Latest / Carson's Corner: Entrepreneurship & Investing / How Everyday Investors Get Institutional-Grade Mortgage Bonds | Shawn Muneio, Bequest

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How Everyday Investors Get Institutional-Grade Mortgage Bonds | Shawn Muneio, Bequest · Carson's Corner: Entrepreneurship & Investing

• 0:00
  SPEAKER_03: When roof leaked and the air conditioning broke, all of that happened.
• 0:04
  SPEAKER_03: Like my phone rang.
• 0:05
  SPEAKER_03: And it was my problem.
• 0:06
  SPEAKER_03: But when you're the bank, none of that matters.
• 0:08
  SPEAKER_03: I'm just collecting the check.
• 0:09
  SPEAKER_03: And in my mind, I'm like, this was all about, you know, me not having to exchange time for money.
• 0:16
  SPEAKER_01: Today's guest is Sean Munea, co-founder and managing partner of Bequest Asset Management, building investor wealth through real estate, energy infrastructure, and alternative investments.
• 0:25
  SPEAKER_03: A lot of investors right now are kind of forced to take the money out of their retirement.
• 0:30
  SPEAKER_03: If they are buying a product like ours that is producing income, they don't really have to go into their portfolio all the time and be like, oh, did I meet my minimum or not?
• 0:41
  SPEAKER_03: Like there's it's always coming out.
• 0:43
  SPEAKER_03: And so a lot of our investors have bought the product, put it in their retirement account, knowing that that's gonna come out automatically and that's kind of helping them get those metrics.
• 0:54
  SPEAKER_02: You know what I really like about this product you have for you, from your standpoint as a fund manager?
• 0:59
  SPEAKER_02: I think is like people evolve.
• 1:01
  SPEAKER_02: You're gonna get a lot of uh high-income younger professionals, I think, and older people.
• 1:06
  SPEAKER_02: But I think what it does is opens doors to other things.
• 1:10
  SPEAKER_03: In our first year of operating this product, we had 100 investors, and now we're up almost 400 investors.
• 1:17
  SPEAKER_03: And so honestly, like this will get into the thousands of investors here soon.
• 1:22
  SPEAKER_03: To me, that's actually the most exciting part.
• 1:24
  SPEAKER_02: So isn't that kind of like what gravitated you to where it's like I'm better off just loaning the money?
• 1:29
  SPEAKER_02: And if they default, I'll take I'll take over the property if I have to.
• 1:33
  SPEAKER_02: Is that kind of your mindset and how you got here?
• 1:35
  SPEAKER_02: When I uh what do you mean by fixed income?
• 1:38
  SPEAKER_02: What assets are you like uh lending to apartment complexes?
• 1:42
  SPEAKER_02: Is it just private credit for all kinds of assets?
• 1:45
  SPEAKER_02: Are you looking at it?
• 1:46
  SPEAKER_02: What does that mean if I'm like an investor sitting at home listening?
• 1:49
  SPEAKER_02: Yeah, you know.
• 1:51
  SPEAKER_00: Welcome to the Carson's Quarter.
• 1:55
  SPEAKER_02: Sean, I'm gonna let you introduce yourself and all that and go from there.
• 1:59
  SPEAKER_02: You're down there in Florida, right?
• 2:01
  SPEAKER_03: We are, yeah.
• 2:02
  SPEAKER_03: Carson, thank you for uh having me uh in your corner.
• 2:06
  SPEAKER_03: Uh it's uh we're building this you know fixed income product for for investors.
• 2:13
  SPEAKER_03: We've been doing it now for many years.
• 2:15
  SPEAKER_03: The company actually just uh turned six years old in March.
• 2:18
  SPEAKER_03: So really excited about what what we've been able to build here.
• 2:22
  SPEAKER_03: Uh folks come to us when they're looking for fixed income.
• 2:24
  SPEAKER_03: We do it through a bunch of different ways, but uh mainly through our private credit fund that kind of focuses on mortgages, uh junior lien mortgages specifically, and you know, how I got here is a is a long journey.
• 2:39
  SPEAKER_03: I'm sure like like you have, you've been on a long journey, you've learned a lot.
• 2:43
  SPEAKER_03: But uh yeah, yeah.
• 2:44
  SPEAKER_03: So we're down here in Sarasota, Florida, uh managing capital for our investors and putting it to work and trying to trying to generate income.
• 2:54
  SPEAKER_03: Yeah.
• 2:55
  SPEAKER_02: So, you know, you and I talked a little bit before, um and I kind of boogered up the intro, but that's okay.
• 3:02
  SPEAKER_02: I was hoping you're gonna interrupt me and say fixed income, because I knew you did like lending and other stuff.
• 3:07
  SPEAKER_02: But uh fixed income is kind of like, okay, people out there that are listening, what do you mean by fixed income?
• 3:15
  SPEAKER_02: What assets are you like uh lending to apartment complexes?
• 3:18
  SPEAKER_02: Is it just, you know, private credit for all kinds of assets?
• 3:22
  SPEAKER_02: Are you looking at industrial?
• 3:24
  SPEAKER_02: What exactly does that mean if I'm like an investor sitting at home listening?
• 3:28
  SPEAKER_03: Yeah, you know, when when somebody throws you in a private credit category, it could mean uh all kinds of different things.
• 3:35
  SPEAKER_03: And in fact, if you look at private credit, it's been on news a lot recently.
• 3:39
  SPEAKER_03: If you tune into CNBC, that you know there's a lot of people that are saying there's problems there.
• 3:45
  SPEAKER_03: But the what what you're seeing uh is mainly folks that are lending uh you know very large, very large uh private credit funds lending to you know software companies, and they're just they're lending, right?
• 3:58
  SPEAKER_03: They're lending on you know future cash flows from from software companies.
• 4:03
  SPEAKER_03: And so for us, I've I've always been a real estate guy.
• 4:06
  SPEAKER_03: And I know you love real estate and love commercial real estate.
• 4:10
  SPEAKER_03: So I kind of grew up uh you know with a passion for real estate that came from my grandfather and uh and residential, right?
• 4:18
  SPEAKER_03: He owned multifamily properties, and in order for me to earn my uh allowance back in the day, I remembered I had to go clean up after somebody in one of his uh um duplexes.
• 4:29
  SPEAKER_03: Yeah, and so I had this love for for real estate, and you know, I actually got into the tech world.
• 4:36
  SPEAKER_03: I graduated and and and went into the tech industry, but always had a love for real estate and and built a portfolio of of properties that I owned that I'd fly home on the weekend to clean up after somebody.
• 4:50
  SPEAKER_03: And that was my that was my passive income you know dream.
• 4:54
  SPEAKER_03: One day to have you know 50 units and and it wasn't long before I realized that was just a r another job.
• 5:03
  SPEAKER_02: Yeah.
• 5:04
  SPEAKER_02: Oh yeah, I understand.
• 5:06
  SPEAKER_02: I talk about that in my book a little bit about it's like you're buying a second job if you don't do it right.
• 5:11
  SPEAKER_00: So yeah.
• 5:12
  SPEAKER_02: So isn't that kind of like what gravitated you to where it's like I'm better off just loaning the money, and if they default, I'll take I'll take over the property if I have to.
• 5:21
  SPEAKER_02: Is that kind of your mindset and how you got here?
• 5:24
  SPEAKER_03: Or yeah, you know, um when I um when I bought my first loan, I actually bought it off the secondary market, and you're like, where in the world?
• 5:33
  SPEAKER_03: I actually found this book on the internet that that taught me, you know, there's a secondary market, and it's out there.
• 5:40
  SPEAKER_03: It's not it's not public, it's it's networked, right?
• 5:45
  SPEAKER_03: And so where do you find these people?
• 5:47
  SPEAKER_03: Where do you find these brokers?
• 5:48
  SPEAKER_03: And I remember a guy like you know slinging me a tape for the first time ever, and I'm like, what the heck is a tape?
• 5:56
  SPEAKER_03: Yeah, this Excel spreadsheet comes.
• 5:58
  SPEAKER_03: I'm like, I know Excel, and this spreadsheet comes over and it's you know, it's got the property address and the you know the borrower and the and the loan amount and the payment status and all of these things, and I'm like, wow, these are for sale.
• 6:12
  SPEAKER_03: They're like, Yep, this is for sale.
• 6:14
  SPEAKER_03: I'm like, wow, this is really cool.
• 6:17
  SPEAKER_03: And uh, and so I remember, you know, buying my first no.
• 6:21
  SPEAKER_03: Well, we we talked about Denver a little bit, and I I was I was living in Colorado, and um, you know, because I was so fixated on like I had to go see the property, like I wanted to buy a mortgage on a property that I could go see.
• 6:36
  SPEAKER_02: Yeah.
• 6:37
  SPEAKER_03: Most guys that are buying tapes are like, it don't matter where, you can buy it all over the country.
• 6:41
  SPEAKER_03: I'm like, no, no, no.
• 6:42
  SPEAKER_03: I you know, I know location, location, location.
• 6:45
  SPEAKER_03: I'm gonna go, I'm gonna go buy a loan and I'm gonna go drive over and I wanna see the property.
• 6:51
  SPEAKER_03: Yeah.
• 6:51
  SPEAKER_03: And and I did.
• 6:52
  SPEAKER_03: I I like went over to there and it was it was uh it was a duplex in Aurora, Colorado, all the places.
• 7:00
  SPEAKER_03: And um and the loan, the very first loan that I ever bought was a non-performing mortgage.
• 7:07
  SPEAKER_03: Wow.
• 7:08
  SPEAKER_03: So so the bank was selling their bad paper.
• 7:12
  SPEAKER_03: And uh, and so I bought the loan and uh, you know, some of the research that I did, I'm like, all right, well, I'm gonna try and reach out to the bar and you know try to renegotiate uh the terms of this loan now that I own it.
• 7:26
  SPEAKER_03: And you know, he didn't respond to me.
• 7:30
  SPEAKER_03: Um and I, you know, I had to get an attorney, and it wasn't, but you know, a couple weeks later he's calling me on the phone wanting to meet me at a Starbucks to renegotiate this loan.
• 7:43
  SPEAKER_03: And and sure enough, sure enough, we met at a Starbucks.
• 7:47
  SPEAKER_03: He he made all the the back payments of the loans.
• 7:50
  SPEAKER_03: It was missed, it was he hadn't paid the loan for a couple years.
• 7:53
  SPEAKER_03: Oh wow.
• 7:54
  SPEAKER_03: And you know, he had a cashier's check, and I'm like, I'm like, I'm gonna meet this guy at Starbucks.
• 8:00
  SPEAKER_03: I just bought this loan, and sure enough, we go meet at this Starbucks, and he hands me this cashier's check, and I had the a new uh modification agreement and modified the loan, and and he signed it and he gave me the check and he started making his payments again.
• 8:17
  SPEAKER_03: And I'm like, wow, this is this is really, really cool.
• 8:20
  SPEAKER_03: Uh and I had I had uncovered something that I'm like, wow, this actually this scales.
• 8:27
  SPEAKER_03: This scales because I I told you before, like when I when I owned it was more Section 8 properties that I own, like when the roof leaked and and the air conditioning broke, and all of that happened, like my phone rang, and it was my problem.
• 8:45
  SPEAKER_03: But when you're the bank, none of that matters anymore.
• 8:49
  SPEAKER_03: You just collect the check.
• 8:51
  SPEAKER_03: And I just collecting the check, and in my mind, I'm like this was all about you know me not having to exchange time for money.
• 9:01
  SPEAKER_03: Yeah, and so yes, like if a borrower stopped paying or something, I might have to get involved.
• 9:07
  SPEAKER_03: But there's no there's no moving out, go find a new tenant, you know.
• 9:13
  SPEAKER_03: There's like I I took the loan, I gave it to a servicer to service the debt, so I didn't have to even send out the statements every month.
• 9:20
  SPEAKER_03: And every month the servicer would send me the payments, and you know, I just I just uncovered like how amazing it was to be the bank.
• 9:29
  SPEAKER_03: Yeah, and and and to to be able to scale something that was true passive income.
• 9:36
  SPEAKER_03: Yeah.
• 9:37
  SPEAKER_03: You know, six years later, we've taken that same model and have allowed what we you know investors to kind of buy into what we do.
• 9:47
  SPEAKER_03: And you know, we we buy loans from banks, uh portfolios, um, we hold them for cash flow and we allow uh investors to participate in that.
• 9:58
  SPEAKER_02: Let me ask you this.
• 10:00
  SPEAKER_02: You know, what kind of, you know, not like you said in the very beginning, you know, not all debt is created equal.
• 10:07
  SPEAKER_02: You know, I mean, there's certain types of debt, like you get into these small business loans, they're way riskier than something that like what you're doing, even though it's a note that's I guess not performing, there's still a property attached to it.
• 10:22
  SPEAKER_02: So, you know, a non-performing note's way less risky than you know, like one on a small business.
• 10:28
  SPEAKER_02: So, you know, what what what size you know assets is it just you know, are you s picking certain markets or w how do you you know evaluate all that?
• 10:40
  SPEAKER_02: Is it just kind of like you know, just purely price, like holy crap, this thing's so cheap, I'm gonna go get it, you know?
• 10:47
  SPEAKER_02: I mean, what how does how does all that work, you know?
• 10:51
  SPEAKER_03: Yeah, you know, so we we have have kind of graduated, you know, because we started in the non-performing, you know, mortgage area, we we um we we fixed up a lot of mortgages and we got people paying again.
• 11:05
  SPEAKER_03: And and so we became um that that became really our specialty is buying uh those types of mortgages.
• 11:12
  SPEAKER_03: And so we we mainly buy performing mortgages today, yeah, but we have the experience and the knowledge and the understanding that if it goes bad, we know how to work with the homeowner and and and you know get it repaired.
• 11:26
  SPEAKER_03: We can have like a a loan repair shop in our organization, and and so it's like we know how to fix loans.
• 11:33
  SPEAKER_03: Some people know how to fix cars and houses.
• 11:35
  SPEAKER_03: Well, apparently we we know how to fix loans if they go bad, which is important when you're you know dealing with a large portfolio of mortgages.
• 11:42
  SPEAKER_03: So we mainly go out and buy um uh these large tapes from the banks, and so a lot has changed over the years of we've grown as an organization and we've grown in our ability to raise capital and the size of transactions that we're doing now with banks um is very different than that one loan I bought back in the day in you know on a house in Aurora uh from you know somebody that had a tape and slipped it over to me.
• 12:12
  SPEAKER_03: We we uh we are a large buyer of of kind of reperforming loan.
• 12:18
  SPEAKER_03: So what typically happens is uh a lot of a lot of banks originate these loans on warehouse lines, right?
• 12:27
  SPEAKER_03: Yeah.
• 12:27
  SPEAKER_03: And we do focus in the second lean.
• 12:30
  SPEAKER_03: Like we're we're a second lean shop, and and so there's a there's some you know, probably some questions there you have for me, but maybe a little bit, yeah.
• 12:38
  SPEAKER_03: But when when a loan is originated um off of you know a warehouse line from somebody, the goal of that originator is to um uh is to take the all of those loans and securitize them.
• 12:54
  SPEAKER_03: That's really what they want to do.
• 12:56
  SPEAKER_03: You want to take them, put it into a securitization and and kind of be be done with it.
• 13:01
  SPEAKER_03: Well, when they right before they go into securitization, loans fall out for whatever reason, right?
• 13:08
  SPEAKER_03: It could be like uh an early paid default, yeah.
• 13:13
  SPEAKER_03: It could be that um the the um the DTI didn't quite match up with the you know the the the bond expectations.
• 13:24
  SPEAKER_03: Yeah it could be that the appraisal wasn't done right or some document didn't get filled out, and so these loans fall out of securitization.
• 13:34
  SPEAKER_03: We're right there with the brokers that you know know what we buy, and we get access to these these pools of mortgages and we will buy them at a discount.
• 13:45
  SPEAKER_03: Yeah.
• 13:46
  SPEAKER_03: Right.
• 13:46
  SPEAKER_03: And so we're looking at, you know, what's the coupon on these things, you know, what is the what is the borrower's credit score, you know, what is the the property worth now, because it could have been like six months after it was originated or 12 months after it was originated.
• 14:04
  SPEAKER_03: So we're kind of re-underwriting the loan, but a lot of them all at once.
• 14:09
  SPEAKER_03: Yeah.
• 14:09
  SPEAKER_03: And and so those are the types of loans that we'll buy, you know, we'll get a discount on them, it depending on the coupon rates.
• 14:19
  SPEAKER_03: But um, you know, we will kick loans out of a a pool that don't quite fit our our um buying criteria.
• 14:28
  SPEAKER_02: So when you get like this, you'll get a lot of loans.
• 14:31
  SPEAKER_02: So call it what you want, but you know, whether it's a spreadsheet and you'll see some and you say, We don't want that one, you'll you'll kick out probably 10% or so, or just a few of them.
• 14:41
  SPEAKER_03: We will, yeah.
• 14:42
  SPEAKER_03: We'll we'll we'll kick out whatever doesn't.
• 14:44
  SPEAKER_03: You have to be careful because, you know, like anything, they want to sell the whole thing.
• 14:48
  SPEAKER_03: And then so if you started cherry-picking things, well, they're just gonna move on.
• 14:52
  SPEAKER_03: Yeah.
• 14:53
  SPEAKER_03: Um, so you know, and and we we um uh well, you know, we've got our investment committee, we we you know, we we run due diligence internally, we bring it to our committee, uh, you know, analyze it, make a decision.
• 15:08
  SPEAKER_03: And these these transactions usually take you know three to four weeks to kind of close out.
• 15:14
  SPEAKER_03: There's kind of an indicative bid and then and then you close out.
• 15:17
  SPEAKER_03: But uh, you know, it's a it's an interesting transaction.
• 15:21
  SPEAKER_03: Uh you know, we sign a contract and loans move to our servicer and we start collecting the money.
• 15:27
  SPEAKER_02: This sounds like it's uh pretty much a hundred percent residential.
• 15:30
  SPEAKER_02: Do you ever go into commercial or anything like that?
• 15:33
  SPEAKER_02: There's nothing wrong if you don't, because you know, there's a lot of risk on the commercial side.
• 15:37
  SPEAKER_02: You know, just I don't with the expiration, I'd almost rather have the 30 year mortgages, but you know, so is it mainly residential what you're doing?
• 15:49
  SPEAKER_03: Or we we are buying residential.
• 15:52
  SPEAKER_03: We're buying owner occupied residential mainly.
• 15:57
  SPEAKER_02: It makes so much sense because the owner never wants to lose their house.
• 16:00
  SPEAKER_02: That's really like the last resort, you know.
• 16:03
  SPEAKER_02: So you have a lot of, you know, there's a lot of reasons for both of y'all to work it out if something does move out.
• 16:09
  SPEAKER_03: So yeah, there's that there's that equity on paper, which is yeah, what's this house worth, what's the loan balance, and then there's this emotional equity.
• 16:19
  SPEAKER_03: Yeah, we've always found that the emotional equity is actually more valuable than the actual equity on paper.
• 16:26
  SPEAKER_03: And so one of those reasons we love this space, um, and you know, we know there's collateral behind the loan, and we God forbid, we have to take it back.
• 16:38
  SPEAKER_03: Um, you know, we try to work with the homeowner, keep them in the home, but you know, if in fact we can't come to terms and they just stick their head in the sand, unfortunately, we you know, we gotta take back the property and you know go to foreclosure.
• 16:53
  SPEAKER_02: I like it, you know, from a risk profile standpoint.
• 16:57
  SPEAKER_02: I like the fact that it is residential.
• 16:59
  SPEAKER_02: You know, I think a lot of the risk right now, you kind of brought it up at the very beginning, is these loans they're doing to these software companies, and they're they're going at like, I don't know, like 17%.
• 17:14
  SPEAKER_02: And the software companies aren't even really profitable.
• 17:17
  SPEAKER_02: A lot of AI bets and SA, the software service type stuff, and they're doing payment in kinds, they can't even pay the notes.
• 17:26
  SPEAKER_02: And then some of the commercial notes, I see it like every other week.
• 17:32
  SPEAKER_02: There's a like an off-market property.
• 17:35
  SPEAKER_02: I had one where the owner was willing to take a$3 million loss.
• 17:39
  SPEAKER_02: I mean, it's on a$20 million asset because they just know they bought it way too high.
• 17:44
  SPEAKER_02: I've seen others where it's more than that, and it's a lot in commercial real estate, and I just see trouble.
• 17:52
  SPEAKER_02: But does that mean there's a crash?
• 17:54
  SPEAKER_02: Probably not, you know, but it could it could dri have a drag on residential.
• 17:59
  SPEAKER_02: But what it goes back to is people don't want to lose their freaking home, you know.
• 18:03
  SPEAKER_02: Yeah.
• 18:03
  SPEAKER_02: In some of the new regulations as far as having people put a little more money down and stuff, there's a little more protection than back in the day.
• 18:12
  SPEAKER_02: So, you know.
• 18:13
  SPEAKER_03: Yeah, we've we we've done a lot of different things here at, you know, like uh like every other entrepreneur, you know, we uh we do dabble in other things, and we have uh bought commercial real estate and we've syndicated deals and you know, we have a 61,000 square foot medical office building in uh in Houston, Texas.
• 18:33
  SPEAKER_03: Wow.
• 18:34
  SPEAKER_03: We're um you know, we're probably about four years into that.
• 18:37
  SPEAKER_03: We're trying to exit out of that in the next year or two.
• 18:40
  SPEAKER_02: Well, you know, medical medical office is pretty low risk on the commercial CREN.
• 18:45
  SPEAKER_02: You know, the ones that just got are pretty sunk are a lot of the multifamily deals, but you know, it's location.
• 18:52
  SPEAKER_02: Not every market's the same.
• 18:54
  SPEAKER_02: You know, there's some markets where it's you know everything's fine, you know, and others you're like, golly, man, this feels like Vietnam.
• 19:01
  SPEAKER_02: You know, there's dead bodies everywhere.
• 19:03
  SPEAKER_02: Something.
• 19:04
  SPEAKER_02: I don't know what to compare it to.
• 19:05
  SPEAKER_03: So yeah, we've we've seen the we've seen that commercial paper for sale too, and it's it's so it's so local, right?
• 19:13
  SPEAKER_03: It really needs to be local, and and it's very different than our business today.
• 19:17
  SPEAKER_03: Like I can get a tape of loans all across the country, and as long as I can get a good valuation on the property, and we've operated in that state before, and we operate in about 40 states today.
• 19:27
  SPEAKER_03: We'll we'll buy the loan.
• 19:29
  SPEAKER_03: When you see a commercial loan, whether it's performing or non-performing, there's a lot of local knowledge that that you need.
• 19:36
  SPEAKER_02: There's so much.
• 19:37
  SPEAKER_02: There's so much.
• 19:39
  SPEAKER_02: I, you know, and everybody like talks about you know industrial and how good it is, and I love it because like, you know, the tenants are bigger and they're usually better credit, but if you look at like the difference between like Nashville and Kansas City, and Nashville, there's like 10 million square feet under construction.
• 19:58
  SPEAKER_02: And I'm like, if that's not alarming, that's just so much square footage, and I'm like, but then you go to Kansas City and it's like the best investment ever because there's not enough of it, you know, and it's it's yeah, I don't know.
• 20:12
  SPEAKER_02: Some places for whatever reason just get so overbuilt.
• 20:16
  SPEAKER_02: I don't and and you have to know that, you know, because for the most part of the country, industrial, especially small bays, doing great.
• 20:25
  SPEAKER_02: And it's a great, great asset.
• 20:27
  SPEAKER_02: But you know, even multifamily too, it's like there's other there's some cities like you know, Phoenix and Austin and others that just took a huge hit, but others, it's like, golly, man, I should have the the Midwest is doing great.
• 20:40
  SPEAKER_03: So yeah, yeah, you know, it's it's we we love real estate, we love commercial real estate, and you know, we've been we've been burned a few times, and it's really about like how much do you know about that area on that level.
• 20:53
  SPEAKER_02: You have to.
• 20:54
  SPEAKER_02: Well, you have the other thing that people don't look at is that supply I'm talking about.
• 20:59
  SPEAKER_02: Okay, just because your property's cash flowing, they're not looking at the risk on the back end because if it gets overbuilt and your tenants go over here and you saw it multifamily, you could be per uh per doing perfectly fine, and then all these class A open up, right?
• 21:16
  SPEAKER_02: And the class A is desperate for tenants, and they lower their rent with move in specials, all your tenants go over there.
• 21:23
  SPEAKER_02: So you have to pay attention to that supply.
• 21:25
  SPEAKER_02: It's tricky.
• 21:26
  SPEAKER_02: I mean, you know, it it's tough to watch.
• 21:29
  SPEAKER_02: It's like every six months you gotta like do some deep dive on it.
• 21:32
  SPEAKER_02: So, you know, I do it all the time, I enjoy it, but yeah, I'm kind of I'm kind of like the CRE a holic or something.
• 21:39
  SPEAKER_02: I don't know.
• 21:41
  SPEAKER_02: Something like that.
• 21:42
  SPEAKER_03: It's fun.
• 21:43
  SPEAKER_03: I mean, it's fun.
• 21:44
  SPEAKER_03: I love commercial real estate, and you know, it's um but but you gotta know the area, you gotta know it.
• 21:51
  SPEAKER_03: Be an expert and uh and you know, and and when you buy the debt on it too, that's that's an even uh bigger situation because you know when you're when you're the when you're the bank on a commercial property, uh you know, until it until it goes into default, there's there's nothing you can do.
• 22:10
  SPEAKER_02: Yeah.
• 22:11
  SPEAKER_02: So uh what are you guys looking to get involved in?
• 22:14
  SPEAKER_02: You know, I I know you mentioned like, you know, you like commercial real estate.
• 22:18
  SPEAKER_02: I love the note thing you're doing.
• 22:19
  SPEAKER_02: I think it's a great place to be, you know, from a risk profile standpoint, I just talked about that.
• 22:25
  SPEAKER_02: But you know, do you want to like reinvest into commercial real estate or are you you know there are places you like right now?
• 22:32
  SPEAKER_02: Like if it was a good market and it made sense that you'd be interested in going into.
• 22:37
  SPEAKER_02: I'm not trying to sell you on anything.
• 22:38
  SPEAKER_02: I'm just curious, you know, I like to see what other people like and what what's on their mind.
• 22:43
  SPEAKER_02: We talked about how hard data centers are to develop and it's like they're a nightmare getting through city and all that.
• 22:49
  SPEAKER_03: So I know you're probably not going there, but you know no, no we're not and I, you know, my background is in data centers back back in the day.
• 22:58
  SPEAKER_03: I used to build some of the largest data centers for Google, Facebook, Microsoft back in the day.
• 23:04
  SPEAKER_03: And uh if if you love commercial real estate, you're like, wow I want to I want to own this you know 10,000 square foot facility with all these machines in it like humming what we don't realize is that cost to operate that facility is just enormous.
• 23:21
  SPEAKER_03: Is it the electricity or just the upkeep or what everything's gotta have you know backup generators and and backup power and multiple power sources and security and biometrics and you know people are real serious about their data.
• 23:38
  SPEAKER_02: You gotta have bait backup and it's just all kinds of I you know my experience on the IT stuff is I used to work at um one of the outsourcers is like an EDS uh competitor ACS and I used to price them out so I was like golly all the stuff that goes into all this stuff's pretty crazy.
• 23:57
  SPEAKER_03: It is it is I don't know you know with with uh nowadays with all the changes in AI and and you know the the requirements are changing so fast these these data centers yeah they yeah they can't build enough but but what goes on inside of them will look drastically different a few years from now um than than the way it is today just because of so many changes.
• 24:25
  SPEAKER_02: I I want to ask you this you know it's kind of like a booming type topic online but I don't see these AI companies I there's gotta eventually be some sort of bubble I don't like saying there's gonna be a crash but most of them are like losing money and it's I don't know what happens.
• 24:46
  SPEAKER_02: I think there's gonna be some survivors and some winners but I just don't think what's going on is sustainable.
• 24:53
  SPEAKER_03: I mean I don't know you know these these tools that they're producing for us entrepreneurs are absolutely uh unbelievable yeah and as we think about our future as an organization we're growing but um you know I pay a couple hundred bucks you know maybe a thousand dollars for my team to have access to Claude giving them a superpower that will you know I I love my team and and everybody's great but because they now have a power tool in their hand they can go much faster.
• 25:29
  SPEAKER_03: I can go much faster we're we aren't going to need as many people as I originally thought yeah and and do you know what kind of savings that is for an organization for us for me to spend a thousand dollars for the whole team to have Claude and they can get completes the productivity out but back to your point like they've already kind of set the bar as to what this technology costs.
• 25:52
  SPEAKER_03: Yeah.
• 25:52
  SPEAKER_03: Right?
• 25:53
  SPEAKER_03: It's not like they're gonna be like oh I'm taking Claude away from you and now it costs as much as another employee.
• 25:59
  SPEAKER_03: Like they're not gonna do that.
• 26:01
  SPEAKER_03: Yeah yet you look at the valuations of these companies you know uh Anthropic is gonna try and you know IPO at almost a trillion dollars like you know yes there's some amazing technology but wow they've got to generate significant revenue and for them to get a a couple a grand from me and another business like you that's got to add up really really fast to get to these valuations.
• 26:26
  SPEAKER_03: But they're amazing tools I love them as an entrepreneur.
• 26:31
  SPEAKER_02: Um I I here here's what I think I think right now there's gonna be like some of them are going to fail and then the winners will kind of pull away and I think they'll eventually raise the price on guys like you and I.
• 26:43
  SPEAKER_00: Yeah.
• 26:43
  SPEAKER_02: Like they're in the pro they're like in the pre-profit stage where they're more uh concerned about you know how Amazon there were like quarters where they'd almost like there wasn't a very good quarter but their stock kind of kept going up because they were trying to build out the infrastructure I think it's in that phase to where the other ones will fall off and then but they're eventually going to have to raise the price on guys like you and I.
• 27:07
  SPEAKER_02: I don't know how high but like I so I was using it and I I told you about all the stuff I was trying to do with it.
• 27:14
  SPEAKER_02: I just wanted to see what I could do.
• 27:15
  SPEAKER_02: And then I ran out of memory so I upgraded to the$200 a month thing and then I had to add stuff and it's like okay it was worth the money all the stuff I did.
• 27:24
  SPEAKER_03: I mean I was like golly this is crazy you know exactly they can definitely get a lot more money for what they're charging.
• 27:31
  SPEAKER_03: So they probably will kind of raise it um but for what we're saving and productivity like it is worth its weight and goals and entrepreneurial and it's you know it's it's a really exciting time with these tools at our fingertips.
• 27:48
  SPEAKER_03: It is it is really cool.
• 27:49
  SPEAKER_02: So yesterday I you know I split two properties into two listings you know and then I took another two and I did it and I'm I have one going and then I put another one in there.
• 27:59
  SPEAKER_02: I said remove everything that's you know for this listing and separate them and I have like all it's like four different Claude co-working things going at the same time.
• 28:08
  SPEAKER_02: And that I was like can I do two of these at once I have them right here.
• 28:11
  SPEAKER_02: And then I did two and I did four and it just it's okay I'm gonna go do something else and come back to it.
• 28:17
  SPEAKER_02: Yeah yeah it's pretty pretty phenomenal like I was like gosh this is crazy you know is it probably take a like take a week and a half to get something like that done you know 10 years ago but um yeah anyway I I love the you know the off topic discussions about stuff like that you know it's it's really good stuff.
• 28:37
  SPEAKER_03: Um so what is your uh main focus right now doing good solid deals you know uh protecting downside for your investors and bringing in more capital and all that what what are you guys looking to do and grow you know what's what's interesting is we've got the investment strategy down we've been we've been doing it for a long time yeah um what is what is very interesting for us is the mechanism that we're going through to actually raise capital yeah you know I'd I'd mentioned briefly you know we found a regulation uh inside um that that we've been able to utilize and get approved by the SEC and want be one of a very few companies to actually be able to say take strategies like this to the to the general public.
• 29:30
  SPEAKER_03: Oh wow those people who run these investment strategies uh kind of go the easy route and only sell their product to accredited investors right yeah probably heard that they use the what's called a reg D 506C and you get into this yeah jargon but um we went down the path in in late 2024 of of getting something approved that will allow us to take our income generating our fixed income product to the masses what we found out is that most people most wealthy individuals when I tell them listen I have a great product it's a private credit product it needs income for you most of the wealthy individuals are like I don't actually need income Sean I need I I need less income I need more uh uh tax savings yeah but what we found is there are there's a there's a select community of folks that need income yeah they need income they're not always on the high end of of the capital stack right they're not always the accredited there are people everyday people listen I have a nest egg and for me to generate income I got to go to my advisor and ask him to pick a bunch of dividend stocks for me or I have to go to him every so often and sell shares of some stock and and like I just I just want to invest in something that will deliver a stream of income to me and we found a way to to be able to offer that to anybody.
• 31:16
  SPEAKER_03: Is it their regs or who they are is it regs E F it's it's a regulation A product okay it's regulation A.
• 31:25
  SPEAKER_03: We we you know it's a very it's it's there's a lot of regulations around it and we went through a lot of hoops to get this approved by the SEC.
• 31:35
  SPEAKER_02: Let me ask you this what is the in this might I mean without playing attorney we're not attorneys okay just high high level if you're gonna go set one up to the guest go get an attorney we're just talking a high level here what's do what's the difference between a reggae and a crowdfund or CF on the well uh there's there's a lot of differences but with the regulation A it's it takes a little longer it's more expensive to set up we're basically like a a um a public company right we have to issue the same type of statements out there every year we've we've got to make annual filings all of our financials need to be audited third party auditing you know they don't want somebody selling to the general public that's not you know that's cooking the books you know you guys are doing it right.
• 32:31
  SPEAKER_03: So there's a lot of regulation around it uh we're filing in Edgar so we kind of look like a public company even though we're private um and then we're allowed to raise up to 75 million I'm not an attorney I'm not giving advice but we can raise up to 75 million in um in this product in this in this vehicle I guess uh on a on a 12 month rolling uh schedule and so that's really enough for us to kind of keep this train going and you know what we found is that there are people that have IRA money that are looking for income that might not be accredited and they have no good options.
• 33:14
  SPEAKER_03: They really don't and and so for the first time in a long time we are able to take our product to the masses it's been really cool to see the market um kind of accept what we're doing and start buying into our it's actually a bond that's what we sell it's a bond yeah uh and it has a coupon on it and it has a higher yield than a savings account and and it's that bond is backed by these mortgages that we're buying off the secondary market.
• 33:44
  SPEAKER_03: And and so normally in order to get a yield like we're offering uh you'd you'd kind of be in a CD or something and and you know although those have been paying more recently our yields are are um above those and um and investors you know also know kind of what they're investing in and who they're investing with.
• 34:06
  SPEAKER_03: So it's it's been an exciting journey for us.
• 34:08
  SPEAKER_03: We left the accredited world and we moved into this new world that we think is really powerful and and we can offer our product to you know everyday normal hardworking people it's having trouble today with income and income.
• 34:26
  SPEAKER_02: Kind of if you look at it from a like an investment standpoint, you know raising money off of accredited investors is difficult.
• 34:34
  SPEAKER_02: You know I mean there's a lot of regulations you have to follow um it's almost better to go lower risk and you know then do the audited financials and you know pay the extra money to go ahead and just go to the general public you know um I I've just I've raised money off accredited investors and it's you know it's I don't know it's it's different.
• 34:57
  SPEAKER_03: I'll I'll just say that you know it's now another thing that's unique about us is when you kind of go into the space and you look around um we have to make it really easy for investors to be able to invest.
• 35:12
  SPEAKER_03: Yeah and and very few folks have done this and so I talked about our investment strategy and I talked about the regulation but we have made it easy for you to go on our website click click click put in your uh banking information tell us where you want the distribution sent electronically sign the documents and literally within a few minutes you're done with the transaction it is done and so we've we've built a lot of technology I didn't have a tech background we've brought in a lot of vendors there's a lot of things that go on behind the scenes it's not as easy as it's imagined because a security is being sold it's regulated it's got to be approved by a broker dealer there's got to be AML KYC there's a lot that goes on behind the scenes to allow this transaction to happen but we've eliminated most of that for the investors so they don't see it.
• 36:10
  SPEAKER_03: And so that's something very unique for us we can sell to the general public we we make it easy for people to invest we make it easy for you to reinvest tell us where you want the distributions compound your interest with us or you know exit out of the bond.
• 36:29
  SPEAKER_02: What does the expert look like what do we you know say somebody wanted to pull out of there after a year do they get penalized?
• 36:34
  SPEAKER_03: Most probably do but well we we have a lot of different classes and so when you come in you might say all right I want to be in for a year I want to be in for two years I want to be in for three years.
• 36:45
  SPEAKER_03: And then we have these really cool products that we created where folks may want to get their principal back to them over a certain period of time.
• 36:57
  SPEAKER_03: We call it our income builder series.
• 37:00
  SPEAKER_03: And so it could be that we put you on like a a three year schedule that you're getting a coupon on the bond but the bond is also paying you back part of your investment reducing the balance every month and so that's a way to kind of accelerate the income off the market.
• 37:21
  SPEAKER_03: And so we've we've been we've been getting very creative uh with with our products and so for somebody who's looking to hey if I give you$10,000 and and you know I know I'm gonna get above um average coupon on that I'm gonna get that$10,000 back over a certain period of time.
• 37:40
  SPEAKER_03: I can rely on that income stream and I know it's making um a yield people have been buying this product and so we've got the regular you know it just sends out um you know the interest on the bond and at the end of the bond they get their all their principal back or they can get into these income building series where you know I know over the next three years, over the next four years over the next five years, not only am I going to get my interest, I'm also gonna get a piece of principal and it kind of helps people kind of inflate their income and and kind of live on that over the next three or four or five years.
• 38:20
  SPEAKER_02: You know what I really like about this product you have for you from your standpoint as a fund manager I think is like people evolve you know you're you're gonna get a lot of uh high income uh younger professionals I think and older people but I think what it does is opens doors to other things because say five years from now you know you actually produce an income for them and they make money it it's gonna lead to other things you know other ventures to where I think it's a lot it's a it's a good place to get people involved in uh you know passive investing and passive income and you know give them a good experience.
• 39:02
  SPEAKER_03: I love how I love the ease of operation you know the way you have everything pretty much automated they're like okay that was easy it wasn't a headache the thing I hate about like the accredited and the syndication is you know they you got this long old thing and it's like each investor has to hire their own attorney because there's so much paperwork you're like oh my gosh you know my head's gonna explode I'm sure you have some of that paperwork but oh yeah we do we do everybody does we make it easy but the really cool thing that we're building which to me is the most exciting thing is we're really really building an army of investors and we started we started with this product and I think our average investment is maybe I think it's like 30 grand right yeah uh which is very different than somebody dropping a two or three hundred thousand dollar check right and yeah we've been down that road before but when we started it took us like um it took us like four or five years to build a a port that when we were in the credited world like a hundred investors like that was a big deal you had a hundred investors in our first year of operating this this this product we had a hundred investors and now we're up almost 400 investors and so honestly like this will get into the thousands of investors here soon and to me that's actually the most exciting part because we are impacting you know we are the goal literally the goal is to have three four five six thousand investors and so to me that's like you know fam more families that we're impacting we're generating income for them to do whatever they want to do with it but to me it's like if we can make an impact we can impact more people the number of people that we can impact um to me is the most exciting part.
• 40:49
  SPEAKER_03: Yeah let's uh I think you talked about the fire movement at the beginning I'm just looking at this in the the reggae CF yeah that's that's good um yeah you I think we what's the uh four percent uh retirement withdrawal assumption well you know a lot of a lot of investors right now um are are kind of forced to uh to take the money out of of their retirement yeah right if they are buying a product like ours that is producing income they don't really have to go into their portfolio all the time and be like oh did I did I meet my minimum or not like there's it's always coming out and so a lot of our investors have bought the product put it in their um uh their their retirement account knowing that that's gonna come out automatically um and and and that's kind of helping them you know hit those hit those metrics and and so just a lot of folks uh are using their retirement dollars to uh generate income they're they're you know in the later part of their life and and you know they Social Security isn't enough to live on anymore and yet they've got this nest egg there and and you know going into a portfolio every so often just to sell things doesn't is not appealing to them and so they they get these bonds they throw it in their um a self-directed IRA account that's that's where a lot of our folks um that can invest with us they use their self-directed IRA accounts because you know and fidelity they they don't allow our products on their platform right uh so so you got to go to like a self-directed world which we have plenty of folks that we work with and and uh you know it's it's really helping investors kind of not really have to think about this stuff anymore make it easy for them that's that's really a big value that we bring we're trying to like create passive you don't have to think about this set it and forget it like make life easy for folks who have worked their whole life uh um you know worrying about things like this and and now's not really a time yeah well awesome man what's uh I think the most important part is where do people go you know it's uh I hope your website isn't like this big long name no no no it's it's really simple it's bqfunds uh dot com so bQuest is the name of the company you know we we built it because we really want you know we want things passed down uh we want people to be able to pass these investments down and so BQuest asset management is the name of the company we uh we turned six years old in March you know 400 investors now uh call beQuest their home go to our website you can click around find the bonds for sale and uh and and we'd we'd we'd love to have you uh participate awesome man I appreciate you stopping by uh love your uh love the product and the risk profile of the residential uh notes and all that and it's a good opportunity to open doors for some people that otherwise wouldn't so appreciate you stopping by man likewise thanks Carson absolutely