Latest / Carson's Corner: Entrepreneurship & Investing / Getting Paid to Be Patient: Whitney Elkins-Hutten on Debt Funds, the Capital Stack, and Protecting Your Compounding Curve

Transcript

Getting Paid to Be Patient: Whitney Elkins-Hutten on Debt Funds, the Capital Stack, and Protecting Your Compounding Curve · Carson's Corner: Entrepreneurship & Investing

• 0:00
  SPEAKER_02: A lot of people were like, no, we want our money in the fun, earnings super fast.
• 0:03
  SPEAKER_02: I'm like, you think you do, but you really don't.
• 0:07
  SPEAKER_00: Today's guest is Whitney Elkins Hutton, real estate investor, author, and partner in over$800 million of real estate, who turned one near failure into a blueprint for building generational wealth.
• 0:19
  SPEAKER_02: You want that tension in place because that's I mean, we all know if we all sat here, and probably a lot of listeners too, we can name two or three debt funds that have either are in trouble right now or on the verge of collapse because they have lent on bridge jet 24 to 36 months loan that they overvalued.
• 0:37
  SPEAKER_01: Yeah, it's kind of like I just see it as a real shady business.
• 0:40
  SPEAKER_01: So when I see people advertising the funds and it's like, oh, it's all short term and we're helping them, and I'm like, you're not helping them.
• 0:47
  SPEAKER_01: You know, quit lying about it.
• 0:48
  SPEAKER_02: I was about to say the same thing, and I was like, it kind of hard payday line.
• 0:52
  SPEAKER_01: And then you say something about it, you're unpopular because everybody on LinkedIn is trying to sell it.
• 0:56
  SPEAKER_02: When we're talking about the private credit space or private real estate debt, the two biggest risk factors you have.
• 1:02
  SPEAKER_02: There's several.
• 1:02
  SPEAKER_02: There's five that I go over that I want investors to really pay attention to.
• 1:05
  SPEAKER_02: But the first two are one.
• 1:09
  SPEAKER_01: So you're like looking for the quick payback, you get paid back, you're not in it forever.
• 1:13
  SPEAKER_01: Because the longer you're in it, the more can go wrong.
• 1:16
  SPEAKER_02: I talk to investors all the time that are looking to invest in our fund.
• 1:20
  SPEAKER_02: They're like, why on earth would somebody even pay 13.75% when they can go to the bank and get, I think I looked at the 30-year fix, like 6.2%.
• 1:29
  SPEAKER_02: And I'm like, well, one, it's a it's a like you said, a bridge loan, fix and flip loan, hard money loan.
• 1:34
  SPEAKER_02: I'm like, they're paying for speed and for service.
• 1:37
  SPEAKER_01: So they're they're basically paying for speed.
• 1:39
  SPEAKER_01: How how quick do y'all close on some of these loans?
• 1:41
  SPEAKER_01: Is it like 30 or 60 days?
• 1:43
  SPEAKER_02: No, we're I mean, uh, fix and flipper, they want to close like cash.
• 1:46
  SPEAKER_02: Like for me, like I was looking to close in 10 days or less.
• 1:49
  SPEAKER_01: Oh, wow.
• 1:50
  SPEAKER_01: And they're not well, the market's not flooded with them yet.
• 1:53
  SPEAKER_01: But like you said, when is too early, when's too late, and people say you can't time the market.
• 1:58
  SPEAKER_01: I'm like, well, it makes a lot of sense to time the market, if you know what I mean.
• 2:02
  SPEAKER_02: But as a passive investor, I think just remaining more Welcome to the Carsons Quarter.
• 2:11
  SPEAKER_01: All right, I'm sitting here with Miss Whitney Elkins Hutton with Passive Investing.
• 2:16
  SPEAKER_01: They are doing a lot of different stuff out there, uh, educating investors on the capital stack, how to get involved at different levels and being diversified within that.
• 2:27
  SPEAKER_01: And uh how you doing, Whitney?
• 2:29
  SPEAKER_02: Doing great.
• 2:30
  SPEAKER_02: Sun's shining today.
• 2:31
  SPEAKER_02: I love it.
• 2:32
  SPEAKER_01: Awesome.
• 2:33
  SPEAKER_01: You are in, is it South Carolina?
• 2:36
  SPEAKER_02: The company, passiveinvesting.com, is in uh right outside of Columbia, South Carolina.
• 2:42
  SPEAKER_02: I personally am in the beautiful mountains of Colorado.
• 2:44
  SPEAKER_02: So wow.
• 2:46
  SPEAKER_02: I was just at the base of the Rocky Mountains.
• 2:48
  SPEAKER_02: I'm uh I'm in uh Boulder, Colorado.
• 2:50
  SPEAKER_01: Awesome.
• 2:50
  SPEAKER_01: I'm up here in uh the northeastern tip of Tennessee.
• 2:54
  SPEAKER_01: It reminds me a lot of Colorado in Kingsport, uh beautiful smoky mountains.
• 2:58
  SPEAKER_01: We're just about an hour and a half from the Smoky Mountains National Park.
• 3:03
  SPEAKER_01: So anyway, I feel like I'm in Colorado, the Colorado of the East.
• 3:07
  SPEAKER_01: So have some uh urban redevelopment up here.
• 3:11
  SPEAKER_01: We're looking at, but anyway, great having you.
• 3:13
  SPEAKER_01: You are an author.
• 3:15
  SPEAKER_01: What is the title of your uh book?
• 3:17
  SPEAKER_02: It is called Money for Tomorrow: How to Build and Protect Generational Wealth.
• 3:22
  SPEAKER_02: I published it with Bigger Pockets a couple years ago.
• 3:25
  SPEAKER_01: Awesome.
• 3:27
  SPEAKER_01: So let's talk a bit a little bit about you know the cap stack, what y'all are doing, and all that.
• 3:34
  SPEAKER_01: Um I know we talked briefly before we jumped on here, you know, the different layers and all that.
• 3:40
  SPEAKER_01: So what are y'all uh, you know, kind of walking investors through and all that right now?
• 3:44
  SPEAKER_02: So yeah, I mean, we actually cut our teeth in the multifamily space and you know, um, like a lot of operators, you know, uh have a lot of 2021, 2022 vintage assets.
• 3:56
  SPEAKER_02: But even before then, we added in in 2020 our um real estate debt fund to help our investors diversify over the different layers of the capital stack.
• 4:06
  SPEAKER_02: Um it and not that we foresaw any sort of crash.
• 4:09
  SPEAKER_02: I mean, you know, uh, you know, uh I honestly out of thousands of people I know in the real estate space, I know one person that called what was gonna happen.
• 4:19
  SPEAKER_02: And of course, one out of a thousand, you think that person's crazy, right?
• 4:24
  SPEAKER_02: So until it's true.
• 4:26
  SPEAKER_02: Um, anyways, but like uh, you know, our our investors, we had you know, a good chunk of our investors that are like, you know, hey, we're really heavy in the equity side um of private investment.
• 4:38
  SPEAKER_02: It doesn't, you know, multifamily self-storage, industrial, whatever.
• 4:42
  SPEAKER_02: Um, you know, I just need to, I had this idle capital sitting here.
• 4:46
  SPEAKER_02: I want to be a little one, pickier about the deals I go into, or two, they're getting really close to retirement and they actually want pure cash flow.
• 4:54
  SPEAKER_02: And so we uh, you know, um, you know, Dan uh, or excuse me, Danny Randazzo and Kelly Garrett were really good friends.
• 5:02
  SPEAKER_02: And they they were they always did this walk and talk in Charleston like every Friday.
• 5:08
  SPEAKER_02: And finally in 20 June of 2020, we stood up um the PIC Real Estate Debt Fund.
• 5:12
  SPEAKER_02: Um, Kelly's strength, um, she's been lending and fix and flipping herself since the late 1990s.
• 5:19
  SPEAKER_02: And that that was really um a diversification play for our own portfolio.
• 5:25
  SPEAKER_02: Um, but then we opened it up to investors uh to help them diversify into pure cash flow assets, but not just any cash flow.
• 5:34
  SPEAKER_02: We wanted them to be in a debt fund that was something we wanted to be in, meaning it was very risk mitigated.
• 5:43
  SPEAKER_02: And, you know, it's not gonna be flashy, it's not gonna be like, you know, 10, 12, 14 return.
• 5:49
  SPEAKER_02: Um, because there's all I mean, debt can be risky in and of itself.
• 5:55
  SPEAKER_02: And it just the risk shows up in a different way.
• 5:58
  SPEAKER_02: We wanted something that was very uh cut and dry, straightforward, transparent for our investors.
• 6:03
  SPEAKER_02: And so the the real estate debt fund invests in fix and flip real estate, mostly single family housing, about 95% of that.
• 6:13
  SPEAKER_01: Why why is that more ri uh less risky?
• 6:16
  SPEAKER_01: Is it because it's uh I mean it I kind of understand why, but you know, for our listeners, it's you know, to be educational, it's you know, the single family assets are easier to get in out of, you know, they're more liquid.
• 6:28
  SPEAKER_01: I mean, you can sell a house in how many days versus you know, if you get into a fifty million dollar apartment complex, it's a lot harder to, you know, sell.
• 6:39
  SPEAKER_01: So I mean it's gonna take a lot more work, a lot more time and all that, you know, versus a house, it's like, you know, it's almost like it's pretty liquid compared to other vehicles.
• 6:49
  SPEAKER_02: So anyway, is that when we're talking about the private credit space or private real estate debt, you know, some of you the two biggest uh risk factors you have, um, there's several, there's five that I go over that I want investors to really pay attention to, but the first two are one, um, loan duration, which really taps into why we do the single family piece and the fix and flipping.
• 7:13
  SPEAKER_02: Um then two, asset valuation.
• 7:17
  SPEAKER_02: So um single family rental, you know, a lot of people think, oh, you do single family rental because there's more buyers on the back end.
• 7:24
  SPEAKER_03: Yeah.
• 7:26
  SPEAKER_02: And it's actually because because there's more of buyers, the loans tend to be shorter.
• 7:31
  SPEAKER_02: We're talking six, nine, twelve months, right?
• 7:34
  SPEAKER_02: As opposed to if you lend money for twelve, you know, twelve, twenty-four, thirty-six months, you know, you get starting it into years now that you're increasing your risk and your concentration.
• 7:46
  SPEAKER_01: Yeah.
• 7:47
  SPEAKER_01: So you're like looking for the quick payback, you get paid back, you're not in it forever.
• 7:52
  SPEAKER_01: Because the longer you're in it, the more can go wrong.
• 7:54
  SPEAKER_01: Yeah.
• 7:55
  SPEAKER_02: I mean and the more the second piece, the valuation can move, right?
• 7:59
  SPEAKER_02: Because your valuation stays the same, okay.
• 8:03
  SPEAKER_02: You've at least got the interest payments coming in, hopefully.
• 8:06
  SPEAKER_02: But if you're what you're looking for is the valuation, that equity cushion to grow.
• 8:10
  SPEAKER_01: Let me ask you this.
• 8:11
  SPEAKER_01: Are y'all like, um are y'all like set up to operate where like somebody can call in?
• 8:18
  SPEAKER_01: Like Carson's like, hey man, I found this flip house.
• 8:21
  SPEAKER_01: I'm gonna call Whitney and can I get a loan?
• 8:24
  SPEAKER_01: Or do you are y'all buying packages of them?
• 8:26
  SPEAKER_01: How are how is it structured?
• 8:28
  SPEAKER_01: Is it you know, how are y'all doing that?
• 8:31
  SPEAKER_02: Well, so we're what we call a balance sheet lender.
• 8:34
  SPEAKER_02: So I'm on the fundraising side.
• 8:36
  SPEAKER_02: So we raise the money into PickFund One.
• 8:39
  SPEAKER_02: Pick fund one is the lender for our sister company rehab wallet.
• 8:42
  SPEAKER_02: They're the ones that are actually originating the note loan, underwriting the borrower, underwriting the deal, got it, executing the fund document or the loan documents.
• 8:52
  SPEAKER_01: So you're over it all, but there's two different sides.
• 8:55
  SPEAKER_01: You raise the money and then you have the side that's gonna underwrite it.
• 8:58
  SPEAKER_01: But go ahead.
• 8:59
  SPEAKER_01: I not to cut you off, so yeah.
• 9:02
  SPEAKER_02: Well, and you kind of want the separation there because um you want to have uh you want to have an operator that's raising the funds, but moreover, you want to have a separate operations team that is lending out the money.
• 9:18
  SPEAKER_02: That gives you a check and balance.
• 9:20
  SPEAKER_02: Um, whenever you have that, uh we're still vertically integrated, but when you have a lend uh a capital raising team also lending the money, there the incentives are not aligned.
• 9:30
  SPEAKER_03: Right?
• 9:31
  SPEAKER_02: So if I'm raising money, I want to deploy it super fast for my investors, right?
• 9:36
  SPEAKER_03: Yeah.
• 9:37
  SPEAKER_02: And so I might over deploy capital into assets or overvalue the asset.
• 9:42
  SPEAKER_02: It's just to get the money working.
• 9:44
  SPEAKER_02: Whereas if I'm raising money and I'm handling it to an origination team, the origination team has no, they don't care about I mean tongue in cheek, but they're less incentivized about getting um the investor their return.
• 9:57
  SPEAKER_02: They're more incentivized about getting a high quality loan.
• 10:01
  SPEAKER_04: Yeah.
• 10:01
  SPEAKER_02: And you want that.
• 10:03
  SPEAKER_02: A lot of people be like, no, we want our money in the fund earning super fast.
• 10:07
  SPEAKER_02: I'm like, you think you do, but you really don't.
• 10:10
  SPEAKER_02: You want that that tension in place because that's you know, I mean, we all know if we all sat here, and probably a lot of listeners too, we can name two or three debt funds that have either are in trouble right now or on the verge of collapse because they have lent on a bridge debt 24 to 36 months loan that they overvalued.
• 10:31
  SPEAKER_01: Yeah.
• 10:33
  SPEAKER_02: And they were evaluating those in-house and did not have a third-party valuation.
• 10:38
  SPEAKER_01: Let me ask you this.
• 10:39
  SPEAKER_01: Have you I I and I want to give you my opinion before we go into it.
• 10:45
  SPEAKER_01: Yeah.
• 10:45
  SPEAKER_01: I'm seeing a lot of the business loans, which I don't really like because I know how high risk small businesses are, and they're kind of short-term, and it's advertised as like you can get your money back in six months.
• 10:58
  SPEAKER_01: We're gonna loan a landscaping scaping company.
• 11:01
  SPEAKER_01: I'm kind of like if a traditional bank won't loan them money, and there's really not many assets that you can go collect.
• 11:08
  SPEAKER_01: So it's like it's so much more risky versus okay, at least you have a house that you can go pick up, but a landscape company, what do you have?
• 11:16
  SPEAKER_01: A couple trucks or you know, a wheat eater.
• 11:19
  SPEAKER_01: I don't know.
• 11:19
  SPEAKER_01: I'm just I'm just talking out loud.
• 11:21
  SPEAKER_01: You know, what are you gonna go?
• 11:22
  SPEAKER_01: Do you s sell a shovel when they don't pay?
• 11:25
  SPEAKER_01: You know, I just I'm just I'm just saying.
• 11:29
  SPEAKER_01: So what have you heard of any of those type of funds, like their MCA type funds going down too?
• 11:35
  SPEAKER_02: Or you know Well, so that taps into like one of those big pieces.
• 11:39
  SPEAKER_02: We got the loan duration, we got that the asset valuation.
• 11:43
  SPEAKER_02: When you start lending on a company like that, um, you know, let's pivot away from commer long-term commercial real estate and more into that, you know, business lending.
• 11:52
  SPEAKER_02: You have to have a good underwriter that understands the clear valuation of that business, right?
• 11:58
  SPEAKER_02: And it and if they don't understand if they just want to lend money, right, get it out there at capital to deploy, um, then they're not aligned, they're sending aligned with their investor.
• 12:08
  SPEAKER_02: And so you also want to have uh, you know, that how do you get at the valuation?
• 12:14
  SPEAKER_02: Well, you gotta have a an appraisal or some sort of broker price opinion, right?
• 12:19
  SPEAKER_02: But those kind of over the night, you know, hey, just plug in your credit score and then voila, the next day you got$30,000 in your bank account.
• 12:30
  SPEAKER_02: They're probably pulling a credit score, right?
• 12:34
  SPEAKER_03: Yeah.
• 12:35
  SPEAKER_02: So the only thing that you have is that person who applied for their loan, their ability to pay off the loan, which is not the same as being able to foreclose on a business and take it back.
• 12:48
  SPEAKER_01: Yeah.
• 12:48
  SPEAKER_01: No, I understand.
• 12:50
  SPEAKER_01: You know, the um thing I don't like about that MCA type business is they're kind of sneaky about how they do it.
• 12:56
  SPEAKER_01: They act like you're not personally liable.
• 12:58
  SPEAKER_01: And then they word it to where it's like you guarantee the business, and then it's like by the time they take it to their attorney, they're like, Yeah, you are personally liable.
• 13:07
  SPEAKER_01: You know, it's like I don't know.
• 13:08
  SPEAKER_02: There's a dead boy carve out in there, I guarantee it.
• 13:11
  SPEAKER_01: Yeah, it's kind of like I I just see it as a real shady business.
• 13:15
  SPEAKER_01: So when I see people advertising the funds and it's like, oh, it's all short short term, and we're helping them, and I'm like, you're not helping them, you know, quit lying about it.
• 13:24
  SPEAKER_01: But anyway, just just admit that it's a payday loan for businesses, is all I'm saying.
• 13:28
  SPEAKER_02: I was about to say the same thing.
• 13:29
  SPEAKER_01: I was like, Yeah, I mean, just be honest about what we're doing payday loans.
• 13:35
  SPEAKER_01: Nobody wants to say payday loans, but anyway.
• 13:38
  SPEAKER_01: Yeah, I don't and then you say something about it, you're unpopular because everybody on LinkedIn is trying to sell it.
• 13:43
  SPEAKER_01: So anyway, I don't know.
• 13:45
  SPEAKER_02: Well, you're paying, you're you're playing a numbers game, right?
• 13:48
  SPEAKER_02: I'm uh as somebody lending out, like, you know, um, you know, in a uh a space where you know credit and valuation is hard to establish, you know, I have to charge 18, 24, 36% because I need I don't need all my loans to produce, I just need a handful of them to hit, right?
• 14:09
  SPEAKER_03: Yeah.
• 14:10
  SPEAKER_02: We're just we're predatory.
• 14:13
  SPEAKER_02: We don't do that, guys.
• 14:15
  SPEAKER_01: So like you know, the MCA loans they get, and this is pretty hard to believe, they get into like 50 to 100 percent.
• 14:21
  SPEAKER_01: Because it's like a six-month payback, but it's like I mean, it you're getting into crazy numbers.
• 14:26
  SPEAKER_01: I'm like, holy molt, but anyway, yeah.
• 14:28
  SPEAKER_01: I mean, 20%'s not that bad on a short-term uh loan for a fix and flip.
• 14:33
  SPEAKER_01: So, but you know, 70% and other stuff, I don't know.
• 14:37
  SPEAKER_01: I mean, what what what does it cost to get a short-term, you know, fix and flip loan?
• 14:42
  SPEAKER_02: I've done over 42 projects in that space myself, fix and flip uh loans, and most of them flipping to uh, you know, I acquired the property below value, I rehabbed it, I tenanted it, and then I took it to the bank to go get a a permanent loan, right?
• 14:58
  SPEAKER_02: That's how I use the fix and flip loan.
• 15:00
  SPEAKER_02: I mean, I'm you know, the right now we're lending at a blended rate of 13.75.
• 15:06
  SPEAKER_03: That's really weird.
• 15:09
  SPEAKER_03: Yeah.
• 15:10
  SPEAKER_02: I think uh you I don't know.
• 15:12
  SPEAKER_02: I I think you have options out there.
• 15:14
  SPEAKER_02: I mean, we even have a first-time lending program that you know hits that 14% if you're willing to put 20% down.
• 15:21
  SPEAKER_01: And it's good we talked about that because I'm talking out of my thing, because I don't flip houses.
• 15:25
  SPEAKER_01: So I'm like, 20% doesn't sound that bad, you know, because you're fixing it, and then it it's it's like a basically a bridge loan until you get permanent financing.
• 15:33
  SPEAKER_01: So totally anyway, well, I think a lot of people is that bad, even though it doesn't sound that bad to Carson.
• 15:38
  SPEAKER_02: So I talk to investors all the time that are looking to invest in our fund.
• 15:44
  SPEAKER_02: They're like, why on earth would somebody even pay 13.75% when they can go to the bank and get, I think I looked at the the the 30-year fix, like 6.2% today.
• 15:54
  SPEAKER_02: And I'm like, well, one, it's a it's a like you said, a bridge loan, fix and flip loan, hard money loan.
• 15:59
  SPEAKER_02: I'm like, they're paying for speed and for service, and they're only gonna be paying that for like the six months they're in the loan.
• 16:07
  SPEAKER_02: And then if they're gonna hold the property, then they're gonna go get the six percent permanent debt.
• 16:12
  SPEAKER_04: Yeah, right.
• 16:12
  SPEAKER_02: So they're trying to like you know, not use all their capital right now to reposition the property.
• 16:19
  SPEAKER_01: So they're they're basically paying for speed.
• 16:21
  SPEAKER_01: How how quick do y'all close on some of these loans?
• 16:24
  SPEAKER_01: Is it like 30 or 60 days?
• 16:26
  SPEAKER_02: Or I mean Oh no, we're I mean, uh fixed and flipper, they want to close like cash.
• 16:30
  SPEAKER_02: Like for me, like I was looking to close in 10 days or less.
• 16:34
  SPEAKER_01: Oh wow.
• 16:34
  SPEAKER_01: So y'all are chilling on a spot, you know.
• 16:39
  SPEAKER_01: You should change the company name.
• 16:41
  SPEAKER_01: I'm just kidding.
• 16:42
  SPEAKER_01: But go ahead.
• 16:43
  SPEAKER_02: Well, so like I'd be like, you know, maybe you had a house to sell that, you know, um, you know, we often you know it's maybe like you were selling your mom's house, right?
• 16:54
  SPEAKER_03: Yeah.
• 16:54
  SPEAKER_02: Okay, and it needed it had it all the original 1970s, you know, flowered wallpaper, brass finishes.
• 17:02
  SPEAKER_02: You know, the structure of the house is really good, but it needs a new roof, it needs all new flooring, and the HVHC needs to be replaced.
• 17:10
  SPEAKER_02: So, but you, I am trying to get it from you, and you're just like, you know, if you can solve my problem in two weeks before I list with my agent, like I'll give you a really good deal.
• 17:21
  SPEAKER_02: I'm gonna go to a hard money lending company like Rehab Wallet, and I'm gonna go get the loan so I can come to you and close like cash.
• 17:29
  SPEAKER_03: Yeah.
• 17:30
  SPEAKER_02: Because now if you go to your realtor, you're gonna get tagged with the extra six percent, right?
• 17:35
  SPEAKER_02: You're gonna have to, you have gonna have all your, you know, every both sides are gonna have their impounds.
• 17:40
  SPEAKER_02: You gotta go through the whole headache and damage of like qualifying the house for a loan.
• 17:43
  SPEAKER_02: Remind you, I just told you the roof shot, HVAC needs to be replaced.
• 17:48
  SPEAKER_02: You as a seller are gonna have to do a ton of work before you can even sell it.
• 17:52
  SPEAKER_03: Yeah.
• 17:52
  SPEAKER_02: Right?
• 17:53
  SPEAKER_02: So that's the type of property we're looking at.
• 17:55
  SPEAKER_02: But me, it's a win-win.
• 17:57
  SPEAKER_02: You get your cash, I get the property, and then I get to create, you know, create something, you know, revitalize the neighborhood with when I rehab that property.
• 18:06
  SPEAKER_01: Yeah.
• 18:07
  SPEAKER_01: So what it so if somebody did one I have a lot of investors that listen to my show, you know, all sizes, big and small.
• 18:15
  SPEAKER_01: Um, I have a lot of friends that are, you know, they flip houses.
• 18:18
  SPEAKER_01: How do they find your the website if they say, hey, I want to flip this house and get a short-term loan?
• 18:23
  SPEAKER_01: What do they do?
• 18:25
  SPEAKER_02: Yeah.
• 18:26
  SPEAKER_02: Um, so rehab wallet lends in the Carolinas.
• 18:29
  SPEAKER_02: So you just go to rehabwallet.com and you can check out everything there.
• 18:33
  SPEAKER_02: So and I should say the southeast part of the United States.
• 18:36
  SPEAKER_01: Would they loan in Tennessee?
• 18:37
  SPEAKER_02: In Tennessee, yeah.
• 18:39
  SPEAKER_01: Absolutely.
• 18:40
  SPEAKER_02: But we also have another company called Consistent Capital.
• 18:43
  SPEAKER_02: I don't think you guys can see my mug.
• 18:45
  SPEAKER_02: Like, whatever Rehab Wallet doesn't do, Consistent Capital probably does.
• 18:49
  unknown: Okay.
• 18:49
  SPEAKER_02: And they're more of a nationwide lender.
• 18:52
  SPEAKER_01: Okay.
• 18:52
  SPEAKER_01: So you have two different branches.
• 18:54
  SPEAKER_01: I actually have a friend that does a little fix and flip down in the Carolinas.
• 18:58
  SPEAKER_01: Mainly like duplexes and stuff like that.
• 19:00
  SPEAKER_01: He's always texting me, like, hey, check this one out.
• 19:02
  SPEAKER_01: And I'm like, eh, it's a pretty cool property.
• 19:04
  SPEAKER_01: I don't know if it's for me.
• 19:05
  SPEAKER_01: He's wanting my opinion on whether it's worth it or not.
• 19:08
  SPEAKER_01: So I'm like, I don't live there, but you know, some of them look like a steal to me, you know.
• 19:14
  SPEAKER_01: Um, so tell me a little bit about your book.
• 19:17
  SPEAKER_01: You wrote a book a few years ago about um what how what's your book about?
• 19:23
  SPEAKER_02: Well, it's how to, you know, build and protect generational wealth.
• 19:26
  SPEAKER_02: I um, you know, I uh when I had our daughter, you know, almost four uh a little over 14 years ago, um even before then, I was taking notes on how on my wealth journey, but I got really dedicated on building out kind of a system and a script for her, right?
• 19:43
  SPEAKER_02: Um moreover, like if something happened to me, like she had a game plan in hand on how we built and scaled our our wealth.
• 19:53
  SPEAKER_02: And that way she could be a good steward of it going forward.
• 19:56
  SPEAKER_02: Um, and I started working with my coaching clients, you know, through the same framework, tuned it, fine-tuned it a little bit, and uh, you know, bigger pockets.
• 20:05
  SPEAKER_02: I spoke at a bigger pockets conference and they're they asked me to, you know, turn it into a book.
• 20:09
  SPEAKER_02: But uh essentially it watched walks any investor through kind of the four main uh stages of investing that you need to tackle.
• 20:18
  SPEAKER_02: Everybody needs to tackle.
• 20:20
  SPEAKER_02: And so this book is for the new investor, it's also for the seasoned investor because I guarantee you almost everybody I talk to is missing one of the stages.
• 20:28
  SPEAKER_02: And so we have to learn how to create income, you know, within our ecosystem.
• 20:34
  SPEAKER_02: We have to learn how to guard it and keep it, which most people are very good at that.
• 20:40
  SPEAKER_02: They all want to jump from you know, uh creating as much as they can and repurposing it into what I call the growth, which is buying assets.
• 20:49
  SPEAKER_02: And I'm like, we gotta put a fence around everything, right?
• 20:52
  SPEAKER_02: Let's fence it off.
• 20:54
  SPEAKER_02: And then then once you, you know, you learn how to create it, keep it, grow it, then we get into like how do you set it up to pass on?
• 21:01
  SPEAKER_02: And you know, and just we go well beyond just, you know, how do you utilize wills and trust?
• 21:07
  SPEAKER_02: We talk about incapacity planning, training errors, um, training executors, you know, what all needs to go into that.
• 21:15
  SPEAKER_02: That way, you know, you don't get to the finish line and lose like half your wealth to like the state, taxes, or like some other predator creditor coming in.
• 21:26
  SPEAKER_01: And I I think I see it a lot where it's like the people spend their whole life building up and then they get this crazy idea that they're gonna start a bar and grill when they're like 60 and it just fails.
• 21:38
  SPEAKER_01: Oh, there went half a million.
• 21:40
  SPEAKER_01: Sorry.
• 21:41
  SPEAKER_01: Poof.
• 21:42
  SPEAKER_01: You know, it's like uh shamwow or whatever the commercial is, and you're like, it's gone.
• 21:48
  SPEAKER_01: You know, but I I was thinking something else, but yeah, I I don't disagree.
• 21:52
  SPEAKER_01: How do you keep more of it?
• 21:53
  SPEAKER_01: And you know, I think by nature, a lot of what you're saying is there was an article, I think, written by the Motley Pool.
• 22:00
  SPEAKER_01: Like psychologically, we're like built to be bad investors.
• 22:03
  SPEAKER_01: We either get scared or we're like fear of missing out and all the different levels of like how psychology works.
• 22:10
  SPEAKER_01: And it's like you're you're your own worst enemy in a lot of ways.
• 22:14
  SPEAKER_01: So I think a lot of that's really good stuff.
• 22:17
  SPEAKER_02: So yeah.
• 22:18
  SPEAKER_02: Um I mean, I think one of the biggest things that people don't consider, especially if they have kids, is okay, great.
• 22:24
  SPEAKER_02: You might have a will and a trust, and everything goes on to your heirs.
• 22:27
  SPEAKER_02: Your heirs know what to do with it, but did they marry right?
• 22:31
  SPEAKER_03: Yeah.
• 22:32
  SPEAKER_02: Right?
• 22:33
  SPEAKER_02: Like, and you you can set up defensible guards, you know, with your estate, um, to where everything that you pass on stays your heirs response, you know, for better or worse, their responsibility, right?
• 22:48
  SPEAKER_02: And so there's just little things like that that we'd like to dive into that people just don't think about.
• 22:52
  SPEAKER_01: You you hope they married right, but you know time will tell, right?
• 22:57
  SPEAKER_01: You know.
• 22:58
  SPEAKER_02: We don't get to control people, right?
• 22:59
  SPEAKER_02: We get to influence, right?
• 23:01
  SPEAKER_01: So it's a very good point.
• 23:04
  SPEAKER_01: Um so where do y'all we're what are all are y'all getting into going forward?
• 23:10
  SPEAKER_01: You are y'all just gonna mainly focus on the debt fund?
• 23:14
  SPEAKER_01: It sounds like it's a good little niche and it's like stick to what you're good at.
• 23:18
  SPEAKER_01: Do you think you can get into any acquisitions and anything in the next couple years?
• 23:24
  SPEAKER_01: I I just kind of think we're gonna start seeing some things come from the bank that are like defaults and getting them at a really good price with the debt wall coming up, you know.
• 23:35
  SPEAKER_01: Do you see you y'all jumping back in and buying stuff or you know, you know, that's an interesting question.
• 23:43
  SPEAKER_02: I saw I heard the perfect analogy.
• 23:46
  SPEAKER_02: Like uh, you know, it was a a passive pockets conference in May, and the analogy was do you want to be six months too early or a year late to the party?
• 23:55
  SPEAKER_02: And in this case, you'd rather financially be a year late to the party.
• 24:00
  SPEAKER_02: Um so we're just kind of staying, you know, staying staying back, remaining patient.
• 24:05
  SPEAKER_02: Um, if we see a good deal, we're gonna jump on it.
• 24:08
  SPEAKER_02: Um, we've seen decent deals, right?
• 24:11
  SPEAKER_02: Yeah, but I think there the we will there be a wave of like fantastic foreclosures?
• 24:18
  SPEAKER_01: I don't know.
• 24:20
  SPEAKER_02: I don't think so, right?
• 24:21
  SPEAKER_02: There's been a lot of workouts.
• 24:26
  SPEAKER_01: They're gonna pop.
• 24:28
  SPEAKER_01: Well, so a lot of what you've seen lately is these owners running around that are upside down or whatever you want to say, they're in a bad spot trying to sell it off market at a high, extremely high valuation, and then you're starting to see some of them let it go and go back to the bank.
• 24:46
  SPEAKER_01: And so you're starting to see them pop up sporadically, and they're not they're not flood the market's not flooded with them yet, but like like you said, when is too early, when's too late, and people say you can't time the market.
• 25:02
  SPEAKER_01: I'm like, well, it makes a lot of sense to time the market, if you know what I mean.
• 25:08
  SPEAKER_01: So I just I think you have to be like, you know, take advantage of opportunities and as an investor, and it's not really even timing the market.
• 25:17
  SPEAKER_01: It's like, is this a good deal or not?
• 25:19
  SPEAKER_01: I mean, you know, I mean, we're getting it with a really good valuation.
• 25:24
  SPEAKER_01: So anyway, go ahead.
• 25:27
  SPEAKER_02: Well, you know, it depends if we're if you're an active investor and you come across an amazing deal, like, you know, for certain, you know, that that's that's your job, that's what you do.
• 25:37
  SPEAKER_02: As a passive investor, remember you don't have any active say of our influence on the deal.
• 25:44
  SPEAKER_02: So it's a little different.
• 25:46
  SPEAKER_02: Like, you know, if I'm an active investor and I buy a multifamily building and I realize, oh wow, I was a little early to the party.
• 25:53
  SPEAKER_02: I can figure out how to refinance, I can hold, like I have complete control and influence over that.
• 25:58
  SPEAKER_02: But as a passive investor, I think just remaining more patient, and that's another thing that our real estate debt fund allows those investors to do is, you know, every investor they hate idle capital.
• 26:10
  SPEAKER_02: They want to be earning a yield, right?
• 26:12
  SPEAKER_02: Um, taking advantage of like a real estate debt fund like ours is structure that allows you to continue to be patient and also keep your, you know, if you choose to use it that way, keep your your capital liquid too for when you do find the equity deal.
• 26:26
  SPEAKER_02: So it doesn't have to be an either or, it can be an and.
• 26:29
  SPEAKER_02: Um but I would, I mean, we have a lot of volatility in the environment.
• 26:34
  SPEAKER_02: If you can read the tea leaves and you are in decision making and judgment control, by all means, do it.
• 26:44
  SPEAKER_02: But if you are gonna be removed from the decision making and judgment control, you know, caution.
• 26:51
  SPEAKER_02: Yeah, I'm flashing yellow lights right now.
• 26:53
  SPEAKER_01: I just want to clarify so listeners aren't confused.
• 26:57
  SPEAKER_01: I just jumped from like residential.
• 26:59
  SPEAKER_01: Their lending fund is in residential, it's a lot more, in my opinion, you know, safer than commercial is what I jump back over to multifamily when I'm talking about you know, the debt maturities coming up at the five-year mark and own owners being in hot water.
• 27:15
  SPEAKER_01: You know, two separate areas.
• 27:17
  SPEAKER_01: So just for clarification, but you know, for a passive investor that doesn't want to worry about like what we're talking about timing and all that stuff, and you know, assets that are liquid, something that's fairly safe, nothing's guaranteed, but you know, that debt fund sounds like a really good place to be.
• 27:34
  SPEAKER_01: So anyway, uh you don't have to worry about timing the market exactly.
• 27:39
  SPEAKER_01: So anyway.
• 27:40
  SPEAKER_02: Well the cool thing is with the short duration loans, it reprices itself every six.
• 27:45
  SPEAKER_02: It's constantly repricing itself because the the loans are short and they roll out.
• 27:50
  SPEAKER_02: As opposed to you're in a fund that carries, say, like 10 loans and they're all 24 or 36 months.
• 27:56
  SPEAKER_02: That's a little harder to turn, it's like turning the Titanic, right?
• 28:01
  SPEAKER_02: Maybe the wrong analogy like here, but like you know, turning a very large ship like the Titanic.
• 28:06
  SPEAKER_01: Yeah.
• 28:07
  SPEAKER_01: No, it's I think it's really hard to predict, you know, exactly where things go.
• 28:11
  SPEAKER_01: And like you said, you know, I was probably one of those one in a thousand, but at the same time, I just knew things were going bad.
• 28:19
  SPEAKER_01: I just didn't know how bad, and I knew to back off.
• 28:22
  SPEAKER_01: But, you know, it's really hard.
• 28:25
  SPEAKER_01: Like I I everybody, it's like you start to see things shift with inflation, and I'm like, okay, rates are gonna go up.
• 28:32
  SPEAKER_01: I just don't know how bad.
• 28:33
  SPEAKER_01: And then it just kind of makes that little turn, you see the warning signs, and you're like, okay, back up.
• 28:38
  SPEAKER_01: And some people see it a little quicker than others, but you know, um where we go going forward, I think there's gonna be a lot of buying opportunity.
• 28:47
  SPEAKER_01: I think the passive investing is gonna be a really good thing with your debt fund and all that, but I think there's also gonna also gonna be opportunities start popping up in multifamily once again.
• 28:59
  SPEAKER_01: I think it's kind of exciting to see the oh whoa, somebody got a deal on an apartment complex again.
• 29:05
  SPEAKER_01: You know, we haven't seen a deal in a while.
• 29:07
  SPEAKER_01: So, you know, maybe I'll get a bank repo and bring bring it to you next week and you'll be like, woo!
• 29:13
  SPEAKER_02: Yeah, but anyway.
• 29:14
  SPEAKER_02: Well, I also think about it, like, you know, we opened up with like the capital stack.
• 29:18
  SPEAKER_02: I mean, if anybody's read right Dalio's book, Principles, and and has studied like how he put together his all-weather portfolio, his fund, right?
• 29:27
  SPEAKER_02: I mean, it all the at any point in time, only 55 ish, 60% of his assets are performing, right?
• 29:35
  SPEAKER_02: And so it's not it's not about how do I get 100% of my assets and equity performing 100% of the time.
• 29:42
  SPEAKER_02: It's how do you create diversification across the capital stack that way certain assets are stronger in certain phases of the market.
• 29:51
  SPEAKER_02: And the cool thing about a really well risk-mitigated, non-levered debt fund is that that performs really well in all phases of the market.
• 30:01
  SPEAKER_02: I mean, yeah, on the floor, the reason why the borrower, you know, is strong too in all phases of the market.
• 30:08
  SPEAKER_02: They're they're finding good deals.
• 30:09
  SPEAKER_02: And there's gonna, you know, when the market's down, they find better deals.
• 30:13
  SPEAKER_01: Yeah.
• 30:14
  SPEAKER_02: So we're kind of heading, you know, like you're excited about equity.
• 30:17
  SPEAKER_02: Well, if we hit more of a challenging market and asset, you know, um, pricing evaluations deflate a little bit um for established assets.
• 30:26
  SPEAKER_02: I mean, I mean, our borrower is gonna find better, better deals.
• 30:30
  SPEAKER_02: And so we're excited about that too.
• 30:32
  SPEAKER_01: Awesome.
• 30:33
  SPEAKER_01: Well, Whitney, um, great having you.
• 30:35
  SPEAKER_01: Glad you came on and educating everybody, you know, uh, even myself, uh, that 20% is not a good rate on a You can do better, Carson.
• 30:47
  SPEAKER_01: Yeah, I can do better.
• 30:49
  SPEAKER_01: So, uh, but you know, for my listeners as well, you know, it's uh great resource.
• 30:54
  SPEAKER_01: Um for investors that want to get a loan.
• 30:58
  SPEAKER_01: Let's do both sides.
• 31:00
  SPEAKER_01: Um investors that want to get a loan.
• 31:02
  SPEAKER_01: You already gave that the the capital.
• 31:06
  SPEAKER_02: Actually, if if you want to fix them flip loon, go to rehabwallet.com.
• 31:10
  SPEAKER_01: Uh rehabwallet, okay.
• 31:12
  SPEAKER_02: You know, we also have our sister company Consistent Capital, which we'll do more nationwide.
• 31:16
  SPEAKER_02: They don't do a lot of bridge stuff in the single family space, but you know, those are two two loan companies you could check out.
• 31:23
  SPEAKER_01: Okay.
• 31:24
  SPEAKER_01: And then so if I have high net worth investors that want to get involved and make a good solid return, you know, uh, you're not gonna get rich, but it's been gonna be very consistent and um lower risk in uh single family assets.
• 31:40
  SPEAKER_01: They can go to passiveinvesting.com.
• 31:42
  SPEAKER_01: Is that correct?
• 31:43
  SPEAKER_01: Yeah.
• 31:44
  SPEAKER_02: Absolutely.
• 31:45
  SPEAKER_02: And like, you know, what what constitutes freedom is cash flow, right?
• 31:50
  SPEAKER_02: You know, you can you can use, I actually did a presentation for a self-directed IRA company this morning, and I was putting together a present presentation and and uh one of the investors asked me, like, oh well, here's you know, how much uh equity, like multifamily equity deals that I had in my portfolio, and then what how comparatively I would have outperformed your debt fund.
• 32:14
  SPEAKER_02: And I was like, okay, let's take that.
• 32:15
  SPEAKER_02: That's not as necessarily the case.
• 32:17
  SPEAKER_02: I took$500,000, compounded in 9% for 10 years.
• 32:22
  SPEAKER_02: I beat them by$400,000 for one simple reason is that I never broke my compounding curve.
• 32:30
  SPEAKER_01: Yeah.
• 32:30
  SPEAKER_01: So speaking of bubbles, I have to ask you this, and this is kind of off subject.
• 32:35
  SPEAKER_01: How long do you think the AI bubble goes in the stock market?
• 32:40
  SPEAKER_01: I can't go on with it's kind of like the dot-com thing where like all these AI companies aren't gonna survive forever.
• 32:49
  SPEAKER_01: I mean, the stock market's ripping, but it's like, okay, if I have an IRA, this is just me talking out loud in my opinion.
• 32:56
  SPEAKER_01: It's like, okay, do I diversify some of that money right now?
• 33:00
  SPEAKER_01: You know, it's like I'm the stock market's not gonna go at 20%.
• 33:04
  SPEAKER_01: Historically, it's like at 8% or 9% over time, you know.
• 33:08
  SPEAKER_01: And we've seen some really good boom and growth, but you know, there's a lot of it that's unsustainable, you know, like even open AI spending a lot of money.
• 33:19
  SPEAKER_01: It's like, okay, how how profitable is it really, the AI stuff, and how long does it last?
• 33:25
  SPEAKER_01: I don't know.
• 33:26
  SPEAKER_01: I think that's I'm not gonna try and time it.
• 33:28
  SPEAKER_01: I'm just saying uh I encourage diversification like you were talking about for my personal portfolio.
• 33:35
  SPEAKER_02: So anyway, definitely diversification.
• 33:38
  SPEAKER_02: I look at the picks and shovels, right?
• 33:40
  SPEAKER_02: Like who are the ones providing the processors, the metal that goes into the processors, right?
• 33:45
  SPEAKER_02: Because that part's not going away.
• 33:47
  SPEAKER_02: Um, and then you know, I actually um do I think all AI companies are gonna make it?
• 33:53
  SPEAKER_02: No.
• 33:54
  SPEAKER_02: Right.
• 33:54
  SPEAKER_02: Like if you're taking individual bets, you're gonna you're gonna get stung.
• 33:58
  SPEAKER_02: But I think somebody smarter than I am can read a little bit more in the tea leaves.
• 34:03
  SPEAKER_03: I like how you phrase that.
• 34:04
  SPEAKER_02: And profit or loss statements to some of these companies.
• 34:07
  SPEAKER_02: I mean, if you if you read like, because I know the stock market had a big collapse not collapse, but like I think a seven, seven or eight percent downturn the last week of July, right before the last week of July.
• 34:19
  SPEAKER_02: What did we have in the last week of July?
• 34:20
  SPEAKER_02: We had five major eight companies for re reporting their profit shares.
• 34:25
  SPEAKER_02: And then we also had the last Fed share meeting, right?
• 34:28
  SPEAKER_02: Yeah, Federal Reserve meeting.
• 34:30
  SPEAKER_02: And like everybody was like, oh no, right?
• 34:32
  SPEAKER_02: But then you looked at what Amazon, Google, right, Microsoft is doing, and they're just at the start with AI.
• 34:42
  unknown: Yeah.
• 34:42
  SPEAKER_02: I mean, it most people are already diversified into them, like just buying by being in like boo or vt i or vt-cx, right?
• 34:53
  SPEAKER_02: Like, so I mean, do you have to go the individual bets?
• 34:57
  SPEAKER_02: I mean, I don't know.
• 34:57
  SPEAKER_02: My my neighbor just bought a you know a couple million dollar house because he went all on, you know, not black, but NVIDIA like made a killing.
• 35:07
  SPEAKER_03: Yeah.
• 35:08
  SPEAKER_02: I was just like, would you do it again?
• 35:09
  SPEAKER_02: He was like, oh no, not at all.
• 35:11
  SPEAKER_02: Like it was scary.
• 35:13
  SPEAKER_01: I've had some wins on stocks before, but I I understand the risk, you know.
• 35:18
  SPEAKER_01: When you go, you stick yourself out there into an individual asset, and you're like, okay, you know, I did really good but on Apple back in the day, you know.
• 35:26
  SPEAKER_01: I was like, okay, you know, this is really good.
• 35:28
  SPEAKER_01: So um well, what's what's a good way for people to get a hold of you if they want to just chat and talk about investing and other things and network and all that?
• 35:38
  SPEAKER_01: What's what's a good email for you and all that?
• 35:41
  SPEAKER_02: Yeah, so you can reach out to me.
• 35:43
  SPEAKER_02: Um simply go to passive investing with whitney.com.
• 35:47
  SPEAKER_02: There you can fill out a little form.
• 35:49
  SPEAKER_02: You get my calendar, we can hop on a one-on-one call, especially if you're looking for um a passive investment.
• 35:55
  SPEAKER_02: If you're looking for more coaching, um, because I do coach people in the space, you can check me out at Ashwealth, as h wealth.com.
• 36:03
  SPEAKER_01: Okay.
• 36:03
  SPEAKER_01: Awesome, awesome.
• 36:04
  SPEAKER_01: Um, I appreciate you coming on and uh look forward to hearing from you on how things are going.
• 36:10
  SPEAKER_01: And um maybe we can do a deal together here soon and uh all that.
• 36:14
  SPEAKER_01: So let's stay in touch and appreciate you.
• 36:17
  SPEAKER_01: Thank you.
• 36:18
  SPEAKER_02: Thanks, Carson.
• 36:20
  SPEAKER_01: Absolutely.