Latest / The Capitalizing Your Life Podcast / Risk and Reward: Justin Moy on Fund Management and Passive Investing
Transcript
- Glenn Today my guest is Justin Moy, founder of Presidents Club Investors, host of Passive Real Estate Strategies. Welcome, Justin. Justin Moy Glenn, man, thanks so much for having me on. It's been like years of us following each other's journeys and just touching base every now and then to see what's new. I know you're up to great things. So it's cool to be on this side of it with you. Glenn Yeah, a little envious of your social media, how you get to travel the world and raise money. And I'm out here in the middle of mobile home parks trying to figure out how to kick residents out and collect rent. Justin Moy It's different journeys man and that's one thing that I always tell people about like real estate investing is there's so many things that you can do. You know, you can be the sleeves up in the parks, in the apartments, in the units kind of guy or girl and I've done that and it's a great skill to have, but ultimately you know you want to pick a niche that kind of supports the lifestyle that you want. And you know every niche that you go after has pros and cons. Every kind of thing that you do within this business has pros and cons. And, you know, to me, it's like, start with the lifestyle you want and work your way into what makes sense. you know, at times I'm envious of you and I miss those days of going into asset management and working with tenants and looking, walking units and doing all that stuff. So it's a give and take. Glenn Awesome. So, if you could tell us your story on how you got started. Justin Moy Yeah. man, real estate has been really a lifelong thing for me. When I was 17 years old, or 16 to 17 years old and it was time to go to college, I really had no idea what I wanted to do. At this point, I think the only thing I've done is I worked at GNC, the supplement store, I love to go to the gym. I didn't really have a lot of direction. So, my mom said, well, why don't you go and look for an office job at least? See if you even want to work in an office or what you want. And I found an internship that was at a commercial real estate company. It was called Cassidy Turley, which has since then been bought and sold, but I think they're part of CBR now or something like that. And I just loved it. It was so cool. I was working on marketing packages. I was helping the brokers. I was calculating commission checks, which was like the very interesting part to me going on property tours. And I just thought I really liked this industry. I like seeing them celebrate these big deals. I like that they're in and out of the office. They're doing a lot of stuff and meeting a lot of people. And so, I said, well, I want to do that. So, when I was 18, I got my real estate license, and I started selling homes in the Bay Area of California. Loved that journey, made dumb money as an 18, 19, 20-year-old kid. And ultimately learned a lot about the business. I think if somebody wants to get in the business of real estate brokerage and being a sale in sales role, it's a big segue into whatever you want because your hands are in a little bit of every single piece of the business from inspections to appraisals to banks and lending. Like you're in a little bit of everything. So, you get to see what you really like and maybe what you like to align yourself with. So, I was in the sales space with that and ultimately realized that I was making great money, but I was transactionally rich. You know, I had to be there. I was chasing deals every single day. It's very, very stressful, right? Commission only. And you got to eat what you hunt. And I even started to go bald actually from stress. I had a lot of mental breakdowns, and it was just an unusual time. Glenn About what year was this? Justin Moy This was when I was 18, 19 years old. I'm 31 now. So whatever that math ends up being was early 2000 or something like that or 2010 or something. And ultimately I decided that if I wanted to be really time wealthy, I needed to invest. So naturally I looked into real estate investing. Didn't love the economics of the single-family space. So I looked into bigger deals. Was it duplexes, fourplexes? Why not go bigger? And then I kind of snowballed into larger units traditionally in the apartment space. And that was maybe five years ago at this point. And now I raise funds for deals from a fund management perspective. And it's the perfect role for me. So that's the long way of essentially or the short way, depending on, I guess, what details you want on how I got here into the real estate game. Glenn So, we talked about a little bit before the show, but what was like the pivot point from when you were actually owning real estate to deciding to maybe I should raise funds for somebody else? Justin Moy Yeah, it was a lifestyle thing. For me, I always felt like my skill set and what I would love to do was centered around raising money. I love sales and marketing, have a big background in sales and marketing, but ultimately, there comes a point in everybody's career where you can't raise money and you shouldn't raise money - if you're brand new to the game and you don't know what you're doing ,and you've never bought a property and you've never done commercial. On one hand, I didn't have the ability to raise money, but I also, I didn't deserve to raise money. Who was I to tell people that I was going to invest their money better than them when I hadn't been there and done that myself? So partially out of necessity, but partially out of just, want to explore these routes of the business. So I spent a lot of time underwriting deals. I underwrote thousands and thousands of deals. I spent time leading asset management and managing contractors and dealing with banks. And ultimately, I didn't love doing those things and I knew I wouldn't, but it helped me build this journey of being such a well-rounded investor that now when I'm looking at deals and now when I'm telling investors about deals or why I'm doing deals, why I'm passing on deals, looking at the risk that deals might have that isn't necessarily underwritten, but you could see operationally a lot of those that helped me be a lot better fund manager. So, you know, part of it was necessity. Hey, it's hard to raise money, especially when you've got no track record. And then part of it was just my desire to be a better and more well-rounded investor before I step into the fund management space and can now really talk about deals on a very real. Glenn Here's a question that I had, right? I never heard of the fund-to-fund model. Let's talk about real quick pretty much how that kind of looks. What is that? Justin Moy Yeah, so it's essentially a term for, let's say you're an investor and you're looking at syndication, there are other deals to be a limited partner in. Typically, your terms are gonna be something like, invest $50,000 with us and you're gonna get a 7 % preferred return and a 70-30 split on profits thereafter. Well, essentially what we do is when we find a deal that we really like, I will go to them and say, hey, if you're gonna give an investor that's going to get you 50 grand, a 7 % and then a 70, 30, what if I give you 5 million, you know, can I get a 9 % pref and a 90, 10, you know, I've gotten up to 92, eight splits on some of these deals. And to a lot of people, it makes a lot of sense because what I'm going to do is I'm going to go to my investors and essentially crowdfund that 5 million in this case, you know, $25,000 $50,000 at a time. Now the benefit for that is one - deal flow. I tend to look, I get about 30 to 60 deals a month to look at. Through that, I will invest in about three to four per year. So, I'm super, super picky in what we do. And a lot of people just don't have the ability, the capacity, or the desire to look at the caliber of deals or those types of deals. And then second is - those terms. We're all kind of co-investing together. So, we all benefit in stronger terms, whether it's more flexible minimums, more preferred positions. There's always higher profit splits and equity splits. Maybe it's removed hurdles where you see a lot of these groups. They'll say, hey, it's 70 30 up into a 15 % IRR. Then it goes 50 50. You know, a lot of times we're going to remove that hurdle. So it could be much, much more profitable to invest through a fund like ours. Now for the operator's perspective, it's much better because they're just getting one check for $5 million. They have one check, one investor, which is our company to deal with. And it's more of a raise money on demand instead of having a whole capital raising department that is idle sometimes three fourths of the year, right? Not raising money for deals, but you're constantly absorbing that overhead. So there's a lot of benefits to it and it fits in a lot of people's business perspectives and a lot of investors perspectives. And it was ultimately what I really liked to do. So that's the fund-to-fund model. You think of it as kind of co-investing together for stronger terms and taking part of better due diligence and better deal flow. Glenn Yeah, definitely. And I think the real value is like, say if you're an investor and you put, I don't know, we'll say your goal this year might be 50 to 100 thousand dollars to put into a deal a year. And that's a lot of money. I mean, for my previous job, it would take me all year to save $50,000 and, that's a high savings rate, you know? And for me, I'm not really keen on the stock market, and I like to buy real assets, you know, stuff that that I can see and know that it's making money and not just like and a web of very craziness. So syndications, I like them a lot obviously I raised capital for it, but when you have somebody like a Justin doing it, as what you were saying, you're looking through like 30 deals a month. And what I can tell you is that whenever I interview with fund-to-fund managers, they generally have very good questions. And it's always like, they'll beat up the operator a little bit, not beat them up, but they're just trying to poke and prod and they know the right questions to ask, especially if you have the right fund manager. so... Justin Moy Yeah. Glenn Like, how did you piggyback, like say when you first got started, you're trying to raise, we'll just say, even if you're raising 100, or 200 thousand from anybody, that's a big deal for your first raise. Cause you're like, somebody's going to give me enough to buy a house to go invest for them, you know? And how did you get over that hurdle? How did you get there? Justin Moy Sure. Yeah, I think a big part of it was understanding what my knowledge and skillset was and letting investors know in a way like this is a co-investment. Like really I'm bringing out the deals that I'm also investing in. I'm a limited partner as well. Having this understanding that first of all, my investment dollars are sitting on the same footing as yours. Like if the deal goes great, it's great. If the deal goes a little bit sideways, like I'm right there with you. I'm not cashing out earlier. And then my compensation as a fund manager comes way after your returns as an investor. So, there is zero incentive for me to do deals that are even average, because even a deal with average returns, I'm not going to make any money as a fund manager. You know, my LP investment will do, of course, average, but I won't make any money as a fund manager. So there's this massive incentive to only do like the best deals because I really get paid on over performance. I mean, you know how pref returns work and I could make $0 if we just return the minimum or return an average deal right over a five-year period, which is a tough business decision to make is five years of $0 really. So understanding those two things and one thing that I would say for a lot of people is you know there are bad fund managers out there, like quite a bit, because there's a lot of education right now on like, Hey, if you have a lot of friends, be a fund manager. Like just get all your friends to invest with you and then you invest with these groups. But you have no idea what you're investing in. You know, there's a lot of people and I'm on some of their emails or there's a lot of fund managers who just raise for the same person over and over and over and over again. And it's like, well, what kind of due diligence are you really doing if you're just a mouthpiece for this operator essentially? You know, so I think there's a lot of red flags that you can look for in those fund managers. But ultimately, when it came to raising money, it's understanding that my financial interests are extremely in line with the financial interests of the investor. And like I mentioned, I've been around the block handful of times. I know that I've looked at a ton of deals before I brought this one up to my investors. And I know that I'm at a position in my investing career where I'm sacrificing a lot of potential yield for some easy sleep nights. So I feel really good about the risk of mitigations on the deals that we do. And I've kind of pulled back that risk profile of what we do. So when you've been there, done that, and you've gotten your hands dirty in the underwriting and the asset management side of this world, and your financial interests are aligned with the same footing or even a lower capital tier than your investors, it's much easier to have those conversations and say, this is a good deal and I'm stamping my name to it. Glenn Definitely. It's like the reputation is way more valuable than any money. Because ideally we, you and I, we're in the same boat where the amount of money we'd like to make in the future is going to be a lot more than what we're making today. So the only way to get there is to have a good reputation. And it's almost like you're deferring your income just to make sure that you're able to capitalize on in the future, to make sure that the, you know, have a bigger pile of money to manage and also better assets, you know, you're not gonna get there if you're just sending your investors to bad deals. Justin Moy Yeah, yeah. And there's this kind of like, you know, I don't know if it's a misconception, but I'm in a lot of investing forums, right? And people will talk somewhat critically about syndications and they'll say, well, you know, they're just raising money into bad deals to make, you know, their asset fees on the front end or something like that. And I think a lot of people don't realize that fee on the front end for operators and for fund managers is really negligible in the amount of profit that you make. That fee really exists because we're not going to make money for five years. And it probably represents less than 10 % of the actual projected profit that a deal can make. So there's this huge incentive of why would I burn investors on 10 % of my total projected profits maybe and put them into a subpar deal and then forego 90 % of my profits if I just wait for a good deal. So I really like the way that the fee structure of fund management syndication is set up in that way where I think a lot of people they've had financial advisors who they say, hey, I lost money this year. Why am I still paying you? And I understand why they're still charging. But to me, I'm OK paying somebody more if things go well as opposed to paying somebody all the time, even if things don't go well. So I think that's a big misconception in the space, too. And why like we are so aligned with the investors because a lot of people don't know this, but about 90 percent of our comp is going to come on the back end when the deal. Glenn Cool, so yeah, so let's talk about some of the deals you have invested in and just kind of like, what does it look like? Justin Moy (17:59.918) Yeah, yeah, I'm actually really excited right now about a couple things. First is, tell, I'll say most of our portfolio now has been apartment buildings. And I think apartment buildings are fantastic. I think because of the way their cap rates are calculated, they have a really high multiple on your income. So, you know, if somebody is in the 5 % cap rate, if you add a dollar of net operating income to that deal, you've added $20 of value. There's not many other assets where you can do something like that. So when you're in growth mode, apartments are really, really good. Now, what we've generally seen in the apartment space over the past, let's say five years, is cash on cash yields drop because it's a desirable asset class, because there's a big multiple on equity on the backend. You're starting to see value add deals with 3% cash and cash returns year one, you might get 4%, 5 % in the next couple of years. And you have to anticipate you're taking on value at risk, right? So my investing thesis is always, how can I look for the same projected potential yield with pulling risk off the table? One thing that I'm really interested in right now is tax abatement strategies. So tax abatement is essentially, it's not low income housing. I don't do low-income housing or voucher housing anymore, but it's more workforce housing. Most municipalities, if you reserve a certain percentage of your units to families that will make something like 80 % of average median income, and you let them fill those units, they will wipe out your tax liability up to 100%. Glenn Real quick one thing I got kind of lost on - so you're saying low income is not low income housing so that means like section eight is that… Justin Moy There wouldn't be - no, there's no voucher. There's no, you know, the tension on government programs. You know, they still have to work and maintain, you know, the 3X income. Glenn What about tax credit apartments? Justin Moy No, it's not really a tax credit one because those again are typically more those voucher housing units or they have to be in some type of housing program with the city or the county or the state. These tenants are not. So typically, what you're going to do is if somebody is making about 80 percent of the average median income in the municipality and you have units reserved for them, you can wipe out your tax liability. So the last deal we did, there were units about 80 percent of the building is is reserved for those types of tenants making 80 % of the median income. And the tax liability on it was just over $500,000 a year. So when you're able to take an asset and immediately increase income by about $500,000 per year without taking on value at risk, you see much higher cash flows. You see a big equity built in return there. And now typically what you'll see is you'll see a pull down of your top line revenue because you can't have units be as expensive if you want to maintain about a 3x multiple on income to rents, but it's not going to be relative to your tax savings. Glenn So when you say 500,000, what is the 500,000? Justin Moy That's the tax bill on the property. So that goes to zero. So I mean, you're immediately adding to the bottom line, a $500,000 gain in the removal of an expense. Yeah, so it's a removal of expense. It’s hard to use the G word, guaranteed investing, but you know, unless these municipalities get rid of that, which they won't, it's a guaranteed savings of that versus value add, you know, you're projecting all of those. Glenn Yeah. Reducing expenses. Justin Moy You're projecting I can rent these units renovated at this price. You're projecting it'll increase by this much. But when you're decreasing the expense right away, you know exactly what it's going to be. And you're not taking on a lot of that value at a risk. So we've seen deals be really successful there. Much stronger cash flows. Good, good and flexible loan terms as well. And I think that's a strategy we're going to see become more mainstream over the next few years. I've already seen a lot of operators getting into it. haven't invested in people if they're brand new to the space or that game. But that's a strategy that I'm really into right now, because I think it gives us asymmetric risk return profiles. Glenn So, if you have, so if they have this 80 % average income, is that what you were saying, median income? Justin Moy Correct, yeah. Glenn And so, if you have that, does that mean that they regulate the amount of rent you can charge or is it just you underwrite it that way? Justin Moy No, no, there's no regulation on the amount of rent you can charge formally. But of course, you still want to be about that 3x ratio, right? So, you know, if a tenant 80 % of your median income is $1,000 a month, right? You want to be relative to that where you're not charging them too much. And the great thing too, is with some of these municipalities, the average median income is so high. I've even seen deals where you don't even have to decrease the rent on the unit to hit that threshold. You just have to reserve those units. And then there's a third party that comes in and audits every quarter. But it's worth it for the gain that you get on the back end. So, if you're getting some of these municipalities where the average median income is very high, you can even not have that much of a pulldown on your top line revenue and still wipe out that tax line. Glenn And how did you get to the number, I know as an example, but how would you get to the number of $500,000 deducted? Justin Moy That was the tax liability on the last property we invested in. That's the tax bill. Glenn So, their annual tax bill was $500,000 and then they're like, okay, since you're offering 80 % of your housing to, or no, they're asking, is it 80 %? Justin Moy 80 % of the units in that municipality, 80 % of the units were reserved for tenants making 80 % or less of the average median income. So, it could be anywhere within that range. And the tax bill, I think, was like $516,000 or something like that. And now I'm into 2025. It's zero. And you can do less or more, right? So you can do 50 % of the units you can reserve, and they'll wipe out 50 % of your tax liability. So you can pull the plugs on these. Glenn Hmm. Interesting. Justin Moy But the best bang for your buck tends to be to get that to zero. And that does really, really well. So, we've seen some early on success with that. And I think it's a strategy we'll keep on pursuing. Glenn Definitely. So, I guess do you have any others interesting ones or…? Justin Moy I think that's a good strategy that's a little bit more unique that a lot of people haven't heard of. I think a lot of these municipalities, you see these value-add deals and a lot of them are great, but a lot of investors are just now learning what the risk of value add deals is. You're taking on dynamic debt to say the least, usually to execute on these. You're seeing how sensitive these deals are to things that are totally out of your control. You know, something happens in the freaking Panama Canal and now those windows are three months back ordered. Like you just understand that all these things are so tied together and you understand that it's not just as easy as we're going to renovate these units and lease them on higher levels. There's a lot of personnel risk. There's a lot of supply risk, supply chain risk, additional just market risk and debt risk that you take on. So, you know, the value-add multifamily space has its place, but it has its risk. That's why it pays so well. That's why you can put up those 20 IRRs and those 30 bonds sometimes. And investors now are starting to learn why those returns are so high. And so, if you can find ways to capture similar yields, right with a tax abatement, I don't think you're going to hit those 30 IRR bonds, you know, but you could hit 20, right? You could - you may not hit 20 % per year average annual, but you might hit 18 or 19, you know, so for a little point of sacrifice on yield, you can take a lot of risk off the table. Glenn Yep. Justin Moy And I think that is something that we've shifted the focus of the fund to a lot now is how can we remove risk from the table even if it means sacrificing a couple points of yield? And I'm happy with that trade off. Glenn So, on that deal, let's just go into the fund-to-fund model aspect of it. Say if you're a regular investor showing up with any amount of capital, what's the benefit of being a part of the fund-to-fund instead of going around the fund to the fund manager. Justin Moy Yeah. Well, a couple of things. First is access. this particular operator, they do not take on, you know, they take on new investors, but they essentially fully fund deals very, very, very quickly. So, for you to get allocation to their deals where they don't market, they're one of those groups that you wouldn't ever really know who they were unless you knew somebody who maybe knew somebody. They're in a fortunate position where their reputation is so strong, and they have such a good base of investors, that they don't really advertise. Glenn Mm-hmm. Justin Moy So for us, we were able to carve out allocation and even get our foot into the door of that deal. And your returns are actually projected to be higher with the fund. Our IRRs were about a point higher than investing directly because we were able to get stronger splits and we're not charging things like asset management fees or other fees that you might conventionally get. And we're able to get things like rebates on fees that the sponsor's charging in exchange for our larger check sizes. So, for us, for that deal particularly, access to the deal for sure was a big one. Minimum investment too, I believe the sponsors minimum is either 100 or 200. Ours was 25,000 in that particular deal. And then projected returns were stronger on it with us. So, every deal is gonna have something there with it. And if you're investing with the fund operator or fund-to-fund, I would just ask like, what did you negotiate on this deal that makes it a better deal? Sometimes it's a really, really good deal. Sometimes it's okay and sometimes they're going to say, hey man, you know, I got to make a little bit of money. I'm doing all this due diligence and stuff. But as an investor, you should know what that benefit is for us. Usually, I like to look at higher returns by investing with the fund-to-fund or removed hurdles by investing with the fund-to-fund, which can be extremely profitable. So that was the facet that we had on that deal. Glenn Awesome. If you could just tell us – the one deal that I like, that is somewhat liquid, was the debt fund that you're raising capital for. I don't know if you're allowed to talk about it… Justin Moy Yeah. Sure. Yeah, yeah, totally. Debt funds are really great opportunities because they check… Well, here's what I'll say. A good debt fund, right? Like I'm sure you've seen the same thing where like everybody's got a freaking debt fund now. And a lot of them were created very recently and they have a lot of different names for debt fund, income fund, private credit fund, opportunity funds like they're all generally the same thing, but typically speak to speak to risk profile. A lot of investors are realizing that there's distress in the markets right now, especially in multifamily. A lot of operators are looking for mezzanine debt or foreclosure saving debt, and they're willing to pay a big premium for that. One thing I always tell people about the debt space is you have a really big range of risk reward profiles and a very easy way to tell how risky your debt fund is, is what the returns are. You know, I've seen debt funds with 14%, 15%, up to 16 % pref returns. And I'm like, well, you're in like the third or fourth position. I'm like a low credit borrower. You're coming in to save somebody from foreclosure because I pay what are they charging the borrower? Probably 20%. I mean, who's paying 20 % for debt right now? Somebody who cannot get money anywhere else. So it is, you know, directly correlated to the riskiness of your capital. Glenn Yeah. Justin Moy So if you want to roll the dice a little bit, that option is there. If you want to stay safe and collect more consistent monthly payments and have first position loans and have low leverage loans, the high credit borrowers only, you know, slide your way down the risk reward profile on that scale. You'll probably see in the safest deals, meaning like things I just mentioned, low leverage, high credit borrowers, consistent sponsors, first position loans secured by the asset on the lowest end. I'd say you're looking at 8% to 9% per year, right? Paid every single month, you can probably compound it versus all the way up to the 15% or 16 % pref returns that are more risky deals. Another thing that you look at too with debt funds is liquidity. The debt fund that we run has a 90-day liquidity notice where you can redeem your capital, just give us a notice and we ask just for 90 days to do it. Historically, it's redeemed in 14 days or less versus other funds, they might have a lock-in period of 6months, 12 months, 2 years, they might be more flexible if you invest more, you know, they might be more flexible with your liquidity. So, you know, those are the two levers that you're going to pull on a debt fund that's right for you is how much liquidity you want versus what risk position do you want your capital to go into, and then find a fund that makes sense for you. For me, I'm all the way on the on the low risk profile for the debt fund. So I'm happy with that, you know, 8% to 9 % yield and the consistency of sleeping well at night. Glenn Definitely, and I like the 90-day, what is it called again? Justin Moy Redemption, we call it like a redemption. Glenn Yeah. Justin Moy It tends to help a lot of people get over the mental hurdles of investing as well. Especially if you're going to make your first investment and I'm going to put a deal in front of you that's like a five-year hold. It's a value-add deal. You're waiting to get 4 % cash on cashier one, and you're going to pay every quarter. It's kind of tough to get through some of those hurdles when you're a first-time passive investor. And so, if I could put another deal in front of you, that's way less yield, but if you invest today, you get paid tomorrow. They pay every single month. It's clockwork. Redeem it whenever you want. Just let me know and we'll get you your capital back. That tends to help people get over that first hurdle lot quicker. And then I'm sure you've seen it. Once you've made your first investment, you make your second investment, third investment pretty easily. But it's good to have that optionality for people. Glenn Also, one thing I've been thinking about, it's like, so they always say like when you're young, you should be taking more risk and as you get older, you take less risk. And I actually feel like it might be the opposite. And I feel like if you're, you're young, yeah, you can take risks, but long-term… Say if you were to just start stocking away money, making 8% to 9%, and it is somewhat liquid. So, it makes it less risky. You're going into a somewhat liquid investment. It's fixed returns almost. But then there's going to come a time that you have that income. Like the second I went from making, you know, I was working on my W-2 and then I made like $500, $1000 a month off of my investment real estate. Once I got to $5,000 a month in investment, my mind shifted because I had the $5,000 and at the time my monthly expense was $5000. It shifted my investing - now it's almost like if something happens with my W2 job, I have this $5,000 a month to rely on. So, I can take my $150,000 a year job and just start stocking that away towards something a little bit riskier. And I think you can make more money by doing that because you're like in a position where you can maybe invest in maybe more of the value-add type deals. Cause I think for us, a lesson that we've learned is that like all we've bought is value add. Justin Moy Mm-hmm. Glenn And I said earlier in the call before we started recording, that it's an understatement to consider it an extreme value add what we do. It's like an overhaul of a property and that's what we've done. And we've learned to set investors’ expectations on exactly what we're doing. And also you find a different type of investor like we have guys that give us funds and they're not too concerned with the preferred return distribution. They're looking for more of the upside. And that's really what we're looking for is finding the investors who not to be, you're not really concerned about, like once you have a certain level of income, like say if you're putting a thousand dollars in or a hundred thousand dollars in, you're getting like a 750 payment. It's that's not going to affect your way of living at all. Like when you're making, $100,000 to $200,000 a year and you don't necessarily need the income that day. So, and that's kind of what I like about the debt fund is like for new investors, you put as much into it as possible. And then when the day comes, you generally, if you find an investment, you generally have, you know, 60 to 90 days that you can start taking action to pull from it, you know, so that it would be a great play. Justin Moy Right. Yeah, that's interesting way to think about it because, you know, I always tell people I invest and my investing thesis is for work optionality. You know, I want you to be able to walk away from your job with passive income. And there's generally two reasons why people do it. It's because first they want to go retire on a beach somewhere in their 30s or 40s, which is great, or because they want to take a bigger risk. Whether it's working at an exciting startup or a lot of your comp is equity based or doing your own deals, starting your own business. Cause now you can start a business and not work a regular job, not even really need the business to do well, right? Cause you all your bills are paid for. So yes, you can expose yourself to more risk when you have that income coming in. It's just about getting there, right? Because to me, if you're a $200,000 earner, right? If you have a debt fund that's paying, let's just say 10% and you put a hundred grand into it, okay, you're gonna make 10 grand a year. That's good. You're not walking away money yet, right? So, you how long is it gonna take you to put in enough money into something like that debt fund to where you do feel comfortable and you can start to cover your expenses. Maybe it's feasible to do that through your W-2 earnings. Maybe you wanna take that hundred and do some value adds until, you get $500,000 or $600,000 after a couple cycles of those deals and now you've got some pretty good leeway. So, there are different strategies. Typically, what I've told people is my path value add until you kind of buildup that equity and then you put it into your debt fund or whatever it's your triple net lease, whatever it's going to be. And then you can live off of that income because again, you are sacrificing yield for predictability, stability, monthly payments and lower risk. So to me, I wanted enough money to put in there that I could walk away and I wasn't going to make a couple hundred bucks a month, right? That doesn't really move the needle for you at a certain point. But I agree. People want passive income, yes, so they can retire, but also so you can take bigger risks. Glenn 100%. And that's exactly kind of my path as well. I didn't really take too many risks. I paid off, I almost paid off, one of my houses at one point. And then I just started pulling lines of credits and stuff like that. But it's one of those things that you just, I firmly believe it's like you get the foundation right and you can take the big swings later. I think, you know, we all took risks being young and I learned that probably if I didn't take some of those risks and I did, know, certain areas it’s just very calculated. Justin Moy Yeah. Yeah. And everybody, everybody learns the price of that risk at some point. Like I mentioned, the investors are learning it now where a lot of people are kind of losing their shirts or, you know, the tide is kind of falling on a lot of people. And I'll tell you, as an investor listening and us as fund managers and Glenn as a lead sponsor, , you are going to learn more on a deal that loses you a thousand bucks versus the deal that makes you a million bucks. You almost just prepare yourself because if you're a lifelong investor and you invest in, you know, 50 deals, 20 deals, you know, you're going to have some that go sideways. Like it's just the nature of things. Now, what you take from that is how you grow as an investor. There's a saying I really like it's pain plus reflection equals growth. So when you get that pain, reflect on it, learn from it, grow from it. Glenn Yeah, that's how you learn. Justin Moy And then just don't make the same mistake next time. But yeah, you'll learn more like losing a couple bucks versus making millions on that deal. That'll be a more valuable deal for you. Because those are always the worst deals too, right? It's like you had to fight tooth and nail to just lose a thousand bucks versus some of the deals that are just home runs or like easy, easy code deals. But you know, that's a saying that I really like and people are gonna learn from. Glenn Definitely. So where can people find you? Justin Moy Yeah, I'm most active on LinkedIn. Look me up, Justin Moy. My URL, I think, is thepresidentsclubinvestor. So look me up there. I post every single day. Podcasts I publish every week, “Passive Real Estate Strategies,” where all I talk about is being in LP deals, how to mitigate risk, due diligence on sponsors, on fund managers, all that type of stuff. So those are the two best ones. If you message me on LinkedIn or you connect with me, I'll send you a message and we can connect there. That's probably the best way to get a of me. Glenn Awesome. Well, it was great having you on the show and thanks for being on. Justin Moy Yeah, thanks, Glenn. This was great, man. Glenn All right, thank you.