How to Build Assets, Invest in Syndications, and Prepare for a Downturn, with Jonathan Twombly

You're listening to Freedom Fast lane, presented by capitalism.com this is the show about building businesses and investing the profits so that you can live life on your terms. And now, your host, the future owner of the Cleveland Indians, Ryan Daniel Moran.

What's up, fastlaners? Welcome to Freedom Fast lane, presented by capitalism.com hey, by the way, before we get started, if you're not looking at what we're doing over@capitalism.com we are moving the show, we are moving our posts, and we're bringing on other shows onto capitalism.com so if you're not following what we're doing on Facebook and over at the website, I'd encourage you to do so. Also, if you have a message that you want to spread about building businesses, investing in profits, and making a difference, contact us. We might want to feature you on one of our podcasts or even create some content around the message that you bring to the table over@capitalism.com because I believe that it is entrepreneurs that create the change that we want in the world. On today's episode of Freedom Fast Lane, we're going to be joined by Jonathan Twombly. Jonathan is one of the hosts over@capitalism.com he hosts the show called Capital Gains. He interviews people who are making money and investing in interesting ways. And in fact, on today's episode, he shares one particular investment that he thinks is a little bit compelling and unique and weird. And it's actually one of the ways that I paid for college and it still happens to be around and is even bigger than it was when I was doing it 10 years ago from my dorm room. And we'll talk a little bit about that here on the show. Jonathan is the owner of Two Bridges Asset Management, which is a real estate investment company, and he leverages other people's money to make investments. And on today's episode, we talk about the economy as it is right now and what people should be investing in right now. Spoiler alert. His answer is not much. His advice is actually to wait. He spoke on last year's investor panel at our Freedom fastlane Live event, and he said the same thing. He said, right now, I don't think it's prudent to be buying a lot of assets right now. I think it's more prudent to be waiting for the next opportunity. But we talk a little bit about his strategy of leveraging other people's money to make investments. We talk about what asset classes you should or might want to look into. Right now, we talk about Bitcoin and we each share our opinion about what to do about that as a potential investment. And just for fun, Jonathan and I talk about the one thing that we agree on in politics. He and I come from completely different backgrounds in terms of who we like and who we don't like. But there's one particular politician that we both share an equal hatred for, and we'll talk about that on today's episode. So we're gonna talk about what to invest in right now, how to leverage other people's money to generate passive income. And we geek out on different asset classes and investments in today's episode with the host of Capital Gains, Jonathan Twombly. Oh, one quick point before we go into the episode. A public apology. For some reason, my microphone was atrocious in this episode, so I hope you will forgive me. You can ignore me all you'd like in this episode. Just listen to the stuff that Jonathan has to say about the economy, about investing, and about where things are going and his recommendations for where people should be investing in right now. And one other thing you'll want to listen for is our note on cash flow versus looking for appreciation. One of the main takeaways I'd say from this episode is all about how you should be looking at cash flowing investments rather than looking for things that are going to appreciate. Because everything is so expensive right now, we have no idea what's going to happen to the actual asset prices. So look for cash flow and nothing else. All right, Please forgive my microphone and just listen to Jonathan. I promise that won't happen again. Let's get to the show.

Jonathan Twombly, welcome to Freedom Fastlane. It's good to have you, buddy.

Ryan, it's awesome to be here.

Thanks for having me on the show.

Hey, you know, I think you're just absolutely killing it over on the capital gains podcast on capitalism.com but I know that a lot of people who listen to Freedom Fastlane aren't quite familiar with your background and the big stuff that you're doing in the world. So would you, in 60 seconds or so, kind of catch people up to speed on what you're doing with clients and how you're investing investors money?

Yeah, absolutely.

So what my company, Two Bridges Asset Management, does is work with private investors to invest in multifamily real estate deals. So we look for deals that are the kind of 100 to 200 unit properties, usually under $10 million. We work only with accredited investors.

And what we do is we pool their money, we put it into a deal and we manage the deal for them through basically from finding the deal through selling.

Operates like a fund, but we just.

Do it on a one off basis.

The other thing that we do is.

Education in that real estate space. So for people who don't want to.

Invest money passively but want to learn.

How to invest in multifamily real estate, we also offer that.

So explain to me what a. I know every deal is different, but these types of syndications really fascinate me from the investment side. So is there a typical deal and if so, what does it look like? Or kind of walk us through an example of what that usually looks like.

Yeah, absolutely.

So many, many people out there doing.

Syndications and they're syndicating now you can.

Syndicate almost anything, but we syndicate specifically assets in multifamily real estate. So what I mean by that is we are looking for deals that usually fall within the 100 to 200 unit range. We have done smaller deals. What we actually do is we invest our time and money upfront looking for.

Deals that we think are good ones that meet the characteristics that we look for.

And those characteristics in our case are we're not looking for deals that are.

Going to be short term holds, like fix and flip type stuff.

We look for long term hold deals.

That we think are going to spin off a lot of cash over time to our investors and then hopefully have a bang at the end when we sell. So it's a long term hold strategy.

So we look for deals that fit that criteria. When we find a deal, we tie it down and then we turn to.

Our investor group and basically say who wants into this deal? We put together all of the deal documents to support that, the legal documents and what have you, and basically form.

A fund for that specific deal.

And then the investors who want in, they sign the legal documents, they can put their money in before closing, deal closes. And now we're all owners, but they're passive. Right. So they own a piece of the LLC that owns the property, but they're not involved in the management. That's what we do.

Yeah, beautiful. So when you're involved in this, what's your personal strategy? Is your personal strategy to put together a great deal and to keep a piece of it for being the investment manager? Is it to just make money on the sell side later on down the line personally? What's in it for the person that puts together a deal?

There are a number of things that.

Are in it for what's called the sponsor. The sponsor is the person who puts Together the deal.

The primary way that the sponsor gets.

Paid is through what we call a promote or promoted interest.

Essentially what that means is that you, in exchange for putting together the deal.

Get a piece of the deal for yourself.

And they're all, I mean there are.

As many strategies for this or structures as you could possibly imagine.

But we like to keep it really simple. And the way that we structure our deals is we have a 20% interest in the deal, provided that we hit.

Certain hurdles for the investor.

So in our case, I mean, depending on the deal, this fluctuates with the way the markets are. But we look to pay what's called.

A preferred return to the investor, which means they get paid first of 7 to 8% of their investment every year.

And if we hit that hurdle, then the deal is structured so we get.

20% of the profit and then the same on sale after all the investors money is returned, all the deal expenses are paid. When we get 20% of the profit.

There are a couple other ways that we get paid.

One is with an ongoing management fee which is, is pretty light. It's 1% of the capital that we raised from the investors.

And then upfront to compensate us for.

Putting our money at risk, compensate us for putting our signatures on the loan documents, taking that risk. We take an acquisition fee that's equal to 3% of the capital that we raise from the investors. Those are the three ways we get compensated.

There are other deal structures where people.

Take refinancing fees and deacquisition fees and a whole lot of other fees. But we like to keep it simple and keep it really investor friendly.

Well, what's beautiful about that is you are bringing value to the deal without necessarily putting up money yourself. Although I know you're an investor yourself. And it kind of flies in the face of that idea of it takes money to make money, it takes value to make money. And you're bringing a tremendous amount of value in the form of a managed deal, but you basically get a piece of the value that you bring together in this Cool. Without necessarily having to be involved yourself. And am I legally violating any regulations yet?

No, no, not at all. And that's absolutely true. I mean, this is one of the things that's great about. If you're looking at this from the.

Perspective of somebody who wants to do what I do for a living, if they want to learn how to do this or they know enough about it to go out and do it themselves.

It is an opportunity for you to get paid with sweat equity.

Right.

And there are some investors who want to see skin in the game. You know, really depends on the investors. Some investors don't really care that much if they think the deal is good, and they think that you have skin in the game in the sense that, like. Like, if you don't make money on this deal, you don't eat. You know, like, there's a lot of skin in the game that way. But it's absolutely a way that somebody who has the skills of, you know, finding good deals, managing deals, assembling money.

Just putting all the pieces together, you.

Definitely need to get compensated for that.

And this is a really good way to do that.

And personally, whenever I find a deal, if I have money, I want to.

Put my money into it because I believe in the deal. I feel like, why would I not want to be getting a piece of the ownership of this deal straight up, too?

So whenever I have money to put.

Into a deal, I always do.

But there are deals I've done where.

I didn't put up any money of my own.

So I don't feel like we've offended anybody yet. So I want to go straight to there, because you and I disagree politically. We're kind of on opposite sides of the spectrum, and yet we seem to agree on issues more often than we disagree. And the reason I bring this up is because I've always wanted to ask you, Jonathan, why does Marco Rubio suck?

Oh, God. Well, you wanna talk about getting us.

Into trouble and probably, like, offending millions of people? Well, my personal take on Mr. Rubio, the erstwhile senator from Florida, is that.

He seems to be. I'd say about 99% of his makeup.

Is ambition and maybe 1% is talent.

And I know that probably describes a lot of politicians, but it seems particularly.

Egregious in his case that he's managed to almost seems like sort of brown nose his way into a position of authority and power without having actually accomplished much of anything.

So I have to tell you, you're giving me the opportunity to grind an axe here. I can't tell you how many of.

My Wall street friends, and I know a lot of them, like, had pinned their hopes on Marco Rubio in election because they thought that he was somehow.

Had, like, the right stuff to be president.

And I would just be, like, scratching my head thinking, like, God, you guys.

Are so good at analyzing the world, and you think this guy is the guy who's gonna, like, make it all better.

Like, it just didn't make sense to me.

Well, I Think Marco Rubio sucks because there was no one in the last election who seemed to be more pro war than Marco Rubio. It seemed like he had his finger on the red button on every country besides our own. And it drove me, actually. I was throwing shoes at the TV whenever Marco Rubio would talk. Now I bring up politics because you're in New York City, and in this last election, both candidates had a lot of, well, obviously name recognition, but they have backgrounds in New York. So you were obviously kind of in the hotbed of where both candidates had a base. And a lot of people will try to analyze how certain candidates or certain political geopolitical issues will affect their business. I'm curious. Being an investment manager in the hotbed of everything, does policy influence the opportunities that you see, or are you most likely to be like, I'm going to find opportunities wherever they are, and I'm going to bring them to my investors, and we're going to figure it out no matter what, which way the economy or which way the political sphere is going.

I think you and I agree, as you said before, we agree in a lot of things, even though we place ourselves at opposite ends of the spectrum.

One of the things that I think.

That you and I agree on very.

Strongly is that there's always opportunity out there, and there is always opportunity to.

Be found by those who are willing.

To look for it. And I don't think that what's going on in Washington has a tremendous amount of influence on whether individual people who.

Are out there trying to make a difference can find opportunity or not.

Now, I know, for instance, like, some of the stuff that Trump has proposed, and I can't talk about it really knowledgeably because I haven't paid that much attention, but some of the tax proposals that he has floated about real estate would have a big impact on the real estate industry.

If they go through. I'm just not sure exactly whether they'll be good or bad or indifferent.

But really, the point is that, you know, Washington sets a bunch of rules, and then, you know, we just go figure out how to make it work.

Right in between that way.

So we just go and, like, the playing field changes, and you just go.

Figure out how it works, and you go find opportunity. And, you know, basically every change in.

The playing field makes winners and losers. So you just got to figure out.

You know, where the winners are and go there.

One time over a little bit too much wine, Jonathan and I decided we were going to do a podcast series together about being completely on the opposite Sides of the spectrum, but still agreeing on certain things and both being committed to success. So if you want to hear that podcast, go over to freedomfastlane.com, leave a note in the show, notes that you want to hear. Jonathan and I talk about politics and success more often now, Jonathan, you are the host of the capital gains podcast on capitalism.com and as a piece of that, you've heard a lot of interesting ways that people are generating cash flow. And I always find it interesting how an entrepreneur makes a buck. What are some of the most interesting ways or most interesting people that you have heard making a buck through means of generating cash flow?

So talk to a number of people.

Who are involved in flipping websites, which.

Is something that once people say to you, oh, you can flip websites, you think, well, of course you can. Right? You can. Any asset that's out there, any business that's out there has value.

And there are people who want to buy these things and transact in them.

But that was really surprising to me. Kind of eye opening that there is now an entire industry springing up around brokerage and websites, or people who buy websites and increase their viewership, increase their clicks or however you measure websites, and then flip them to a new investor at a different value.

So this is a really interesting way of making money as far as I'm concerned.

Yeah, I have actually flipped many websites in my day, although I was more of a buyer and a holder, where I would buy them and hold on to the passive cash flow. So I share in your sentiments. Now, what I've found in that strategy specifically is I've always likened that to real estate. It's just a different kind of real estate. You know, it has land on the Internet that produces cash flow that also goes up and down in value based on readership, based on exposure. And there's more that you can do to a website that you could do to a house, because a house, you can paint the carpets, you can do all kinds of things. You can't move the land, though. In websites, you can move the land. I've also long thought about doing kind of a course on that specifically, which is a game I've been out of for a while. So what has been your take on that strategy?

It's funny you make the analogy with real estate because certainly Google rankings are.

A kind of real estate.

You've got your position on the page.

When someone does a search for specific search terms and you really want to own.

Just with real estate, you want to.

Own the best location physically on the ground.

With a website, you want to own.

The best location on the page when it pops up on someone's computer.

There's definitely an analogy there. And it is interesting too that what you point out, that you can actually affect your positioning like you can with real estate by upgrading the property, you.

Can upgrade the website and affect your positioning on the page and command better economics from the website as a result of doing that.

So, Jonathan, let me ask you this. You're in New York City, you're around a lot of massively successful, maybe even uber rich people people.

And you're in real estate, you're putting deals together. My question to you is, from your experience, how do the rich invest their money most often?

Well, they absolutely invest their money in assets, right?

With the exception of my friends who are fund managers and are investing money.

In their own funds that they manage.

Even those people too are investing in assets that, you know, they're not looking to make like a couple of percent.

A year, but they're looking to really get massive results with massive upside.

So they are really strong into alternatives of all manner.

And you see, I mean, there isn't.

Really any one thing that people are going after. Although real estate is a really big one. I mean, it seems that it's a net. What I've noticed, there's one dynamic which.

I've noticed which is that I don't know how familiar your listeners are with family offices, but what a family office is.

Basically when a family through a business gets to a certain amount of wealth, they just can't manage all that wealth themselves. They have to have somebody whose full time job it is to manage their wealth for them. And what you see is no matter what the underlying business is for family offices, almost all of them invest in real estate. Some of them invest almost everything in real estate. But I would say all of them invest something in real estate.

It's very surprising to see ones that don't. I mean, I have encountered ones that.

Don'T, but really, really rare. Wealthy people always invest in real estate. But then with money that is a little bit more sort of risk capital, the real estate part of it is like, okay, we want to put all this money that we've worked really hard.

For into something that we perceive as safe. So it goes into real estate.

If they've got more risk capital, then they'll start investing in things that are a little bit more on the edge. Like for instance, a big thing these days that everybody seems to want to.

Be involved in is the legal cannabis market.

Generally not the cannabis itself, because people.

Don'T want to touch that, but the.

Whole penumbra of industries that are growing up around cannabis, whether it's cannabis land, whether it's cannabis products, whether it's things that service the cannabis industry.

That's a really big one. And we had actually a really great show with a fund manager who focuses on cannabis, on capital gains, and that.

Kind of stuff is more. When you say risk capital, you mean like, they're hoping for a big return, but that's also like, not their bread money. It's what they hope creates a monumental return in a certain number of years.

Exactly. And it's also they recognize that this.

Could go to zero very quickly because it's such a new industry. So it's either going to be.

They're hoping it's going to be big.

But they recognize that it could just be zilch. It's not like they're not investing, like.

I guess for folks like that, it's the 10th generation great grandchildren's college funds.

Or whatever it is.

They're not investing that money in the cannabis world, but they are definitely going.

Into assets like that, for sure.

That's really interesting. So you mentioned that real estate was one of the assets that people invest in. When you say assets, real estate is the first thing that comes to mind. So that seems kind of obvious. What else do you mean that falls under the umbrella umbrella of assets that the rich buy?

Well, gosh, it could be all kinds of things.

Precious metals is always one.

I think, again, that's more of a hedge strategy. I think another thing to kind of clarify up front is that when you get to, I guess, a certain level.

Of wealth, people start becoming very concerned with asset preservation even more than making money, because they've already made the money. Now it's like, okay, I don't want to lose what I've got. So a lot of investment goes into hedging strategies. Like precious metals is one.

One interesting thing. When we interviewed our precious metals expert.

On capital gains, he talked about that.

A lot of people buy precious metals that are based in foreign countries because they're hedging against the risk of something.

Really bad happening wherever it is that they live.

And they want to be able to go someplace and have, like, literally physical gold there that they could put their hands on if the world goes to hell.

That's one thing that people invest in when they're very wealthy.

Technology is another one. There's definitely a great interest in tech. I think a lot of people will Invest a little bit derivatively in tech, which, I mean, they'll go through a.

VC fund or a private equity fund or a hedge fund rather than trying to do it themselves.

But there are definitely family offices that.

Have an expertise in tech and will do direct investments in tech companies. But really it's across the board what people invest in.

I would like your opinion on two specific asset classes. The first would be municipal bonds. The reason I ask is because that seems to be from my network where a lot of rich money goes to be completely preserved. Like, I just want to park this somewhere and make sure I don't lose it. Have you had the same experience, and if so, what's your opinion on that as an asset class?

Yeah, I mean, I don't really have.

A lot of experience with municipal bonds.

My understanding, though, is, you know, I think the attraction for municipal bonds is that they tend to be tax free. So they're certainly exempt from, usually from.

State tax and same thing sometimes from federal tax, too.

So they don't pay a lot of interest, but what they pay is tax free. And so I think that's really the attraction. And I think they're obviously perceived as pretty safe.

Although, I mean, you do have municipalities going belly up from time to time. And in those cases, I'm sure the bondholders are getting wiped out or getting.

A haircut, but they're probably pretty high.

On the order of payout when a municipality goes bankrupt.

Yeah. And what about your opinion on cryptocurrencies? Right now I am very public about my opinion on bitcoin and why I won't touch it. And I have a ton of peers who are buying it no matter what price it hits. What's your opinion on cryptocurrencies?

Too soon to tell. I mean, I'm like you. I find them very interesting. We had a great guest on Capital Gains who talked about bitcoin quite compellingly. For me, I think it's the kind of thing where.

You might just, if you're really interested in it, might want to invest a little bit of money in it just so you have it and you won't feel like I completely missed out on this. But it's the kind of thing where I just don't know when the whole thing is going to go kablooey and they don't have any intrinsic value. I mean, frankly, I have an issue even with gold in the sense that when people tell me, oh, gold has.

An intrinsic value, I say, what intrinsic value?

It's an idea like everything else. It's it's physical. But the fact that we invest all this safety in this asset only has to do with the fact that for.

You know, we've just decided that it's a store of value, but it's an idea like everything else.

But I think that cryptocurrencies take this problem to a whole other level in terms of just thinking that something has value. I know that they try to ground it in an algorithm, and it's supposed.

To have all these safeguards built in to avoid reproduction and all manner of other things. But I'm still, I have to say, somewhat skeptical.

These could be famous last words, but.

I remain a skeptic about cryptocurrency.

Yeah, and I also feel like people are buying at retail right now, and it's almost like they're hoping that by buying it, they can go back in time and capture the growth that they missed out on. I mean, I wish I had bought at 10 cents, too, and now it's worth 2,000, but I didn't. And me buying it now doesn't change that fact. So I think people are trying to catch a trend that they have no control over. And that makes sense. Me really nervous.

Yeah. I also have sort of a different.

Fundamental problem with, say, Bitcoin, for instance.

Now, I understand that the bitcoin program, the way it works out, like, fewer.

And fewer bitcoins are becoming available, and at some point there won't be any more at all. And then supposedly the price of them is going to skyrocket.

I guess what my concern is, like every other commodity that there is in.

The world, in a capitalist system, when.

Profits are off the charts on something that invites competition. And I don't see how bitcoin can maintain essentially a monopoly position in cryptocurrency forever. It will just have to invite competing currencies, and then once that happens, then the value of bitcoins is going to go down because they don't. They don't really have any intrinsic. There's nothing. There's no there there, I guess, is what I'm saying.

I hate to say it, but I agree. I agree 100%. So we agree that we're not buying bitcoin. I am in this position right now where I thought we were at the top of the market, in the stock market, in real estate, in business valuations. I thought we were at the top for a really long time, and I mean, multiple years now. And yet things continue to go up. And I'm scratching my head going, what do investors do? Next. So, Jonathan, what are you buying right now?

Well, I'm not buying anything right now. Basically, real estate is my thing.

That's what I prefer to invest in.

As an aside, I was really honored to be at the last Freedom Fast Lane live with you on our investor panel. And one of the comments I made was that I have to eat my own cooking. And I feel that way very strongly, like, I don't invest in a lot of other stuff.

Real estate is my business. I need to put my own money.

On the line with deals. But that being said, I'm not buying deals now because there is really very little out there to buy. We employ a pretty rigorous methodology towards doing deals, and we're not interested in.

Financially engineering our way into profits because that's a quick way.

When things go south, they go south very, very fast. Right. So. And if you're at the top of.

The market, you definitely don't want to be taking that kind of risk.

We haven't been buying deals not because we're not looking, but just because we can't find anything that makes sense. I just hear this when I interview people across every asset class.

Nobody can understand the valuations of anything.

Not that they can't understand it, but just the valuations of everything across the board are just so outrageous that people are having real difficulty finding deals that make sense. And it's causing a lot of people to invest in more and more marginal assets, which I think is dangerous. But I would definitely agree with you that we're at the top of the market, certainly in real estate. I think we may be at a tipping point again, could be famous last words. I do feel like we're at a.

Tipping point, at least in the multifamily real estate space.

So when you say that you're not buying anything right now, does that include the business that you're in, which is multifamily real estate?

Yeah, we're not currently doing any deals because it's just too difficult to find deals that pencil out. So we look at deals, but, you know, the last couple deals I bid on, I went really aggressively. For me, after those deals, you know, put in bids that I felt a little bit uncomfortable with putting in, and we were told, oh, you're 20% off. So, yeah, so it just. It's really. The market has just kind of taken off to a point where there's not.

A lot of opportunity right now to.

Find good deals, but people are still.

Buying, but not me.

Yeah. Can I tell you the one asset I am buying? A Lot of.

Yeah, absolutely.

Ads, Advertisements.

Tell me about this.

Yeah, well, I mean, my strategy is when things. When there's blood in the streets, you should be buying hard assets. And when things are really good, you hedge your bets for the next time there's blood in the street. So things are really good right now. So it seems. We'll see what happens. So I am preparing by growing my business, by growing my audience, by growing our customer base, by growing our reach, by putting in those investments so that when the next down cycle comes, there's a sustainable business that will spit off the cash flow in order to buy up every asset. And I have heard people say, you know, they think there's going to be a massive, massive downturn. I'm not that optimistic because if that was the case, I would just buy everything at the next downturn. But I'm not sure that's going to be the case. What about you?

Yeah, so you and I are thinking a lot along the same lines in the sense that on both points you made, one is that I strongly believe a downturn is coming. I don't think it's going to be.

2008 style, though, to be honest.

I think we're going to have a normal business downturn in the next year or two, you know, and that's going to definitely hit the property markets and.

We may even see it earlier in the property markets.

But the second thing that I agree with was your first point, which is now is the time to be preparing.

For when the opportunities arise.

And that's really what I've been focused on too, because, you know, deals don't model out for me, that they're not.

Attractive to buy at the moment.

What I've been spending my efforts on.

Over the last six months to 12.

Months is getting my investor group bigger, you know, like increasing the size of my platform so that when the buying opportunities are there, I know I can move on them and I'll. And I won't be having to convince people that now is the time to buy because I will have already convinced them that it will be time to buy when I say it's time to buy. And they should be all in at that point.

Right. So that's really where I'm focused at the moment.

Yeah, I agree. Let me ask you this. As an entrepreneur or for an entrepreneur who's listening, who's saying, oh, well, crap, there's no good opportunities right now because everything is so overvalued. What advice would you give someone who is running a business, growing a business and is looking to invest their profits, but do it wisely. What advice would you give to them?

Two pieces of advice.

I mean, one piece of advice is if you have the patience to wait, then wait. Because, you know, what goes up always comes down. And the people who have dry powder.

During the down markets are the ones.

Who really make the big money. But that takes a lot of patience and it's difficult for people. It's really tough when you see everything going up, up, up, up around you, not to get caught up in the euphoria. But if you can exercise that discipline and wait till there's real, you know.

Blood in the streets, then that's when.

You'Ll make the real money. But if you can't do that, if you just have to buy something, then what I would advise people to do is really look, you know, with a really, really kind of strict view at the cash flow of the asset, right? Invest for cash flow. Because something that is returning a lot of cash, if you buy it at a certain return right now, the valuation of the property, when things fluctuate, when asset values fluctuate, is really not going to matter to you, especially if you're planning on holding it for a long term anyway. Because if you've locked in a return that you're happy with on a cash basis, that's not going to go away. If you invest a million dollars in something and it's returning 8%, so you're getting $80,000 a year off this thing, and then something happens in the asset market and the valuation of this thing goes to, goes to half, but you're still making the same amount of cash, like, what does it matter? You don't care that it's going to have. Because you're still making and it will go back up, right? If you just, if you hold it long enough. The thing that people really need to be wary about is investing in speculative things, right? So if somebody comes to you and says, look, Ryan, I've got this great deal and it's going to go up in value. It's not producing any cash now, but we're going to do this and this and this. We're going to do X, Y and Z to this thing. And then once we do all that, it's going to spin off a lot of cash. Those are the things that you should be wary about now, because first of all, they're contingent on execution of X, Y and Z. And second, those kinds of investments almost always depend on timing the market correctly. And if you don't time it correctly, then the blood in the streets will be yours. That's my advice for people who just.

Can'T wait for the market to turn back down.

If anything does trigger a down cycle or does create blood in the streets, what do you think is going to be the thing that unravels that and creates that environment?

Well, I think a spike in interest.

Rates would definitely tip things over the.

Edge because I think a lot of.

What'S driving asset prices has been cheap money.

So if the cheap money goes away, that I think could really be the.

Pin that pricks the bubble.

Another thing could be if, say, for.

Instance, for some reason the seemingly endless flow of capital from China dries up. If they suddenly were to reinstitute capital controls or something to staunch the flow of money, that could be it.

But I think that's less likely than.

Just interest rates going up or if.

There'S some great shock, if we have.

A big terrorism incident or something that.

Causes to panic, that might cause interest.

Rates to go up and then could start the whole chain cascading.

Jonathan, tell us about the capital gains podcast, what you aim to do there and what you cover on the show.

Yeah, so we really, on that show try to introduce our listeners to as many different ideas about alternative investments as possible. And when I say alternative investments, that really is what Ryan and I have.

Been talking about all along.

Today it's really anything that is not.

Your stocks, bonds, and mutual funds, which are considered your traditional investment. So it could be real estate, it could be raw land, it could be gold, it could be bitcoin, it could be cannabis, it could be websites, really.

Anything that falls into that category of alternatives. The idea really is for people who are either well compensated employees of a company or entrepreneurs whose businesses have reached the point where they have investable money and they're thinking about how they go from being cash flow rich to being asset rich and really growing their net worth. That's the idea behind the show, to introduce people to the kinds of things that will really help get them from.

Being affluent to being wealthy.

Well, Jonathan, I love what you're doing. Capital gains. It's why we publish it on capitalism.com. so I will personally endorse what you're doing over there and encourage everybody who listens to the show to fire it up in itunes and subscribe to the capital gains podcast.

How can they find.

They just type in capital gains into their podcasting app.

Yeah, that'll bring it up.

All right, cool. So I would encourage everybody to open up their iPhone, search for Capital gains. Subscribe to the podcast or you can find it on capitalism.com Jonathan, thanks for hanging out with us on Freedom Fast Lane. Keep on changing the world buddy.

Thanks a lot. Thanks for having me.

Ryan, it's great talking to you.

If you enjoy conversations like this about what people are investing in and how they're making money, I would encourage you to go to itunes, search for capital gains and subscribe to Jonathan's podcast on capitalism.com we're going to be rolling out more shows on capitalism.com and if you want to be featured, write us on Facebook. Let us know what you want to contribute content about and you might see your own content over@Capitalism.com or be featured on the show. We're always looking for interesting people to highlight and to feature on the YouTube channel, on Facebook and as contributors on the podcast and@capitalism.com if you go there now, you'll see podcasts like Jonathan's and this one, the one you're listening to right now. You also see what's going on in the world of politics and features on entrepreneurs and capitalists who are making a difference both within our community, inside of the tribe and elsewhere in the world. I hope to be featuring your business and you on capitalism.com one of the ways that you can do that is join one of our trainings. If you head to freedomfastlane.com Boot Camp, you can go through our 90 day bootcamp of having a product up and selling within about 90 days. Once you have your product up and selling, we help people take that to the seven figure mark and beyond inside of the tribe and we feature businesses who get to that level over@capitalism.com because I believe that the more we highlight success, the more we'll peel away this mysterious idea of what an entrepreneur is, who is behind businesses, and that it's okay to be successful. I think it's the best thing that we can do for our communities in the world to be insanely successful. To start businesses that provide products and that provide jobs. And if we can show the people behind those businesses, if we show the people behind the profit, then we can change the idea and the direction that our country and the world follows. Maybe, just maybe, we can encourage success rather than demonize it. And we can move things forward rather than waiting for the right politician, the right guy or girl, the right savior, the right policy to do something for us. Maybe a little personal responsibility could go a little bit further than government could in terms of solving the world's problems and making a difference in individuals lives in communities and around the world. So I hope you'll join us in that mission over@capitalism.com in the meantime, please subscribe to the show and search for capital gains in itunes. Subscribe to Twombly show and I hope to see you featured in some capacity@capitalism.com write us on Facebook and let us know. We'll see you on the next episode.

RA.