GI250: Mailbox Money with Bronson Hill

GI250: Mailbox Money with Bronson Hill

Bronson Hill was also interviewed on episode GI132, and we have him on again. Bronson is a general partner in 2,000 multifamily units worth over $200M, has spoken individually with over 1500 investors, and has raised over $40M for real estate and his ATM Fund deals while also co-leading a large in-person multifamily meetup in Glendale, CA, and hosting his own podcast.

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Transcript:

Announcer:
Welcome to the Global Investor Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host Charles Carillo combines decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now, here’s your host, Charles Carillo.

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host, Charles Carillo. Today, we have Bronson Hill. He was also interviewed on episode GI132, and we have him on again. Bronson is a general partner in 2,000 multifamily units worth over $200M, has spoken individually with over 1500 investors, and has raised over $40M for real estate and his ATM Fund deals while also co-leading a large in-person multifamily meetup in Glendale, CA, and hosting his own podcast. Bronson, thank you so much for being back on the show again.

Bronson:
Hey, Charles, really excited to be here. Love talking to all things real estate. I’ve always loved talking with you and, and being on your show and just man, there’s so much to talk about these days, isn’t there,

Charles:
<Laugh>? Yeah, that’s for sure. Understatement. So before we jump into it, can you tell us a little bit about yourself, both personally and professionally prior to getting involved with real estate and what you’re doing now?

Bronson:
Yeah, so personally I, let’s see, what can I tell you about myself? I do Spartan races, which are a lot of fun. I do these, you know, say, why would you punish yourself? Everybody’s listening to David Goggins. I like, you know, try to create more pain in your life so that you enjoy the other parts of your life. I guess that’s, I guess one personal thing. No, we you know, my background is medical device sales. Did that for 10 years. I was a, well-paid medical sales professional was working 30 hours a week, being making over 200,000 a year. But the thing I didn’t have is what a lot of people wrestle with is you can make a lot of money, but really we don’t necessarily want financial freedom. What we really want is time freedom, right?

Bronson:
It’s, it’s the ability to be free in time. And so I had a single family portfolio, was trying to kind of scale that up, realized I was kind of creating another job for myself, didn’t want to do that. Found you know, there’s a saying when the student is ready, the teacher peers found a mentor and said, why don’t you consider a multi-family? Or why don’t you center consider apartments? I said, I’d love to, but I don’t have the money. He said, you can, you can actually raise the money. So I learned about raising money for real estate and for other types of deals. And you know, it’s just been a, a great ride. I left my corporate job about two and a half years ago where this book behind me called Fire Yourself. So I fired myself about two and a half years ago. And the book’s just really about replacing working income with passive income in three years or less, and just ways to do that in Main Street instead of Wall Street. So that’s a little bit of my background.

Charles:
Why did you choose real estate back then when you were getting into single family versus other other potential asset classes and investment strategies?

Bronson:
Well, real estate is one of those things that, you know, a lot of people, I mean, I think just about everybody, I know most people know that real estate is kind of how people become wealthy, right? Over time, time through real estate. And I think you know, I think there’s a quote by Andrew Carnegie, who was the wealthiest man in the world at the time. You know, a hundred years ago he said 90% of millionaires, which was a big, a lot bigger of a deal, made millionaire about a hundred years ago than it is now. But he said 90% were made through real estate. And so, you know, real estate, we all kind of know we should be doing something in real estate. I’ve, I’ve always kind of had that vision. But, you know, I think I thought single family would get me there, and I didn’t realize it really just kind of created another job for me.

Bronson:
That’s why when I talk to people, I’ve had all these calls with investors. A lot of people own a rental house or a vacation house, or they’ve got three houses. And I say, well, if you 10 extra strategy, if you went from three houses to 30 houses how would that be for you? And they just, their eyes just about bug outta their head, even though they’re not the property manager usually, but they still have a lot of work to do. They’re getting calls and the tenants are doing this. They’ve gotta repair this. They’ve got a storm thing, you know, they, they’re figuring all these things along the way. And so that’s where, when, when people truly can become passive in investing, and that’s what real estate offers is, you’re not running a business, you’re not running, I mean, it is a business, but it’s something that, especially as a passive investor, someone else can be running that business for you.

Bronson:
And I think until you’re someone who’s a, a limited partner it’s very, very difficult to actually be passive and to actually have the, you know, like I’ve traveled six times internationally last year, right? I’ve got Mount Everest. I’m doing an Everest base camp hike, you know, for two weeks coming up in April. Like, I can do these trips because I know that I’ve got partners that can kind of handle the, the operation. So so I think that’s the appeal of real estate is obviously, you know, there’s some other benefits to tax benefits and there’s appreciation and there’s using leverage to get to use other people’s money just by using debt, which helps you hedge inflation. So there’s, there’s definitely a lot of benefits to real estate, for sure. Yeah,

Charles:
Yeah. No, it’s, it’s possible. I’ve met people that have been able to turn their own portfolio into a business. However, there is I mean, it’s just like scaling any type of business, you know what I mean? It’s, it’s very difficult, you know, so it’s one of those things that’s just that people don’t have it in them. I mean, it’s just, it takes a lot of time. It takes you know, and to put all those processes in place in the beginning, and it’s just much easier if your whole goal is actual passive income, not to be a real estate property manager to go into the passive route through syndication. That’s what I found myself and my own portfolio as well.

Bronson:
Yeah, absolutely. I think and that’s something I think, you know, no matter what your role is, a lot of people we work with you know, they have a business or, you know, they have been doing it for 20 years and, and, or maybe they’re a professional, they’re an attorney or a doctor or something, and they make good money, or they have a business that makes a lot of money, but they think, man, if I retire or if I sell my business okay, I’ve got some money, but what do, how do I actually create more income? And that’s the thing that Wall Street doesn’t give you. It’s very hard to actually create income through Wall Street. And, you know, and, and of course there’s misalignment of interest. In my book, I talk about all the challenges. I was actually, for a while, I was what’s called a registered investment advisor, which is you know, it’s, it’s somebody who’s registered to do, you know, work with people’s, you know, investments.

Bronson:
But now I call myself an RIA where I’m a recovering investment advisor. So I still just change same title, just change the, what the words mean. But you know, you, you just really see that, you know, as you grow your wealth, if you can grow it without taking more of your time, and again, for the person that has the business that has sold it to know that, hey, I can actually put this into deals that will help me to hedge you know, to to, to minimize taxes, to grow my wealth, pay for my kids’ college, and support my lifestyle and grow my wealth all at the same time. That’s really the, the skillset. ’cause Again, it’s, it’s not just investment is not just, oh, I did this great deal. I got this hot stock stock tip and I did this thing.

Bronson:
It’s, it’s the investment that happens in here, right? It’s the investment that you invest in yourself. Warren Buffet says, which I quote Warren Buffet a lot, he says, the best investment you can make is in yourself. And so, by you learning, by you even investing a small amount, you know, a hundred thousand dollars is a lot of money to a lot of people. But for some people, if you have a net worth of 10 million, that’s not a lot of money, right? It’s a very small amount of your total net worth. It gives you some experience in learning what that’s like and, and kind of seeing how you like it. And also you can kind of take it and run with it and see, okay, I like this element, I like this operator. I didn’t like this. And, but once people get, they realize, oh, this is a muscle I can use. They, it, it gets really exciting for me to see the light go on and be like, oh, wow, this, this stuff actually works.

Charles:
Yeah. And the real estate has that thing, I think is, ’cause it’s a wealth generator that people, that surprises some people is that it’s kind of got that wealth creep too. And that I realized initially when I was first time I was checking if I was an a credit investor or not, when after I had like a small portfolio and you add up stuff and you’re like, oh, wow. Like this is, the stuff is really appreciated in value, you know what I mean? And I think it’s just because you can’t really check it. You can’t like log into your account and check what you’re, what you’re worth. So when you actually do it and you put it together, you’re like, you see how stuff has appreciated that you’ve been managing. And it’s really fulfilling to see like the whole thing actually working for you.

Charles:
Even if it’s on a super small scale, then, you know, like, okay, this is the way to go now I just have to change my route a little bit or change my direction towards it. And that’s one thing that makes, you know, syndication, it’s easier for people to make that adjustment into it. And like you, I mean, we do have small investors, and I think that’s a normal thing where you’re like, single family house, someone’s got a duplex, and now they want exposure into a different market, exposure into bigger properties. Something that just gives ’em more time freedom.

Bronson:
Yeah, exactly. I mean, it, it’s, that’s really it. I mean, it’s, it’s creating, I mean, one of the big impetus for me was when I was working I saw there were two physicians I worked with, and they made over $3 million a year each. They were worried, but they were working 80 hours a week. And so I just saw how they worked and I was like, man, I don’t wanna, and then if they didn’t show up for the procedure, they didn’t go to the thing, which, I mean, that’s a lot of money no matter what you’re doing, that’s a lot of money. But I’d imagine they were paying a lot in taxes. They’re probably paying, you know, 50% or more, especially in California, in taxes. So, which is still, you know, 1.5 million take homes, not bad, you know, for for years’ work, right? But but at the end of the day, it’s just, and I saw this in the medical field, I see it in the law field. I see it especially for, for professionals, business owners too, but especially professionals, is you just can’t take time off. I think in the US we take on average across any worker in any industry, 13 days off a year, including six times. That’s about two and a half weeks total. But if you go to Italy, do you know what the average is in Italy? So it’s 13 days here.

Charles:
I don’t know. I know it’s the most leisurely country in the sense of work. I, I don’t know. I would, I would say it’d be like three times as much. I don’t know as much you about

Bronson:
That. It’s actually more than that. It’s, yeah, it’s 42 days, 42 work days. So if, if you count work weeks, that’s eight and a half work weeks, and that’s the average. So that means the average person is taking two and a half months off, you know, of total if you count weekends and everything, like, which is crazy, right? So it’s the idea of do you live to work or work to live? And so I think but what I’ve, what my really pa my passion is, is to help people become financially free. Because what it allows you to do is then you can, you can do the things that you really feel like you’re here to do. I something like 70% of people say they don’t like their jobs, they’re not engaged at work, or there’s, they don’t wanna be doing it. So if I can travel, if I can spend time with family and create memories, if I can write the book that’s, you know, if I can write music, if I can, it contribute to causes that I believe in if I have time and space to do that. But the problem when you’re, when you’re super busy, you don’t have time for that stuff.

Charles:
Yeah. That’s funny what you say about I’ve never really heard, I’ve heard that quote before, but I have, I’m a dual citizen with Italy, so like I have a lot hate relationship when I’m there. So you, so

Speaker 4:
You’re, you’re like, you’re like feeling conflicted by that. You’re like, oh, I’m working too much, I’m not gonna work at all. And

Charles:
<Laugh>, I found out the only efficient thing you can do in Italy is order coffee. That’s like the most efficient system that they have there. I’ve never, it’s, it puts America to, to bed with how they operate there. I’m like, if they could just do the rest of this country, how people do their coffee here, this place would be the most successful place ever. <Laugh>. But they,

Bronson:
They got their priorities right, where the coffee’s the most important thing there, right? <Laugh>.

Charles:
Yeah. Yeah, yeah. So give us an overview of your company. I mean, kind of what you invest into. What is your strategy and what’s your firm’s overall role in those projects when you partner with people?

Bronson:
Yeah, so basically we like you mentioned on my bio we have over 200 million in multifamily. We love real estate because it provides like a lot of the, you know, benefits I mentioned. You use leverage, you use, you get tax benefits, you get cash flow, you get appreciation, you get a lot of, you know, there’s such a need for, it’s very understandable. About two years ago we shifted to do a lot more things outside of real estate. So we’re partnered a, a big thing we’re doing is ATM machine investing, which we have the fourth largest operator of ATM machines in the country. And so you know, it’s surprising a lot. The hardest part of about this deal is, is actually convincing people that don’t use ATMs like you and I, that there’s like this big segment of the population.

Bronson:
It’s actually 10% of the US population that doesn’t even have a bank account. I mean, just think about like, you have a bank account, you use it, you have your card, even if you don’t go to the bank, you have a bank account. This group doesn’t 10%. So, you know, if they, if the US has over 300 million, I mean, it’s 30 million people don’t have a bank account. So what are they doing? They’re using cash, they’re using prepaid debit cards. There’s other things that they do and they’re not considered, you know, bankable, they just don’t have income. They, they wanna pay fees, you know, those kind of things. If you have income, you have direct deposit, you have a lot of money in there. Banks are great if you don’t have, have a lot, they’re not really friendly to people. So people are using ATM ATM funds for those kind of things.

Bronson:
We also do oil and gas. We’ve got a senior housing project we’re working on, we’ve got other things that we’ve done just kind of all across. We had kind of a venture deal in the, the energy space that we were involved with. We’re doing a debt fund, so we’ve got a lot of things that we’re doing. We’re also looking at, we’re looking into a group that is really good at, at buying businesses, buying small businesses for cash flow. There’s some incredible returns there if you can do it right. Kinda the private equity world, so we’re looking into that. We’ve doing car washes, so we’ve done a lot of things. So, again, for different reasons, some for tax reasons, some for cash flow reasons. I’m a big fan that I used to think, you know, I, I always ask this question, what’s more important to you as an investor?

Bronson:
So when iwhenever an investor call, I say, is it, is it appreciation or is it cash flow? Right? And it was kinda like, oh, a little bit both, whatever. And then it’s kinda like I’ve become such a cash flow guy that it’s like cash flow is the thing that actually allows you to fire yourself. It allows you to quit your job, right? You can actually cover your living expenses. Once you cover your living expenses or what they call your rat race number, you’re free. You don’t have to work anymore. You can choose, do I wanna do this, do I not? And even if you don’t wanna leave the, just knowing that that’s the case is amazing. So it’s much, it’s much harder to cover your full income and maybe initially, but if you can at first just cover your living expenses that, that’s a big deal. So we look for things that do that. We look for things that provide different benefits to investors. And there’s obviously many different ways to do that.

Charles:
Yeah. Yeah. That’s I always like my dad’s like a cashflow investor as well, and it’s something that I call him more of like an old school investor. And my dad would only do numbers off, like the cash flow when he bought properties. You know, he didn’t even know what IR meant or anything like this, which is, you know, all cap rate, all this kinda stuff. It was all about like working out cash flow for the properties, if that percentage for him would work. And it works for, I mean, it works. It’s a work, you know what I mean? It’s obviously not the most technical way of doing it, but you know, it works. And like a lot of, that’s one thing we have, when I work with investors that are like that and they invest in our funds, you just kind of have to explain to them and set the priorities of how the cash flow starts. It’s a little different than if you bought a property and maybe you’re cash flow in two months, you know what I mean? We’re doing major renovations to their property we’re kind of taking a business, disrupting it and then putting it back together, you know?

Bronson:
Yeah, absolutely. Yeah. And it’s, it’s amazing. And that’s the thing I think about real estate is that it is very understandable. Like you said, your dad didn’t understand IRR and some of these complex metrics we use, but doesn’t cash flow, you know, any investment if it cash flows and you have, you know, sustainable debt or you have no debt, it’s like, that’s a great investment. ’cause Again, you, you have much less things. I mean, what can go wrong? As long as you manage it, okay, you’re managing well, there’s enough cashflow there, you’re gonna be in good shape. And these days I find there are deals with real estate that cash flow. It’s just, it’s just gotten harder to find that. I think it will change. And I think right now we’ll look back and say, man, I wish I’d bought more right now. A little more multifamily right now.

Bronson:
And that’s the challenge. It’s the best time to buy is the time where there’s the maximum amount of pessimism, which I think we’re kind of about there. I mean, it’s really, you know, we’re raising millions and millions for, for multifamily now. It’s like hard to raise half a million. Like it’s harder to get there just ’cause of investor sentiment, but it really is a counterintuitive thing where it’s the being fearful when others are greedy and vice versa. And so but a lot of investors just are are a little wary right now in general. Yeah.

Charles:
It’s the same thing with banks too. You know, the best loans are done in the worst of times and vice versa when you’re in real estate. And it’s just, banks don’t realize that when they should have been loaning like crazy in oh nine and 2010 not like in 2019 or 2022, you know what I mean? So it’s just, it’s just how human nature, but it just continues. So, but getting more into what you’re working on I find it great that you have this stat that you’ve spoken to over 1500 investors. That’s awesome. I imagine you’ve you’ve found some similarities between people you worked with. Can you kind of share some of those with us? What you have from speaking to 1500 investors and maybe what some of the most successful investors have in common?

Bronson:
Yes. There’s a few things. It’s, it is interesting. After you get on a call with a lot of people, you kind of start to gen, you know there’s kind of a joke, you know, if anybody’s ever waited tables, we used to always kind of like stereotype people that, you know, if they came in and they were really rude, then they were like this kind of person. Or if, you know, if they would sit at your table for like two hours, they were considered campers. ’cause They would just like sit there the whole time. Oh, I got some campers at my table. You know, so you kind of like, so it’s funny, you know, there’s not necessarily someone next to me I’m kind of talking and sharing this with, but in general, I would say you know, it’s amazing. It was a, it’s been an amazing opportunity just from a personal growth standpoint to have this interview where I can ask questions to people that are almost all millionaires, right?

Bronson:
That’s incredible to start asking, what are you, what’s important to you? What are you doing? Why are they doing this? And the amazing thing is that they’re actually having this call, right? They have typically more than enough money for themselves, but they’re trying to figure out ways to grow their wealth. And actually I look at it, like we said, it’s also an investment in learning. They can invest in you know, kinda learning, Hey, is this a good fit? Is it not? Is it, am I gonna learn, you know, what kind of things are they working on? Whatever. They’re continually working on their deal flow and they’re also working on really trying to grow their mind. You know, like, what, what about this is something that’s interesting. Also, people are typically very busy. You know, a lot of people that are wealthy are very busy people.

Bronson:
If even if they’re not busy, they value their time. And so a lot of people you know, they put a high value to this call to learn about investments. And one of the big concerns is reducing taxes. So like I mentioned, you know, some physicians or people, professionals that make a lot of money are paying over 50% a year, depending on if you have a state income tax or not. And again, I’m not a tax person, but there are tax strategists that are fee-based tax strategy people that can help do, you know, we’ve got referrals to those and they’re amazing. And they can say, I’ve, I’ve seen one where, you know, they’ve just really dramatically, actually a couple of scenarios. And I’ve talked about some of my book where they’ve just dramatically helped people to pay zero taxes or almost zero taxes, and it’s incredible.

Bronson:
And so so there’s some different opportunities there. And then, so I think that those are a couple things. Another one is just, you know, how can I, how can I grow wealth? What are the you know, what, how can I start creating cash flow Now, something can sound a little too good to be true when someone says, oh yeah, this deal returns 15% per year and it’s conservative, whatever. And they’re like, I’m not getting outta my stocks. Like, what? I’m not getting that. Anything else? Like, how is that real? Like, is this right? And, and a lot of times when, you know, someone doesn’t know, or maybe they’ve heard from a friend, but they’re like, this, this still sounds a little bit weird. So a lot of people are just kind of checking it out. And we, we do metrics on our calls of like how many people we speak with actually invested.

Bronson:
And you know, it’s, it’s around 17% of the calls that we have actually converted to somebody actually investing the average investment size. It depends on the minimums per deal, but typically about 120,000. So it just, it just kind of varies, right? It, it depends on the specific deal, but those are all important things and they’re all interesting things. But again, I think the thing that strikes me the most is just that these are people that typically sometimes are very, very wealthy, and they are all, they’re, they’re taking time out to have a call to learn about our deals, right? And, and I’m sure that you have the same as well, is that they find value in trying to learn about what deals are out there. And the, the, the challenge and the, the, the possibility of, of kinda what we do is that we have things that people can’t just get on Wall Street.

Bronson:
They can’t get, they’re not publicly traded. And so it requires that people are doing this level of networking and asking around and finding, and, and I’ll have deals that come to me through my network and I’m like, huh, that’s a really good deal. I mean, I say no to like, I’m sure you do as well. I say no to a lot of deals, you make a lot of offers, whatever. But we say, we say no to probably 98% of deals that come around. But once in a while there’s something comes around, Hey, this is really interesting. It’s an interesting team. It’s an interesting, there’s a lot to this I like, and you really try to develop and see what that looks like. So so yeah, so I guess those are a few things that you know, I’ve noticed from those calls.

Charles:
Do you have money sitting in the stock market? And you’re worried about it or worse. You have money sitting at the bank, not keeping up with inflation. My name is Charles Carillo, founder and managing partner of Harborside Partners. And since 2006, I’ve been investing my money and my family’s money into income producing properties. These are real assets, real properties with real addresses that produce real cash flow. At Harborside Partners, we provide passive investors who love real estate with a turnkey investing solution. If you want to put your money to work in real estate, but can’t find deals, don’t have the time to get funding in. The last thing that productive people want to do is manage real estate. We find the deals. We fund the deals and we manage the tenants, the termites and the properties. Partner with us at investwithharborside.com. That’s investwithharborside.com. Go to investwithharborside.com. If you love real estate, you like the idea of passive income and believe that income producing properties will appreciate over time. Go to investwithharborside.com. That’s investwithharborside.com.

Charles:
So when you’re teasing out this information from investors, this is probably like for us, it’s a 30 minute call. Can you kinda share some of like the specific questions you might ask new investors that are, that are important to really figuring out where someone is in their investing journey and if they’re gonna be a fit for what you, for what you do?

Bronson:
Yeah, so for anybody that raises money, these are things, and these are questions that I think are good to kind of ask yourself as well, if you’re just to kinda understand someone’s goals. But I, I always ask how’d you hear about our group? I mean, that’s kind of an compliance thing as well. ’cause It is just helpful to know if they saw us online or if we get referred by a friend or it was on a webinar, just to know where that came from, so that if, if it’s a, you know, from a lead perspective, that’s really helpful to know. And so I’ll make a note of that and I, you know, take notes on all this. I type ’em in, and then I’ll ask, well, tell me about your, your work experience and also any investing experience, right? Because then you’ll learn, okay, if they’re a physician and they, you know, have invested in 30 syndications, well you’re probably gonna have a, you know, a really, because of that real estate experience, you’re gonna have a lot of, you know, really specific things.

Bronson:
Likely they’re gonna have talk about cap rate reversions at exit, and they’re gonna talk about, you know, lots, lots of more complex things versus somebody who’s never invested in a syndication. You know, that’s just gonna be a much more basic conversation about who you are and what you do, and just kind of keeping it real simple. So and then, you know, sometimes I’ll ask if somebody’s been had a lot of experience, I’ll ask them, well, what does the perfect deal look like for you? Right? What’s, what’s, what does that deal look like for you? And I’ll try to get a sense of what are their goals? And I’ll, I’ll always ask the question, what’s more important ca cashflow or appreciation? So somebody who has enough income coming in typically, or they’re really wealthy, they’ll be like, oh, you know, appreciation or doesn’t really matter.

Bronson:
Whatever. Somebody who’s like, I wanna leave my job within a couple years if years like, cash flow should be really important. And it sounds like even saying, well, it sounds like cashflow would be really important because it’ll allow you to do this, right? And so then it’s making those connections for people and, and the call, the goal of a call like that is not just to sell somebody something, it’s to really figure out what they need and then try to add value. And then if it works to work together, great. If they join us on a project, they’re gonna be better off. Hopefully. If they don’t, then hopefully they’ll find another project. But I just wanna be somebody who could be a person of value. So anybody who’s trying to raise money or kind of be involved in this industry, it’s just about all, all about adding value.

Bronson:
Just as like on this show, you’re adding value to people, right? And so those are a couple questions. Another one I ask you is are you accredited you know, is it by net worth or income? I’ll try to get some sense of their financial, like where they’re at financially. And then I’ll just, you know, at the end I’ll kind of say, this is kind of what we do. We buy this type of property, we do these types of deals, does this fit your parameters? And now we’re doing such a broad range of things, so it’s not quite as applicable, but I’ll just kind of get that from them and then I’ll save all that, and then I’ll just kind of say, okay, well thanks for that information about yourself. This is what we do. And then I’ll explain, you know, and then I’ll, I’ll try to tailor it to what they want. So if they’re more cashflow, then I’ll kind of put, you know, present some more cash flow options for them. If they’re more long-term appreciation or they don’t care, or they need tax reduction, I’ll try to present something for them. And so you know, it’s just, I, I think that that’s really good way goes, just ask a bunch of questions, try to figure out who they are, what they, where they want to go, why they set the call up, and then is it something that we can help ’em with?

Charles:
Yeah, no, that’s great. That’s a great way of running a call and getting the information you need because obviously we have a lot of compliance with SEC, you wanna make sure that you’re taking money from people that have money to lose, as are a hundred of pages of legal documents that each of these deals has tells you over and over again. And so yeah, it’s important to ask those questions and figure out where people’s head’s at. And then it gives you an idea too, of what kind of deals that you can speak to your partners about. Maybe someone that wants does need cash flow right away. Maybe they have some deals that are maybe a little bit more heavy value add or something like this that’s gonna take more time to to kind of write the ship on. And you might have investors that are interested in participating, something like that. So that’s great. A lot of great information. Kind of, I imagine when you’ve spoken to new investors there’s been some misconceptions about passive investing, about investing in real estate deals. You know, what are some common misconceptions that passive investors have about investing in real estate deals that you’ve probably heard over the years of raising money?

Bronson:
Yeah, I mean, some people I mean, just expectations. It’s like sometimes people will say, well, I, you know, I want cash flow day one, or, you know, I wanna, I get want a distribution. Is it monthly? Is it right now? And we have seen deals I’ve seen actually, but the challenge is I’ve seen some operators, they raise too much money for a value add deal so that they can start paying distributions like the first quarter, first month. And in a way you’re kind of like, you’re kind of overcharging investors to kinda give them back their own money or have a psychological perception that like things are coming back. So that’s an interesting thing I’ve seen. But you know, sometimes again, it’s, it’s just really coming down to the right expectations of what people want. I’ve had some calls where, and one, you know, a couple I can think of where, you know, one guy had a PhD and it’s something related to real estate and he had a negative net worth from a student loans and he wanted to invest.

Bronson:
And I was like, well, hold on. Like, how do you <laugh>? So it’s funny how like, I know people, I met people that like didn’t even really finish high school and they’ve got millions of dollars and this guy’s like, you know, more educated than, you know, he doesn’t have anything. He’s like, minus 200 K in net worth. And I’m like, well, I don’t, you can’t really invest with like, <laugh>, you can’t do that. So and then sometimes people will say, well, you know, I’ve got a hundred K and that’s my total net worth and I wanna put 50 K into a deal. And I’m like, you know, I’m sorry, we really can’t do that. It’s gotta be, we kind of generally have a rule. It can’t be more than like a quarter of someone’s net worth for any one deal. And that’s, that’s even, that’s a lot.

Bronson:
And then we kind of talk it through and once in a while we’ve done something like that, but it’s just, you know, we just don’t wanna put somebody in a situation where it really you know, it just doesn’t serve them. And that’s, and that’s a challenge, you know, people have different levels of risk tolerance. That’s one of the things I learned as an investment advisor. And you know, some people would say, Hey, I’ve got, you know, $5 million in the bank and I’m ready to fire myself and like a month before retirement, they’re like, okay, now I fired myself. You know? And it’s like, okay, that’s a pretty safe way to do. Other people are like, they have no money and they, you know, they, they go into debt to buy a coaching program or they’re gonna go do real estate and they go into debt and they do it.

Bronson:
And you know, some of ’em do. They burn the boats and they quit the job and they go and, but you know, that’s not always the wisest thing, right? So everybody’s a little different, but it is, it’s just really interesting to see the variety of kind of what brings people to real estate. And I find in general the people that we work well with are kinda like yourself, you know, very collaborative, very, Hey, how can we add value? If I can help you, and I’ll even start at a call, Hey, this is generally how we do these calls. We usually kind of talk about passive investing, we learn about you and what you, where you’re at and ask you some questions. And then afterwards, you, you have time to ask any questions you have and does that sound like a good plan?

Bronson:
And so they can agree to that. And if not, it’s like, no, I wanna talk about you know, that they wanna talk about raising money. Okay, great, let’s talk about that. You know, let’s have a conversation. So it’s just kind, think getting on the same page of what someone really wants and either, you know, in the beginning you either have time or you have money. So if you have, if you have money, you can just start investing passively, which is, I think we should all aspire to that be full-time, passive investors. If you have time, then you can leverage your time. Or like for me, maybe you don’t have a lot of time, but you’re gonna make the time ’cause you don’t have the money to do it. So that’s kind of a side hustle to get it going. So so I think there’s a lot of ways, a lot of things that, that people you know, come to real estate for. But I think those are a few.

Charles:
Yeah, that’s great. That’s a great way of doing it. I had a mentor years back that told me not to invest more than 5% of my net worth into any single deal. And obviously that’s a little tougher and I broke that many times as a younger investor, but that’s something that I’ve successfully done for the last few years. Help between that. And I’d even scale that down more with even like if I do an angel investment or something like that, it’s gonna be like less than 1%. But it’s like, you know, you just, as the risk goes, you just, with real estate, it’s like, you know, safely do 5%. So when you’re speaking to someone and you think that they might be getting over that 10 or 15%, whatever, like you said, 25% you know, gotta ask a little bit more questions and see exactly what their knowledge is on it. You know what I mean? Because you don’t wanna be getting these calls. You get a deal that’s going well, but it’s gonna go six years and they need that money back in four and they never told you. I mean, that’s gonna be a tough conversation and you’re gonna have to figure out a way of buying ’em out or doing something and it’s, it’s a situation you don’t really want to get into. But you know, it comes up when I speak to some larger operators out there.

Bronson:
Yeah. And we’ve had, you know, just to be transparent too, I mean I always like when people share, you know and you know, I know you guys, your deals have all gone well all the time. We’ve had a couple deals that have really struggled with interest rates, you know, having some bridge debt and there’s one area of Atlanta where two year from, you know, 24 months, year over, you know, from two years earlier to now, I mean, the value of properties in general has gone down 42% in that submarket. So, you know, if you have that, no matter what kind of value you did, if you put, you know, 20, 30% down and you have bridge debt and you’ve gotta refinance, you’re in trouble. ’cause There’s negative equity there. You just, you don’t have the equity there. And so I have, you know, you get these calls sometimes from an investor who’s, you know, like, hey, you know, they’re net worth 500 k but they’re, you know, close to retirement and they’re like, Hey, I really need this money and what’s, you know, can you buy me out?

Bronson:
Whatever. And it’s like, this is part of the investment process and we don’t, it’s unclear what’s gonna happen there. Right? And it’s, it’s a really challenging, and we don’t really talk about it as much as operators or capital people, but there is the other side of it too. We wanna make sure that when, and if something happens and there is a challenge, there is something uncertain or there could be a potential loss that it doesn’t. And, and of course nobody wants to lose or, you know, be in a position where they’re losing anything. I didn’t wanna lose anything, but you know, it just, it kind of, it kind of gives you a little more perspective when kind of looking back to the conversation. Okay. You know, just going back to like, I think, you know, for, for this person it was okay to take and just kind of specify, hey, these are the risks here or whatever.

Bronson:
But it, you know, stuff will happen sometimes in deals. There’s no such thing as, as a a hundred percent secure investment, right? Everything involves risk. And I think that just really making sure that we’re stewarding people well. We’re really one of my, before I was in medical sales, I was a youth pastor for like four or five years and the idea of like, pastor is like a shepherd, right? So how do you shepherd people with their finances? You know, that’s kinda what I feel like I do as well. And sometimes it’s telling ’em no, sometimes it’s say, you know what, I just think maybe this isn’t the best thing for you. Maybe some other type of investment or just wait, save for a little longer. And, and but you know, I think that’s the part of, of this that’s challenging as well as it gives us growth opportunities to continue to, to, to have conversations and really try to help people. And, and we’re all, we’re all growing. So

Charles:
Yeah, I’ve done it many times where I’ve lowered the amount someone’s investing and just being like, Hey, you know, this new to you maybe. You know what I mean? I had it with my, it was like my second or third investor who’s someone I knew for years now is like you know, just, I think you should invest like half and you know, did really well, the investment, but it’s something’s like you don’t even understand. You know what I mean? Like, so it’s just, I think it’s better if you come in and they agreed with it. And it was something that I actually I was speaking to my wife, I remember we were walking and before doing it, I was like, I’m gonna, I’m just gonna reach out and tell ’em not to, you know what I mean? Because it was something I never told my investors, <laugh>.

Charles:
I never told the investor group I was working with. ’cause They probably needed that extra money at that point on our first deal. But it was something that you know, you have to do the right thing and you have to make sure this is a long-term, long-term partnership. I mean, they go many, many years or they’re supposed to, I mean, in a normal market, not in what we’ve gone through over the last, say, four out of six years. So as we’re finishing up here, what mistakes should passive or active investors avoid when investing in syndication deals or maybe come mistakes when in syndication deals or real estate in general that maybe you, you see, you come across in all the years of doing this from single family all the way up to what you’re doing now?

Bronson:
Yeah, I mean, there’s a few. I think one is that, you know, we think things are passive when they’re not owning. A rental house, in my opinion, is never passive. Even if you got a good renter and they’ve been there for years, you’re still, you’re still involved. It still takes Headspace. There’s still, there’s still a lot going on there that you’re involved with typically. And then, you know, I think the biggest one of the biggest things I see for a lot of people just starting out is, is the analysis paralysis, right? They look at it, they’ll kick the tire. Well, I don’t know. And then they, they decide that they’re just not gonna do it. And so what I tell people, and I have a system in my book where it talks about giving yourself a time goal of like, okay, I’ll give myself 60 days.

Bronson:
I’m gonna get on people’s investor list, I’m gonna get on Charles list, I’m gonna get on, you know, Bronson’s list. I’m gonna call these other groups and get on their hear about their investment deals. And then within the next 60 days, by this date, I’m gonna invest in something, either one or two deals. And, you know, the deals will probably go fine. But the biggest thing is you’re gonna learn and because you actually are kind of the idea of being in the arena, right? When you’re in the crowds, you’re in the stands watching the game. That’s very different than being on the court, playing the game. And when you’re invested and you have money in there, you’re actually playing the game. Even though you’re passive, you’re still, your money’s there. I pay attention when I’m invested to something. So I think for anybody who’s just kinda looking at all this saying, Hey, this looks great, whatever is, you know, I think it, it takes action.

Bronson:
I mean, I went to, I, I tell this story, I run a meetup in, in LA area, and, and you know, I tell this story, I went to meetups for six years, over six years, and I didn’t do anything. I had one rental house and I just kind of sat, I just kind of would go to the meetups and didn’t really do anything. And it wasn’t until I actually made a decision that, okay, I’m gonna leave my job in a few years that I just, I just started taking a lot of action that things started to change in my life, right? So I think it really takes both making a decision and taking action and I think a lot of people get stuck in the inaction.

Bronson:
Yeah. So I do have a podcast called the Mailbox Money Show. It’s anywhere you get your podcast and we talk about all different things. We just had you on there recently. We talk about things, real estate, we talk about alternatives, we talk about inflation, all kinds of stuff. You can also check out I’m on the social medias Bronson Hill. You go to my website, bronson equity.com. You can hear about, I have my new book that’s available. It’s also on Amazon called Fire Yourself. And then we have our investment club as well. But I really enjoyed being here today, Charles, thanks so much for having me.

Charles:
Yeah, thanks for coming on. Looking forward to connecting you with you here in the near future.

Bronson:
Sounds great, man. Thank you.

Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.

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About Bronson Hill

As the Managing Member of Bronson Equity, Bronson is a general partner in 2000 multifamily units worth over $200M. Bronson co-leads a large in-person multifamily meetup in Glendale, CA, called Investor to Investor (ITI). Bronson is the host of The Mailbox Money Show. He understands the investor mindset, having spoken individually over the phone with over 1500 investors, and has raised over $40M for real estate and his ATM Machine Fund deals. Bronson is the author of the book. Fire Yourself; Replace Your Working Income with Passive Income in 3 Years or Less; he is a regular contributor to YouTube and his blog. Bronson leads an exclusive mastermind for affluent passive investors, providing unmatched investment opportunities within a growth-oriented community.

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