Next Level Wealth-Building Through Overseas Development and Opportunity Zones with Russell Gray and Robert Helms

Brandon:                   All right, Robert and Russ welcome to the BiggerPockets Podcast. Good to have you guys here.

Robert:                      So great to be here. Oh my goodness.

Russell:                      Really good to be here. Thanks Brandon.

Brandon:                   Yeah, so I was just telling these guys before we started recording like this show is what I’ve been looking forward to for like the last five and a half, six years. Because this is like … I don’t know if you guys knew this, but like we started the BiggerPockets Podcast because I was obsessed with podcasts, but I was only obsessed with one podcast, and that was your podcast. Like I listened to so many hours. Like my wife and I would just listen to probably hundreds of hours and I learned a lot about real estate by listening to you guys. This is like a fan girl right here going this is going to be great.

Brandon:                   But I actually, I don’t know a lot because you guys are like very, very, like very informational on your show and you teach a lot of really good stuff, but I don’t know a lot about you. You guys don’t talk a whole ton about your past and your stories, so today’s the fun … At least that, you know, back when I listened, so today we’re going to dig into that I guess. And we’ll just start early on I guess, whoever wants to go first. How did you get into real estate? Walk us through that beginning journey into your first deal.

Robert:                      All right, well maybe I’ll start since I’m more of a real estate guy as you’ll learn in a minute. Russ is a great financial strategist and idea guy, and really looks at numbers a lot. Obviously numbers matter in real estate. I was kind of born into a real estate family. My dad was a real estate broker, but before that he was a real estate investor. Bought his first property in 1957, and I just got around it and I wasn’t sure I was going to be in real estate, but pretty quickly he made it clear that I should get a license and the very first commission check I ever got I bought a duplex.

Robert:                      I lived in half, and then rented out the other half, and my initial plan was I was going to buy a house every couple of years and just keep a trail of houses behind me. Never sell, just buy. And then that’s how I would collect real estate. And then a great mentor of mine said, “Well, Robert. Why would you keep a house as a rental if you didn’t specifically buy as a rental?” You might be able to instead buy something more strategically, and that led to a whole nother thing, but I just got the bug early on and realized that real estate was such a great vehicle for so many reasons that you guys always talk about.

Brandon:                   That’s awesome. Where was that duplex at?

Robert:                      That was in San Jose, California. So I was born in the bay area. We started our show in the bay area, 22 years ago. Today Russ and I, neither one of us lives in California. We don’t even live in the same state. But through the power of technology, we still do our show every week. I was a California investor for a long time. And then I had a big change, a big epiphany that might be interesting. I was at a real estate event and I was talking to a guy and at the time we had the same number of units. Same number of doors, and I said, “Well, that’s interesting,” except none of his units were in California even though we lived in California.

Robert:                      And 100% of my portfolio was in California. So I thought, “Wow, we’ve got something to talk about here.” And he said, “well, being in California, tenant landlord law’s not good. Prices are expensive.” I said, “Well, why would you be anywhere else? Appreciation is great and it’s beautiful.” And so we had a long conversation and it really, you know, jarred me to start thinking about other places to invest, and so today I always say live where you want to live, invest where the numbers make sense. If you want to live in a place that’s beautiful and it doesn’t make sense really from a real estate perspective, well that’s okay. You can invest anywhere.

Brandon:                   Yeah. And I definitely want to dig in that today, because I think that’s a topic … You know, David here wrote a book called Long Distance Real Estate Investing on the same thing. Like you don’t have to live, because David also lives in California now and he invests out of the area. And now I just moved to Hawaii and I now invest on the main land, but live here in Hawaii. Yeah, definitely doable and I definitely want to make that a good chunk of today’s show, because you guys seem to be really good at that. But before we get there, Russ, so what about you? Where did you … How did you get into this game?

Russell:                      So I’m the opposite of Robert. I did not grow up in a real estate investing family. I grew up in an entrepreneurial family. My dad was a high tech entrepreneur in Silicon Valley and like a lot of folks do in his 30s, and I was already a teenager by then, he was at that spot in life where a lot of people get where they’re on this treadmill in the corporate cubicle. And he’s looking at the world and he’s thinking I need to find a way to get free, and he took an interest in real estate. So at 17 years old I went down and took a real estate principles and practices class at the local community college, and I think when I was 18 or 19 yeas old I bought my first home. At 24 years old, got my first rental property, and I really had no idea what I was doing. I didn’t have any real mentor, but I was just out there just kind of poking around, making a mess and trying to figure things out.

Russell:                      I made a bunch of money early. I blew it all. I have a pattern of doing that. I make a bunch of money and then I blow it all. So that … I realized I needed more than that, so then I really took an interest in understanding what was underneath real estate and what made real estate kind of tick, and I was a lot more of an entrepreneur than I was a real estate guy. And the other thing was I was hyper analytical, and the problem with that is you analyze yourself right into not doing anything.

Russell:                      So one of the things I’ve learned in life to do is remind myself of people who are prone to action. Robert Helms is one of those guys, and so I started a mortgage company at the end of the 1990s and went out looking for a way to market that company and I decided I wanted to specialize next week working with real estate investors, because I came out of corporate sales. I liked corporate better. I liked dealing with professional better than dealing with consumers, and so then I met Robert and then kind of that’s where it all took off from there. And really most of the real estate investing I did happened after I met Robert, as a result of the things we were doing together, a lot more than what I’d been doing on my own.

Brandon:                   Okay, so it sounds like Robert is the people guy. He’s the networker, he gets up there. He’s the magnet that pulls people to you. And then Russ, you’re probably like the filter, that looks at everything and is like, “All right, let’s pick out for everything that we just got brought to us what our best opportunity’s going to be?

Russell:                      Kind of. It’s actually gotten a little bit different. I mean we’re old guys and we’ve been around a long time.

Brandon:                   You don’t look that old.

Russell:                      Well, trust me. So after the 2008 deal, because prior to 2008 we were just out there multiple markets, multiple property types. We had so much stuff going on. We were in real estate. We had the radio show, we had the TV show, we wrote the book. We had the mentoring program and the seminar business. We got involved in real estate development, because that was really Robert’s passion. But he had come out of C Class Apartments, so we were doing C Class Apartments. We were doing ground up development. We were buying brand new high rise condos in multiple markets.

Russell:                      I mean we just were doing everything, and everything we touched turned to gold. I mean it was great right up until about 2008. And then everything fell apart, and then so at the end of 2008, Robert and I sat down and kind of looked at each other and thought, “Okay, you know, we’ve been at this a while. We know how to make money. We know how to invest. This is no longer about making money,” even though we needed to make money because we’d lost quite a bit. “What do we really want to do?”

Russell:                      And that kind of that Jim Collins Good to Great hedgehog concept. What is it you love to do? What do you have a chance to be best in class at? And what can you monetize? And we gravitated towards real estate development in very niche market, and Robert can talk a little bit about that. And decided to hone in on syndication as a way to get there, because it meant that we didn’t have to wait for our own resources. We didn’t have to wait to recover. We could just go big right away, and that’s what we ended up doing.

Brandon:                   Okay, so you guys went from … You just got started with a couple small deals. How quickly did you scale up to start doing all these huge variety of things? Was it years and years you spent on a small step or did you just get out of that as quick as possible?

Robert:                      Well, for me it was longer. I definitely was acquiring real estate. I kind of view myself as a collector of real estate, so I was doing that in California. Again, throughout California, but lots of different marketplaces and a few different product types, but almost all residential income property. Commercial property here and there, mixed use property, but no development of any kind. And I think for me the scale up happened when I was making a lot of money, and I was approached by a guy who was doing the development project and it’s a long story not worth telling, but it turned out to be a really great opportunity for me to put just $50,000 possibly into a commercial development.

Robert:                      And I wasn’t just interested in making a return. I wanted to learn. So I would hang out with these guys and I’d sit in the conference rooms, and they would allow me and I’d [inaudible 00:09:35] over their shoulder and then I got the bug to start developing and they really held my hand. They had an arrangement where they would raise capital, and they would do a project, and they’d return the equity in 18 – 24 months, because it was new construction and it seemed every time I invested with them they’d beat the timeline and they’d beat the return, which is pretty cool. So I started to say, “Hey, can I bring in friends?” We started referring people and there was no money exchanged for that. It was just, “Hey, they’re doing a great job.”

Robert:                      And the principal sat down with me and said, “You know, you raised more than half the money on our last deal. We’ve got a deal in mind that we think you could be the developer on and we’ll just ride shotgun.” And I said, “Well, I’m not a real estate developer.” And they said, “Well, it’s not that hard. Why don’t you sit in this chair and we’ll sit in this chair?” And sure enough we did that and it was amazing.

Robert:                      So that’s when, for me, it scaled up. I mean, we’d already gotten the bigger units. You know, we went from four plexes and duplexes up to you know, the 20, 30, 40 unit buildings. We had over 100 unit buildings. But then development kind of got our attention and it was still in, when times were good before the crash, and yet development in many ways is a little resilient depending on what you’re building and where. And it just became a whole different type of real estate. I think for me that’s what we saw the scale in. But I think to Russ’s point we got enamored of a lot of different things. And we tried a whole bunch of different things. And sometimes you have to do that to figure out where your heart lies.

Brandon:                   All right, so very true. A lot of people come to real estate, listening to this show right now, and they’re very new and they’re not sure what to do. They haven’t found out is development right of me or is you know, should I go buy that duplex and what we call house hacking. Live in one half and rent the other one out. Or should I jump right into flipping houses or you know … Do you guys have any recommendations if you’re brand new to real estate, how do you determine what that best thing for you is? Because there’s so much out there.

Russell:                      Yes, I’m going to jump in on that one. Robert does this excellent whole presentation called Personal Investment Philosophy to help people understand that. And to me, because you’re playing with real money and real credit, and your time, and especially if you decide to raise money I think it’s really really important to get around a lot of people that are doing a lot of different things. So we’re big fans of networking, getting together in live meetings, doing meetups, becoming active in clubs, talking to lots of investors, going on field trips, getting out in the real world and seeing what there is and then just kind of seeing what interests you.

Russell:                      Once you find something that interests you, then try to find a way to play passively if you can, or at least small until you can get the lay of the land and really know that the people you’re dealing with are good people, that they’re competent people, that they’re committed to you. And then when you have a little bit of success then you can talk about scaling up real fast. So to me, the secret isn’t about how much you learn, because you’re going to learn. But you can’t learn it all.

Russell:                      I think one of the challenges and Kiyosaki talks about this all the time when he talks about the A student mentality, and we saw this a lot in our program when we were together in Silicon Valley. We had a lot of engineers come in, and these guys are A students, and they’re used to knowing everything. And if you’re selling real estate education you can make a mint on these guys, because they want to know everything. They want to know how to do appraisal, they want to know how to do inspections. They want to know how to do contract law. They’re trying to be the tax guy. They’re trying to do everything, and you can sell them 40 years of education before they’ll ever do anything. I think that’s a huge mistake.

Russell:                      I think really there’s only a few things you have to be good at which you master those. It’s really about building a team and knowing how to ask, be conversational, in a way, in whatever the subject matter is. And then learning how to ask good questions and make good decisions when you get the answers. Once you master that, then you can begin to go pretty fast. It’s a lot more about people than it is about knowing. And you learn by doing.

David:                        That is such a good point. And you know, Russell, I’ve never had anyone tie the fact that people think that they need to learn every single thing about real estate that there is to the vulnerability that like gurus can go after them and take advantage of them, because they’re saying, “Hey, if you don’t know it all, you can lose your money. So come pay $50,000 and we’ll teach you everything.” That’s exactly right, because the people that actually do this at a high level, they rarely ever are masters of more than one or two parts. Like they partner with other people that are good. They know, “I’m not a numbers guy,” or “I’m not a people guy,” or “I’m not an operation guy, I’m an idea guy.” Oh, I just love that you mentioned that, because it’s not that you … It’s not that ignorance is okay. Somebody has to know, it just doesn’t have to be you, and if you wait until you know it all, you’ll probably die before you ever actually take any action.

Russell:                      That’s true.

David:                        In this business. Can you tell us how you guys … Did you know that right off the bat? Did you learn that along the way? Was there something that clicked that made it make sense for you?

Russell:                      Yeah. I think, for me, you know, I’m just very aware of my own weaknesses and it’s easy because there’s so many of them. But the thing that I was really good at, I think, was going and getting what I needed. So I recognize, because my dad was an entrepreneur and the essence of being an entrepreneur is to just go get what you don’t have. And so my dad didn’t get a college degree, yet he started a high tech company. He wasn’t an engineer, yet he found a way to create brand new products that were high tech. I never even understood what he did. It was just fascinating to me. But what he was was an organizer. He was the guy that would go out and he would get the money. He would write the plan. He would recruit the talent. He would set the vision. And then he would lead the team, and more often than not it wasn’t him answering questions. It was him asking questions and a lot of it was, “What do I need that I don’t have and how can I go get it?”

Russell:                      And so I learned that. I mean I learned that early on. And I couldn’t be bothered to go to college. I lasted for one quarter. I wanted to play football. I played one quarter of football, and I had a wife, and kids, and a recession came and I had responsibilities. So I quit doing that and I just went into sales, because it was a short path to making money. And then I began to stabilize my income and look for other things to do. I realized that in order to change I needed to get into a different industry, and the first time I tried to know everything there was to know and I failed badly. The second time I realized I didn’t have to know that much. What I needed to do was meet the right people. And it was on that journey about looking for the right people that I met Robert. And Robert was the right person.

Russell:                      Robert brought connections. He brought, he had a cache of reputation. He already had The Real Estate Guys Radio Show. This was probably three years old at the time. And so he had a seminar company going, and so there was a good foundation that we could work together on. I found a way to add value to the relationship. I brought the mortgage side, and I had a business model for teaching and mentoring. And we adapted that to him and his talent, and then pretty soon it just took off. So you know, the where it clicks for you is when to me, in anything that you’re going to learn, when it clicks is when you see somebody else doing something and you learn how to take what they’re doing successfully, that principle of success and apply it to your own situation. And I saw what my dad did in terms of being a true entrepreneur and I thought okay, I can apply that even though I’m not high tech. I can find a way to apply that to what I want to do.

Brandon:                   That’s fantastic. You said something in there I want to point out. Because this is something I’ve had coaches over the years tell me this over, and over, and over is that … You know, business coaches. It’s not about how, it’s about who, and I love that you said your dad would say like, “What do I need to do and who do I need to get to do that?” Like you know like, it’s not always like how do I learn, how to do this particular thing. It’s who can I find that already knows that, who’s already a rockstar at that? Pull them into our world and get that done. I just want to point that out, that’s fantastic.

Robert:                      Yeah, that’s bold right there. In fact, David my answer’s just a little bit different than Russ’s, and I wasn’t as strategic about thinking through that and observing. I was the guy that just wanted to do it all until I realized that I wasn’t really good at a lot of stuff. And I would try to take on too much, and I would try to figure it out. And then I’d find someone who could do it better, faster, cheaper, and go, “Wow.” That seems like a much better solution. And so there are a few … a handful of things that you will be masterful at and set your life up so that those are the things you do. And the stuff that you don’t like to do or you’re not good at, that has to be done, find somebody else whose joy and gift is in doing those things. That is the key to success.

Brandon:                   Yeah, yeah. That’s so true. Do you guys have assistants, real estate assistants or people that work? I’m wondering if so, when did that come into your life? When did you hire somebody to … your first like assistant in your life?

Robert:                      Yeah, I think we have a lot to say about this, because we grew a big company with a lot of people, and decided that wasn’t the way to go. I’ll let Russ tell that story. [inaudible 00:18:39] early on that in real estate transactions you need somebody watching the bottom. Most real estate sales people are good with people, and networking, and selling, and not necessarily paperwork. So you see that in real estate industry. I sold real estate for 18 years, and my business really exploded when my dad and I who worked together in real estate sales got our first assistant at the urging of a mentor who told us the first thing you should do is hire an assistant. Which is a hard mindset when you’re like, “Well, I barely make enough money to survive. How can I afford to pay somebody else?” Well when would you expect that to change?

Robert:                      That’s the whole concept of anything you were doing that somebody else can do that you should delegate. And learning to delegate it. Having the right hand person, ironically one of the great assistants we hired, I think our third or fourth assistant in our real estate practice was Russ’s daughter. We met Russ and his daughter Stephanie at a seminar, and at the end of the seminar, it was a thing we did called Jump Start Your Real Estate Business, teaching to real estate agents how to be rookie of the year, basically. You know, collapsing timeframes, stuff that took us 20 years to learn, let’s teach you in a shorter period of time. And we hired Stephanie at 17 years old, and that’s really how relationships started. And that brought Russ into the picture to help us systematize even more and it’s one of the arts, hiring, and delegating, and getting help is difficult at best. So spend some time doing that. You can’t really scale up very well without some help.

Brandon:                   Yeah. That is so true. It is something that for years I struggled with that, about bringing in an assistant and then finally I did, and it helped but I probably brought in the wrong assistant. When I did it, I just hired somebody that was available, rather than somebody who was good necessarily … and hopefully she’s not listening to this. And so I struggled for a year. And today I have a fantastic assistant, even he’s moving beyond assistant role. He’s just like running my life, and company, and everything. But yeah, huge difference in my life. And I have the same mental thing. It’s like I can’t afford this person. At least I don’t want to afford this person, but I needed that person and anyway, it made a huge impact in my life.

Brandon:                   So those listening to this show, maybe that’s what you need in your life. If you need to be more organized, someone to take all, to keep your eye on the ball and all that stuff while you go and generate leads, or you’re generating, analyzing deals or whatever you’re looking for could be a really good option there. [crosstalk 00:20:58]. Can you –

Russell:                      There’s a bigger lesson to that too, Brandon, and that is that’s a core skillset that you have to have. You have to have, you have to know … you have to have the ability. First of all, you have to have the mindset that you’re not spending money, it’s an investment. I mean when we go to buy a piece of property we don’t look at the money we’re putting out as an expense. We look at it as an investment. We expect it to make us money. When you have an expense in business, it’s exactly the same thing. When you have an expense in business, you expect it to make you money. You shouldn’t be making the investment if you don’t have a direct path. If you don’t have a plan for it to make money. So you have to develop the skillset of knowing how to make money on other people’s efforts.

Russell:                      Fortunately, it’s not that complicated, because you just keep a time diary and you figure out all of the things that you’re doing and how much money you make at each of those tasks and it becomes pretty apparent, pretty fast, that you’re doing a lot of things that don’t make very much money that are easily replaced so that you can then invest more of your time on the things that give you the highest return on your time. And if you do it right, eventually you can build the businesses completely run by other people and all you do is own it, which makes it a lot like a professionally manged property where you don’t have a lot to do, you just collect passive income. Businesses can be the same as apartment building in that regard.

Brandon:                   Yeah, it’s something I never thought a lot about, but businesses are a lot like owning rental properties if you do them right. You can build it the same way. You can get the cash fulfillment. Yeah, very good point. [crosstalk 00:22:23].

Russell:                      But the essence of business investing is harnessing the efforts of others. That’s it. Once you learn how to make profit on other people’s efforts and you master that these other … they’re just vehicles. I mean an apartment building is just a way to get 125 people to get up every day and go to work for somebody else, and pay you 20, 25, 30% of their income. You don’t have to train them, you don’t have to supervise them. You know, you don’t have [crosstalk 00:22:49].

David:                        I love that.

Russell:                      Somebody else does it. If I start a business and I’ve got a bunch of work to do then I just bring people in to do it at less than I charged to do that work and I make a split. And so when you understand what’s the essence of what you’re building to create passive income, to create a portfolio, to build a business, whatever it is, then you just concentrate your efforts on mastering that one component. I wish somebody would have told me that in my 20s, because I didn’t figure that out until I was in my 50s. Until I really understood that concept. I had the same mental block that hiring people was an expense and that I was diminishing my bottom line. But can you imagine investing in real estate I think that attitude? I mean, I can’t make down payment. I’ve got to save my money.

Brandon:                   Yeah. It wouldn’t make any sense.

David:                        It’s something, Brandon and I get asked a lot, I bet you guys get the same question, like how do I find a mentor? Will you mentor me? They basically want someone to teach them the entire business without having to learn on their own. And I like the point you just made, Russ, that you want an ROI on the money you’re paying an employee just like you would on an investment. Are you investing in the right person or is that person a bad investment? And I would say to flip that around, if you’re the person looking for a mentor, is if somebody decided to take you on and teach you, or hire you and pay, give you time, give you education, give you money, are you a good investment. Would you make that person more money because they invested in you than they would make if they didn’t have you? And I don’t think many people look at it that way. They don’t understand that as an employee your job is to be the best investment possible, because what do we do with our best investments? We put more money into them.

David:                        That thing’s performing amazing, let me go rehab it. Let me put more energy into this. Let me build off of it. You do the same thing with your best employees. That person is doing so well for me, can I give them more opportunity and more responsibility? And I feel like in 2019 that’s one of the big things just kind of missing from the world is we’ve had what? Has it been like 11 years of just straight an improving market and it’s gotten kind of easy to make money, and people don’t understand it’s not always like that. Which might be a good segue into what happened in 2008 when a lot of people lost money in real estate. Can you guys talk just about what the mindset was at the time and what it was like when it shifted? What you learned from it so we don’t make those mistakes again? Stuff like that?

Robert:                      Oh my gosh, we will have to collapse the timeframes here a little, because that’s a long story. We, I will say, are much better prepared for a change today than we were back then having gone through it. It was pretty rocking there, right? 2003, 4, 5. Russ talked about everything we touched seemed to work and made us think we were smart. And now we’re pretty clear that wasn’t the case. All right? The market was good, and any real estate investor can make money when the market’s good. It’s hard not to.

Robert:                      The key is being able to make money in any kind of a market, and that does take this perspective of time. So one of the things we did is we’re big lovers of leverage, so we found lots of ways to get lots of property with not a lot of money down. And that’s actually not a bad strategy, because if you have too much exposure to a property in terms of say about a 50% net loan to value, now if there’s a challenge in the markets or in the economy you’ve got some equity someone can target. So it’s not a bad idea.

Robert:                      It’s just we got ahead of ourselves, and I think we weren’t looking at the signs of when is the market going to change and so forth. And so the mindset shifted pretty quickly when it all fell apart, and I think instantly people thought well, real estate’s a bad investment, because look at what happened. And of course, that wasn’t the case. It was the right real estate, the right market, the right situation, and boy we learned a lot. I know Russ has some things to say about that.

Russell:                      Right, yeah. I mean, the first thing you learn is you learn that you’re not smart. And you’re actually, the smartest people I know are humble. They ask a lot of questions, they look for people who have expertise. And so I’ll just speak for myself, but I took a lot of pride in being the smartest guy in the room, and I learned real quickly that that was so stupid. So that was one part of it, because we had people who were warning us. People that had been investing longer than us. They told us these things come in cycles.

Russell:                      The guy that mentored me in my mortgage business told me when the credit markets seized it’s just like somebody just takes a spigot and just turns it off. It stops instantly. It’s just like a power failure. It’s not, doesn’t just dim down. It just shuts off. And yet if I would have taken two minutes and really looked over our entire business I would have recognized we were 100% dependent on credit markets, healthy credit markets, and not studying the credit markets. Not understanding what drove them or wheat threatened them. I couldn’t even recognize the warning signs when they were there.

Russell:                      And so when they seized up, exactly what he said would happen happened. All of the sudden you couldn’t get your projects funded. You know, I had a mortgage company. I couldn’t get any loans funded. We were running everything on credit lines. We didn’t have any cash. We were fully deployed because cash, having cash in the bank was a waste of money. So we said, “Well, we’ve got all the liquidity we need with credit.” When those credit lines got shut off, not because we weren’t paying, not because we were a credit risk, just because everybody was reducing their exposure. And if you were around back then you may remember some of that happening. Then all of the sudden we were illiquid. We were upside down, and we couldn’t generate revenue.

Russell:                      That’s a bad combination, and so we learned that … You know, in fact it’s really interesting because Robert always does the interviews, especially all the major interviews, but we had this one circumstance back in January of 2015 where we ended up in Iowa, of all places, to go to a farm investing conference where Donald Trump, pre-president, pre-presidential candidate, Donald Trump was the keynote speaker and they ended up having a press room and we ended up in the press room.

Russell:                      But Robert had to get on a plane to go to Belize. So I ended up being stuck in the press room and I got an opportunity to ask Donald Trump just one question, and I asked him. I said, “Well, Mr. Trump, you’ve had great times and you’ve had down times, and what did you learn in the good times and what did you learn in the bad times? And if you end up running for president and winning how would that help you?” He didn’t answer the last question, because he wasn’t ready to announce yet, but he said, “Yeah, I didn’t learn anything in the good times. In the down times, learned it’s always good to have some cash, to be liquid.” And that’s the voice of experience right there.

Russell:                      So I think being liquid, real liquidity, not credit liquidity, being liquid, having some cash on hand is probably really important, and of course having good solid positive cash flows which was something else. We were running negative cash flow on portfolio, and negative cash flow on the business, and you put those in a blender and it looked good, but when the business failed because it was largely mortgage driven, at least on my side of the business, the cash flow stooped and then the properties were under water and I couldn’t get out and it was just disastrous. That was the big lesson.

David:                        Do you think that having a good amount of money flowing through the businesses gave you this false sense of security about the criteria of the investments you were making?

Russell:                      Yeah. Oh absolutely. I mean, when you’re making six figures a month and you only need, you know, 10 or 15 to live on, you can have a lot of negative cash flow. And my attitude was, “Hey, if I can own five, 10, 20 million dollars in real estate and it’s going up 5% a year.” You do the math on that, the negative cash flow versus the equity growth, it was great. The problem is equity is phantom. I’ve learned that capital gains unrealized aren’t really real. And stock market investors just find this out all of the time. But you know, you look at the real estate market, but real estate has never gone down or never substantially gone down or if it does go down it’s back in 10 years. Yeah, but you got to survive those 10 years. So cash flow is the thing that really makes you stay.

Russell:                      At the same time, we were developing a friendship with Kiyosaki and Kenny McElroy, and we watched Kenny operate through that crisis and he had a very different approach. And while everybody else was selling, everybody else was strapped, everybody else was under water. Everybody else was losing, Kenny was out there acquiring $300 million in real estate and he was very much focused on value adding cash flow. We learned a lot in watching all of that. And then of course we started hanging around with Peter Schiff and that’s a whole different discussion, but we learned a lot from him too.

Brandon:                   So, let’s a talk ait about what happened then after 2007. So pre-2008, it sounds like you guys are doing a lot of different things, including development at that time. And then what happened after? What did you shift to and then can you bring us up to where you are today and how did that journey go from ’08 now to here we are in 2019? What do you [crosstalk 00:31:59]. Yeah, where did you get to then?

Robert:                      [inaudible 00:32:01] and I think every investor has an evolution. There are some people who are doing what they did 20 years ago, but I mean for most people we’re always talking about this idea of personal investment philosophy, which is getting in touch with who you are as a real estate investor and why real estate is interesting to you. What’s the why? And if you get that figured out then the vehicle can change over time. You try something for a while, markets change over time. With real estate it’s hard to pop in and pop out, because of the sales cost involved. So we say you get married to a market when you pick a real estate market plan to be there for a while, but you can definitely shift and I know we shifted a lot. I started in C Class apartments, which are management intensive, and you better keep your eye on the ball, but a lot of money can be made. But it just takes a lot of effort and we really shifted our focus.

Robert:                      When we went through the crash and said, “Okay, starting over.” And we didn’t get completely annihilated, but we definitely got punched in the stomach pretty well. It’s like well, okay, knowing what we know what would we do differently, and the first thing we did is we started to get around people that saw it coming. Because we didn’t see it coming. I mean, there were a lot of people smarter than us who didn’t see it coming, but we certainly didn’t see it coming. But the people that … There were, there were not as many as claimed that they did, but there were people who were [inaudible 00:33:19] like Russ talked about, so we started to get around them and we made a big shift in kind of our show even.

Robert:                      We were all about real estate, we went to real estate events. We got asked to speak at real estate events, we were at live events. It was the real estate events. Then we shifted to go to a lot more economic events, events that were broader picture, events that talked about the financial system, and trying to understand the federal reserve and the way money works, and all of that, because that was the key to really understanding every market, not just the real estate market. And then a big part of it was deciding what were we going to do with our time? I think this is critical.

Robert:                      If you’re brand new in real estate investing, or you’re been doing it awhile, and you feel like maybe you’re bumping your head against the wall a little bit. Those people that say, “Well, if it’s not broke don’t fix it, and there’s people that say it’s not broke we’re going to break it.” Break out to something new, try something different. Without giving up what you have. And so we discovered that there were a lot of things we enjoyed doing better than managing tenants, and managers, and dealing with all the stuff surrounding C Class and so we made a conscious decision to be more in the development business and more in the higher end property business and land development and things like that.

Robert:                      And it was great. The biggest shift from a structure point of view was real estate syndication, where we still invest in our own portfolios and most of what we do today is investing in other people. Which gives just a lot of exposure to different folks, and different markets, and different types of products and you can accomplish a ton and it’s a bit of diversification as well. You know, generally diversification can be a recipe for mediocrity. You know, think of stock investors with like 20 stocks. Okay, two are going to do well, and two are going to tank, and the rest are going to do okay and at the end of the day not much happens. But in real estate you can get so much more specific and based on those skills that you have, and the relationship that you have, you can outperform as you guys know. So I think us just getting in touch with our inner investors and deciding what do we want to be when we grow up.

Russell:                      I remember the day. I mean, I remember sitting in the conference room of our building which, you know, was now vacant. It was like a morgue and we were sitting there, and we got out the white board, and we listed all the things that we had to work with, you know, just a typical strategy session. It’s like okay, what do we want to do? What do we have to work with? And we took that Venn Diagram from good to great, and started talking about that and we said, “Well, okay, let’s keep the radio show. Let’s keep the radio show going and let’s really focus on growing the radio show and developing it more into a business,” because up until then it had been something that was kind of a little bit off to the side. It wasn’t center mass. And so we did that, and we liked the seminar business, and teaching, and so we said let’s keep that and marry that to The Real Estate Guys Radio Show, which we did.

Russell:                      And then the other part was we had the development company, and Robert really loves development, said, “Well, you know, let’s take a look at that.” I decided to get out of the mortgage business, but I wanted to stay in capital and I saw that the capital markets were broken. The flow of money from savers to main street was broken, and it was very difficult to get loans back then. So I thought okay, the flip side of every problem is an opportunity. There’s going to be a big opportunity in private capital. Well first thing Robert and I have had that experience of raising many millions of dollars. We said we can teach people how to do this. And so if we teach people how to do this we can help kind of heal the market, we can create opportunity for ourselves, we can fund our development projects without debt, just using equity, and now we can continue to go. We can actually go bigger faster than we could before when we were just investing with our own resources.

Russell:                      So that’s what we ended up doing and then when it came down to really what we wanted to do it’s like okay, well we have to focus on markets that actually … demographics of people that actually have money. So we not only shifted to the financial conferences because we were interested in the subject matter, we wanted to understand the bigger picture of what was happening, in the bond market in particular and the symbiotic relationship between debt, the cost of debt, and real estate, but also because that was the demographic that had more accredited investors, more affluent people, more [inaudible 00:37:26] investors that would be the kind of people we would want to know and develop relationships with for syndication.

Russell:                      So we ended up doing that, and so that shifted what we were doing with our annual investor summit at sea. And the types of people we were bringing in for the first 10 years, it was pretty much Robert and me, and our team. And we were the gurus and we taught. Since then, it’s been pretty much we’re the hosts, and the emcees, and we put it together and then we run around and we just bring people that are a heck of a lot smarter than us, investors that are really, really successful, and we learn from them and they learn from each other. And so in looking at where could we invest and drive rents from the affluent, and marry that to what we like to do, we deiced to hone in on resort property investing. And so we have this really, really narrow niche that we do personally that we don’t talk about a bunch on the show because we don’t like the show to be about what we do. We’re really interested in just helping people do what they want to do and kind of discover their inner investor and then facilitate that.

Russell:                      But for us, that’s what we ended up doing, and when I say we I use that term very loosely, because it’s primarily Robert and our other partner in the development business that do all the work, at least as far as I’m concerned. You know, I spend my time just kind of organizing the business side of The Real Estate Guys, and keeping that rolling. But it’s fun. It’s fun, because it’s a fun place to visit, it’s a great demographic. It’s a super sexy story. I’m not qualified to tell it. Robert can if you’re interested, but it kind of took everything that we liked to do and put it all together in a ball and we’ve been able to focus on it. It’s been great.

Brandon:                   Yeah, I want to dig in on the … Yeah, I really want to dig on the resort investing thing, because that’s fascinating. I do want to pull out one piece of information … or thing you said that I thought was just so smart. Is you guys sat down and said, “Where do we want to get to? Where do we see ourself in the future?” So many newbies don’t do that. They’re just like I’m going to go buy real estate, because that’s what I heard was cool, that’s what’s going to make me rich.

Brandon:                   You guys are like, here’s where we want to be and here’s what we want to do or we don’t want to do. Okay, we think, even down to … What I love is like even down to like hey, we’re going to do this summit at sea. I want to change the type of people we bring in to make sure that we’re surrounding ourselves with the type of people that we want to get to know. I mean, how many people really go that deep in their thinking. It’s not very common. I don’t know, I love that. I just want to pull that out of there. You guys are just so like driven on what you want and how you want to get there. I think that’s awesome.

Russell:                      Yes, Stephen Covey says, “Always begin with the end in mind,” and so you have to think about that. A lot of people do the two step. I think the biggest mistake I see investors make in their careers is they do what I call the two step. And that is they say, “Okay, I’m going to go do whatever I can do to make as much money as I can, and then once I make this much money then I can live how I want to live.” And I just, you get to a point in life where you go you know, life is too short to live that way and so many people die just trying to finish phase one they never get to phase two. And they die and they never fulfilled their dream. So to me it’s more about being a business modeler, an entrepreneur strategist, and saying, “Okay, how do I want to live and what do I need to build that will pay me to live that way?”

Russell:                      And whether it’s a business, whether it’s a portfolio and so you know, you may say, “Hey, I can make a bunch of money doing whatever,” but if you hate doing whatever. Robert and I had a chance, we got called in by a friend of ours that was a real estate agent in Las Vegas, and she called us in and she said, “Look, I’ve got this client and he’s got,” I don’t know, “150, 200 condos that he’s aggregated into this giant apartment complex. He rents at this apartment complex. He wants to sell.” And so we went in, and you know, good sales technique is seller motivation. So we’re interviewing him and we’re sitting there in his office, and his office is flea ridden and fleas are climbing on my leg, biting my leg, and I’m like this is awful.

Russell:                      And this guy’s explaining to us his situation. He works 16 hours a day, seven days a week. He clears over a million dollars a year, and he hates every single day of his life. Hates it, and he wants to get out of it. Meanwhile, his wife comes in and she’s all dollied up and she’s out shopping … Remember this, Robert? Remember this guy?

Robert:                      Yeah.

Russell:                      And Robert says to him. He goes, “You know, we have people in our program right now that would give their eye teeth to be you.” And that’s when for me the light bulb went off, and I thought, “You know what? Money is not the answer.” If you could live … if you owned nothing, but you had no money, but you stayed in four and five star resorts, you traveled, you ate well, you had a roof over your head, you got to do what you wanted, you were healthy, aren’t you rich? I mean, what’s the definition? So to me, when you think about what you’re really doing with your life force in the precious amount of time that you have on this planet, if you can figure out exactly how you want to live and what you want to do, and design a business and a portfolio that will pay you to live that way, you’re rich and you’re retired. And it doesn’t matter how much money you have or don’t have because you’re living the life.

Russell:                      And that’s what Robert and I figured out how to do. People ask me what do I do. I go, “I’m semi retired.” I mean, because everybody gets up every day and, you know, does what they need to do. I get up every day and do what I need to do, but I get to do what I want to do when I want to do it, with who I want to do it. I have plenty and I always want more, but you know, I’m very, very happy in my life and I think that a lot of people do the two step and think I’m going to go do something I hate. I’m going to hold my nose and then I’m going to make a bunch of money and then I can buy the life I want. I think that’s the biggest mistake any entrepreneur can make.

Brandon:                   Yeah, that’s deep. [crosstalk 00:43:06].

David:                        Can you guys share a little bit about how you built your portfolios and then what your portfolios consist of now?

Robert:                      I would say, you know, at first real estate was part-time, like it is for many people. And many people it stays that way. If all you did was buy a nice little rental property every three, four, five years and just stay at it you can develop a nice income stream and then that will appreciate perhaps over time, right? So early on we were just collecting properties, finding great markets, collecting properties. And it really comes down to just personal investment philosophy idea, but for me I never buy a property I can’t see having in my family for the next 100 yeas. That’s just a screen I use.

Robert:                      Don’t flip properties. I did it once, made bunch of money. That was fine. Learned that, that’s great. Just flipping properties is a great job. It’s not investing. Investing is where you put the money out and it comes back with friends, and it continues. Legacy. And then I think the development business that was also a way to collect properties, because several times he would do a small development and keep a building and that was a way to pick up profit, if you will, in real estate. But the whole act of turning dirt into dollars is very, very different than just passively accumulating income. So we continued to build that up and then when you’re in the development business that all really is more of a business than it is an investment.

Robert:                      So to make sure we were investors we would hang on to property, we would develop some things for our own portfolio, but we’ve always had a heart to bring people along. And you’ve got to be careful about this. For some people partnerships aren’t healthy, and many of life’s problems do come with hair on top. So you have to enter partnerships lightly, but I will say that almost everything I do in my business life I do with a partner. I just think that power of 11 that Napoleon Hill talks about, you know, when two people get together it’s not just the sum. It’s greater than the sum, because of the synergy, and because of the ideas that will foster between two people, make that three people, it gets even better. But at the same time, like there’s … It’s personally figuring out for you what makes sense.

Robert:                      So today a lot of what we do is investing in bigger projects with partners. Sometimes we’re the syndicator if you will, we’re the master partner, and sometimes we’re not. My favorite thing to do today is to invest alongside other people that are doing great stuff. It’s a form of leverage. [inaudible 00:45:36] will say, “Well, if you invest in a syndication there’s no leverage.” Well I think it’s exactly the opposite. It’s the ultimate leverage.

Robert:                      You’re leveraging somebody else’s experience, and time, and relationships, and market knowledge, and you get to glean from that if you choose to and make the financial return. So you know, I think it is smart to have a niche of some type, something. For me it was small residential properties. Typically four, six, eight units. You know, there’s that financial difference between one to four units and five and above, but sometimes that niche is difficult because it doesn’t have as many economies of scales in the bigger stuff. So it’s been an evolution for us. Today we’re kind of all over the world. In fact we talked about that earlier. This live where you want to live, invest where the numbers make sense. We’ll ask an audience of people, “Who thinks it’s risky to invest outside of the U.S.?” And there’s hands that go up, and you say, “Well, who thinks it’s risky to have all your investment capital tied to one nation’s economy and currency?” And then a whole nother set of hands comes up.

Robert:                      So it’s not right or wrong. You can become wealthy and successful and never leave your country. But to us it’s a big world out there, and there are so many places to invest, and the harder you search the better there will be opportunity if you choose to. So a lot of what we do today is outside the United States. It’s not just outside United States. It’s not that we don’t like U.S. property. It’s that there’s just different opportunity and there is some diversity and there also is … Part of the thinking is what happens when, not if, but when there’s a downturn or if U.S. dollar continues its climb downward like it has for 100 years. You know, trying to be on both offense and defense at the same time.

Russell:                      I think there’s one interesting thing in there that … We talk about the lessons learned in 2008. We couldn’t tell the difference between a bubble market and a resilient market, and what we realized was that the markets that really shot up and then crashed hard were the ones were there was a lot of leverage. And Texas was a market that did not crash hard, and it was not because it had some economic bones that were rooted in energy, and that was part of it. But part of it was because they had some restrictions on how much cash out you could take, and so their lending restrictions created less leverage in those markets and so kind of extrapolating on that we went in and said, “Well, gee what about if you could invest in markets where there’s no leverage at all yet?” And of course that’s hard to find in the United States, and one of the things that drove us off shore was finding markets that don’t have leverage yet with the idea that at some point in time they probably will. And I’d rather be in before that happens then afterwards.

Russell:                      And of course then once you study any market the big question is what’s the appropriate product type or demographic that you want to serve in that particular marketplace? And for us because we want to just spend time in exotic locations, and we found a place that had the right supply and demand dynamic. The question was what’s the right product and it ended up being resort property. So to come full circle, that’s how we ended up kind of in that resort property niche, and then the indication was the secret to getting it done and then there’s a little, yes, probably secret sauce factor that’s in it that we won’t talk about that makes it a real interesting investment for us in terms of passive income. So anyway, so that’s where we primarily focused our attention for these last eight or nine years, I think it’s been.

Brandon:                   So where. Say you’re outside the U.S. Can you guys give us some examples of locations that you’ve invested or that you are currently invested? And do you have lots of resorts or there’s like a massive huge thing that you’re working towards?

Robert:                      Yeah, great question. So we started out, first other country that I invested in was in Mexico. And in Mexico, anywhere … As soon as you cross a state line, laws are different, practices are different.So there’s a level of education you need. I don’t need to go pay $50,000 to learn it, but you do need to understand there’s mortgage dates, and deed and trust dates, for example. As soon as you go to another country, well now the very basis of law can change as it does in Mexico. Mexico’s based on Napoleonic Civil Law. That’s different than what we’re used to in the U.S. and then Canada and places like that. And so in the zones we were in, coastal property areas in Mexico, you don’t actually own the land. You own a bank trust. Something called a [inaudible 00:50:14], so that takes a while to get your mind around. Like I don’t have the simple title. Well, isn’t that scary? Well, it can be, so the learning curve there.

Robert:                      But Mexico’s the first place we went and we bought some property passively there and then we developed two projects in Mexico, which was great experience. Today I don’t know that I have interest in doing any more in Mexico. It is the opposite of a tax haven. Very political, very difficult to get things done, in my opinion, but it was a great learning experience. And how do you operate in a completely different country with a different language? So that was tough. We invest a little bit in the Dominican Republic. It’s in the news a lot today, the Dominican Republic, but today just passively interested in that market.

Robert:                      My next market was Australia. Australia was interesting for a lot of reasons. They almost speak English. It’s a long way away, but we had an opportunity to invest with a huge company with a giant track record owned by a big conglomerative that is publicly traded and so there was some security and stability in that. It was new construction in a great area. That turned out to be great. Again, lessons about team and who’s behind any project and most of these were just onesies and twosies and then after we made the strategic decision that Mexico probably wasn’t our long term development home we went on a two year search, and we wanted to find another country. And I think a preface to this is what really set me off in this direction was when Las Vegas, Nevada went up 52.6% median home price in one year we knew something as wrong. We didn’t know what it was, and we made a ton of money doing it, but it’s like wow, this can’t sustain.

Robert:                      Today we’re probably better educated about those things, but at the time there was just something tugging at me. And I had been attracted to Cabo San Lucas, and that was the first part of Mexico that we went into and that turned out to be pretty good for us because again, leverage down there. So unleveraged properties don’t get into trouble when the mortgage market explodes. And then we sat down and said, okay let’s find another market. Mexico had a lot of great things to offer but also a lot of negatives, and we were on this two year quest. We went to every country in Central America, most of the Caribbean. We wanted to stay closer to home. My investing in Australia taught me that I want to be within a few time zones of where I live. Just easier to conduct business. You’re active. You’re passive, not as important, but if you’re active. And if we’re going to go there we want it to be a place we enjoy going, so we ended up in the country of Belize. And Belize had a ton going for it.

Robert:                      It’s the only English speaking country in Latin America, so everyone speaks English. The law is in English. The contracts are in English. It’s postcard beautiful. Where we are is like a Corona commercial. The water’s 82 degrees, palm trees and white sand. I’m about to make my 137th trip to Belize, and never once I look at my calendar and say, “Oh man, I’ve got to go to Belize next week.” It’s always great. I take my family there. We vacation there every year. It’s extraordinary. Now, that wouldn’t be enough. There would also be a real estate opportunity there. And so to answer your question specifically, Brandon, the largest project is in Ambergis Caye, Belize and it’s the single largest hotel by room count in the country. Now it didn’t start that way, that sounds all impressive, but we really just started to try to come next to the great operators in the country and provide what was needed. There was real demand for quality hotel rooms that wasn’t being met.

Robert:                      And again, financial construction is difficult there. You can’t really get a construction loan very easily, and that’s actually a good thing. Means that you don’t see too many broken projects, but it is hard to get off the ground. And so it’s been such an amazing learning opportunity. Seems like it’s always two steps forward, one step back. But it’s extraordinary and we got a bunch of great folks behind us and it’s humbling to go there now and walk around and so wow, we built this thing.

Brandon:                   Yeah that’s super cool. You say you don’t have a construction loan. Does that mean you’re financing the entire syndication basically via … I mean just all raising money for 100% of it? You’re not using bank financing at all?

Robert:                      Yeah, pretty much that’s what it means, and that’s a heavy life, right. So first of all, first money in is our money. So we’re at risk and we’re all in, and then rather than go to … We, you know, have some good connections. We thought about, “Hey, we’ll just go grab a bunch of money for this thing,” and instead we wanted to empower people to go out and raise money themselves. So we created kind of an environment where people can syndicate three of four rooms inside of a Hilton Hotel. Well, that’s a hard thing to do. How do you rent four rooms at Hilton? Well, you don’t. That’s not something that’s typically available, but we figured out a way that both could do that and raise the money to do it, and so we only did one syndication ourselves just to build the model homes and from then on we found folks that want to come in and syndicate.

Robert:                      You know when you syndicate every day you wake up with two problems. You’ve got to find a deal and you’ve got to find money. And our premise was imagine this scenario where you didn’t have to worry about where the next deal was going to come from because you just bought another lot and have another four, five, or three hotel rooms and folks can just continue to raise capital in a market they understood and in a market they were talking to their investors about. So that’s how we did it, through an army of syndicators and it’s been quite a journey.

Brandon:                   That’s cool.

David:                        So there’s something I want to make sure that I understand right. One of the things you guys mentioned was you’re investing in countries that don’t have financial leverage, which meaning like it’s hard to get loans to buy real estate. And if I’m understanding you correctly what you’re saying is that if you go buy real estate when it’s not easy to get a loan, when that funding does come, when their government does like what ours does where they support Fannie Mae, Freddie Mac type loans now people can afford to spend a lot more to buy that same leverage because they can borrow money at a cheap rate which makes the value of it go up a lot. Is that the basic premise?

Russell:                      That’s exactly what happens. I mean look at what happened to housing when Fannie and Freddie were created. They basically introduced subsidized debt into the system, and the purpose was to make housing more affordable, but it made it more expensive. Look at what happened to college education. They instituted student loans. The idea was to make college more affordable. It actually made it more expensive. Same thing happens anywhere debt gets introduced, because you hold purchasing power from the future into the present and then people can take, for example, a six percent 30 year fully amortized loan, $300 a month means I can pay $50,000 more today for that property. Well, if you’re the owner, the seller of that property, that person’s $300 a month is $50,000 cash to you right now based on their ability to bid up based on cash flow.

Russell:                      And so until that shows up there’s no debt service in the marketplace, so the cash flows are very solid, and once it does show up typically it begins to push the rents a little bit too. In this case it’s overnight rentals, because you have to build in the cost to debt service so you end up pushing the higher end of the market. But the point is is that it pushes up the pricing, and so you’re always looking for those kind of opportunities to get in early. But that’s exactly how it works. When you bring purchasing power from the future into the present and it doesn’t just have to be that country.

Russell:                      I’m not holding my breath for how long it’s going to take for Belize to figure out to bring financing, but what we experienced in Mexico was that at the height of 2006, 2007, U.S. lenders had made every loan they possibly could make in the United States. Part of the reason we had the crash is because now I understand this. I didn’t understand it back then, is we have an economic system that requires perpetual exponential growth of debt. And when you have lent to all the good borrowers you have no choice but to lower your standards and lend to the marginal borrowers.

Russell:                      When you’ve done that, then you’ve got to go look for new markets. It’s like any company for anybody who’s trying to grow, you’ve got to get out on the margin. The problem is is when you’re doing that in debt markets that markets can collapse. Anyway, so they were moving into Mexico. Now of course the crash came, and then all of the lending went away. But we’re back at that phase. So at some point down the road, as long as this expansion of global debt continues, global lenders are going to be looking for premium properties to loan.

Russell:                      And so for us they’re not going to be living on single family homes in the country of Belize. It’s a third world country. It’s very poor but primo resort properties on a tiny little island with no capacity to expand where you’ve got a big brand name development, big developer, great product. We think, now we don’t know, we’ll find out, but we think that at some point that’s going to make great collateral and either private or institutional lending is going to come along and want a piece of it. When that happens the folks that get in before all that happens are probably going to ride an equity wave, because that’s typically what happens. I can’t say that’s going to happen, but it wouldn’t surprise me.

David:                        Well for anyone who doubts that, all you have to do is look at what happened in 2001 through 2007/8. That’s what drove prices to go so high was the lending standards were lowered and opened up and money flooded in there. And people would pay whatever they had to for a house if someone would give them the money. The money’s there, they’re going to take it. They’re going to pay more. It was great if you owned a property like what you were saying. Your values went up. People kept buying it and then it’s not sustainable. You also mentioned that, and then crashing, but that principle is absolutely proven through that time period when you say why was housing so expensive? It was literally because banks would give you the money. That’s why houses became so expensive.

Russell:                      Well I call that the air in the jump pass. You know, when they’ve got the pump on, and they’re pumping a lot of money into the economy, they’ve got a lot of air in the jump pass and everybody’s jumping around and having a good time. When somebody trips over the cord and the air stops, the thing deflates, all of the sudden it’s not a [crosstalk 01:00:47].

David:                        You’re going to, yeah, head to the concrete underneath it it doesn’t feel so good anymore.

Russell:                      Exactly.

Brandon:                   So I want to ask you guys a question about, I’m sure you’re asked this all of time, but you talk to a lot of investors. You guys are looking at the world market, but also you’re still in America so you’re looking at the U.S. Market. Where are we? Like what inning are we in before a crash comes again? Is it going to be a big one do you think? I mean obviously none of us have crystal balls, but what are you seeing in the U.S. economy right now and what are you doing to prepare for it?

Russell:                      Such a great question. And you’re right, everybody asks that question. I was on a panel two days ago and that was the question they wanted to know. We had Dr. Doug Duncan, you know, Senior Vice President of Fannie Mae and their Chief Economist on our summit boat for two years in a row, and one of the things he said last year was, “You know, these cycles don’t die from old age. There’s something that happened that creates the change,” and so yeah, we’re long in the tooth, but at the same time our federal reserve has done an amazing job of kicking the can down the road. That’s not necessarily a compliment, but I think we’re late. I think we’re near the top of the cycle.

Russell:                      There’s all kinds of reasons to think we’re there. I don’t think that we all ought to be pulling out every dollar and sticking it in the mattress quite yet, but I think you need to be proactive. You need to be thinking about when the next downturn comes. How could you be best prepared? Because I know that in 2008 we were ill prepared, and in 2019 we are much better prepared.

Brandon:                   [crosstalk 01:02:20].

Russell:                      Yeah, I.

Brandon:                   Go ahead.

Russell:                      Well, I was just going to say this is, you know, I spent a lot of time studying this, because it’s fascinating to me. Coming from the money side and understanding that this is all financial market and economic driven. It is hard to say, because I think anybody who’s an observer recognizes that the central banks around the world have been passing the baton around the globe, taking turns devaluing the currency, and pumping up debt and pumping liquidity into the global financial system. How long can that go on? I don’t know. But you know, the point is you have to be prepared to weather the storm and I think real estate is arguably the best investment to do that. I could do a whole dissertation on that, but I won’t. But I do agree with Robert and I think it’s the general consensus that we’re closer to a top than we are to a bottom and so now’s the time to be thinking about hedging equity.

Russell:                      It’s a good time to be getting liquid. It’s a good time to be locking in long term debt on properties that you expect to be keeping long term, and just being prepared. You might miss a little bit more of the upside, but you’ll more than make up for that by being liquid when the time comes, when there’s blood in the streets. And I used to really resist the idea of like a vulture fund or the idea of capitalizing on other people’s misfortune, but the reality is having been the blood that was in the street. You know, somebody could have come along and bailed me out by buying a property out and mitigating some of my loss. They’re actually helping me and I would be okay with that. I didn’t realize that back then.

Russell:                      The other thing is is we talked about this a lot on the show, because the show’s been going on since forever. And so we went through that whole 2008 thing and we talked about healing America one house at a time. And so when somebody comes in and buys a house, investors are like the white corpuscles in the economic system, and they run around and they clean up all the garbage and they get rid of the bad debt, they get rid of the bad properties, and they put things back in service.

Russell:                      So there’s going to be lot of those kind of opportunities. So again, it’s just a matter of being prepared so that it doesn’t really matter which way things break. You’ve got a plan. If you’re only geared for one, for sunshine, and even though the forecast is sunshine it doesn’t cost you that much to pack an umbrella. And I really think that from a financial perspective, everybody should be taking a look at their portfolio, looking at their exposure to rising interest rates. Not saying their gonna rise. Right now they’re currently going down, but they could.

Russell:                      And then how liquid are they really and what are they exposed to? And then really tightening up the properties that they have, making sure that they’re really operating optimally. That you’ve got competitive rents that you’re not at the top of the market. I think right now would be a dangerous time to be top of the market in a product niche in a market that’s at the high end of the market.

Russell:                      In other words, when things can track, you’ve got to have somebody above you to bring some pressure to where you are. So the good news is real estate’s not an asset class. Because it’s not an asset class, whatever goes on in the macro really doesn’t matter. It only matters what goes on in the micro, but if you’re in a market where people who are living in a more expensive area when downtimes comes will move to you then you actually will get some upward pressure when everybody else is feeling downward pressure. So I think market section is real important. Product niche and the demographic you’re servicing is very important. Price point is very important. How your portfolio, your balance sheet is structured in term of liquidity. That’s very important. Making sure that you don’t have exposure to the potential for rising interest rates, even though you might pay a little bit more for that right now. I think it’s good insurance, so there’s things that you can be doing in a market like this without completely disengaging.

David:                        Have you guys seen those companies that are literally giving you the down payment for your house in exchange for a share of the equity in the property?

Russell:                      No, I haven’t seen that.

David:                        It’s like a Silicon Valley tech, start up type thing, but they say, “Hey, we’ll give you 10% or 20%, or whatever of the down payment of your house, but we own 30% of it, and when you go to sell it you have to pay us back then.” That’s how much money is floating around that people are putting into real estate that are not thinking what you’re thinking.

Robert:                      Based on that, I think we’re higher to the top than I [inaudible 01:06:42].

David:                        Changes your opinion a little bit. I know. I think … Brandon and I met a guy who worked for one of those companies a couple of years ago in Hawaii and then … Because I live in the bay area in California, and one of my clients works for that company. And he like, that’s actually part of his job is to help them find houses they’re going to give money to and then like well five or 10 years later when they go to sell it we’re going to get all this cash. But that is, that’s like gambling, literally. That’s a gamble that you have zero control over, but it’s a legit business doing it.

David:                        And Russ, I think you made a really good point that we often criticize the vultures, but a vulture serves a purpose. If you didn’t have vultures you’d have dead carcasses stinking up the place. They’re everywhere, right?

Russell:                      Exactly.

David:                        And that’s kind of what Blackstone and some of these hedge funds did after the last crash is they were the vultures and we all criticized them because they swooped in and they took everything, but that’s also what cleared up the mess that all the people that had spent too much money for a house had made. So rather than criticizing the vulture asking “Well, how can I be prepared to be that vulture?” … Maybe you can pick a better animal. I’ll be a hawk or an eagle or something.

Russell:                      Yeah, but I mean that’s the idea. So part of it is in being resilient, and we talk about this a lot with our friends at Peak Prosperity. The concept of resilience is they talk about eight forms of capital, but one of them was social capital. One of the things that Rob and I spend a lot of time working on is our network. We have I think arguably one of the best networks in the business, and because of that when there is opportunity we have a lot of people who take our phone calls. We have a lot of people we can talk to that have resources and the thing is typically the way the fed responds to economic crisis is to help the rich get richer. They believe in this trickle down thing. If we just help the rich get richer then there’ll be plenty of money in the system eventually that’ll find it’s way through the system to the little guys.

Russell:                      That may or may not be true. I’m not here to debate the pros and cons and relative matters for that. It doesn’t matter because nobody’s asking me. But I just observe it, and I can see that that’s the way it works. And so if you have a relationship with lots of people that are on the winning end of quantitative easing, and loosening of money, and printing of money in order to simulate the economy, then you’re going to be able to aggregate that capital and put it to work. Because the people on the other side of that when they end up with all those gains, are like, “Okay, now what am I going to do?” Like right now, there’s something going on. This whole opportunity zone thing is really interesting.

Russell:                      It’s like, to me, step two and it’s really interesting because you say okay, President Obama who is on one side of the political spectrum passed the Jobs Act that, the Obama Administration created the Jobs Act, and buried inside the Jobs Act was the ability for purveyors of private placement syndicators to advertise to accredited investors. Before you had to have preexisting relationship, where you had to be a publicly registered security which is extremely prohibitively expensive for small deals. And so that really opened up the ability for people to find investors and for investors to find deals. And so we talked about that a lot on the show, back in late 2013, 2014 when that first broke. Now this new thing with opportunity zones and the tax law, the tax law that the Trump Administration pushed through has elevated real estate to being arguably the best tax shelter there is.

Russell:                      And on top of that, the opportunity zone thing has now made it possible for people who have unrealized capital gains in anything, including their stock portfolios, but folks like Robert that bought Apple Computer way back in the ’70s [inaudible 01:10:15].

Brandon:                   Nice move, Rob.

Russell:                      And they’ve been sitting on it. They’ve been sitting on it, because if they sell it they’re going to have to pay the tax. They don’t want to pay the tax. So they borrow against it, but they don’t sell. And yet they recognize every day that if the markets do blow up they’re at risk. They can’t diversify. Well today with the new opportunity zones law they can. They can sell those properties, they can roll that money in and it’s done in such a way if you really break it down, and we’ve done a few shows on the opportunity zone thing, that when the money moves into marketplace it has to be invested in rehabbing and done on a mass scale, so whereas none of us is individual investors, even a group of investors, a group of syndicators aren’t powerful enough to turn an entire neighborhood or to turn an entire community, but the opportunity zone thing has the potential to do that.

Russell:                      The hedge funds, just like the Blackstones got involved in cleaning up the single family housing mess, now are very much interested, and they’re aggregating a bunch of capital, billions, and billions, and billions of dollars that are going to come in. You as a small investor may not decide you want to do that, but as a syndicator you can go in and have these little small projects in the same areas and get in on that action, that flood of capital. In the essence of trying to catch a wave is just figuring out where the capital’s going to be moving and then getting in on the action.

Russell:                      So these are two kind of related things that came from two very different administrations, but all are boding extremely well for real estate investors and real estate syndicators, in particular, right now.

David:                        If they want to know how to catch a wave there’s no one better to ask than Brandon Turner.

Russell:                      Now that he’s a Hawaiian.

Brandon:                   Now that I’m Hawaiian, yeah. The [inaudible 01:11:50].

David:                        [crosstalk 01:11:51] Hawaiian.

Brandon:                   I don’t know if I can catch a wave, but I show you where to find one.

Brandon:                   All right, that was awesome. Yeah, and opportunity zone is something that intrigues me and we can do an entire dozen shows just on that. And then the other problem I have with opportunity zones is I feel like … I mean I probably, the thing that’s interesting about them is if I ask a dozen attorneys or opportunity zone experts about exactly what it is you’ll get a dozen more, 13 answers. Like I find that … which doesn’t necessarily mean it’s a bad thing. It just means it’s something that like there’s a lot of opportunity in opportunity zones right now.

Robert:                      It’s early. [crosstalk 01:12:24].

Brandon:                   It is early.

Robert:                      You know, it’s like we were talking about like who do we have that’s an expert on that? Well, just nobody, because up until a few weeks ago and even now it’s not finalized. Like every part of the wording of every law is not finalized. So it will be interesting to watch, and I think big picture it’s going to do a lot of good, and like everything else there’ll be folks that rise up and there’ll be those other folks too.

Brandon:                   Yeah, I get conflicted about it. You know, partly because you have the phrase the pioneers are usually the ones with arrows in their back. In front of, you know, like –

Russell:                      In the front and the back.

Brandon:                   Yeah, exactly, right. So I don’t want to be the first necessarily. But also the firsts sometimes end up being the Steve Jobs and the Bill Gates, and so it’s you know, I’m not saying there’s not opportunity there, but it’s definitely, yeah, I’m not sure where to jump because I haven’t yet.

Robert:                      I think the biggest thing to me is that what the opportunity zone opportunity does is it allows people that previously were not really that interested in real estate; they were investing in companies, or metals, or equities, and now the reason they’re not selling an appreciated asset like Russ talked about is because the tax thing. And here’s a potential chance for them to sell, and defer, and diminish their tax, and then to invest in something that is truly tax free.

Robert:                      So someone that previously wasn’t interested in my apartment deal is like, “Wait a minute, I could be interested in that,” just because of the tax law. Now we always don’t let the tax tail bite the investment dog. Don’t make an investment just because the tax, because tax, as we’ve just learned can and does change. But at the same time, the tax benefits are huge in real estate and we definitely want to take the best advantage we can. So I’m with you. We haven’t jumped into it, but we’re certainly eager to watch.

David:                        Yeah, I think it was a brilliant idea though from the government. Let’s figure out a way to get other people to fix up these areas that we cannot do efficiently by getting people smarter than us with money to put their own stuff into it. And if they can trick people into doing what you just said not to do, doing it just for the tax break and that’s it. Like I would bet when you guys were in the 2008 era, you talked about you’re making all this money in your business and you’re buying deals, a big reason why you bought deals that didn’t cash flow was because the tax savings that you were getting off of the money that you were making. If you were getting accelerated appreciation, and you can use cost segregation at the time. And it seemed brilliant until the bottom dropped out.

David:                        So that’s what scares me about opportunity zones is your motivation isn’t this is sound financial thing based on good fundamentals and principles, it’s oh, we can save all these taxes. So let’s go do that and then the next thing you know your money’s stuck in something you don’t want.

Russell:                      Yeah, I think what I’m saying though is that you don’t necessarily have to do it for the reason that everybody else is doing it. What I’m saying is that this is a giant wealth redistribution plan, and normally when you hear that you hear about taxes spent. Well that’s one way to do it. Another way is to create tax incentives and motivate wealth to move. It’s two different ways of doing the same thing. The Trump Administration is gravitating towards the idea of getting the government out of the way and creating a tax incentive that is going to incentivize people who have money to take a tax break and move it. What I’m saying is that when they choose to do that, we’ve identified where that money’s going to go and we can get in to those markets ahead of that money, or alongside that money, and it’d be easy to see it happening. So [crosstalk 01:15:50].

David:                        Similar to what you guys were talking about with other countries, right? Try to get in before the leverage comes to bring up the value. If you know that money’s going to be flooding into opportunity zones you want to be there first.

Russell:                      Yeah, it’s the old Wayne Gretzky quote. Figure out where the puck is headed and skate to where the puck is headed. We kind of know where the money is going to be headed. We know that real estate is hot right now. You know, we’ve got at least for another two years, or year and a half, and maybe more we’ve got a real estate guy in the White House. We’ve never had a real estate guy in the White House. People are trying to figure him out.

Russell:                      I mean, love him or hate him, at least it’s easy to figure out the way he looks at life. He likes debt. He thinks everything is a deal that needs to be negotiated. He doesn’t deal with things in groups. He doesn’t deal with commodities. He deals with individual relationships. So he’s the only guy, only president that I’ve ever met … even though I didn’t meet him after he was president and he’s the only guy that I feel like we kind of know a little bit, and understand a little bit, because of just friends with people that he’s friends with and have been around him just because he’s a real estate guy. And we’ve been real estate guys for a long, long time.

Russell:                      But the point is that we can see where the capital, where the government wants the money to move. The tax code is telling us where they want it to go, and they’ve specifically identified these geographic zones which are not hard to identify. And so now it’s just a matter of just paying attention, and getting in position, and being ready to ride that wave as it continues to break.

Brandon:                   That’s fantastic. All right, well this is a very different type of show, so I’m going to actually skip a couple sections that we normally do, normally we do the deal deep dive and then we do the fire round, which are questions from the four of us, but this was just so good and in depth I don’t want to … I want to move towards kind of the closing here and make sure we don’t tie this up all day.

Brandon:                   So the next segment of the show that I want to get to is called our Famous Four. We got sound effects there. All right, before we get to the Famous Four, let’s hear from Mindy on what’s going on this week over on the BiggerPockets Money Podcast.

Brandon:                   All right, before we get to the Famous Four, let’s hear it from Jay Scott or Carol Scott on what’s going on this week over on the BiggerPockets Business Podcast … I’ll resay that … All right, before we get to the Famous Four, let’s see what’s going on this week over on the BiggerPockets Business Podcast.

Brandon:                   All right, with that let’s get to the Famous Four. So for the last 300 and some episodes, we’ve been asking the same questions, final four questions to every guest and so we’re going to play it with you guys. You guys can answer separately, and I’d assume you have different answers, but maybe you have the same.

Brandon:                   But the first one is, do you have, other than maybe you’re own, because I know you guys wrote a book. But other than maybe your own, do you have a favorite real estate specific book? Some book about real estate that has stood out to you?

Robert:                      You know, since you’ve been doing this so long I noticed that a lot of folks have some of the same books. There’s not that many great real estate books. I’m going to throw out one that’s not a best seller and it’s not that well known, but it’s really well written and it’s total contact. It’s called Construction Funding, written by Collier, and it’s just a no nonsense book. If you’ve ever been wondering about how construction or development projects get funded it’s got a really sizzling sexy name, Construction Funding. But a brilliant book and you’ll learn from it for sure.

Brandon:                   That was great. Russ?

Russell:                      I’m not that clever. I really do like our book. The reason we wrote it is because we felt like the world needed it. Of course that was like 15 years ago or longer, but –

Brandon:                   You’ve got to write another one.

Russell:                      It’s … I know, well we need to update the one we wrote. That’s on our to do list, but it hasn’t made it to the top of the list. I’m going to say for me it sounds kind of crazy, but I’m just going to say Rich Dad Poor Dad. And the reason is that’s because that was really what helped me understand what passive income really was all about and the importance of passive income. I kind of understood it before, but it took a long time. I mean a couple of reads and a lot of spending time with Robert himself to really begin to understand what it means. I know it’s technically not a real estate investing book, but it’s such a paradigm shifting book and I think you can’t do anything until you shift the way you think. So Rich Dad Poor Dad.

Brandon:                   I agree. 100%.

David:                        All right. What about your favorite business books?

Robert:                      Yeah, that’s a tough one. We read so many business books and you know you look at your bookshelf in anticipation of being on the shelf. It’s like gosh, I have a hard time with favorite too. Like people say, “What’s your favorite beer?” It’s like which is your favorite child? You know. [inaudible 01:20:15] certain circumstances. But the book I’m going to go with is Steven Pressfield’s Turning Pro. Not a business book, but an entrepreneur book, and it’s a kick in the butt and you’ll feel like he wrote it just to you and it’s a quick read, Turning Pro by Stephen Pressfield.

Brandon:                   I’m actually half way through that one right now. I’m always half way through like a dozen books, but that’s one of our [crosstalk 01:20:33].

Robert:                      Halfway through.

Brandon:                   I’m loving it, yeah. And what was it, the War of Art was his first one? [crosstalk 01:20:38].

Robert:                      Yeah, the War of Art.

Brandon:                   It’s phenomenal.

Robert:                      Great book too. Definitely. Those two books together, read them like one book, good stuff.

Russell:                      Well, I already mentioned Jim Collins, Good to Great. I think that’s a great book, but I’m just going to go with a classic … Sorry, I’m in classic mode today.

Brandon:                   That’s good.

Russell:                      Myth by Michael Gerber. I just think that really what a business is … And people say all of the time, you should run your real estate investing like a business, and you ought to run your business like a business even though a lot of people don’t. They run it like a hobby. But a business is just a system of processes, you know. Even getting ready to come on to do this podcast with you guys, you guys have a process. And we have the five forms you send, and this process that we go through, and these little formulas, and it just makes life so much easier, so much more efficient. I’m just going to say that nobody explains that better than Michael Gerber.

Brandon:                   Yeah, that book was transformational for me. Huge. Cool, all right, number three.

David:                        Number three. What are some of your hobbies?

Robert:                      Music for me. I love music, I love going to shows. I’ve been playing in bands since I was in junior high school.

Brandon:                   Oh, what do you play?

Robert:                      It’s the one thing … I can play guitar and couple of other things, but it’s the one thing I do that really has nothing to do with anything else, although we do certainly push the boundary there. But I just think music is great. It’s so impactful and there’s music to help you through anything. You know, whether it’s working out, or you’re down in the dumps, whatever it is, music is magic.

David:                        Brandon, he’s a musician as well, and he wrote a song while I was in Hawaii called Somewhere Over the Rain BUR. BUR is an acronym that we use and I just wrote the BUR Book and I think it was to commemorate –

Robert:                      BUR [crosstalk 01:22:20].

David:                        I mean, but it’s hilarious. I mean, I just cannot look at that video without laughing at it. It sounds [crosstalk 01:22:25].

Russell:                      Your BUR book is on my bookshelf behind me, because I think [crosstalk 01:22:28].

David:                        Right on. [crosstalk 01:22:29]. I sent you guys an advanced reader copy.

Russell:                      Yep.

Robert:                      Well, and we’re happy that you guys will actually sing on your podcast from now on, because we [inaudible 01:22:37] don’t do that.

Brandon:                   I try to limit that.

David:                        Brandon peer pressures me into that. He’s always … I’m like, “Brandon I’m not comfortable. I don’t want to sing.” “You’re going to sing and you’re going to like it or I’ll find another cohost.” That’s [crosstalk 01:22:49]. I got bullied.

Brandon:                   [crosstalk 01:22:50]. Yeah, I don’t think I’ve done that. [crosstalk 01:22:53].

Russell:                      It’s just the opposite with me. You better not sing or I’m going to find another cohost.

Robert:                      That’s for sure.

Russell:                      I have a reputation.

Brandon:                   There you go. Well, what about your hobbies, Russ? What do you do?

Russell:                      You know, I thought about that and actually I’m kind of in a hobby less mode. I’d say probably my number one hobby right now is still I study economics. I mean, it’s a boring hobby. I’ve still got my saxophone, I kind of broke out my old comic book collection the other day, and I collect coins. So I’ve done different things over my life, but in terms of what I’ve probably actively spent most of my time doing, which is probably related to this show, is I just study economics.

Russell:                      I just think we’re living in the most interesting economic time. I really do think that somewhere along the lines the global system’s going to reset. I think we just happen to be fortunate enough to live at a time when we’re going to get a chance to get a front row seat and watch that happen. And in the chaos is going to be a lot of opportunity. I just want to make sure I’m on the right end of the chaos on the opportunity side. So that’s what I spend most of my time doing.

Brandon:                   I feel like that could be a whole podcast right there on the future of the global economy. But we’ll people will have to listen to your show for more on that I guess.

Robert:                      There you go.

Brandon:                   Number four. What do you believe sets apart successful real estate investors from all those who give up, or they fail, or they just never get started in the first place?

Robert:                      For me, I think it’s you’ve got to focus on the why and not the what. If your what is to put money in your bank and to collect a lot of doors, that’ll only be exciting for so long. But if you have a compelling, passionate why that drives you every day, whatever that is for you. It can be personal, altruistic, some dent you want to make in the world, if you focus on that and let real estate be the tool that the vehicle that drives you there that will keep you in the game and we see so many people get all enthusiastic and will then go off to the next thing, but at your core if what you’re put here to do can be enabled by your investing in real estate then you’ll never quit.

David:                        Beautiful.

Russell:                      I’m going to say relationships. I think that a lot of times that investors spend too much time focusing on the money. They focus on the transaction. They focus, to Robert’s point, on the how to and once you’ve got the why, which I think precedes everything, because you’re not going to do anything until you have a compelling why. The first thing you really want to spend your time doing is relationships and I see so many people play the relationship cards poorly, because they’re trying to extract the little bit extra profit from the real estate agent, or from the deal, or from their service providers, or from their property manager, and it’s just the stupidest thing ever. I mean, you know, create abundance and invest that abundance in relationships and creating abundance for other people, and if you do that plenty of abundance is going to be in your life too. So I would say to me it’s the biggest mistake I see investors make is not putting enough emphasis on relationships and the most successful investors I see put all of their effort into building quality relationships.

Brandon:                   That’s a great answer. All right, well, David Green, you want to take us to the final question?

David:                        The last question of the day. This has been an awesome conversation with you guys. Just tons of wisdom spilling out of it. For people who want to find out more about you, where can they go look?

Russell:                      Well, we decided to make it easy for everybody. We’re old school, they can just send an email to us at BP like BiggerPockets @realestateguysradio.com and we will send you an email with information about all the stuff that we do. We’re easy to find, realestateguysradio.com, but if you send an email to [email protected] it’ll just land right in your inbox full of links and you can click away and learn all about us.

Brandon:                   Perfect, perfect. All right, very, very cool. We’ll put links in the show notes as well. I think we’re at BiggerPockets.com/show338, I believe. So we’ll put a bunch of links in there as well, the things we’ve talked about today as well as where they can find all your different resources, and different things like the summit at sea and the syndication seminar. All that good stuff that you guys have going on. You guys are [crosstalk 01:27:06].

Russell:                      Yeah, we should get you. We should get you to come one of these days, Brandon. [crosstalk 01:27:09].

Brandon:                   I know, I would love to.

Russell:                      It would be great fun, yeah. [crosstalk 01:27:11].

Robert:                      Come on down.

Russell:                      Yeah, I definitely will.

Robert:                      But we just appreciate what you guys are doing. It’s amazing and just the community you’ve built, and the help that is available, and just the nature of what you do is extraordinary. We couldn’t be more thrilled for your success and it’s been just an honor to be on this show, so thanks for having us.

Brandon:                   Absolutely.

David:                        Thank you, guys.

Russell:                      Congratulations on everything you’re doing. Great job.

Brandon:                   Aw, thank you, you guys.