Deal Room | Businesses with Deal Hunter | Titan Impact Group

Good morning and welcome to the Deal Room Live, the daily real estate deal tank powered by Titan Impact Group, a global leader in AI driven real estate investing and funding. Where the real estate world meets speed, precision and profit. And bring us your deal so we can put it into our AI model that analyzes and structures real estate deals in minutes, generates all the docs you need to get the deal done and gives you a verified, unbiased breakdown of due diligence reports. The investors get the advantage of getting fully vetted AI analyzed deals that cut their due diligence time down by 60%. So you're in the right place. Let's hope in the Deal Room now and get into today's Arbitrak mastermind and today's host with Katherine Bell from Titan Impact Group, sentinels of the American dream. And we are in the Deal Room today. We are going to be talking about how AI can help real estate investors become better investors and become quicker at identifying deals and getting into deals stronger, faster, better. So my, my partners in the land shark mastermind Roman Rubio and Dr. Nangyang Chan may or may not be joining us today, but today is Monday. It is Labor Day. It is a holiday. And so we're just grateful to anybody that wants to come in and share the, the knowledge today about how AI is changing and altering the way that people do real estate investing and a lot of other things too, I'm sure. So which leads me off into our sponsor, Titan Impact Group. The CEO of Titan Impact Group is Catherine Bell. Catherine Bell is an AI connoisseur, even a guru if you ask me, and she has a lot of experience in real estate investing, raising money. She wrote the book on raising capital by using AI and she's also got about a, about four other international bestsellers on her resume. So I want to make sure that people that are interested in learning more about AI go and visit Katherine Bell AI and have a conversation with her virtual assistant. Her AI assistant there will be able to tell you everything that Katherine understands, built in real estate and an AI. So if you ever as you have any questions about how AI can affect you or, or help you, Katherine Bell AI is a great resource and once you figure out what you want to do and discover what path you want to be on, I suggest going to meetcatherinebell.com and scheduling a one on one appointment with the actual live and live, living, breathing version of Katherine Bell AI. The real Katherine Bell will set you up with your own Rosetta Stone, your own personal voice in your GPT and help show you how to manage projects with a virtual team or virtual executive board. So really cool features that Katherine's been able to produce and provide. So it's been a, an amazing opportunity for us to learn what we can do and, and how we can accelerate. Catherine, do you have anything you'd like to say today?

Happy Labor Day. Most people are out enjoying and being with their family and friends and all the cool things and you know, again, it's, it's an important part of yes, we're working. Yes, we're doing all the things and I hope that people are taking time to cultivate those relationships and do all the fun things, you know, that really are the things that matter more than working and, you know, deals and all the things. So, yeah, I hope everybody's having an extraordinary Labor Day and doing all the amazing things.

All right, well, I appreciate that today. We are just kind of perusing today on what, what cheap chat GPT can do for us on many levels. One of the things that I was actually working on before the meeting was I was, I attended the Phoenix Real Estate, Phoenix Real Estate Club meeting last week where we get together and talk about our has and our wants and they email out this list every month, every, after every meeting. And you can see here, I don't know, can you see the screen real good, Catherine?

I see like you have a side by side, they see you and then over the screen.

Are you able to see the, are you able to see the GPT screen or should I change it?

You need to change it. Should be too. You have to probably stop sharing. Yeah, there you go.

No, I, I, I, I've got it. I was trying something different. I wanted to see if we could keep our logo on the screen.

So it was too hard to see. The logo still stays on the screen.

There we go. Yeah. So here you can see there's a spreadsheet that I've created. Just I collected all of the information from the meeting and then was able to actually produce a spreadsheet that gave me what these people have and what they're looking to offload and what they want. And what I did was I was able to then tell my GPT to, to give me a breakdown of, you know, how I can help people, you know what? Because my gpd, GPT already knows what I do. So I said go through this list and filter out who needs funding and who needs and who, who is providing funding so that we can figure out how to help them. And so we were able to, to break down and get. Get even more detailed lists from it. So. And you can see here, all I did was just copy and paste into it what I had from an email. And what it did was it made it into a nice fancy spreadsheet. I know Katherine Bell loves spreadsheets. So one of these that came to mind, Catherine, was this, this individual here, Laura Serone, she's with. It looks like Capital Action llc. They have, they have wants. They, they are looking for people who need money for manufactured homes in Arizona. So I don't know if that's something that's. It sounds like it's in your wheelhouse with all of the projects you've got going on between Snowflake and, and stuff like that.

They're a lender.

Yeah, yeah, it sounds like they, they have money for projects in 41 states. So Arizona being one of them. That's a, that's a prime position, so.

Huh.

Yeah. Pretty interesting. Another one there is. Looks like this Felicia person is looking to buy businesses. And so I'm. I did a recount on that this morning.

Nice.

If Felicia would like to talk more about businesses and see where we can go from there.

Nice.

Yeah, for sure. We actually have. We've used AI to do a number of things for us. One of them was to do an underwriting of a couple of properties that, that are, you know, businesses tied to the property. And that can be tricky for real estate investors when, when business is tied to a real estate transaction. Have you ever encountered that?

I'm sorry, say that again. I was busy reading what was on the screen.

Yeah, the transit. Like, have you ever dealt with real estate that has a business attached to it?

Yeah, I mean, the RV park. So you have your. The business piece of, you know, the RVs coming in, you know, daily, weekly, nightly, whatever. And then there's the real estate piece of it also. What was the other one? Mainly it's been RV parks that we've been dealing with on both sides because it's an actual business and then the likes. Well, strip malls, depending on if you own a business inside of it. Yeah. Separating out what those individual pieces are.

Nice. And so how, how do you usually break that down as far as, like when you're looking at a business that has real estate attached to it, what is the best way to that, you know, gives you the, the most or best understanding of the value? I know you're, you know, look at the numbers and numbers tell you what to do. How do you break that down or, or can you explain that to us? So that we can understand how. More how GPT is able to help out with that.

I have not done that with GPT yet. That is an interesting. I need to noodle on that because that's depending on the prompts that are put in. We need to have it read the numbers separately because on real estate you've got your depreciation, The value and everything based on that. But then on the business side of it, you have your revenue, all your marketing and everything that it takes to actually run the actual business.

So.

It would have to run two separate analysis.

Well, one of the things that we ended up with was this is a, this is a precast company. They, they make septic tanks for us and it's, it's a business with land. And so one of the things that we did was we kind of ran this business through here a while back. We, we were able to obtain the financials from the company. Here's the 2024, 2025 P. Ls we put those profit loss statements in and we, we let GPT analyze them and come back to us with a, a price on, on not just the actual income, but also then factoring into it the equipment on the, on the property, the, the inventory of the product that the company actually creates because they have standing inventory is what that's called. And then they had, they had basically the, the land value tied into that as well. So what we did was we were able to go through and look at all of these things then tied together as to how we were going to be purchasing it. And I had to kind of help prompt it to value the land properly. And so what it did was it came back giving us a valuation of the property or valuation of the business between 10 and $14 million. And then when you tied everything else back into, carried the value of the property up substantially. So what we were able to discover is that with a 6 cap on the business, or I'm sorry, this is how it valued the land. The land based on comps was, was barely worth 800,000. But because the land, it can be leased for about $11,000 a month and putting a 6 cap to it, it made the land go up to $2.2 million. So the fact that the land can be, you know, the land itself can produce income was what gave it gave the, the business a higher valuation and got us to a higher cap rate, which is, it's really at the end of the day, what, what investors want to see is that their money's going to make more money so when we factored in all of the components then to come up with a true land value, a true business value and a true market value of the products on the ground or assets standing assets, we found that there is a good chance that this whole property could be total valued at low about 12.7 and at high about 18.2. So and that positions us pretty good because we have built in equity then the owner of the property and the business only wants $10 million. So we're acquiring everything for between 22 to 45% below market value. And that's where we're getting built in equity to the, to the project. So this is something that GPT was able to put together for us on, on that deal. And, and so we, you know, put together that we can put together this on just about any property at that point. One of the other properties, we did this to see if I can go over to my virtual board. This is something that Katherine had helped me set up was a virtual board. And what, what it does is it helps me plug in ideas as a project and load the project with, with all kinds of information so that it's, it be basically becomes an expert at, at what everything is there and what's going on there. So this is a project that, that entails a little bit of residential, a little bit of vacant land and a lot of future development down the, down the road. So what this, what this conversation was able to provide us with was an understanding of what that project will be doing in the future. But it also gave us new creative ideas about things. And one of the things that it came up with is that we should consider splitting the, the property up into segments to increase our value because then we can actually sell off each segment while retaining a portion, a portion of it, you know, through different, you know, different vehicle structures. But basically this was, this is what it came up with. We were going to buy this property at about $1 million and then exit it at $3 million, doing a little bit of sweat equity in the place, getting it to where literally it's just making the full, full potential of its, of its income because right now the current operator is only running it at about 30%. So just by getting it back up to, you know, 80 to 90%, you know, occupancy and operating correctly, it'll make enough money to have a value of over $3 million based on that cap rate equation that I showed you just a little bit ago. So again, this is something that's produced when we give and prompt GPT to do certain things. And this is actually this part of this project done without the use of, of AI models. This is just the information that was fed to it. Using word docs, using PDFs, using Excel spreadsheets, we were able to input all of the information it needed to create a full blown breakdown of everything that you know, this investment is going to require. So it even produced a, a, like a PowerPoint on a Pro forma for us so showing how if we stabilize the property it'll, it'll make 480 to $525,000 a year pulling out the operating expenses. We're giving it a pretty, you know, pretty liberal amount of money for operating expenses. And it, what it's doing is still projecting a stabilized NOI of over, you know, a quarter million dollars which the implied value of that at a 10 cap is 2.5 million. So we can lower that cap rate but it'll raise the value I believe. So we want investors feel confident what we got there and feel like we're being conservative with what we're doing. So what we also discovered was that we could do a preferred monthly distribution to our investors of about $6,000 a month across all the investors just based on the fact that we would eliminate our debt service. And so if we eliminate debt service we can just flip that debt service over into Realtor or I'm sorry into investor distribution. So one of the other great things about this property out there in Winden is that it's looking to create about 30 to 40 jobs as the area comes, comes to life out there. They're doing a lot of work in the area. They just spent almost $3 million on the road just about a mile away from here. They had a pretty, pretty shady bridge that wasn't, wasn't too sort of strong. So they, they went out and spent about $3 million stabilizing that bridge because they've got a lot of, a lot of trucks going to be coming down, down the road there pretty soon. So. But AI is, is not just an analyzer. It can help create documents. It creates the, created this pitch deck right here. It's got the slides. I can just copy this and go straight over into a, straight over into a PowerPoint presentation and start creating a very professional looking PowerPoint and it'll provide my, you know, provide my deal room with a very professional looking and very detail oriented and, and full chock full of information so that investors can feel confident what they're looking at as a possible opportunity to get into and Invest with. So let me see what else. The, the other amazing thing that it did was it created the entire, created the entire business plan, put together an executive summary that was pretty detailed. And this is, this is what we call bankable documents. Bankable documents are very important when, when trying to get loans, trying to get investors because they need to see certain, certain criteria, certain things, certain information to make it, you know, to make financial, educated financial decisions. So we provide them with this, all these documents so, so that they can make good rational decisions. But also now with the use of AI, it helps, you know, dial in those decisions a lot quicker, a lot simpler, you know. So up here we had actually fed it a criteria. This is an example of what we were able to get it to do. We fed it a list of the assets on the property, like the refrigerators, the pizza warmers, the countertops, the cash registers, etc. There's a pretty durable list of about four or five pages of things that are, are in that, you know, in that deal up there. We fed it to it. It went through and you can see I just put screenshots. But then it turned around and it put it all into a, you know, nice order and then flipped around and started giving me. I asked it to do a value summary on the equipment using conservative values. And it spit out, you know, some prices for me on all the things listed. So a conservative value is about 120,000. But it did note that it would cost about 300 to 350,000 to replace all that. So at that point, if we had to replace everything, it's still going to cost us over $300,000. So those things there are helpful to making the money that it claims to make. You can see here that I was able to put some PDFs in there. The PDFs were provided by the seller. So we're able to understand what all that was. And then the, the next thing we got is, oh, this is the investment. This is our investor package tracker. So basically this is what we, we use AI to help us do. Put together the executive summaries for both investors and municipal departments from the municipal department. They have to read the document from a different set of lenses. Investors look at it for the numbers. Any municipal. And what I mean by municipal, I mean the county and city officials, the city planners, stuff like that. They need to see our plans from a different lens. So they don't necessarily look too much at it from an investor point of view. They look at it from a planning and development. But this will Provide us with both of those. Gave us a breakdown of our organizational chart. Pitch deck. Not just the investor version, but also a bank version. Because again, a pitch deck for investors is about building equity. A pitch deck for a bank is about taking debt. So we get both of those financial performance for, for this is important. It shows how what our operations are going to be about and how the investor plans to get a return on their investment. We also are able to use GPT to develop sources and uses for the property. It'll analyze it and see how we may not be seeing something like we, we can only look at it or think about it from once, you know, one perspective. What GPT does is, takes, you know, takes a prompt and goes out and scours the Internet comes back with multiple more creative ways of looking at it. Very helpful in these types of deals. The next thing it did was it provided us with a capital stack and waterfall visuals. You know, these are important when you're looking at graphs and stuff. Sometimes it makes more sense to see pictures than it does to actually read words. It gave us an exit strategy, metrics and actually what it did was it gave us three, almost four possible exits where we're, we're actually making money for our investors or for the bank or for ourselves. It was all, it was all laid out there for us, easy to dissect and understand as well. So what some of the other things it'll do is it'll actually prepare the documents for our legal counsel. What that means is we're not practicing law. What we're doing is we're just creating the legal documents for the experts, our legal counsel to review. What that does is it lowers our cost on our legal counsel bill. Like we pay accounts, we pay a lawyer, you know, a certain amount of money to review documents. Then we pay a certain, we pay that lawyer a certain amount of money to also create the documents. And so when we're in that, in that realm, it's a little bit easier for on us financially to create those documents at first and then get the lawyer to approve them and basically put a stamp on them. Stamp of approval is just as good as the, as the lawyer creating it because at the end of the day he's the one that's signing off on it. So the other thing it's able to do is help us out with marketing. So it'll create a one pager which is basically something we can email out to people. It'll create landing pages and deal portals for us to create on, on our websites. And it'll do this by writing the code for it and everything else. It'll also help create email drip systems to, you know, put out on something like go high level. That's a program, CRM program that helps, you know, continue to put deals out in front of people and even, you know, introduce people to new things and then what it will provide us with as well as the commitment tracker, when people do sign up into what we're doing, we can see they've been paying attention to us for 30 days, 60 days, 90 days. Like we got to get, get them closed and get them closed quick. That'll help us keep track of who needs to be, you know, who needs to be contacted and, and who we should, who we should send more info to. Stepping down. It goes into due diligence materials such as appraisals, comps, zoning maps, rent rolls, market comps, principal background checks. It'll do all this stuff. And the abilities that that GPT has is almost to the point of like having a built in Guido. And I don't mean any disrespect when I say that, but basically, you know, GPT can do more research in three minutes than I can do in three months. So it's pretty amazing. So it's helpful in validating things and vetting people and stuff like that as well. Investor engagement programs, it'll help us develop webinars, it'll help us develop Q and A sessions, it'll help us put together timelines, it'll help us put together funding strategies, it'll help us put together tracking records. So this thing is just amazing and all of the, all of the amazing things it's able to do, it actually, I think created that list as well. So going through, I think that's about it. Wind and Marketplace is a project that's ready to go. We've actually put an LOI together. We're hoping to get it sent over and see if we can get it approved, see if they'll, if they'll accept our, our, our offer. On the flip side, we're also looking for investors into that project. It's going to be a pretty, pretty substantial project with, with a large amount of projected, you know, return from it. Again, I'm, I'm only going based on what we've been able to produce here in the AI model. I'm not guaranteeing any results. We're just, we're just going based on what the numbers show us. So, you know, we encourage people to do their own due diligence and do all their own research and by all means come back and review it with us so that we know what, you know, what you found. If you found a discrepancy, we can definitely be. That could be helpful to us. And, and it could also help you learn where, you know, where we're. We're prompting it to. To do a different thing. So. But so far, what do you think, Katherine? How. I mean, it looks like you're busy typing away on. On stuff over there. Are you. Are you running deals on the board?

I am having fun with my own AI. Yeah. Again, I feel like the, the use cases are endless and like there's a whole other. I was having a conversation with a good friend yesterday. We're talking about now bringing in AI agents to be able to now run things through a process even deeper inside of what you're talking about. So we're putting together something that I think everybody's going to be super excited about that literally like what you were just talking about, the doing the background checks, the. Not only the deal analysis, but the market. Like, there's just so many layers to this that if, you know, we're creating basically a conveyor belt that you plug it in and then all of a sudden like it doing all the things. This is. It's amazing. It's about working smarter, not harder, which is so freaking awesome. I love it.

Yeah. Yeah. Oh, I see. I see we got a friend in the room. Hoy. What's going on, buddy? How you doing?

He's in Canada or did you get back?

I got back this morning. Three hours ago. We did a. Goodness.

Wow.

How was.

Was so fun?

I love it.

We went to the CN Tower. We didn't go up it we around and there was all this food. Yeah. Mainly a lot of food.

You guys are all about the food. You're total foodies. Yeah, I love that. Well, and here's the thing. What I love about, you know, both you and Katie taking the trip, it's like that's what this is all about. You know, we create multiple streams of passive income so that you can go experience all the things in the world. Right. Like have the freedom to go and do that, go to another country for the weekend. Like, that's. That's freaking awesome. I love it. Well, cool. I love it.

That's awesome. Glad to see your back way. So are you. How was. How was your review of the. The information you got last week when we were talking about using Deal Hunter to run some deals?

It was good. I. I think it's very powerful. Tool, you know, that cuts down the time by tremendous amounts.

Yep. Have you, have you explored any conversations with it yourself.

With the deal hunter?

Yeah, yeah, very good. And what, what were you able to discover?

Like, so you, you basically tell it like the way to respond and it just gives that information in that specific, you know, like tell me about the property, for example, and then I'll tell you all the things when you go into like a real estate deal.

Right. So it kind of responds back to your general question with the same, with the mindset or knowledge base of the real estate investor, you know, and, and what it does is it prompts you, it's almost like a learning tool in a lot of ways for, for a new investor. And I know that you've got some experience in investing, but as far as real estate, I know that this tool could be very helpful in teaching you different ways to get into real estate deals. What do you think?

Yeah, yeah, it teaches me and introduces me to a lot of the ideas of or like different ways you can pursue real estate, like the different types of lending you can get.

Yeah, for sure. And so like one of the things it did is this is something that I, I prompted it to do was do a landshark due diligence. And what it did was it came back and, and basically gave us understanding of what a full due diligence under, you know, report would look like. And you know, from parcel maps, title reports, you can see that the, it goes into zoning and utilities and entitlements, infrastructure and access, the market and economic viability of things and financial inputs, operational viability, like these are all things that can check on just one, one property and it triggers itself to ask how are you going to exit this property? And that's one of the big things I think that real estate investors don't ask themselves before they get into a deal. Is what is my exit like? I mean, when you buy a house, most people buy a house and they intend to live there for 30 years. But when you're real estate investing, you're not planning to live there for 30 years. You're planning to buy it, do something with it that makes money with it and then eventually get out of it, you know. And so some people will bank real estate. I know that, I know that there's people out there that have probably 200 to 250 doors, rentals, and they could be all single family homes. You know, what they've done is they've been able to snowball these things into a portfolio of, of of an immense amount to the point that if they sold it, they would have what's called a capital gains event. And, and that capital gains that could possibly be in the millions of dollars. You know, when, when that happens, you're looking or standing to lose about 30 to, you know, 35% of your money to, to the government because you were smart enough to, to build a portfolio of 230 doors sounds like a penalty, not a, not a prize. Right? So this is something that, and, you know, early investors need to learn about, because when you think about your exit, you got to think about, are you going to exit out of it to something that you're going to pay taxes on, or you're going to exit out and increase the amount of cash flow you're bringing in every month? Because that's another way of investing, is that you invest for cash flow instead of investing for, for pure profit. So there's two ways of doing it. Some people like to have a steady cash flow coming in. Catherine calls it Southern Streams of Passive Inc. Income. And, and that's, that's, you know, exactly what, what you should have is seven streams of passive income. But I feel like you should be able to, you know, accelerate that, you know, over time. And instead of making $500 per property, because if you're making $500 off seven properties, that's, you know, $3,500 a month. How about if you took those seven properties and then continue to kind of leapfrog those up to the point Instead of making 500amonth, you're making 5,000amonth. And if you had a property that's making you 5,000amonth and you had seven of those, that's $35,000 a month. That's a whole different ball game. So learning how to leapfrog up to that is possible with a good coach, with, with good mentorship. But I think it's also possible through a good tool like, you know, like Deal Hunter by Landshore. So.

So what's an example of a property that you're investing for the cash flow and what's an example of just the profit? Is that just like a fix and flip?

Yeah, basically. So if you're buying property to buy and hold, and what you're doing is you're buying it, you're fixing it, and then renting it out so that it makes you anywhere between 200 and $700 a month or, or whatever, something like that. Yeah, that's what you're after when you're doing a cash flow deal. If you're looking to do just pure profit, which is a, basically your roi, you're going to buy it with the intention of exiting it and taking a profit from it to reinvest that profit. So the differences is the one where you're buying and holding and renting it, that basically builds your portfolio. Whereas when you're buying it, fixing, you know, fix and flipping it and then selling it or whatever, that's a, that's a temporary result to a, you know, or a temporary hold as a, as a result of you, you know, just going after pure profit. So some of the other things I like to do, like for example, I'll buy a big piece of property and then subdivide it. When you subdivide it, you're creating multiple, you know, multiple pieces of, of property or multiple products for people to buy off of one purchase. So if I buy it for, you know, if I bought a piece of property for a million dollars and broke it into five pieces and sold each piece for 3 million or 300,000, I'm basically looking at a, you know, $500,000 margin, you know, so those, those are the things that we look at as far as when we're, we're looking at just going after pure profits. We're looking at ways to increase the availability of the profit. And we want to make sure that we're tying into it, a way for somebody else to cash flow on it, you know, because sometimes the end user is going to be somebody that wants to cash flow it. So we want to make sure that's in there. We want to make sure that maybe there's equity too. Like sometimes we might be selling straight to an end user. The end user could be a home buyer. When I was selling custom homes, oftentimes my, my client was the homeowner. So they would want or feel better about having a little equity in that property when they bought it. I would, I wouldn't basically price it out to the fullest value because then that would keep people from coming forward and trying to buy it. The mentality of. Have you ever been to an auction?

Yeah, I have. All right, I've been to an auction house, but not an actual.

Well, during an auction, they know that the product is worth, say a thousand dollars, but they'll start the bidding at a hundred. And the reason why is they'll build up a, they'll build up a frenzy where people are bidding on it and eventually it'll go past the thousand dollar value because people have been duped into thinking now that it's got even more value, as more and more people bid on it, it'll increase the value just based on the immediate market source that's there. You might have people that'll push that thing up to 14, 15, 1600 dollars, because, well, they want it. And so even though they know it's only worth a thousand, the minute they pay 1,600 for it, now it becomes worth 1600. And that's the beauty of the, of the auction model, is that, you know, you can literally change the value of something just based on how. How people purchase it.

So that was. So I need to share a quick story. This was actually if we. I was at a historical event, and we were at Sotheby's in New York, and that's when the Constitution got sold that night for $44.3 million, the highest pay amount ever paid for an actual document in the history of the world. So had we walked into that, like, what is it worth? It's worth whatever the person's gonna pay that day. You know, Ken Griffin from Citadel Group was the one who purchased it. But, yeah, it was again, how much is it worth? How much somebody's gonna pay? So, yeah, auctions are fascinating, and the whole prestige and people can get wrapped up in the whole excitement of the whole thing. So, yeah, auctions are fascinating.

Yeah, that's awesome. I love that story. But when you're talking about real estate, that tends to be the case with real estate as well. So there's a couple of other ways to cash flow. An example of cash flow might be to buy a piece of property and then start selling easement on it. If you know that the path of progress is coming through, through your property, what you can do is open it up for people to run roads through it or to lease. Like, for example, selling. Leasing a piece of property to a cell phone teller. Back when I started in real estate, I actually sold billboard space. And what I would do is I would actually, actually go out and stand up a billboard. Back then, billboards weren't. Were not electronic. They were four to eight telephone poles with a bunch of plywood nailed to it. And then you put up. Then you had somebody come out and paint, paint, hand paint the words onto the plywood. So. And that's how long ago I was doing billboard real estate. But I never owned the land. I just. And that's a. That's an arbitrage system. I leased the land from the farmer, built the. Built the billboard, and then sold space on the billboard as advertising Space that paid me a monthly income, cash flow.

Wow.

There's so many creative things you can do with real estate. It's nuts.

Yeah. Remember when you were speaking about the properties where you buy near universities. It'll be like a land split, was it? Is that what it's called? Or where you're running out to a bunch of college students?

The co living or pad splitting?

Yeah, yeah.

Yeah. I mean there's a variety of those models as well. And so currently what they have out there right now is called a pad split. You can buy a house and create affordable housing within that house. So if you were renting a single family house, a four bedroom house, you're probably going to rent it out to a single family for about say, let's just say $3,000 a month. If you turn around in the same house and create four more bedrooms, created, make it into an eight bedroom house and then rented each room for seven, just say $700 a month. Which in that area where, where a four bedroom house is, is like $3,000 a month, a one bedroom house is probably 1100. Right. So like a one bedroom apartment with nothing attached to it. Like no, you know, it's just a one bedroom apartment with a bathroom in it. It's going to cost you eleven hundred dollars a month. Whereas if you live in one of these co living pad splits, it's only 700. I mean you get, you get and you get a full house. The, you know, so from that standpoint or aspect, If I have eight rooms and just say I only rent six out of the six out of the eight on a consistent basis, I'm making four, eight hundred dollars off of a house, that would have been $3,000 a month. Right. And so if I'm making four 800 and I'm not even maxed out on my, you know, I'm not, I'm not limited to or fully maxed out or limited by the rooms that I have, I'm still making eighteen hundred dollars a month and I'm not even at full occupancy. When you rent just a house, you have to be at full occ to get the 3,000, you know. So with a pad split model, you're able to actually get more money off of the house because you're creating more units.

Yeah.

So and even if you just kept it with four, four bedrooms instead of bumping it up to eight and you just increase the rent to like 900 instead of 1100, you're still going to make money because four, if you went four full occupancy for, you know, and rented each one of your rooms. That's still 3,600 bucks a month. You're pro, you're, you're making 600 bucks more with that second model than you are the first one.

So do you think that's a smart idea of. I look for properties near my university and kind of structure like that with a fha, get like a four unit property and basically remodel into multiple bedrooms.

So just like with every, just like with every great idea comes the, the bad news of what the flip side of that looks like. When you have eight units, you have to maintain eight, eight beds. Like you gotta make those beds every time somebody checks in and checks out. You're running a, you're, you're kind of like running a, a miniature hotel at that point. So as long as you have the time to commit to running a hotel and acting as a boarding house, then yeah, you're great. I mean, you're, you're able to, to turn and burn those rooms so that you're able to, to keep people, you know, your occupancy level high. You're going to make cash flow, but you're also going to work that hard as well. Like if you're just, if you're, again, if you want to put, put a comparison out there, would you take less money for, for, for less work or more money for more work? And so that's kind of the way you look at it until you get a solid system down. Like, for example, you might put a, a house manager and something like that. Instead of charging them 700 bucks a month, you might charge them 400 bucks a month and let them run the house. Now you're able to, you know, have a little bit of freedom or time, you know, but you're also sacrificing a little bit of profit for that. But you know, again, a good, a good concept. One of the things that Katherine does is she buys mobile home parts. Now the difference between a mobile home park and a pad split is that the mobile home park, she's just renting the dirt. The people that live there actually own the building they live in.

For anybody who's interested, we have a few more coming up that people can invest in. Just gonna throw that out there. So renting dirt is the best.

Mm.

So what did the investment. Like how do you structure that look like, like how does that look like?

What do you mean?

Or, or for a project like that.

Like, if you were to, if from which standpoint?

From I guess from the investor standpoint.

So an investor will receive basically the prospectus of how much, obviously how much the park is being purchased for, if there's any money going into renovations or whatever and then the cash flow that is projected that they're going to receive and then that's the, you get the cash on cash irr all those numbers of what that looks like for you as an investor, what you're going to make and then what the exit plan is and the exit timeline on, you know, what that, what that park is going to do.

It's typically structured as an LLC and it can be one of one of like three different ways. It can be a syndication member managed llc, it can be a manager managed LLC as well with a dedicated principal to that. So those syndications and you can look those up, you can learn more about syndications by asking Deal Hunter to tell you about those. There's also crowdfunding option. It's a 506B that's for non accredited investors and then there's a 506C reg D which is for accredited investors. And so those are the three possible most popular ways to get into those types of investments. But it's all dependent on how the fund manager sets it up and establishes the way that they're going to manage, you know, manage the asset.

So is it why, why do you structure where you raise a fund to purchase it rather than getting a loan from a bank? What's the.

No.

So you.

We do have loan, we have debt and equity inside of a capital stack. So there's multiple things that come to a capital stack. So there's your debt, there's your equity which is where your investors come into play. And then there's your tax breaks and tax benefits as well. So there's multiple layers to this. So yes, there's debt and if we could get 100% of the debt, technically debt long term is cheaper than bringing investors in. And given my whole philosophy of leaving every person, property and community better than we found them, we structure it in such a way that investors can come in so that they can have the benefit of the passive streams of income from that. Again, it goes with my investment philosophy of why and how I do what I do. So if I can bring as much many people along with me as possible on the journey because there's more than enough profit in there, I'm happy to do that. I don't have to. There's, you know, this isn't a have to thing. This is a want to because of, again, my journey of creating multiple streams of passive income to deal with, you know, mitigating the five Ds, death, divorce, diagnosis, downsize, being dumped by creating those opportunities for families to have those passive streams of income. That's another way of us leaving every person, property and community better than we found them. Does that make sense?

Yeah.

Yeah. And it's one of those, like, it's. This is a who, you know, not what, you know, opportunity for you to be a part of these deals. Because this isn't put out to, you know, just anybody everywhere to be able to invest in these. So this is where those relationships really, really matter. So remember when I had you read Tony Robbins, the holy grail of investing.

Yeah.

And he said, where did the billionaires invest? Well, it's private equity. This is private equity.

Yeah.

So it's not like you can go and.

Yeah, but one of the situations where you would want to use just. Just equity and not debt is where you can't get debt. So an example of that would be a. On a distressed property. So you got a hotel that burnt down. The after repair value is $2 million, but the property as it sits is only worth 400,000. You're. There's not going to be a bank out there that'll lend you money on that. There's no equity. So what you have to do is you have to create that through say, for example, like a syndication. You're going to say, we need to buy the property at 400,000. We're going to fix it up for another million and make it worth one. You know, we'll put 1.4 million into it, and at the end we'll be able to get a loan then because it'll be fixed up and look pretty and the after repair value will be, you know, $2 million. So the way you do that is you get together a syndication, whether that's friends and family or a group of personal, you know, a group of people that you know personally that are into investing. And you're able to put together a fund that is either 400,000 for the acquisition or 1.4 for the entire project. And everybody puts their money together, they put it in the bank, and then they turn around and they. They collateralize that 1.4 million and they'll take a loan to do the project. When they get done with that project, they can then refinance it for the 2 million because it's worth 2 million, and they can pay off their debt and pay off their investors. Does that make sense? Yeah, so that's, that's a creative way of doing a deal. That's, that's almost undoable because not every deal is going to have cash flow and be perfectly bankable for the bank to be like, oh, yeah, here's a, you know, here's a, here's a loan. Do what you want. You know, so sometimes you're raising money before you get the deal, sometimes you're raising money after you get the deal. And typically if you're doing it after you get the deal, it's because you've got debt on the property or you've worked out a deal with the property owner to be, to be the note holder or be the one carrying the debt. But that would still be considered a debt model when you do creative financing with the seller. So.

So it's almost the top of the hour. I've got a call. I have to be on in one minute. Do you want to wrap this up for the day?

Yeah, for sure. I appreciate everybody coming in and just going to close out with a real quick prayer. Heavenly Father, we thank everybody and everything that has come together today to put this wonderful meeting together. We are appreciative of your, of your abilities of bringing people together that, that are able to help each other. So we want to be able to go from here and do your will. Give us all the strength, courage and power to do so. In your name we pray. Amen.

Amen.

Awesome. Well, we'll be back tomorrow. I hope everybody has a good rest of your holiday today on, on Labor Day. But we'll be back tomorrow with residential deals. Wednesday is going to be some commercial work. Thursday's going to be our land and industrial. And then Friday's Catherine's day to talk all things opportunity Zone. So we'll see you all tomorrow and. Or later on this week. Have a great day.

Bye.