The Exchanges

Q I'd like to make some extra money. What's an idea that most people have not heard about?

A For homeowners looking to make extra money and, wait for it, tax-free in many cases, I have an idea teed up for you. You can rent your own home tax-free if you follow these guidelines. The rule is referred to as the fourteen-day rule. It's sectioned, two-eighty-A of the federal tax code. You can use your home with all the tax breaks associated with home ownership And you can rent it out free of federal taxes if you rent it for fewer than 15 days in a calendar year. The rental income is generally excluded from your federal income tax, but check with your tax advisor. I think you may not even have to report it. People call it the Augusta rule because homeowners in Augusta, Georgia for many years have rented their homes To masters golf fans and kept every single penny, but the rule works anywhere in America and works especially well where a town throws a big event, but doesn't have the hotel rooms for everyone. So for example, Coachella, the Kentucky Derby, the Superbowl, the F one race, which is coming up in Las Vegas. If you own a nice home near that track, you can clear out for race week. Rent something inexpensive in the desert nearby, and lease your house for some serious money, and generally owe the IRS nothing on it. Same house, same week, the difference is knowing the rule. Now let's get into the fine print, because this rule has a sharp cliff, and the cliff, the hard limi…

AI assessment note: “You can rent your own home tax-free if you follow these guidelines.”

Q Should I hold my rental and an LLC?

A I do get this one constantly, and people expect the attorney to say always, and the honest answer is, it depends. And here's my idea of the framework. What an LLC actually does, it separates the rental's liabilities from your personal assets. That's important, but it works only when it's set up right and run right. And that includes a separate bank account, Real records, and no commingling. If you treat it like your own bank account, you lose the separation. So for example, if the rent checks go into your own personal checking account, not the LLCs, if the repairs go on your personal credit card, these are the issues that if somebody sues, the lawyer holds them up and says, look, this person, this isn't a real company. This is what they call an alter ego. That's a legal term for treating it like yourself.

AI assessment note: “the honest answer is, it depends. And here's my idea of the framework.”

Q um, then, you know, we'll get more buyers. Uh, so then they spend money, they fix up the basement, um, that, that initially doesn't do everything they needed to do, and then the price comes down a 100,000 dollars. I don't know what your actual sales price, purchase price was, but that's likely a high percentage of the total acquisition cost. Do you mind telling me what was the price?

A Yeah, it was seven 25. They ended up acquiring it at Uh, with a buyer's credit of 20 K, uh, to fix the AC unit and some other things needed. So, um, yeah, it, and then What really changed the narrative for that property was then the money I reinvested into it. Like where short-term rentals are going today is it's less about the interior and more about the exterior. As people are generally going there as a destination, especially a five bedroom home like I invested in. So we added a pickleball court. We added a hot tub. We added playground for kids. Uh, and where we, given it was in a more rural area, like, it's 20 minutes to a grocery store, it's 20 minutes, or 15 minutes to a restaurant, people are going there as the destination, and if you make the home attractive of, oh, I could see myself spending a day at this home, I don't need to go out and do other things, um, and they're just imagining, oh, we're gonna do this with the kids, we're gonna do that, like, uh, and, It's really, that's what it's become. And so many of the reviews are like, I never left the property. I'm, uh, we had such a fun time entertaining. Like the kids never left the pickleball court the entire time. Like that's what you want to have a guest sort of envision when they're booking your property.

AI assessment note: “Yeah, it was seven 25. They ended up acquiring it at Uh, with a buyer's credit”

Q to the point where, um, I'm just guessing, like, you know, they have an algorithm, and if I run everything through Airbnb, you know, maybe I'll be higher on their algorithm. If I take Half of the listings off and put it in my pocket. Um, where, where, is there a balance there? Can you tell me, educate me about that? Cause I have an idea, but I don't know.

A Yeah, and the general rule of thumb is you don't want to be too dependent on any one channel. Uh, so I don't want, I'm more than 60% of my revenue coming through any one spot, because then I'm, I'm dependent on them, right? If I get a bad review and Airbnb delist me, like that's, I'm putting all my revenue, I'm up, I'm at risk. So whether it's, I'm distributing through Vrbo, booking.com, uh, creating your own direct booking website, and driving, and repeat bookings through that, and those are all great ways to diversify, uh, your revenue mix, and across channels, and so, and my property, it's still about 50% of revenue that comes through Airbnb, and, but it's, and 40% that's coming through Vrbo, and 10% that's direct, and I'd love a, I mean, I'd love it being, I mean, 25, 25, 25 in terms of distribution, uh, cause then, I mean, it also lets you to push rates higher, I mean, if you're getting more eyeballs through multiple channels, I mean, that's ultimately gonna allow you to charge more, uh, for any given night. Uh, yeah, so, I mean, my suggestion is diversification, uh, and if you're a destination that people come back Over and over and over again, too. So let's say you're in Palm Springs, and you get, I guess, driving from LA over and over again, and have a direct booking site, uh, make sure they know where they can book the next time they come, uh, and then that's gonna sav…

AI assessment note: “the general rule of thumb is you don't want to be too dependent”

Q Question one. The news says the economy just lost jobs. Should that scare me away from real estate, or does it actually help me as a buyer?

A So the straight answer to that is both a caution light for the economy, and as I mentioned before, it may take pressure off of rates. 23,000 jobs in July sounds good, but that was against an expected rate of 80,000 or more. May and June revised down a combined 103,000, and so the chain here is weaker jobs equals less inflation pressure, less reason for the Fed to raise rates, and The market repriced overnight. Here's sort of the odds changing dramatically. One week ago, there was more than 72% chance, according to the odds makers, of a September hike, and this morning, the odds are down to 60%, and that is 60% of a hold, so that's really a flip. So, More than 70% were expecting a rate hike. These job numbers come out. They're softer. So now 60% of the odds makers are saying hold, and that is a very big switch. So here's why this is important to an investor. Real estate really does run on jobs. Fewer paychecks equal fewer renters who can pay rent, and certainly fewer buyers who qualify. And those are important stats. Remember, rely on the data, not the headlines. Now, the other side of that is one month is just one month. Private employers are up 30,000. The losses mostly are government job losses and also seasonal job losses. So, Inflation still at 3.5% versus the Fed's two percent target, and height talk returns if August bounces. So this is really month to month stuff. Now, a…

AI assessment note: “the straight answer to that is both a caution light for the economy”

Q Question two. I found a seller whose mortgage is at three percent. Can I just take over their loan?

A Can you take over a seller's three percent mortgage? Sometimes yes. It's called an assumable mortgage, a loan that the lender allows a new buyer to take over at the original rate and terms. Why is a lender going to want to do that? So it would have had to have been baked into that loan originally, because with rates being so much higher, it's far better for the lender to retire that, that mortgage at three percent, and, and the next buyer's gonna have to come in and pay quite a bit more. So, but let's look at the roadmap for that. Most government-backed loans, those are FHA loans, VA loans, USDA loans, many of them Can be assumed by a buyer who qualifies, but most conventional loans cannot because they carry what's known as a due on sale clause, and that just means that the loan has to be paid off. That particular loan has to be paid off when the house gets sold. That's why when a buyer comes in, they need to bring their own financing. And here's the catch that kills a lot of these deals. You take over the loan balance Not the price. So if the house is 600,000 dollars and the seller owns 400,000 dollars at three percent, you still have to cover the seller's 200,000 dollars in equity in cash or with a second loan. So in other words, you've got this great assumable loan at a 400,000 dollar loan on a 600,000 dollar house. You pay 600,000 dollars to the house. If you're lucky enoug…

AI assessment note: “Can you take over a seller's three percent mortgage? Sometimes yes.”

Q Should I buy now or wait for rates to come down?

A Here is the most often searched question in real estate investing today. Should you buy now or wait for rates to drop? And here's my answer, but first the facts. Rates are at a one-year high, and after last week's Fed meeting, the market puts better odds on the next move being a hike than a cut. In one national survey, more than a third of lenders Said that their buyers are waiting for a 5.75 or lower interest rate. That's a lot of people betting their plans on a number that nobody controls, and it's one that I don't see coming in the very near future. So here's my actual view on this, and that is by when the asset, the price, the financing, your reserves, and your time horizon all work at today's rate. Don't buy because rates might rise. Don't wait because rates might fall. If the deal works today, rates falling later is a bonus. Refinancing may be an option, though it has costs and you have to qualify. And if the deal works only at some future lower rate, you don't have a rate problem. You have a deal problem and waiting won't fix it. One thing worth knowing about this exact moment, and that is pending sales. That is the properties going under contract just fell 5.4% nationally, but not, not every pocket. So you still have to look locally, but every region has been impacted by the number of homes that are going under contract. So buyers are standing aside, and that means less…

AI assessment note: “buy when the asset, the price, the financing, your reserves, and your time horizon all work”

Q Um, so, talk to me about the first, uh, you know, did you, okay, so did you have, did you have a paying job?

A I've never had a paying job. Never? I've never had a paying, I've never had a, A job that I'd have to create a resume for. Let's just say I've never had a resume, but I had jobs. You know, I shoveled snow growing up, golf caddy. Um, I always liked having some money in my pocket. My dad actually went bankrupt when I was, uh, 13 years old. Um, he was an entrepreneur, is an entrepreneur, and I saw kind of the disastrous effects of, you know, kind of not having money. He fell in some hard times, had some mental health issues. And so I got into this entrepreneurship not to create like a billion dollar business like we did at Buddy Media. Got into it just to have like freedom and the ability to kind of control my destiny. You wouldn't have started an internet business in 1994 if you really liked money. The only people who started internet businesses when I did back in the early nineties really hated money or didn't like money because there were only thirteen million people on the internet. There's no commercial internet. Netscape had barely launched. There was really no commercial browser. Yahoo was organizing the web with people. And at the same time as a journalism major, I just, it felt like it was going to be big. So I was early, not too early, but I was young, right? I was 19 when I started my first internet company at Northwestern where I went. And then once I started, I just n…

AI assessment note: “I've never had a resume, but I had jobs.”

Q Um, so, talk to me about the first, uh, you know, did you, okay, so did you have, did you have a paying job?

A I've never had a paying job. Never? I've never had a paying, I've never had a, A job that I'd have to create a resume for. Let's just say I've never had a resume, but I had jobs. You know, I shoveled snow growing up, golf caddy. Um, I always liked having some money in my pocket. My dad actually went bankrupt when I was, uh, 13 years old. Um, he was an entrepreneur, is an entrepreneur, and I saw kind of the disastrous effects of, you know, kind of not having money. He fell in some hard times, had some mental health issues. And so I got into this entrepreneurship not to create like a billion dollar business like we did at Buddy Media. Got into it just to have like freedom and the ability to kind of control my destiny. You wouldn't have started an internet business in 1994 if you really liked money. The only people who started internet businesses when I did back in the early nineties really hated money or didn't like money because there were only thirteen million people on the internet. There's no commercial internet. Netscape had barely launched. There was really no commercial browser. Yahoo was organizing the web with people. And at the same time as a journalism major, I just, it felt like it was going to be big. So I was early, not too early, but I was young, right? I was 19 when I started my first internet company at Northwestern where I went. And then once I started, I just n…

AI assessment note: “I've never had a paying job. Never? I've never had a paying”

Q Did that grit carry over? Were there other things that carried over into, into your next careers?

A Yeah. The, for me, the stuff that I just had in me that were refined through skateboarding, it was, I will go through a wall to get there. You know, something like failure that started becoming very natural for me. So that wasn't part of the equation any longer. Um, the skills that I learned from skateboarding that I then applied afterward was number one, Skateboarders look at the world very differently. And then two, because of how our world, the skate world is structured, we can't do a trick that's already been done at a certain spot. So, you know, for a, let's say Tiger Woods, right? If he's playing Augusta and hole one has been birdied, you can no longer birdie hole one. It's off the map. It's off the table. And that's how skateboarding is. So it makes us go to a spot and try to find a way to do a trick that's never been done before. And that actually changed the way I looked at life and business. What does everybody else see? And then what are they missing? And skateboarding taught me to focus on the thing they're missing. That's a very good thing to have in business. You have to be careful with it because being early on business actually can create a different type of challenge. And then I would say the second part was skateboarding breeds genius marketers because there's nothing really different about the product we're selling. Right? If you look at a actual skateboard, …

AI assessment note: “The skills that I learned from skateboarding that I then applied afterward was”

Q Yeah, no, yeah, right. So explain to me, um, you know, sometimes listeners will hear private equity and they'll think Wall Street or they'll think like the, you know, Apollo or some of the, you know, some of these massive private equity, uh, companies. So it just break it down for me. What, what, what's private equity mean? Where do you, where do you, where are you in that?

A Yeah, that's a really good one. So private equity traditionally Means that you are going to pool capital together and that capital is not going to come from the private markets. So it's not going to come from the stock market. And then usually traditional private equity invests in business, right? So what, for the listener, you're going to hear this one because it's trending everywhere. Private equity right now is doing a roll up strategy. That's the hottest strategy. And they go out and they buy service based businesses. They buy financial businesses. They buy marketing agencies. They package them up together. They try to find some efficiencies, right? They're cutting down expenses or increasing revenue. That's ultimately going to increase their EBITDA, then they're going to offload it. That's traditional private equity. In real estate, really what it means is that you're bringing investors together to go out and buy real estate. And you're doing that on the private side, not the public side. So for my business, we go out and find limited partners. So that's investors that want to own real estate. They want the benefits of real estate, appreciation, cashflow, depreciation loss, but they don't want to be active. They don't want to find the assets. They don't want to manage it. They don't want the phone call at night. And we Basically bring the two parties together and then when…

AI assessment note: “In real estate, really what it means is that you're bringing investors together”

Q Sure. Um, I, I, I had done a syndication, you know, um, and I, I view the difference between syndication and private equity is basically syndication is just a smaller version of it as opposed to Uh, private equity would be like a real estate fund. Is that?

A Yeah, you can, that's a totally fine way to look at it. Like if you're looking at my actual business, there's projects that we do as a syndication. So a syndication just means that you're creating an offering for a singular project. And then a fund means you're going to create an offering for multiple projects. That's really the only difference. There's some, uh, there's some more complexity into it, but That's the biggest difference. Private equity really is just a flow of your capital. Where's your capital coming from? And you can almost look at it as crowdfunding. You're crowdfunding one project, or you're crowdfunding multiple, and then there's different sizes, right? I would probably be viewed as a boutique company, and then you have the monsters. You have the big players.

AI assessment note: “that's a totally fine way to look at it”

Q I love it. I love it. What, um, what do you tell people who, uh, are getting in the game now? Um, you know, maybe they have a little bit of money, uh, maybe they have 50 grand, um, what's a, what's a good way to get started?

A Okay, so, this is what worked very well for me. I started with where I wanted to go. The end, the end game in mind. And when I first did this exercise, I was 23 years old and I was a skater, so factor that in. I wanted to make, at that point, a 180,000 dollars a year passively. Because I was like, that's a good life, I can have kids, I'm good. And so, I reversed it and went, what's a conservative yield I can get off that? And that could sustain during downturns. I picked five percent. Okay, I need about three million dollars invested. And then I just started putting money in those assets that would get me to that three million. In the beginning, the calculation is this. You need to grow your wealth. So even though we're talking about passive income coming in, if you pick passive income over growth, it's going to be a smaller return. So in the beginning, I was focused on growing the wealth, which was going to be, how do I double my money every three, four, five years? And then once it's at the number I need it to be, I'll switch over to income. That was my blueprint. And then once I knew where I wanted to go, I was like, okay, can I get, Nine and a half percent in the market. Cool. Money's gonna go there. Can I get 15% on this real estate deal? Money's gonna go there. And then as I became more sophisticated, it became a game of taking risk off the table while still maximizing up…

AI assessment note: “In the beginning, the calculation is this. You need to grow your wealth.”

Q they'll make a bunch of money. And I understand skate skating, you didn't make a bunch of money, but it was great money at the time. And they really, you know, sort of blow it all at the end. And it doesn't come out well for them in the end. How are you able to sidestep that mistake? And what's your advice for people, for people that are facing that?

A Yeah. I sidestepped it because my parents panicked when I told them I wasn't going to go to college and I was going to try to be a skater. And the thing that my parents pushed on me really heavily was go get help. Just go get somebody in your life that will help you do this financially. And that mixed with a fear, fear can be powerful, right? You can definitely use fear to get you forward. It can also You know, hold you back at the same rate. For me, I was so scared of what my life was going to look like after skateboarding that that fear created action to stick to the plan that somebody, you know, built the blueprint for me when I was young. And so what I was doing was wasn't making an astronomical amount of money, but I was living off almost nothing. I took the Dave Ramsey approach. I just reverse engineered it. And instead of living off nothing to pay off my debt, I was living off nothing to invest as much as I could. And that was very, very powerful for me. Now, talking specifically to athletes, here's what happens with athletes. Number one, pro athletes don't like thinking about the end. And when they have to think about the end, it's typically when they're on their way up or potentially at their peak. What usually happens as, as the wheels start falling off and your career ends, then you go into, okay, I got to figure this out. And unfortunately you just left yourself wit…

AI assessment note: “I sidestepped it because my parents panicked... go get help. Just go get somebody”

Q And we should have that interest where we're saying, Hey, listen, you know, don't you want a healthy patient population? Wouldn't you want to study some of these things at least, you know?

A So, yeah, so for example, to put that into, into, like, real terms, um, naltrexone, of course, at one point in time, so it passed the high bar of safety, and then it passed the bar of efficacy for, for treatment of, of addiction, and so, you know, I imagine they had a patent, uh, they don't have it anymore, so now the cost of the drug has gone down so dramatically, That it's the, these drugs that aren't on patents are, are cost pennies, and, and when it was approved at a hundred milligrams a day in terms of safety, You don't have to be able to do much math to realize that at four and a half milligrams, it's going to be extraordinary. It was extraordinarily safe at a hundred milligrams. So like, it's going to be safe at, at four and a half milligrams. But the problem is there's no, there's no, there's no money to test it for these other really very important causes.

AI assessment note: “the problem is there's no money to test it for these other really very important causes.”

Q Okay. Yeah. And then take me through post Post air DNA analysis. What are we doing next?

A Okay. So next thing is regulation, right? So you're going to identify the regulation in that area, um, and create a quick checklist. Like, do they have rec regulation? Yes or no. Does the property manager or the person, um, managing an asset need to live within a certain mile radius? It does a local host need to be within driving distance or some of these different elements, the different markets have that you should know. Um, that if it passes that vibe check, then you need to look at what is driving that individual market's demand. Okay. Is it seasonal? Is it, uh, for example, Vail, right? Colorado. Is it around a certain activity? Um, or is it geographical? Is it weather-based like San Diego and LA? Sure. Um, and so you have to identify What's creating the demand?

AI assessment note: “So next thing is regulation, right? So you're going to identify the regulation”

Q Location, uh, you find a similar building, and, and by that, Especially around where we live. One of the things you're doing is you're looking at what year it was built, right?

A Yeah. When, when I look at similar building, we have things here called like tuck under parking and we have, we have, you know, all sorts of different variables. So it usually does go back to about approximately year built, but then you, even within year built, you have flat roof versus pitch roof. Pitch roof obviously lasts a lot longer. So you look at all these, you take the buildings apart and then I pull the analysis Of my other buildings, and then that's when I can really spot where a building is operating inefficiently. And for instance, this one building, the plumbing expenses were historically running 20, 30,000 a year, which is ridiculous. Why would you spend 25,000 a year for plumbing repairs when the cost to re-pipe is a 123,000?

AI assessment note: “So it usually does go back to about approximately year built”

Q Okay. So I gave you an example, but we're talking about an example. You look at that deal. You can get that deal all day long and you're like, you know what? I'm that deal. I'm passing.

A Correct. So, so basically let's say if it's a 400,000 dollar home market value, right? I gotta buy it. For around two 52 42 60, somewhere around in that neighborhood. It needs a little bit of work. So it depends on the amount of work that it needs, but it's gotta be discounted. I mean, it doesn't take a rocket scientist to go and buy homes at full market value. You'll find them all day. Anybody could sell them to you and it's, you know, anybody could buy them, right? So you gotta find the right deal that have some Upside potential, because if it doesn't have the little bit of an upside, you're buying at a full market value. So what? What, what did you accomplish? Right? So there's gotta be some kind of a discount.

AI assessment note: “if it's a 400,000 dollar home market value... I gotta buy it. For around two 52”

Q What, uh, what were, uh, what was a mistake and how did you solve that mistake?

A So one of the, one of the things I mentioned was, you know, when I first got into, uh, when I first got into the short term rentals, uh, you know, I went to Joshua tree is very saturated. Um, I know the rules can change. Uh, it took me a while to find the right team. Um, it, it would have been, and in essence, without knowing it was the top of the market. It was the top of the market and I was still buying at the top of the market. The one thing I did that saved me really was that I stuck with my, with my, it has to be value add. So I remember seeing a house, I was buying houses at, you know, 400,000 dollars that required maybe 200 or 250,000 dollars of improvements taking me up to six 50. And then those houses at that time We're trading for about a million dollars. And then in a million dollars, they were trading for a million dollars because the massive amount of short term rental justified that. And I watched people go out and buy that same house. You know, I looked at the house and go, wow, this is what ours is going to be. Ours is going to be nicer. It's in a better location. Somebody just paid a 1,000,050 for that. Like we're, we're We're crushing this. And then, you know, the rules changed a little bit, the market changed a lot, and the person that bought that house for a 1,000,050 lost their shirt. Now, I didn't lose my shirt because I bought for 400, put two 50 into it…

AI assessment note: “I was still buying at the top of the market. The one thing I did that saved me”

Q No, my, no, my question is, is there a proportional strategy to investor own money? Like, do you want to maintain a certain amount of, uh, Skin in the game. Skin in the game. Uh, and what does that provide you?

A Well, first of all, uh, savvy investors, um, will not invest in a deal unless the principles have, uh, Really a rule of thumb is 10% of their own money. That's what I'm asking. Yeah. So let's just go like a very basic deal, and let's say we're not going to over leverage, which I wouldn't want to over leverage, cost two million dollars to purchase a deal, and we're going to put a million dollars down, and we're going to get a million dollars in financing. That should be pretty easy to do, especially on a performing asset. Ok, great. The principal being me, or my group of principals, should put in a minimum of 10% of that equity. So if it needs a million dollars cash, we should really only be raising 900,000 dollars in cash. And we should be putting a 100,000 of our own money in, which gets treated the same as the investor money. And that way, they know that you have skin in the game. Because really smart investors, um, and wealthy people that have made money in other industries, One of the first things they ask me when I talk to them about a piece of property is they're like, okay, hey, sounds great. So how much skin do you have in the game? And if it's a million dollars, if I'm raising 900,000, I go, well, I have a 100,000 of my own, which is never the case, by the way. I tend to have a lot more than that in. So, you know, if I need a million dollars cash, I'll probably have 40…

AI assessment note: “Really a rule of thumb is 10% of their own money.”

Q I, I'm, I'm interested in investing. I'm too busy to manage my own, uh, Airbnbs. You know, just assume I'm going to pay 20 to 30% of gross income, uh, to, uh, to a management company. Is there still a market where that makes sense, and I can still get a great rate of return, or is that, does that, does that price me out of the market by definition?

A Uh, It's going to price you out of a lot of markets. So if I'm in a market, you're looking on some of the good ones, you might be able to get a, I'm 20% or 30% gross margin. Like if you then have to, uh, and pay that for your fee, that's essentially taking away your margin. So, and if you're, and a lot of investors are looking for tax benefit by investing in short-term rentals, you're still going to get that. A lot of investors are still looking at the appreciation component. They're still going to get that. So. If you're looking forward to cashflow and hiring a professional manager, I might sort of reduce that, uh, but you're still gonna get maybe some of the other benefits of investing in short-term rentals. And then there are markets where, I mean, margins are gonna be higher. You still might be able to operate it. And we've seen that hiring a professional manager can generate higher returns than managing yourself. You're gonna have a full-time revenue manager. You're gonna have someone that is generating direct bookings. Uh, not having to pay the fees to Airbnb and Vrbo, uh, for those bookings. Uh, so, I mean, a lot of times the right professional manager is going to actually earn you more revenue than you would have done by yourself, uh, and they can still, uh, maybe get you a return. So, um, it's definitely good to interview a few. Um, we at AirDNA highlight the best ones…

AI assessment note: “It's going to price you out of a lot of markets.”

Q a third, a third, and a third would be ideal for you because you'd be picking up a third of the revenue without paying, uh, without paying the fee for it, but then you'd have diversification between, Uh, still Vrbo and Airbnb. Does, is it going to hurt you? Let's say I get, get it to 60, 20, 20. Um, is, is that gonna hurt me on the Airbnb algorithm?

A So what's going to hurt you on the algorithm is lack of availability. So if just all your nights are booked through other channels, like, yeah, that's going to hurt you. Um, but I'm, but you're booked. Uh, so, um, and, and then the other thing that's going to hurt you is if you don't have a lot of reviews. So if you're getting going and, and you don't, and my suggestion is, is you, you do lower your prices at the beginning, you get five, 10 reviews. On Airbnb, Vrbo, um, that's going, and with the algorithm, if you're getting booked, you're getting reviews, they're positive reviews, you're gonna keep, I mean, staying up at the top of the algorithm, and that's gonna have a snowball effect for your property. Uh, if you don't have any trust built on that platform, that's gonna be hard for you to show up top, uh, on that platform. So that's where maybe it makes sense, uh, I mean, if you don't have any reviews on Vrbo that you make some investment in that platform, okay, I'm going to lower my rate a bit on Vrbo. I'm going to try to drive bookings. I'm going to try to get, um, volume on that platform. And then once I've got five to 10 reviews, then I can start pushing my rates again. Um, and it won't hurt me as much. Uh, so it does take, I'm focusing on each platform on, on building your review history. Uh, and to get going and then, um, making sure that you have availability across p…

AI assessment note: “what's going to hurt you on the algorithm is lack of availability.”

Q What was, just out of curiosity, what was, uh, what were some of the pieces of the blueprint that the billionaire taught you about?

A Yeah. That's great. Um, he asked me, or he would, he was to test me. He died. One of the three things to say, PPP, predict, plan, persevere. He said, you're going to predict a market. So right now he's dealing in a lot of nuclear and alternative cancer care. He says, Claire, are more people or less people getting cancer? I said, obviously more people are getting cancer. He said, okay, so there's your prediction. Plan. Make a plan. It's so simple, right? Make a plan for how can you solve this problem? The world's billionaires, they're all solving problems, right? Anyone who's extremely affluent has solved a problem of some sort, right? And persevere. He says, it's going to get hard. It's going to be, you're going to have ups and downs, you know, the ocean, the tide, it comes in and out. It's just like that. He says, but you have to keep persevering, especially if you believe in that project. So that was my number one thing I took from him. There were lots of little gems.

AI assessment note: “One of the three things to say, PPP, predict, plan, persevere.”

Q of money, I'm going to really impact cancer and heart disease, but really it's in a preventative way as opposed to, ok, You know, we found a new chemotherapy, which is, which is less toxic, therefore more effective. Everybody wants that. We want, you know, even if we don't have this cancer, we want that for everyone. But I think, don't we really want to avoid it to begin with?

A Absolutely. So the best way to treat a disease is to avoid having it in the first place. And we know enough now that there are strategies where we can prevent many diseases if we You know, it requires some work on the part of the patient, you know, because you need to sort of make certain changes and you know, this need to be knowledgeable in what you put in your body, how you exercise, um, certain supplements, all these things can play a huge role. Um, the unfortunate thing is there is no money. So the, the pharmaceutical industry is not interested in this model and interestingly, even the medical, medical education. So we are heavily influenced by the pharma industry, of course, and the model has been so far you present with some illness and then we figure out what it is and then we, Give you a strategy on how to treat it. Right. And that of course, you know, uh, is the most lucrative in terms of, uh, the pharmaceuticals we need and the surgical interventions and all that, you know, but that's of course not in your interest. Your interest would be, Hey, how can I, even if I have, especially when I have family history, take steps to prevent getting the disease in the first place. And I think that's, and that's also why I'm, what I'm very interested in, but you're absolutely right. There's, there's hurdles. There are, um, treatments that are sort of fighting to recognize, I men…

AI assessment note: “Absolutely. So the best way to treat a disease is to avoid having it”

Q the case may be, you made your own decision there. You're in charge, you're in charge there. I think that's one thing. Uh, and I think that's attractive to a lot of people to being able to Manage their own money in a way, right? And be directly connected to the outcome of how much money they make, which you probably don't really have it in the stock market, really.

A You know, again, I'm, you know, I'm, I'm a little behind the news cycle. Okay. But to your point, um, you know, Elon Musk offered, uh, the CEO of Apple, uh, a deal to, to do a deal with Starlink so that, that there'd be satellite You know, satellite coverage on, on iPhones and, and CEO of Apple decided to go another route. And I think because of that, you know, iPhone didn't jump further ahead of everybody with like real satellite coverage. Now I don't know the ins or outs of that deal. And maybe Tim Cook was doing exactly the right thing. I have no judgment on it because I don't know enough about it, but that is what I think you're talking about in the sense that now this CEO, Over whom you have zero control, because no matter how much money we have, it's never going to put any kind of a dent in a vote on anything. And that CEO makes a decision, like, do we go Starlink or not Starlink? It makes a big difference. Now, when you own your own property, you're like, well, you know, do I put in the, the granite countertops or do I put in the marble countertops? And then I'm going to ask my, my professional and my professional to say, well, you know what, the cost of marble versus granite in this particular neighborhood, you're, you're, you're, you're not going to get the ROI. So that's, that's go ahead and we'll go with granite. They're, they're just the things we can, the things we…

AI assessment note: “that CEO, Over whom you have zero control... Now, when you own your own property”

Q Sure. What do you see as, uh, as an opportunity for, uh, do you see an opportunity for, for buyers right now?

A Definitely. Deals that were bought in 20 to 20, 20, 20, 22, they were over leveraged. Those are the opportunity because people are in distress situations now and that it's kind of like a feeding frenzy. If you have cash and you can close quickly and make get them out of their pain that they're in, whether their loans have matured or that they're just have a distressed property, bad tenants, anything like that, that they just can't take The city of Los Angeles anymore is another reason I hear quite a bit. Um, people are getting out and moving out of state with their equity. Um, I think in those, in those instances, the local buyers who have cash can really, you know, jump in and get great deals right now. Great deals. I mean, most of the guys that are doing deals, I'm hearing it's the cash on cash return must be in the sevens.

AI assessment note: “Definitely. Deals that were bought in 20 to 20, 20, 20, 22, they were over leveraged.”

Q I'll bet, I might, I'm not gonna assume, I'll ask the question, but I would want something that, that I love, and then I would say, okay, Jimmy, I love this artist, I saw them, or I love this piece, you know. Is it valuable? What's a good price? Where can we get it? I would want your knowledge way before access in that instance. Am I wrong there or?

A No, that's a, that's a great question. The analogy of the car dealership is actually perfect because if you go to a gallery, prominent gallery, um, that is representing a specific artist and you've gone to an opening or just walked into the gallery without the opening and You see this artist that they're representing, and you love it, and everything's sold out already, and you ask them, well, I'd love one of these artworks. Well, okay, well, we'll take your name, and next show, or next availability, um, or you can try to seek it elsewhere, right? Which is what you kind of alluded to. So now, call up Jimmy Basile, and tell him about this artist that you saw, and like, and what are, what are the thoughts? So the first thing is, if I know about the artist, Hopefully I do. I think I do. Um, I'll try to pull up some analytics and kind of know where it's at with value. Uh, and then I'll source it through my network or if I already know exactly where to get it. And I'll give you an example in a second. Um, And then we can have a conversation about this artwork that you, that you like at the gallery was 20,000. I think I can get it for maybe 30,000 for you. And I think it's worth 30,000 easily. And I think it's a good deal. You should, because for me, it's a little different than some other, um, let's call it the Ferrari dealership or buying a ten million dollar mega house. Uh, how oft…

AI assessment note: “I'll try to pull up some analytics and kind of know where it's at with value.”

Q chosen to rent. I'm going to, I'm going to assume that there's sort of an opportunity cost of, of, of their capital, that they choose to buy properties that they, quite frankly, would be great investment properties, but they don't want to live in them perhaps. So like, how, how do you reconcile that? Are there ever times, I guess, where it makes sense to rent as opposed to buy?

A I actually owned probably about 20 units before I owned my own house. And one, there are a couple of reasons for that. One is that the real estate I invested in was in Pittsburgh, which is where I'm originally from. It's a market. I knew I feel strongly and believe in, in, in buying where, you know, and then I moved around quite a bit, but I was living in Washington, DC, which was much more expensive than Pittsburgh. So I owned 20 rental units, 20 or so rental units, and I was renting in, in Washington, DC. And there was really two reasons for that. And one was that I viewed at the time housing was so expensive in Washington DC, um, that I felt like I couldn't afford it really. Um, and also, um, I, I felt like I was transient. So I, I do think that home ownership is, uh, it's, it's never a risk in the longterm. But it can be a risk in the short term. So if you know, I have a client, uh, that has, that has plenty of money, um, and they're renting, and one of the, and, and I sort of advise them in a way, um, you know, maybe keep renting because the client asked me, you know, if I buy this house, you know, where's it gonna be in three years from now? Because I, I think I might want to live somewhere else in three years from now. And I don't have a good answer for that because the market was very hot at the time. And I'm like, hmm, three years from now, you know, you're going to co…

AI assessment note: “I actually owned probably about 20 units before I owned my own house.”

Q I love it. You had a, uh, you had a great, uh, experience, great exit with, uh, with St. Archer, which is the brewing company. Tell me, tell me how you, how you got into that, and how did that wind up great, and what did you learn from it?

A Okay, so I ended up being a part of building a very successful business that had a phenomenal outcome. We ended up selling the business, and That was in big part due to my father-in-law, because I was dating his daughter at the time, and I wanted to marry her. So, I asked if he would have lunch with me, and I was gonna ask his blessing to, you know, marry his daughter. And when I asked him, I was not prepared for the reaction I was gonna get, which was an onslaught of questions. Great, what are you gonna do after skateboarding? Uh, I don't know, maybe start a business. Okay, what type of business? Uh, I don't know. What makes you think you'd even be good at business? Uh, I don't know. Just hit me, hit me, hit me. To the point where I was like, is he gonna say no?

AI assessment note: “That was in big part due to my father-in-law, because I was dating his daughter”

Q the shelf and what are the amenities that are making these other places go that's not mine. And, you know, and then also sort of deciding that rather than doubling down on what you have, try, let me just keep trying to make what I have even better. Let me look out there and see What's that house that really has the, the, the qualities that I can, uh, develop?

A Right. And I mean, you can't, I mean, and the yard, I mean, yeah. And for me, it was just like the, the, the architectural significance. Classic Post and Beam was in 1955. I believe that the construction was started in 55, ended in 56. Um, my education during that time with the first house was learning Palm Springs. I, I was making friends. I was being invited to dinner parties. So I was getting into like mid-century Um, homes and other neighborhoods and starting to realize like the, the thing to get into is something that's like a true classic Palm Springs mid-century. Cause otherwise I could go to another desert city, which were certainly at the time, even better deals. Right.

AI assessment note: “for me, it was just like the, the, the architectural significance.”