EP 46: Private Credit & Pilot Training: Investing Beyond Wall Street | Brandon Martini & Madhavi Jain

One last thing, and it has nothing to do with my company, has to do with private credit. And private credit is this new asset class that people aren't understanding because they're not diving deep into it yet. And it's never been available to accredited investors.

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Before we go ahead, just a little bit, 2 cents from my lawyer that this is information and education purpose only. If you want to engage with any of our guests, including Shauna, please do your own due diligence. And I am not particularly a financial, legal or tax advisor or investment advisor. So please seek your own team and maybe Tashana would be one of that team members. Right. And also we, you know, we'll have some examples for educational information purpose only. So keep that in mind. These are point in time. These are not representative of any real information. Hey, hey, hey. Welcome back to another episode with Think Outside the Stocks. I am your host and we have Brandon Martini here today with us. Hey, welcome Brandon, to Think Outside the Stocks podcast.

Thanks so much for having me, really appreciate it.

Of course. And Brandon is from Stratus Financials and it's a very interesting topic that we're going to discuss today. Do you ever wonder what part of your portfolio could take a flight, pun intended for our investments today beyond the bond yield grind and the equity roller coaster, and steer you towards something more grounded. Like literally more grounded. Today we are exploring a niche within private credit. Yes, private credit that connects investors capital to a real world training, creating both income and impact. So we will unpack how funding pilot training, which Brandon here is specialist of. Yes, aviation can be structured as a disciplined, asset backed private credit investment. This isn't your typical Wall street version of private credit. It's a targeted, purpose driven approach and could inspire a new way of diversifying your portfolio. So listen in and Tune in. Brandon again, welcome to Think Outside the stocks. I always like to do my introduction of my guest with three fun facts. So we're going to talk about the three fun facts about you. First of all, from cockpit to the credit desk, it's a quite interesting journey that you have. Brandon here. You hold multiple pilot and instructor ratings. I would love to jump into those ratings and you know, certifications that you have. You also have. The second fun fact is the flight school routes you built and ran a Part 141 flight school, gaining deep insights into the cost and the challenges of the training. And that's why probably you are here. You are mentor at heart and you co founded the aviation mentors to guide aspiring pilots beyond just funding. And one interesting fact about Brandon here is when Brandon is not flying, you know, up in the air, he's actually loving and enjoying scuba diving under the water. This, you know, two extremes. Brandon. Amazing. Amazing again. So welcome back and let's dive into this topic. I'm really excited about this.

Same here.

Perfect, perfect. So before we go ahead, right. I mean, would love to know about your background and you know, it's kind of quite two different contrary careers here. So let's talk about your financial background and your pilot background and all these certifications and you know, kind of a background that you have built up. It's almost like a story built up. So Brandon, please enlight us.

Yeah, absolutely. There's a friend of mine, he always calls me the Renaissance man because I like doing a little bit of everything. But I don't just kind of just dip my toe, I go full in. So I like you. Like you were saying, I hold every airplane certification, commercial pilot certification you can have for just airplanes. I don't have all the type ratings, there's a hundred of those, but I have all the normal airplane ones and flight instructor ones and, and now I'm working on my scuba diving stuff and, and whatnot. So I've done quite a few different things in my life and today here I am in the private credit world running a fund and running a company that's, that's almost $100 million in new loans originated and those offer small, small loans. We're talking $80,000 loans to, to borrowers, not million dollar loans like residential houses or larger. Right. So it's quite a few loans, almost a thousand of them.

Build brick by brick. Literally.

Yeah, literally brick by brick for sure. So we started out about five years ago with Stratus Financial and we built our fund Stratus Financial fund just shortly after that to basically help us expand the opportunity. Right. So it started out with my flight schools. I've owned and operated two flight schools, as you mentioned earlier today, for a long time. They were in Riverside and Redlands, Southern California. And I bootstrapped those from zero aircraft to 14 aircraft, two locations, and two separate Part 141 certificates, which are basically FAA accreditations. I took assistant chief check rides and mentored a lot of students in my way and just had an absolute blast with that business. And honestly, I could continue scaling it, but I thought that was capital intensive. So I figured, oh, I'll just go to lending. That's probably less capital intensive. That's definitely not correct. So what happened was I noticed that my bar, my students, they didn't have access to funds. It's really expensive to go to flight school. When I first started this idea, it was 60, $65,000 to go to flight school. Today it could be anywhere from 70,000 to $150,000 to go to a private flight school. And if you want to go to a collegiate program, it's 200 to $400,000, sometimes more than that. It is an astronomical high number to become a pilot. The great thing is though, if you do become a pilot, you're going to be making more than a doctor makes over the career. And there's a lot of data. I tell people, just go and Google what does a doctor make and what does a pilot make over their career. And you'll notice that a doctor makes almost 20% less in a lot of instances. Obviously there's going to be outliers on both sides of it, but in general they don't. They make a lot more. With that being said, I noticed that we, we didn't have any way to, to fund these pilots. And I would call every finance company, I called banks, I called all sorts of people, hey, I need help, help finance my students. They're like, are you accredited? No, accreditation doesn't exist in my industry besides FAA accreditation. And that is not what a bank will look at. They don't care if you're accredited, quote, unquote by the faa. They care that you have an accreditation from an accrediting body. Well, there's one of those that exists and I think only one school has gotten accredited in like five years. It's a huge lift. It's very expensive and the ROI is not there. So if you want to be a school, there's no reason to do it. Even if you can get funding. It just, it doesn't make any sense. You basically have to become a college. So it's from going and having your own flight school to become a full fledged college. There's a, there's a lot of money involved in that. Right, right. So I looked at some other ways. I've been part of a group called Entrepreneurs Organization or EO for a very long time, about a decade now. And I reached out to one of my forum mates who's also my friend, Anthony Gerasi is my co founder of Stratus. And I said, hey, own this law firm that specializes in, in private credit and credit structuring and finance lending in California. I need your help so I can do an in house, in house lending. So Anthony started off, he helped me create that product and he said, Brandon, we're not really going to do this. We're going to go bigger. I said okay, how are we going to do it? I don't have, I don't have a million bucks. He said well guess what, I just sold, sold some property or something. He had, I have the cash and the capital to, to kind of launch this. So we started out as 50, 50 partners. He had the capital side of things and I had the flight school knowledge and the business side of things. So we decided to partner up and we started Stratus, which is my flight school. It didn't quite scale as quickly as we wanted. So I reached out to five other flight school partners across Southern California and we brought them on board. We started to get some traction, we started to take flight. The puns are always intended, just like yours was in the beginning. And we did our first few loans after that we kept on expanding. We eventually created our fund that I was talking about earlier and we eventually took that and we started running out of investor funds. You can only raise so much money so fast. So we went to Wall street and we got investor capital on Wall Street. So we are one of the deals that Wall street especially a few have invested in. We've raised nearly a hundred million dollars from Wall street in institutional capital, which is really kind of the holy grail grail of, of being a small boutique lender. We have, we have several hundred million in term sheets that we've received so far and that we continue to receive. And we've done all of that while still holding on to our operating company, which is fantastic. Most people give it up by now. They, they take on private equity or something like that. And we've decided not to do that. It's not something we will be against in the future. But it's something that we've been very cautious and aware of because when somebody else is your maker, they get to make all the decisions. And, and basically it turns you into having a very, very expensive boss that you need to report to. And that's not, that's not my gig. So we've done that. Now we're in, we're in 36 or 38 states or territories in the U.S. and like I said, we've done about 100 million in loans. And, and we work with over 375 flight school partners across the U.S. so we've created a very large network and it's, it's been fun growing this business because it just like your, your, your podcast name is Think outside the Stocks, you have to think outside of what's normal, right? You can't just invest in stocks, you can't just invest in real estate, you can't just invest in bonds. You need to diversify and, and see what's paying well in different places. And, and that way you're not stuck when we have the next economical downturn. Right? Diversifying it, it really helps out.

Love that, love that. Phenomenal story, Brandon. I, you know, really admire that. You saw a problem, you saw a niche and you kind of built from there. And I'm sure you're looking back, it's a, you know, it kind of looking back at the business, it's not too many years that you have been existing, but what you have done in this period of time is incredible. And you know, just starting the journey from being a partner and, you know, now institutional capital, there's so much to kind of layer by layer until there, so let's dive deeper into it. But before I go ahead, you know, listeners, we are, you know, education focused. This podcast is education focused and we are talking about a completely different niche and we will try to identify step by step, learn different aspects of it. Keep it in mind that this is not an investment proposition. This is not an investment offer. And if, if you need to invest in this or any of it, please do your own due diligence thoroughly and consult your lawyers, tax professionals, financial advisors, whoever you want to consult with. So Brandon, let's jump back into it, like peeling the layer by layer of this onion. Let's talk about for our listeners sake, because our listeners are passive investors. This diversified asset class, especially outside of the Wall street roller coaster, they're a little different. For them, we talk about the private credit and we also talk about the institutional capital. Why institutional Capital, such as family offices is interested in private credit and that becomes one of the biggest kind of chunk also in their portfolio. So with your financial backgrounds, let's talk about what private credit is. If you can explain in really layman's term for our listeners.

Yeah, sure. I mean, yeah, I could go very deep into what private credit is or what private credit is to certain people. It's different for bankers, institutional investors as well as accrediteds. Right. So what private credit looks like to me it just looks like an alternative investment where you're not using a traditional asset as your collateral. So for example, we go to the ABS markets, those are asset backed security markets to get capital. Right. When, when I talk to most investors, they think of an asset as something they can go get, go touch. I'm looking outside, I'm in Newport beach right now and I can see buildings everywhere. There's somebody who owns a building or an institutional player who owns that building. Right. So they look at that as that asset. But I'll tell you, there's a lot of institutional investors as well as accredited investors who are having a really tough time right now in the real estate market. And although it is secured by this piece of real estate and the building or the, or the land that it's based on, it doesn't mean that you could fill that building up with tenants, especially in the commercial marketplace right now. Right. So many people still working from home. So point being is, I think that private credit is something that is different than the normal asset class that you're looking at. It could be anywhere from my type of product that I have to. I know there's attorneys that need to finance their invoices or it could be businesses that need to finance their invoices or loan small, small business loans that you can obtain from, from different places. Because if you notice banks do not lend money anymore. You think they do. Banks only want to lend money to people who don't need it. Banks want to want to lend money at very low rates, which is attractive, right. But they want to give you a line of credit for 2 million or a million dollars or even $100,000, whatever it may be. They want it fully secured and basically with cash in the bank. And that just doesn't make sense for most businesses. They need growth capital. They need somebody to take a little bit of the risk with them. Now that risk needs to be aligned, obviously. So you need to have some skin in the game on, on, on, on these, these private credit deals. But banks are not lending anymore. So the Only way to fill that void is through the private credit markets. And I would say the reason why you asked about family offices a few minutes ago was why are family offices investing in private credit heavily? What do we notice? Most family offices are very real estate heavy and that's the reason why I mentioned that earlier. They need to diversify. They've already done it all in real estate. They need to go do it in other ways. They need to go around the world and go into other marketplaces or they need to go into different asset classes. You can go into an asset class as interesting as a credit card, right. You wouldn't think you go invest in a credit card. And the answer is you can, you can invest in, not necessarily like paying debt for a credit card, but you can be an investor in a very large fund that has a credit card fund. That's something that no one ever thinks about or no one talks about or something like mine or something like the, the business loan stuff. That's all private credit. That is getting the void filled by private bankers that banks have left wide open. And I don't know if that's going to get solved anytime soon except for by the private bankers in Wall street and people like me.

Yeah, yeah, I love that. So there is a need kind of soaring at one end and there's, you know, the bankers just backing out. They don't want to loan these people. And that's where the private credit kind of fills that gap, kind of creates that bridge. But when it comes to investments, and by the way, you know, I'm a big proponent of diversification outside of the Wall street. And we do it with, you know, my investors, I bring in, in the real estate investment deals something that as you mentioned, can, somebody can touch, actually feel. Right. So different commercial real estate, apartments, self storage, etc. In my fund. So what I look for is risk manage, right? How do we manage the risk by the securitization that there is an asset that's behind it? You know, we can actually, if something happens, of course, if we can take that asset, it has a value and you can recoup that, that investment. So what is in terms of the risk managed approach of what you offer here and the securitization behind it, can you explain how do you mitigate that risk?

Yeah, like I said, we're considered a asset class in asset backed security, just like real estate would be. The difference in real estate and U.S. for example, is besides having that one building, most deals, real estate deals are one deal per fund or if you're in a customizable fund, then you can have multiple deals, but they're still in a deal. So if that deal goes bad, you lose your per se. Right. Now if you have 10 deals, sure, you can play the averages, that's fine. Well, what happens if you have a thousand deals or 10,000 deals? Then, then the diversification of that is it's a lot more spread out. So it's the same thing we do with our loans. Sure, we're making, we're making individual loans and there's no asset on the back end of that. But during our due diligence process, or underwriting, for lack of a better word, when we're underwriting the borrowers, we're looking for their assets. And if they're in a non homestead state, that means we can attach those assets in court if they default. And there's a reason why we have an 83% collection rate on our defaults, which makes it so. Only I think it's my last report I looked at was like 1.3% loan loss rate, which is incredibly low. And that's because we identify hard assets that we can go after that they might have outside of that. Because not every borrower has that right. You want to diversify with the number of loans you do. So if you've got a thousand loans, okay, sure, 8%, 5% can go bad. You need to make sure the economics work on that. On that side of things, which they do, we borrow our money from Wall street or we borrow our money from independent investors or accredited, etc. And we're able to cost, average that, that, that dollar and then lend it a higher dollar amount and make that delta in between. Besides that, I know from my background in flight schools, hey, this is the way that a student's going to progress. And if they're not progressing in a program, then I'm not going to pay for it. So for example, if you go to a traditional college, you're going to pay whether you pass or you fail your class, Correct? Right. Every, every semester you're going to pay another 2 grand or 5 grand or 20 grand, whatever it may be. With our model, we pay based on the student progressing in flight hours. You can't fake your flight hours, it's illegal. I mean, you probably could. We have some checks and balances. We, we check. But if you do that with the FAA and get caught, you're going to prison. So it's not just fudging some numbers. It's legitimately important. So we look at their flight hours. And we make progress payments based on that throughout the entire loan. And in a lot of states we can actually charge interest on that amount that has already been pre disbursed into, into kind of their account, so to speak. Some states we're not allowed to do that. We actually have to disperse the funds before we can charge interest. But we, so we can actually make a really high whack on that. I mean we could be, our cost of capital can be as low as, I don't know, between 13 and 16%. And we can actually be making these loans with the weighted averages. Almost 30% will be our weighted weighted averages on these interest rates for these loans. So we're making that entire delta of what, almost 15% on each loan. And obviously that goes down over time, but that's, that's the way that we've stayed attractive and we've lowered our risk overall. Hope that.

Very, very systematic. First of all, you know, having this, the low percentage of your default and then collections, if there is any default. The 83% that you mentioned, I think that's, that's an incredible, you know, in your thousand plus loan portfolio, it's an incredible amount of kind of managed risk. So thank you for sharing that. With that, I do want to talk about, you know, when it comes to real estate, typically we have, you know, a down payment or the, the capex or the renovation money. That's typically the capital raises and they go in, put in some loan from the banks and you know, create that asset. Is there any le leverage involved when it comes to, you know, the loans that you're providing or when you get actually invested capital, it directly goes to this loan for the students.

Yeah, so that's kind of all answered in two parts. The borrowers themselves do not have to put a down payment, but do not send the money directly to the borrower. We send it to the flight schools who we vetted and we've actually underwritten. We have an 86 page underwriting manual just on the flight schools themselves. We also have a large underwriting manual that's been vetted by a multitude of institutional investors on the, on the borrower side and we have our own scoring model, etc. But on the borrower itself, we send the money to the school. So if the borrower ends up dropping out after they've only spent $5,000, the school legally has the obligation to send us back the cash. Oh yeah, so if we distributed $20,000, they'll send us back 15 grand. And now we can just pay down that borrower's loan, they've defaulted or whatnot. So that's how we've kind of mitigated that risk for the borrower and why we don't really request that down payment. We're not sending them the money. Doesn't matter. Second thing that you asked was, do we leverage our fund, so to speak? And the answer was yes, we do lever the fund. When we first started out, we were levering at almost 20 to 1, which is really high leverage. And as we've gotten more investor capital, we've lowered that substantially. We're about at 4 to 1 now. So if I'm just going to use whole numbers, these aren't real numbers, but whole numbers. We've raised 25 million in the fund. We're able to get 100 million from a large investment banker. Right. We've got that four to one there. And that's kind of where it's been landing lately. Our goal is to be at a 5 to 1 ratio and we think we'll get there.

Thank you. Thank you for explaining. It's kind of a little bit difficult tidbit, but I think it's important to know. So once you have these loans, and I mean, I'm just thinking in back of my mind the mortgages and how typically the mortgages will get placed in and there's a secondary market for it. So do you play in that secondary market? Do you group these loans and kind of sell it in the secondary market as well?

Yes and no. So in the beginning we grouped up our first like seven or $10 million worth of loans and we sold them to a, a community bank. So we created our own secondary market because it didn't exist. There have been some other lenders that have similar loans and they've went to the securitization markets and they've taken pools. Same thing they do with mortgages. If you, if you have a big mortgage shop, you clump up 100 mortgages and you sell them off to a large investment bank or an endowment or something like that. That's been proven out in our industry already. We have not done our first securitization yet. We've been doing it on balance sheet for now. So we've been holding these loans. We are working on our first securitization right now. As you know, you need a large pool of loans to be able to do a securit, of course, and securitizations are not cheap. They cost about a million dollars just to do the Securitization. So we're about to go through our first securitization, hopefully coming very, very soon. I was actually in a meeting talking about the securitization actually right before we got here. So we are forward on that, on that secondary market, on selling those loans. And there's already been buyers identified. So once we do that, we can sell off those loans, rinse and repeat that capital. And that's how we get liquidity for our investors. It's also how we get liquidity our large warehouse lines of credit that we've gotten off of investment bankers. And yeah, it's a, that that's how we're, we're going to be getting rid of those loans. There's also some other ways that we can do it that we haven't done yet, but we've opened up the opportunities. And that's with, that's with like credit unions and just people who would want to buy those notes. Right. Even on the defaults, there's somebody who buys default notes. There's probably some distressed buyers that listen to your, listen to your podcast. They go buy these notes for pennies or quarters on the dollar. Right. And then they go collect on them in a very creative way. And we can do the same thing on our side.

Love that. Thank you for that clear and concise answer. It's, it's again, it's a little complicated, but, you know, thank you so much for that. Let's step back a little bit here and talk about the impact of it. Right. It's actually quite surprising for me that, you know, there is this, you know, whole system that exists, which is, I mean, of course we have used that to find my daughter's education, that there is this, you banks, you know, private banks who are very specialized in the student loans and you know, you're offering as a private market. Right. So are there any institutions who can actually, you know, lend these students? And of course that, that's probably a reason that you saw that pinpoint that there's, you know, it's not that easy to lend it. So why really, you know, are they not lending and why is there is a, that increased need and demand for these loans for the pilots? And I think you have mentioned before as well that you have probably more people lined up to take loans than the investor capital that's lined up with you. So why is there like such a huge disparity between this demand and supply?

There's a ton to unpack in that question or multitude of questions. So I'll do My best to address them. If I miss something, just let me know. But let's, let's go with the competition in the marketplace right now first. So there's really no one in the marketplace that does our types of loans. There is one other player and that's Sallie Mae. Most people have heard of Sally Mae. They were quasi public many, many years ago and they went private. Most people don't know they're private now, but they are a private lender just like us. They've been around for 30 years or 40 years, so they've gotten huge. There's another one called College Ave. They don't play in our space, but they are, if not the largest, they might be second largest. They're either before or ahead of Sallie Mae. And they're called College Ave. They're, they're a fantastic lender and they're out there playing in the higher education space. People, 30 years ago or 20 years ago, when our parents would tell us, hey, you need to go to college, that's the way to do it. You need to get an education, there was no, I don't want to go to college. There was, you're going to college and this is what you're doing nowadays. For example, I have this conversation with my son. I've had this conversation for years. He's 14 now, he's going to high school in two weeks. And I said, austin, there's no reason for you to go to college unless it's a specific degree that is required for you to go to college. I hear more and more people with all the AI stuff going on. Well, AI might transform or you don't need to go to college for most instances. And I'm fully agreeing with that. To be honest. I've never been in the camp of you need to go to college. You only need to go to college if it's going to further your career because there's no reason to go take on a whole bunch of data. So I think that higher education is fully broken one. It's way too expensive for what you get out of it. If you have a degree, all it is is a piece of paper nowadays. This is my opinion, obviously. But I'll tell you this. If somebody comes in and they've got a bunch of experience even being a teenager and have experience in my industry versus has a college degree, I'm not taking the college degree person. I'm going to take the person who has the know how and has done it. And, and I think that's most people I would prefer you with no degree now I don't have to make you unlearn everything. So with that being said, I think higher education is broken and higher education lenders are still making money hand over fist. Private and public lenders. Public lenders are allowed to do it very cheaply. It's like 4% because they're insured by the federal government and private lenders are still making a ton of money doing that. So there's really no reason for them to change their model to go after smaller types of schools, smaller dollar amounts, and not change what their accreditation metrics are. So like I was saying in the beginning of the podcast, you have to go to an accredited school to get cheap money from one of the nationally renowned lenders. Right. It doesn't make sense. If I own five airplanes, which is basically between 500 and a million dollars worth of assets that I've, I've bought and I put a couple hundred thousand in loans on those, on those assets, and I run this small business with five people for me to go spend hundreds and hundreds of thousand dollars to get accredited through a major organization and there's no even guarantee that I'll happen for me to get that cheaper money. It's probably not going to. So these big lenders need to change their models. Hopefully they don't gives me more opportunity. Right. But if they're going to be competitive in, in the world, in the changing world, they will have to change drastically or they will die. My opinion is they're too big. They're not going to change drastically or quick enough and they will eventually fail to companies like myself or others. So I think that's why there's a big opportunity for basically loans that are not traditional colleges. And that's what we're doing. I happen to identify a niche with pilots in particular because of my background. But there's a lot of other industries that do this, right. That this help. And with the pilot side, there's a pilot shortage going on. We don't hear about it as much now. It's been alleviated slightly in North America, but around the world it's huge. It's still going on. We still need more pilots than ever. And the reason why is global travel has skyrocketed. I mean, people want to go travel again. Covid made two things happen. One made people not travel. Okay, so sorry, the lights just went off.

There you go.

Covid did a couple things. It made it so people weren't able to travel and, and that made it so people got laid off from airlines, right? Well, airlines had to go higher again after that. Well, they also forcibly retired people. When you forcibly retire people, they're not coming back. You also cut out a year or two of people who are in training to go become an airline pilot. Well, they all had families or different things. They're not going to just go to become a pilot still. They had to go make money. And then on top of that, all the baby boomer generation at 65 years old, you have to retire being a pilot. There's no continuing to work as a commercial pilot. So with that trifecta of problems, it created an issue. And an issue was there weren't enough pilots. Well then, okay, how do we get more pilots? Well, you got to increase the pay. So they did, they increased the pilot pay. So starting out pilot pay at a regional airline started to be about 100,000. Now it's in the 90s, 90 to 95,000 starting pay at a regional airline, which creates a great opportunity. You go to school for eight months to 18 months and within three years you go get a job making almost 100 grand a year. And at the end of your career you make more money than a doctor and you only work seven days a month. It's unbelievable. You have a bunch of side hustles. You can be rich. And this is that we identified and that's why we're here. Besides that, you can look up Boeing reports, Boeing reports the pilot shortage around the world on how many pilots we need. And I would urge anybody to go look up Boeing Pilot Report 2025. You just look it up on Google and you can find out the exact numbers. But I think it's like 640.

That's my homework today.

Yeah, you should. It's amazing. So I think that was about most of your answers on your question. But I don't know, that's why I said it was a very complicated one.

No, no, that's again I, you know, it's a, it's a clear and concise answer. Again, it is a complicated topic. We kind of have decided to, to dig into a complex topic. But you know, amazing clarity. I must appreciate that. But with that, you know, let me ask you from the student side, you know, who impacting when who you are impacting. So how does the outlook look like by the way? I love that, you know, you have, not only that the money goes directly to the flight schools and you also have kind of milestone check and then based on the flight hours you kind of dispersing the next and next Payments, it kind of manages that risk. But when at the receiving end of these pilots. Right, typically how many years do they have, you know, officially to pay off this loan and what used to see, typically how much time are they really taking to, you know, pay off these loans?

Yeah, it's a great question. So we have between five and seven different loan products and it depends on what state you live in, it depends on the loan amount, et cetera. The average tenor of our loans, when you look at most loans are either 10 or 15 year notes. The average tenor, the last I looked at it was between 12 and 13 years. Because of the credit mix. Right. Or the, the loan mix. But then when you count in early payoffs, we're getting between eight and nine years for an average loan to. Or average tenor for loans to pay off. Because there's people paying off $100,000 loans in one to two years. They don't want to pay our high interest rate loans. They want to go refi em, which is fantastic. Please refi em after a year or two years. It works for us. It works really great because now we've gotten back our capital, we've gotten back our principal, we've made our fees, we've made our interest and now you get a lower interest rate with somebody else. We were able to give you that loan. You were able to prove it out and now you can refi us out, which is fantastic. So we've actually had over 10% of our loans pay off early. Almost $10 million in loans have paid off early. So when you calculate that in, it's getting sub 10 years, like I said, between eight and nine years is kind of becoming the average. And every month we're getting more and more payoffs. So I'm thinking, I don't know for sure, I try to model it out, but you don't know what the borrower sentiment is going to be in a year or two or five years. But I'm guessing it's going to end up being around seven years as the average tenor for these loans. But people are paying them off and paying interest over those or over the. Sorry, paying principal over that time. So they're really getting paid down quite quickly.

Yeah, yeah, I love that. So it's really that, you know, that tight spot when they're wanting to get that education but don't have the money, there is no credit that's getting, you know, assigned to them. That's the tight spot that you're trying to address so that they can just get through, get their Education, get this high salaries, I mean demand is high, the salaries are high and start paying it back or refinance it. And, and I love that, you know, when the capital gets released you actually can take that capital and it's not just using it for the new loans, but this is using for a new person to impact that that person's life again because now that person has the same problem that he's not getting that credit. So love, love this model. You know, with that, I mean I can really talk on and on about this topic, my favorite topic about investing and deep dive into it. But we are almost to the end of this segment. Is there anything else that I did not cover or did not ask you the answer for that you would like to just, you know, to add about it? And of course we will go, we have two or three extra segments here to the show. But is there anything else that I did not ask you or we didn't cover that you would like to talk about?

One thing a lot of people ask are, are what are the graduation rates and what are the percentage of borrowers who have co borrowers or co signers? And the answer is over 86% of our borrowers have co borrowers or co signers. And I don't know the exact number but I think it's like 20% of them have more than one CO borrower. So we really go after these, these borrowers and make sure that we can collect on them. And I think that's why we have such a high collection rate on our defaults because we have, we have other ways of going about these, getting back our money on these loans even though they don't have a traditional asset. I mean if they were in a, in a single family home, I would have to take six months to 12 months and, and foreclose on their house and get judgments and all these things. And with our, with our model we can do it a little bit differently. We can go after some, some other assets besides just that home. But outside of that our graduation rates are very high as well. I don't have the number off the top of my head, but out of fully funded loans within six months they're like 90% or something like that. And that's on the contrary of what most people see when they look online. What is the attrition rate of a pilot? And the attrition rate on a pilot takes into account everybody who just wants to go become a pilot, right? Let's just say my parent next door, he's 50 years old and he says, hey, I want to go become a pilot, because I think it's been really fun and sexy thing to do. And. And he starts and realizes it actually takes work and effort. And he's like, I'm done. So now he's a dropout statistic. Right. But that's not who my borrower is. My borrower is somebody in their teens or 20s or early 30s and wants a career change. One of those types of people that are going to take the time and dedication and if they have the funding, they're going to finish. So that's kind of how we look at it. We look at these borrowers as, hey, we're funding their careers. So we, we like to say we're funding people's futures, because we are. And we also say we're for pilots by pilots. Me and Anthony are both commercially rated pilots, and I happen to be the instructors, et cetera. So I think those are two things that you didn't work on. But I wanted to mention. But I also wanted to mention one last thing, and it has nothing to do with my company, has to do with private credit. And private credit is this new asset class that, that people aren't understanding because they're not diving deep into it yet. And it's never been available to accredited investors, which I'm assuming that's a lot of your investors. It's been available only to people on Wall street or investment banker to investment banker. And then it started out getting. Becoming available to. To family offices, and now we're seeing it trickle down to accredited investors and really just have to really look at these deals and ask all the questions that you don't know to ask and talk to your friends or family who have done other types of deals like this and put some faith in some new types of asset classes rather than just real estate or just stocks or just bonds, because there's a reason why Wall street kept it away from everybody for so long and a reason why it's taken so long to trickle down. And it's because they didn't want to tell everybody their magic sauce on how they're making so much money. And today is the day where you can get substantial returns for pretty low risk in general.

Right? Love that. Love that. Absolutely. I think, you know, the think outside the stocks and think outside the box, that's kind of a mindset that you have to look into here. But with that, thanks. First of all, thanks for adding that, you know, the graduation rate, that's really important. And also that aspect that it's not just an overall pilot percentage that we are looking at. We are looking at students or career changes who are really, really interested in getting the pilot as a job because you know, man, the AI taken over the world with a, with a really, a bit tsunami and the jobs, you know, that are not going to get replaced but pilot probably that's one of the, you know, most important jobs that will not get replaced completely by AI. So kudos and you know, congratulations for what you have achieved so far and kudos for continuing to impact this, you know, this young candidates lives just one candidate at a time, one student at a time and getting their dream to soar high, you know, to get that completed. So I really recommend that. So with that, you know, we are moving to our next portion of the episode which is my, one of my favorite too. And you know, we think outside the stocks. I actually love to talk to our guest and you know, incredible amount of experience and expertise. I see. I very grateful and fortunate to meet people like you every day with this show. But I'd like to ask that when it comes to your personal portfolio. Right. And my focus, we think outside the stocks is not just about investing or passive income or financial freedom. I want my listeners to focus on, you know, growing, preserving, protecting and passing their generational wealth. Kind of an eagle's eye perspective. So with that, you know, would love to ask you that, you know, you, Brandon, how do you think outside the start and you know, how do you create this almost like a vault for your family's wealth as you're adding more and more to it and what's the checks and balances and diversification that you apply?

Yeah, absolutely. So first off, I, I invest substantially in my own fund. I have nearly a million dollars in my own fund. So that's where I keep a lot of cash, obviously. But I look at all sorts of different things. Everyone was calling me an idiot for, for buying gold and silver two years ago. And I kept on buying it. I had it delivered to my house every week. I would buy more gold and silver. And now gold and silver has outpaced some major stock indexes and it's sitting and I could go sell it for spot or even less than spot and make, make a ton of money. I also look at very different asset classes. I buy wine, I'm really into wine. I so I, I collect wine that's also an investment. There's this company called Vinovest. You could, you could actually invest in buying wine and they store it for you, et cetera. So I do some stuff with that. You can also do whiskeys and all sorts of things. Fine art has also been kind of a hobby of mine. I've got some great pieces at my home and I also have some fantastic pieces that I've co invested in that are million dollar pieces like Kusamas and I even invested in a Banksy. So there's different things that I do with that. I do have some stocks, I do have some bitcoin, I do have some alternative investments with real estate, oil and gas. I've looked at a whole bunch of times I have not pulled the trigger on but I've thought about it for the, for the tax benefits. Although with the new big beautiful bill, I think those might be going away now. So that might be less to look at. And then I've also done some investments where you invest in a business that has real estate property for the tax benefits. But really I like the income and I normally pair the income with a tax benefited investment in addition, that way I could save the taxes and make the money on, on both sides of things. So that's how I diversify. I am one of the most diversified people you could ever meet.

I was actually gonna say that, that you know, it's a really different set of investments and asset classes. Kudos, kudos.

And then I also have, I have my normal, I have rental properties, things like that too. That's are those are different but. Or the same. They're one and the same. I really don't like having all my eggs in one basket. I've got my biggest eggs in Stratus and the fund. But why just be beholden to one thing. You might as well diversify and make some money all over the place. And I'll tell you, all of my investments have made pretty good money. I can think of only one off the top of my head that has been kind of breaking even but it has a good future. So yeah, that's where I'm at.

Love that. Thank you so much for sharing. I'm sure that listeners have a lot to learn from that. Thank you so much. And with that, you know, I'd like to, before I go to the last round, which is a rapid fire round, which is the most fun round by the way of the show, I would like to know, you know, ask you that, you know, if our listeners wants to get in touch with you both for, you know, taking the loans and to know more about, you know, your investment option, how do they get in touch with you?

Yeah, absolutely. If anybody would like to get in touch with me, you can reach out to me via email. It's Brandon Stratus Finance. Or if you just want to learn more about the fund, you can go to stratusfinancialfund.com. obviously the website for, for the OPCO is Stratus Finance. And then you can also find me on LinkedIn. Just make sure that you reference where, where you heard me. If you heard me on the, the podcast, make sure you put heard you on the podcast or something. When you had me on LinkedIn, it's just Brandon Martini, I'm I think the only one on there. But if I'm not, I'm definitely the most handsome. So just find me there.

And I think that's a qualification to become a pilot.

It is. Yeah, yeah, that and you have to have a beard, I guess.

Oh my God. Yes. True, true. Absolutely. No, this is so much fun.

Of course, right?

Of course. This is so much fun we are already having. But you know, I'm gonna ask my rapid fire kind of questions here, which is unfortunately the last bit of our show today. Are you ready for that? That rapid fire?

So let's do it.

So, so first of first question I'm going to ask is a very interesting question. You know, you talking to you have realized that you, you are in a very short period of time a very well achieved person. And my first question, interesting question to you is that you know, of course there has been, you know, recognization about that. So let's talk about what awards and what recognize recognizations that have you received. I think you're truly, truly I you know, feel from the heart accomplished person. So let's talk about some of those accolades that you have received.

Yeah. So actually as of yesterday, as of the day of recording this Inc 5000 actually came out. I get goosebumps thinking about it. We are number 113 on that list. We barely missed the 100 and I think if they would have had our financials closed in time, like fully closed and we probably would have been a little bit higher than that. But still it was, it was amazing. We got 113the past past two years. We got fastest growing small company in Orange county, which is Southern California. We're located in Newport Beach. So we got that. I won entrepreneur of the year In I think 2021 for small business business business to consumer in the Inland Empire. And those are kind of the most notable ones that were really fun. But the Inc 5113 was really, really cool.

Congratulations. Congratulations. That's incredible. And I think probably this is the first time you're sharing this news on air. So thank you so much for. That's a privilege. Thank you so much. And congratulations. That's quite a bit. I mean, you might be thinking about, okay, you missed 100, but it's still, you know, top 150. If you had 200, you know, it felt a little bit better. But my gosh, this is. Yeah. So congratulations. That's big kudos. Big kudos. I'm sure there's some celebrations. It's on its way too. But with that, my second question to ask is, you know, what is the most. I'm sure that, you know, you get to hear back from, you know, your clients, the end users, the students. What's the most kind of emotional and kind of goosebump moment that you had when somebody came and told you that this is the impact, you know, this kind of a model that you created made on their lives?

So outside of the loans, yesterday or the day before, I got a text message and I get goosebumps thinking about this text message. I got it from one of my, my students, actually, two of my students, they were in a cockpit of a commercial airliner flying a 737 together. One was the captain and one was the first officer. And the first officer, I trained him, he came to. I put a Facebook ad out at my flight school and he came out to a free ground school and started flying with us. Over a couple years, he got his ratings. This was a second new career. He was in his late 30s or 40s, 40s already. He was, he was, he was going to change everything for his whole family. And. And he ended up sending me a picture of him and Matt. His name's Corey. Corey and Matt. And they're taking this picture together in a cockpit before they go take off on the, on a flight, taking passengers, wherever they're taking them. And they both sent me like heartfelt thank you messages telling me how much I changed their lives. And if it wasn't for me, they wouldn't be here. Honestly, if, if it wasn't for their effort, they wouldn't be where they're at. I was just a conduit and had the airplanes and I had the business that helped them get to that point. But that was truly emotional. I was almost crying in my car when I saw that. It was that cool. Wow.

Wow. That's giving me goosebumps here, Brandon. I mean, it's incredible experience with you guys.

It's so neat. And, and then I, I've gotten borrowers that reach out to us that have said thank you for allowing me to change, chased my dreams and you've changed the trajectory of my life and changed the directory of my family. We gave away $10,000 scholarship this year. Last year we gave away $5,000 scholarship. We did that just two weeks ago. The guy we gave it to this year, his name is desean. He is a aviators aviator. He's truly inspiring, wants to become a great, great pilot and I'm very excited that we were able to give him that $10,000. I saw that wire went out like a week or two ago and, and just impacting these people in meaningful ways is incredibly fulfilling for me. And obviously making money is fantastic, but doing, doing the work and making an impact on people's lives truly is all inspiring for me. It just, it makes me wake up every morning and be excited for what I'm gonna do.

Oh my God, Love that, Love that. That's where the pleasure is, you know, the money is just the out output outcome of it, out product of it. That's what I believe in, you know, believe in your impact. Believe in what literally makes you jump out of the bed every morning. And I'm so glad I asked this question. You need and you got to share this story literally gave me goosebumps too. So last question I'm going to ask in the rapid fire round is when you are not flying or you're not up in the air and you actually under the water, you know, what does that feel like? What are the, you know, the thoughts? What's that Brandon thinking? What's, you know, because this is so fast paced for you, this is so much happening. This world is just so much to manage and you have incredible superpower to manage it. So when under the water and you know, I'm asking you this because when I go underwater, of course I don't do scuba, I just, you know, but when I go under water, when snorkeling, it's just like a meditation. It's like, you know, just blocks out everything. So would love to know about, you know, your experience and what is that brand and thinking and underwater.

Yeah, honestly, I, I just got into scuba diving about a year and a half ago and, and I've started getting ratings and, and now I'm advanced scuba and I'm going to do master, I think next or rescue and then master. But I did it because I was afraid of it. I had a friend of mine who passed away in A scuba diving accident several years ago and I went for the first time time when I was on vacation and I freaked out. And I don't like being afraid of things at all. So I really did it to overcome a fear. Believe it or not, I'm afraid of heights. And even though I'm a pilot, still be afraid of heights. If you put me on the building, I don't want to be there. I know you put me in a cockpit, I'm fine. So honestly, I've tried to overcome fears in my life. I feel that they're debilitating for anybody to have. So I always wanted to get rid of those types of fear fears and learn things, learn brand new things and become every day I want to wake up and I want to be a little bit better than I was yesterday. That can be personal, family, scuba, etc. But what I've realized, which kind of full circle back to your question, was I've realized why I like scuba diving now. After I got over the fear, I got over that and I figured out why I love it. And it's because it's so tranquil. Tranquil and peaceful down there. And the best part about it, my cell phone doesn't work. That means nobody can access me. It means I don't get a thousand slack messages a day. Not really a thousand, but a couple. Nobody can text me or call me or anything. And. And they actually have mask and things. You can actually communicate in water. And I don't want it. I want to be quiet and not have to communicate. And just seeing the fish, it's just, it just is so much Zen. And just like you're saying, it's kind of like a meditation that I can get down there and it's only for 40 minutes or an hour, but it's that 40 minutes or an hour just for me. And nobody else can reach me and nobody can talk to me and I can just focus on being here and being still. And I used to be able to do that when I was a pilot. When I first started, I would have to focus so much on flying, I couldn't think about anything else. And now whenever I go flying, all I can say think about his work, because I can multitask with that now. But now scuba has taken that from me and is able to and to put me into that zen. So I'm glad you asked that question. Makes me think a little bit more about it. But yeah, it's fantastic.

No, that's, that's beautiful. That's how I feel about it because it's, it's almost like you know, turning it off something some magical thing about the water. Right. But I love you share a couple of things here that first of all, you know, you how you started. Very interesting becoming best version of yourself every single day. I can see that you are that kind of, you know, person who wants to continue to challenge and become a better person every single day. So thanks for sharing that and love, love that. Just getting off the radar and completely be yourself and actually be with yourself for in at least that 40, 45 minutes at a time. So thank you sharing for that except sharing that experience with us. And with that Brandon, unfortunately what I'm having fun and having this personal conversation with you. This episode has come to the end. I'm truly grateful for being so clear, so precise in your answers, being so open and sharing, you know, your business personal life with us and being a super powerful guest on the Think outside this dog. Thank you so much. Very, very grateful for that.

Oh I'm grateful for you having me here. So thank you again and looking forward to our next conversation. So looking forward to new people too. So thanks again.

Absolutely. Yeah. This is, you know, actually the podcast is a, is a way I get to meet so many different kind of people and have even if it feels like a recording and on air just feel that I can have such good conversation and get to know in a different level to people and you know, listeners. I, you know, I'm grateful and thankful to you as well with your listeners and your, you know, you engaging till, towards, till the end of the episode most of the times is what has put our podcast on the map and you know, recognize the top 3% globally. So I'm grateful to you as well. But you must agree that today's conversation was very, very interesting. It was a, it showed that private career is not just for corporate giants, but could be about investing in human potential in a sector most portfolios really overlook. We saw how pilot training finance can be a stable income producing niche as Brandon has provided insights into that complement your of course the Wall street roller coaster outside of your real estate and equity and other alternate holding strategies as well. And well the takeaway, you don't have to overhaul your portfolio by yourself. Sometimes a two degree shift into your unique tangible strategy can change your entire trajectory. And that's what we focus on to focus on changing that financial trajectory of one family at a time and thousands more to go by making that 2 degree change. So thanks for tuning in. In another episode of Think Outside the stocks keep exploring these overlooked and out of the box, out of the stock opportunities that are designed to last. Thank you so much, Brandon, again, and this is an incredible resort. Thank you.

Thank you. Have a great day.

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