The Coming Recession

Full Transcript Below

Intro
Hi. My name is Rod Khleif, and I’m the host of “The Lifetime Cash Flow Through Real Estate Investing” podcast. And every week, I interview Multifamily Rock Stars and we talk about how they built incredible wealth for themselves and their families through multifamily properties. So hit the “Like” and “Subscribe” buttons to get notified every Monday when a new episode comes out. Let’s get to it.

Rod
Welcome to another edition of How to Build a Lifetime Cash Flow Through Real Estate Investing. I’m Rod Khleif, and I’m thrilled you’re here. And I know you’re going to get tremendous value from the gentleman I’m interviewing today. His name is Gary Wilson, and he’s done a lot of things. He’s written six real estate books. I think he presently owns 250 units, but he’s developed real estate companies. He actually has a pretty large presence helping agents and brokers, teaching them how to deal with investors, which is certainly very relevant in what’s coming. And that’s through his website, “GlobalInvestorAgent.com”. And, you know, I think he could probably– has probably forgotten more about real estate that many of us know. So we’ll have a lot of fun today. Welcome to the show, brother.

Gary
Thanks, Rod. I appreciate you having me on. I’m glad to be here.

Rod
Yeah, I know I was on yours a while back. I forgot the name of your podcast. What’s the name of your podcast?

Gary
“Massive Passive Cash Flow” podcast.

Rod
“Massive Passive Cash Flow”. Love it. That’s very close to Lifetime Cash Flow. Love it.

Gary
Yeah.

Rod
So, why don’t you give us a little background? Let’s start with that, Gary. Just kind of tell us why real estate, how long you’ve been in real estate? I think you were in mergers and acquisitions a previous lifetime, so, you know, but give us a little background, brother.

Gary
Yeah, well, for me, really, when I was a kid, Rod, I used to design houses, I mean, but my idea of designing was drawing a picture of a split level or trial level the way I saw them on the street. And in my mind, I knew where the bedrooms were all that. Turns out my grandfather taught architecture in college, way back in the early 18, early 1900. Excuse me. And he saw me doing that. And then he taught me all the terminology, the scaling, everything. And my mother bought me a kit for Christmas, a T-square, the board, the whole nine yards, and started drawing houses, designing them, and floor plans. So going forward, Virginia Tech didn’t like my SAT score, so I didn’t get to the School of Architecture and then going to Old Dominion University in Tidewater, Virginia. And there was my big lucky break. God made sure that I was going to pursue my dreams, and he had me be a roommate with a guy named Socrates. His dad and parents were Greek.

Rod
That was his real name?

Gary
Absolutely. Yeah.

Rod
Okay.

Gary
He lives here in Florida, near Port St. Lucie. So, in any case, we became best friends. We’re still best friends today. In fact, I’m going to go see him in a couple of weeks here. But his dad came to America not speaking a lick of English and started investing in Richmond, Virginia, which still has a great market today. And we’ll touch on that. We have time on the podcast. But when we graduated, I never forget, Rod, this was the game changer. We were going to go rent a place because we didn’t figure, how could we ever buy a place. His dad said, no. You’re going to buy a place and you’re going to make money on it. And when you’re 35 years old, you’re going to retire. And he’s, like, pounding his chest, like, telling us you boys got to listen to me. And I said we bought a four-bedroom, two-bathroom rancher in Virginia Beach, Virginia, for $63,000, if you could imagine that.

Rod
When was this?

Gary
January 1986.

Rod
’86. Okay.

Gary
We were very creative. We assumed the guy’s first mortgage, it was a VA mortgage. And you can still do that today.

Rod
Sure.

Gary
We refinanced his second, and then we gave him a third note for the remaining equity. And that was my first exposure to real estate. I was hooked. Two years later, I got married. Soc bought me out, and I had 3,000 into it. I got 8,000 out, and I thought, I mean, this is, like, too easy, you know. So ten years goes by, get married, have kids, move to Pittsburgh, and I’m thinking, man, I’m like, dying in this corporate job. I was not born to be sitting behind a desk, you know. So I finally started investing for myself. In that first year, I picked up 30 units. It was ten properties, duplexes, triplexes, or four-plexes, using some of what I learned from Socs dad, and using some traditional financing too. You know, basically, use a home equity line of credit. Had a personal line of credit, had some savings, you know, did some motor financing. I bought the property from a lawyer who financed me, did a number of things, and then ended that first year, Rod, my net income from the rentals was actually equal to my net income from my job at the bank to emergency acquisitions. I’m thinking, I’m going to do this, man. Now, Mr. Conservative here took another four years of the corporate gig before I finally retired at the ripe old age of 40. And from there, just, I mean, you know, maybe I’ll pause here and let you catch up because that was really the beginning. And everything after that was just like I was shot out of a cannon. It was that fast, you know.

Rod
Yeah. No, I feel exactly the same way about the business. And, you know, that was about the time I was doing a ton of single-family as well. I was about eight to ten years after I started as well, in ’86. I started in ’78. And, yeah. Love it. And, I mean, I remember buying houses for 20 grand and 13 grand and how I bought 200 in Memphis, and some of those were and– of course, I regret it, but I paid 3500, 5,000, 8,000, 10,000. You know, those were the days. Well, so, you use creative financing. What you just described with, you know, assuming a note, refinancing a second. So that’s interesting because that’s actually very challenging. And then giving the seller a third. You know, I know you love these creative financing techniques. Before we start recording, you talk about a rent participation mortgage and why don’t you elaborate on that as it relates to seller financing?

Gary
Sure. I learned that a long time ago and some of the listeners might remember. Another Floridian name, Carleton Sheets, way back in the day. And I originally learned a concept from him. I never applied until years later. But what we realized is– or what I realized through my learning about in real estate investing is the markets are always going to be changing. It’s very fluid. It’s going up, it’s going down, it’s going left, it’s going right. And there’s no one strategy that works well in all markets. That’s why you got to learn the strategies to know how to be strategic and apply the right strategies in the right market. So here’s what this strategy would apply. Right now is a great time because I think we all agree prices have gone through the roof in the last several years on everything. Anything in real estate prices has gone up. So let’s take an example. Let’s say you come across a 30-unit building. And this is a real-life example, by the way. 30-unit building up in Michigan and the owner was a senior woman who had passed away and her two sons that inherited it, they didn’t know what they were doing, you know, but they put in their mind that this thing is worth millions of dollars, okay? And they won’t budge because there’s no mortgage on it. So, we finally show them, let themselves open up their minds and hearts to listen to us. And we would say, look, you know, we can buy properties all over the country now. This is the beautiful thing about today’s world, is anybody in investing, you don’t have to invest in your own backyard anymore. I mean, I recommend you start off doing that. But once you’re comfortable, look at the other markets and we’ll go over some websites to show them these markets too. So, anyways, back to this property. We show them a history of sales and rental rates in the area. And we said, look, your property is literally one-third occupied, two-thirds empty, and yet you want to sell it for what it’s worth if it was fully occupied. Think about that. Would you do that deal? The guys will [inaudible] of course they wouldn’t. I said, well, nobody else is either. You know, people with money generally are pretty smart with money. That’s why they have money. So I said, let’s do this. If you were to entertain us, I’ll show you an opportunity here that will help you participate in the future growth of this property. And I am willing to take that risk because I’ve been doing this for 36 years. So I’ll purchase it from you based on today’s value, which is based on your net operating income. That’s how income properties are valuated. It’s the income approach to valuation. Based on that number, it’s worth about $700,000. Going forward, as I raise rents because you’re behind on your rents too, your rents are very low. I said I will share with you those increases on a 50-50 basis. That way you can get some money now and you can get some money coming almost residually down the road because I’m going to manage the property, not you. You just sit back and collect the checks and you spread out your tax burden. And a few months later, after going back and forth, his brother convinced me and said, look, nobody’s even looking at this thing except for dear old Mr. Wilson, let’s do the deal. You know, so that’s what we did. So it ended up– you know, at the end of the day, probably cost me another, you know, $150,000. But what he wanted was over a million, you know, and it just wasn’t worth it.

Rod
Well, you just did it to make the deal work. And obviously, some people may have a resistance to sharing half of the upside with a seller, and I’m assuming that’s in perpetuity until you sell the asset. So it’s not like over a period of time. Or did you cap–

Gary
Yeah, you cap it off. So, you know, we did it in that one. We did it for over five years. That’s what we did.

Rod
Oh, you did, okay. Well, then that’s even more appealing. Okay. Well, that is a very unique strategy and I’ve heard lots of strategies and I haven’t even heard that one. And so, you know, that’s a very unique strategy. And by the way, guys, you know, if you’re going to go direct to seller, I teach this at my boot camp. I would encourage you to reach out to people that have owned for at least 20 plus years. Why? Because for several reasons. One, chances are the property is free and clear. Additionally, the property is fully depreciated in most cases, so they have no more tax write-offs. And so, you know, proposing seller financing can be– actually the best thing for them. And by the way, if they’re a retiree, which they likely are if they’ve owned that long, they’re not going to take that money from that big investment of theirs and put it into another high-risk investment. So you want to have a conversation something like this, you know, because you know, when they sell, they’re only going to get to keep 65, 70 cents on the dollar. So you say, you know, Mr. And Mrs. Smith, I’m going to buy your property for a million dollars. You know, and because you’re fully depreciated, as you know, you’re only going to get to keep 650, 700 thousand. And I know you’re going to put the money in the bank and the banks paying 1%, here’s what your payment would be, and you figure it out for them. But then you say, listen, you know, work with me and I’ll pay you enough of a down payment so you know I’m serious. You know, I’ll pay you three, four, five, 6% interest, and you’re only paying taxes on what you get from me every year, which is what Gary just described in this scenario, which is even in addition to what I’m telling you here, but, you know, your payment for me is going to be three or four times what you get from the bank, and it usually is. So, honestly, guys, if you’re not having that conversation with a retired seller with a free and clear property, you’re doing them a disservice because it’s actually a better deal for them because they want the cash flow. So, a great analogy, brother. So let’s talk about area evaluation, okay? When you’re looking at a market or a submarket, we mentioned– we get into this before we started recording. So talk about some of the websites that you like, and I’ll add to them if you miss any that I am aware of that– and guys, you might want to take some notes on this. These are websites that you can go in, get demographic information, and I tell my students, you know, immerse yourself in this. Have fun with it, wallow in it. Don’t be intimidated by it. Just go in there and play around. You know, maybe put in where you live first and then put in whatever submarket you’re interested in. You can compare the two. You can see trends. You can see, you know, demographical information, which is what you need to know if you’re going to invest in the market. So take it away, buddy.

Gary
Yeah, sure. Well, I’ll give you a couple of basic ones– you mentioned when earlier when we were having a prior conversation is DataUSA. Guys, I got to tell you–

Rod
By the way, that’s “DataUSA.io”. Okay.

Gary
.io, I’m sorry. Yes, correct.

Rod
Yeah.

Gary
I stumbled across that Rod because I used to go to the US “census.com” directly, and then you have to create your reporting.

Rod
Yeah. That’s “census.gov”, by the way. “Census.gov”.

Gary
Yeah. So we would do that the hard old fashioned way. And finally, I discovered this, and I thought, this is beautiful, man. All that’s all formatted for you. So make sure “DataUSA.io” is in your toolbox, guys. Okay. You also mentioned City-Data. City-Data for several years is way behind on their updates, but they’ve caught up, it’s very good.

Rod
That’s “City-Data.com”.

Gary
Yeah. And just a little side note, I’m not really promoting it, but I tell you, we actually get a lot of good information from Wikipedia. You can plug in any city or town, and it’ll give you all the little nitty-gritty.

Rod
It’s a good idea.

Gary
Yeah. But here’s a really neat one. It’s called “HowMoneyWalks.com”. And it sounds like a quirky name, but if you open it up, it’s actually IRS Tax Migration. So it’s public data. It uses, you know, data from the IRS that they publish based on filings, tax filings. So it’s not necessarily tracking the migration of people. Although the two are often closely related, it definitely is tracking the migration of money. So you can see money is pouring out of the five boroughs of New York City. Money’s pouring out of, you know–

Rod
L.A.

Gary
Yeah. L.A., San Francisco, and, you know, Chicago. The money is just, you know, leaving in droves because it’s going to the states where the landlord laws are more favorable, the laws are more–

Rod
Or business in general, really. You know, obviously, these blue states are just not as business-friendly. It’s not a political statement, but that’s just reality and it’s causing, you know, forgetting politics, although politics of course playing a big role. There are a lot of people moving out of these states that are tired of the business environment, tired of the controls, and of course, you know, the political piece as well. Yeah. Another one by the– “HowMoneyWalks”. I love that. I don’t even know about that. So I will look into that after we’re done here. But another one is “BestPlaces.net”. That’s another great website. And, you know, one of the things, you know, when we’re doing a property– I’m sorry, a presentation on a deal we’re raising money for, for example, we’ve got one right now in Nashville, screaming deal, mid-90s build, 145 doors, just fantastic returns, even with low 60% Freddie Mac financing, fixed-rate financing, it’s a hell of a deal. But in our presentation, like we’re doing a webinar on it. This will probably air after that, but we’re doing a webinar on it. And when we do that, you’ll notice we use a lot of information from these websites that you just mentioned and, you know, you can print graphs, you can do all sorts of things that really show what’s happening. Because remember guys, you want to see some things going up. You want to see population going up, income going up and jobs going up. And of course, jobs are the biggest thing. You want to see employer– employment diversity. You want to see not just one industry or one horse in town, you know.

Gary
Yeah.

Rod
You don’t want like just one military base or one big employer because if that horse gets sick or dies or leaves town, you’re screwed. So, you know, it’s really important that you have that diversity as well. Do you agree?

Gary
Absolutely. So we actually came up with a short list Rod, years ago of the industries we’d like to see. And if we have two or three of them, we’re like we’re in. So, higher education, very stable, it doesn’t matter what the economy does, people are always going to college, university. Strong medical presence.

Rod
Health care.

Gary
Yeah.

Rod
Yes, I was going to say the same thing. Yeah. And what’s the third?

Gary
If you have a high-tech presence, sometimes it’s through the university systems. But really anything, you know, high-tech presence. And another one would be if it’s a financial center or a sub-financial center. So like Pittsburgh is considered a sub-financial center to New York even though it’s in the Cleveland Fed district, it’s a sub-financial district area for New York City. So financial, high-tech, higher education, strong medicine.

Rod
Medical.

Gary
Yeah. Some other industries, like a military base. That’s another one, by the way.

Rod
Yeah, sure, that can be one of them for sure. It just can’t be the only one. Right.

Gary
Correct.

Rod
Yeah. Love it. No, that’s good.

Gary
We look at two to three of them. We got three that’s like we’re in, you know. But if you got two of them, we’ll check out some other data.

Rod
Yeah, but remember this guys. Jobs is absolutely the most important piece of this, okay? And, you know, especially heading into– so let me ask you this, Gary, what are your thoughts on the political– I mean, I’m sorry, the economic environment right now? You know, Trump was just quoted as saying it’s going to be a depression, not a recession. And love him or hate him, he’s, you know, a pretty smart guy and– economically for sure. So what are your thoughts?

Gary
Okay. So, everybody, just remember, I’m not an attorney and I’m not an accountant, but I did spend a lot of years in banking, and more important aspect, years privately investing. So this is just my opinion, okay? Now, this is my fifth market cycle. The day this is being recorded, you know, Thursday, August 11th, we are in a recession.

Rod
No question.

Gary
It might not feel too dramatic right now, but guys, we’re absolutely in a recession. So my recommendation is to turn off all the mainstream media and television networks and focus on the data. Just get the actual data, you know. So, in any case, here are my thoughts on this. I started back in 1986, and if everybody remembers October 1987, that was– they called a Black Monday. Stock market lost 25% in one day. And later on, you had the slight recession of ’92. The tech burst in early 2000, and of course, the big recession in late 2007 through probably 2011, if you recall that. So, what I know is this. In the last recession, the Great Recession, we did not have a problem with inflation. We had a very hot real estate market that was driven by, unfortunately, unscrupulous mortgage broker business, you know. They were just pushing back–

Rod
Well, really, Wall Street more than that even. They were sliced and diced in those mortgages. And if you could fog a mirror, you could buy a house back then. Right.

Gary
Oh my gosh, it’s crazy.

Rod
Yeah. Right.

Gary
So, I don’t want to go on all the history of, you know, how it all started in the 1970s–

Rod
Right.

Gary
But just if you can read all about it, watch the movie “The Big Short”.

Rod
“The Big Short”. Yeah.

Gary
Yeah.

Rod
A great short or big short. But it’s exactly what happened, guys.

Gary
Exactly.

Rod
In fact, in the midst of the crash, I built a litigation support company to help people try to save their homes. You know, and I built law firms in five states and supported those law firms and stopped foreclosures, and tried to, you know, modify loans. We saved thousands of families’ homes. But thankless business, and thank God I sold it a few years ago. But, you know, all the things that they said in that movie are real. There was so much fraud by big banks. You would not believe the level of fraud. That was just obvious. I mean, big, I’m not going to say the names, but big banks, you’d recognize every single name.

Gary
Oh, yeah.

Rod
Just crazy stuff. But anyway, I digress. So keep going.

Gary
That’s okay. That’s why, you know, I’m not an anarchist. But I’m telling you, I take everything with a grain of salt that comes across the television. I don’t care if politicians or the media.

Rod
It’s mostly BS. It just is. It’s complete crap. So, guys, listen. If you’re listening to me, you’ve heard me say this before. You’re a leader, and as a leader, your focus is freaking critical. So make sure you’re bringing in the good stuff, and you’re standing guard, like Gary says, at the door to your mind. And keep that crap out. You know, yes, you’ve got to keep a finger on the pulse, but don’t get sucked into it, because what you focus on gets bigger. Positive or negative. Okay? Super important that you pay attention to that. All right.

Gary
Focus on the positive. So here’s what’s happening. In the last recession, we didn’t have a big inflation problem like we had back in the late 70s and early 80s. And if you guys weren’t around back then, don’t worry about it. You don’t need to know all that history. Just know that it occurred. So, when you have big inflation, it’s very difficult to control the economy and bring it down without killing the economy. So back then, they had something called stagflation. It was just sickening. I mean, 18% interest rates are ridiculous.

Rod
That’s when I started the business. Yeah. 18%. I mean, I remember doing back flips and, like, screaming with joy when it hit 7%. Seriously. Yeah. So, anyway–

Gary
Oh, yeah? I’ve already got below ten, I’m talking man, things were getting [inaudible] were 9%.

Rod
Yeah, right.

Gary
Here we are. The government’s telling you it’s now in fun 9.1%. It’s not. The user was called a basket of goods. It includes things like shaving cream. Now, how often do buy shaving cream? Once every three months. How much does it cost? $3. What’s the inflation on shaving cream? 3%. But where do we spend all of our money? Most of it. Here it is. Housing cost, transportation cost, food, medicine, and education.

Rod
Gasoline.

Gary
All five of those have gone up, and three of them have gone up dramatically in the last couple of years. Not by 9.1%. Some of them have double guys.

Rod
Yeah.

Gary
We’re talking 50, 60, and 70% on the big-ticket items. That is massive inflation. This has been a Venezuela type of stuff. Okay? So there’s not anything politicians can do to stop this freight train, right?

Rod
Right.

Gary
What you and I can do, though, is have a level head and not panic, but prepare. So I’ve been on a cash basis for seven years now, anticipating what might happen. I’m not saying I’m not investing. I’m definitely investing. But I have a strong cash in right now because it’s going to be Christmas time.

Rod
Yeah.

Gary
Right now, if you look at the– do you know that there are five or six major [inaudible] institutions that have just announced layoffs? Just in the last two weeks? Okay?

Rod
Yeah.

Gary
It’s quiet. It’s not on the news. You got to dig and find this stuff. Look at the– here’s something for you. In June, of all the active transactions that are worth of real estate, 15%– buyers backed out of 15% of them. Transaction volume in July was down 20% year over year. In other words, 20% less than July 2021. Now, what we’re starting to see our price drop. So in the state of Virginia, where I spend a lot of time and I’m looking to purchase, by the way, I’m looking– you really know what Gary Wilson’s doing. I’m looking in Virginia for different reasons. But, any case, across the board, 10% price drops on active listings, then fast too. This is not like over time. This is–

Rod
No, no. Hey, listen, I had my– sorry to interrupt for a second here, but I had my Multifamily Boardroom Mastermind. This probably went about six weeks ago. And, you know, these are the biggest operators in the country, about 16 billion in assets in there. And we met in Houston, and at that point, almost all deals were being retraded at about ten to 12% reduction.

Gary
There you go.

Rod
So there you go. And this is in big multifamily, so, same-same. Yeah.

Gary
Yeah. And then the other thing, too, is in the last recession, if everybody remembers, Congress rewrote the rules about lending and appraisals and all that. And if you notice, the appraisers started really pulling back on the appraisal values, pushing down, keeping them, you know, not being so crazy, wild, wild west like it has been. It’s already started here. We’re seeing in another it’s 10%. Appraisals coming in at 10% lower than the agreed-upon price. And people are pissed off. I’m sorry. People are mad about it, excuse me.

Rod
Oh, listen. We drop F-bombs and everything else here. We’re good. Go ahead. Okay.

Gary
But these are all, basically, these aren’t the problems.

Rod
Solutions. Yeah.

Gary
These are the indicators that there is a big problem. Yeah.

Rod
Yeah. You’re right. They’re the indicators, but they’re also the solutions. Okay?

Gary
Yes.

Rod
Because it’s been crazy. You know, it has to settle down. Hell, in the last year and a half, two years, you had no due diligence. If you didn’t go hard on a property, non-refundable, you didn’t have a chance. And still a little bit of that now.

Gary
Yeah.

Rod
But, you know, we’re getting back to normal, to a 30-day due diligence period to you know, normalcy with brokers actually calling you back. In fact, I’ve said this before, I don’t know if it’s on this podcast or somebody else’s, but in the last two months, I’ve gotten more emails from brokers than I got in the last two years. That’s how much it opened up. I mean, just you know, deals are coming back. So, yeah.

Gary
Yeah. So, in any case, the thing to do is, you know, be level-headed. Don’t be too greedy. I mean, well, let me rephrase that. Be aggressive, be demanding. It’s better to be demanding right now. And that’s what I’m doing. I’m going in low, and people are getting mad at me, and I’m thinking, well, look, I know the data, and I just tell them flat out who I am and what I’m all about. And I said, look, you know, I can wait it out. I don’t have to buy this property. I’m not trying to make you mad. I’m just trying to be realistic. If you were smart, you would sell now because it’s going to go down. So here’s my final submission here. I really hope it doesn’t get that bad, guys. But in my opinion, the way the numbers are shaping up, it could get pretty bad. It really could.

Rod
Yeah.

Gary
The probability is much higher today than it was even in 2007, ’08, and ’09, you know.

Rod
I agree. I agree completely. And I was the most bearish one at my boot–you know, my Mastermind with these other operators. They’re all like, no, it’s okay. There’s still huge job demand, and so on and so forth. But here’s something sobering that I heard. And, guys, again, we’re not trying to scare you. Get freaking excited, okay? If you haven’t learned this business, get your butt to my boot camp. I’ve got a virtual one coming up in the middle of October. It’s $100 to come, I mean, and I don’t sell anything there. It’s kind of a no-brainer. But the point is– you know, and am I buying? Yeah. At that great deal in Nashville. But we’re very, very conservative. Okay? And so, but get up to speed as fast as possible. And where was I going with that? I was going to say something else. And don’t be aggressive. Be super conservative. You know, and like you say, you know, wait it out if you have to, but don’t overpay right now. That’s just insane. Now, of course, the debt markets are crazy right now. It’s very, very difficult to get, you know, debt, especially in tertiary markets, you know, outlying areas, you know because Fanny and Freddie know what’s coming. I mean, they know what’s coming. Oh, here’s what I was going to say. That’s right.

Gary
Okay.

Rod
I heard, you know, that we’re going to have to print money again in September just to pay the interest on the freaking debt we already have. Okay? Guys, that is really bad. Okay? You know, they’re trying to drop inflation by raising the interest rates, but typically that doesn’t work. There’s just too much money in circulation because they printed trades and these– don’t get me started on the idiots. They just did another trillion with this latest bill. It’s just the dumbest crap ever.

Gary
Right.

Rod
So, you know, they’re making it worse, much worse. And so, you know, we’ll see how it all shakes out. But I think it’s going to get ugly, in my opinion, and I think there’s going to be an incredible opportunity, you know.

Gary
Right.

Rod
I was hiding under a rock in 2008, ’09 because I thought I was set for life and I lost everything. Not this time, man. I’m in a lot of cash. And by the way, guys, you don’t necessarily have to have a ton of cash yourself, but you need to have built relationships so you have access to money. Okay? And, you know, like I talked about this at my Denver boot camp just last couple of weeks ago, is, you know, build relationships with people that have money. Let them know you’re waiting, and as you know, what hits the fan and the blood’s running in the streets, there’s going to be an incredible opportunity. You’re being a contrarian, you know. And that’s where the biggest money is made. Yeah. You’re great.

Gary
Yeah. I gave you another thing I learned, and I learned this partly from being in banking, is, you know, the reasons why the banks are at the top of the food chain is because they’re also smart with money, most of them. Some are not smart.

Rod
Right.

Gary
But here’s the learn to do. I had a lot of properties and built up quite a portfolio and I wanted to get a commercial line of credit, a business line of credit across all the equity. And every lender I went to would say, no, we’re going to want you to refinance because we want to be in the first position. Like, look, guys, I’m not going to start amortization all over again. I’ve already got these things paid down. I got a ton of equity. I said, here’s what I’ll offer you. I said I’ll let you record a lien on every single property if you want to do that, you know. I just want the availability of the funds to be able to write a check and a moment’s notice when I find a deal. I’m not saying I’m going to go out there and spend this tomorrow. I’m not. I’m not going to buy boats and cars and mansions. I’m going to buy income-producing assets.

Rod
Right.

Rod
You know, when I phrased it that way, I finally found somebody says you know what? We’ll do the deal. And what’s interesting, Rod is I bought more properties. Guess what they did with that big line of credit? They increased it because–

Rod
Oh, they did.

Gary
I had more income-producing assets.

Rod
Nice. When was this just from a historical standpoint? Do you recall what year that was?

Gary
That was 2000– my gosh. Hang on a second. No, that was 1999. 1999 I did that, you know. Yeah.

Rod
Okay. And just as a line of credit comment here, I know that in ’08 and ’09 lines of credits got frozen, they got reduced.

Gary
Oh, yeah.

Rod
And what’s really onerous is if you had money in their bank, they could claw that money back to pay off lines of credit. So if you have a line of credit, don’t have money in a bank account at that bank or redefine print because chances are they can go into your bank account and claw money back to pay down that line of credit. And, you know, that could really be ugly for you. So, again, if you’ve got a line of credit, have your money parked somewhere else.

Gary
Yeah. But one thing I do want to share with you guys, listeners, just remember this. The beautiful thing about real estate, it is a tangible asset that also throws off income. Like if you think about blue chip mutual funds, it’s the capital plus the income. So, to real estate, the beautiful thing about real estate is, it will never go to zero.

Rod
Right.

Gary
It says you got land and the building on top of the land. All that happens, guys, in a recession is the properties change hands. It’s just going from one person to the next. Your goal should be here to listen to Rod, go to the training, and figure out how do you be that person that’s on the receiving end. Okay? Be the person as part of the transaction, participate in it. Some way, shape, or form there’s a role for you to play in this. And more people have made more wealth in down markets than do in up markets, you know.

Rod
Exponentially. Exponentially more. Yeah, for sure. I mean, some people are saying “the greatest transfer of wealth in our lifetime is coming”. So, guys, just get up to speed. If you’re trying to learn this in the midst of it, it’s going to be too late. You need to get up to speed right now. I don’t care if you learn from me, but, you know, $100 to come and see me for two days without a sales pitch. Kind of a no-brainer, if you’re interested. By the way, if you are interested, text my name “Rod” to “72345” or go to “MultifamilyVirtualBootcamp.com”. And like I said, it’s 16 to 18 hours of training without a sales pitch for $97. Kind of a no-brainer. Well, listen, I appreciate– yeah, you know, what you give, you get back 100 folds. You know that. So I don’t make any money on that, but, you know, I get coaching clients and deals and all sorts of things from doing that. So it always works out. Well, listen, brother, I appreciate you being on the show. It’s great to see you again. You know, we’ll have to continue the conversation. We’ll have to grab lunch one of these days since you’re so close, man. That’s kind of a no-brainer. Let’s make that happen. All right, buddy. Well, listen, good to see you. We’ll talk soon, man.

Gary
Sounds good, Rod. Have a wonderful day. And everybody listening, keep the up look because it is going to be positive, you know.

Rod
Yeah. Thanks, man. See you.

Outro
Rod, I know a lot of our listeners are wanting to take their multifamily investing business to the next level. Now, I know you’ve been hard at work helping our warrior students do just that using our “ACT” methodology, which is Awareness, Close, and Transform. Can you explain to the listeners how they can get our help?

Rod
You bet. Guys, we’ve been going non-stop for three years building an amazing community of like-minded people, and our coaching students which we call our Warriors have had extraordinary results. They’ve purchased thousands and thousands of units and last year we did over 1000 units with our students. And we’re looking to grow this group and take it to the next level. We’re looking for people who want to follow a proven framework that’s really step by step and then leverage our systems and network to raise equity, to find and close deals, and to build partnerships nationwide. Now, our Warrior community is finding success in any market cycle. So if you’re interested in finding out more about how you can become more of our incredible network and take advantage of the incredible opportunities that are coming very soon, apply to work with us at “MentorWithRod.com” or text “CRUSH” to ‘72345″ and we’ll set up a call so you can check us out and we can check you out. That’s “MentorWithRod.com” or text “CRUSH” to “72345”.