Brandon Turner's $15M Loss: And More Losses to Come???

I am a risky person. I do these big things. $700 million in debt right now, something like that.

The only way to save the real estate deals are if I can build and sell one of my other companies for $50 million or more. All right. Welcome back to Multifamily Strategy. I'm already fired up. We just decided to hit the record button because we were getting so excited in the pre-episode. Michael's like, dude, hit record. So we're here. You guys are mid-conversation. We're talking, we're talking syndications. We're talking the Brandon Turner situation. And so I always, I always want to start this out being fair. I started real estate. The first real estate book I read was Brandon Turner's book, and I still like the book. And honestly, I really like the way that Brandon Turner started out his investing. Cash flowing real estate, secondary markets. I mean, granted they're Washington State, which I left, but he started on solid fundamentals, solid operations. Mom-and-pop investor did some great work with BiggerPockets. I, that was my favorite era of that channel. So I'm going to do the kind thing here. And we're going to start with the positive because honestly, most of the rest of this is probably going to go downhill from here.

Brandon Turner, as many of you know. Yeah, I'll even go deeper, right? I have a longer history with Brandon Turner. I knew Brandon Turner as an intern, right? That's how OG I am on BiggerPockets, right? I was interviewed by Josh Dorkin in his basement in Colorado. I was like interview 65. I wrote for BiggerPockets as a featured writer once a week on their personal BiggerPockets podcast. I was a speaker at the very first unofficial BiggerPockets event in Denver. I flew in from Asia to speak at that event. I have a, I have, if you, if you're a true OG, Josh Dorkin gave speakers a shirt that I'm sure nobody remembers, but it says on the front, mine are bigger than yours. And on the back it says pockets, bigger pockets. Again, it's kind of a double entendre about, you know, Mine are bigger than yours and then, you know, pocket. So again, I got some OG history and yeah, I remember Brandon Turner coming as an intern. I remember him completely disrupting the blog to the point where I left. I hated the man. He and I spoke decades later and we kind of realized that frankly, 95% of the problem was mine, not him. So, you know, it is what it is. I held a grudge for a long time simply because I was wrong. Um, but yeah, I, I've known Brandon a long time and what I will say again, starting on the positive is I truly believe over the last 2 decades, certainly the last 15 years, no single human being on the planet has gotten more people excited about real estate investing than Brandon Turner. Absolutely. He is the cra— he is bigger than Rich Dad Poor Dad in the last 15 years. If you wanna go the last 30, Rich Dad's probably got him. But the last 15, I think Brandon's, I think, and again, part of the reason this story is building momentum is it's the guy we all looked up to, the golden child, the guy with the Midas touch.

Yes. And the longest beard. Yeah. He did such a, he just did such a good job and he told the story in such a real way. I think it's what related on the podcast and that voice carried through in all of his writing. So he'd put out books and the books were just fantastic. In fact, I loved what he did with The book on rental properties. I love that he could say he wrote the book on rental properties. That was some of the inspiration for why I wrote the book on creative real estate is I was like—

I see what you did there.

I see. I was like, that's a genius. I have loved that since I read it. I'm like, that's the best branding. And so when I was choosing the name, like, please, please, please tell me that that name's not taken anywhere else.

Please be available.

No one else has wrote, no one else has written the book on creative real estate. So I was like, haha. So that is, that was inspired by Brandon. So, he did a lot of great things. I think great things for the industry, great things for the community.

No question. Let's talk about this. So, so one more, one more thing. Like, again, I've been lucky enough to know him a long time. He and I kind of squashed, you know, squashed the beef again, 95% my problem, but his superpower, I think all of us have a superpower. I think most of us don't know what it is. And then even fewer of us capitalize on our superpower. I believe Brandon Turner knows what his superpower is. And the guy is just wringing it for all it's worth. It's what makes him the top guy. And that's his ability to look at a process like BRRRR, like it's a process. And he has the ability to tell a story, to create acronyms, to almost trademark stuff. And he has, I mean, BRRRR is just one example of probably dozens of things that he's done that's now just normal for us to talk about. He is uniquely talented, uniquely gifted at just seeing and capitalizing on something. He's a freaking marketing genius.

He really is. And it kind of gets into a, probably a, you know, much smaller version, but it's almost got into a Grant Cardone territory where it's the same similar skillset of like, hey, I can take a thing and I can brand it fantastically and story build around it. Uh, though he really emphasizes on the ability to tell a relatable, compelling story, which is, that is what I find unique to him is, oh yeah, the branding. When he explains it, you can put yourself in his shoes directly. Yes.

Which is something you remember.

I was never able to do with a Pace Morby or a Grant Cardone or any of these other big, big real estate guys. It's always like they're larger than life. He always felt real, which is, which is superpower. So we, we've said a lot of nice things about him and, and he's, he's earned them. He's, He's, I, I really think he has. Uh, let's, let's talk about this actual deal. I, the news has already dropped on this. You've talked about it, I've talked about it, everyone's talked about it over the past several weeks. But for those who've been living under a rock, uh, he had a massive syndication, uh, that went under. It sounds like he lost about $15 million of, uh, investor capital. I believe it was his, uh, second raise, but it all went to zero, uh, which is, that is worst case scenario as an LP. That is typically your maximum. The maximum bad. Yes. Yes. Michael, how did, how did, how did we get to that point on that deal? I have some thoughts, but I'd love to hear your analysis from like where it went wrong.

So again, I think we've need, I, you know, I, I have learned to be more measured as I've aged. 'Cause I think my initial reactions were probably over vicious. Certainly the ones that I thought I didn't put 'em out because I, I've, I've learned to temper my action, but wow. You know, I have receipts. I have receipts, unfortunately, and you know, I've been recording content for 8 years now and I've been an accredited investor for 15 years. So I saw syndications in '21 and '22 that were DOA, but they still went through. So what we've gotta remember is in '21, '22, inflation was still about 4%, right? We did not see the crazy run to 9% yet.

Yes.

But the reason I think this deal, Katy, Texas went bad is it frankly was bought wrong. As I've looked at the details shared this far, he bought Katy for a sub-4 cap. Yeah.

I'll say that again. It was about 3.2 when I looked at the underwriting.

Yeah. I've heard people talk 3.2 to 3.8. I don't give a rat's ass. Sub-4. Sub-4. Yeah. And the reason that is a problem is I've been, you know, I've owned this, I've owned this stuff and I'll just talk about my market. So in my market of Fresno, California, it has long run as an 8 cap. It's a Class B area. It's a little bit rougher. The inventory's older. It's an 8 cap and it's been an 8 cap for a decade. In 2021, it went to a 6 cap. I sold, I sold 2 apartment buildings cuz I'm like, these people are freaking crazy. Yeah. Little did I know they went to a 4.5 cap. They went as low as 4.5. Now this is the era that Brandon bought Katie when people in my market were paying 4.5 for what should have been an 8. I sold it a 6, so I was early, but hey, I'm out. I'm liquid.

I have to imagine Katie is never a mistake.

Yes. I have to imagine that Katie, Texas doesn't normally trade at a sub-4 cap. That is correct.

I just have to assume as someone who invests in the Houston area, that is, I can, I can verify.

Yeah. So it makes no logical sense to, to buy anything at a sub-4 cap. The only reason you do that, unfortunately, is you have mouths to feed. You have overhead, you have teams, you have people to feed. That's why so many syndicators are going bust now is because they did bad or skinny deals with stupid assumptions. And you tie that all together with debt, short-term debt, 3 or 4 years. As I've said, and I have receipts, these deals are DOA, the DOA the day they closed.

Yes. And that's, that's what I saw too. If you look through the rest of everything else that he did, you look at the increases that they put in place, the management structure as an operator, I see no to low holes in the entire business plan, almost near perfect execution.

Agreed.

Totally agree. You cannot mitigate a bad deal, a recession deal.

No, you, when you overpay, you overpay.

I mean, there, there's a, there's a small margin in which being an operator, you may be able to outperform, but you're talking a 10, 15% push from one operator to another and what you could potentially do. If you are the best marketer with the best operating team, you cannot fix it.

People win the lottery all the time. People win the lottery all the time. It doesn't mean you should play.

No, you have limited impact to do marginally better than other people if you're a better operator. His near-perfect, apparent near-perfect operations cannot solve a deal when you paid almost twice what you should have paid for it.

There, there's no, yeah, he overpaid by at least 50%.

At least, I mean, it's just, it's an insane overpay and there's, there's no way out. There was never a way out. The risk here, and this is, this was, you, you, you already nailed this, but this was the era where the zero-down strategy was just become a syndicator and pick up all these fees and real estate's easy and the market's always going to be great, which was the dumbest thing ever. You had new people jumping in. What was disappointing to me, because I remember looking at these deals going like, Man, this is such a bummer seeing this from Brandon because he's the small town hero, you know, buy small multifamily. He left what he was good at and made weird assumptions and got paid fees to do so. It's the worst of syndication. It's a bummer seeing it from Brandon, but that is, that was rampant there. He is not the only one who did it. Oh, there's going to be, I mean, there was really no, there was no path to make money on that deal.

Well, I'm sure you've heard this from Ken McElroy. I've talked about it a lot. So Ken McElroy's I don't know, top 5 real estate investor probably of, of the era. Certainly if you say people sharing content on YouTube, he's in the top 5, if not the top 5.

Absolutely. Absolutely.

He said there's 1,000 deals in Dallas that were done during this era that are in trouble. That just tells you how nutty that era was. It was bad.

The, the amount of deals. So, so for context, I've closed $12.5 million of, of, uh, syndicated deals this year, uh, outside of my JVs and other stuff.. It's been a good start to the year. Those were both in Q1, both in Abilene, Texas. Strong cash flow day one, over 90% occupancy. Like we're talking hyper-stable real estate. A lot of the deals that I've seen in Abilene, in Lubbock, in Houston, in Dallas, we're looking at one in Addison, which is DFW. All of them are selling for less than they owe. Every single one. That is what's on the market right now. It is not. The bloodbath that influencers would have you believe. I've seen every single year I've been in real estate, it's all coming down. The debt's all coming due. These are mostly big players who can maneuver and they can work extensions with the bank and they can, there are plays available to these large operators. But at some point, some of these deals are hitting the end of the road and the lenders are saying, look, we're going to, everyone's come to an agreement. We're going to take a loss. The lenders are going to be shaving a little bit off the price. They've accepted reality and that's the opportunity.

I want the audience to realize when the bank or the lender is talking about a 5 or 10% haircut, that means 100% of the equity is gone.

Yes.

That's what this means. And that's, that's why I feel bad. Right. So I invested through the GFC. I bought a ton of residential properties last time. I am set up. I, you know, I've raised multiple 7 figures in the last 9 months. Because I personally plan to buy a bunch of apartments at 60 to 70% of debt.

Yes.

Because again, I, I've been here before.

They get offered there. That is the Denton, Texas. I, I was shown 4 deals. I didn't buy 'em. They were, it was just not a good fit for what I was doing. But they, the broker was coming in saying, hey, here's the ones that I'm not personally buying. We've negotiated all of them at exactly 70% of what they owed on the building. And that is the standard pricing for what they're offering. They're working direct with the bank and they're like, hey, everything for both these portfolios, they just want to try to recover 70% of the money. That is the magic number. And so it's a realistic goal. And Michael, like what you're doing is what I'm getting calls from brokers trying to get buyers for. And I'll tell you what, the 70% off in Denton, Texas, the deal still didn't work.

Yeah, it's going to be an 18 to 24, maybe even 36 months. 'Cause again, it's really a weird time. And again, I say this as a guy that did this before, I bought apartment build, I bought apartment buildings at 50% of debt. And at like, I mean, I bought one apartment building at $21K a door. That's $120K a door today.

You know? That's like, that's like middle of nowhere Midwest pricing.

No, this California stuff, baby.

I know. I was gonna say, get that, that low though in California. That's, that, that's crazy.

That's crazy. It doesn't suck. Yeah. So, you know, I look forward to doing this again. You know, and the other thing you brought up, you did a bunch of deals this year. This is the, I, I think it's amazing, but the audience may think it's sad.

Yeah.

The crazy thing about doing deals this year, 2026, is they are 100% more better deals than 2021. Because again, you're buying below, you're buying below replacement cost. Here's a hint in real estate. If you can buy it 60% of replacement cost and have at least a 10-year hold period, it's really hard to go broke. It's just really hard to go broke.

Best deal also, Texas syndicated deal I did last year. This is my first ever syndication. Replacement cost came in at $22 million for 76 units, 13.5 acres, beautiful big buildings. We're talking, you know, garages, 2-story, 4-bedroom pools, gym, the whole campus. Bought it for $7.6 million. Replacement cost $22 million.

Dude, 30 cents on the dollar. As long as your debt's right, and I'm sure it is, it's as good as Fannie, 5.8% interest.

Hard to go wrong. Fixed rate, 7 years.

Hard to go wrong.

These, these are available, but this is, this is getting back to the Brandon thing. This is where I think this goes wrong. So common. The bigger the name, the worse the deal is such a common thing. Yeah.

That's the win. Yeah.

Bigger than, and so as the online presence grows for Christian, I worry about pushing that saying too much.

But the, yeah, you've got a decade before, you got a decade before you're Brandon Turner, but I like the moxie. I like the moxie.

Yeah, I'm all far away from that, but you know, it's as the brand grows and as marketing goes out, I'm like, man, if I keep, if I keep pushing the bigger the investor, what if I become big?

Always a risk.

But there you go. Look at people who are operators first. If I was an investor in Brandon Turner and he was like, hey, early on, And he is like, hey, I'm buying two side-by-side 12-plexes in a market that I'm highly established in. He has the credibility, he has the experience. I trust he's going to do that deal. He's an operator in that space. What happened, a lot of these syndications in Texas was just a perfect case study for this. Everyone and their sister said Texas is amazing and it is, and it's growing, and therefore I can buy at a 3% interest rate and the market's always going to be 3% and these numbers will make sense.

And 5% rent growth and a lower cap rate on exit and just all this other non-logical things. Stupid, stupid stuff. But yes, that's what happened.

If you are an LP, you need to learn to underwrite like you're a GP. It's the only thing you need to do. The beautiful thing about being an LP is you get to skip the deal finding, you get to skip the debt qualification, you skip some of the risk. You're not a cosigner on the loan. You have all these cool advantages. The advantage you don't have is you don't get to skip underwriting. You need to know how to analyze a deal, especially if you're going to invest hundreds of thousands or in some cases millions of dollars into a syndication. You just need to know the baseline. Does the deal make sense? Would I do this deal if it wasn't with this operator? And then you invest in the operator second and you need both pieces. You need to vet the, vet the operator, vet the deal first though. You're investing in a deal. And then you're trusting an operator. That's your job.

You know what, this is your thing. I don't do this stuff, but this is what I've told people. And again, it might be wrong and I share this to learn, not to preach. I'm gonna learn from you. So when I've been looking at syndications, I actually start with the market. Do I want to be in that market? Do I want to be in that asset type? So that's where it all starts for me, right? You could give me all the great stuff, but if it's storage, I don't wanna play there. It's just, it's a thing, right? So for me, it's the deal type and the area of the country. Do I want to have my assets there? Then it's the operator, right? Who's going to be on the ground? Do the, does the team have experience? Do they have other successful exits? Who's the one throat to choke that I can yell at if I see a problem? And then, and only then do I go to the deal. Do I have it right or am I ass backwards?

No. Yes. Well, and this actually reminds me of something that you said on, uh, Ryan Panetti. We were talking about cash flow. Is you're not investing for appreciation, but what you are doing is you're buying for cash flow in areas that you expect to appreciate. What you're going to do is you're stacking the deck in your favor. That's the location. I'm going to get the highest odds of getting some crazy appreciation and the highest return. Then I'm going to make my decisions based on the fundamentals of the deal in that market. And what Brandon did on this deal is he chose just the market and he went, this market's going to carry us. It's amazing. Not the fundamentals of the deal. You nailed it on the Pineda podcast that short did not get enough love. It got love from me. I don't even interact on social media and I commented on that post. I was like, yes, someone said the thing that everyone needs to hear. Buy for cash, buy for appreciation based on cash flow. That is my version of it.

No, it's, I'm glad you picked up on that. Okay. I wish more people got that.

Well, hold on.

I want to hit that again because it's so important. People kill me all the time, right? Michael, you're the one rental at a time guy. You're boring. Cash flow, $200 doesn't mean nothing to me. You know, all this stuff that I hear all the time. But here's the deal. I was a full-time employee raising a family, traveling. The cash flow frankly, honestly meant nothing to me. I didn't want to pay for my tenants to live in my home. That's why I call those alligators. But here's the deal. I knew when I started buying at 30, if I held them until I was 65, They would be worth double or triple. So I know appreciation is coming. I want to be able to hold and not become a forced seller so I can cash that check. That's the key to this that most people miss.

So, so wait, you're saying that the secret to buy and hold real estate is you have to be able to both buy and hold? The fact that that blows people's mind to, to this day, my model, the, the motto that I have, like the slogan for multifamily strategy has been buy it and never lose it. And everyone's like, I resonate with this. I love that model. I'm like, guys, that's another, we're just saying buy and hold. You have to be able to hold it, but it's sexier.

It's sexier.

We're, we're, it's, it's granted. This is, we've all learned from Brandon. It's great branding, right?

Yeah.

Yeah. But that's all it is.

Cash flow is how you hold.

Cash flow is just the blood in the body. As your business grows, you need more blood. You need the cash keeps you there. Appreciation ultimately in real estate is what's going to make you wealthy. That's why you invest in real estate is the way that it appreciates, it hedges against so much. But you base the business off of cash flow. Had that been done on this deal, Brandon would probably be rolling in money.

Yeah. If he could have held that deal for 10 years, but Houston's done decent. Yeah. Yeah. If he could have held for 10 years, he probably would've been okay. That short-term debt sealed his fate.

You had some opinions on the post and I, I've flipped on this, so I started out very kind to Brandon and I'm going to If you guys saw that video, I was having an allergy attack. It looked like I just got beat up. I had two black eyes from allergies. So if you guys saw my black eye video, I did not get beat, uh, except for by the, uh, the lovely state of Texas. The original thought that I had is he put out a letter addressing very head-on, and here's why I liked it. He addressed what went wrong. He addressed the market. He addressed the operations. He did everything. He explained the situation. And at the end, he took ownership of like, but you guys invested in me. And I made these decisions. It was, the accountability was really high in his letter and I appreciated that as an investor. I'm like, you know what? It's the worst thing that can happen and at least he's out in front of it owning it. I watched your take on it and you noticed something in the comment section that I had missed that it's really changed my opinion on this. Michael, can you, would you mind sharing with the channel a little bit of your due diligence on this, on this post?

Yeah, the first thing, so a couple of things on this. So first and foremost, you gotta remember the kudos that we gave Brandon at the beginning. He's an extremely good marketer. He's an extremely good storyteller. So, you know, something I've learned through my career is when people show you who they are, believe them. So I believe that Brandon Turner is a wonderful storyteller. And as you said, that post was a story, well put together story, accountability. But let's just say I was suspect, right? Like, hmm. Why is he doing this? Is he doing it just because he's the man of the people? Because, you know, he wants to, to, to, to just lay bare and all of that. I don't believe that shit for a minute. So a couple of things. First, I immediately reached out to him because again, we have this mea culpa, 90% my problem. I said, hey, Brandon, you want to come on the channel? We can interview this. Uh, you know, I have 10 questions I want to ask you. And in the beginning he said, yes. He said, absolutely. Here's my admin cat. Let's schedule something. And again, I have receipts. I went on my daily financial news and told everybody, hey guys, Brandon Turner might be coming on the channel. What questions do you have for him? And that video got lots of questions. So I, I, I created my 10 from that and others. But as I've said, always, I can't imagine his lawyers let this happen. I can't imagine.

I wouldn't be surprised. And, and you've noticed all of a sudden the conversation of what he was sharing has just all of a sudden cut off. So I, I, I imagine that his apology tour is likely over and that is likely his legal advice. That is my guess.

I guarantee you it's over. He sent me a rather long voice text or voice message basically saying, hey, good news, bad news. You know, sorry, I can't come on the pod. I can't talk about this anymore. My lawyers and partners said shut the fuck up. You know, blah, blah, blah, blah, blah. So, you know, as expected, again, dude, I've been around a long time. He shouldn't have, he shouldn't be, he, he shouldn't do interviews on this because it only, there's no upside, right?

There's only liability. There's not, right?

Yeah.

And as a fiduciary to your investors, I would actually say that he has an ethical obligation to not overshare.

Like he, I agree.

He could only cause damage. And so, yeah, I agree. It's the right thing to do. That being said, if he would come on the channel, I would interview him too.

Yeah, exactly.

By the way, I wanna, I wanna hear some of these questions you had written for him. If you're willing to share a few of them, I will love it.

I have, I'll give you the top 5. I'll give you the top 5.

Ooh.

Okay. Let me, let me go to the, because again, I assumed the great storyteller was telling a story. So I dug into the comments and as expected, 70% of the comments were attaboy, great job. You know, if you're in real estate long enough, everybody has a loss. It was very much attaboy, attaboy, attaboy, attaboy. However, there was this one comp where Brandon Turner replied to the comp, and I actually read his comment, which may no longer exist, but I read it live on my daily financial news that basically said, I have more deals in trouble to the tune of $30 million, and I am going to fill this hole by selling more courses and selling more masterminds. Because I know no better way to raise $30 million than to sell education. So the storyteller in King himself is getting in front of this going, hey guys, learn from me and give me $5,000 or $10,000 or whatever the hell he's going to charge. So as expected, the storyteller in chief is just telling another story.

Frustrating thing is like as a, as a storyteller, I don't feel like that works very well as an ad. Hey, my real estate's in trouble. Will you guys please give me $30 million?

Yeah, that was a crazy reply. I don't know why he would've typed that.

I, I feel like that's one of those things that may be an internal thought and you're lying in bed early in the morning or late at night and this, this reply comes in and it's like, I'm gonna earn my way through this. I, I don't understand the, he got into this mess by leveraging his massive audience that, and that's what happens with the big syndicators. They get such a big audience. That's the downside of having an audience. You will have people who invest in you because you're big, not because your deal's good. And that's what happened to him. I feel like this is almost a version of like, hey, I lost $15 million of your dollars before I lose another $30 million of your dollars. I need you guys to give me $30 million.

Like it, that's pretty much how it read to me.

It, it doesn't feel good. And I'm, I'm sure his intent wasn't as aggressive, but I'm, That's how it read.

That's how it read. I read it. I read it word for word.

It's not a, it's not a good look. And that is the, I think that is the big lesson is if you're an operator, if you're raising capital, you do it by a per deal basis. You go deal by deal. Is this deal a good deal? I actually turned down a good deal recently that we could have gone under contract for because we're going under contract for a deal that I like even more. And I just couldn't reconcile in my head, how do I pitch someone on a really good deal? When I'm also pitching other people on a deal that's even better. I couldn't do both at the same time. So I'm passing up on a truly great deal in a market that I really want to operate in. I actually just referred that deal to a friend who should do that. It's a deal worth doing and I'd be doing right by my investors to do it. But like, I can't figure out even that piece. Yeah. Brandon will, let me, let me give you a podcast. He always has that power is the, is the problem is that, that much. Raise power is actually kind of dangerous as an operator. You can get lazy.

Yeah. Well, here's question number 1, and you're kind of dancing right on the grave. Oh yeah. Did access to endless amounts of money make you do a bad or skinny deal?

I would, if I was Brandon, I would probably answer that question as, you know what? Yes, it did. That had to be, that had to be a factor.

And now you know why he doesn't want to come on my podcast.

'Cause as soon as he says that liability, It's a hard, it's a hard question. Yeah, exactly.

Exactly.

You can't say yes, but the answer kind of has to be yes because no one else could have done that deal. You couldn't on that deal's fundamentals have pitched that without the brand and got money. I have one. Yeah. Michael and I combined could not have raised for that. I don't believe that. No, I don't believe so. With our little, with our little reach, but all of our capital raise power, I could not convince someone, hey, massively overpay for this deal. I just don't see that being. And it was a big deal.

Yeah, he raised, I think he raised $25 million in total, but yeah. So again, question 1, did access to endless amounts of money make you do a bad deal? All right, here's number 2. And again, why he won't come on my channel. Did you really, did you really think a sub-4 cap in Houston would go lower, right? On the exit. Lots of people thought that. And I'm like, did you really? Like, did you really, really think that? What do you think?

Yeah, the historic lows. So it's never, it's never been lower in Houston ever. That's the lowest it's ever been. Now, to be fair, there was a lot of operational upside and they did technically hit their operational upside. So there's probably—

doesn't matter if cap rate doubles. Doesn't matter.

No, no, it does not. There's an argument of if cap rates had stayed the same, which they weren't going to, but let's just say, let's say they weren't going lower. If they had remained the same or even gone up a little bit, they added so much to the NOI that maybe it was okay. So Brandon might, might survive that question. There's, there's an operational answer of. Hey, this is what I'm good at. I wrote the book on, I wrote the book on rental properties. I can manage this thing. There's NOI increase. No one can survive the double when you overpay.

My follow-up question for that, if he would've answered the way you did, is I would've asked him what's the historical cap rate for Houston? Because I don't know the answer. Maybe the historical average is 5%. So you're within the realm, but if historical average is 7.5%, again, that deal was dead the day it was done.

5.5% to 6.5%, it fluctuating in that range is probably no, We'll call it like a Houston's a 5.5, 6 cap market in most areas of Houston.

Katie.

Yeah. Probably a 6.5 cap market.

Okay, cool. I have no idea. So question number 3 really goes back to, and again, this is my understanding of Brandon. Please tell me when I'm wrong. He started very much one rental at a time, right? Absolutely. And again, that got him to Hawaii. Then Brandon started doing mobile home parks. And near as I can tell, had wild success. And then he went to— Yeah.

And then he went from houses to duplexes to mobile home parks. That, that, that makes sense to me. I would invest in that. That makes sense. Yeah.

And then he went to multifamily. So here's my question, assuming that is the right progression. Was it ego or boredom that made you risk it all moving to multifamily? Because he already had a good life.

He did. That's the, that's the thing is he made it on all metrics. He, he had made it. Which is the bummer to see this happen at that point. I would love to see what it was. I would have to imagine it's a mix of both as a serial entrepreneur, 'cause he, everything he's touched has mostly worked. The temptation is always to scale and add new stuff.

Well, again, I don't buy that for a minute.

Hmm.

Right. I will, and again, this is just, we're different people, right? But again, there is certainly a percentage of us that want to be Grant Cardone. Ryan Panetta, Brandon Turner. I want to be a billionaire. Always bigger, bigger, bigger. But most people I talk with, Christian Osgood, are like, I want time with family. I don't want to worry about my bills. So if you get to that point on the financial mountain, sit the fuck down, enjoy life. Go for 3 weeks in Australia, come back, get bored, go to Canada, come back, get bored, go on a Caribbean cruise. Life is good. You don't have to keep moving the damn goalposts.

I actually do agree with that. And as someone who probably struggles more on the like, hey, I just want to reach the next mountaintop syndrome. I have numbers that I have set throughout my entire portfolio of I'm done buying here and I have a size of my PM company where I'm like, if, when we reach this value, I'm selling the PM company. Like I have set my metrics. It's the same way you treat, like I treat all the businesses exactly like you would the stock market, which to be fair, I just own 100% of the stock of my businesses. Like it's, it's, it is the same thing. I have a strike price on everything that I am in. And there's that.

Yeah.

To be fair, I'm pretty aggressive on liking to scale. You're right. Even I have a number and I'll tell you, knowing, uh, knowing a couple of Brandon's friends, it is, it is lower than where Brandon had made it at that time is my jumping off point. There's a point where I love what I do, but I wouldn't do it if there was just absolutely no functional use for the money, I would rather, I would rather take my kids to the pool in the middle of the day, go to the, go to the zoo. Like there's, there's a million things I'd rather do than show up in the office to make more money. Yeah.

So, so again, was it ego or boredom that made him do this? Because again, by all metrics, he was wildly successful.

He was the golden child. How hard can you be in Hawaii with your family?

Dude, he could have, he could have spent, went on a speaking tour once a year. Made half a million bucks talking 10 times and not worried about life ever again. He's bearded Brandon, the number one guy he had. He was set. And again, boredom or ego. All right, I got two left. Here's number four. And I would pull up his tweet cuz I, I took a picture or his post. I took a picture of it. Even if he's deleted it, I still have it.

Nice.

And I would basically read it and say, Brandon, clearly you have $30 million in problems ahead. It sounds like you have 2 years to fill that hole? Is the answer selling masterminds and education? Is that what the plan is? So that would be question number 4. So I would hold his feet to the fire a little bit because I think that, I think it's almost a disingenuous comment.

Yeah. Well, it almost has to be because he is going to have a hard time convincing people to buy more overpriced real estate right now. And I don't know that he has the pipeline and has built the muscle on how to do great large multifamily deals. And you have to do a lot of large family to make up that gap. So I, I just don't think that he has the experience and the volume in successfully running that business because he put all of his eggs, I think rightly so, into the RV, the house, the podcasting, all of the other baskets that worked really well for him. That's where his experience is. He doesn't have $30 million businesses. Like he just does not have niches and experience where he can make that gap in that time unless he's leveraging his brand. It's the the only path that he has, uh, other than just calling these investors and saying, sorry, you guys all lost your money. Like that's his only two options is sell or lose.

Yeah. Let's be clear on that. Right. I, and I think we said this earlier, all investors, if you're around long enough, do a bad deal. But if he has a series of bad deals, game over. Yeah.

Game over. Yeah. And no one's almost impossible to recover from that. It's your brand as an investor is pretty much done. He can survive this one deal if all of his other deals do.

Yes. I totally agree.

Totally. Yeah.

Yeah. Totally agree. So here's number 5.

I was fortunate enough to make all my bad deals in the beginning. I decided I just started with the wrong people.

But it was only your money. Yeah. Yeah.

I'd say, yeah, I did. Well, I had to save one investor, but I did. I did. I earned through $1 million, which is a lot easier than $30K. I will tell you that.

And it's still a lot easier. It's about 30 times easier.

Yeah.

Roughly, roughly 30 times. So here's the number 5. And this is probably the most important question for me because I will admit to struggling. I've admitted plenty of times that I get online and every now and again, I, I look at Pace Morby or Ryan Pineda or, or Brandon Turner or any of these big shots. And I, I too suffer comparison syndrome. Mm-hmm. And I wonder if I'm doing the right thing, right? I chose to sit down 8 years ago and, and really not do anything. And I, I, I, I always ask, is that the right thing? So here's question number 5, Brandon. Given what you know now after this loss and the problems ahead, was it worth it? Yeah.

Oh, I see why it's not gonna hop on your channel, huh?

Those are hard.

Those are hard questions and I don't think you can answer that. Uh, I, I, I don't know an HR correct way to answer that question with the situation he has right now. Correct me if I'm wrong, didn't he for a time, or I don't know if he did permanently, didn't he move from California to Texas to try to salvage some of his job?

Yeah, I think for 6 months he did.

Oh no, California, uh, Hawaii.

Houston. Yeah. He moved from Hawaii to Houston for 6 months. He, he tried, he tried again, back to Yeoman's work. He, he tried, he, he moved his butt to Texas to try to save it.

Yeah. There's the, the, the right thing to do, but I can't, I can't imagine there's an argument for that being worth it. Like if you made it and the dream was sandals in Hawaii and now you're, you're boots on in, in Houston, which, sorry, people in Houston, and I'm an investor in Houston, but you're not Hawaii. Houston is not the best of Texas. I'm sorry.

It's, It's not, it's not Hawaii, but not even the best of Texas.

No, it's, yeah, it's not even the Hawaii of Texas. If you, if you go as a, as, as a tourist, just objectively, and you visit the, the 3 majors, if you, if you go to DFW and you go to Austin and you go to Houston, Houston's very clearly in 3rd place.

It's just, it's not granted.

I'm biased towards Dallas, but like Austin is beautiful. Dallas just has awesome, awesome, awesome amenities and population and much better weather. I, I just visited my sister. She lives in Houston. So I can make fun of Houston a little bit 'cause I own there. I'm, I'm there often. My family's there. It's like, this is, this is, what was it? It was, this was like late April, early May. It's 90 degrees and 100% humidity.

I'm like, this is miserable.

This is terrible. I can't imagine leaving Hawaii to deal with that was what Brandon would've wanted for himself or his family. And that is a really expensive lesson to learn that far in the game. Yeah. Yeah. Well, I promised Michael that I wouldn't take him away from his wife all day, so I will start to wrap here. Unlikely, but in the event that Brandon sees any of this, on a personal note, thank you very much for publishing the story and thank you for all that you added to the community. On a sincere level, he's achieved some amazing things. So I'm going to say one more nice thing about him because I do mean it, like bottom of my heart. I would not be where I'm at in real estate if he did not write that book. And if he wasn't on BiggerPockets, I would not be where I am today, making better decisions in syndications. I appreciate that he is taking the $15 million loss for everyone else to watch. I think this is going to make syndicators more cautious. So I think he's paying the price for a lot of people to significantly, positively impact the industry. So painful lessons. And I know we're, we're hard on Brandon. So if Brandon for any reason gets upset about this, someone share the end of this podcast with him. We appreciate you. Also, ouch, really painful. Everyone buying deals, Michael hit it on the head. This is the model that both he and I, we have some differences in model, but this is the one that we are just lockstep on. Buy in great areas, buy in appreciating areas, and buy based on the deal's fundamental, not the market, not everything else. Buy fundamentally good deals that pay you to wait. Buy and hold. Make sure you can do both halves. Yes. And bankruptcy is the opposite of what you're trying to do, so don't do it. Michael, thank you so much for joining. As always, Michael has the book on You Are One Rental at a Time. Very easy to remember. There's his background here if you're watching it on YouTube. If you're listening on the podcast, uh, he has a really cool background. Rowan, One Rental at a Time is Michael. I have the book on creative real estate, a whole bunch of deals that I have not lost, uh, and are all cash flowing and the actual clauses that we use to do them. Uh, you can check both these books out on Amazon, but we appreciate you guys a ton and we'll see you on the next episode.