0:00 Hey, welcome to the hybrid sales podcast. I'm your host Daniel Martinez. Today we have returning guests. Mr. Kevin Walsh from Pine Financial Group he. If you haven't heard his other episodes, please go check it out. It's episode 371 and 374. Kevin, how you doing today? 0:16 Daniel? I'm so happy to be back man. Excited for it. 0:20 Yeah, it was kind of unexpected. I like having returned guests. But man, you're one of the people I definitely want it back to Sam another conversation. I don't even remember what we talked about last time, but we're gonna have a different conversation cuz I have some like different questions for you. Okay. Because one thing I love about Kevin here today is Kevin is on the financial side of real estate, which is what I love. And it's always fun being on the finance side. But you you've been in real estate, 15 years, if I remember correctly, this is from my memory. 0:51 Yeah. So two decades in real estate. And then I started pining 15 years ago. So Bynes 15 years old. I was doing lending two years before that. So who decades real estate 17 years and the lending side. 1:03 So last time we spoke, which was actually over the weekend, because I was on your podcast. That's right. Can you plug your podcasts in real 1:09 quick? Yeah, the real estate educators podcast. 1:13 So I was just on his podcast, and we're talking about how Kevin loves what he does. So we're gonna dive a little bit into why he loves the financial side of real estate. And why is the best part of real estate because I think I think he and Kevin are on the same page on this one. So first of all, please go to the other episodes, because we're not going to repeat the same things here. But why? Why is the financial side of real estate the best side of real estate, in your opinion? 1:41 Well, it's like what we talked about on my podcast when you came on, it's the tail structure, man, it's so you can be so ridiculously creative in real estate, when you when you can negotiate, you know, the financing. So the deal structure, how you negotiate it, how you make your offer, how you present that offer, as you were telling me with that amazing deal you just did, has everything to do with how you're going to finance it. And when you can start bringing in owner financing or private capital and keep the banks and institutions out of your business and your deal. Managers opens up an entire world for you. 2:18 Are you still active on like, the actual deal side? Are you more on the lending side? 100%. 2:23 So now I'm definitely still active investing. I'm trying to do much larger projects now. So I've got a portfolio of single family homes, and I love them hate them, you know, they're great, but I'm looking for for the bigger profits at this point in my career. So we're looking at more larger commercial, do some developments like you do? So that kind of that kind of 2:44 thing. Okay, okay, so you're active. And you. So let's talk about that. So how do you you have a team? How big is your team for the active and how team is your team for the lending side? 2:54 Yeah, so the active is really just me. Okay. You don't need a ton. I mean, I have my I can lean on my office when I have tenants that call in or they want to bring in their their rent, and I have someone help me with a book. So it's pretty much all outsourced at this point. The lending side, man, we're just we're just rolling here. We'll do 2025 deals a month. So I definitely need a team here that there's there's 13 of us on that side. 3:18 There are 13 active on the on the lending side. On the Yeah, on the lending side, right. I mean, it's that bad. That's, that's not so bad. So are they all virtual? Are they in office? 3:29 Yeah. So if you add the virtual, we have two virtual assistants. Otherwise, we have one person in Minnesota because we do a ton of business out there. So we want boots on the ground there. And then we have one person in Texas Kim. She's amazing. She was my very first employee. So I hired her in January of 2009. And she's still with me today. So we're like, sure you want to go, you want to go to Texas and, and work remote, we're going to definitely give you that flexibility. So she's there. Everybody else is in our office here near Denver. 3:59 Awesome. That's okay. So that's what why have a person on the market specifically? Why is that important? Yeah. 4:08 And, I mean, it's a little bit different on the lending side than the active side, although I do think that you need some local, you know, local talent on the ground on the active side as well. But for us, we do a lot of construction, lending and rehab and lending. So we need to go out and inspect the property and make sure that it's getting done correctly. Now, I know you could outsource at the title companies, and there's national inspection firms and all of that, but I want someone that I know and I trust to be given me honest, accurate reporting. So that's why we decided to have a person on the ground in Minnesota. And we do quite a bit of loans out there. So it just it just makes sense. 4:43 So every every property of doing a loan on that person is going physically to the property and inspecting it. 4:49 Yeah, on the residential side, the commercial side is different, more sophisticated High Net Worth borrowers. So we're not as concerned they're, you know, their personal want guaranteed turns a lot more weight than something that's kind of just getting started? But yes, we want to look at every property. 5:06 So one thing I have a question about that, too. So I asked the commercial lender about this but or ask you, but does your basis on let you lending on the deal? As far as what's the difference between single family and commercial property, as far as that lender is more to the deal or more to the lender or mortgage lender more to the deal? So I'm sure it varies for both. 5:26 Yes, on the on the on the residential side, we're very deal heavy. So we're like asset based lending, right. So we don't care so much about credit as much more now with the current environment, but we don't care as much about credit, we certainly don't care about a debt to income ratio, like you're not going to be servicing this loan with your income. This is typically short term fix and flip or repositioning loans. So the asset itself is going to be what's paying us back, not you. So we don't care about income. But we want a good quality deal, right? If you're not, if you're not getting into a deal, that's going to be profitable for you, one of two things is going to happen. One, you're going to default on a loan or two, you're going to not default, but lose money, and then never do business again. So we want to be very careful with that. On the commercial side, we got some strong guarantees. So we're less concerned, I'm still concerned with the asset, but I'm more concerned with the personal guarantee and how strong that is. And then on the asset side, where we lower our loan to value. And here's why we do that Daniel, commercial assets fluctuate, they're more volatile than a residential asset. And with with what's coming with, I believe what's coming is some market softening on the commercial side, we want to be just a little bit more conservative. So we're capping our loans, that 65% of a stable value. And on the residential side, we're 70% of the as completed or after repaired value. 6:50 Gotcha. So essentially, if there commercialism, you have to put up more capital because it is more volatile. So it gives you ensures your risk that you're putting it? 7:00 Yeah, exactly. I mean, gosh, cap rates have been compressed for so long. And with interest rates high and remaining there, you have to see cap rates go up. And for the listeners that don't understand it's an inverted inverted relationship. So if cap rates go up values of the asset come down, you have to pay less to get a higher return rate. So what I believe we're going to see cap rates increased to keep up with this expensive lending environment. 7:26 Yeah, yeah. 100%. It's just crazy to me, because like, it's barely, like softening, like people are still selling like, you still see, like, four or five caps saw they're like, interest rates at 8%. What are you guys doing? Yeah, what do you think about that? Is that sustainable? I mean, it's not that's not sustainable. It's just doesn't make sense to me. And I get I get both sides of it. Because some people are like, trying to sell now to exit to possibly still get that cap rate. But that doesn't make sense to me. 7:57 Well, what if you're entering at a four or five, like you saying, I'm gonna tell you, you're ready, you're repositioned and you're ready to exit? You're exiting at a seven? Which is probably where you should be, you know, seven or eight is what you should be at probably. And now, you went from a five to a seven. That's kills your your value? 8:13 Yeah, yeah. Definitely hurts it in the long run. And the type of noi or value increases probably out the window at that point. Totally. 8:21 Yeah, zero value increases, even if you increase the income, which is the whole idea. You're still lost value. At that point. You just keep it probably. 8:30 Yeah, just cash flow. What what type of are you doing like bridge loans? Are you doing like long term financing for this commercial stuff? 8:38 It's all bridge all short term, the difference is to reposition a commercial asset is a lot longer than to fix and flip a house. So you could be in and out of a house in four or five months. It's pretty common on the on the on the commercial side to reposition it might take two years. And then you have to season the new leases before the bank will look at it. So you might be two to three years to reposition something. So it's just a slower process. 9:04 I didn't realize you had to season the leases. That's no. 9:07 Yeah, not always. Not always every lender it seemed the commercial space. It's not like I mean, you have some institutional government institutional money like Fannie Freddie in the multifamily world but if you start talking about warehouses and retail which we do a lot of there's no there's no big institution other than the banks that do that stuff. So every bank is has their own different guidelines because they're keeping those loans on their portfolio. Hmm. go too fast. 9:37 Are you are you doing an adjustable rate for your for your commercial loans? Or is it 9:42 It's interesting you asset so I get that question a lot. It's crazy. Very few private bridge lenders do adjustable rates. They're just not set up to do that. So we have a high interest rate, but it's it's not it's not adjusting. And what's interesting about this is a lot of my peers and competition there rates have gone up, because they're getting so much of their money from lines of credit, or from, you know, the capital markets, most of our capitals, privately raised, so we have a pretty fixed cost of capital. So we've maintained our pricing through all of this crazy environment while all of our competitors are increasing. And we've chosen to do that annual because well think of it this way supply and demand, right. So there's an increased demand for bridge loans right now, because capital constraints, banks are tightening. So demand is up, but our supply is still you know, maintaining similar levels. So that typically would drive up value, right price, I demand low supply, we've chosen to slow demand down by tightening guidelines a little bit, just being a little more conservative, we want a higher quality portfolio. So we've just tightened up a little bit, instead of increasing prices. So everyone around us prices are going up. We're maintaining. 10:58 That's, that's really, it's really cool. Because I think a lot of people, they, there's a lot of different lenders out there. But I think that you have in private capital, let's make sure your prices stabilize, is priceless. Because, like you said, institutions, if you have some type of institutional backing or listen type of line of credit, like you have to you have to adjust, I mean, there's no other. There's no ifs, ands, or buts it is what it is, you know, you have to adjust because you get to make sure you're covered. 11:26 Yeah, think about this, one of our largest competitors in Colorado, they almost all have their capitals, from lines of credit from different banks. And in 2008, when I was just getting started in this industry or with this business, you know, the world was crumbling around us, at least the credit markets was was and their line of credit got shut off. So they had no more access to capital. Now they have all of these commitments in the pipeline, right, with no ability to fund so people started not getting their construction drawers, people had deals that were getting ready to get to the closing table, and there's no money for them. All of that just fell apart. So I think I think anyone that's highly reliant on lines of credit, could have some rescue. 12:13 That's that's that man that you as a as a, me me as a as a as potential Lendy doesn't even think about that. But I hope that perked your ears, everybody listening? Because that's that that that's scary. 12:29 Yeah. And who knows what's going to happen? I don't think we're going to go through 2008 Again, but that and that was significant, right? But banks did shut lines of credit down, that was happening across the board. How many lenders went out of business? Because they weren't structured properly? 12:47 This is this this sort of experience? Are you just getting better from the beginning? 12:52 I mean, I started doing this in 2006. But I didn't, I wasn't able to go out and get lines of credit, when you're you can't get lines of credit when you're just starting. Because you might have a portfolio of let's say, a million dollars, right? These these lines of credit are 2030 40 million, that's kind of the starting point. And you need enough collateral to feed into that line to be able to, to access it, access it. So here's how it works. And the let's say I have $100,000 loan to keep it very simple, we might have an advance rate on a line of 65%, maybe 70. If you're super lucky. So of that $100,000 that I put into a loan, I can now use that loan as collateral to draw maybe 65,000. Now, you definitely your client usually has skin in the deal. And then you as the lender has skin in the deal. So the bank is being very, very safe. But it doesn't give you a you to get access to a $20 million line you need. I don't know 26 $27 million of collateral get that right. So it doesn't make sense when you're starting out. 13:56 One thing, I think is crazy, because like, I think you're alluding to it, but like you starting out not being able to get those credit lines almost made you safer than everybody else because you didn't have that availability. So now you just operate in that you have that safety factor already built in. And everybody else has they had they had they might have had that that ability to extend. Now they're they're operating loosely, was loose turn but loose, loosely. And there could have ramifications to that and in this in this market. 14:29 Well, yes, yes, and exactly what you do. You're very creative, and you're gonna go out and meet with an owner of a land deal. Paste it there. You meet with an owner of a land deal and figure out some terms and you could potentially buy buying these properties with little or no money down or lock it up for a long period of time. So you can go and bring in your capital from selling a piece of the property offer all the different creative, cool things you do. Now you've learned that because Probably you were forced to, you didn't have unlimited resources as much money as you could possibly have. So I had a buddy that started investing about the same time I did. So we were we were 2122. And he had family money. So he had a huge advantage on me. That was freaking broke, man, I didn't, I didn't break I didn't, I didn't have money growing up, I had to earn everything I had to pay for my own school, I could pay for my own cars, I'd pay for my own gas insurance. I didn't get any help. So I started investing in real estate, I had to learn how to do that without any cash, right? So I created this creativity, that once the art career started going, he saw me accelerate much, much faster than he would because he wasn't able to structure deals the way I could. And then I remember him sitting down, we were having some drinks, and he would be so I mean, he's like, Man, I wish I didn't have that ability to just go out in the capital. I wish I was forced to learn a creative finance. 15:55 Oh, I one thing I love about this is I think a lot of people, they want the easy route. But the easy route might not be the best route, and not knocking your friend at all. But I think when you're forced to go through the trenches, you learn you get a lot of experience going through the trenches. And it's priceless. You really can't put a price on the education of going through the trenches. 16:17 Yeah, that's exactly what you're doing right now, man. And, and I know you have your fund coming up, and you're gonna be doing some really special things and, and investors that are looking at something like that should have a lot of comfort, because you've been in the trenches, right? You'd know what the hell you're doing. 16:30 Yeah. That's so cool, man. I really, I really appreciate that. Because it's been hard, man. It's it was hard for me. I'm sure it was hard for you for probably five years, maybe seven years. 16:41 Oh, yeah. It was when I lost. I mean, I lost everything, right? Because I went I went I was I went up to 2008. And I was so young and naive. And nobody saw coming. I mean, just people say they did, but no one really saw. I certainly didn't, I wasn't smart enough to see that. And so I was not structured appropriately. And, man, it took me down and then I had to rebuild again. So millionaire long before I was 30 years old, lost it all and had to rebuild again. 17:09 That experience is priceless. 17:12 Just definitely helps. Now I'm super conservative. You hear probably in my tone like something's coming. I don't know what it is. I'm, I'm just being very careful now because I've been through it. 17:22 Yeah. Yeah, it's amazing, man. I really appreciate I really appreciate like the struggle side of it. Because man, everybody looks at everybody looks at like, probably, you know, like, ah, probably got a leg up like, no, no, he struggled for a long time. There was a long time struggle behind that look a little deeper sometimes. 17:44 Yeah, yeah. So a lot of investors have been investing since before 2008. So they don't really know what's coming. Yeah, they don't quite understand. It's been. It's been rainbows and roses and all of this unicorns. For the last 15 years, we haven't seen a correction. 18:01 Yeah, and that's one thing. I'm like, I was I mean, I was 2008, I was 16. And I, the reason why I do stuff like this as a whole is because I want to listen to more experienced people and pay attention to what's happening, understand how every part of it works. Because if you understand how the financing works in your business, then it makes me operate my business accordingly. Because it all feeds into each other. Everything's connected but not connected. And there's so many sub niches that affect each other through the line, you have to know a little bit about everything. So you know how it flows? 18:40 Yeah, that's a good way to describe that, especially when it's stuff that you're working on. It's, they call it the capital stack. So how are you going to get bring the money in to take down the projects like in residential, you don't really have a capital sec, it's usually a down payment alone. And it's pretty simple, right? When you start getting more complexity, then you are going to start laying in different types of capital. So to understand private bridge money, it is important. 19:07 Yeah, yeah. And like I said, it's something that you might not understand but you want to you definitely want to understand because and this is why I always asked like what the lending requirements on the back end of each lender that I talked to, because that open should open your eyes because every lender I've had on our SS always ask them that question that by itself because I want people to understand like, what are they looking at as a whole when you have a deal because I think the biggest thing is finding great deals is always number one. But if you get some the financing is always number two. Because you need it you need to a find the capital, close it or raise the money to capital closer and what terms are you offering? And this is where like, Hey, I heard Kevin on the podcast that he is buying this persona devalue, I might need to get better deals, you know, right. 19:55 Yeah, no, I love it. And I I tend to agree with you and I would just challenge it. The money is pretty darn important. So in some cases, you might want to at least line up a loan or lender prior to finding a great deal at least. So you know, you have some direction, once you get it under contract, I hear all the time, the money will find you if you find the good deal. I just, it's just not always the case. So I would maybe in tandem look for money and deals. But don't forget about the money. 20:24 Man, I think right now we every deal we have we send to like every lender, we have to we lock them in, and then we move on to like we send every lender we have every deal, because I don't know what they're gonna take. And we need to we need to lock everybody up, we need to lock certain lenders in on certain projects. And depending on what the cause, even with us and land, like I have people like, I don't do anything over 300,000. So anything under 3000 We send to those guys. And then like, I want to do 5000. But I want to do at least a couple deals with you and LRH and I were like okay, we need to find more deals in the lower range just to get build up that credibility with them over time. So now we're on the hunt for smaller deals just because they had that comfortability of like half a million or more, but they want to do a couple of deals with us on the on the smaller range. Okay, so now we did find smaller deals. So it's kind of like picking and choosing and kind of working that capital. I'm working, I'm working the capital. With the deals, I'm actually finding the capital than the deals. 21:18 Yeah, that's a good, I honestly believe that's a great way to do it. And you're right. lenders have different appetites and their appetites change. They do for us, for example, I mentioned that we're tightening guidelines a little bit, well, we, we've reduced our maximum loan from, we were doing deals over 6 million, which is small, but for us that's big. So now we're not doing anything over 4 million, because we just want to give create more diversity over our portfolio. But that just changed like an overnight we met, we're like, let's stop doing it. If you and I talked a week ago, and then we change that. And you know, you might be looking for a $6 million deal now. And now we can't do it anymore. So it's constant. It's a constant work and building those relationships. 22:03 And I think having constant communication with your lenders as a whole too, because that decision can be made overnight. And you need to meet 22:10 Ashley in the private capital sighs it's like institutions they change to their appetites are constantly changing, too. But private private money, for sure. 22:19 Yeah, we just talked to a private money guy. And I was telling him, I was like, maybe it's not the time, maybe that time when when you build the balance sheet little bit more, and we'll talk to you a few months. And it is what it is. But I don't ever, like push people away just because they didn't fit our lending criteria right now, as a dentist, I mean to put you in the Rolodex and ledger. And if I get something that fits in your parameters, I know what to call next time. And we'll see if he's really working. Because I mean, it's really, really important to network with other lenders in new markets. So let's talk about that. What you said you're lending in Colorado, Texas, in Minnesota, are you lending on single family and commercial and all three are in certain markets? 23:02 Yeah, so I my am moved to Texas, we're not quite lending there yet, but that is on the radar. So on on the resit, we're 80%, residential 20% commercial. So we're heavy, heavy residential, because I feel it's more liquid, it's easier to cash flow and safer. So I like that. On the residential side, we're in Colorado, Minnesota, those are our two primaries. We also do quite a bit in Wisconsin. And now we're doing deals in DC. So we might do one or two deals a month in Washington, DC. So there's a story behind each move. I know it's kind of scattered. But so those are the four markets. We're in on the residential side. On the commercial side, we will look across the country. Just we're funding another one in Chicago this week, for example. So we're kind of spread out. But again, that we're chasing those balance sheets. So we're looking for higher quality guarantee. And a good strong project. 24:00 Yeah, yeah. On a percent. This is a side question more on the organizational side. What is it? What does it take to become a lender in the United States as far as like through your Are you like, are you guys regulated? Yep. Licenses. You have to follow certain lenders. I know you follow certain lender requirements, but like, like, what does that look like on your side? Because I'm really curious about this one. Yeah. 24:20 So private money is very crazy. And the reason I say that is there's no federal regulation around Yeah, so it's all state level. Some states require licensing and they have like reporting requirements and that kind of thing, and some don't. So for example, in Colorado, there is long as I'm sticking to business purpose loans. I'm not doing any owner occupied. So only read only residential, if you're going to flip it or rent it out, and commercial. As long as I stay in that world. There's no licensing requirement or regulation at all in Colorado. In Minnesota. You do have to be licensed to do private money is if the collateral As residential property, so it doesn't matter what the purpose of the loan is, it matters what the collateral is. The difference is you don't have to have individual licensed mortgage officers loan officers, it's only a company license. So see, it's like each state's going to be pretty unique. Yeah, Minnesota, we have reporting, we have to report once a quarter to the National Mortgage licensing system, the MLS. Now, that's on the lending side. And if you're going to start bringing in the capital, and start putting together funds or selling off notes or brokering private notes, there's a lot more regulation around that because now we're talking about securities laws. So in Colorado, to broker private notes, we have to have a securities license. That's called a mortgage broker dealer license. And so it's just a broker dealer, but it's dealing with mortgages, and you got to pass a securities exam, it's a serious 63, then you have to be bonded, and you have to have all of that. So we have all of that in Colorado for the the transacting loans that are originated, but you don't need the license to originate and then Minnesota opposite, you don't need a securities license, but you need the lending money, you need the lender license. 26:15 Gotcha. Okay. Okay. So it's a little different, a little different for everything. And this is where, and this is where like, I think a lot of people, they want to get the financial side, but it seems intimidating. 26:29 Sure, yeah. Because it's so capital intensive. 26:32 Yeah. So let me ask you this. So to get to get big capital, you have to have a balance sheet. To get private capital. It's just relationships, 26:45 right? Yeah. That's just like, like what you're doing raising money in a fund. It's just that so if I could meet an investor that's interested in investing in a fund, and I can convince them that my fund is the right investment, then they're gonna invest with me, right? And then I can go out and use that money to generate business. So it's just just selling, you got to have a good product. And you got to be credible. 27:08 Yeah, yeah. Which takes time. takes time. It takes time and experience. It takes time experience. But I really like the financial side of it, because it's just like, it's more than the VAT the values in the paper, and then the asset, you don't have to do all the work. 27:27 Yeah, you said that in our episode, right? You can create more value with paper than you can do in construction or remodel or being a property or something. Yeah. 27:36 Yeah. It's such it's such a cool dynamic. What is what's the future look like for you? Because I know you said you're doing larger, larger deals. Now you're focusing more on that? Are you kind of hesitating, that I know, you say you're kind of unlocking your guidelines? Like what what's what's the future look like for you in the next like, two to five years? Because Are you Deputy the market used to go on to bigger stuff are well, what's that look like for you? 28:02 Yeah, so on the Pine financial side, we honest, be real transparent with you here, we we generate revenue of around 7 billion, okay, and we are we want to go to 20. So I think once we hit that, and I'm going to all be in a better position to take a step back, I'm sort of taking a step back now, but I've got an executive team, which is huge. Once you can get a good solid leadership team, then it allows you to get more flexibility. But I think I could take a big step back at that point. And I could focus more heavily on my own personal investments. So that's the pine side, my personal investment science, I want to do more commercial, I don't like Land, land development or land deals as you do. I'm more like, I want to reposition assets that are already there. So I'm looking for retail and industrial. And the reason I'm focused on those two is because that's what a lot of my clients have done so that I've just the rapid the reps, right? I've seen those deals over and over and over and I can see how it works. Yep. So I've, I've gotten on the auction sites and I've bid on these and I haven't won anything yet. I'm working with brokers bring me deals and nothing is penciled yet, but I think that's going to change as as the market softens. So it's got a little bit of dry powder, and I'm ready to pull the trigger when I see something like 29:12 Yeah, I think it's a he's got to be active in the game. And I think 100% I don't know, I don't push anybody because I think your experience is in those in those already creative deals, because you've done that for years. So why do I learn something new? If you already have that experience and repetition, then you already know that asset class that's huge. That's a huge like, seems nationally about that, you know, people have you know, are you planning an exit out of pain financial, is that is that like a feature? 29:43 I, it's so hard. That's a tough question to answer because ideally, I'd like to pass it on. So I'm engaged and we've we've been together for seven years. She's got three kids. I have two so we have a blended family of seven. Oh, and so we have lots and lots of Kids that may want to take over the business at some point and, and I talked to them about it, but they keep telling me no, I'm not doing it. So I don't know if this is going to be a generational thing. We might exit at some point. But if that's the case, my plan is to get out. So it's passive. Somebody else's running it. And it's just cruising. You know, in 30:21 rotis. 30:21 Yeah, yeah, exactly. It's very similar. Yep. But if the executive team who participates in the upside chooses to sell, then then I'd be on board. So I think I'm gonna kind of leave it more up to them. My goal is just get to a point where I don't have to work. 30:37 Yeah, 100%. I think I think it's a great goal. And I really appreciate the passing down the fact that thing, but a lot of a lot of kids don't understand. And they might, they might regret that in the future. But you can't force it down their throat. 30:51 And there's a couple of entrepreneurs in the group, man, so who knows, we'll see. We'll see what happens. 30:57 How, what's the range of the seven kids? 31:00 Yeah, they're all really tight together. So it's between 13 and 17. And they're all five in that range? That's crazy, huh? They're all Yeah, they're all in the same black black classes at school. And it's pretty fun. 31:12 That's pretty cool, man. Well, they're all right. They're all right there anyone can make the decision to at any moment. So I mean, you'll probably know, I don't think you're retiring anytime soon. But I think you'll you'll know, in the next five to 10 years, 31:26 right. And real estate has been such a blessing to me, I can't even tell you how grateful I am for this. Yeah. But I've been into in a position where my passive income is more than my expenses for I've been in that position for years and years, I just love this so much. I just like to be able to take a step back from pine. Because I want to focus more on my own event I enjoy like you, I enjoy the deal structure, I love putting it together. I like that more probably than than the pine stuff. But I'm having fun with this too. 31:58 It's a kick that keeps you busy. And it's like you love what you do this and that honestly work for you, you know, 32:05 right. And I get to help people, right, I help my investors make money in the in the fund. They I get letters all the time, how that's changed their life to be able to consistently count on this consistency. And then I'm helping my borrowers people that are borrowing the money, create financial freedom as well, because they're out there fixing and flipping or, or doing commercial deals, and they're all making money. So it's just a good business to be in 32:27 is your back end on the model. As far as the capital stack, what you mean, is the is your private capital on the fund model itself, or is it like, private private, 32:38 so so we have multiple sources. So we have, we actually have four mortgage funds, three of them are reg DS, which are private offerings, like, you're not really allowed to advertise, you have to know that kind of thing. Now, some of that's changed with the new laws with the Jobs Act and all that, but those three weren't like that, it was definitely build relationships and then make the offering. And our most recent ones a public fund, it's a reg A, so I can actually advertise that one. So we have four mortgage funds, and we are layering in a little bit of debts with lines of credit, but it's, it's about 10% of the total portfolio actually a little bit less than that. So we're still in a really strong position. And then we sell off individual loans when we need additional liquidity. So let's say we have a deal coming up that we need to fund, we might sell some loans, that's where I need the license for right so myself some loans to generate some extra capital, so I can close on that loan. So that's kind of where we got it from different many different sources. And there's revenue streams from each one depending on which where the money is coming from. 33:38 That Were you always on the on the on the fund model on the floor? Or is it kind of recent recent adaptation? 33:45 We started the first one in 2009. But when 2006 to 2008, when I was working with somebody else, all we did was private note like brokering right, so bringing, let's say John had 100 grand and, and Sam wanted 100 grand, I would just bring those two together and charge a fee for it once I started 2000. In 2008, I continued that model until I was getting feedback that hey, this is getting too expensive. We need we need options were I'm not putting all my money into one deal. So I need more diversification a lower investment amount I want some liquidity. But debt isn't liquid is despite what you hear, you can sell notes, but there's not a market for it. So it's if you don't know somebody wants it, then you're gonna probably have to discount the note to get it sold. So it's not we don't call notes liquid, right. But they wanted liquidity. So if you created a fund and you're invested in a lot of projects that are paying off and money's coming in going, there's some philosophy there that created the liquidity of much lower investment amount and then obviously, the diversification so we started that fairly early in the career about one year into buying starting. Okay, okay, that's good. Yeah, it's just been a different fund. Each time we hit a threshold from the Securities Exchange Commission. We started different 34:59 Yeah. Well, one thing I've, I've noticed now that I've been delving into the fun space is that a lot of companies are. And I didn't know that. So I asked that question. So like, a lot of people, they use the fund the fund side of it, but don't actually, I mean, a they can sometimes they can't say and be like, there's it gives them a lot of, it gives them a lot of like amplification of capital, that is really required in some of these businesses. And that's, that's how I'm learning. There's a lot of people more a lot, a lot more people use it than you think. And the people that use it, are really sometimes using big doing big, bigger things than normal, because they have that in their back pocket. 35:45 Well, you know, that all came out of the Jobs Act, right. They, they started the reggae, reggae plus came out of that loss. So they're allowing small companies like you and me to publicly advertise our security. Now, that was never a thing. So they're trying to I say they I'm just talking about lawmakers in general, they're trying to make it, they're trying to make it help companies to create more jobs. Right, that was the whole point. So if we can help them raise the capital they need, then it's going to create jobs. And that's, that's good for the for the country. So that's, that's why we're all came from? 36:19 Yeah, I think I've, I've learned a lot over like, last 612 months, because I realized that there's a lot of good businesses out there, they're just not funded properly. So once you get the right funding, you can really amplify and create a lot of business opportunity, what creation, job creation, asset creation, I mean, even development or remodeling like that whole, there's a whole thing that comes in that once you get the once you get the capital in place, and it's just doing doing creating the right vehicle for people to invest in 36:51 this Yeah, and this is something good for you to know, with your new fund coming up, it's probably going to be a lot of accredited investors, I would assume. So you're gonna want accredited investors. So there, there are some discussions right now the annual that that they will make, they were going to add an educational requirement to become accredited. So you don't necessarily need to hit the financial requirements that we have set today, there may be an option for somebody that wanted to invest with you to go through a little class and maybe take a small exam online, and then they would qualify as accredited and then you could accept them as an investor. So we'll see where that goes. But that's going to open up a lot of potential investors to us. 37:29 That's amazing. That's amazing. So I think I think the the accredited investor requirements there, I mean, people hit them, but it's very hard to hit them. As as especially getting this is where I think like the threshold to make to become wealthy, you have to have money. And it always like it always, like hinders the people that they're starting from scratch. So I think I think opening up that threshold, I think it creates a lot more opportunity, because a lot of people don't even understand that they might even heard accredited investor term. 38:00 Yeah, well, it's kind of a weird requirement, because they, they use the the accredited investor to steal, the government knows, they don't need to be as careful with them. They don't have to protect them as much as the non accredited. But what's interesting is because it's a net worth requirement, the main ones net worth requirement, people might have an inheritance, right, and you get to get this money, then all of a sudden become accredited and not know what they're doing. And they're going to be investing in projects, and they don't know how to analyze risk. Right. So it's weird that it's only a financial requirement, when that doesn't really tell you much about their sophistication, right? 38:37 100% 100%, there's 100% Well back down, and then it just disappears into the ether, from bad GPS and bad funds and carelessness. 38:48 All right. So maybe an education piece makes a ton of sense that that's a better way to keep people safe. 38:55 That that's that's huge. I think that's huge man. Education, I think is should be paramount with everything. And I think if you are have if you are an accredited investor and don't know what you're doing, please get educated because that that that opens up. Like you're, I always advise people, like, people that inherited money, like I always tell them, like, did he, you could do this you can do there's a lot of things you could do. But if you don't know what to do with it, and how to make money with money, you're gonna burn it, and you're gonna burn it real quick. I mean, I see it all the time with people on Capitol and you hear the horror stories of the lottery people and it's just it's a bad it's a hindrance more than a help to some people. 39:39 Oh, it's an amazing statistic, which I don't know what it is right now. But the number of inheritance that are supposedly generational, that last one generation, like a stack like 90% or something, it's like staggering, how much if you don't teach your kids and educate them when they get the inheritance it just goes away. 40:01 here's the here's the here's a parent question. How are you instilling that in your kids? 40:08 It's tough man because we live in a neighborhood like a nicer neighborhood. And there's like all the kids are getting their cars paid for. And they're all turning 16 Right now, because that's where the age that we're at. Yeah, all they're all the parents are buying them cars and paying their debt and doing all this. And we're not, we're just not doing that. So now our kids are, they feel like they're a huge disadvantage, because we have one car that they can all share, until you go out and save up and buy your own. And so they're learning is extremely difficult lesson right now. Right there, they have to go out and work. We play cash flow. I don't know if you if you know, the game I have. 40:43 I have it. Yeah, 40:45 I love that game. And it gives you such a great opportunity to go through different lessons with the kids. So we'll sit down and play it. And then we'll start getting more creative. Like, Oh, you want to buy this property? There's no rules here at right in this game. She's just like, Well, why don't you Why don't you you to partner up with me. And then we'll buy this property that will split the profit. And we start talking like real life examples on how we can do this. Yeah, and, but that game allows for that, right? So we play that game. And then, man, I've been trying to they're all working. We're trying to get them to start being interested in mine. Right? So you have them to the middle, a little good. Branson and Maddie. They're gonna start running our Instagram, not Instagram, our tick tock, tick tock. Yeah, so it's, it's the Tick Tock one. They're there. They've been telling me for years, I gotta get on tick tock, I gotta start doing this. So I made I put together a presentation, they did it on PowerPoint, they came in, they presented it to our leadership team. They went through the whole slide deck and, and gave the presentation. And then they just got the job offer. So now we're getting ready to start this new social media thing. And I'm just I'm trying to think of different ways to, you know, make sure that they're not spoiled, because it is difficult to do that. When you have the ability. 41:58 Yeah, I really appreciate that. That's so awesome. I love that you're using creative. Let's partner and get this deal done. You know, I love that. 42:09 That's the right way to play the game man. Like, how do we we're trying to get out of the rat race here. Like what can we do? I can't afford this property. Well, how can I afford it? Let's let's talk as a group, what can we do? 42:20 That's so cool. I've never heard anyone do that. That's awesome. That's awesome. I really, I'm like I said, my kids are younger, my kids are younger. So I'm like, the reason this is the reason why I do the podcast as a whole. Because like, I can't have this conversation with my with my five year old like, right. So this is why we I record a lot of these conversations, because they're there forever. You know, I doubt YouTube is going anywhere for a long time. So watch YouTube. 42:48 You're not far from starting to play my game with them. And I think they're they might have been 778, something like that. And we start playing that game. So you're not far off. It's just it's a little harder because of the math is tricky for them. But 42:59 yeah, I'll probably wait till that point, because they can't even speak clearly are 43:06 yours? Oh, yeah. They might be wanting to buy some real estate. 43:09 No, I think it's I think it's huge. And I like to get the question to heart too, because like, when I grew up, we all had one car. And that's how we grew up, like my older brother drove us all to school. And then they all got, they all worked a job to afford their own car. And then the car got passed down to the next driver. And that's kind of how it was. And then my dad got me a car. But it was like, he probably paid like three grand for it. He's like, Oh, here's your car. And I broke down like a week later. 43:42 $200 For my first car, and it broke down all the time. But I learned how to work with cars because, right, like we're talking about earlier. 43:51 And then like, I remember, after I had a good I got a really good job when I was 18 I was making like 17 an hour. I bought I bought a new pickup truck. It was like 400 bucks a month. And I'm like, what, we just buy a new pickup truck. And that's what I did. You know, it wasn't it wasn't like the big like, two ton, four wheel drive all that stuff. It was a little tiny. Like it was a Nissan Frontier. It was a tiny pickup truck. Like it got me to point A to point B and I needed a reliable car. But I got that carbon fed a lot more to me because I bought it my own money. 44:22 That's right. You took care of it right? 44:25 I did secure. So not taking care of the shared car there. Yeah, I'm sure it's your car. Next you have here's the keys. It's gonna be interesting with all the kids around age. What's the shared car because he has seven kids we'll get visit a minivan 44:48 data sharing. So we drive a Yukon extended so that's the one that it fits us all comfortably. Okay. The shared car that they're all using is just a pilot. Okay, that's got it's got the third row So I'm considering switch that out for something that only has two seats in it though, because you know, what happens is this turns into the community bar. So now it's like all the friends pile in. And I think I saw eight or nine kids Prahlada at one time, and I'm like, I know there's that nine seat belt so that when you have the biggest car, then everyone writes with you. 45:22 That's true. I think my my editor is making a stick shift. 45:26 If I could find one, yeah, that'll take texting and driving. I'm gonna make it hard to text and drive, right? I want that. I want that that, but can we find them where I'm working to get one of those. 45:35 I mean, you can do it, you can search. I remember, when I bought my new truck, my new truck that I bought when I was 2122. That was a I went to the dealer and asked for it. And they found one. And if they don't have one the order for you and takes up a few months if you're buying a new, but if you go if you're buying a US you got to stop his like Carmax and search for the different types of transmissions. So you can search for manual transmission vehicle. 46:06 That's interesting. But do that? 46:09 Do they know how to drive it? 46:11 No, because we haven't. They don't even they seen one? 46:15 Yeah, that's my deterrent. That's I want to buy I want to buy a stick to pickup truck now. That way I can give it to him. And I'll take care of it and they can have the the old pickup truck 20 years old, you know, but 2000 1000 You know, it's gonna be historic vehicle, you know? 46:40 I might do that. So they we've cruised around four wheelers. So they know how to shift but that formula is didn't have a clutch. So they don't they don't know the, you know, they don't know how that feels. But gosh, I think I could teach him pretty quickly. 46:52 Do you know how to drive stick? Oh, yeah. Okay. Yeah, as long as somebody knows how to drive I that's one thing I'm trying to do with my kids is they're all young, but I'm trying to instill the, it's already in my mind, they're getting a stick shift. I don't really care. Because no friend is going to drive a stick shift because by the time my kids turn 1617 years old, no one's gonna know how to drive that. 47:13 You don't know, etcetera. But it's funny. You go over to Europe and say, so we went over to Germany, we were going to cruise on down the autobahn. And you have to you rent a car, obviously. And there's like all stick shifts. All sections like I think I knew how to do that. Otherwise, we wouldn't have been on our excursion that day. 47:29 I've been thinking about that, too. I've been thinking about importing a car from Europe. Once I want to drop in the on the on the on the opposite side of the vehicle, just mess with people. I remember the first time I saw that. It was to me a jeep and they're on the right side. I'm like, added like double double take a stick shift. Yeah. Okay, that's pretty cool. I just wanted to tell people 47:52 so they drive on the left side in the Bahamas. And they don't have a ton of stoplights on those islands down there. So it's all it's all like roundabouts. Yeah. You subtract 30 off, go on a roundabout the wrong way. That's then takes a little bit used to because you're on the left side. So you go into the roundabout or on the left, you know, and yeah, I was on I was on a moped and I went the wrong way. These cars come flying around and like oh, shit. jumped up on the sidewalk and my little moped, my first roundabout in the Bahamas. Yeah, 48:28 that'll do it. That'll do it. 48:30 No idea. Pretty funny. So scary. 48:34 This is such a such a good podcast. We're what's your what's your path? We'll find you online. And what's your podcast again? 48:41 Yeah, the podcast is real estate educators. It's on all the platforms. Had a great time with you, Daniel, when you came on and learned a lot from you. Thank you for that. I am going to implement some of what I've learned. You could find we talked a little bit about the market and the opportunities coming. So we wrote the report, the comparing the 1990s crash, which none of us were really old enough to understand. But I definitely research that and I understand that that it's right after the 70s alone, super high inflation, super high interest rates, right. That's what created that crash. And that's sort of the Simulate, similar to what we're in right now. So I compared those two and I wrote a report about it. I think that will shed some light on what we're what you may expect to come. So you can get that report for free at the pine report.com The pine report.com otherwise reach me at I'm financial group.com I see there on the screen. Pine financial group.com 49:38 Amazing, amazing, man. I think I said this last time, but you were one of my favorite guests. 49:44 Thank you. This was great chatting with you, man. This is a 49:47 it's always fun and like I hope it wasn't one of the I was trying to switch it up as far as like the topics and questions and it's always good. It's always a good time but I appreciate the honesty and In the parents seek advice and I appreciate all that it's good stuff. 50:04 Yeah, and you've gotta you gotta always to go here but your five year olds man, that's amazing time. 50:11 Yeah, that's my three year old tyrant you hearing what where you are. All right all right for everybody here. Thanks for tuning in. Go like, share, subscribe. We'll see you on the next episode. Thanks for tuning in. Thanks for coming on, Kevin. Please go follow confidential group.com We'll see you next time. Thanks for tuning in. Thanks