Episode 100: It's All About Market Cycles with Bill Ham

Bill Ham is the Chief Operating Officer and the driving force behind Broadwell Property Group. He has upwards of 20 years’ experience in Real Estate with a proven track record of identifying, acquiring, operating, and divesting of large footprint Multifamily Housing. Bill can be seen and heard on countless podcasts and webinars as well as standing on stage giving presentations at tradeshows and other forums both online and off. Ham is a Real Estate Entrepreneur, a sought-after speaker, an author, and an operator but his real passion lies in education. He has been a coach and mentor to the future titans of Multifamily. Over the years he has counseled hundreds of students who have gone on to close countless millions of dollars in their own deals, many crediting Bill with their success. Bill was born and raised in Middle Georgia where he honed his craft opting to move to the big city of Atlanta in 2015 to expand his reach. He has a wife, Yvonne, and two dogs Jake and Lola. He loves gardening, water skiing, and hiking.
Get in touch with Bill: Broadwell Property Group

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Are you ready to bring your real estate game to the next level? My name is James Prendamano. I'm the CEO and founder of PreReal. And over the past 25 years, I've closed over a billion dollars in transactional real estate. Each week, a meeting with outstanding investors, high performing individuals, and visionaries operating in the real estate space. These are the people that are actually out there in the real estate game right now getting it done. This podcast aims at bringing anyone's game to the next level. This is the Prereal podcast. Welcome, everyone, to the PreReal podcast. So we've got a lot of value coming at you today. We're joined by a special guest, Bill Ham. Bill is the COO of Broadwell Property Group, and he's the founder of Real Estate Raw. He is a no nonsense, straight shooting, multi family guru, to be candid. And we're also joined by you may recognize Rob Nixon. He joined us in a previous episode. He is the Deal ninja, super valued top producer year after year, member of the team, and a heck of an investor in his own right in the medical and commercial space. So first, Bill, thank you so much for taking the time to join us today.

Yeah, pleasure. Thanks having me. Yeah, man. Always a treat to deliver value. And Rob, thanks for taking the time to join us as well. Of course.

All right, so let's jump in, Bill. I like to give the audience, just by way of context, a little bit of background on the journey. None of us woke up and were these wonderful savvy real estate investors. Right. So if you could just give the audience in a few minutes or less a little bit about the background. I know you're a pilot before and how you landed where you are today. Yeah, no pun intended. Right. As you said, I was a pilot by trade. Flying. Came out of school, college, started to fly airplanes, went to the 911 debacle. Kind of wind up being a flight instructor longer than I meant to. Long story. Became a corporate pilot, flew for a few years. I realized I was a bad employee. So that was kind of my first AHA moment. It's not that I really hated the job, it's just having a job hated me. I wasn't a good employee. So realize the important people actually were sitting behind me in a pilot's.

Really important from take off landing, and you're not worth much on the ground. So flying airplanes is fun. Being told when to do it, where to do it, how to do it, how long to do it. Not so much fun. So studied real estate for about a year. Just rich dad, poured out all the crap we all read. I went through all that stuff, and my very first deal was a Duplex. I'd saved up about $10,000 Duplex cash flow and a couple of bucks, $300 a month. And I walked away from the aviation career with the Duplex and said, I'm going to figure this out now. Fair car out there. I was 28 years old at the time. No debt, no family, no kids, none of that stuff here. That's great. Worst case scenario, I'll just go get a job if I mess this up. And I got into flipping houses and small properties, and then just over time, worked my way up into multifamily small, multifamily 1020 units, larger and larger, until I got up into large commercial assets. And that's what I do now, is syndicate own and operate larger apartment complexes. And I'm also the COO of Broadwell Property Group, which is my partner, Tony Morgan and I. And that's what I do. A lot of us were bad employees, right? And I wonder, as a student, were you a bad student also? You're the first person ever asked me that in that regard, and I've never thought about that. I was a terrible student. I was a C students. They called it cheating. I just called it syndication at an early age, you know what I mean? Because you have the notes. Come on. It's syndication, right? We get paid for that out here in school. I don't know. Potato, potato, right? They called it cheating. Whatever. Horrible student. Yeah. Really didn't do well in school at all. Funny thing now is I love studying, I love reading, I teach. Basically what I do is academics now. But yeah, as a student, hyper, wouldn't sit still, couldn't tell me what to do for nothing. That's terrible, dude. Yeah, that's funny. You mentioned that it was awful. C at best. Student so I'm finding there's a common theme, those of us that have made the leap and are kind of entrepreneurs at heart, right? I was a terrible student, and I was also a God awful employee. So here we are. You had mentioned some fix and flips and some properties along the way. Rob and I have done a number of those. I think it's important for the audience because unless you were blessed and you have access to a trust fund or you have access to capital, many of us go through that process of fixing flips entitlements because it's a pathway for us. Right? So Rob and I have worked on these deals where we want the sustainable cash flow.

We want what I call mailbox money, but to get there, to have enough skin in the game, at least we felt, to be taken seriously as we took that next step into the larger assets. That's how we cobbled the money together. And I think that that's a fair part of everyone's journey. And Rob, if you want to spend a minute on it, we've had a lot of fun doing it, and I think we've learned quite a bit during that process. Do you look back now and regret any of the properties we sold, Rob, or do you still look at it as kind of the bigger picture and it was a means to an end. No, I think it was the right move at the time, and I think realistically, we probably would have sold shortly after regardless, because of the way things were going. Yeah. So as you're going through these properties, folks, and you're starting to put money on the side, bill is the guy that actually took that next step and did it with a tremendous amount of success. So, Bill, for those of us that are in that place, right, let's forget about the folks that are still trying to get off the couch. There's a bunch of us that are ready to go, and we're looking to take that next step. Where do you start? Where do you start pulling it together? Yeah. First thing is education. It's always going to be my answer to almost every question. It starts with education. I tell everybody, the only real estate deal you ever have to worry about closing is six inches between your ears. You can close that deal, the rest of them don't matter. If you can't close that deal, the rest of them don't matter. Right. So it's really starting about your mentality, your thought process, and your education. And the education will lead to confidence, and the education is almost your crutch to get to experience. If you're trying to transition into a larger asset class, you're probably going to be doing it with other people's money. You're going to be looking for investors, you're going to be looking for partners.

You're going to be leveraging someone's capital, and that person is going to look at you and say, are you the right person? If you don't have a tremendous amount of experience, you had better have the education. The education leads to the experience, and everybody kind of feels like they have to have this big resume or nobody's going to take them seriously. That's not true. People will give you a shot and they will give you a break and they'll try out your first deal and things like that, but not if you sound like an idiot. Not if you sound like you don't know what you're talking about. So take care of the cheap stuff first. Get a book, $20, listen to the podcast, Google, whatever. And then maybe you want to kind of start investing in a higher level of education. So start off cheap. Do all the cheap stuff. Spend your hustle before you spend your dollars. Then you might want to start looking at maybe a higher level, someone that can help you move forward in the business and learn that's kind of the progression. And then look at deals. You just got to look at a lot. I can tell everybody right here the only two things you ever need to know about real estate. Know the values in your area. Look at more deals than anybody else. If you know what a good deal is and you look at a lot of deals, you're good. If you know what a good deal is, you never look at it. You're wasting your time. If you look at all the deals in the world, but you have no idea what you're looking at, you're wasting your time. So you got to really focus on education and really learn what is a good deal, how do we find them, how do we work with realtors, how do we work with sellers, how do we do all these things to identify a good deal? Obviously a lot easier said than done. And then you've got to rinse and repeat that process on a regular basis. So Real short answer would be start with your education and then just get out there and start looking at deals. It's free to look, it's free to analyze, it's free to do the math, do that. And in evaluating what's a good deal, everyone's got their own formula and their own metrics. What is a good deal to bill? Is it the cash on cash return? Is it the net dollars? At the end of the day, what is it that constitutes a good deal for you? Yeah, again, broad answer. A good deal, in my personal definition, a good deal is something that costs you more, that produces more money than it costs you to own, basically. All right? So that kind of starts to break it down and say, well, what's a good deal? When somebody asked me that, if they're asking generally what is a good deal, I answer with a question, well, what is your cost of capital? So we got to look at what is your money cost? If you own the money, then it's cheap. If you're going to a bank and getting 80%, well then cost of 80% is the interest rate. Well, where is this other 20% coming from? Is that investors? Is it your money? You got to look at what all the money costs. If you're syndicating it's about 80% with the interest rate, the other 20%, whatever your investors want. So I would say in that regard, a good deal is a deal that produces enough return to feed my investors the returns they want and have enough left over for me to be worth the return on effort. So that's kind of the answer. There is a good deal. Does it pay for itself and does it cover the people that are going to help you get into the deal? And if it covers all those things and it's in a decent location and you can get a decent loan, I'd say that's a good deal.

I will now start going a little off track to the question. Yeah, it's not about cash flow, it's equity. If you want to have that all cash flow equity conversation, you have to have both. First of all, I think when anybody starts arguing that appreciation is nice to have, I buy for cash flow or no, I buy for appreciation. I don't worry about cash flow. You're both wrong. You're all crazy. Look, if you don't have cash flow, you're not a stay in business. You've got to have cash flow to take care of all the bad days and the things at the break and things you didn't see coming. It covers all the bumps in the road. And if you don't have appreciation, you've never tried to exit a deal before. Anybody that tells you that they're not worried about appreciation is not somebody that's been full cycle on an asset. Because if you try to refinance the deal that has gone down in value, good luck to you. Give me a call. Let me know how that goes for you. You try and sell something that's gone down in value, again, good luck to you. Valuation and the appreciation has everything to do with the exit strategy you must have. Folks, we're jumping over a bunch of stuff in the timeline, but you're where I think is the most important part for people today. I've been through a bunch of cycles. You've been through a bunch of cycles. There is a time and a place, folks, believe it or not, where the banks don't lend. Rates are not even now with these little bumps. I find it hysterical. People are manic about what's happening with rates. This is still relatively cheap and free money. I was doing deals with 13% right, and there's a lot of runway left here, Bill. So for folks that are investing in deals today, we're seeing it dependent on a lot of liquidity events, refinances lost to lease, all of this upside, like we're at a point in the market and I'll stop at a certain point and I want you to finish it, then I'll share my thoughts. We're at a point in the market where what? What do you see happening next in the multifamily space? Big shift. Big shift. I don't want to use the word crash because I'm not quite sure I'm feeling a crash. Correction. Absolutely, yes. I think a lot of things in this we spend another hour just sort of answering that one question of what do I think is about to happen? But short answer is I think that we have a debt service ratio problem in the world. I think that a lot of people are going to become distressed sellers. If they got short term loans, the loan comes due, they did not get the revenue up to where it needs to be for them to get the price they want to get.

I think that's going to be a problem. And that's what I always tell everybody that's the greatest thing about multifamily is like, hey, if you go and buy a property this afternoon and you go get a five or seven year mortgage and the values crash tomorrow, so what? Just don't sell. Who cares? Cash flow. Keep going. You're great. You get a two year mortgage and that thing comes due and you're 18 months into a two year mortgage and you got that mortgage at three and a quarter percent, and now you're going to have to exit at six and a half to get you're in trouble. You're in a lot of trouble. So that's where I kind of think that a lot of people have gone out and gotten short term loans because that was the only way they could justify the price they were paying. They got short term interest only loans and they have raised the rents, but then the Feds just raised the rates. Now you're kind of still on par and you want to sell, and you're going to have a debt service ratio problem. Your revenue is not going to be high enough to get you the price that you want. And that's going to cause that's going to be good and bad. I think it's going to be bad for some owners, and I think it's going to be a great opportunity for a lot of people that are getting into the business to capitalize on a shift in the market. But yeah, lending is tightening up and I think that's going to expose some of the people that are over leveraged and can't operate. I also believe this is why I wrote the book Creative Cash that we're about to see a wave of creative financing on the way that it's going to kind of infill a lot of where the lenders or traditional lenders retreat and they will use a lot of creativity in that market space. But that's what I truly think. That's why I wrote the book Creative Cash, which is on Amazon. Check it out. Self explosion. So Bill, now how long have you been in the space, the more sizable stuff? About twelve years now. Ten years now. So you've seen a huge shift already? Oh yeah, big time. Yeah. If you look at really getting way off into the financial leads, just look at the monetary policy. If you kind of look at cap rates over the last 20 years, the cap rates have been on the decline for about 20 years. They did kind of rise a little bit in the eight cycle and then back down. But we've had pretty easy monetary policy for those 20 years. And so now if they severely tighten up monetary policy, I'm curious to see what that does because this market has been, I think, on a sugar high for at least three years, four years now. And now I think the economy is also on a financial sugar high. But whatever.

Hey, I've looked, I've been here 17 years. You've been here I don't know how long you've seen markets. I've seen markets. At the end of the day, this is all just chit chat. It doesn't matter if you get a good piece of real estate in a good location and you know, what you're doing and you know how to analyze the deal. None of this matters. None of this matters. Just get in, get a good piece of real estate, get a decent mortgage, learn how to underwrite deals. This is all irrelevant. I'm telling you. I've been here 17 years, and over 17 years, the only thing I can say is I didn't buy enough. No matter what the market cycle was, I didn't buy enough. I wish I had more. Yeah. So without a doubt, look, the worst markets is where we found the greatest opportunity. Yeah. I've been through two of them now, and they're always uncomfortable. No matter how much you had and how much you prepare, they're always uncomfortable. But if you're balanced and measured bills 100%, right, there's just opportunity out there and you still act. Bill. I would argue that there's been creative financing already in the marketplace. It feels like the big institutional banks have been really reserved and not jumping in where in the past they would have. So we've seen the emergence of these opportunities. Funds, equity funds, whatever you want to call them, and the small banks have filled a lot of that void and they've done really well for a couple of years. But I believe that there is a whole mess of notes that are going to come due in the next twelve to call it 30 months where inflation is running rampant. And if you're in the multi family space, folks, that's a great thing because you could recast your rents for the most part. If you're not stabilized, you're not controlled at the end of every year. So multifamily is one of those asset classes where in an inflationary period, you want to be heavy because you do have the ability to enjoy that upside. But if you didn't arrange for financing that allows you to get to what I call the other side of the rainbow, there's a world of hurt coming. So what policies do you see or what creative financing do you see is going to enter the market over the next however long you think it's going to be? Yeah, I think we're going to go from the flipper market speculator market into an operator market where operations will be rewarded far more than they have been over the last three to five years. We're flipping in the quick cash in the 18 months hold, and you made a few million bucks for no good reason kind of market is going to cool off and we're going to see who can really operate. That's kind of what I see. First answer, second answer. Yeah, I think seller financing and lease options are going to be the hallmark of creative financing. You're going to see a lot of lease options with people that are sellers that got long term debt. They did go out, get Fannie Mae, Freddie Mac, but now they're into a ten year mortgage and they've got massive prepayment penalties the fees and seal maintenance. They can't exit without paying off this giant loan and they need someone to assume the mortgage. But you don't really want to assume the mortgage because the loan assumption is going to be bad or the property is not in good shape. Whatever lease option, match lease option is going to be that in a nutshell, you're going to go and rent that property with the right to buy it some day in the future at a set price. And then hopefully you bring the operations and evaluation up. I've done a lot of those. And then if someone has full equity, they actually own some equity in the property.

You'll be looking at seller financing with that one. Outside of that and those are the two positive ones that I come up with. The third one always got to throw in the negative. That's me. But equity right now, I think you're going to see some LPs lose money. I think you're going to see some investors get some of their investment money written down. Yeah, those are the three things I think you're going to see. Two creative financing and one, people will lose some cash. My opinion, I think that there's no question about it that has to happen in this next iteration. So we just had a meeting on this this morning bill. Where do you start, right? Do we start courting lenders now that are heavy in the multifamily space? Where do you start? If you want to be in the right position to take advantage of what's coming around the corner? Yeah, I would say that really probably depends on what size asset we're talking about. If we're under 50 units, I always kind of split the world in 50 units and above and 50 units and below. If we're below 50 units, you're better off trying to go directly to owners. You're better off trying to set up direct mail, contact ringless, voicemail, text, email, whatever these kids are doing today, right? Get out and do some direct contact campaigns for under 50 units. Start tracking those people. That's kind of building relationships with sellers. If you're 50 units and above, it's really about building relationships with realtors. You can try the lender thing. They're likely to not really talk to you, not on the higher level. They're going to just refer you back to a Realtor. That doesn't work as well as the gurus tell you that it does. This whole contact the bank where that came from was back in I used to teach that and we used to do that back in a way where you could actually call up asset managers back in that foreclosure crisis and the asset managers will actually talk to you and basically sell your property right off the banks ledger. They largely, largely got away from all that and almost never do that anymore. So I'm not saying it's impossible, highly improbable. You're going to pick up the phone, strike up a relationship with a lender and go picking up deals from them. Unless it's more of like a private lender. If it's any kind of bank or institutional lender, realtor is the way to go. Now, the Realtors are the ones that get these properties and receivership. They're the ones that bank calls up and says, hey, come over and give me your opinion on value, this kind of stuff. So that's where I would start really working on is relationships with Realtors. Over 50 units go directly to owners under 50 units. Those are the two things that I would say. Third, if you can track the data, this is a little bit higher level, but you would need something like Costar or some other ability. But if you can track loan maturity in the market, I think that's going to be killer data. If you can sit there and watch people's loans maturing and go, all right, I see. Once you do Main Street, it looks like they got about 18 months left. This one over here, they're about two years. And you start a track of loan maturities in your market. You're building yourself a motivated seller's list. And that's what I would recommend everybody do. Easier said than done, but you can get the data. So Bill, if I may. So first of all, I totally agree with everything you just said. I think that makes the seller financing. I think you're going to see a lot of that. Completely agree. That's awesome advice. So, if I may, you had mentioned that you have been selling off a lot. Yeah. Was that just part of the initial business plan or you just feel like the numbers are at a peak and it just made sense? All the above? Yeah, I mean, basic comment. Nobody ever went broke. Cash and checks, right? So I'm cash and checks. We bought the properties. Some of them were meant to be a long term hold and I've owned it for almost eleven years now. Great equity in that deal. A lot of equity pay down, a lot of appreciation. Big cash equity there. One of the other ones that we sold recently, we owned for about 18 months and somebody just walked up and knocked on the door and said, hey, we'll pay you a whole lot of money for your real estate. And we said, well, we'll sell it to you for a whole lot of money. And we did. And then the third one, we all kind of partners. And I looked around and said, probably just get a little bit older, rates are going up, we can go out and do all these repairs and maintenance, but you know, that may be a net wash if the rates go up. Why don't we do this? I said, you guys are thinking about selling, let me call a few of my Realtors. I said, we won't list it. We won't even put out publicly. I'll call five of my top Realtors, and I said, I bet you I can get one of them to bring us an offer. We got five offers. One of them we've accepted. So that's one of the reasons that I tell people, if you really want to get into the commercial space again, anything over about 50 units, relationships or realtors, it's not an easy thing, but it's the answer. Yeah, because here's a great example. I called up a handful of Realtors. They went out to their immediate list of buyers. If you weren't on that list, you can get phone call. It's not a public deal. It was not on Loot. You were never going to see that. You either have that relationship that realtor, you got phone call, or you did, period. So that's why it's relationships with realtors. So the next challenge, you're down in Atlanta still, right? All right. At the moment I'm at the beach, but yes, other than the moment. So up here in New York, for the most part, everything is priced out. It just doesn't make a damn bit of sense to even think about the multifamily market for a number of reasons. Pricing is one of them, but legislative risks, we have seen so many just really difficult, well intended, okay. But really difficult policies come down the pipe from city council and the mayor's office, even Albany. That has made it tough to reason why we would continue to invest here. So we're faced with this challenge of we know the market intimately, right? I mean, we know every nook and cranny here, but it just doesn't pay anymore. So when identifying other markets, what are some of the things you look for? Or are you just investing in your backyard? Well, no, I invest whatever deal makes sense. I would say short answer would be population growth. That's probably always your number one answer is go where the people are moving. So if you're in a state that incenses bureau, by the way, is one of the best quick places to get the data. But look at your general population bureau. I think census came out 2021, so it's not that old. But if your state had level or negative population growth, be careful because you're probably going to have stagnant rent, because if you're not having population growth, you're going to have a supply and demand problem. And, yeah, you might look out the front door right now and gosh, the rents went up, but they won't for forever if your population is flat or negative. And there's a lot of sort of the Northeastern corridors from Chicago to New York kind of either lost, ran, flat, or kind of held in population but didn't incline much. So I would be looking for population growth. First comment, second comment. Yes, there is the politics, there is, but again, we could go into a long conversation about this, but I think that regardless of whether a state or city is landlord or tenant friendly. I think the politics are going to move in the direction of New York on all older buildings. You are going to see politicians and cities get liberal. I don't care where you live in the middle of Dallas, Texas. I don't care. You're going to see politicians get liberal when it comes to older buildings, the conditions that those tenants are living in and your responsibility of that building, the city's going to come after you. They're going to look at you, they're going to say, you need to maintain that building. That's exactly what they're doing to you all in New York. They're saying, hey, you need to maintain the building.

And you're looking around going, yeah, but I can't get the revenue high enough, the rent is high enough to justify the repairs that need to be done. That is a valid argument. Just not to code enforcement because they don't care. That's not their department. That's where I think that even in a landlord friendly city, you're not going to get a slum lord free card. You don't get to come down to Atlanta or to some other landlord centric area and mistreat tenants and run a property into the ground and think that that city is not going to come after you for that's New York, that's La, that's anywhere. So be careful with that. Don't think you're going to be a slum lord and that's going to be free. Yes. I'm certainly not implying the slum lord or not, take care of the building. The type of legislation that we're talking about that we're seeing now is when there's a wholesale crossing onto the other side of tenant rights, good cause eviction, for example, right. Where essentially outside of a real heavy lift, if you have a tenant that is a tenant that's been a good tenant and you didn't raise them for years and now they move on and the kids have the apartment, you want to recast to market rent. No, can't do that anymore. Right. Those are the kinds of things where we're finding it's just become too much of a challenge. There's just so many tenant rights that I had an eviction in Pennsylvania. Sheriff gave them a notice, they were out in 14 days. 14. I have an eviction in New York that's going on 13 months. Right. Those are the kinds of things where I think that it's become too much of a challenge and too expensive, and we're now seeing population swing the other way. That's real bill like folks are up and out of here in a very real palpable way. So I was thinking more along the lines of those types of restrictions now on those older buildings that you were referencing, just to go back to them for a minute. Is that a no go for you now? Are you staying away from older buildings? I am, yeah. For exactly the same reasons you and I are talking about. I think they're going to be too expensive to repair. The prices are too high. So you've got a cost basis problem. I think the governments, local and out of state are all going to move liberal towards protecting tenants and protecting the people living in those buildings, which is I'm not arguing a bad thing at all. I'm just saying I think that's what's going to occur and I think the financial model is going to be what you've come to realize in New York. There's no money in that. I mean, there's just no money in this. The building is old. I got to replace all the plumbing, I got to replace all the roofs. I got to pay this price. And then I got the city that says, I can only do this, I can only raise it's. Exactly. What's going to happen in New York? You're going to see the value class. There's no point in there. Just don't buy the real estate. Just don't go play golf. Go do something else. Go by in some other state. Let the market speak. This is a free country. You don't like the price, don't pay it. When the market crashes, then you can look at your politicians and go, hey, you did it, now look at me. So, Bill, what's your approach look like now versus the past? So now as you're doing the rents and repeat, looking for new assets, what have you learned? The biggest things? Are you looking for specific markets? Are you getting a lot pickier on buildings after 90? How does that happen as you put down newer buildings? Right, but I'll answer that question in sort of something that's been, I think, a little bit of an undertone here that I've kind of circled around with you, James, a little bit about that cash flow, man, don't worry about that. It's not the cash flow. Cash flow is great. Yes, you have to have cash flow. Keeps lights on, runs business, great, whatever. Nobody's getting rich on cash flow. That's the number one thing I've learned in real estate over the 17 years, is that you will make a living on cash flow. You'll get wealthy on appreciation. And appreciation has everything to do with the exit strategy. So the number one thing you got to be paying attention to in real estate is the exit strategy. Everybody thinks it's about buying real estate, closing deals. That's nonsense. That goes along with the same comment, you make money when you buy. Also a complete nonsense comment. If you see her and say, oh, you make money when you buy, I understand. Why is anybody even listening to us? We're worthless. Just go buy real estate. I got disclosed. You'll make money. Why are you listening to us? You don't need to know anything, right?

If it was that easy, go ahead and see how that works out for you. Go buy anything and see. You don't exit. You don't make money. You make money not when you buy, but when you exit. If a check clears the account, then you've made money. Ask anybody that went into foreclosure if they've made money. How do I know it's not how that works? And so by saying you make money when you buy, you're throwing exit strategy to the wind. And you're saying exit strategy has no value here. And that, I tell you, is a ridiculous comment. You won't be in business long if you don't understand how valuable exit strategy is. So that's what I've come to realize, is that over the 17 years, everybody out here talking about cash flow, cash flow, cash flow. That's because you want to quit a job. That's a sales pitch. We're going to sell you that concept. Cash flow will get you out of the job. Equity will keep you there. And if you don't have equity, you're not going to make it long term. So where is equity in those old junky, old buildings, in those tough neighborhoods that struggle to cash flow with the city coming down on you and the tenants that are hard to deal with. That's what I've learned, is just quality buildings and a quality location that is timeless. You are all but guaranteed to make money in that. And that's why I kind of celebrated in the day. Just buy decent real estate in a decent location. None of this matters. Everything we talked about is out the window. As long as you can do that, that is easier said than done. I agree. But if you can buy a decent property, decent location, don't worry about it. Yeah, we feel like there's been a craze here for maybe the last two years. Maybe I'd say two years. I call them the TikTok investors where they're buying payments, right. They're not looking at those other factors.

They're taking short term debt, they're buying payments, and they're taking a lot of people's money to invest into these deals. And they're looking at, hey, here's what we're going to net. Year one, here's what we're netting. Year two, here's what we're netting. And they're not paying attention to some of those other metrics. So you believe that there's a day of reckoning coming for those folks as well, right? I do. And I think some people will be okay. I think some people might lose some money. But all in all, again, I really, at the end of the day, don't think that matters. I've lost money. I've had deals go bad. I'm still here. Again, it's all about the six inches between your ears. It's how you tolerate failure. It's how you tolerate market cycles. But to say that you're going to get into the market and out of the market and successfully look, it's always Tuesday. It's always some kind of market cycle. It's always some kind of something. It's always up, it's always down. It's always who cares? Just get started, get into the business. Get an education, learn what you're doing and you're going to be here for the long haul. You're going to be like James here myself. And through market cycles. It's not that big of a deal. It's always something. Just get started and learn and get going. You'll be fine.

Don't worry about this stuff. So could you spend a few minutes talking about real estate? Right I think that it's a great place for folks to consider starting. I went and I logged on, I took a couple of the classes there. You've got a real different approach, or real neat approach. Can you talk to the audience about what that's about there? Yeah. So realestateraw.com is the website and that is sort of my education branch. I've been teaching through different programs for about ten years or so. I've had hundreds of students. So realestateraw.com is sort of the education branch. If you want to get more information on some of the programs we have, you can go there. Yeah. And that is really just me working with people individually, helping them build out their businesses. So if you're new to the business or you're looking to get in and you need some guidance, that's what that is. That's hand holding and teaching you how to build a business. From my 17 years of experience working with me directly, I have two books. One also called Real Estate Raw, that's on Amazon, and the other one, Creative Cash, that is one that brought out about two years ago or so, and that is on creative financing. So Real Estate Raw, the book is how to Build a Portfolio. Creative Cash is the book on how to get that portfolio funded using creative financing. And then Real Estate Raw the website. Go over there and check us out. Yeah. I've helped a lot of people get into the business and I always tell everybody, you're going to learn one way or the other. You're going to pay for education one way or the other, either through me or out on the street. You're going to hire somebody, you're going to learn on the street, find with me either way, but you will pay it's just where and how much, without a doubt.

So before I let you go, Bill, if you could spend a minute or two talking about scale, I know that you own and operate or still own and operate a management company for the assets. So a minute or two on scale and at what point? How important is it to self manage and have that company set up? I always tell everybody, I think you should manage and then not manage and then manage again. So I think you should manage in the beginning when you have a small portfolio, a few houses, a couple of duplexes and stuff like that, to learn. But without scale, without economy of scale, you're going to start wearing a lot of hats and what's going to happen is you're going to get in the weeds of building a management company and yes, that will be money that you collect every month. It's w two money, all that. But it is going to come at an opportunity cost that may slow down the asset purchasing. So that's where I say I think you should jump in there and manage for a little while to learn. And then I think you should outsource the third party until you have probably at least a couple of hundred units in the city. And then when you can hire some bench talent, you come back in and take in the in house. Now you've got enough money and enough scale, you can actually hire some folks to know what they're doing. I did not do that. I took none of that advice. None of that. Started with a duplex, managed my way all the way up and it was great. I really learned a lot. But I saw a lot of other people close a lot of other deals in the same amount of time. It slowed me down. So it's good and it's bad. It is not for everybody. It is not free money. It's one thing I want everybody to take away with. Don't think you're just going to go lateral, open up a management company out of being mailbox money. No, that is brain damage money. That's hard job, that's hard work. Be very confident in that business before you do it. It's great, it's good, but it's not easy. Yeah. So look, some tremendous insight and information today, bill, I love the straight on approach. You say a lot of things that other folks dance around and they don't come quite square and say and I think in real estate where the stakes are as high as they are, you need that kind of candid, straightforward, direct approach. You can get hurt. You can get hurt out here. Yeah, you can. It's not as easy as everybody is making it look on social media now. And there are some really difficult stories. In 2008, we sold hundreds and hundreds and hundreds of millions of dollars in defaulted notes and there were some good folks on the other side of those notes and some not so good folks, right, depending on who and where. But just be careful out there folks. Make sure you're choosing your syndicators wisely.

Right. Has that been the model that you've used? Have you? Pretty traditional? Not when I first got started. I did my 1st 402 units with only creative financing, lease options, seller financing, line of credit, credit card, what the hell ever. But then after that, yeah, I got into GPLP, syndicated model and that's what I do. So now that you've done this for years, you've owned a lot of different stuff, right? So what's your opinion on scale from the standpoint of, hey, would you rather, I don't know which one of your partners you do steady deals with are you in the mindset of, you know what, should we just own some stuff ourselves and not raise money? Or is it the opposite? I want to scale on a much larger level and raise it all. I'm curious what yes, I hear you. I kind of look at it like the diamond model, right? So I'm starting off and I'm going to syndicate and use everybody's money that I can build up that equity and then pay off and have a small portfolio. So I'm going to go wide and then narrow. So 100 units with a mortgage or ten units free and clear about the same equity, about the same cash flow. But to get the ten units free and clear, you might have needed to syndicate the 100, you know what I mean? So, yeah, I'm going out as wide, as big as I can to get as many assets appreciating as possible so that when I have those exits, I can eventually, to your point, burn off the partners and the LPs and all that crap. And equity, that's a longer term business model that takes some years to pull that off. But yeah, that's the idea. So I'm figuring about halfway through, so you know what, okay, and then last question, minimum investment size. I know some guys that don't get anything under 100,000 or under 250. Then I have the opposite guy that are like, no, take everything. What's your opinion on that? Okay, I think the bigger dollars are better. That's irrelevant. Comment. Basically both of those comments are irrelevant until you stop and look at your own database and say, can I take that advice? You should only raise money for millionaires. Yeah, sure, I agree. You got some millionaires later on, go ahead. If you don't, that's a bullshit confident, isn't it? It really has to do with you looking at your own network and saying, can I take that advice? Yes, I agree. Get a million dollars out of every individual you'll have big fish, and it will be awesome and all that kind of good stuff. That might not be functional comment for you to really accept. So you got to kind of apply it where you can apply it. Our minimum is usually about $50,000 to get in, depending on the size deal, depending on how much the raise is, depending on what we're doing, I might bump that up to $100. But that's if it's a big deal. And I feel like I've really got the Rolodex to bring those folks in. If you're out what I call millionaire panhandling, right? If you're out, spare 50 grand, spare hundred grand, 50 grand, you're out panhandling. For a million bucks, you're going to take what you can get. And if you're about two weeks before closing and you hadn't raised your money and your earnest money is on the line, you got nice comments, but I don't know how effective they really are. This is really good stuff. Definitely give Bill a shot. Go check out the site. Bill Ham, Broadwell Property Group and Real Estate Raw. Bill, I really appreciate the time today, man. Thanks a lot. Thanks. Have you on. Thanks, Bill. As always, everyone out there, please stay safe.