Welcome to the final episode of Inside the Family Office, Live Investor panel, seven
pillars of passive income and avoiding late cycle traps. Here, Investor Brian shares
how he went from early 4H investing to buying distressed Phoenix real estate at a
fraction of replacement cost and why he's now focused on building seven super pillars
of passive income across real estate, private equity, syndications, and public markets.
He's also going to explain how to spot real value when everyone else is running
from an asset class, the danger of pioneering into yesterday's winners at today's cap
rates and his rules for working only with operators who truly share downside and
upside with investors. So last but not least, I'd like to turn it over to Brian.
Take us home, Brian. Give us your good stuff. Well, first of all, I just want to
address a couple of my fellow panelists. John, you'll be happy to know. I think I
have 13 self -directed accounts. So if you don't have a self -directed account, they
are a powerful tool, and it's great to make gains and not pay taxes. And Kip, the
other thing for you, this summer, I took a 16 -day trip with my son. We went to
Uganda to dig water wells. And I'm sure, to your point, that in 20 years we'll be
talking about that. So it's fantastic. So one quick story on my background. When I
was seven years old, I bought a piglet for 50 bucks. And it was part of a 4 -H
project. I fed and watered that pig for about four or five months.
And in the fall, I sold it for 450 bucks. So that was my first experience making
that 8x multiple on an investment when I was seven so I got I got hooked early on
I'm primarily a real estate investor about 50 % of my net worth is still tied to
some type of real estate investment primarily got on the board and playing this game
using money from my music production business to reinvest in real estate and during
2009 to 2012 we bought a ton of real estate in Phoenix Arizona for like 25 cents
in the dollar. And what I want to share with you about that is to the reason that
worked is I recognized value. Now Richard alluded earlier about sometimes when an
asset classes hated the most is when there's the most opportunity. And I describe it
as running into a burning building when everybody else was running out saying, this
is horrible. Don't do it. We're all losing money, right? But to recognize that when
you're buying for $33 a square foot or you're buying for like a third of
replacement cost, you know, those are the times where you have to go heavy. And
those things turned out to be really good. So I invest in a lot of different real
estate assets. They've proven to be great from mobile homes, self -storage. Just good
to have a variety of different pillars and different asset classes. Different ones
will perform. The main thing, I don't know, this is a point for my tips for you
guys, but just because something's worked in the past, doesn't mean it's going to
work in the future. We saw a lot of people pile into like self storage. Well, when
I was buying self storage in 2013 and 2014, we were buying it nine caps. And then
everybody's like, oh, you can make a ton of money. And then they're pouring money
into it when it's a four cap, right? So just be careful not being late to the
party and chasing what worked already with one of your country club buddies, right?
So The other thing about the Phoenix deals, all those deals I bought, I bought most
of those deals off the MLS, which not to rub it in, but anybody in this room
could have bought those deals. So part of that is learning to recognize when there's
value and when to pull the trigger.
So my goal right now is to build at least seven super pillars of passive income.
So some of that is from a single family portfolio, multifamily real estate, from
private equity, from syndicated deals, from the stock market, and from selling
options. So having those multiple sources will allow when there's a disruption or
there's a hiccup in the real estate game, then some of those other pillars will be
there to support that. So as far as structure, I really liked aligned interest.
It's so, so important. I like deals where the operator will make the bulk of their
money after I've made money. The deal you don't want to go into is where the
operator is going to make money no matter what. And that can happen a lot of
times. And it creates an incentive for the operator just to do deals to make fee
money. And you have to understand, are we really aligned or, you know, are we not
aligned? And if they're making their money and if it happens, you'll make money and
maybe they'll make some more money, just be really careful. I like deals that are
heavily focused on, you know, hey, I make a seven pref or an eight preff, and then
we start splitting money, right? You've got to perform. And then if you perform, I
don't mind. You make a ton of money, Mr. Operator, but make sure you perform first.
So that's some of the things. I also like partners with deep pockets. It It helps.
If your partner does not have deep pockets and there's a problem, you're going to
become the deep pocket, right? So they'll be looking at you to solve the problem or
it'll blow up. So, and then the other thing I've been investing a lot is with
generational families. So the grandfathers did business together. The fathers did
business together. They're selling the business to their son. So there's a lot of
relationship capital. There's a lot of history. There's a lot of proven track record.
So I really like deals and structures that are like that. So what I'm looking for
is other 1031s. I came to Family Office Club about a year ago.
I met a partner Erwin Boris. He works for a couple of family offices. I was
looking for 1031 exchanges. I've done two with him now, placed about a million bucks
with him, and I've gone from making like two, three percent return on equity because
I had all this trapped equity in my assets to making like 10 % cash on cash. So
those kind of deals have been great. So, and so again, my point is just because
something's worked in the past doesn't mean it's going to work in the future, just
be really careful about those. And then for anybody raising money,
it's really important to have track record. And if you don't have track record, you
got to show some kind of resilience. You're asking people to turn over money. I see
people like, oh, just use other people's money. It's like, oh, well, other people
work really, really hard. There's a lot of blood, sweat, and tears behind that
money. So if you can't protect that money and treat it like your own or have skin
in the game, then you won't be a partner for us. And so it's hard to expect other
people to trust if you don't have some skin in the game that you're going to lose
if things don't go well. So. Brian, common sense advice. I hope everybody was taking
notes. I think there were a lot of really great insights from these panelists. I
hope that you thought so too. It was privilege of moderating this panel. Let's hear
it for our panelists.
This concludes episode five and the first season of inside the family office live
investor panel, seven pillars of passive income and avoiding late cycle traps.
Brian reminded us that the other people's money carries real sweat and sacrifice, and
that the track record, skinning the game, and aligned incentives are non -negotiable.
If you absolutely want to stay rich, not just get rich. If you enjoyed this mini
-series, follow the show, leave a quick rating or review and share it with the
founder, Family Office or Advisor who should be in the room with us. Thanks for
listening to the Inside the Family Office live investor panel.