average note on our platform is sold right around 75% of the value of the underlying property. So if a property is worth $200,000 that’s probably being offered at $150,000 to buy the mortgage.

So basically our pre REO is providing the opportunities. So you can go identify mortgages that you want to buy you. We also provide you the capital? We provide resources like a service or a law firm. A trustee that can all help throughout the process and a compliant holding vehicle for all the investors.

So it’s really solved a small mortgage investors even a smaller funds, their challenges at finding opportunities, finding money and finding a vehicle to hold the asset. We right now both on the buyer and seller side, we’re seeing a lot of interest next month. We expect to list over a thousand properties in one month on the platform, which is a huge infusion for us this month in October, we should list several hundred next month to be first time we go over a thousand and That is just in time for year end, where we think there’ll be a motivation for funds to sell these at attractive prices. So we do see a big opportunity in the next time and the next 60 to 75 days where for the year end, there’ll be some great deals for investors.

This is where if you people have been watching my monthly updates like Adam came up with some data that saying those people who are house flippers their return on investment is almost like a 10 year low, because so much competition in the market.

So if you’re looking for a different faucet for deal flow, this is where to get it. Granted most, you guys, my audience George, most of ’em are high income earners, passive investors. So they’re more looking for the fun.

Absolutely.

The appeal to the other guys that are more passive investors is maybe it might be a great way that you can find something in your backyard, that something to tinker around and get to get real estate professional status, some kind of thing to screw around with to get that 750 hour.

So you use the passive losses to possibly lower ordinary income, or maybe I buy a house one day here in Hawaii, but I want to get a good deal on it. That’s where maybe it might come down. Like one of these days. Although that one a Millani on there has been on there for, I don’t want to live in there. It’s too close to my parents.

It’s odd. I wouldn’t have suspected. Hawaii has as many assets as we see. We see a lot in Hawaii which historically is not a place that we see a lot of non-performing mortgages, but there’s been a lot especially condos but also some houses.

I want that house that’s $6 million that was worth 10 million that the bank foreclosed on.

You never know. We had two, $4 million assets that weren’t in Hawaii today. But there are some multi-million dollar assets that have been listed on the platform. I’ll tell you there’s one gentlemen, one pre REO buyer who said the best deal he ever did in his life.

And he’s been doing this for a living for years, was on pre REO. He bought the first mortgage secured by a a home in singer island, Florida last year. And I think he bought it for. Under $2 million, just under $2 million. He thought it was worth 2.5 to $3 million and six months later he completed the foreclosure, the tenant.

He paid the tenant $25,000 to vacate the home and he got excited. He called me a few months before it was foreclosed on and said, Hey, the broker says I can probably sell this for three. And then right when he got the tenant out the broker said, Hey, list is a 3.5.

He ended up listing at 3.8. He ended up listing a 3.5 and getting multiple offers and taking off at 3.8, made over a million dollars on one single pre REO asset, which is just insane. And that’s the record deals that I’m aware of so far. You should have got an equity on that line. Cause he essentially, you guys just play as the 12% note we get.

Today we get $2,000 of 2% of the acquisition price. Plus we get the 12% then he put on 25%. So in this case it was a half a million dollars on that he put down. So he put down it’s a big amount of money. He was the risk position. That’s, I think what’s attractive, especially going into a potential, uncertain market of the future, where there’s an investor putting down 25%.

There’s a discount of 25% off the current value of the property. Then the local investor puts up 25%. So the money that we’re putting up is in a pretty secure position, even as this market starts getting on, getting a little shaky in the next year. Which is likely to happen.

I think we’ll be in a very protected position and hopefully everyone does really well, but ultimately there’s going to be a downturn. And I think that 25% discount plus a 25% down payment will keep us in a very protected position and still generate a good return for our investors.

Be good for folks like myself, have trouble qualifying for mortgages or car loans because of our business owners, you guys, it says nice. You don’t have to Dick around with a bank. You guys are just the private lender.

Exactly. We do some very basic qualifications but if you have decent credit and if you’re an investor, the things that may.

Yeah, too many properties or whatnot that may bar you typically, that’s not going to be impediment with us. We’re making common sense logical decisions and in our underwriting, and basically we feel very comfortable the 25% down payment on something that’s already discounted and something that we could forfeit within 30 days of you ended up defaulting. So it does have a a lot of protections for the lender.

Can you take me through maybe not that particular Asur, maybe it is, but like, how does that note trickle? Like where does it originate from what was it in like a lot of 500 to bot.

No. Initially some, most of the ones came from AHP, so they were in like a big pool that we bought and maybe they were vacant initially were all vacant.

So we take the vacant ones that were in long-term foreclosure states and put them on the site, with anticipating people would use the receivership actions. Now from third-party funds, some of them are laid in the foreclosure process. Many of them are occupied. So receivership doesn’t apply on those, but people are just buying them.

And so they may I think for the sellers in their minds, they can pick up more and more or less 5% more than they could buy simply selling it in a big pool to a national investor because that national investor is going to say, okay, if I foreclose on this, I’ve got to pay a commission. I got to do this, that and discounted a little bit for a local REO ambassador here.

We’re selling it to the local REO investor in many cases. So they are comfortable with, paying a little bit more, but now they’re buying the mortgage which they otherwise couldn’t do. The sellers that we work with, none of them would be selling these individually. It’s always going to be in pools of, a hundred or even 500 or more.

And now they’re selling them, effectively one by one, and they’re get taking bids one by one. But the key is the process is that when we close these, we’re typically closing multiple ones at a time and we do one or two closings a month with each fund and so we grouped their assets together. So for them it’s not burdensome to have too many contracts or anything like that.

So I’m just going walk to the steps. It’s hard to follow for myself. So like I go to the website, I look for a property that I’m like, Hey George, I like this one. It’s a million dollar property.

I think it might be worth maybe a little bit more, hopefully a million and a half. But I put down 25%. And I, which is 250 and I pay your guys’ listing fee of two grand, right? So 250, 252,000.

Actually it just changed. So now we got 2000 or 2%, whichever is higher. So in that case you actually played 20 grand. I we’re seeing traction. It makes sense. It’s still a great deal.

I give you about 250 for that property. I take ownership over it is somebody still take ownership for them? To be clear, you’re buying the mortgage. So you take ownership or participation interest in the mortgage. And as part of the cap, the participation interests, you have delegated authority.

So you make all the decisions. Do we proceed with foreclosure? Do we take a modification if the homeowner asks for that? Do we, what do we set if it goes to foreclosure sale? Bidding, where do you set the bid at? Okay. Now it’s foreclosed on, do we sell it as is? Or do you want to do repairs to the property?

These are all decisions that you get to make on the loan. So you’d work with AHP servicing. The servicer will be in constant contact with you in terms of, what. What’s needed, for you to approve, because you’re basically controlling the destiny of this particular mortgage, but yet that’s what you own.

You own a participation interest in the mortgage and after we’ll get the 12% Everything else goes to you. So you get all the upside. So that guy that made a million bucks, we got 12% on our money. He made, a million plus bucks and that is, he gets to keep the upside and that’s, just like when you buy a house or a multi-family building, the lender gets a predetermined return and then the owner takes the risk.

They can make a lot of money, they can make a little money, they could lose a little, lose a lot. That’s what the owner gets, but ultimately the mortgage holder or the debt provider gets a predetermined return. And in this market, that’s where. That’s the way to go in and out in uncertain times, that’s the position that we want to be in the investor that takes it over.

What are most people doing? They can’t do the heartless fraud and. AHB serving. We want about, Nope. I want to make deals. What are the percentage of where people are doing? Yeah. Good percentage. We’re just going to go through the process and go to foreclosure. They’re already, almost all of them are already in foreclosure.

However, I’d say there’s going to be 25 to 30. At some point, want to do some kind of deal like a mod. And my messaging is if a homeowner says they want a mod and they qualify for one we’ll present it to the investor and I encourage them to take it. Or if it doesn’t make if it’s not quite rich enough financially, they can counter it.

But. Reject it. And here’s why, because if a homeowner really wants to stay and the investor really wants to get them out and get the home there’s a reasonable likelihood that Comodo will get an attorney and fight the foreclosure, which could add months or years to the foreclosure. And in those, in that period, the homeowners.

Tourney not paying you. The lender is the investor will then be paying the attorney as well. It will not be a happy outcome. So my, my purse, what I share with most investors is that if you do five of these, you probably get REO on maybe three of them. There’ll be two where you do a mod or some other, maybe a deed in lieu or short sales, something like that.

And that is you have to account for that and be prepared for that. And that really is the right thing to do. And the other part is the investor will say wait, I don’t want a mod because I need to be collecting payments for the next 20 years. I want to get in and out of things, make my money and do it again.

And I say, okay, wait, look at it a little bit differently because today, if you do a modification about on a loan, which you just bought it, let’s say 75. And the homeowner gives you a down payment. Maybe they may give you a lump sum of five grand. Then they paid monthly payments for six months on time.

Maybe you’re getting a grand a month when that started. They made six payments on time. You can sell that loan at probably 90% today. We’re selling our performing loans at 90, 92%. And that will so you’ll make a profit. So you’re starting to make money now. Quite so much as if you actually got titled to the property where you’re going to make a good return.

So do these on an ongoing basis. You get some RTOs, you’ll get some mods, but in all cases there’s opportunities to make money in HBS servicing. We’ll do. We sell it alone. Okay. Actually, I wasn’t aware of that exit strategy, so yeah. And this is an odd one and that came out of pre REO.

So the institutional buyers, when it’s a non-performing loan, the best buyer is the local investor. But when the, when a low, a smaller seller is trying to sell a re-performing loan. Selling them one by one. You’ll probably get the worst price. The best price will be if you can aggregate a large pool of them.

So what we’re doing now is some of the premier investors have agreed to modifications on their loans. And now the people have paid several months on time. We’re putting them in large pools that we offer, which are, they’re not as large as I’d like, but maybe they’re $10 million. And it’s a combination of HP owned assets plus pre REO investors, even some other smaller investors.

And then we offer them to large institutions to. To buy. And when they buy when they make a bid, we’ll come back to the investor and say, Hey, do you accept this? They accept it. And we close. Then we get a 2% fee. And that has worked out well because we’re selling these things at say 92 cents. If they sold them directly on their own a, the institution wouldn’t buy it.

They’d probably be selling. 10 10% less than that. If not even less than that. And I, to give you an example, the last couple of wires we’ve gotten where it came from, Goldman Sachs. These are funds that are backed by Goldman Sachs or other large wall street banks that are buying these these re-performing assets.

And and so that’s. Ultimately pre REO is making money, when they’re non-performing and being sold. And also when they’re re-performing and being coming from institutions and going back into institutions so we see opportunities from both sides. And we educate the investors that this is, you need to be prepared for any of these outcomes and and act accordingly.

But if you do so you can make a there’s the opportunity to make money, regardless of the. Yeah. Cause I, I know you, you have a soft heart, right? Like you want get these things, but you’ve already tried. So it’s Mr and Mrs. Late payments, we want to work with you, but if not, we have to ship you off to our pre REO sharks.

And they’re not, and again, as people, some people will not reach out or respond to. The outreach until there’s Hey, there’s a foreclosure sale next week. And now they want a mod after six months or a year, but that’s what happens sometimes. And again, I still, I encourage investors if we can make it financially viable on both sides to go ahead and seriously consider taking that model.

Yeah. Yeah. Most real estate investors, not in our community. But you know which one I’m talking about. The people that it’s like, they don’t like, they like to be their own landlord. Cause they don’t want the property manager 8%. That’s the scarcity, mind people, typically real estate investors are always the ones that, oh, can I get a discount?

Can I get a discount? Like they’re the ones that the shark. Looking to foreclose these people, as soon as they take over the asset, because time is money and velocity of money, but you guys you keep it honorable, right? Yeah. Yeah. Absolutely. If you do the right thing in the annual do better in aggregate, you may not make quite as much as you could on an individual asset basis, but on the, in an aggregate you’re going to do better.

And as an entrepreneur, George, you’ve done it again. You’ve made little points here and there and that’s an, and you feeling filling the void. So what the needs in the marketplace for the flyers and south and collecting a fee here and there and collecting a spread on the money? It is I actually pre REO.

We see a big. We see a potential for a lot of growth. To the point where right now people are saying, Hey, I bought, I’m buying this loan from some other fund. They didn’t get it off pre REO. Can you provide the financing? And we’re saying, sure, we’ll do the financing. So we’re right now we finance on an off platform deals.

And And, the majority of people are buying on pre REO, it’s not to say every loan is, has to transact on pre REO. They could they may have a relationship at a fund and they want to buy something, but they need the financing. Even a small pools were financing. But again, that there’s a huge need for financing for smaller buyers in this market.

And the buyer doesn’t have to be tiny, even for some buying a few million bucks, they may need financing. So we see it as a big opportunity. If something comes up, man in Hawaii, let me know. And I’ll I’ll do it. I’ll be a Guinea pig for everybody. Absolutely. Go on pre reo.com. I know there’s so I know we’ve had it Hawaii assets.

I’m pretty comfortable. I’m pretty confident that there’s some there right now. I don’t want a three about a week ago. I just don’t want to buy anything on the east side. I don’t know. Hawaiian. Yeah. Yeah. I’m not going anywhere on that side, but So there’s, we, you go through this, the lender, HP financing is the lender, and this is maybe a good transition into the fund. Is that the fund that’s getting these loans? Is that hard for the last year? Yeah, so sure. HP servicing has been funding pre REO loans for the last year. That’s all transitioning right now. They’re all being funded with pre-op by pre REO.

With this new crowd funding offering. So think about that in the past, HP servicing was a 10% fun. So we have money coming in at temper, our repeat behind crowdfunding investors, 10%. And we loaning out a 12%, pretty skinny but it worked right now with the lower interest rate environment we pay crowdfund investors 7%, whereas loaning it out of 12%.

So there’s a five point spread in the middle. And are you guys still doing that? You had that pre REO e-course at one time. Yeah. And we’re doing a new one that is still live at dot com. There is an e-course there’s another one we’re going to do a live one in in December. We record it and share it with make it available.

In perpetuity on online. But yeah, that one, there’s a new one coming up in December. A lot of things have changed since last November when we did that one. So we’re wanna include all the updates in the new one, in the new opportunity. In the new e-course yeah, something I’m thinking of this.

I’m not a big fan of retirement funds, but if you guys got them, the bad thing about note investing is you don’t get the passive losses at the least. But this would be something idea that you would do with in a retirement account, especially when there’s a high potential for explosive gains.

If you were to sell the property. Yeah. Yeah. People have bought P people have bought pre REO with their IRA account. There’s nothing, no problem. Doing.

And let me I got to share about the crowdfunding part of it. And here it is. So this is just so everyone understands on the crowd funding opportunity. It pays out 7% just as all the HP funds, in the past we distribute every month, it’s open. This is key. It’s open to accredited.

And non-accredited investors. That’s a big for regulation. A plus that’s a big benefit that almost anyone can invest. There’s some limits in terms of what, how much a non-accredited investor can can cannabis. But you’ll see that, they’ll see that on the site, the minimum investment, only 100 bucks and that is, we want to make it as accessible as possible to everybody.

And this offering is qualified by the sec to raise up to 75 million through regulation. A-plus. What is that like the BDN or average investor? 7,000 bucks is our average investment. Ooh, wow. Oh and then I guess the other question I had with this prod funding method. Like liquidity, right?

Like when, if the people need their money back, how is that? Sure. This has been a, so historically HP has offered this, I think since 2016, that if an investor needs their money back, we will undertake our best efforts to return it within 30 days and pre COVID. We were consistently able to do it. COVID hit.

We were unable to do it. We just caught up on the COVID air redemptions and the going forward, we don’t expect another situation like that. So we do expect that we’ll be back to returning money within 30 days upon request the or at least undertaking our best efforts to do that. Now, key caveats, all that is if the investment is redeemed in the first.

Year then the return goes from 7% to 5%. If it’s redeemed in the second year, it goes from 7% to 6%. If the investor keeps the the investment outstanding for at least two years, they can request redemption at any time and they’d be able to keep the full 7%. And I think this is for investors.

I think they just need to get a little more sure what this, like these investments, the reason why you’re not making 0% is that there is some liquidity. Like you can’t just assume that you’re going to get the money right back. I still think what you guys do for investors is, pretty amazing.

If you can even there’s even a possibility of redemption. You guys are using in liquid investments at the end of the day. Yeah, investors can’t really expect to get money back and forth and use it like an ATM. Although I know investors have used in the past and they got comfortable with that.

And then when COVID hit, it became difficult to get the money out. That’s something that luckily, the market’s gone the way it has. It’s now gotten returning to the point where, we expect to be returning money early on those two legacy funds.

And I think in the two new funds, I, a pre REO and the soon to be launched HB title, and those you’ll be able to Yeah, I think we’ll be back on track in terms of getting money back within 30 days when needed. Yeah. And everybody asks that question that comes up a lot of times in HP and pro is always in there.

Part of the solution is oh, what do I do with my short-term liquidity before I look up from our longer term or asymmetric type of risk deals? Are those more. And I tell everybody that’s where you guys have to join the mastermind group and stuff’s going around and doing it all on your own, just suckers, like seriously, like you’re not going to find out if it’s different for everybody, finding opportunities is through your network and it’s different for everybody. And everybody’s trying to do this all by themselves. These should be crowdsourcing, best practices for other people. I’m just, I’m not going to tell you guys what to do out there because you, then you guys will get mad at me.

Just like how you got mad at George, because you can’t redeem your $7,000, the first one, right? You guys, these are the tools you guys need to put these tools into the right border and the right name to say and understand what you’re working with. Those pros and cons to everything. I still invest with.

But I have it within my holistic liquidity opportunity fund. I think you guys can still get that article at simplepassivecashflow.com/poolfunds. But as part of the education process, I guess a lot of people alternative investing or private funds are still new to a lot of people agreed.

It’s a new experience and lots of times when things are going well, it’s like today with the real estate market where everything’s going so strong, people forget that, Hey, at some point it won’t be so strong and property values will go down right now. They’ve been going up like you forget people, forget that in 2008 it was really tough to sell properties.

Property values are going down each month and, that went from 08, 09, 10, 11, 12 up into maybe even 13 where things were a lot different than it is today. Remember, all these things are cyclical and that will prepare for the worst, but prepare for the best, but be prepared for the worst as well.

So call to action guys, if you guys want to learn more about this, we’ll stick it in the infoPage at simplepassacastle.com/AHP. We’ve got several other webinars we’ve done on this in the past. And if you’re interested in getting involved in that pre REO thing, us go to simplepassivecashflow.com/preREO and drop a comment into our Facebook group.

I’d be curious. I’d like to find somebody who’s doing and not just, staying to themselves and keeping it to themselves. I’m interested in this type of stuff.

There’s Hawaii on there there’s opportunities in your backyard probably, or maybe your parents backyard.

It’s astounding how many especially when we get the hundreds and the thousand next month, I think they’re going to be all over us. There should be opportunities in the majority of the markets.

But all right, guys. Thanks for joining us. Thank you, George. And we’ll see everybody next time.