YOUR DAILY REAL ESTATE INVESTMENT SHOW
May 17, 2022

Over 20 Years and 200 Deals Worth of Experience, Join Us for Jeremy Roll's Take on the Current Market Conditions

Jeremy started investing in real estate and businesses in 2002 and left the corporate world in 2007 to become a full-time passive cash flow investor. He is currently an investor in more than 70 opportunities across more than $1 Billion worth of real...


Jeremy started investing in real estate and businesses in 2002 and left the corporate world in 2007 to become a full-time passive cash flow investor. He is currently an investor in more than 70 opportunities across more than $1 Billion worth of real estate and business assets.
In this episode, we talk with Jeremy Roll, Founder and President of Roll Investment Group, Jeremy manages a group of over 1,000 investors who seek passive/managed cash-flowing investments in real estate and businesses.
Jeremy is also the co-Founder of For Investors By Investors (FIBI). This non-profit organization was launched in 2007 to facilitate networking and learning among real estate investors in a strict no sales pitch environment. FIBI is now the largest group of public real estate investor meetings in California, with over 27,000 members.

Jeremy has an MBA from The Wharton School, is a licensed California Real Estate Broker (for investing purposes only), and is an Advisor for Realty Mogul, the US's largest real estate crowdfunding website. Jeremy welcomes e-mails (jroll@rollinvestments.com) to network with or help other investors and to discuss real estate or business investments of any size.

Jeremy talks with us about why he started investing in passive cashflow opportunities and the difference in real estate syndication now versus when he first started.

He shares how he manages his investments, the importance of diversifying your investments, and the pros/cons of passive investing.

Watch this episode with the incredibly knowledgable Jeremy Roll and learn how you can achieve success in your investing career!

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I learned at a young age that people do not really care about you. They only care about what you can do for them. Then I thought, how could I leverage that into helping me build a career. I said early on when I started selling real estate that I wanted to be where everyone came for information, and I would sell real estate along the way. Well, so far, that has worked out really well. As I close in on 1 billion in real estate sold, I am proud to announce that I am just getting started. We are excited to roll forward to next year and the next and the next by providing the value people look for, by giving them information and helping them out when they need it, and selling a little real estate along the way. Let's learn together. Yes, together, I want to learn from you as well.

Transcript

Casey Brown  0:02  
All right, I'll just do an introduction and then we'll go from there. Okay. Sounds good. Hey there, and welcome to today's episode of cash flow Pro, your real estate investing podcast and YouTube channel. I want to welcome you hear today and I'm going to be real honest, this is an episode that I've been looking forward to for quite some time. We've got with us Jeremy roll of roll Investment Group, I'm sorry, I had to look down because I wanted to make sure I got that right, Jeremy, Jeremy is has been in this business quite some time he is. He's a mentor to a guy that is a mentor to me. So I just thought it was very valuable to have him on our show so that he could maybe spread some nuggets or share some some just general knowledge about the real estate syndication business. Jeremy and I were talking a little bit before the show, and I don't know Jeremy, we are a fund to funds, which I know and I'm gonna go ahead. My mentor is Hunter Thompson. And I know that you and Hunter are pretty close. And so I just the fund to fund stuff just so you have some context to when I when I refer and use some terms like that. That's kind of what what we're talking about. And so Jeremy, how are you today?

Unknown Speaker  1:21  
Doing good. How are you doing? It's the usual sunny day in LA over here.

Casey Brown  1:24  
And that's great. I'll tell you it's it's a ray. It's been a little bit rainy here. I'm about an hour from Nashville, Tennessee. And so we're just trying to get out of the cold early spring and get into Hurry up and come on summertime. So

Unknown Speaker  1:41  
I'm originally from Montreal, Canada, I very much can relate to that.

Casey Brown  1:45  
Yeah, I guarantee. Montreal. That's a nice, nice place, though. So anyway, so why don't you you know, generally what we'd like to start with here, or what I like to start with is, is to hear just a little backstory about maybe, because, you know, my, my listeners are probably early on maybe in the real estate education, like learning how to invest or learning where to invest or learning even what to invest in. Now, you know, we've had everything from people who talk about moving, or investing with self directed IRAs all the way to two, again, like I told you down in the weeds and try not to get so technical, but we've had we've had those people on as well. So, but we want to hear a little bit about your backstory about how you kind of got maybe even interested in real estate. Sure,

Unknown Speaker  2:32  
yeah. Thanks again, for having me on. Hopefully, this is helpful for your listeners. And then one important thing before we start, I'm not a financial adviser or investment advisor, or an accountant or attorney or anything. So I think I'm sharing for everybody today, just my perspective as an investor. So So I started investing in what I call passive cash flow opportunities. And I started with real estate back in 2002. So it's been 20 years now. And the reason why I got interested in that to answer your question is because I watched the.com crash happen, which some of you probably aren't familiar with. But it was a huge crash, mostly in tech stocks. And after that, I said to myself, you know, I'm a very low risk, kind of slow and steady guy watching the stock market go up and down 30% In a year was not the right fit. For me, I didn't think it was the right fit for my long term retirement strategy, honestly, in terms of having the lack of predictability of what was happening. And so I started to look for different ways to invest came across the concept of more predictable cash flow being probably the better fit for me. And I started with real estate down that path. So it was really more about a search for predictability for me, and it's a kind of a shift away from the volatile stock market.

Casey Brown  3:38  
Sure, and I'll be honest with you, I'm a little bit of a of a young and I was graduating high school when the.com bubble, stuff went down. We were you know, but but I just remember the sheer, just just the fear that just seemed like it just kind of captured everybody all at one time. Because you know what, during the.com, boom, there was never going to be another bad day, right? I mean, everybody was was just moving in towards, like, they were just this was this was the new gold rush. And again, there was never going to be another bad day. So so when you started looking and started evaluating your long term retirement, you know, your long term retirement strategy and, and kind of looking for these things. What, what markets, or did you just like immediately go in? So hey, I want to I think this is the way this is the best fit for me. And if so, what markets did you kind of started like researching or how did that look?

Unknown Speaker  4:37  
Yeah, good question. So to be told us it had a bit of an unfair advantage. And I say that because I had lifelong friends in my family who had actually been investing in real estate and syndicating for a couple of decades at that point, maybe one or two decades. And, and I grew up like blocks away from I used to play kids. I used to play hockey with their kids all the time, like you know, after school so it was that type of a very long standing relationship and terms of trust and knowing them. And so when I went started going down this path, the first thing I did, I said, Okay, I'm going to try dabbling in a couple of their deals, because it wasn't just about I could trust them was also like, I'm going to learn a lot from them, right. And actually more than probably learn from an addict person, because I'm gonna be able to get more of their time because I know them very well, etc. So it was definitely a lucky situation. Now that by default, and it's funny, because I can't remember my first they'll have to ask them I get asked that question. I know the answer. But it was likely either in retail office, I was gonna say or industrial, because that's the three asset classes that that company focused on. But it was more likely on retail, strip center, or office, probably smaller office building.

Casey Brown  5:38  
Gotcha. and whatnot. Now, just for context as to where we're at on the timeline, what, what year, round was the first one?

Unknown Speaker  5:47  
Yeah, since early 2002. And the market as you asked, So, I'm from Montreal, Canada, and I grew up half my life there spent half my life here so far in the US. At that point, I had just left the Canada only a few years ago. And so I left in 98. And that was 2002. So I didn't have very many contacts in the US. I didn't know who to trust. I wasn't into the markets very well, honestly, you know, I'm new to this country at that point. So I was investing in a couple of deals in Canada at that time, in fact, out of the US, and that's a whole other ball of wax. So then you got like interest, sorry, foreign exchange risk and all kinds of other stuff. Right. But it was definitely not a US market that I started focusing on here.

Casey Brown  6:27  
Sure. And then so so you had an unfair advantage. And now you you also, I guess you call it real estate syndicating as in today's terms, but I don't was it wasn't called Real Estate syndicating back then

Unknown Speaker  6:40  
it was it just wasn't nearly as popular and understood and widespread. For many reasons, including not the least of which is you know, now you can do a public solicitation on a 506 C structure that allows you to actually market openly to accredited investors, for example. Yeah, so that was none of that back then. I mean, this is just a very recent phenomenon. I think that passed in 2015, if I remember correctly, so yeah, it was a very different time back then. You know, pre I call it pre internet was really just the beginning of the internet really, very difficult for me to find opportunities compared to today. No conferences exist today, no podcast that exists today. No online forums. Today, truly. And I was really lucky to because another piece of luck that I had is I was actually in Los Angeles, a big city. And what that meant is that I was able to go to in person meetings to network and learn and find these types of opportunities. I did a lot of that. Right. But had I not been in LA would have been much harder for me to ramp up my education, because there's not all the access you have today to all these nationwide, you know, options. Very different time back then.

Casey Brown  7:41  
Sure. Oh, yeah. And then, and of course, I guess, I guess it would have just been probably referred to as just business, I guess back then. I mean, it's just typical. And really, when you look at it now aside, you're taking in private money or private equity or whatever you however you want to turn that but but you know, when you when you're looking at it from just a business structure standpoint, I guess it's I guess a lot of these structures are pretty much the way they've been structured for forever. I mean, as far as the the cap, capital stacks, and so on, and so forth goes. But so so you so you've definitely been around for a while, and I'm sure you've, you've invested in in probably everything from I'm assuming most multifamily and such as that as well.

Unknown Speaker  8:28  
I have been in most asset classes, the one that comes to mind that I haven't been in is hotels, specifically. I mean, I'll give you a very quick list to give you an idea of apartments, student housing, apartments, mobile home parks, self storage, RV, Park, industrial retail strip center, retail, large mall, office. Now that's on one side, I've done single family buying whole single family flip hard money lending on the and some notes on the single family side. And I've done stuff outside of real estate. So at this point, because I do this full time, I've been doing it for so long, I'm in over 60 LLCs right now, I've probably been in over 150 to 200 over time, so I'm kind of like hyper diversified, not to the point that I'd recommend people do that at all just a lot. But I've been in many, many things. I'm currently in many things.

Casey Brown  9:17  
And do you pretty much the the 60 LLCs that you're that you're personally in? How does that how does the management of that load,

Unknown Speaker  9:30  
but it's not as bad as it sounds? I will say we're currently recording this right around tax time and I can tell you like the deadline for tax had just passed. I think I only got 39 of the K ones so far. So you know only about two thirds right. So now I'm gonna have to wait for those to come. The last one normally comes in around August depending July August. So there's that issue, but in terms of extending taxes, but the management isn't so bad because most of them have a quarterly report and a quarterly cash flow payment all All the tax forms are created by somebody else. For me, my account has to deal with all actually dealing with all these forms. But I don't have to put any together myself, I just have to forward them on. And given them a cash flow investor, my number one concern and focus is on cashflow. And of course, there's 1000 ways to invest, none of them are wrong. And whatever is best for the person listening is best to mix, but I focus on cash flow. So what I do is as soon as I go into an opportunity, I will take a spreadsheet that I have in Excel, it's very basic, it goes out by month, over 10 years. And I will say okay, this deal is supposed to project 8% Cash Flow year, well, divided by four to quarterly payments, I'll actually put the amount that I'm expected to get when they typically will make their payments which month, and I'll put it into the spreadsheet all the way up. And then when it comes to the, you know, quarterly timing, I'll basically just check one off after the other when I receive and make sure they look right. If it's with plus or minus, I would call it 15 to 20%, then I don't really see anything, these are projections, I'm not expecting to be perfect. That's just unrealistic. If something's way off, either on the downside, or on the upside, I'll inquire as to why. And actually, the downside is a bigger concern. But frankly, if something's up to the upside, I won't understand what's going on why things going. So well. Like I said, there's many different reasons is a temporary is a permanent, that type of thing. So that's how I manage it. To be honest, it's not that much management, once you're in them. What becomes really tricky though, is after a long time, once you're in this for many years, and things start to roll over, if you want to keep your money working, you have to reinvest it and compound it. And when you have this many balls up in the air, at the same time, I constantly have stuff either selling reinvesting looking at new opportunities. So it just, there's constantly gonna be pitching me like a juggler. Right? If a normal person is maybe in 10, to 20 opportunities down the line, and I'm in 60, I've got a lot more balls up in the air at once. And actually makes things more difficult. But my biggest concern is both making sure I'm getting all the payments I'm supposed to get making sure they look right or about right. But then reinvesting the money and you know, getting ready and knowing Okay, well, I gotta have four things exit and next three months, I have a separate spreadsheet for this. And what is it? Like? How many deals are coming up that I'm aware of? How much should I put into each one based on that money coming out? Plus how much money having cash, I'm constantly trying to reevaluate, like what chunk of money is supposed to get into the next thing? And what where's that going to be? When's it gonna be? So it's kind of an never ending, you know, ongoing equation.

Casey Brown  12:26  
Sure, sure. And then it's and then it's your I'm sure it's all the time. You know, if you've got four deals, exiting two months from now, being having at least something on the radar that you can move that money into to keep that money working so that it doesn't just come in and just sit?

Unknown Speaker  12:42  
Yes. Although I will say that I do not at all, say to myself, Okay, how many deals are going to excellent next year, this is how many things I have to go into. I don't forward to like that at all. I'd rather just go into deals that I find that I like, and then figure out, okay, it's actually the reverse. It's like, okay, I have three deals coming up in the next four months that I have to fund. How do I fund them? How much should I fund it each one? Right, then I have to go look at what's coming out. When's it coming up? How certain is it, this one's really going to close? If I were to put a lot more money in upfront and wait for that one to cash out a week later, is that money really coming? Those are the types of things, but I don't, I'm not trying to the one challenge in this space as an investor is that you never know what's coming up. And you also don't want to just go into a deal. Because there you want to go into business right fit. So I'd rather have money sitting in cash than going just making it go back into work just for the sake of making it work, you know, and that also because I'm pretty low risk. So that's kind of the way that I handle it.

Casey Brown  13:37  
You possibly Yeah, then you start getting into to the risk of missing of not having the cash when the good opportunity does come. So a lot of times, you know, what we hear all the time is is how do I get started. And of course, we went through your, your story of where you found, you know, how you how you kind of decided that this was was what you want to do. But, you know, for the guy out there that's sitting there that maybe has 50 or $100,000. And it's just or even in a in an IRA or a 401 K or something like that, where you know, what, what do you recommend somebody like that do to just to just, I mean, it's so overwhelming, because the amount of information that's out there, and the number of opportunities that like you said, for the sake of just jumping in an opportunity. You know, what do you suggest somebody do just to just to even get the ball rolling?

Unknown Speaker  14:34  
Absolutely. So if I had to start again from scratch, and I didn't have any, my prior knowledge is probably what I would do. I would say okay, which asset class can I relate to the best is what's going to easiest one for me to learn right up front. And so I tell people look, if you lived in a mobile home park, and that's where you grew up, you're gonna understand the asset class better than most of the others. Let's start with the mobile home park because you're gonna be able to pick up the details of that much more quickly, right. A lot of people tend to like to start by I'd like to start with apartments. And I think there's two reasons for that. Number one is a lot of people who live in apartments can understand the business model, it's actually relatively easy and straightforward, maybe compared to some other asset classes. And that's number one. But number two, the interesting thing about apartments is that there's a lot of apartment deals out there. It's like, if you think about a big city, like where I am in LA, think about how many park buildings they are, for every one self storage facility, many, right I don't know what the ratio is, but it's many. So that means that theoretically, you're gonna have a much easier time finding an apartment opportunity, or at least finding a lot of them to evaluate compared to yourself storage deal. As an example, I'm not trying to pick on self storage, just making a point here, so So I would look at the the asset class and I'm gonna be able to understand, easiest start to analyze that start to learn, there's a lot of ways to learn these days, you can listen to great podcasts like this, you can look for some online courses, you can go either virtual or in person, depending on your city panels, speakers you can listen to, there's conferences, you can go to, that really focus on one asset class, or many asset classes you can particularly choose. And so there's other stuff I'm missing, too. So there's just a whole list of stuff you could do to start learning. One of the things I like to recommend, it's how I learned, and that's not necessarily the most efficient way, but it's much more efficient than it used to be, is. I like the idea of what I call opportunity exposure to learn. Meaning that, let's say you choose an apartment building. And let's assume you're a credit investor, you can now log on to in your pajamas, the top 10 crowdfunding sites, each one's probably gonna have several apartment deals. As an example, you can download 20 apartment deals in the next two hours, literally, and then put them all side by side, look at the similarities, look at the differences. What are the preferred returns? What are the splits? What are the management fees? And you actually, I mean, imagine if you're comparing management fee structures on 20 deals, how much you're gonna learn from that, because you're actually going to tell what the outliers are up and down, and what what I call market rate is, and just that alone will not get you to hone in on what am I looking for what's fair, what isn't fair, right? So I did a lot of opportunity exposure myself because of the lack of educational tools that existed. And that is more efficient than it used to be for sure. Because what I do actually find 20 opportunities, it was a whole different problem than what someone else to do today. So you know, there's a lot of different options to learn. But I definitely recommend someone focus on one asset class that might be easiest for them learn it all. And the cool thing about this is that you could probably transfer about 80% of your knowledge from one asset class to brand new one is all transferable. There's revenues, expenses and net operating income, there's cash flow to look at, there's all kinds of stuff from one deal to the other, it's identical, you have to look at different tweaks, right? So mobile home parks have a different consideration set a little bit than an apartment building, but some similarities for sure. So I tell people, you could transfer about 80% of your knowledge onto different asset classes after but I'd say focus on one learning, try a few different deals of that asset class. And when you're ready, then to diversify out of the asset class, go for it. But that's what I'd recommend.

Unknown Speaker  17:58  
What's your favorite asset class?

Unknown Speaker  18:02  
Well, here's there's different ways you can look at it, I guess. So what I will say

Unknown Speaker  18:06  
is that, obviously there may shifted over time to I mean, it's right, right?

Unknown Speaker  18:09  
Well, if you look at my goal, my goal is more predictable cash flow and a more stabilized deal. Being a value ideal is completely optional, to me doesn't have to be like that, because I'm just looking for more predictable cash flow, because I live off the cash flow, I want that predictability. And that's why I got away from the predictability stock market. So to me one of the most predictable asset classes someone can choose assuming it's a highly occupied stabilized well managed property is mobile home parks, that has much lower turnover than any other asset class, I could think short of you like having a 20 year lease on the Starbucks, but then you have a single one tenant problem. The challenge is no diversification. So I really like mobile home parks for that reason. But my top four favorite asset classes for the next 10 years just based off of demographic trends, other things would be mobile, home parks, self storage, apartments, and senior housing or senior living those four if you're looking for more predictable cash flow with some probably reasonably reasonable expectation of continued future demand. That's less that's less uncertain, or more certain. Those are my four favorites as a generalization for the next 10 years.

Casey Brown  19:09  
You liked the Senior Living committee said that that's one thing. That's one question that it seems like it always comes up. And of course, there's the there's the idea of owning the real estate that the senior living facility is in. And then there's the idea of managing the senior living facility. And of course, the fact that those are almost two completely separate. I don't even know that you would be at want to be an investor in the management company of the of the senior living, but the real estate there is there. What's your take on that?

Unknown Speaker  19:48  
Yeah, so actually, I want to bring up actually really important point before we even get to that, which is that these four asset classes I just mentioned, I should have get everybody to copy out that these are my favorite for the next 10 years, but I don't necessarily they think that they're necessarily a great fit for me today. What I mean by that is the current market timing, right? So we're recording this, in April 2022. Interest rates are spiking up, quantitative tightening is coming up, I'm mostly on the sidelines, right? I think on a 10 year horizon, they're going to be the best asset class for me, but maybe not today. So the reason why I go back to that comment about senior housing, specifically, is because senior housing has had greatly affected by COVID. And in my opinion, I think it has a very bright future in the long term. But at this exact timing, today, I'm on the sidelines with it, waiting for the COVID challenges to shake out, and some of the turnover to take place as far as ownership. Unfortunately, I made a few deals right now. And unfortunately, some of the senior living deals got hit by COVID. And what happened is that once those tenants, like once some tenants left because they were scared is very hard to get new tenants in during the peak of COVID, as you can imagine, right? Oh, yeah, we'll want to keep their parents at home rather than put them out into another world with a whole bunch of other people in one building

Casey Brown  20:58  
world where they couldn't really go see him and talk to him.

Unknown Speaker  21:02  
Exactly. So I think that's going to be behind us in next year or two. And I think we're going to be back into a more predictable path with senior housing. But I am concerned about that for now. And I just want to point that out. Yeah, so I'm sorry. Now I got distracted, because it was, what was your question? Again? I'm sorry,

Casey Brown  21:16  
the question was about the Senior Living real estate ownership versus the senior living, actual management of the business itself.

Unknown Speaker  21:25  
Right, right. So look, Senior Living has many different verticals, right? So and it's very complicated to really thoroughly understand. So you can go all the way down the chain to like what I call 55, plus retirement communities, which is literally just an apartment building that is restricted to 55 plus age group, as tenancy, there could literally be nothing else to it as far as amenities or whatnot. But you can, if you're over 55, if you live here, if you're under 55, you can't write. And that is actually just like managing an apartment building, literally, then you can go to, you know, kind of independent living, assisted living, memory care, nursing facility and some other stuff. So Senior Living is very complicated to break down because it has its own verticals, which is unusual, most of these other asset class we've been talking about don't have them. So, and to your point, there's in a management company, and that can be either in house or can be hired third party, right, just like any other asset class. And to your point, when you have a senior living facility, regardless of almost which verticals he's in, except for me the 55 Plus, there's actually, it's almost like a business, there's tasks. So someone once said to me think about a senior living facility with 50 beds, right, which is not uncommon. If every if you're in a assisted living facility, what's very common is that every morning, each one of these residents is going to have a newspaper at their front door, right or at their, the door of their unit. And that is 50 tasks for someone to fulfill. Right 50 tests, you know, Jim's door here at John's door there. And so and then think about what is required everyday to see all the tests everyday they see are the versus having a tuner unit apart building for the random day that there's no repair, right, because there's an attendant problem, this isn't clogged or whatever, there are days where there may be zero tasks is wrong, but maybe just a common area tasks as opposed to a client specific tasks, right. So the management of senior living is much more complicated, as a result, the cap rates have been historically higher, the risk is higher, the reward is higher, right. And then you have different levels of risk within all those different verticals I just mentioned, meaning that if you invest in a skilled nursing facility, that is much more difficult to manage than 55 plus the returns are going to be theoretically should be higher in skilled nursing facility because the risk is higher, for example.

Casey Brown  23:43  
And then you got on the management side, you you you have the personnel management, then you've got somebody you got to potentially have somebody to collect insurance, and then you got to potentially have somebody to file government, you know, government insurance claims, which is those are completely separate as well. But nevertheless, I mean, so so that vertical, you're right, it's or that that that asset class you write is very. But you can also you can almost diversify within just that one asset class. I mean, for all intents purposes, you could you could be in the real estate and part of it and you could be in ownership on another part of it, whatever the case is, but so you said let's let's go buy your multifamily mobile home parks. What am I trying to say? Living and self storage? That's correct.

Unknown Speaker  24:29  
Those are those are for me like it. These, by the way have to be in the right locations with the right management company, etc. But all the boxes checked off. Those are my four favorites for the next decade, assuming you're looking for more lower risk more predictable cash flow.

Casey Brown  24:43  
Sure, sure. And it seems to me like with all the cash in the market that came through and stimulus and so on and so forth, that the amount of stuff that Americans have, have accumulated, I mean, just just stuff. Amazon packages and whatever. They're kind of packages that they've gotten to that their door, they have to have somewhere to store it. Because Lord knows we don't throw it away. Nobody throws anything away. Right. And so So in theory, that's that's, that's right. And then, you know, one asset class that you didn't mention for the next in your next 10 years that I want to just that I want to just touch briefly on is raw land, and even could even be as much as farmland have you? Have you done any studying or thinking on any of that of just land type asset class?

Unknown Speaker  25:33  
Yeah, great question. So raw land is the wrong fit for me only because it doesn't produce cash flow, and I live off the cash flow. So when I redeploy money, I want to make sure it's going to be cash flowing, I look for more predictable cash flow, because I live off the cash flow. So that's my number one goal can be the perfect fit for someone else for sure. Farmland is interesting, because it produces cash flow. But the challenge with farmland is that it doesn't produce predictable cash flow. And that would be my argument, because of weather, because of crop yields. Because of other weather and crop yields around the globe, nevermind the country that can impact the price that you're going to get for a certain type of commodity. So I have always stayed away from that type of opportunity. Because the predictability, cash flow just isn't there compared to me investing in a 100% occupied mobile home park, for example.

Casey Brown  26:17  
And that's what and I assumed that we were gonna get something along those lines, because I didn't know you to be a land guy, but I just, I just wanted to I knew you probably had a take on it. And I had to, I had to see what I could get forward. So I thought that that's a very good answer. And exactly, you're pretty much exactly right. If there's a lot of risk for for you know, some reward but but depending on the purchase price, again, not not great. But so, you know, you talked about somebody getting in and possibly investing in in the type of asset class that maybe like you said, they grew up in either grew up in an apartment building or grew up in a, in a in a mobile home park or whatever the case is. So they obviously know the ins and outs and saw managers around and doing this and that, but when you are you talking when when we talk mobile home parks again, now that's similar. I'm gonna have the same a similar question about mobile home parks like I did Senior Living, is it? Are you interested in mobile home parks that actually like you're not interested in ones that they're out in the park and the home? Are you talking about just the park and they rent the space to somebody that owns the home?

Unknown Speaker  27:27  
Yeah, great question. So, again, I'm gonna generalize, but typically, there's two different types of mobile home parks you can invest in, you can invest in majority owner occupied home, Park, which means that most of the owners own most of the residents own their homes, and you're getting land rent for most for most of the residents with the odd Park owned homes sprinkled in where the park owns the home and the land, then you can do the opposite, which is you can have mostly Park owned homes, which is basically rentals, typically, right. And that can be a majority large rental property. Now. Let's see. First of all, I will say I've always focused on parks that have been at maximum absolute maximum of 30%, Park owned homes, preferably, the lower the better, as far as in fact, zero would be great, too. That's not real. Almost every park I've ever seen has at least one park going home. Not all of them, but most of them. And it's very common to five or 10% or 15%, Park owned homes or maybe even a little higher, depending on the situation. I tend to stay away from Parkland home, any properties that are over 30%, Park owned homes, because those are more rental type of communities. And while they do tend to have higher returns, they are more difficult to manage, they can have more problems, there's less predictability, there's more volatility, there might be more turnover, there might be more other challenges like crime, etc, is a different type of park. So again, it's probably a good fit for the right person because the returns are higher, I think the risk is higher and the predictability is lower. And it's just not what I focus on. So I've always looked at the lower percentage Park on home parks.

Casey Brown  28:56  
Sure. And I Yeah, and I've seen firsthand exactly what you're speaking of there I mean the crime and so on and so forth. And like you said you if you're going to own a if you're going to have a park that has 80% Park owned homes, you might as well have 100 unit apartment building somewhere. I mean, it's the same, it's virtually the same business model but with with a little bit different maybe like you said they're just a different kind of management. Take on that so well you know, what other investment advice or just general real estate syndication advice would you give to somebody who is looking, looking at vetting sponsors and looking at at saying hey, why, you know, this guy may not have quite the prayeth quite the preferred return that this guy has. But I like these other these these these styles that he has or something like that, like, like if you were to step into a new deal and you had three managers and you had to pick one, what would Be the qualities, I guess that's maybe probably the best better way to ask that question won't be the qualities of a of a good operator when you start vetting somebody that you're

Unknown Speaker  30:09  
sure. So first thing I just want to point out is that, in my opinion, who the manager is, is actually even more important than the property itself for the property being a close second, clearly, the property in the asset you're investing is very important. But I think who's managing it is even more important, because I think they have a huge impact on what direction that property is going to head and how it's going to perform. And so very good question. What I would say is, I look for someone who is experienced, and several is gonna have their own opinion about that. But you know, I like to see someone who's done at least seven deals, I don't know even how I came up with that number at some point, comfortable, just random. But you know, and so if it's someone brand new, I'm going to kind of watch them, but I like them to learn off someone else's money. And I'm sorry, that sounds the way it does. But it's just an honest answer. Just in terms of risk reward. Number two, is I'm going to look for someone who is conservative. So to me, I'm conservative, I'm looking for someone who is trying to under promise and over deliver, to build long term relationships with investors who want investors repeatedly investing with them, I'm trying to avoid someone who's over promising and may under deliver as a result, that can be just because they're using aggressive numbers, or it could be they're purposely using aggressive numbers and marketing, because they're just trying to attract investors. And there's gonna go on to the next investor, when I don't reinvest with them again, but they don't care, because they're a marketing machine. Right. So I'm trying to avoid that type of mentality, I've always found that the ones that I tend to work well, best with are the ones who are very similar on the same page with me. So when they're making assumptions, whether it's inflation assumptions, cost assumption, whatever it is, exit price assumptions, the one that's more aligned with my more conservative thinking is the one that's going to be the better fit for me. And so I'm trying to find a combination of an experienced sponsor, who's also very conservative. And if I just think of the top two, you know, things I'm looking for, that would be good.

Casey Brown  31:58  
And I'll tell you, one that we look at, and, and I've always been a big, and as my listeners have heard me harp on this time, and time and time and time, again, I've always been a big quality of life person at the actual asset, like you can tell so much by just even if there's a management company, between the manager and the, the, the, the tenant, you know, there, there's, there's just things about a culture that, that, that pass through. And, you know, if you've got a manager, that's telling people, Hey, we really need to cut our expenses, and those expenses are fixing dishwashers and, and making it habitable, reasonable, decent place to live, then that's, you know, you definitely have to look in there, because in my opinion, they're not taking care of an asset that you're invested with them in, if that's the case, because, you know, multifamily, and again, we go back, we always go back to Oh, 789 in that, that that era, where you know, I don't even I can't even tell you how many how many apartment buildings around the country, when we would travel and look and see and do that there was big, big signs hanging over the side wall that said, free plasma screen TV with a sign of a one year lease. And you know, and you start getting, if you ever get into situations like that, and your manager, you know, you don't have a tip top manager that knows how to how to maybe even adjust rents. And of course, that's another big one that's potentially going to come 567 10 years, 12 years, 15 years down the road, when you know, rents actually don't go up one time they start you start having to manage them and bring them back in. So what geographically speaking Do you have any any real like specifics that you'd like to look for? Like, hey, I won't invest. I mean, I know what mine are. But I assume you probably do. But do you have areas where you're just like, I'm out? I don't? I don't want anything to do with those?

Unknown Speaker  33:50  
Yeah, great question. So I would say that as an overall kind of philosophy, I'm much more of this market doesn't work because of acts as opposed to like, I'm only looking for these markets. So to me, it's an exercise of exclusion instead of inclusion. And so all all stay away from markets that are very volatile and expensive. So Los Angeles, San Francisco, New York, Miami, great markets for the right people, my markets, for me, not only they're not cash flowing as much as the next market, but the prices tend to go up and down a lot. And so I'm looking for predictability. I'm just trying to stay away from those volatile markets. I'm also typically going to stay away from hot markets for the same reason. So a great example for those of you can relate Denver and Seattle, great cities. I've been there both of them many times in the past few years. The what I would say is that they became very hot between let's say 17 and 20. Of a pre pandemic, I was staying away from them because at that point, the price was too high and the cash flow wasn't there for me. I'm not trying to chase a hot deal. I'm trying to do the exact opposite. I'm trying to go into value play. So that's number two. Number three is I will stay away from a market that is very low income, and frankly, I normally stay away from market this way. Very high income too, I'm just trying to go into the mid range. And looking for more predictability more of a, what I call an A minus or B market, B type of asset class. And again, I'm just kind of no one's probably surprised. But I'm just looking for predictability, I'm looking to be midstream. And I tend to invest outside of California for a lot of those reasons that I mentioned, even though I live here. But I, but I'm open to what I've learned about the US. And it's interesting, because I had a different interesting perspective, because I moved here in 98. Right? And having not grown up here, I was open to anything that made sense. And I still am today, right? And it's blowing me away, once you go, like, I've been in over 43 states just for business looking at deals, and it blows me away, how different how many different markets are good in the US, right? If you're going to be open minded, right? If you come from the East Coast Northeast, and you say, I only want to be in New York and Vermont and Connecticut, maybe that's okay, because you actually know those markets better than all the other markets. But man, there's great markets all over the country, right, that you could consider. So I tend to be much more trying to exclude the markets that don't make sense for me, as opposed to try to figure out the few that I just want to include.

Casey Brown  36:13  
Gotcha. Well, and that's, you know, and I think that's true for just about anybody and of course, with you being in in LA, it's it's a little, you know, not passing on something that could be potentially at your back door is something that I think those of us that are in more tertiary markets are markets that are not necessarily just, you know, it's like if something came up 10 miles down the road, you better believe you, we'd be all over it or trying to be all over anyway, if it made sense. But you know, that's so so that's a little different take on on some, some some other answers that I've gotten to that quote that I've gotten to that question. But

Unknown Speaker  36:48  
yeah, I do want to clarify one thing, though, I tend to stay away from tertiary markets myself only because they tend to be more volatile. So they tend to be have more price variation than what I call secondary market. So when I said a B market, I meant a secondary market. That's what I tend to look at. Just FYI. And again, it's there's there's no right or wrong answer for this. It's whatever's best for the fit for the person and what their goals are, because there's 1000 ways to invest. So

Casey Brown  37:12  
sure. And is there. Is there any other particulars that you love this? This is the question I was kind of going to try to get to a minute ago, and I've re formulated in my mind. But what is there any other like maybe, for instance, you made a mention? I think it was you want to you want to invest with somebody that has, has done seven deals now. Now, again, you you made mention that I have no idea working with that number, want to do seven deals, but is there any other just kind of because obviously, there's something in your, in your mind somewhere, that maybe you invested one time with a guy that did six and it went not so great, and you invested with the guy that did eight and they went great, and then all sudden you're like, okay, hey, the average of that, you know, we'll leave it at seven. So is there any other little like Nuance ideas or nuance thoughts that maybe you give things that may just be something that that like you just the may not just stick out to everybody else?

Unknown Speaker  38:08  
Yeah. Well, so just to clarify the seven. You know, if I say to you, how many how many? I don't know if you have kids, but I have kids, how many Hershey's kisses too many for one sitting. And United debate? Well, is it three? Is it six? Is it four. And I guess what we're both doing is taking this notion of mine, which is what sounds like too many or too few right here that that's really how I came up with that more. But I will say this, I am willing to give weight and credit to someone because like there are people who have been in real estate for 10 or 15 years, who then go syndicate on their own, they've actually either worked for other companies who've done it, or tangentially, you know, they kind of work their way up, they started as a realtor than they did this, they need that they were the commercial leasing. And you add up all this experience. And it could be significantly better than someone who's done seven deals straight out of like, you know, out of college, or just someone who just, you know, literally was a tech programmer. And then they just started this and then nothing wrong with any of that. But yeah, so I tend to add some weight for sure. And someone who's done stuff in someone else's company, depending on what it is. And they may not take me seven deals for that person. Right? So so that we can get into the nuances, but then that person should have manat do they have experience managing investors? What does that mean to them? Did they have no clue about that? Which is possible? What does that mean? There's a lot of things to look at. So I didn't want you to think it was like a hard line. I just that's the easy answer that I can get.

Casey Brown  39:31  
Gotcha. And that that seems to kind of bring the average of everything together at some point and and maybe you add some for one day or something like that makes perfect sense. And I mean, and that's the thing that and that's what that's so many times when we start talking about the people looking and vetting new sponsors and looking for for people to make investments with and it's like, Man, listen, I can't tell you to feel comfortable with that guy. I can't tell you that. Maybe you feel comfortable with him maybe online. You know, he just like you said too much marketing fluff for too much this or too much that and but maybe this guy goes in and he connects to him on a completely different level they're both into weightlifting or they're both into cars or they're both into motorcycles. And they connect on that level a level that I didn't necessarily connect with. And so So, you know, I guess that question is a little bit could be a little bit loaded to and saying that hey, is there what do you look for but, but because there's gonna be things and people you connect with on a different level than than I do so. But we'll listen Jeremy we're kind of pushing up here against time. I don't want to keep you any longer. I know that that you're a busy man. And again, like I said, anybody that that that mentors, my mentor I'm definitely gonna listen to and definitely going to be all ears when it when they start talking. And you were one of those guys, so I can't thank you enough for being on here with us today. And I know the listeners, if they picked up just any one little tidbit maybe one of them's going to put down and and start making sure that their next sponsor has done exactly seven deals, you know, so just and but but I can't thank you enough.

Unknown Speaker  41:08  
Oh, absolutely. No, thanks for having me on. I just hope this episode was helpful for your listeners. So thanks again.

Casey Brown  41:13  
Absolutely. Jeremy. Thanks again. And that's Jeremy roll. And that's, I want to make sure get it right roll investment group. And real quick, Jeremy, if somebody wanted to reach out maybe had a question about something we covered. Is there a way for them to do that already is do you have a website or email or anything like that?

Unknown Speaker  41:29  
Yeah. Your website? Yeah, no, no website. I'm just very much under the radar focusing on investing. But I will say that anyone is absolutely welcome to reach out to me through email, if you're brand new, and just, you know, have some questions that I can help if you're experienced and want to network as an experienced investor or a sponsor, other investor group. I'm happy to do network with anybody, frankly, or help anyway can my email is the best way so it's J roll J R O L L at roll investments, R O L L investments with an s.com So J roll at rolling investments.com

Casey Brown  42:01  
Awesome. Jeremy. Thanks again, sir. Hope everybody has a wonderful day and thank you for listening to the cashflow pro podcast

Transcribed by https://otter.ai

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Jeremy Roll

Roll Investment Group