How To Get Financial Wealth Through Passive Real Estate Investments

Hey, it's Mark Podolski, the land geek with your favorite niche real estate website, thelandgeek.com and on this week's Art of Passive Income podcast, I've got a treat. My guest today is Alan Lomax and Dr. Al Lomax, and he is the CEO and Investor Relations manager of Steed Talker Capital, a multifamily real estate investment firm committed to enhancing the quality of life for communities and investors. He's been doing this for quite a long time and has an incredible story. So, Al Lomax, welcome.

So glad to be here. Mark, thank you for having me.

So, let's talk about Steed Talker for a second. What is going on with you and these horses?

Well, quite a lot. They've been an important part of my life for really the last 15 years. I've always wanted horses in my life, but it really wasn't until the last 15 years that they got into that I really got into horses. Got my own, started going to what they refer to these days as natural horsemanship clinics. Learned a whole lot about being with horses and how to, I guess you would call, manipulate horses to do what you want them to do from what is called a natural horsemanship perspective. But in actuality, it's not particularly natural for horses. May be natural for humans, but not necessarily for horses. So anyway, evolved from that and got into, to really started working with other people who, who look at horses as being intelligent beings who have their own ways of looking at the world. And like all of us, like to work as autonomous beings. And so we work with them. I work with them now from that perspective of they have their own will, they have their own desires, and they have a very unique perspective of looking at the world. And we follow the strict rule of just like you do when you're dating, no means no. And if a horse is telling you no, there's a good reason for that. And so it is actually a way of respecting the horse in ways that I never learned from natural horsemanship. And from that have developed the kind of relationship that I've always dreamed of having with horses, which is just a relationship of beings from two different species respecting one another and working together in harmony and taking those same, same approaches to working with humans has also has changed my life and, and trajectory of, of essentially everything I do. It's just a way to, to work with beings on this planet.

Yeah, let's talk about that approach. Let's, let's rewind the tape and talk about how you got started in multifamily.

And.

What you like about that niche and also will bring the horses back into it.

Okay, so I got started in real estate investing back in the 1990s when I was a professor at the University of Guam. And I purchased a vacant lot in Colorado where I was from, and had a home built there. And I had it built intentionally with what you would might call a mother in law suite so that I would have a place to go back to when I was here in the States. And that is turned out to be what they call these days is house hacking, is splitting up houses and, and generating income from them while also at the same time being able to utilize those for yourself. Well, that went pretty well and I moved back to the States and I really, I essentially continued that process and got into fix and flipping and small mobile home parks. And so how did that all turn into to passive investing with multifamily? I'll try to keep this short here, but in 2008, everything was going well and fine in my profession as well as in my investing career, and I had developed wealth really far beyond what I had ever imagined was even possible. And then 2008 crash hit and I lost everything. The job that had brought me tremendous fulfillment and satisfaction and most all of my investment assets. That was, to say the least, a dark and dreary time. And even though, well, even though I am supposed to know something about psychology and counseling, I did everything that everyone's not supposed to do and entered a period of really deep, dark depression and finally came out of that through granting myself grace and forgiveness and changing my mindset from a mindset of a fixed mindset that this is the way things are, to a mindset of growth and that looking at challenges as opportunities. And so I got educated where I had not been before in terms of real estate. I was just blind by the seat of my pants. Started looking at all kinds of different alternatives and different ways to go about this and realized that at my age, I didn't really have the luxury of starting over from scratch. You could say I needed a way to scale and scale pretty rapidly. And so I came to multifamily, joined some mentor groups, developed an extensive, extensive network through my podcast. And my intention was that I was going to work on the active side of multifamily. And I realized really early on that I didn't want to do that. I'm still in higher education, enjoy it a whole lot, and I've only got so much time and energy. And so I looked at it from the passive side and developed a, a capital raising private equity firm. And, and in a nutshell, I guess that's it. A lot of details left out of that. But we've only got so much time here, so I don't want to totally take up and dominate it with my story here. So wherever you want to go with this, Mark, just ask and we can go there.

Yeah, I mean, I hope I'm not pouring salt into an old wound, but I would be curious and I think most listeners, because we all go through something like that. I know I went through it. Mine was really 2010. And, you know, I really, I wouldn't say I lost everything, but it felt like that at the time. And I had, you know, I had a big lifestyle and I lost that lifestyle. And really, for me, the feeling was that this sort of, this feeling of never having enough, and I would keep chasing it and like, okay, the more money I made, the more money I spent. And I would fill up my life with these things and I realized, okay, this is not enough. And then when it was all gone, I realized, oh my gosh, this is just an internal game. And I mean, this, years of therapy and coming back that I figured this out, but that there's nothing out there that's really gonna bring me any satisfaction. It's really my own internal game. And I'd be curious if going through this dark night of the soul and losing everything, going from wealth beyond your wildest dreams to losing it and then coming back, what that was for you and what advice you would give someone else.

Well, I, I, you know, I, I, you know, everybody's different. But my experiences through that time were that the, I mean, there was tremendous depression. There was tremendous amounts of shame, humiliation and embarrassment. And, and so the first thing I had to do was was to forgive myself and to grant myself the empathic understanding and unconditional positive regard that I would give a friend or family member who was in the same situation and granting that to myself and then realizing that, I guess that all that physical wealth that I had been enjoying and had wrapped myself in was when I really looked at it, it was a really small and significant aspect of who and what I am. And we'd been talking about horses earlier. I had gotten into horses before 2008, just shortly before that. But it was really through these relationship with horses that I really came to see that every moment is a precious moment and that to find beauty and joy in the moment is the richest thing that we can ever really give to ourselves. And I spent a lot of time with horses, really in what you would call deep meditation, it was not necessary. I wasn't doing anything with the horses, but just being in the presence of horses and, you know, horses, bless the heart, they don't have all of these human concerns, and they spend. They just naturally spend a lot of their time in that present moment. And so they are perfect vehicles for leading us into that place and finding that tranquility in the present moment, no matter what your circumstances may be. And with that, and with additional counseling and coaching and mentoring, instead of looking back at all the negatives, instead of looking at all of the things that couldn't be done, I just started looking at the possibilities. And, you know, when. Where we focus our minds is where we go. And in those deep, dark times, I mean, it's. It's so easy to look at everything that's wrong and takes intentionality and purpose to, to redirect our minds, to look at the possibilities there. Like I said, you know, that's. That's me, that's my story. I, you know, I don't know that that's going to work for everybody. And of course, not everybody has the opportunity to be with horses. But. But I think probably all of us have an opportunity. Even those of us who live in metropolitan areas can find space in nature to. To reconnect with nature and then to reconnect with our authentic selves.

Yeah, no, there's a lot in there to unpack. And since this is the Art of Passive Income podcast, let's shift to the passive income part. Because you didn't want to necessarily be the operator and the one finding the deal, but you wanted to help other people and you created the specialized knowledge that, like through mentorship and through doing deals, that you could spot a good operator and then created this private equity group and would raise this money to then go ahead and deploy that capital with the operator. Am I understanding that correctly?

That's correct. Yes, I am.

So what is the benefit of the investor to go and work with you directly versus going straight to an operator?

Well, the. Well, I guess the long and the short of the story is that if you come to me rather than going to. To an operator, then, you know, you're working with a well vetted ethical operator whom I've had a relationship with and have developed that relationship over really essentially the last four years. That's if you can find that operator. And these are private placement agreements, and they're called private placement agreements because they're private. You can't go out to the stock market and find these offerings. And so that initial step of even finding those operators is an arduous task. What you're going to be told, if you go out to any of the sites and you want to invest in as a passive investor in multifamily properties, the first thing they're going to tell you to do is start networking, go to local meetups, put your name out there. Anyone who's gone through that process knows that time consuming, expensive going to all of these different events. And in any one of those events, you may turn up people that are going to be viable for your investing, you may not. So it's a lot of time, effort, energy. I've already done that. So that's the big advantage to that. In fact, that's the biggest advantage of working with me, although my program is a comprehensive mentoring program. And I take people who have never invested passively in multifamily from being totally ignorant to being able to look at an offering memorandum and from that offering memorandum look at the private placement agreement, the operating agreement, the subscription agreements, and know exactly what to look for. And all of those, because all three of those are the legal documents you'll be signing when you put your money down to invest in that. So I take them from absolutely no knowledge to really understanding what it is. And so they've got my expertise, they've got the network. And just in this last quarter we closed over 85 million in transactions. We brought 650 new units under management. All of those are delivering to our investors 18 + annual rates of return with 2 times equity multiplier within 5 years and 7% + preferred cash on cash returns distributed on a monthly basis. And so there's a lot to be gained by going through a save your time peace of mind in knowing that who you're working with are vetted operators whom, who have a stellar reputation in terms of their ethics and an excellent reputation in that they deliver on what they say that they're going to deliver.

Wow, that's, that's, that's a lot. What I'd be curious, what would be the, the three biggest red flags you would look for when vetting those PPMs or offering memorandum subscription agreements? What, what would raise your, your alarm bells at looking at either the operator or the deal and you know, so the listeners could say, oh, okay, well if I was going to, you know, try to, to do this, these would be things I'd want, I'd be a better educated investor.

Well, the first thing you, you would want to do is really to, to find out if they have a, an, a reputation of being ethical operators. And you know, with the Internet out there, you can do a lot of Internet search, you know, just to find that. Have they been involved in lawsuits, are there negative comments in various different sites and what have you where you can track them through podcast and so on and so forth. So that is certainly what we are going to do. But even further than that, before I work with anybody or even think about working with them, I've had a number of one on one conversations with them. And just like we're doing now, you know, we can look one another in the eyes and I do that with each and every one of these. So that is the first thing I'm going to do. And then the next thing I'm going to do is to, to actually look at their track record and an ethical operator is going to be able to open those past records and I can go through those and I can. And what I'm going to look at is what were their projected returns and what were the actual returns with the completions of those properties. I'm going to look at what was their, what was their operating agreement and did they follow that agreement and follow through with it as it was planned and essentially what is the bottom line? Did they deliver what they said they were going to deliver? So those are the things that I would look for and just, well, I mean further in conversations and vetting them and working with them, I want to know that they know how to do due diligence. They know how to look into the communities that we're investing in and know whether there's employment growth, whether there's population growth, whether there's income growth in those three areas. How well do they know the areas in which they are investing? I also want to know and their projections as opposed to the outcomes are going to tell me whether or not they really know how to do underwriting. And if they know how to do underwriting and they're underwriting conservatively, they almost always are going to come out of those deals performing better than what they had promised that they were going to do. So I want to know that they know that underwriting process and I want to know that they have a stellar reputation of underwriting conservatively. So I look at really all of those things. And I will want to know how they've worked with property managers and I can certainly check that out by looking, by contacting property managers that they have worked with in the past and get a really good idea if they really, truly know what it is that they're doing in terms of syndication. And, you know, we were talking about when, I mean, when I thought that I was going to go into the active side of it. I mean, I'd spent several years, I have a Realtor's license, I've done a whole lot of real estate transactions myself. And so all of that transactional basis isn't new to me. But when I was going into multifamily, I learned all of those things. I'm just talking to you about the underwriting process, the procurement processes, insurance, lending, all of those things that are necessary in that procurement process. I know how to do them, and I know enough about them that I know I don't want to spend my time doing those. So just for example, in the last quarter, in closing those $85 million, how many realtors did I talk to?

How many?

Zero. How many sellers did I talk to?

Zero.

Zero. Exactly. How many contractors to do the due diligence did I talk to? Zero. None of that. How many property managers? Zero. So it's truly passive and the rewards are immense.

So, yeah, that sounds like a good business model there for sure. Now.

Working. Working for me. So, yeah, yeah.

I'd be curious about, you know, the interest rate environment as interest rates are going up. I know a lot of multifamily operators really took it hard because they didn't buy down the rate or they didn't lock the rate. And is that a forgivable sin in your world or is that an unforgivable sin?

It's an unforgivable sin. And thank you for bringing that up because that is an extraordinarily important part of that underwriting process to start with. And an extraordinarily important part of what you just mentioned is getting the lender terms that can mitigate that risk. And operators who know what they are doing are doing fine. Those operators who were purchasing properties in 20, 20, 21 and 22, and the early parts of 23, who were novices or they just really didn't understand the underwriting process and didn't underwrite conservatively in the first place, and they didn't know how to deal with lenders in order to get the precautions that you had just talked about, they are hurting now. And I was just talking to a lender yesterday, and we have been told for the last, oh, I don't know, nine to 12 months that all of these deals are going to be there because of all of these people who didn't underwrite properly, and they're now underwater because interest rates went up and they had no protection against that. And that just hasn't happened. That just hasn't happened. And he's a lender and he goes, well, what has happened is, is that lenders have kicked the can down the road and given extensions to these operators, hoping that these operators can get their heads above water and they won't have to foreclose on him. But he said the likelihood of that happening is rare, to say the least. And he said that we are going to start seeing those foreclosures come onto the market within the next three to six months here. And, yeah, that's unfortunate for those operators, but you're absolutely right. That is a critical part of underwriting. It's a critical part of putting the deals together. And why is it an unforgivable sin? Well, you could lose the property. What also happens in these cases is these operators go back to the investors and say, we're in a little bit of trouble here. Can you divvy up some more equity to help us through these times that dilutes your investment? And like the lenders, you're going to be asking those same questions. If I divvy up this additional equity, are you going to be able to pull this off? And that's always a question. Wow.

Well, given your, your, your long track record now in real estate and investing and, and, you know, your, your relationship with horses and, and how that sort of colors everything that you do now, what would you say is the Dr. Alan Lomax definition of success?

Well, I think the definition of success for anyone is to ask yourself, are you living an authentic life? Are you living a life of passion that brings you fulfillment and satisfaction and happiness? And if you can answer yes to those, then I'd say you an extraordinarily successful person, because those aren't easy things to do. And, and, you know, it's nice to have wealth on, financial wealth on top of that, but that's just, you know, that's just icing on the cake. It isn't. It's not really an authentic life. It's not really a life of, of fulfillment and, and passion.

I love it. I love it. Well, your mentorship has been invaluable. We're now at that point in the podcast where I'm going to ask you for your tip of the week, a website, a resource, a book, something else actionable for the art of passive income listeners to go improve their businesses, improve their lives. Before you do that, I have to give A shout out to our sponsor, which is flight school. Learn how the next 16 weeks can transform your life by creating a passive income of any renters, rehabs, renovations or rodents. And I know what you're thinking, what about the tuition? Ain't gonna cost you nothing. Guaranteed you're gonna make it back 180 days or less. Just show us you did the work. Learn more go to landgeek.com training schedule a call with one of our land investing experts, the landgeek.com training Dr. Al Lomax. What is your tip of the week?

Well, my tip of the week is that a lot of people listening to this podcast may think that you and I are competitors, but I don't think so. I think that you have a gateway into real estate that I don't have. I'm looking for people who have developed some wealth and they have the ability to take that wealth and that capital to invest passively.

Your.

Land, your flight deck program is a perfect way to do that. It's a perfect way to begin to get into real estate with very little capital and a way to develop it and develop it pretty rapidly. And once you have that mechanism in place, then you are going to need a place to park your capital where your capital is not just sitting idly but it is working for you. And so I'm the next step on your journey there. So I guess that's one tip. The other is that some people see things as they are and ask why. I see things that have never been and ask why not and what people can do here if they want to learn more about what I'm doing. They can get our exclusive High Yield Investment Blueprint 60 days to 18% returns and they can find that at high yield blueprint.com that's www high yieldblueprint.com I look forward to hearing from your viewers and listeners.

Amazing. I will have links to highyieldblueprint.com and my tip of the week is Learn more about Dr. Al Lomax at Steed Talker.com SteedTalker.com There's a wealth of information on there as well. And yeah, I agree we are definitely not competitors and there's definitely people out there who are accredited investors. They need a place to put their money and like you said, it's not always obvious where you're going to find the best operators and to have a trusted source who can vet them understands the complexities of a multi family deal is invaluable. And so there's a reason that you're able to raise the money that you're raising and producing the returns that you're producing for your investors and your partners. So go there. Steedtalker.com and if you love horses, there's going to be a lot of horse pictures in there as well. And, and maybe if you've never heard of the, the power that, that equine therapy can, can give people, you know, check that out as well, because there is something magical about the horse. And it's one of those maybe ineffable types of experiences that you have to actually go and do that words don't really truly convey. Is that, is that fair to say?

Yes. Absolutely. Absolutely. Thank you, mark.

Thank you, Dr. Lomax. And I want to thank the listeners. Remind you if you're getting value, just do me three favors. Follow Rate Review the podcast, send a screenshot of that review, support the Land.com and I'll sign send you a signed copy of our newest book, Dirt Rich 2 how to scale your land business without skipping a beat as the plot thickens on Dirt Rich too. So please do that. And even if you don't want the book, it just helps me get guests like Dr. Al Max to come on the podcast and even come back because he'll look at the reviews like, okay, this is a legit podcast for me, so just do it for yourself selfishly. All right. Let Freedom Ring. Thanks everybody.

Thanks for listening to the Art of Passive Income podcast. Are you ready to learn how you can start building a passive income without renters, rehabs, renovations or rodents? Schedule a free consultation@thelandgeek.com forward slash training. Let Freedom Ring.