#26: How to Find a Real Estate Investing Mentor feat. Brad Sumrok

Welcome to the Passive Income MD Podcast, where we talk about creating your ideal life through multiple streams of income. I'm your host, Peter Kim. If you enjoy hearing about this stuff, make sure to hit subscribe so I can bring it to you every week. Now let's get on with the show. Hey, everyone. I am extremely excited for this interview. He's a busy guy, so I'm just glad he's here with us. Want to introduce to you Brad Summrock. He is widely considered the country's top educator and mentor when it comes to real estate investing, particularly multifamily is what he focuses on. He's been a good friend over the last year. We spend a bunch of time together in random places all over the world, but it's awesome to have him today, and he said he's willing to come here and just teach us, so I got to take them up on that offer.

Hey, Brad.

How you doing, Peter?

Thank you, man. I'm doing good and excited to be here.

Nice, man. You know, I remember first hearing your story, and I still remember it myself. You told me when we were sitting, like, outside at a cafe, like out in Amsterdam, you know, And I remember hearing your story, and I was like, man, so many people need to hear this. Do you mind sharing with us how you got into real estate?

Yeah, well, that's a. I'll give you, like, the three minute story. So if I go too long, just kind of say, hey, Brad, we got to move on a little bit, right? So, yeah, like, I first of all just say thank you for having me on again. And I'll just say that I never in my wildest dreams thought that I would ever, ever, ever be in real estate yet alone. Apartment buildings. And so that's what I do. I do apartment buildings, right? Or what other people call multifamily. But my background was, you know, my dad only finished three years of college, and he was one year short of becoming an engineer. And I heard that over and over growing up about, you know, oh, you know, you're. You're from my mom, like, oh, your dad only makes, you know, 42,000 a year. And if he would have got his degree, we would have more money and better vacations and a nicer house and all this type of stuff. So, like, I was one of those kids that, like, studied hard, got good grades, wanted to. Wanted to make my parents happy, you know, And I actually went to engineering school. I grew up in Pittsburgh. I went to Carnegie Mellon and I became a chemical engineer. And honestly, I didn't even know what a chemical engineer did for a living. I just knew I wanted to be one because my dad never achieved that. And it was impressed upon me by my mom how important it was to graduate college and to have your degree. So I became an engineer and I wanted to climb up that corporate ladder and, you know, try working hard and doing all the right things. But after a few years, I realized that, like, engineering wasn't my calling. It was like, you know, trying to fit a square peg in a round hole type of thing. And I was a little bit more like, wanting to get out of the office and talk to people and help people. And I don't know, I just had like, different. Different interests. Hey, I decided to go back to school. In my world, that's what we were taught. If you want to be more successful, you go back and get more education, right? So I was like, well, do I want to be a lawyer? No, I don't want to be a lawyer. Do I want to be a doctor? I don't know if I want to be a doctor. Maybe I should have become a doctor, Peter. So I was like, well, I'll go and get an MBA, because it's only two years. You know, Dr. Was like seven years. Lawyer was like three or four years. MBA was like, well, in two years I can get another degree and then I could be a businessman. So I went and got my mba and I got out of engineering and I got into the business world. I worked for small companies. I worked for big companies. But honestly, there were times where I absolutely hated my job. I was fired once, I was laid off once. I was told I didn't have what it took to be management material. I was told that I didn't work hard enough, that I didn't put in enough hours. And for 17 years, I was really. If you think about one of my mentors, Robert Kiyosaki, what he talks about is I was in that rat race. I actually thought when I was in my early. I was 31 years old when I got laid off, and I actually thought about going back for a third degree. And I studied for the lsat. And it wasn't until I picked up the Rich Dad, Poor dad book that that book changed my life because I learned about, like, Cash Flow. His second book, the Cash Flow Quadrant, talks about esbi. Employee, self employed, business owner, investor. I'm sure you know these concepts, right? You read these books. And so for the first time in my life, I was like, man, my parents taught me to become an employee. How Come. No one taught me to be a business owner and an investor because they make more money and they have leverage and they understand good debt and they pay less taxes. So that was in my early 30s when I started shifting my mindset. And that was really the first shift for me was shifting my mindset.

And.

And then I started looking at, like Kiyosaki talks about. Network marketing and real estate investing are the two easiest businesses to get into, right, where there's so many successful people. And the whole concept of network marketing didn't appeal to me. I mean, I don't know about you, Peter, but I don't know if you've ever been invited to some party.

Might as well. Yeah.

And you go to somebody's house and next thing you know, you're in some downline party and they're trying to sell you some, you know, some juice or whatever. And I'm just like. So, like real estate, you know, real. It comes from the Spanish word real, which means royal. So, like, when you're a real estate investor, just think about you're investing in royal assets. And so I decided to be a real estate investor. So, you know, why multifamily is another story. And it's like, because there's like, you know, 27,000 different ways to make money in real estate, right? I mean, not. Maybe not 27,000, but like saying I do real estate is like saying I play sports. Well, there's baseball, football, basketball, hockey, soccer, and then even in sports there's like, you're the quarterback, the running back, the wide receiver, the tackle. So my specialty is investing in multifamily. And I started small, but now I only do like 100 units and up. And as you know, I have an educational program too, where I help people do 100 unit and up buildings. We don't build, we don't develop. We buy B class and C class properties. And so I invest passively, I invest direct ownership, and I invest as a syndicator. And the reason I did that is I went to seminars. After reading Robert Kiyosaki, it was very clear to me that I didn't want to go down the single family route. Because this was back in like 2001 when I started going to seminars. And for single family, what I learned was, you know, you want to replace. Well, not just for single family, but my goal, my outcome was to replace my earned income with my investment income, or what other people might call passive income. Right. That's what Kiyosaki says is the definition of financial freedom or Independence or leaving that rat race. So you need like 40 houses to have like 10,000amonth at least. I was living in Houston, Texas at the time. I don't know how it is in California.

You need a lot more than that.

Yeah. So just to get like 10,000amonth of investment income, you need like 30 or 40 houses. And I'm thinking, oh my God, like, you know, I got to look at all these deals and make hundreds of offers and how am I going to manage these? And you know, managing your first, when you got 10 or 15 houses, they become easier to manage. But what about like your first five or ten or one and you're doing all the management yourself. So I knew that I wanted to have scale, leverage, professional management right from the get go. So my first investment property that I ever made, ever, it wasn't a single family house, a duplex, a 4 plex. I bought a 32 unit apartment building in 2002 with my own money, 100% direct ownership. It changed my life forever. And that was back in 2002. And I've been buying apartment buildings ever since.

So let me ask you, I mean, a lot of physicians are probably feeling the same way you felt at that one point when you realized, hey, I'm part of this rat race. I think a lot of physicians feel like that we work really hard to get where we're at. We've dedicated all our lives to making sure we have a good life for ourselves and our family. And obviously we're motivated by passion as well. I mean, to do good and heal and these kind of things. But ultimately, especially with the way medicine's been today with the environment, both politically regulatory, all that stuff, I think a lot of us end up feeling like we're just part of this whole rat race. Like you said, we're the employee and so we don't necessarily have the freedom or the time to do what we want to do. And so I think there are a lot of physicians now looking to figure other things out. I think that's kind of the basis for passive income, MD. You know what I do right now? Now you started talking about how you started. You went to seminars. I want to know what would you suggest today for people now that, you know what, you know, if there's like a doctor who wants to get into real estate investing, how do they get started? Like, where do they start? The books that you mentioned. But are there any other sort of ways to kind of get started?

Well, obviously I have my own personal experience with that. And here's the again, it's my opinion, right? We have more information today than we did 2, 5, 10, 15, 20 years ago. So there's tons of information online on blogs, bigger pockets, you know, Facebook groups, meetup groups. But I think what we're lacking is wisdom and wisdom and content from somebody that's been there and done that. And so for me, and this is part of my mentor selection process and by the way, this is for any mentor, okay? If I want to achieve something in a certain domain of my life, I'm going to find someone who's done it and has a track record of not just doing it for themselves, but a track record of helping other people. Because there's a lot of business owners that are successful, but they don't have the heart of a teacher. Right. And so I think it's a unique skill set to find somebody that has achieved the results and also as the heart of a teacher. And some people do and some people don't. It's not good or bad, it's just what it is. So for me, I think the best way and it's still what I do. And I know that's what you do in a lot of areas of your life because that's where we met is at a seminar, right? And so we surround ourselves with people that are like minded, that are doing what it is that you want to do and that's being led by an industry leader in that field. So to me, seminars, and today of course, they're more virtual than in person, but virtual seminars and in person events, when that is appropriate. To me, they, and I don't mean to say this politically, but they trump meetup groups and blogs and stuff like that. And so courses like what you're doing is fantastic and that's why I'm glad to be, you know, with you today. What you're doing is fantastic. Fantastic is you're educating people. You're an MD that has developed passive income or income from your rental properties. And so you're an example of what I mean. And I'm sure that your students or the people that come to your course get more value than just from reading a book. So to me you get, you want to immerse your, you want to find that special somebody and learn from them and not just from them, but from their ecosystem of like minded people that they've put together. Does that make sense?

Yeah, no, it's super helpful. I think that's, I agree completely. I think that's what's changed my life. I mean it's like, I've read books, I did all that, but until I found that community, you know, of like minded people, and then you just, your, your learning starts accelerating at like a ridiculous rate, you know. And of course it also takes investing. Get in there. Right. Take action is what I found.

Yeah. So like, books are great because they give you like. But you got to implement those. And so sometimes having information could be. Well, information is never bad, but too much information could be bad because like I know people, they go to like 10 seminars though, and they get 10 viewpoints and then they're stuck. Well, Brad, you said this and this person said that and this person said this and then a year later I'm like, well, how's your investing going? They're like, well, I haven't done any, anything yet. So at some point you need to put your money on a horse and bet on a jockey and do your research and do your diligence and put your money on a horse and a jockey and implement. You got to implement.

Yeah, I mean, you started with that 30 unit building, then where did you take it from there? Because I think a lot of people also want to know. And of course there's not one path, but I get asked all the time, I'm sure you got asked, like, what's the roadmap for them? How do they get from the place where they're in the rat race and then to a place of that financial freedom that you talk about using real estate? What does that look like? Start with 1 buildings, 2 buildings, they just keep buying that. Do they invest passively? Do other people's deals? What have you seen work well for people, especially in my situation where I'm a doctor. Because you've worked with a lot of them.

Yeah, well, obviously it depends on where people are at and how much net worth and liquidity they have and what their goals are that. I'll give you two perspectives. One would be me, and then one would be like, you know, because I got hundreds of students that I work with too. So like, so like for me I wanted to. And again, it's a reflection of my first real estate mentor at the time. My first real estate mentor was buying his own deals with his own money. I think that's what we call direct ownership. Right. But he had more money than me, so he was buying 60, 70, 80 unit deals and I was buying. He said, brad, don't spread out your money amongst five aplexes because now you got five properties all over Houston, for example. He's like, Take as much money as you're able to put together and buy as many doors under one roof. Okay? So it's better to have a 32 unit property than it is to have four aplexes or eight, four plexes. Now you know, you might say, I don't agree because you don't have diversity, but from a scale management financing, it's, I say it's better, it's more efficient, you get better financing, economies of scale, easier to manage. You can hire one person to take care of it for you. That was my original plan. My original plan was to get 100 units of direct ownership. So I had 32. My second deal was 30, so I had 62 units. I'm making like 8 or 9,000amonth and my goal was 10. So I'm like, okay, I just need one more deal and I quit my job forever and I don't ever have to be an employee again. But what I learned is 62 units was easier to manage than 30, especially because my second property was literally a half a block away from my first property. So I had 32 units and I had a part time manager and a part time maintenance person. Now I have 62. Like on Monopoly, when you, like by Boardwalk and Park Place, you know, so now I control that corner. And So I have 62 units and now I have a full time manager, a full time maintenance person and a full time bookkeeper. So oh my God, 62 units was easier than 30. I just needed another 30. 20 or 30 units and I'd be retired. Two things happened. One is that word started getting out that I was successfully owning apartments and people wanted to invest with me. And two is I ran out of my own money. Because the good part about direct ownership is you get all the cash flow and all the tax advantages. And the bad part is you need 20 or 30% down. So if you're only doing direct owner and direct ownership is a great strategy, I do it today and I can talk about that, why I do it. I do all three. I do passive, I syndicate and I do direct ownership. So I do all three and I'll talk about all three and why I do each one. At the time I bought my 62 units, I didn't have any more money and I'm making 120 a year and spending 80,000 a year. And so like, how am I going to save up enough for my down payment for my next deal? And so I naturally became a syndicator. And So I did 32. Deal number one. 30 deal number two. Deal number three was 250 units. And all of a sudden it was like, this is easier than the 32. It's counterintuitive. The banks like to give you money on the bigger deals more than on the smaller deals. Because now that you have professional management, you know, 250 unit, you have no choice but to hire a professional management company on 32. You could mom and pop it or you could self manage and the banks are more timid to loan you the money. So I didn't know that up front. So that was my evolution. I started with what I would consider smaller deals. 30 unit, did two of those, got my feet wet, got confidence, went bigger with other people's money, A lot of money. Now that was my story. Then I started investing passively because I started making more and more money. And the truth is I couldn't find enough deals to for myself. So like, let's say, you know, one of my students find a deal and they're raising money and I'd be like, well put 100,000 in that deal. Passive investing is a great way for me to leverage. I mean there's hundreds of places I look in Dallas and Houston and Central Florida, but I have students looking all over the country. So they find a deal in Phoenix. I'm not looking in Phoenix. I love Phoenix, but I don't have the time and energy to focus there. So somebody finds a deal in a market where I'm not focused, boom, I'll put money in Ethiopia. And now I'm diversified. I'm leveraging their expertise and time and energy researching that market and their management company. There's a lot of different ways to get there. I'll start with the challenges because I don't want to make it all, what do they call it? Roses and unicorns. The challenge with mds. Did you ever play Kiyosaki's cash flow game?

I actually have never played it, but I know of it.

Yeah. So the goal is to get out of your job and into the rat race. And the way you get out of your job is you have to buy enough investment property that covers your income. Well, if you draw the card of a Walmart employee in the cash flow game, your salary is 2,000amonth. And you're like, woo hoo, I only have to buy three rental properties or you know, and I'm out of the rat race. And if you draw the card of a physician, your salary is 30,000amonth. And you're like, oh man, I gotta buy like 30 properties. To get out of the rat race, right? And so you know, a lot of physicians because they're high income earners, if you make 5,000amonth and you spend 4,000 or 3,000, you're spending 60% of your income. If you make 30,000amonth and you spend 25,000, 20,000, you're spending 60%, you know, two thirds of your income. Sometimes for physicians it's challenging because they make a lot of money. So for them to become financially free from their practice or from their medical job, they need more rental properties. So I mean, that's not always the case. I mean, you know, a lot of people have like scaled down hours. And so I've been mentoring people since 2006 and helping people get out of the rat race by investing in apartments. And so I've literally helped and worked with well over a thousand people easily. And I have a lot of high income doctors and lawyers and stuff like that. And a lot of doctors, they'll start off as passive, especially if they're like super busy and they're building up their career and especially if they're earlier in their career, it's like, look, they just spent, I mean, you tell me, how long does it take to become a physician? You know, four years of medical school and four years of residency and another three years of specialty. I mean, they may have spent eight to 12 years in their training and education. So to talk to somebody that is 30 that just got out of medical school about getting out of medicine, what are you getting out of medicine? I just thought, but as you know, because you're one of them and you have a lot of people that follow you and that, that'll work with you and your course. You know, a lot of physicians want another stream of income and they ultimately want to get out of that. If you look at esvi, physicians are an S or an E. They're self employed or employed and they want to become more of an investor and business owner. So the best way for physicians initially is to do both. You keep your job, you keep your practice and you start learning about. And again, that's what I like about what you're doing. You start learning about passively investing and then maybe as you get more experience, you do some direct ownership, you can even syndicate. And in a syndication you don't have to be the main syndicator like Peter did, you know that like you could be a co syndicator with somebody else that maybe is a little bit, has a little bit more time and energy on the apartment stuff. And maybe you could be the person that is like helping, you know, select the market, find the deals, capital, but then somebody else could be a little bit more hands on, on operating the deals. And so there's so many ways for physicians to get into this business, and I think that's the main message that they want to hear, is that they could be passive, they could have direct ownership, they could buy. I know, I know physicians that are buying 4 units, 8 units, 10 units, 12 units. And there's nothing wrong with that except they're a little bit more management intensive, where it's a lot less management intensive to buy a 60 unit with a group of other people. I know I've talked all over the full circle.

No, I think that's extremely helpful. I think that one of the other benefits that we talk a lot about besides the income is the tax savings. Because as physicians we get hit hard. And I know that investing in real estate, I've talked a lot about it. But maybe you can also talk to it as well, some of the tax benefits that might be available to physicians, depending on, you know, how much they work, whether their spouse works or not. But I know you talk a lot about it.

Yeah. So fortunately, you know, this is something that I know a lot about. There's a few things that I know a lot about, and there's many, many things I don't know a lot about. But buying apartment buildings and taxes, I know a lot about. But I think it was the 2017 tax year. I paid 900,000, 935,000 in taxes. You know that at one point, when I was an engineer making 120,000 a year, if you would have told me that I would pay 935,000 in taxes, I would be delighted because I was only making 120,000 a year. And if you pay 935,000 in taxes, you know what your income has to be in order to pay 935,000 in taxes. It's got to be like, what, over almost $3 million. Right. So, like, if I'm making 120,000 a year, I would take making 3 million and paying the million in taxes any day of the week. So that's first perspective. And that's what happened to me as I started doing more and more deals, I was focusing on my cash flow and my sales proceeds in my income. And I didn't mind giving a third of it away. I mean, I hate to say it, I just didn't know any better. And then I met somebody that had more apartment buildings than I did, had more income than I did. And I was speaking in an event and I shared how I paid 935,000 in taxes. And he said, brad, you need a new accountant. And so if I could share details. Again, I'm not bragging, but like, I just completed my 2019 tax return and before depreciation, my total income. And I have multiple businesses. I have an education and mentoring company, a brokerage business. I have apartment buildings, 17 apartment buildings. The cash flow, but my total income is over before depreciation income minus expenses, it was over $5 million. But because of depreciation, we paid zero in taxes. Now I also, my tax home is Florida. And so I'm just talking about federal tax, but I don't pay state tax either because I'm in Florida, okay? And we run our company out of Texas, so both of our states where we reside and where we run our business. Or zero state tax, zero city tax, but I'm talking about federal tax. So imagine a physician that makes a million dollars. And I don't know, I don't know how much physicians make. I mean, some do, some don't. Pick a half million, a million, whatever the number. Well, if you make a million dollars, you're going to be paying 400,000 in federal tax, right? And so how do you reduce that? This is when it comes down to if you're married and file a joint return and your spouse could qualify as a real estate professional. And real estate professional status is just a tax filing status. It requires no license, no education. And go ahead and Google all this, right, because I'm not a tax advisor or financial advisor. And for your listeners, just Google qualified real estate professional. But you need to put in 750 hours per year and actively participate. And if you do that, then your passive loss from depreciation could offset income. So, like, I have a lot of clients, I call them students, but I have a lot of clients that I mentor. And let's say the wife is a physician and the husband wants to get out of the rat race. And maybe he's already quit his job or he decides to quit his job. I don't ever advocate someone quit their job first. But sometimes people come to me and, you know, the wife is a physician making a lot of money and the husband's like, well, I just laid off or I quit my job, or I'm going to quit my job and I'm going to do real estate full time. And so he becomes the real estate investor. They buy a building, they syndicate A building they buy direct ownership. They have passive investments. And because he's actively participating and putting it in 750 hours a year, which is only 15 hours a week in real estate related activities, they could take that depreciation that they're allocated from their investments and offset earned income. And I have lawyers and doctors and highly paid executives that are in that married filing jointly situation. And so what if you're not? Okay, what if you're a physician out there and you're making a lot of money and paying a lot of taxes? Well, what will happen is your investment, whether it's passive or direct ownership, you're going to get depreciation. But the challenge is, can you use it in that calendar year? So you might not be able to use it because your depreciation loss is only going to offset your passive income. And your income from a physician is most likely earned income. And so it's not going to offset it, but it will carry forward and offset other passive income. So if you invest in multiple real estate transactions and you're passive in like four deals, and some of these deals are making a lot of money, that's passive income. So your depreciation loss will offset that income. And when you sell the property or offset your capital gain. The other advice I would have, I mean, if you're single and starting with a clean slate and you're writing down your criteria for the perfect spouse, just pick somebody that could spend 750 hours a year in active real estate and that's an added bonus. I'm kidding, Peter. You know that I like to play around, but I actually tell people that I'm like, hey, if you're writing down your criteria and you're a physician, just say, I want to marry somebody that become a real estate professional.

Yeah, that's awesome. Do you see that tax benefit going anywhere anytime soon?

Well, I do, and it's not going in our favor. And the reason is that depreciation always existed in real estate and there was a change.

Can you stop for one second and just explain? We've gone a little bit about depreciation. I realize that some people may not know what that is, but just a quick one or two liner about what that exactly means.

Over time, real estate, the market value usually goes up. Over time, prices go up. So you have market appreciation. And then in multifamily or apartments, we have, they're valued by income. So the more you increase the rent and the more you increase the occupancy, the more valuable the property is. And we call that forced appreciation. So generally the model for buying apartments is we buy the building and through our business plan make it become more valuable, not just from the market, but by our operational strategy. So the value is going up. However, the government lets us assume that it goes down in value every year. So we have the market value, which is what we could buy it for and sell it for, but then we have the value on our tax returns. So say, for example, I buy a $10 million building and I could take a percentage of that $10 million every year and it becomes less valuable on my book value or my tax value. And that's called depreciation. And the reason the government lets us do that is there's the theory that over, you know, there's going to be wear and tear and, and deferred maintenance is going to build up on the property, so it's become less and less valuable. Like for example, a lot of people know the term depreciation when they buy a car, right. What do they say happens as soon as you buy a new car and drive it off the lot? It depreciates value.

Yeah, immediately.

Oh, you could take the same concept with apartment buildings, except the market value doesn't go down. But the government, when you file your tax return, the government lets you make it less. It's less valuable on paper, it's more valuable on the market, but it's less valuable on paper. So that's depreciation. And so that's a paper loss that could actually it's not a cash flow loss. Like if I buy a $10 million building and the government says, well you've owned it for two years and now it's only worth 9 million. Well, I lost a million dollars on paper. So If I have 300,000 in cash flow, but a million dollar loss, my net loss is $700,000. So how much do I pay in tax on a net loss? I put 300,000 in my pocket and I can go spend that money. Woohoo. And then I get my Schedule K1 or my tax return for that entity and it shows 300,000 in cash flow, depreciation loss, a million, net loss of 700,000. So how much, how much tax you pay on that loss of 700,000?

You're not paying anything.

Yeah, yeah. And that 700,000 might be able to offset your other income, which it does for me. So it could be a big deal. Okay, so the reason why it's going to go away, and it is scheduled to go away In January of 18 the Republican Party, led by our current president, who by the way, happened to be a real estate investor and business owner, they pushed through benefits for people that own real estate. And so what the benefits are now is depreciation. Always existed. It always will, probably. But they gave us extra benefits where you get more depreciation faster. And here's my question to you and anyone listening. Is more money faster? Like some people say, oh, bigger isn't always better. But to me, I can't think of a case where more money faster isn't better. Like, think about it. It's like, well, do you want a million dollars right now or do you want it over the next 30 years slowly? It's like, no, the only piece in the one, the only people that want it slowly are kids that don't know how to manage it. Right? So it's like, no, give it to me now and I can invest it. So in 2023, some of these laws that were changed to be in our favor are scheduled to go back to pre2018 levels. So they're still good in 2018, but we actually have a limited window between now and the end of 2023, or actually it's the beginning of 2023 to really maximize these tax benefits. And again, I'm not being political, but it's just the fact when Trump was elected, he unwound in the Republican Party. They unwound some of the stuff that Obama did. They unwind, they tried to unwind Obamacare, they try to unwind the Paris climate accord, they try to unwind the Iran nuclear deal. And they did some of that right. On the other side of the coin, if the Democrats win, they can try to unwind what Trump did for business owners and investors on the tax policy. And I'm not saying it's good or bad, it's fair or unfair. I'm just saying it is what it is. So if the Democrats win, they may start to unwind some of these laws that are already set to expire in 2023. They may try to unwind them a little sooner. So this is why. And there's another reason too, but this is one of the reasons why right now is actually one of the better times to be investing in real estate, to be investing in apartment buildings, because there's a potentially one to three year window where you're going to get more tax benefits now than ever before in your life. And I'm 53 years old and I've owned my bought my first apartment building in 2002. So I've been doing this 18 years, and I have more tax benefits now than I ever have in 18 years. And it's going to go away in one to three years.

Well, let me ask you, you said this might be the greatest time for taxes, but I think something that's on a lot of people's minds is what's going on right now in the world. Obviously, with COVID things are happening. The economy has shut down in many ways. Obviously we've gotten stimulus packages here sort of thing. But those one might go away as well. Now that you see, you know, you see apartment buildings and deals all across the country, you're working with a lot of people there. What do you see happening right now in the market in the short term, in the longer term, like in a year or two, and then kind of where we are, like in that three to five year kind of window?

Well, that's the $64,000 question. And let me answer this a couple of ways. One is there's people that are a lot smarter than me that study, you know, the economy and economic cycles. And Peter, you know, you know, some of these people, right? But my question is, how rich are these people? Some people have been saying there's going to be a crash, like 2012, the upcoming crash of 2012, the Great Depression of 2015. Look, you would have to be a fool not to believe there's going to be some impact because of COVID and there already has been. And things aren't the same and may not be the same for a while, if ever. Like, I don't know. I mean, I would imagine at some point they would be. But I could tell you this. Okay, so let's start with some facts we've heard a lot about, like renters strikes, eviction moratoriums. I could tell you that in April, May, June, July and August, we're still in the middle of August. April, May, June and July. Nationally, across the board, the apartment sector has been one of the more resilient sectors. The fact is, nationally, collections are down, but they're down in like the 2 to 3% range. So if I owned an apartment complex, which I do, and I look at my monthly financial, I own 17 of them. Not all direct 100%, but I general partner or passive investor in 17 deals. I look at my financial statements, which I do, I could barely tell the difference. Now, maybe one or two are a little worse than a few percent, but actually there's one or two that are even better. And so one of the things I say is up until now, I could have fallen asleep in a coma and woke up. And if I didn't hear what was going on with the news or go outside and see people with masks on, I could look at my financial statements and I wouldn't know anything was happening. Are we out of the woods yet?

No.

And why is that? Because it's really just now that August is the first month that the stimulus package hasn't been out, but there may be one coming. Like we don't know. Trump did this executive order and there's still probably negotiations and there's still an election. And we all know what happens when elections come. Both parties do irrational things, right? I mean, I don't know. I'm not going to go there. But to me, we have September, October, November, and my vision after that is whatever happens is going to be in place for the next four years. So I'm not saying it's all going to go away. I'm not saying it's all going to be fixed. I actually think there's going to be some long term consequences from COVID 19 and I think it's really just gonna depend on how, you know how, on how things go. I mean, it's hard to say like some people are predicting like a five year, not recession, but depression and others are predicting like I could tell you what's going on right now in multifamily prices haven't changed that much. There was this huge expectation that we're gonna be buying deals at 25% discounts. But look, as a business owner, if my income went down 2%, maybe I'll give you a 2% discount, right? I'm not giving you a 25% discount because you as a buyer are building in uncertainty into your underwriting. So right now there aren't that many discounted deals. Now I think, and again, I could be wrong. I think there's going to be discounted deals in the next six months because the stimulus packages are going to be running out even in places like Texas and Florida. States that were opening up from COVID started to slow down or reverse their opening up because they had more cases. Again, I'm not being political, I'm not going down like what I think about it or not. The fact is when things aren't opening up, people aren't going back to work. And now with virtual schooling, what happens if you're a parent and you were wanting to go back to work, but now your kids at home doing virtual class and you can't go back to work or you can't look for a job. So again, I don't study this stuff, but I surround myself with people that study this stuff. And so I think the consensus is there's going to be some damage. And there's going to be. And whenever there's damage, there's going to be people that freeze to death. Like we talk about economic winter, but there's going to be opportunities for people that are prepared. So the better question is, what are we doing to be prepared?

And it's a follow up question.

Well, it's better to be prepared and have it not happen. Like, I mean, there's part of me that's like, man, I hope that we blow through this and things just go down by a few percentage points. And, you know, I hope that some of these conspiracy theorists are right and as soon as the election is done, this kind of goes away either way and the economy gets back and the economy opens up and people go back to work and everything's great. But I don't think that's going to happen. I think it's going to be slower recovery and there's going to be businesses and apartment business owners that can't survive the downturn because they're poor operators or having partnership issues or have poor liquidity, you know, and they don't have enough equity to get through a downturn and their vacancy goes down and their concessions go up. You know, for some apartment owners, a 20% drop in income for three or four months in a row could put them out of business. And so what I'm doing to be ready is I'm ready. I'm very liquid, I'm educated, my saw is sharpened. You know, the seven habits of highly successful people. Seven. Habit number six is sharpen the saw. So my message to people that want to take advantage of this opportunity and be in this one to three window of the best tax opportunity of all time is get ready and sharpen the saw. And the best way, the best way to get ready is to get educated. It is, it's to get educated, build your team and be ready to go. If you wait six, seven, eight months, once the opportunities are there, you're not going to get them. The only people that are going to get them are the people that have their teams built, have their investor database built, they have their business plan built, have the relationships with lenders, brokers, management companies, all the providers that they need to be successful and they're ready to go. Yeah.

Brad, this has been awesome. I want to thank you for your time. We're so lucky. We're going to have Brad come and speak, actually, at our conference that's coming up on October 10th through 11th. It's financial freedom through investing in real estate. Brad's going to come and speak to us and teach us some more, and so look out for that. We haven't actually announced sales of any sort of tickets. Honestly, you'll be surprised when you see how much those ticket costs. It's actually going to be free on the front end, but Brad's going to be coming and speaking to us. And one more thing that he actually talked to me about, I heard that he's actually running a big conference, and Brad brings in the big, big players. Brad, can you tell us a little bit about the conference that's coming up right now?

Yeah. So this is. I'm really excited about this event. You know, Peter, as you may know, I do a few times a year, I conduct a weekend training event where I teach people for 16 hours. But once a year, I am not the main teacher, and I bring in other speakers. Okay. And one of the things that I've learned is, you know, you want to surround yourself with if you want to. You know, I'll probably get it wrong, but, you know, if you want to fly high, you got to soar with the eagles, right? So in 2018, I did my first, what we called the National Apartment Investor Conference. And as you can see by my virtual background, our company name is Brad Somerock, Apartment Investor Mastery. We have the conference, and it's called aim, which is Apartment Investor Mastery National Conference. And we had Grant Cardone as our keynote speaker. And it was our first one we did with outside speakers, Grant Cardone. We had 800 people live in Dallas in a conference room. And then I'm thinking, oh, my God, I want to do this again next year. And we had other speakers, too. So in 2019, I'm like, well, how do I top Grant Cardone? And then we had Robert Kiyosaki, and it's arguable as who's better Kiyosaki, Grant Cardone. But I'll tell you, Grant Cardone is out there on social media, but nobody has written more successful personal finance books than Robert Kiyosaki. I mean, I would imagine 80% of everyone listening read one of Robert Kiyosaki's books, right? The guy has impacted millions of lives. So we had kiyosaki in 2019, and then 2020 before COVID I'm like, well, how do we top that? So we were going to do an in person event in Dallas. And of course we switched it to 100% virtual so we could just reach more people. And so this year we're going to have a two day event and we have two keynote speakers and it's Robert Kiyosaki and Grant Cardone. And so it's going to be like, these are, I mean, I don't know anybody that's thrived during COVID more than Grant Cardone. If you follow him on Instagram and YouTube, I mean, this guy is like buying large apartment buildings, raising hundreds of millions of dollars through his Cardone capital fund. His company is growing. You know, he's hiring people, he's got a great sales training program. The guy's a genius. He's controversial, he's polarizing, he's got a lot of haters, but he's thriving. And so Grant's going to come in and share with us how he's thriving in all aspects. His sales business, his apartment business, his capital raising business, how he's thriving, especially since COVID 19. Kiyosaki, on the other hand, is also going to talk about why he likes real estate, why he likes gold and precious metals, things that he doesn't like, what he thinks going on with the current times. And he's unfiltered. So you're going to get a amazing perspective from Robert Kiyosaki. Big picture. Now, some of my other speakers, I got a guy that owns 14,000 apartment units. He's not a celebrity, maybe he should be because he's probably just as rich as Caron and Kiyosaki. But he's an apartment guy, but he owns 14,000 units and then his partner manages them. So he goes out and buys them. He's the acquisitions and debt and equity guy and then his partner runs the management arm. And so they're going to be speaking and they're going to be talking about how they're finding deals at a discount, off market deals, how they pivoted their management company during COVID and went virtual and all the things they're doing with technology to move the needle. We have Tom Wheelwright, who is Kiyosaki's accountant and now my accountant, and he's going to talk about taxes. He's read the entire Biden tax plan. So if Biden wins, he could tell you in my event what to expect. Okay. He's read the Heroes act, the Hills act, which are the Republican and Democratic versions of a stimulus package that hasn't been passed yet. I mean, it's a great event. It's not 100% free. And one of the reasons is truthfully, and I'll be honest, I don't mind. I'm, you know, these guys are, you know, $100 million plus guys, so they have speaking fees. I'll just be honest. Okay? So, I mean, I could get all these free speakers like you got Brad Somerock at your event. You know, he's not charging you, but you know, Grant Cardone, you know, he's not free. Okay, but you know, it's a couple hundred bucks and you get two days.

The value is. It's a no brainer. I think for people that are looking to find out more about real estate, especially, I mean anybody if you're at intro level, you're at more an advanced level, you want to get some more techniques. It's no brainer. I mean, I saw it and I was like, Brad, how can we make sure a lot of people in this group. And that's why he volunteers to come on and at least educate us to talk about it. The other thing that I asked him to do, and just so everyone knows, I always disclose everything. I have no financial interest in this at all. Nothing in this for me. But I asked Brad if he could create some sort of discount for our group exclusively. And he said he'd get back to his team and get back to us. And so he actually created a special link for us. So he graciously agreed to give everyone who's listening to this part of this group 25% off ticket sales, whether it's the regular sales or the vip. Again, nothing in it for me, just a discount for you. And you won't see that advertised anywhere else. So yeah, I'll put that in the link to this so that everyone can do that. And Brad, I hope to see a lot of people there. I'll be there.

There's going to be virtual networking. I'm going to have my service providers like, you know, besides the big name people, okay, and the guys that own 14,000 units. And Tom will write, we're gonna have Garrett Sutton, who's also a rich dad advisor for asset protection. We're gonna have Robert Helms, who's like a podcast where he runs the real estate radio show. Maybe you've heard of these guys. They're good friends of mine. His partner, Russell Gray will be there. He's a financial strategist. And then like the companies that I work with for lending, insurance management, water conservation, you know, for apartment investors. So somebody could come to this event for a couple Hundred bucks. Get exposure to the perspectives of Cardone and Kiyosaki and drill down, learn from people that have 14,000 units. I'm going to have student success panels, first time syndicators, passive investors. So like there is really something for everybody. If you're a newbie, it's a great place to, to get started. And if you have, if you're an experienced business owner, an entrepreneur and real estate investor, it's a great place to go to the next level.

Awesome. I hope to see all of you there again. I'm going to put the link somewhere on this so that you can get 25% off. If you guys are. Can you tell us the dates again of it?

September 19th and September 20th. So just, you know, less than four weeks away.

Okay, awesome. Well, cool. Thanks so much for this, Brad. I think we've learned a ton. Hopefully you can come on again soon. We can learn from you some more. And I really appreciate your time. And if you guys want to hear from Brad again, obviously he's got his conferences, he's got his, you know, his groups, he's got his live. Hopefully that'll come back soon and also he'll be at our conference. Anyways, thanks so much for your time. Hope everybody enjoyed that.

Take care everyone. Hey, thank you, man. Loved it. Boom.

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