How to Use Inflation to Your Advantage with Bronson Hill

On this episode, we have special guest Bronson Hill. Bronson is a real estate investor with over 2,000 multifamily units and over $200M in assets under management. He's also the host of the Mailbox Money Show, where he helps other investors achieve their financial goals. Bonson will discuss how to raise money for your next real estate deal, and whether you're just starting or you've been investing for years, this episode has something for you. 

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Transcript

How to Use Inflation to Your Advantage with Bronson Hill

[00:00:00] Ryan: Hey guys, Ryan DeMent from Chasing Financial Freedom Podcast. I hope you guys are having a great day today. On the podcast, we have Bronson Hill. He is a multi-family investor. He also helps busy professionals. Earn that passive income that they're looking for. We're gonna talk about multifamily investing and he's got a few other things he's doing.

Bronson, welcome to the show. 

[00:00:22] Bronson: Hey, Ryan, Really excited to be here, man. It's great talking about finance and it's always awesome to learn about, how we can get better at passive investing and make our money work for us. I'm super excited to talk with you today. 

[00:00:33] Ryan: Cool. Before we get into everything, can you give the listeners a little bit about yourself and your background, and then we'll get into your journey?

[00:00:39] Bronson: Sure. I was a busy professional. I was doing medical device sales, which basically means I was wearing scrubs going into surgery and showing heart surgeons how to use their devices. It was a great job. I enjoyed it. It was very interesting. One challenge about it that I didn't like is that I didn't, Control over my time and I wanted to try to develop passive income.

And I had some single family houses and I thought, Oh, this is passive income. But I was getting calls every week and I really wasn't getting a lot of cash flow. And so the idea, there's this quote by Warren Buffet and he says, Unless you learn how to make money while you sleep, You'll work until you die.

And I just, I spent a lot of time thinking about that and just what does that actually mean To really have passive income to where you don't actually have to work for your money actually works for you. And through someone I discovered, I learned about multifamily syndication, which is just a fancy way of saying raising money from other people and pulling it together and doing big multifamily deals, typically a hundred units or more.

And I learned about how to do it. Started a local meetup in Southern California and four years later I quit my great corporate job. And now we have about 200 million in multifamily assets and we help people to leave their jobs or start getting passive cash flow through real estate and other types of investments.

That's 

[00:01:51] Ryan: cool. I'm in the real estate space, but I'm not in multifamily. We're in single family. We develop affordable homes, sustainable workforce, however you wanna call it. But I always like to talk about real estate in general. You had some, you had single family residents. What really popped, you wanted more time, you wanted to have freedom.

What got you to the next level? Or started, you started you to look at multi-family? Yeah, so I think 

[00:02:15] Bronson: I didn't really catch it right away. I just thought, hey, my goal, I had four or five and. It wasn't really cash flowing as much as I thought I was buying some low cost houses in Cleveland.

And they penciled great on paper and then when it actually came down to it, they were actually much more, it wasn't like a nice part of Cleveland. So there were a lot more expenses than I thought and it just didn't really turn out the way that I wanted. And so I think a lot of transformation happens when we meet people.

We meet someone who's done what it is you're looking do, maybe you didn't even know there was something out there. And that's why I go to a lot of events a year. I probably. 20 live conferences a year or more. I go to a lot of conferences and I meet interesting people. But met someone who was doing, multifamily syndication and they just said, this is way easier.

Why don't you, why don't you look at doing this? And so then they just, they were, they've been doing it for 25 years and they just said, Read this book. Listen to this podcast, go to this conference, go to this training. I just did everything they said. And then before I, I went to an event that really convinced me that was like, Okay I could do this.

A lot of times we say, I can't do this. It's really the question is how can I do this? And a lot of things are actually not as hard as they seem on the surface. It's just meeting the right people and actually trying. And it wasn't as hard as I thought. It took a little longer than, I think I left my job it was a total of about three years after I started, but I was really happy about that.

I had a great job. I wasn't able to necessarily replace my. My income right away cause I was making a lot of money, but I was able to replace my living expenses and I think that's kinda the first level of financial freedom when you actually can replace your living expenses. So that's the challenge with single family houses.

If you buy a bunch of houses right now, especially how many houses do you have to become, your, where you're your. After you pay all your expenses, you're getting enough cash flow to live on. And I found, today it's hard to find no matter how much the house costs to get more than a hundred, $200 a month in cash, particularly if you have a manager.

And it doesn't become a job for you. Cuz if I had 30 or 40 houses and I wanted to self-manage or something, that's just another job. And I didn't want another job. I wanted the ability to 10 x my income or my net worth without having to take up more of my time. And so that's what really gets me excited about passive investing, where people can actually have their time back.

And that's really what we do at Brown today, is we try to help people to. 

[00:04:17] Ryan: So you're getting yourself into learning and so forth. What would your biggest hurdle be during that time when you're reading Books podcast? Are you listening to podcasts, going to live events? What slowed you down? What held you back?

[00:04:30] Bronson: I think initially there's just a lot, you don't know what you don't know, right? When you're starting out doing something, you're like, I wanna get there. I don't know how to do it. And a lot of people have this experience. There's really two ways to get started now. If you have money you can invest passively with an operator in their deals, which is great.

didn't really have a lot, even though I was making a lot of money, I didn't really have a lot of money to, to invest. So I just, I really tried to leverage my time and I just was reading a lot. I tried to keep learning and how can I add value? What can I do? And then it just, it took about, I'd say about six months until, or, close to six months until I found my first investor in a deal.

And then it took about another six months after that before I really found a partner and we really scaled up. So again, I'd raised a hundred thousand. And it just, it was hard to move up from there and find the right partners. And so then I found a guy who was just doing some big things in the real estate space and I said, Hey, how's it going in this area of raising money?

And he had been thinking about wanting to expand. And so we set up a partnership. And over those next 18 months together, we raised about 15 million. So I went from basically not raising any money or a hundred. To raising 15 million. And it really came through really trying to find a way to add value.

There's this paraphrase by a guy named Jim Ro, who is a motivational speaker, and he's used, he said this, he said, Make yourself valuable to valuable people. So what that means is find people that are doing things that are, that you admire, things that are really a lot, adding a lot of value in the space, and just really try to think.

How can I really help this person to grow? Or how can I bring value? Because a lot of people that are really successful, they're super busy and they're dealing with problems in their business, all the. Most people will come to them and say, Hey, I want you to mentor me, or, Hey, I want this from you, or I want that from you.

But when you can come to somebody who's very successful and if somebody comes to you, Ryan, and says, Hey how can I help you in this specific area of your business that you're already thinking about? That's a really impressive thing. Somebody's actually thinking about that in your business.

And then it could potentially lead to some sort of partnership where you could work together. And that's how people get paid. People get paid by adding value and finding a way to grow grow the value in a business. I love 

[00:06:22] Ryan: that. Adding value is huge cuz. I would probably say almost on a daily basis, someone reaches out through the podcast or through social media and they're like, Oh, I wanna do this, and this.

And I'm like, Okay, where are you at in that process? And they don't think the process through but they just want you, like you said, to mentor them or hold them accountable or whatever. And I'm like, Okay, I can help you, but there's gotta be a give and take. And it doesn't seem like that there's there.

But back to what you said when you first raised your first a hundred. The listeners here are self, entrepreneurs. They're self-employed, small business owners, people that are working their nine to five like you did, and are looking to climb that corporate cubicle and get out and get their side hustle going.

What were some of the obstacles that you had for raising your first a hundred thousand and some tips that you could share with the listeners to help them get more comfortable with raising? 

[00:07:10] Bronson: So there's a lot of obstacles that come up when there's something you've never done. There's this thing that, you know, when you have your comfort zone, right?

So your comfort zone is this area where you all you live, you do things when it comes to something like, Huh, I've never raised money. That sounds really scary. Or something that's outside your comfort zone or, what would happen in this scenario? Or, what if I fail? Or what happens if I try this and it doesn't work?

So there's this kind of comfort zone area, and then way outside of. Kinda the larger, you have the panic zone, right? So you don't wanna go like straight from the comfort zone of the panic zone, but there are things that get you from the comfort zone to be able to take some steps out into the area.

That's, it's not comfortable, right? And that's called the growth zone. So as you do something, And then once you've been there a little while and you do something, you achieve something, you're like, Oh, this actually I can do this. And then your comfort zone grows. So the goal is to try to draw your, grow your comfort zone.

So it's not to go from, Hey, I've only done this to I'm gonna go all the way out here. And it's just, it's super panicking. So people wonder, how do you have these progressive growths in your life? There's a lot of challenges. Just that in the mindset that come into, Yeah, what if I raise money?

That sounds scary. What are the. Issues with that? Or what if I lose people's money or I only wanna invest in friends and family, or I don't wanna invest in friends and family, or I don't wanna have them invest in my deals. Cause what happens in these scenarios. But a lot of this stuff can be really it can be limiting.

Or if you just talk with somebody who's done it, who's a step or two ahead. It can be really helpful because it allows doors to open and almost everybody's had that same thought. So the thing is, if you get around people that are a step or two ahead of you in any area of life, whether it's fitness, whether it's you know, a job or travel or investing, you can learn so much.

And then it takes some of the scary out of it. And then also, if you start asking those questions, it develops mentors that when that issue or an issue comes up, you can go talk to people and say, Hey I'm having this issue here. So this person that really introduced multifamily to me had been doing it for years.

I had a close enough relationship with them where I really had a mentor built in, right? I could call up and say, Hey, we help me in this area. What can I do here? Or, Hey, what do you think about this? And so it became like really helpful to have somebody who had done it. Now, when I started, this is my journey.

This is not how everybody's journey is different, but I think it's just, if you just take action, you take enough action, you make a decision that, Hey, I'm gonna go this direction, or I believe my job in three years, or whatever, and you take the actions, eventually you'll get there. It'll look different, but you'll get there.

So what I did is I started a meet up. I approached somebody who was very successful and I'd been going to a general real estate meetup and I said, Hey, how about we run this meetup, we do another one. And so two instead of one a month, two a month and we'll do it. I'll do all the work and you just show up and we'll do it just on multifamily.

They said, Hey, that sounds like a great idea. So I just did all the work. And then at the first meetup we had 60 people there cause we promoted it a lot. And the guy comes up to me out of the blue and he's Hey, I'd invest in one of your deals. And I'm thinking, Are you talking to me like is

And so he's Yeah. So he said, So I said, Okay, let's grab some coffee. So we got some coffee and I basically said I showed him a sample deal that just said this is what a deal would look like. And he said, Yeah, I'd invest like a hundred K in something like that. So I said, Okay. So then I.

Introduced him to another guy I met at that first meetup who had a deal and was looking for money. And then again, I just brought those two together, the deal and the money. And now here I have some experience as a general partner. So again, if you can just try to find a way to add value and help people.

A lot of people have what I call, they have a money problem, right? That it's not, They don't have money. So they have money and they don't know what to do with it. The stock market feels scary. Oh my gosh, what am I gonna. And things like multifamily investing or other sorts of alternative assets can provide an awesome way to help people.

So when you approach people, it's not Hey, would you please, you're begging, or, Hey, would you help me out by investing in my deal? It's no, people really have what they what you need, and just getting that in your mindset and also realizing that. Not everybody's gonna invest with you right away.

And I remember sending, 62, I had 62 friends and family I had in person or phone call meetings with, and I had zero actually invest. But it was that guy I met at the meetup who saw me in that place of leading something in the space that actually invested. Now, fast forward a lot of those 62, I'd say maybe you know, a number of those 62 people, friends and family have invested.

Cause I knew it would help them just take time for them to see, hey, is this something that is, a lot of people don't know that you're doing real estate, so you have to tell that story in a way that's very creative. So there are some definitely some challenges there. Covered a lot there, but I think if you just take actions, and get around people that are at the next level really help you to get there.

[00:11:11] Ryan: It's also going back to that initial conversation. It's sad, but it's true. Cuz I've struggled with it. Raising capital is probably the biggest things I struggled with. And the investor on the other side, whether it be over the phone or in person, zoom, whatever, can sense when you're desperate, you have to position yourself as it's, they're going to lose out if they don't come on the journey with you.

And once you get that mindset right, it works. But it takes time and practice. I probably. I think I lost on 15 to 20 deals because I never got that until I found the right mentor like you did. Took me a little bit longer to get to the mentor game, and I can always talk about that. But once I had the right mentor in my corner that had raised capital that could help me with those pitches, could understand, or I could understand where he was coming from.

It made a lot more sense. And then the role. As, as stupid as it sounds, most people think role playing doesn't work. It works. It works very well. And if you get comfortable in your own skin and project how you feel about your investment opportunity to these individuals, or maybe it's a group of investors, they'll buy in just exactly like what you did at your meetup.

They saw you in a position of power, they saw you in a position of knowledge, and he comes up and boom, you get to be able to put the deal together and make it. 

[00:12:32] Bronson: Yeah, absolutely. No, it's, I think what you shared is really worth emphasizing. I call it a scarcity mindset, right? If you show up, and I touched on it a little bit too, but if I show up, Hey, would you invest in my deal?

And it's this I need this. It's the same thing when you go to a used car lot or something. You can say, Hey, like nobody pounces on the person when they come in there. That's how it feels, right? Versus if you, a position of strength is, when you talk to an investor, Hey, we've got our deals our partners, our deals fill pretty quick.

This is generally what we do. This is how the process works. If you wanna join, here's what it is. And I don't chase people. know we've raised 13 and a half million in the last 12 months. I don't chase people for it. I just basically add on my list, say, this is how the process works.

I try to, A lot of people have never done this before. They've, they're invested with you. , or even if they have in invested before, they've never invested with you. So you just think about the, what do you want the experience to be like? When. Go to Starbucks or you go to your favorite restaurant, you know what you're gonna get.

You know they're gonna make your drink a certain way. The attitude of the staff is gonna be a certain way. The place is gonna be clean, it's gonna have a certain music, same at your restaurant that you know that experience. So the big thing is when people talk with you, you just need to try to set the table right.

You need to say, Okay, this is generally how it works. Even it's your first team. You never had a conversation with an investor. It takes this long, this is how it works. This is when you get cash flow. These are things you can expect. This is the communication, these are our values. And then somebody walks away and says, Huh, At least I feel like I have a pretty good understanding who this person is.

, if they, And I just feel like if, most people you talk to are not gonna invest. We've talked to, I've talked now over to about a 1300 investors one on one, and it's about a 17% rate of those that actually invest. So it's, less than one out of. They will actually invest with you.

So it's okay, to realize it's gonna take time to figure out how to talk with investors, role playing works. And then even too, when you talk with your first investor, you might be nervous, but by number 50 you'll be a little more comfortable. , I think that's something just to remember. It, 

[00:14:10] Ryan: it's practice.

But I, you made me think of something. One of my first investors I spoke to, I thought I bombed it in having that conversation. , but it took him, he didn't invest right away. Took him almost seven months and then he came back out of nowhere. I put him in our email marketing. He kept on getting our weekly emails, letting them know what we were doing, blah, blah, blah.

Never heard from him never responded to any of my emails, and all of a sudden I have nowhere and goes, Man, I've been listening to your podcast. I've been watching your emails. I see what you guys are doing. I'm. Okay, cool. And sometimes there's investors like that are gonna do that. You just have to be able to be open and honest with yourself.

If it doesn't happen, then you just gotta keep on going. Like you said, one in six, you gotta play the numbers And my mentor talked to me about something that still sticks in my head. Most people that are out pitching, whether it be for money, business, whatever, typically give up on the third or fourth ask, You need to get to that sixth, seventh, and eighth.

That's where you start making your money and that's where you start getting things going. But like you said, you've spoken to 1300 people, you've got people that are gonna come back each time, cuz now they've got history. But to get there, you've gotta be out there and putting yourself out there consistently, day in and day out.

[00:15:20] Bronson: Yeah, absolutely. It's something too. This is an issue that I know I coach people now I'm with a group called Kingdom rei. So we're a faith-based group of entrepreneurs that help people do real estate, either raise money or find deals. And a lot of times somebody's like they're coming from being a lawyer or being a salesperson or being a teacher or being, some, having their own business.

A lot of times it's all about telling a different story and that's why you talked about your content, your weekly content, and it's just when you start telling a different story, it's almost if I were to go to my car mechanic, And I was trying to get my car fixed and on them for years, and they start pitching me on a real estate deal, right?

I'd be like, This just doesn't really fit. Dude, fix my car. What's going on? You're the car guy, but if we'd had conversations about real estate over the years, or if they'd send emails or had some sort of way like that would start to change, Oh, this person's, they're an entrepreneur and they're doing real estate and whatever, and it changes the way.

People see you. So I think, for anybody who's looking to get more into real estate, if you can start sending out weekly emails or monthly emails or just post on social media, hey, this is what I'm doing. It changes the way people perceive you. We always tell people, that's step number one, is start an email list and then just start giving value to them.

And why do you like multifamily? Why are you convinced that it's the best thing? Why do you love real estate even when inflation is high? What are those reasons? And you start sharing those. And people will read them. Like not everybody will read them, but especially if they're good. I'm always amazed I go to a conference, Oh, I'm reading all your stuff.

I get your emails, whatever. I'm always like, Wow, that's amazing. This stuff actually works. Yeah. But it's about basically changing the story so when people see you, they see someone who's adding value in the investing space and not just, what you did before, what you're doing on the side.

It 

[00:16:50] Ryan: is, it's tough because I also have my personal brand that I do the podcast through, so people get that confused, and I always tell people have your separate social media, your channels, whatever. So when you're doing something personally, they know that it's, Hey, it's Ryan Dein, and these, there is podcasts and then there's true vests, which is the real estate arm, and that's what they're doing.

I I messed up in, in the beginning, overlapped them and people got confused. And I got some great feedback from people and saying, Hey, you got us confused, man. You're doing podcasts and you're doing real estate. Which one is it? And I said it's both . So one guy said are you asking me to invest in your personal brand or true vest or both?

And I'm like that's a good question. I gotta step back and go back to the drawing board. It's true. It's mistakes that we make along the way that we can learn from and be better. But when you don't, when you don't heed those words of wisdom, that's where you get in trouble. And a lot of people don't listen, man, you just have to.

And people will tell you what they're looking 

[00:17:48] Bronson: for. Yeah, absolutely. People I think you, you mentioned that, when you get feedback, that's how we grow. And I think sometimes, we'll, what'll will stop most of us is the analysis paralysis. That we don't take the action. You've obviously taken action.

I've taken action. It took me seven or eight years of thinking about it. To actually do it. And there's some life changes that happen. I was like, Dude, like I'm not getting any younger and I know I would regret if I didn't do this right. So there's a saying that at the end of our lives will regret more of the things we didn't do, rather than things we did.

And then, and the way as you go, you're gonna learn all kinds of things. You're gonna make. All kinds of mistakes. There's a really great book out there by Robert Kiyosaki called Before You Quit Your Job. And because of cliche, my cousin said, You should read this before, before you quit your job. So I was like, Okay.

I read it. And he describes as an employee, the employee mindset is you can't make any mistakes, right? If you make any mistakes, you make too many mistakes, you get fired. As an entrepreneur, you have to make a lot of mistakes. You gotta be comfortable making a lot of mistakes and then quickly learn, right?

So there's this learning process. He describes being an entrepreneur is like jumping out of an airplane, which if you do real estate or you do anything, like a lot of, it's very entrepreneurial. It's like jumping out of an airplane without a parachute and trying to assemble one before you hit the ground.

And in a way there's a lot of truth to that, right? That you're going for it. Oh yeah. You take the action and, as long as you keep taking action you'll figure it out. But it takes a lot of work. There's a lot in the tank to get things moving. But once you do it, like I have no regrets.

And I remember sitting right at this table, this was, I was in a kinda a high pressure sales environment when I was working in the medical sales. I remember get those calls the end of the month, the end of the quarter. I just remember thinking about that and I had been doing with real estate, full time for a couple months, and what came outta my mouth was, Thank God I'm not doing that job anymore.

. So I've been really glad because I always thought what's the worst that could happen? I was like if it doesn't work out, I could always go back to medical sales, right? And so a lot of times we say this is gonna make me a failure. I can never, whatever. And it's If you have some savings, could you try it and go for it, or, lots, you don't have to leave a job, you can do it on the side, but it's, it just comes from, really taking the action, finding mentors and going for it, I think, 

[00:19:42] Ryan: yeah, I'm a two time tri at entrepreneurship, so this is my third run in, in corporate America.

Never taught me how to be a fisherman, It kept me my belly fat and happy. I got a bonus at the end of the year, there was no concern. The things that I learned from my first two failures. If you asked me then I probably would've said, Oh yeah, whatever. I'm tired of this, crap.

But they were huge. And it molded me into what I wanted to be. And then reset, to today, we've got a, an affordable housing, real estate development corporation, a nonprofit. We buy defaulted mortgages in the secondary and tertiary market got podcasts. Things are starting, to, What I wanted to do from the beginning, but it took two failures and a hundred thousand dollars in debt to get me where I need to be.

And I'm not saying everybody needs to go my route, but that's just my story. I mean it, it was painful, but there's a lot of great learning experiences in there that I wouldn't change. But back then I was angry at myself because I didn't know them. And it just took a lot of growing up to do, just to get through.

[00:20:43] Bronson: Yeah, absolutely. No it's a process of learning and it can't, you have to let go. I think if you wanna do something different, you gotta let go of the having to be perfect and having to, know the plan. You figure it out on the way, and you shift and you change. And, but, not everybody has the mindset for it.

So I think, and that's okay. And I think it's helpful to learn, who you want, you know who you are and who you wanna be and what works for you and what doesn't. So I think that's, I think that's all valuable Inform. 

[00:21:05] Ryan: So you're on this journey. You're four years, doing your side hustle.

You're, you raised a hundred thousand, then you raised a million. Now you're saying you're up to 13 million. 

[00:21:13] Bronson: We've raised 30 million. So 30, It's been 13 million this year. Yeah. So in, in 2022 or the last 12 months, I should say. 

[00:21:21] Ryan: So with the capital raise, why don't we start working into what, how that has grown over time.

So you did the first deal where you brought two parties together, then you raised a million. Were you in on that deal as a general partner at that point? 

[00:21:35] Bronson: Yeah, so I basically was able to get in as a general partner. My goal was to bring, a half million or a million or, try to bring more money.

I just was new and I wasn't able to, so they still allowed me to be a general partner. And there's a lot of benefit that comes when you go from doing these bigger deals and you're just somebody who's talking about it to somebody who's actually now a general partner and a deal. So a lot of doors started to open up.

After that people see you differently in the industry, out of the industry. And now you have some experience in the industry doing deals, which is. 

[00:22:01] Ryan: So that first. Walk us through that, what it, what that looked like and what transpired out 

[00:22:06] Bronson: of it. Yeah, so this was a deal in Amarillo, Texas, so a smaller market, but it was a, value add multifamily deal.

It was 225 units. The raise was only, we only to raise about 3 million. Again, in, in the beginning when you've never raised money, that could have been like a hundred million. It just feels Yeah. But yeah, I just, like I said, I had a bunch of calls with friends and family and trying to raise on the deal the kinda the benefits of the deal.

We saw some opportunity to come in and do some renovations, which is pretty common. We'll see a lot of owners that their rents are below market because they haven't really done renovations and they're really. They've had these proper centers for years and they're just, they're ready to sell them because for whatever reason.

And so we had this property for, the goal is to hold it five years. We had it two and a half years, and we ended up getting about a 26% average annual return to investors. So we. We did very well and I think we projected about a 15% return per year, and we ended up with a 26% return per year. And it's great.

So we, obviously it was a home run. It was a win for us, and we, we had a range of performance, but that's one that we're excited about. And so yeah. And then when that one ended, we'll, we find another one to go do another one, and then it's, there's a lot of the deals, like I mentioned will have particularly project a five year hold.

And then we'll end up selling a lot of times between years two and three, just because you've got so much appreciation, you don't need, you only need a 20% appreciation a lot of times if you put 20% down to, to double your investment, right? So you don't need a lot of appreciation. And so a lot of you start getting some appreciation and then it's okay, if it makes sense to sell and everything's for sale at the right price.

We actually had one that we sold. This is, back in Jacksonville, we have about 1500 multifamily units in Jacksonville. We bought this one in March of 21. And we plan to hold it six years. We ended up selling it 10 months later. We bought it for 27 million. We sold it for 37 million. So it was about a 90% IRR to investors.

And then we were able to exchange that, do a 10 31 tax exempt exchange to roll that into another property. So it was just a total home run. So those are, those happen. And then we have other ones that are more kind of base hits and, we just, we love 'em all. So we're just trying to continue to do things.

How add value to the, to our, I. 

[00:24:05] Ryan: So if somebody wants to get into it and they're all excited about the numbers you're sharing, where. Where is some starting points for individuals? Maybe let's talk about two types of people. One would be an individual like yourself. Starting out you don't have a lot of capital, and then two, that busy professional that does have capital that wants to park it and be able to have some passive income out of it.

Yeah, 

[00:24:27] Bronson: so a couple things. If you are somebody that you know, you are looking to learn and you want to, figure out how do I do this? Or is it even possible that I could raise money or I could find deals? Those are kinda the two ways people get into these deals. Either they find a deal or they can try to raise money.

I think for everybody going to local meetups there's a bunch in Southern California where I live there, most cities have you gone meetup.com where you search online you can find a real estate meetup. And you'll meet very interesting people, right? You'll meet people that are doing all kinds of interesting things in the real estate space, and there's also some great national events that talk about real estate syndication or multifamily syndication, and.

It's just great because what happens is it gets you, the first person you really need to sell on something is yourself, right? So if you can't sell yourself on it that, hey, this is something I could do, this is how I could do this. And so once you start hearing the stories and you meet someone that, Oh, hey, I actually quit my job.

Or it's not just on some podcast, or it's this is actually a real thing. There's somebody in my neighborhood or my era of somebody I know actually did this. Then it's why couldn't I do that? So that becomes real. . So I think that's the biggest thing is the networking and education.

So going to conferences, going to local meetups, that's a great place to start for either somebody who you know is looking to do it themselves or somebody who's passively investing. First passive investors. There's a great show. I have a podcast called The Mailbox Money Show. That's where we talk about all things passive investing, different asset classes.

Actually have this ebook that I wrote that's called How to Use Inflation to Your Advantage. So it's a basically an eBooks about 50 pages, talks about, some of the challenges with inflation, how to take inflation and make it your friend. And also, how to get involved in passive investing and things like multifamily real estate or other asset classes that are out there and really how to analyze them, right?

Cause I think the biggest. Investment we really make is in our own education. . the conferences help the books, help the podcasts like this help everything helps to help get you to a place that's a much better place that you actually feel like, Oh, I actually can do this. And now you're doing things, you're like people are like, How did you do that?

It's I just learned about it. , I just figured it out just like you did. Yeah, 

[00:26:19] Ryan: it's I like that book. Can you put your book back up really quick? 

[00:26:22] Bronson: Yeah. It's called How To Use Inflation To Your Advantage. This is a free download at my website bronson equity.com. Cool.

[00:26:29] Ryan: I like that. That's a good spin. Out of the book, what could we take, what could be three things you could share with us without giving away the secret sauce or whatever for so we actually can use inflation to our benefit cuz it's killing us. 

[00:26:41] Bronson: Yeah. Yeah. So I'll just touch on that part of it.

So yeah, inflation right now, obviously we're feeling it at the pump. We're feeling it, with costs going up with rent, going up with the value of goods and services. Everything's going up and there's reasons for that. They printed all this money. There's a 40% over 40% creation of new money, either digitally or physically, over a two year period between February of 2020 and February of 2022.

So they just. Printed and created so much money, there's no mechanism to put it back, right? So the money's gotta go somewhere. So how do we, And so I just see inflation being here for the foreseeable future. And so how do we get on the other side of the equations? We're not being hurt by it, but where it's actually helping us.

And I gave one example about real estate, right? If I have a house that costs a hundred thousand dollars and I put 20% down, which would be 20,000, and the house, has a 20%. Appreciation that goes up to 120,000. I haven't increased my equity by 20%. I've increased it by a hundred percent, right?

So if you can get into long term fixed debt now I still think, some people are really cautious on real estate, but there could be real estate deals that make sense when you buy a property. The buying price is fixed, but the interest rate potentially can be adjusted later. The Fed typically raises rates for a period of time.

It's usually, five to 12 months where we're, we're in the middle of that period. So I think potentially in the next three to six months, they could reverse course, and then there could be a chance where you could either refinance or evaluations can go up. Single family is a little tricky.

That's why I love multi-family, because if people can't afford to buy or can't qualify for single family houses, where do they. They've gotta go into multifamily apartments, so that's why I think rents are gonna continue to climb. One way is through multifamily housing. You're able to buy a great, apartment, deals that are really based on how much income is coming in, not on a comp, based on how much this property across the street, across town sold for.

It's more based on how much income you're producing in that particular property. So that gives us opportunity to add value. And I can get into to details on that, but in the book it talks about some of the strategies and some of the different asset classes that are beyond multifamily. But I just think multifamily is a great place for people to start.

Cause it's very understandable and it works great in a time of recession. It works great in a time of inflation and the rents generally keep pace very well with inflation. 

[00:28:46] Ryan: How do you add value? Does, that's just the first question I would ask. 

[00:28:50] Bronson: Yeah, that's great. Yeah, so I look at, I have some different views on this than a lot of people.

A lot of people like class a brand new apartments. Of course, this is what reads by. Yeah. No repairs. That sounds awesome. Buy brand new things. The returns are really pretty low to start with, is what res and institutional groups buy. But what happens when there's a recession?

I live in Pasadena, California. There's a two bedroom. A luxury apartment going for 4,200 a month. What happens if there's a recession? They're not gonna get 4,200 a month. They might get 3,500 or 3000, and that will dramatically hurt. So basically you own the real estate market, right?

You just go up. It's like you don't really have an edge. You're just buying things as they go up. Hopefully they stay up, they come down, Oh, what's the real estate market? There's a way though that you can put in here. I'm a big student at Warren Buffet. He talks about having a margin of safety in your investments.

So what does that look like? In a real estate deal in a multifamily deal, it's called adding value. It's called buying something that you can renovate. Just, it's very similar to the concept of doing a flip, right? You buy a house that's a dump and you fix it up, you sell later. We don't really buy it just to sell it in a short period.

We'll hold it for five years. But like for, here's one example. In Jacksonville, we've got a deal that rents or a thousand dollars a month. If we put in $6,000 per. We do those renovations, we can see rents now at over $1,500 a month. So that's an over 50% upside in the rents. And again, like I said what we're going for is not just it's not comp properties.

If this house I'm in right now sells it depends on what the house, across the street or, across town sold for. Again, it's all about income. These properties are all value based on the income. So we know if we. Increase the value. We come in and we renovate 80% of these 300 units on this particular property.

Then what does that actually mean? That means that the value's gonna go up by, close to 50% just based on what we're seeing right now in the market. That's not even any speculation. It's called forced appreciation, right? We see those rents right now in the market, in those renovated units.

All we've gotta do is do those renovations and that over time as people move in at the higher rents, it increase. Value. So that's where I feel like it puts much more of a margin of safety, that even if interest rates keep going up, even if valuations go down, even if all customer stuff happens, as long as we're able to achieve and do those renovations and see the new rent increases, we're gonna just fine under deal.

So that's, I think, a way you can get more safety in a deal. And it also gives a much higher return instead of a seven or 8% return per year, we like to project around a 14 to 16% return per year. Which is awesome. And people that in the stock market are like, Oh my gosh, how can you do that? And it's it's much more predictable and we don't have the ups and downs that you have in the stock market or even in single family.

So I think there's some opportunity there. That's, 

[00:31:16] Ryan: that's cool. I like that. It brings me to, we do notes. So we'll buy defaulted mortgages. We also originate notes and those are on single family, and it's the same. , you come in, you have your margin up front, but you're also able to buy down the discount.

So you have that margin. So when you do sell it on the other side, you have that built in already. So it's similar just a little different. But I like both. We're not in multi-family. I've talked about multi-family in my, with my partners. We just haven't got there yet. It's, we've got enough on our plate.

I like how you take that approach and be able to bring value, because ultimately you go in buy A, B, or C, property that needs help, and you guys can come in, renovate, get those apartments up to speed. Next thing you know you're bringing in that additional cash flow. But roi that's huge because ultimately if they can't buy a house, they're coming.

And most people right now are priced outta the market. One and two, interest rates are outta control. Where else do you go? You have to go to an apartment, you gotta go rent something. And here in Phoenix, like you were talking about the hedge funds and in the larger institutional buyers, in the neighborhood, I I live in, there's probably 25 or 30 rentals that are owned by either Blackstone Pathway or I forget the other one that's out there.

It's green and white logo, but I can't remember the name of it. And they're all under. They bought him at the top of the market. They're trying to rent him right now at 27 to $3,200. They can't rent 'em. So now they're flooding the market here. They're taking the rentals and turning them in, for sale.

And they still have him at the top of the market. And now one that's seven doors down from, he's been on the market for six months. They bought it at five 80. It's now down to $420,000. Wow. Yeah. $160,000 in the hole and they still can't sell it at that price. Yeah. So it, I get where you're coming from. I totally do.

So I like what we're talking about with multifamily guys. It's a way to hedge against a lot of issues, but also you have to know the game. You have to learn and put the time and effort in. And this conversation today should be invaluable to you if you're trying to beat inflation, But, Do something different other than just a normal nine to five if you're wanting a side hustle or turning into a full-time job.

Take note. This is good information. Yeah I'm sorry I digress there. But anyhow. No, it's good. With that property, the value that you guys bring, How is it structured? And I know we're gonna get in the nuts and bolts a little bit, but upfront let's say I'm a passive investor.

I have a hundred thousand dollars to invest in a multifamily deal with you. How does that work for me as a passive investor? 

[00:33:53] Bronson: So as a passive investor really your job is to vet the team and vet the deal itself. I talk about three areas to analyze. One is the market. What mar, is it a growing market?

Is there growing population? Is there population growth, job growth, income growth? If you're buying in the right market, you're. And then the second thing really is the right operating team. Have they done this before? What are the experience of, What's the experience of the team? And then also the last thing is really what does the deal look like?

Does it make sense? Do you see how you can make money? Do you feel like you understand what is the primary risk of that deal? And so those are things that as a PA investor, the more deals you look at. And you don't have to look at a hundred deals. You might look at, five deals or six, just try to see, get a sense of what it is.

And. When people choose to invest or start and they've never done it, it can feel very much like a foreign concept. Like , this is something like I've heard about, but do people even do that? Is this a scam? Just, there are a lot of things that came up for me when I first started, but really what, for a lot of people it's, I think of a call I had with a physician who is worth $5 million and he had only ever done stocks and bonds, right?

So he, for him, that conversation was just much more basic about understanding how syndication works versus somebody. You had invested in 10 or 20 syndications and they're asking about cap rate, reversions, and your rent growth assumptions and, there's, it's a different type of conversation.

So it depends. For a lot of people that are new, it's more just about trying to understand how it works, what could happen, what goes wrong, what could go wrong. And in every deal something will go wrong. But it's just like when you do a flip or you buy a house, like nothing ever goes exactly according to plan, but you wanna get the sense of when you're looking at a deal.

Someone is very conservative. They're not looking at a best case scenario. They're looking at, we're modest on our projections here and we've already, actually, there's these three positives in the deal that we didn't really put in the numbers, but we feel like these are pretty likely as well.

We were very conservative here. We feel like it's gonna do really well and those, that's some common things of great operators, so they don't try to, make the numbers look really good, actually try to make the numbers look worse so that when people get in, They're able to outperform on those.

So that's an approach that we take. But for people that do invest, how it's structured is we start an LLC or a limited liability corporation in the name of this new property and we basically raise money whether it's a recent deal we had, we raised 12 or $13 million for, and we just raise, 75,000, a hundred thousand from some one person here and there.

We also do 10 31 exchanges. So meaning if somebody has a house that they have over 500,000 inequity we will allow them to roll that into a syndication. There's a little work to do it, It's a little bit of cost to do it, but it's awesome cuz if somebody could take those gains, they don't have to pay they can defer the taxes on it.

And we've had people have some real success doing that. So those are those are a couple things. And then as people get started, it's just, I think some questions to ask or, how, what does the reporting look like? How often do you guys report what's the reputation of the sponsor in the industry?

That's why it's helpful to know some people in the industry. And I think as a passive investor one of the most transformational friendships or relationships you can have is with somebody who is a full. Passive investor, that's all they do. Or maybe they, they have a business, but they've just been investing for years because they'll be able to share information that's just Hey, I invested with these guys.

It worked well. I would never invest with these people for this reason. And they don't really have anything to sell you. Like our group or a syndicating group. We basically, I'd love to have everybody, your listener, do a good deal with us just to, Cause I feel like we're doing a great job, but I have something that I'm sharing, versus somebody who's a passive investor. They're not really pitching anything, right? They're just simply trying to have the same goals that you are. So I think that's, when you go to meetups, you'll meet a lot of great sponsors, a lot of great people, but if you can find people that are experienced passive investors then it can really go from just an idea to like, here's something that I actually can do that will be really valuable for the long term, which is great.

[00:37:16] Ryan: Are you raising capital through accredited and non-accredited investors, or only accredited? Yeah, so we 

[00:37:22] Bronson: do accredited and non-accredited. We really we have some deals that are for accredited only, which just means high net worth or people that you know, have a certain level of income. And then we have some that are for everybody, just as long as people have a minimum net worth.

And I just really trying to make sure that the deal makes sense for '

[00:37:35] Ryan: em. And then are you using a 5 0 6? Sorry. Are you using a oh my gosh. I'm drawing a. A five oh A six or B or C To actually raise for your accredited investors. 

[00:37:48] Bronson: Yeah. Yeah. So yeah, for those that aren't where 5 0 6 B is for accredited, non-accredited with a relationship, so we do those where it's basically have an investment club.

So we have everybody that goes to our website that's interested in joining, basically, join our investment club and we set up a brief call to learn about them and see if our goals are aligned. And then we have the. 5 0 6 C, which is for credit only. It just has to be verified that somebody actually is an accredited investor and then we can take funds from them.

So we've got some of both. We've got some deals that are for accredited only and some that are only for or for, non-accredited as well. So it varies. 

[00:38:21] Ryan: What would you what would you say is the best mixture of passive investors? Do you like accredited versus non-accredited, or a combination of both?

I 

[00:38:29] Bronson: think in general accredit investors have more money and there's a little less regulation. The way it's perceived is just that credit investors have a higher level of sophistication. They have more resources, more money, and they have, more ability to withstand risk and they typically are higher net worth.

So the average call that I had over the 1300 calls is typically a two to 5 million net worth, right? So people are typically more wealthy, right? So they have a higher net worth somebody who's not accredited. It just, you just have to make sure they understand, I guess sometimes you get a call where somebody doesn't have high net worth and they're looking to double their money in 12 months.

And I say, that's just really not what we do. We're looking at kind of base hits and once in a while we get, like I mentioned, one of the deals was a home run. But you just wanna make sure the kind of the the goals of the investor line up with yours. Remember one time I had a guy.

Who was like a PhD in real estate investing or something, but he had a negative net worth, right? He had a lot of student loans. He had no money. He was gonna borrow 50 or a hundred K to invest in a deal. And I said, No, that isn't time la that's not gonna work. don't want you to borrow money.

You have a like this is for, it could take, five years before you really start receiving. Cashflow on this, or if we get your money back, hopefully it's, six to 12 months. But you want to just make sure that you don't get in a place where you're putting people in a pinch.

And the deals we have that are 5 0 6 B where we can raise from both accredited and unaccredited, we typically raise more money. We raise these route 50% more money just because people, some people have a high net worth, but, or, a decent net worth. But a lot of it's in their house.

They don't have a lot of it, like on the side. And we'll get a bunch much people that are interested in investing. It, it depends on the deal. It really depends on what kind of deal we 

[00:39:56] Ryan: have. So between accredited and non-accredited, is there a entry point for investment?

Is there a minimum amount that you would actually work with? 

[00:40:06] Bronson: So we typically do 75 K as our minimum. So if somebody just as a general rule this, there's no specific rule from the scc, the whole thing is about creating a suitable investment for people. So again, if somebody has 70, let's say I've got a hundred K and they wanna put 75 K in your deal.

That doesn't really, that may not make a lot of sense cuz what's gonna happen in the next five years, the next couple years? What happens if the deal doesn't perform right and all of a sudden they need that money? So this, that's the downside of a lot of syndicated deals is that if people need liquidity or they need to sell right away that may not be possible, or it may have to be sold at a deep discount.

Really having the right investment for the right investor. So we typically, as a general rule usually around 300 k if somebody's gonna put 75 K in generally it depends on their situation, but it depends how much liquid they have. If that's all they have liquid, what happens if they have a health need or they've got some thing that comes up or they lose their job, or, just things like it.

You'd rather think that through. And then, there are special situations where somebody will put in more, it's like a big amount in retirement where they don't have a high net worth, but they've got a lot in a retirement account. So there's special situations that come up, and I think it's just really having conversations and taking notes around all that, that if something does come up, at least you've.

You've addressed it, right? So it's not like it's just a surprise. Oh my gosh, I had no idea that when I invested that this is, liquid. I had no idea. It's no, we talked about it. I have notes. Mr. And then we'll try to help people out if we can. But again, the best part where, you know, a lot of times you need to say no to people just because it's I'm really sorry.

Maybe just save up a little longer and maybe you can invest in the future. 

[00:41:30] Ryan: And then. As an passive investor, I shouldn't expect any type of cash flow till year five is what you're saying. 

[00:41:37] Bronson: So I, as a passive investor, what we tell people, at least in most of our deals, every deal is different. But typically we say distributions usually start around six to 12 months.

Now we've had some that we've said that to, and it starts at three months after closing. They start right away almost, and then some that take longer than a year. And, it just depends on the deal. Some there's a variety of different ways that can look. And every deal is different and it's not, if I could predict that and tell you exactly which deals are performed great or not, then I'd be able to just only do the deals and produce ridiculous cash flow and they say, Oh my gosh, you're a genius.

But in general we've performed or outperformed our projections so far. On every deal that I've done, which is awesome, right? So I've been really happy about that. In general it's hard to calculate because you have so many different variables, right? You don't know if you're gonna renovate the units as quickly as you'd like.

You don't know what's gonna happen in the market. Is it going to continue to appreciate as far as rent growth? It just, there's a lot of unknowns that you can't figure out ahead of time, but that's where the, having reserves, extra reserves, having a margin of safety that. You're just really trying to be conservative on the way you approach things is really important.

[00:42:39] Ryan: That's good because I know there's, in the single family residence space, everybody wants cash for like the next month and I'm like, Are you kidding me? You just funded a deal. We have to get the house built to renovate it. It's gonna take, 90 to 120 days and then we gotta put somebody. So you've gotta the expectations and it's amazing how many conversations you can have about that document it, email it.

It's in the contract, It's in the agreement. It's in the investment agreement. And they still think it's supposed to happen the next month. It's crazy. Yeah. I digress. Sorry. No, it's true. We're running, we're getting close on time here. I wanna be able to connect everybody to you that wants to be a passive investor or maybe they want to be a syndicated or anything to that extent.

How can they get ahold. 

[00:43:22] Bronson: Yeah, so the best way to reach out is, like I mentioned, my website broadside equity.com. We've got that free guide there you can connect with. I'm also on social media on mostly Facebook and LinkedIn. And then, I go to a lot of events. I speak at a lot of events. We have a YouTube channel, so just, love really educating folks on investing on how to get started, how to start putting money passively into deals, how to get out of Wall Street.

And then really looking at what's happening in, the kind of the markets as well, the Federal Reserve and just, how do we really protect ourselves from just inflation and other sorts of things that can go out and steal the hard earned money that we have. But yeah, love connecting with folks.

This has been great. I really appreciate you having me on. This has been a lot of 

[00:43:59] Ryan: fun, Ryan. Not a problem, sir. I will put a link to your website and let people go from there. But thank you for educating us on multifamily syndication. I love learning about it. So sorry that I asked so many questions, but I could ask a billion more.

But it's, I love real estate and being able to share different ways for people to prosper with it is just ideal for 

[00:44:20] Bronson: me. Yeah, no, it's great man. I love having these conversations, so it was a great time. Really enjoyed it. Cool. 

[00:44:25] Ryan: Thank you for coming on. Love the conversation, love the information you shared, and we'll be talking.

[00:44:31] Bronson: Sounds great, Ryan. Thanks Brian. Have a good one. You too.