Seth: Hey everybody! How's it going? This is Seth Williams. You're listening to the REtipster podcast. This is episode 205.

Today, I'm talking with my good friend, Brian Davis. Brian has written many articles for us at REtipster.com. He's an accomplished real estate investor who has run SparkRental.com for many years. I actually interviewed Brian way back in the early days of the REtipster podcast in episode 21. If you want to get caught up on Brian's story, you can hear that at retipster.com/21.

Brian's life has changed a lot since then—he's a dad now, he sold off his rentals that he used to own, and his latest venture is running an investment club. I don't know anybody else who's doing anything quite like this. Brian is going to tell us about this in just a minute. We're going to hear about how this works, what it takes, the best and the hardest parts about running this type of business. Should be pretty interesting.

Brian, welcome to the show. How are you doing?

Brian: Seth, I'm doing great. Thank you so much for having me.

Seth: Yeah, you bet. So last time we talked, rental properties were a big thing in your life, but you're not in rental properties anymore, right?

Brian: Correct. I cut my teeth on rentals. I cut my teeth in real estate investing in general with the BRRRR strategy back in the early to mid-aughts, back when everyone was just having one big party in the real estate sector. I made a bunch of mistakes back then. I was young and arrogant. I was in my 20s. I overpaid and I didn't know how to calculate cash flow. I did all these things wrong. And then of course, the market compounded those mistakes and made them way worse.

Fast forward years later, I got rid of all of my rental properties. I still love real estate. I still believe in it as a vehicle to help you reach financial independence and help you build a more intentional life by design. Today, I only invest passively. We run an investment club that lets other people go in on those passive investments with us. We all get together every month. We vet investments together. We go in on them financially together so each person can invest small amounts. It's fun and it's different. There's really no one else doing this. It's been an adventure. We've had to make it up as we go along, but it's been totally worth it.

Seth: So when you made the decision to pull out of rentals and move on, did something happen? Or was the market just in a place where it made sense? Or were you just kind of getting bored or tired of it? Or what exactly made you come to that decision?

Brian: A couple of things. First of all, my wife and I moved overseas in 2015. So we've been abroad for almost a decade now. I realized when we moved abroad just how much I had been subsidizing those rental properties' returns with my own labor and effort. And that's something that doesn't show up obviously on paper with your returns, right? Like when you're calculating cash flow.

We had a property manager, but I was still finding myself coordinating with contractors and city inspectors and managing the manager. And tenants would call me sometimes instead of calling the property manager. So I was still spending my nights and weekends and vacations hassling with these rental properties. When I started to factor in my labor and time and that hassle factor that you sometimes talk about, Seth, if I compared that to my truly passive investments, like my ETFs and stock portfolio, I was losing money on my rental properties. And this is after owning them for 10+ years.

So I said, "I'm done. I don't want to hassle with these from across the world." We were living in Abu Dhabi at the time. So I said, "Screw it, I'm getting rid of them." But we had also started SparkRental in early 2016, which is all about real estate investing. I felt I had some of that imposter syndrome saying, "Oh, I teach people how to invest in real estate, but I don't actually own any real estate investments anymore." So I felt a little out of alignment about that.

So I started investing passively in real estate. I started just by dabbling with real estate crowdfunding investments, small amounts in some of those. And then I discovered syndications and started investing in those. And I was like, "Ah, it's really hard to get excited about putting $50,000, $100,000, $200,000 at a time in these investments. It's hard to diversify." So my co-founder Denny and I started talking about, well, how could we go in on these with some of our audience members? Our audience keeps asking us, can they invest with us on projects? So we started just experimenting with how we can go in on real estate projects with some of our audience members. And that's how our co-investing club was born. Just trial and error. We started with a couple single-family homes, actually.

The returns were fine, but it was just too much work. And so yeah, it's been a lot of experimentation and trial and error. But for the last two years, we've been running this investment club. And it's even evolved quite a bit in the last two years. But yeah, it's fun. It's a way for us to invest small amounts every month and dollar cost average our real estate investments and a way for our members to invest small amounts month in, month out in real estate without having to become a landlord.

Seth: I've got tons of questions about this. First of all, what is this called? Do you have a website for this thing?

Brian: Yeah. If you go to sparkrental.com, you'll see our co-investing club front and center in the website.

Seth: Gotcha. Okay. I'll include a link to that in the show notes for this, retipster.com/205.

Is this like a fund or is that not really what this is? I know of the 506B and the 506C and that kind of thing, but that's not what this is, is it? Is there a legal name or term for what this type of thing is?

Brian: Yeah. So the first question that we always get is, "Oh, so you guys are a fund of funds." We are not a fund of funds. We don't get a cut of any of the money that's invested. We're not selling securities.

So yeah, it's not a fund. It's a flat fee investment club. So if you think of an old school stock investing club from the 1940s, where a bunch of guys are sitting around puffing cigars in a back room somewhere with wood paneling and sipping brandy out of snifters and talking about different stocks and maybe going in on stock investments together. It's like that, but with passive real estate investments.

So syndications, private partnerships, private notes, real estate equity funds, real estate debt funds, all that kind of stuff. But we just invest alongside our members as one more member in the club, basically. So not only do we not get a cut of any of the money that's invested, we're putting our own money in these.

Seth: Gotcha. But I assume you get paid something for administering this thing, right? For pulling all these people together for the opportunities, how much money do you make? How many members do you have? What kind of fee do they pay? How does that work?

Brian: Yeah. So we're definitely not getting rich off of this, I can tell you that. We charge either $59 a month or $497 a year for membership in the club. As for how many members we have, we have 280 members currently. We've grown quite a bit this year. And we're trying to get to a thousand members and beyond.

One of the nice things about scaling this investment club is that the more we are able to invest every month, the more we can negotiate for preferential returns and better profit splits, better preferred return percentages with syndicators or sponsors or partners, depending on what it is we're investing in. So there is power in scope and scale with this.

A lot of syndications already have that built in where they'll offer a higher pref and a better profit split if you invest $500,000 or more or $250,000 or more or whatever it is. So as we scale, we are able to give our members that kind of power of scale and volume, even though each individual member can invest with $5,000 or more. Collectively, we've been investing $150,000 to $400,000+ range each month. We're looking forward to scaling that up above half a million and beyond to really be able to negotiate for better returns than people can get anywhere else on their money.

Seth: So if I'm a fee-paying investor in this club, do I have to invest in something or could I just sit on the sidelines if I want and almost do it for entertainment purposes or something? Is there any requirement that people have a certain amount of money or that they do a certain amount of activity to be in it?

Brian: No, not at all. Every investment is purely optional. There's a cost to be a member of the club, so there's really no point in being a member of the club if you aren't going to invest, but no one has to invest in anything. In fact, that's one of the ways we approach this—we know that our different members each have different financial goals. Some people are looking for more short-term investments or long-term investments or cash-flowing investments or growth-oriented investments.

So we want to have something for all of those people. Every month, we're trying to do something very different. We try to do very diverse types of investments, whether that's multifamily or mobile home parks or industrial or retail or private partnerships with mom and pop flipping companies. Last month, we invested with a raw land flipping fund.

Brian: So we want to have something for everybody. And diversification really is one of our core values. And we mean diversification in every sense of the word—geographic diversification, diversification of sponsors or partners, diversification of timelines, you know, short-term, long-term, et cetera, diversification of property type. So yeah, there is something for everybody. And that also means that there's stuff that's not going to be for everybody, right? There's going to be niche stuff that is not appropriate for each member's goals. So they can sit on sidelines for those investments.

Seth: Yeah. So as the manager, administrator, whatever your title is in this club, but in that position, is it a lot of work for you to find these opportunities and just gather all the information and present it to people? I'm just curious how much time that takes for you to run this kind of thing.

Brian: It is a lot of work. So a lot of what my partner, Denny, and I do is network with sponsors, syndicators, or fund managers, or whoever it is that we're investing with. We meet with different people all the time. I mean, every week we're on the phone trying to get to know different people. We can't tell people that we are vetting sponsors on their behalf. We don't want to sign ourselves up for legal liability. But that is ultimately part of what we're trying to do is do some due diligence on these people, try to get a sense of who's trustworthy, who's experienced, who do we feel comfortable putting our own money with.

So yeah, that's a lot of work. And then administering individual deals is a lot of work. I underestimated how much work that would be to my partner Denny's chagrin. She handles more of the administrative and operations side of our business. And she's been pulling her hair out this year as we've scaled to 30 deals or so total in the club. That's become a lot of work for her.

So we have really spent this entire year trying to streamline our processes, automate what we can, delegate what we can't automate. We're almost to a point where Denny no longer has to do much hands-on work. We have some pretty good systems in place, but we've spent this entire year working on those. So that too has been a lot of work. Yeah, it's not a trivial amount of work, but it is scalable. So the more members we have in the club, the less work we're doing per revenue dollar coming in. The first 100 members or so was the most difficult, and as we've scaled from there, it's gotten easier and easier and will continue to get easier as we scale.

Seth: I'm wondering, like, aside from the work of finding these other investors to partner with and gathering the information—like on that whole thing of gathering the information—like I used to be basically a credit analyst in my old life, in my W2 job.

Brian: I never knew that.

Seth: And it was a lot of work. I mean, it was literally a full-time job. I just know how many details are involved with that, with understanding the quality or lack thereof of a deal. So do you have to do a lot of that or do you just bring that partner on? So I think the last time we talked about this, you said that you bring a partner on a call and then all the club members who are interested in investing get on a call too. And it's more that partner who's explaining everything. So it's not necessarily on you. Am I saying that right?

Brian: Yeah, that's right. So we never want to put ourselves in a position where we are representing a deal or representing a sponsor or a partner or a fund manager or anything like that. I mean, we are simply organizing an investment club and we will invite these people in to come and speak and to introduce their investments, explain their investments, take questions about their investments. Ultimately, it's on our members to do their own due diligence on these deals and make a decision for themselves if they want to invest in that deal. Again, no one has to invest in any of these. We try to support that process as much as possible. And we only bring in people who we feel comfortable investing our own money with, of course.

And we are putting our reputation on the line every time we bring someone in. So we certainly don't want to bring anyone in who is not going to perform well for our members. But at the end of the day, each member is responsible for their own investment.

Seth: So like that partner who gets on the call, when I say partner, I mean the person who is sourcing the deal and finding the deal and bringing it to you guys, do they like have a giant stack of papers or information ready to show everybody? Or is it just kind of like, "Yeah, I'm here. Ask me questions." Like how much do they have to do and how much information do your club members expect to see when you get on these calls?

Brian: So what we do, Denny and I will, when we network with investors or let's call them operators, because that covers syndicators, private partners, fund managers, all that stuff. When we network with operators, we have an initial call or two with them just to understand their business model. And we get on their investors' email list. So every time they have a new investment come along, we'll get an email about that. So every month, really every day, every week, we get emails from operators saying, "Hey, here's our latest deal."

So Denny and I are constantly in communication like, "Oh, what do you think of this one? Do you think this might be a good fit for the club?" And when we find one that we think is a good fit to feature as that month's featured investment in our investment club, we will schedule a time with the operator to come and speak in front of our club.

When we announce that to our club members, we'll send an email and include a link to the investment summary deck, which is usually 30 to 80 pages long, giving incredible levels of detail about the deal, from projected returns to risk factors and how the sponsor is mitigating those risks and the local market that they're investing in and all of that. Often they have a recorded webinar of themselves explaining the deal and taking questions about the deal. So if we have a copy of that, we'll send that out as well, in addition to the written investment summary deck.

So we try to provide as much information in advance as we can to our members before the Q&A session. And then when we have that deal discussion with our members, we have a big video call. The operator comes in. We usually have them summarize the deal in five minutes or so, just giving a quick overview of the deal, why they like it, what's the property type and what's the local market like and all that kind of stuff. What's the exit strategy for the deal?

And then we'll open it up and have an open discussion and Q&A with our members where each of our members can grill the operator with questions. And I mean, I've been in real estate for 20+ years, and I would like to think that I am somewhat of a real estate investing expert. But every time we do this, every deal discussion we have, I am pleasantly surprised by how good the questions are from our members. There's always at least a couple of questions that never would have occurred to me to ask that other people are asking. And that's the beauty of crowdsourcing the vetting of these deals, is you get 40 sets of eyeballs on these deals and people are coming at it from all different backgrounds and personal experiences.

For a quick example, we've got a woman in our club who is an insurance adjuster. So she's constantly asking these really sharp questions about the insurance projections and the insurance protection on these deals. I never would have asked those questions, right? Likewise, we had a deal, I think it was in Dallas, Texas, where, I mean, I don't know anything about the Dallas market, at least personally, I've never been to Dallas. But we had a woman in our investment club after the sponsor left, we were sitting around talking about it as a club. And she's like, "I live five minutes down the road from this exact apartment building. And I can tell you right now that there is not enough supply of this type of housing in the area and that it's a good investment." So I wouldn't have known that. Yeah, so it's really nice having many different sets of eyeballs on these deals, all trying to poke holes in these deals and analyzing the risk from 40 different directions.

Seth: Do you think that ends up making the quality of investments a lot better because there's just so much more scrutiny put on it? Or does it end up like killing off deals that otherwise would have been really good because people were almost scrutinizing it too much?

Brian: No, I think it's really all upside. We've only ended up killing one deal to date because there wasn't enough interest in the deal from our club members. And that ended up being a bullet that we dodged, frankly, that was with an operator who later imploded, a big name operator, actually. So it's all upside. Having a better understanding of the risks of an investment is always better. More information is always better in that regard, as far as risk analysis.

Seth: Yeah. And I guess that's sort of because the way your club works, if I remember right, is that if certain people want to invest, they invest. And if they don't, then they don't. So it's not like everybody's making the decision unanimously together. It's just like, hey, people can participate if they want. And that's how it works out. Is that right?

Brian: That's exactly right. Yeah. So some months, if it's a deal that not as many of our members are interested in, we might invest collectively as little as $125,000, something like that. If it's a deal that everyone is really gung-ho and excited about, like last month's investment, we invested $413,500 in the deal collectively as a club. So yeah, it's a wide range of how much we're investing every month. It just depends on how much interest there is among our members and who wants to participate.

Seth: I am wondering, you might have already answered this and I just missed it. So if somebody says, yes, I want to invest, is there a minimum amount they have to bring to the table or even a maximum amount? What does that really mean in terms of, say, if you get five people who want to do it, how much money does that equate to?

Brian: Yeah. So the minimum amount is $5,000 for any given deal. So each individual member can invest with $5,000 or more in any of our deals. As far as a maximum amount, almost never. We did have one deal where the operator ran, they hit their cap for what they could accept. So we did reduce how much each member could invest in that deal. But in general, the max would really just effectively be the normal minimum investment on that deal.

Let's say the minimum investment on a deal is $50,000. Then you might as well just go invest $50,000 directly with the sponsor if you wanted to invest that much, right? You wouldn't need to go through us to do that. So yeah, minimum investments, five grand, there's almost never a maximum investment, but you know, it only makes sense to invest through our club if you're going to invest less than the standard minimum investment for any given deal.

Seth: So given that, I'm trying to think through what does the profile look like of the type of person who's a member of your club? Like it sounds like clearly they have at least $5,000. So if they have less than that, there's probably no point in them participating, but is there a maximum, like I've got $50 billion to my name. At what point does it not make sense for them to join your club?

Brian: Yeah. So the ideal candidate for our club is a working professional who makes a solid income. They may not be earning half a million dollars a year, but they earn a respectable income as a working professional. They're not billionaires, right? But they do earn a solid income. They want to diversify into real estate. They don't necessarily want to create a real side hustle. They don't necessarily want to become a landlord or flip houses or create that side hustle that you really kind of have to if you're going to be buying properties yourself directly. So they want to diversify their portfolio to include real estate.

And they don't necessarily want to invest $50,000 or $100,000 at a pop with these. We do have a lot of accredited investors in our club. I would say our club membership is probably around 60-40 or 65-35 non-accredited versus accredited investors. That is another one of our core values is serving non-accredited investors as well, that inclusivity to include everybody. So we only feature deals in our club that allow non-accredited investors because that's one of their challenges. It's so hard for non-accredited investors to find deals that accept them.

So that is a priority for us. But we still have a lot of members who are accredited investors who want to just diversify more instead of having to park $50,000, $100,000 at a time in each investment. So this lets them practice dollar cost averaging where they can invest $5,000 a month, $10,000 a month, whatever it is they want to invest month in and month out instead of trying to time the market or having to worry about parking $100,000 in a single investment and hoping and praying that that investment does well. So yeah, it's a way to spread out their investments and reduce that concentration risk, which is such a problem in real estate investing in general.

Seth: Are your members looking more for like big cash payouts or are they looking for like passive-ish income, like investing in a note, for example, or like a long-term deal that's going to pay out like small payments each month? Are they looking for that or the cash in, cash out as quickly as possible?

Brian: Yeah, it's a mix. I mean, we have some members who have told us that they're most interested in the high growth investments and they're not as interested in income. And then we've got other members who say the exact opposite. They say, "I want passive income. I want the highest yields possible. I want income that I could live on month in and month out."

So it's a mix. What we have found just as a general observation is that our members feel more comfortable with deals that do start paying distributions early, quickly, even if the yield is relatively low in the beginning on those deals. So even if syndication, for example, is only going to be paying a 4% or 5% yield in distributions, there's a comfort level that comes with starting to get those distribution payments within one quarter or two quarters of investing. It makes them feel more confident in the deal. Yeah, it just helps them sleep at night, reassuring them that the deal is doing okay and that they're earning a little bit of money on it, that the sponsor didn't just take their money and run off to South America, where I live, by the way.

So that's what we found is that earlier distributions help people feel more comfortable, but a lot of our members are totally comfortable with more growth-oriented investments.

Seth: So for the ones, the deals that you do where you're focusing more on growth, like what is a normal turnaround time to get the money back after you invested it? It probably just depends on the property type and all this stuff, but like, is there a target? Like we want all the money back within 12 months or six months or anything come to mind?

Brian: Yeah. So I mean, with syndications—and we invest in a lot more than just syndications—but syndications tend to be longer-term investments, usually a minimum of three years. Usually more like five, six, seven, sometimes indefinite, which is fine. A lot of our members are totally fine with that, especially if they do pay distributions. And especially if there is a planned refinance somewhat early on to return some or all of the initial investment capital.

Brian: Because if you get all your initial capital back, then it's all gravy beyond that, right? I mean, you get to enjoy the distributions from that old investment and you can reinvest your capital in a new investment and start pursuing what they call infinite returns with that. Put that in quotation marks because it's not mathematically infinite, but you get the idea. You can reinvest the same capital again and again.

But some of our members would really prefer the shorter-term investments. So for example, a month or two back, we invested with a flipping company based in Michigan. And we basically invested with them on a series of house flips and just said, "Look, we need to close out this partnership by the end of 2025 because we don't want to file more than two years tax returns. So let's do as many flips as we can between now and the end of 2025." And then what we do, we do. Great. But by December 31st of next year, it's done. It's over. And then we're closing out the LLC, no more tax returns. So yeah, it's just a mix. We try to mix it up as much as we can.

Seth: Yeah. Okay. What kind of return would one of your members expect? For example, say I've got a million bucks and I want to make 10% on that or 20% on that, or I don't know. What is a reasonable expectation if they were to join your club and get involved with these deals?

Brian: Yeah, no, that's a great question because at a certain point, it doesn't make sense to pay a membership fee if you're just going to earn average returns, right?

I mean, so our mission is really to find asymmetric returns, as they say in finance, returns with high potential returns and low potential risk. The way we define that is for debt investments, that typically means 10% to 12% annualized returns paid out each year as income, so either monthly or quarterly interest payments.

For equity investments, we aim higher. We aim for 15% or more annualized returns on those. Now, often a lot of that comes on the backend when the property sells. So you're not getting all of that as yields every year as ongoing income. Some of it usually comes in the form of distributions and then some of it comes on the backend.

Seth: I'm wondering when you guys invest collectively in a building or something like that, does each person that invested in that get to write off a little bit of depreciation as a result of that? Is that a thing?

Brian: That is absolutely a thing. And yeah, that's an important part of this. So yeah, we get full tax benefits when we invest these. We basically become fractional owners in these equity investments. So in the case of a syndication, for example, the joint LLC that we invest under, which by the way, maybe I should explain that first, we create a joint LLC for each one of these deals. And each member who participates in that deal gets listed as a partial owner, a fractional owner in that joint LLC. The LLC then invests in the syndication or the partnership or whatever it is.

So the LLC gets a K-1 at least for an equity investment, gets a K-1 at the end of the year, which then goes to our accounting firm. They will split that up to a bunch of individual K-1s to each of the members. So yes, not only do people get all of the tax benefits of deductible expenses and depreciation, but we also get to take advantage of accelerated depreciation because most of these, the sponsor is doing a cost segregation study to really maximize the tax benefits upfront.

So in most cases, the K-1 will show a big loss on paper for your tax purposes, even though we actually collected real money in the real world, right? We collected distributions, but we get to show a loss on our tax returns. So that's a huge benefit of this. But when that property sells, then you have depreciation recapture, but you can just recycle that into the next deal and do what we call a lazy 1031 exchange and just reinvest your capital on the next deal so that the write-offs from the next deal cover any taxes due from the last one.

Seth: Who controls this LLC? Is it like you and Denny?

Brian: Yeah. So either she or I will be listed as the managing member, but it's not like we have any disproportionate ownership of the LLC. I invest my personal money in every one of these deals. So I get listed as a partial owner of the LLC, but only proportionate to the amount that I actually invested myself. There's no what they call a promote in the industry. I don't get a promote because I'm not a sponsor. I'm not a syndicator or a fund manager or anything like that. If we got paid for doing these deals, or if we got a cut of these deals, we would be selling securities. And then the SEC would be knocking on our door and threatening to haul us off to prison, which we're not interested in. So yeah, so we don't get a cut of any of these. There's no special spread for us on these.

Seth: When you set up this LLC, do you typically see it where like that LLC is the only investor in the deal? Or is that LLC like one of many other investors, depending on how big the deal is?

Brian: Yeah, it depends on the deal. I mean, sometimes we invest in syndications where we're one of many, many, many, what they call LPs, limited partners, who have just invested passively in that deal. And we've invested in some huge syndications, $80 million syndications, et cetera. We also invest sometimes at the other end of the scale in very small deals or private partnerships.

So like I mentioned a few minutes ago, we invested with a very small boutique house flipping company a couple of deals ago, a couple of months ago, where it was just a private partnership between us and them, where we agreed to fund a certain amount of money to them, whatever our members wanted to invest. And that is funding a series. We've got three simultaneous house flips going on with them right now. And then as each one of those houses sell, they'll just reinvest that capital into the next house flip and the next flip until the end of next year, when we'll close it out. So that's a micro kind of investment. It's just a private JV partnership between us and this small company. So it's a mix. It's a mix of all that stuff.

Seth: Am I remembering right? Did you tell me that you use Mercury for your banking platform?

Brian: We do use Mercury for our banking platform and they've been a good partner. So each of our members that participates in a deal, they get view access to the joint LLC bank account. So they can see in real time every transaction that takes place. As we get paid a distribution from the operator, that hits the joint bank account, everyone can see it. And then once a quarter, our team will just divvy that up between each of the participating members that goes out to them. So yeah, it's very transparent. Everyone gets a login. They can view what's going on in the account. No one can log in and siphon off all the money, of course. But yeah, everyone can see it. It's very democratic.

Seth: Mercury, it's not technically a bank, but it's a banking platform with a bigger bank sitting behind it. But I did a review on it about a year ago. A lot of land investors use it. It's very quick and easy to set up an account, but also establish like sub-accounts so you can put automations in place. And what Brian is talking about with letting other people see stuff, but not control everything—like it's super useful for that. Got a lot of good things going for it. If anybody wants to see the review I did, I'll put that in the show notes. Again, retipster.com/205. I've also got an affiliate link to them, retipster.com/mercury. If you want to check it out, has anything about Mercury been like a pain or an annoyance? When I signed up for my account with them, they've got like transaction limits and stuff initially that you have to like request them to open up the floodgates. You can send more just like little stuff like that. Has that ever been a problem or has it been mostly just a fine experience?

Brian: Yes, we have had a couple of those issues. I would say my biggest complaint about Mercury is the fact that you can't talk to a human being over there. You can email them for customer service. And they're somewhat responsive by email. There's no phone number you can call. I don't think that there's a live chat, although it's really my partner who works with them. But I don't think you can speak with a human being over live chat in real time. It's just email support.

We've wanted to get on the phone with a manager over there just to establish more of a personal relationship with them because we have like 30 accounts with them. And some of these accounts, there's $400,000 coming in and out of some of these accounts, right? I mean, so we want to establish a more intimate relationship with them and we haven't been able to do it. We haven't been able to get them on the phone despite the volume that we've done with them. That's been a little bit of a frustration.

As far as wire transfer limits, like you alluded to, it's been something that we have to deal with with each of our deals because the wire transfer limit is really low. I think it's like $25,000. It might be a little bit more than that. So every single deal that we do, we have to manually email them and say, "Hey, we need another wire limit lift," you know, so we can send $200,000, $300,000, $400,000 to fund these deals. But they're pretty responsive, like I said, so it hasn't really held us up. But it is something that for every deal, yep, send another email to Mercury Bank, you know, get that limit lifted.

Seth: Yeah, that's really interesting. I've been diving into a lot of these Mercury and similar organizations like Mercury, like Relay, for example, or Bluevine, they're almost the same thing. But one big difference with both of those is that they do have phone support so you can call them anytime and it's actually pretty good like they're really helpful and responsive and that kind of thing. So like, if that's a problem, check out Relay or Bluevine. By the way, I got affiliate links to both of those too. Check out the show notes. But also that money transfer limit thing. I think that's an issue with all of them, where it's just one of these annoying things you have to deal with. I think, I don't know if it depends on the type of business you are or how much information you submit to them. I kind of thought that once you requested this limit expansion or, you know, I'll let you just send more money, like that's it. You don't have to keep requesting it, but it sounds like you have to do that every time for every deal. I don't know if that's because that's like a new LLC involved each time or why that is, but yeah, different quirks. Looks like no bank has it all figured out necessarily.

Brian: Yeah. So you do have to, there's two quick comments on that. Each account that we open is new for a new LLC. So we do have to request a limit for the new account. But even that aside, the higher limit that they give you is temporary. I think it's good for two weeks or a month maybe. And then it reverts back to the normal is my understanding.

Seth: Thanks for mentioning that. Do you guys use any automations? Is that a feature that you use or is it not really that helpful for you?

Brian: Yeah, that's something that we've been working on throughout this year. And in fact, right now we're working on an automation so that when a member signs up for a new deal, we have them fill out a Google form. So now we're setting it up so that they'll get an immediate email back with all of the customized instructions for that deal, the funding instructions and so forth.

Brian: So yeah, I mean, we're trying to work on a series of automations like that, but we've had to kind of make this up as we go along a little bit or figure out what the right processes and systems are in place for this because there's not really anyone else doing what we do. The closest thing is they were left-field investors. They got bought out by Bigger Pockets and other passive pockets. So they kind of sort of do some of this and they use a company called TribeVest, which we have used in the past. We stopped using them for a couple of different reasons, which I don't want to come on here and talk trash about another company and how they're doing business. But yeah, so we used to use them. Now we manage it more in-house and use Mercury Bank for a lot of that. So yeah, we've just had to kind of figure out what are the smoothest systems for us? What are the smoothest systems for our members? How can we make the process as easy as possible for everyone involved. And we just kind of had to experiment and figure it out as we go.

Seth: Now, I am wondering, you mentioned earlier that there's lots of different types of properties and investments that you've looked at and participated with. Have you noticed, are there any particular ones like the best performing? Like, man, whenever we do this kind of deal, it does really well. Or another question would be, which ones are the most popular? Like everybody wants to be in that deal. Does anything come to mind?

Brian: Yeah. So we really like private partnerships with smaller operators. And just as a broader observation, the last couple of years have been very challenging in the commercial real estate space. And when I say commercial real estate, I also mean multifamily, which obviously is residential use, but it's classified as commercial real estate. It's been a really difficult couple of years for commercial real estate for many reasons, the high interest rates being one of those, but not the only one.

And what we have found over the last couple of years is that the largest operators go in say 2022 or even the beginning of 2023, you know, the ones who had the biggest brand names and, you know, like these sterling reputations, you know, and they had podcasts that were popular and, you know, they had these big, expensive coaching and training programs and they were building this big brand around themselves. We actually found that those operators have done the worst in these more challenging conditions because in the couple of years leading up to 2022, it was very easy conditions for anyone to make money in this space.

So yeah, we have found that those big brand-oriented companies and operators have really struggled. And I'm not going to name names, but the two worst operators we've worked with were some of those big brand operators that everybody knew and everybody trusted really going into 2022 and early 2023. So we have actually found that the smaller operators have done better. The ones who aren't trying to build a big brand, they're not trying to create this $50,000 training program or anything like that. They're just trying to keep their heads down and focus on finding great deals, operating good deals efficiently, cranking out good returns for themselves, for their investors. They've actually done better has been our observation.

I mean, like I said, we talk to different operators every week, but also we've invested with a couple dozen operators at this point. So that's been a broad trend that we have seen. And we haven't found the bottom of that yet as far as what's the smallest you can go and still have it make sense. I mean, it still has to be an operator who wants to raise outside money, right? Some of the private partnerships that we've done have been the most popular, the best received. And in some cases, we have felt the lowest risk.

That kind of ties in just a related point here that another thing that has changed for me over the last year or so is we've really honed in on risk as our highest priority. Every one of these operators promises high returns, right? They all promise mid-teens returns or higher for these equity deals. But some of those deals are very high risk and others are very low risk. So learning how to separate the difference on risk is really where the meat and potatoes lie for passive real estate investing.

Seth: So it sounds like it's not necessarily about the type of property. It's more about the partner and the confidence in them that has a lot to do with what the returns end up being and how popular that opportunity is among your members. Is that accurate?

Brian: Yeah, that is accurate. There's a saying in this space that you bet on the jockey, not the horse. The sponsor or the operator matters a lot more than the individual investment. And we certainly do believe that maxim. And we've seen it happen where really good, dedicated, honest operators with a lot of integrity, they can salvage a deal that goes awry. And the opposite of that is also true. An inexperienced or a bad operator can mess up even a good deal. So yeah, so the operator absolutely matters as the highest priority. You still want to vet the deal itself, of course, but yeah, the operator is the highest priority as far as vetting.

Seth: So you mentioned there, it's all about separating risk. So in hindsight, with everything you've seen so far, when you look at new deals now, are there any like red or green flags that show more or less risk? Like what kind of things would one of these partners say that makes you like, "Oh, I don't know about that. Maybe I don't want to do this." Or, "Oh, that's a good sign. We've seen good things from this in the past." Anything come to mind?

Brian: One of the hardest things about vetting operators is trying to put your finger on the pulse of trustworthiness and character, which there's no numbers or metrics that you can look at for that. You just have to get a sense for it. And to get that sense, you kind of have to just keep asking probing questions until you start developing, you're feeling around the edges to try to get a sense of the shape of their character.

So one question that we always ask is about, "Tell us about deals that have gone wrong and what happened? How did you handle it? What happened to your investors in that case?" And we ask, "Have any of your deals lost money? Have you ever lost money on real estate investments? Have your investors ever lost money on investments with you?"

And what we look for in some of those answers is every real estate investor who's been around long enough will say, "Yes, I've lost money on real estate investment." I mean, I personally, I've lost money on real estate investments, right? You're in this space long enough, you're going to lose money on real estate investments. What we want to see in their answer, we want to hear them talk about how they put their investors' returns ahead of their own.

And, you know, so an answer that we would like to hear is something like, "Yeah, we did. We had this deal go awry. You know, we had this terrible thing happen. We learned a lot from it. You know, this is how we changed our operations because of this. And, you know, we lost money on that deal, but we came out of our own pockets to make our investors whole. And, you know, they didn't earn a positive return, but at least they got their investment capital back." You know, that's a decent answer to that question. That's the kind of answer we would want to hear.

If we hear someone say, "No, we've done 120 deals and none of them have ever lost money," then we're like, "Really? How does that work?" Or some of them will say, "Well, as a company, we've only done five deals, but our founders between them, they've done a certain number of deals." I'm like, "Well, then do I need to talk to every single one of your founders and hear about their past deals because five deals as a company doesn't seem like enough to me."

So you just feel around the edges of this stuff and try to feel out what has gone wrong in the past. How do they avoid that moving forward? What are the ways that they mitigate risk? How do they approach debt? Debt is a big one. That's really the first risk that we look at. How do they protect against rising interest rates? What kind of LTV do they take out for loans on these? Are they trying to just max the hell out of the LTV or are they more measured and more conservative with their loan structuring? All of these kinds of questions. I mean, we have a whole battery of metrics that we look at. But yeah, with sponsors and trying to gauge sponsors, you really are just trying to feel around the edges to develop a sense for who the sponsor is, what are their values, how trustworthy are they, what's their integrity level, and of course, what's their experience level. But that's easier to measure than their character.

Seth: Yeah, that's interesting. Yeah, the character is a tricky thing. Once you've done a deal with them, it becomes much clearer, I think. But when you're just limited to just talking and just asking questions, I mean... I don't know. It's just hard to get to the bottom of that. I mean, there's certain red flag answers, I think, but some people know how to answer questions really well. It still doesn't mean that they're a good person.

Brian: That is true. And so a couple of notes there. So one of, I mentioned a minute ago, the two of the worst operators that we've ever encountered were really big name, popular operators with sterling reputations. And the one guy, he came in and he was so polished in his presentation of a deal. And he was personable. He didn't just throw a bunch of industry jargon. I mean, he said everything right to your point. And it was a perfect presentation. And he's a total train wreck now.

But yeah, so we have a couple rules that we follow around that or guidelines rather. One is we try to find new operators by being referred to them by other operators who we know, like, and trust. It doesn't mean that we won't consider operators that we find through other means, but we like being referred to operators by other people who we like and trust. In fact, I mean, the operator we invested with last month, Meridian REI, we heard about from you. You recommended Chuck, Chuck Dreison from Meridian REI. So that's exactly the kind of thing that we try to do.

And our other rule with this is we don't want to reinvest with the same operator within a year of our first investment with them. So we want to give them basically a one-year probation period to get a sense for how's their communication style? How does the deal perform? When things go wrong, which inevitably happens with these big complex deals, how do they handle it? Do we feel comfortable that they're putting us first with these investments? So yeah, we have a couple guardrails in place. You can never completely eliminate risk, but yeah, we have a lot of guardrails in place to try to minimize the risk on these investments and again, find those asymmetric returns.

Seth: It's really interesting. And maybe it hasn't been that long since you've been doing this, but I might be curious to ask you this question in five years, but I'm curious what percentage of the deals you do are like, it's your second or third rodeo with these people. It's not the first deal. I know a house flipper, he told me years ago that he hadn't been doing this for a long time. And he says, there's not a single contractor or subcontractor that he works with that has been there the whole time. They come and go and he has to keep finding new ones for different reasons.

I wonder how that works in your kind of business. It seems like a challenge to find these repeat partners that you can go to again and again. I know for land funders I've talked to, that's like the holy grail that everybody wants. They don't want to have to keep learning new people and finding new people all the time. They just want consistent, reliable people.

Would you agree that that's a difficult thing to find?

Brian: Yes and no. So yeah, I mean, there are some operators who they've been around for a long time. We think they're going to be around for a long time to come. We want to keep investing with them year in and year out. We also want to balance that, the relationships with existing people who we know and trust. We're going to balance that with diversification and bringing in new operators who are maybe working in different markets or different property types, working on a different timeline. So as we mature as an investment club, that's a balance we're just going to keep trying to walk of, hey, we have a couple of operators we really like. We're going to keep bringing them back year after year. And we're going to keep bringing in some new operators to keep the blood fresh and to provide true diversification for our members.

Seth: I keep thinking about the thing you mentioned about how these big names that are so polished and how those were the worst ones. It almost reminds me, I don't know why I'm making this correlation in my head. It reminds me of like the Me Too movement. I like all these high profile, you know, super clean looking people ended up being like really nasty individuals. It just makes me like not trust anybody. Because if I can't trust this person who like looked so good, like who can I trust? It also makes me wonder like, do you avoid those big names because of that? Or do you look at them with a lot more skepticism because of your past experience? Or if you could have your pick of the litter, would you go after the guy that nobody knows about because of that? Or has it shaped your decisions in any way?

Brian: Yeah. I mean, that's so tricky. So we're not opposed to working with big operators. They have a huge company, a lot of employees. We're not opposed to working with them as long as we feel like they've been around for a long time. They've been through multiple market cycles. They've stood the test of time. And that's why they're so big. We don't mind working with them and we like working with them.

I'll give you one example. Post Real Estate Group. They've been around since, I don't know, 2003 or something, maybe even the late '90s. And they've done 130 some deals total, but they're a big outfit. So we like them. We did our first deal with them this year. And yeah, I mean, we think that they're going to be a good partner for years to come. And they're a big operator.

So we don't shy away from the big operators necessarily. I also think that part of the value that our club can bring is finding operators that our investors or members wouldn't necessarily find on their own. Anyone could go out there and find Post on their own. They're a pretty big name operator. They're well-established in the industry. So someone who has $50,000 to invest... They don't need us to find Post, right? They can go invest $50,000 with Post on their own.

So, you know, yes, there is some value in us bringing Post in and each member being able to invest small amounts with them. But I think some of the best value that our club can bring is finding some of these smaller under-the-radar operators that no one, you're never going to find on your own, right? Or like, you know, a mom, a regular person who's not in the industry, they're never going to find on their own. You might find them as someone who's in the industry, but our members aren't going to be able to find them on their own to invest with, but they can prove to be really great partners and provide outsized returns because they don't have a big polished marketing budget or marketing strategy. So they just want to operate deals, right? They just want to find good deals and operate them and make money that way. They're not looking to become a household name and raise millions upon millions upon millions of dollars in private equity capital.

Seth: How do you find these opportunities? Like, do you just find people like me and say, "Seth, who do you know?" Or like, how do you sort of go under the radar? If somebody isn't already a big, well-known brand, is it just kind of your network? Asking your friends, like, "Hey, who do you like? Who have you invested with?" Is that some of it?

Brian: Yeah, exactly. And our members. As the club grows, increasingly, our members will say, "Hey, check out this person." So for example, there's a syndication group that we never would have found on our own. They're a smaller outfit. They were in the same real estate syndication mastermind group as a member of ours. So our member came to us and said, "Hey, these guys are great. They're a smaller outfit, but they have a lot of experience and they're doing kind of unique deals. So can I introduce you to them?" And Denny and I were like, "Yes, please introduce us to them."

So we met with them and we really liked their model. They do the Section 8 overhang model. It's a niche thing. We don't have to get into that. But yeah, it's a more unique or it's a more niche investment strategy. But yeah, we probably never would have found those people on our own, but a member of our club referred us to them. But yeah, the bigger answer is just people like you, people who we've known for a while in the industry we trust. We asked you, "Who do you like out there? What smaller operators should we connect with who you think is doing great work?"

Seth: Yeah, it's interesting, that whole thing of like recommending people because I think there's a—well, I'll just give an example. So there is a company I know of that I don't really think they're doing that good of a job but the owner of the company is a very, very likable person who's very good at networking. He has lots of friends, lots of people who like him, but they've never actually used his company. So they will recommend his company even though they've never used it because what they're really saying is like, "I like this guy," but they know nothing about the product he's selling.

Seth: And, I think there's a huge differentiator there. Like if you've actually used the thing versus like, "Yeah, I know a guy and he's my friend," totally different things. I mean, sometimes they line up, but a lot of times they don't. So I guess what I'm saying is to two different groups out there. Like if you are recommending somebody, you know, include a giant caveat that you've not used them if you're doing that, because you never really know what you're recommending if you haven't used it. And also for people following other recommendations, make sure you understand, like, did that person use this? Or are they just friends behind the scenes? Because there's a lot of stuff that can kind of go get messed up there if you don't know what you're doing.

Brian: No question. And yeah, so the last question that we ask every operator that we sit down with the first time we meet them is "Who else do you know, like, and trust in this industry? And who have you invested your own money with as an LP, as a passive investor?" Because we have yet to meet a general partner, an operator who has never invested passively in someone else's deal, right? Like, I mean, they too want to diversify their investments. So they also will have invested with other operators. So that is a question that we ask. And it's an important one to your point.

Seth: So when a deal comes across your desk or a person or an opportunity, is there anything you look at to say like, "No, we're not going to bring this to our group because of XYZ." Like whether it's because the deal is too small or too big or partner, the risk is off. Does anything stick out to you as like, this is the reason we don't take it to our club? There's probably tons of things there, I know. But anything come to mind as the top thing that kicks most deals out?

Brian: Like I said, we have a whole series of risk metrics or questions that we ask around risk. But I'll give you a couple of the big ones. So one is property management risk. So people love to talk about like, "Oh, is the company vertically integrated or not?"

Brian: The question really shouldn't be around, does the operator do their property management in-house versus outsource it? The more important question is, how many deals has this operator worked with this property management company with, whether it's in-house or outsourced? What I want to hear when I ask that question is, "Oh yeah, we outsource property management and we've used the same company for the last 20 deals. They operate all of our deals. They manage all of our properties in this market where we operate." And that is a question or an answer that gives me comfort as opposed to, "Well, yeah, we're vertically integrated and we do all of our property management in-house and this is a brand new market that we're going into and we're going to hire all new people in this market." And they've never worked with those people before.

So yeah, what we have found is that... Well, let me back up one second here and just give a big picture way of looking at risk with these. When real estate syndications go bad, they don't usually go bad because of one thing going wrong. It's like an airline crash where there has to be what they call a cascade of problems before the plane goes down or before a real estate deal goes down. So in aviation, the average, I believe it's seven. Seven things have to go wrong for a plane to crash. We recommend that people think about real estate syndications and other passive real estate investments the same way.

There's usually a cascade of problems. And almost always one of those problems is property management, bad property management. So we have seen deals where a lot of things have gone wrong and the operator has been able to keep it just above the waterline with really outstanding property management. So I'm not sure I've ever seen a deal go wrong where the property management was outstanding. So bad property management is almost always one of those seven things. Not that it's always seven, but you see what I'm saying. A cascade of things has to go wrong. And almost always, one of those things is bad property management.

So we look at what is the history together of this operator and this property management company or group of people. Same thing with construction risk. It's not so much about whether it's in-house or whether it's outsourced. It's what's the track record of this operator working with this renovation or construction team? How many deals have they worked on together?

Brian: The question really shouldn't be around, does the operator do their property management in-house versus outsource it? The more important question is, how many deals has this operator worked with this property management company with, whether it's in-house or outsourced? What I want to hear when I ask that question is, "Oh yeah, we outsource property management and we've used the same company for the last 20 deals. They operate all of our deals. They manage all of our properties in this market where we operate." And that is a question or an answer that gives me comfort as opposed to, "Well, yeah, we're vertically integrated and we do all of our property management in-house and this is a brand new market that we're going into and we're going to hire all new people in this market." And they've never worked with those people before.

So yeah, what we have found is that... Well, let me back up one second here and just give a big picture way of looking at risk with these. When real estate syndications go bad, they don't usually go bad because of one thing going wrong. It's like an airline crash where there has to be what they call a cascade of problems before the plane goes down or before a real estate deal goes down. So in aviation, the average, I believe it's seven. Seven things have to go wrong for a plane to crash. We recommend that people think about real estate syndications and other passive real estate investments the same way.

There's usually a cascade of problems. And almost always one of those problems is property management, bad property management. So we have seen deals where a lot of things have gone wrong and the operator has been able to keep it just above the waterline with really outstanding property management. So I'm not sure I've ever seen a deal go wrong where the property management was outstanding. So bad property management is almost always one of those seven things. Not that it's always seven, but you see what I'm saying. A cascade of things has to go wrong. And almost always, one of those things is bad property management.

So we look at what is the history together of this operator and this property management company or group of people. Same thing with construction risk. It's not so much about whether it's in-house or whether it's outsourced. It's what's the track record of this operator working with this renovation or construction team? How many deals have they worked on together?

Because there's a big difference between, "Oh, we're moving into this new market. We're going to hire some subcontractors and it's going to be fine." It's not going to be fine. You're going to have some bad experiences and some surprises, as opposed to "We do all of our deals in this one city and the same guys are swinging hammers on every deal that we do. And they've worked with us on 30 renovations or 30 properties." So yeah, same thing there with construction risk. But yeah, I mean, these are the kinds of things that we're looking at, trying to find what are the most common things that go wrong in that cascade of problems and a deal. And what do the people who mitigate those risks do? How are they mitigating those risks? Yeah. I mean, we can go on and on about that. But yeah, we want to find people who are consistently mitigating those common risks every deal that they do.

Seth: Yeah. Well, I'm really glad you pointed those things out because in my experience of rental property ownership and development—absolutely man, I mean so many problems go back to property management. Like when I built my self-storage facility, my general contractor had a lot of experience with every single subcontractor, except for, I think just one of them. And that one was where all of the surprises came from. And I don't even know that that subcontractor was like messing up that bad. They just don't know each other and the communication. It's not understood. It's not there. It turned out fine, but like there was any heartburn or like problems or complaints I heard from anybody. It was about that lack of history in their relationship together. And it's a huge deal.

Brian: Yeah, it's—I can see you understand this probably from a lot of experience. And those are—totally agree with that stuff.

Seth: So I am curious. What if something—and maybe this hasn't happened yet, but what if something goes horribly wrong in one of these deals? Like, how do you make sure the mob doesn't come after you and get all mad at you for bringing this deal to them? Like, is that ever a concern or like what would keep that from happening? Do people just kind of take responsibility for the risk they took and not bug you about it or how to make sure everybody's willing to accept the risks in the deal?

Brian: Yeah. So there's a couple of answers to that question. So this did happen once. We had one of the first deals that we did, it did go bad on us. And I was actually, I was really pleasantly surprised. Denny and I were really wringing our hands. We were so upset about it and so worried about like, "Oh my God, everyone's going to blame us." We invited the sponsor to come and speak in front of the group, and then this deal didn't go according to plan. Our members were very mature about it. They were very philosophical about it.

We do try to communicate very clearly with people. We're not vetting deals on your behalf, even though we are kind of, but we want to be very clear that you can't count on us to do your due diligence for you. It's your money. You've got to take responsibility for analyzing the risk versus the returns on these deals. We're going to do our best to bring high return, low risk deals, those asymmetric return deals to you. But at the end of the day, it's your money. It's your retirement on the line, right?

So you've got to make a decision for yourself about what you feel comfortable with. And if you don't like the deal, skip it, wait for the next one or skip the next three or whatever. But it's your money, it's your responsibility. So we try to communicate that clearly. And we also try to be very frank in all of our discussion about risk in these deals.

So when we have a deal discussion, the sponsor comes in, they talk for a few minutes, they answer a bunch of questions, and then we kick them out. And we have the syndicator or the operator leave and the rest of our club members stay on the line and we have a private internal discussion about it. What do we like about this deal? What are our concerns about this deal? Where do we think the risks are in this deal? What could go wrong in this deal if something were to go wrong? And how do we feel about the return profile versus those risks?

So yeah, I mean, some of it is just communicating that everyone, yes, we are an investment club of investors and we're going in on deals together, but each of us are also individuals who are investing our individual money and are individually responsible for those investment decisions.

Seth: It just makes me wonder, if somebody joins your club with the inappropriate expectation of no risk, how do you catch this kind of thing and make sure that they understand that there is some risk and that it's kind of on them before they get into it? Do they sign some kind of disclosure or disclaimer? Do they have to watch an onboarding video just making it clear that they get it? There's risk to it?

Brian: Yeah. So the form that we have them fill out to indicate that they want to participate in a deal does have a couple... We minimize the legalese. I mean, it's basically like a series of one-sentence things that they initial, basically saying, "I understand that the risk is my responsibility. I agree not to hold Brian and Denny responsible for," hold harmless kind of stuff, basically.

So we do that. We also try to have, like I mentioned a minute ago, we try to have very candid conversations around risk and say, "What are the risks of this deal? Do we feel comfortable with the risks of this deal? What could go wrong?" So we want to keep that conversation, not only candid, but also we want to make sure that risk is the first thing that we are talking about with any given deal as opposed to returns. For some of the reasons we talked about earlier, all these investments promise high returns. Some of them have high risk, some of them have low risk. So our job is really identifying the ones that have low risk versus high risk. And by our, I mean all of our members, not just my and Denny's job.

Seth: That makes perfect sense. Well, Brian, I appreciate you taking all the time to explain this stuff. Is there anything else I should be asking you or any other notable things you want to cover before we wrap this up?

Brian: No. Well, yeah, I will leave one final thought with the audience that we consider passive real estate investments. It's a great vehicle to lifestyle design and intentional living and being able to have that location independence, time freedom, all that stuff. So I've spent most of the year in South America with my wife and daughter. We travel around. And that's why I got into passive real estate investing in the first place is so that I wasn't tied to one city where I had properties or anything like that. But yeah, it's just the vehicle. Real estate is just a vehicle for passive income and asymmetric returns.

But ultimately, it's about lifestyle design and living a life by intention and trying to figure out what does my ideal life look like? What does my ideal work look like? You don't need to be financially independent. You don't need to be able to cover all of your living expenses with passive income in order to live your ideal life. I've interviewed dozens of people who retired early, they reached financial independence, and then they went back to work. Every single one of them went back to work because they got bored sitting on the beach, sipping piña coladas, right?

So all you need from your investments, whether real estate or otherwise, is you just need enough passive income to cover any gap between what you want to spend every month and what your dream work pays. And often that gap is not very high if it exists at all. So I would just encourage people to go out and figure out, have some really of those soul searching questions around what does my ideal life look like? What does my ideal work look like? How much does it pay versus how much do I want to spend? Maybe I only need an extra 500 bucks a month, $1,000 a month in passive income to quit my high stress day job and go do what I really want to be doing.

Seth: Yeah, for sure. If people want to participate in this, they just go to sparkrental.com and then click on co-investing in the navigation bar. Is that right?

Brian: That's right. It's that simple.

Seth: Yeah, I'll include a link to that again in the show notes for this episode, retipster.com/205.

Brian, thanks again. Always a pleasure to talk to you. Hope things continue to go well and hopefully we'll talk again soon.

Brian: Seth, thanks so much for having me. This was a lot of fun.

Seth: You bet.