Episode No. 44

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Episode No. 44

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In this episode, we have Lee Johnson. As the Co-Founder and Vice President of Value Investment Partners (VIP), Lee is responsible for implementing strategic methods to grow VIP and help partners grow their wealth using various alternative investment strategies that allow leveraging money and time, conducting and monitoring project due diligence He has been investing in real estate since 2005 through multifamily, private lending and rehabbing residentials properties. His focus now is passive investing through real estate syndications and active multifamily investing.


His current portfolio spans multiple markets around the country – over 2800 units valued at about $334 million. As both an active and passive investor, his approach to business is “Being an investor FIRST” which simply means he only shares investment opportunities that he also invests in himself. He is a driving force for embodying creative use of alternative investment strategies, building generational wealth and empowering people to achieve wealth. 


Schedule a FREE discovery call for The Microfamily Investing Accelerator

The mentorship program designed to help you get your first small multifamily building and start building multiple streams of income! https://calendly.com/noirvest/themicrofamilyinvestingaccelerator



[00:00 – 17:06] How He Started in Real Estate

  • How watching Carlton Sheets helped him start in Real Estate
  • How Sally Maid became an integral part of his life
  • How purchasing his first house made it work it for him 
  • How he starting flipping houses


[17:07 – 19:26] Things That The Government Wants You to do

  • Why they want you to create jobs
  • Why they want you to build housing
  • Understanding how income is generated


 [19:27 – 24:32] Meetups or Mentorship Programs?

  • Trusting yourself and accelerating your earning potential
  • He shares how he uses a checkbook I.R.A
  • Why it’s an opportunity to be in a multifamily real estate


 [24:33 – 42:23] How Do People Get Started?

  • Why learning is important
  • How the real estate bootcamp got him started
  • The importance of due diligence 
  • Why when you’re investing in as an L.P., you’re collecting cash flow distributions 


[41:35 – 48:49] Closing Segment 

  • Watch out for part 2 of our conversation with Lee!


Key Quotes 

“If you create jobs, you’re gonna be in a very good situation.” – Lee Johnson

“if you trust yourself and you put it into a great system, you’ll be able to accelerate your earning potential.” – Lee Johnson


Connect with Lee Johnson

through valueinvestmentpartners.com. Follow him on LinkedIn, and Instagram


Let’s get connected! 

You can find Nicole on LinkedInInstagram, or Facebook. Visit her website https://noirvestholdings.com



[00: 00: 00 – 00: 00: 30]

So I remember the advice that the only bit of good advice that the emperor Jones that I gave me, and I went to purchase the house because I was looking for apartments, and I think my mortgage at that time was, like, 11:36. And they wanted me to pay for my one bedroom or cabinet, it would have been 1100. And if I wanted a 2 bedroom, it was gonna be, like, 1300. So I was in a much better position to purchase a home at that time rather than rent.


[00: 31: 00 – 00: 02: 14]

Welcome to the share the wealth show where minority professionals can learn to escape the racial wealth gap and help hold themselves into abundance. Your host Nicole Pendergrass, who her net worth from being negative to multiple six figures. Join her on her investigative mission to expose secret strategies of the wealthy so we can all have the tools needed to build the life and legacy we were created to possess. Now it’s time for the show. Man, oh man, oh man. You guys are in for such a treat. Uh, this is definitely gonna be a 2-part episode. So be prepared but we talked about so much with Lee Johnson today. And this man is such a wealth of information. He has so much knowledge. We have not even scratched the surface as to what he knows about and the information that he’s yattered and garnered over the years. So we discussed how he highly leveraged his w2 He actually still working it, but I’m sure he probably doesn’t really need to, but he’s leveraging it very strategically, he leveraged it to get into real estate investing and to have the capital He’s using his retirement accounts in a strategic manner as well, not your typical retirement account. So you need to listen in to see what type of structure he has for his retirement health so that he can invest with them and just write checks to himself, right, interested in that? Immediately submitted and hear how he’s doing that. But I’ll tell a little bit about his background here.


[00: 02: 15 – 00: 03: 38]

He has been investing in real estate since 2005, through multifamily, private lending, rehabbing residential properties. He started with washing I believe he said Carleton Sheets um, VA chances stuff that he said he was gonna age himself and learning how to do that, but they didn’t do nothing with that information until, like, years later after he actually finished college. I won’t go into the story here because you guys need to listen and hear how his story is very relatable. He grew up in the projects of Jersey City. And he was able to use his w2 and his job that let him travel around and be able to save so much money from his w 2 and then use that to actually be his in his investment capital.

And then he started vetting all the people that he was working with, making sure he was only working strategically with people who he liked and trusted. He would stay within that circle of trust. So it comes to a point where he really talks about your network and your network being trustworthy and how to build that and how to make sure that you are vetting the information that you get from the people in your network or from investment opportunities that you’re looking to get into. There’s ways that you could double check what operators are telling you.


[00: 03: 39 – 00: 04: 36]

So we go through, oh my goodness, so much information. He calls himself the paper millionaire. I don’t know if that’s gonna be the title of this episode yet, but I guess we’ll see. But he’s paper millionaire because he just has a lot of his millionaire asset is in his properties and his assets, but he doesn’t mean that for the cash flow right now, he has a plan for how to keep He calls a swamp until you drop, swapping one property for another, and for another until he passes away. And he’s he has a plan for how he’s gonna leave that to his ears, I’m telling you this episode covers the entire gamut of what we like to talk about here at the show. When it comes to how to grow your wealth, how to start from very little, how to be a smart investor, and how to strategically leave it for your ears, and create generational legacy after the fact. So in any case, there’s so much in this episode. I don’t want you to miss it.


[00: 04: 37 – 00: 05: 29]

Another quick piece about his bio, his current portfolio spans multiple markets across the country over 28100 units, valued at about $334,000,000. He is both now an active and passive investor. I mentioned that. But he is a driving force for embodying creative use of alternative investment strategies and building generational wealth and empowering people to achieve wealth. So he’s here to help, and he’s here to teach people how to do it and how to be a wise smart investor. So this is not so that you can afford to miss out on, and he leaves his phone number at the end. Please contact this man. Reach out to him. He leaves his phone number. Please don’t fast forward either. Listen to the whole episode. Get the phone number the right way. Alright. I’ll see you later in a second.


[00: 05: 30 – 00: 07: 32]

Listen. I know you’ve been digging in, studying everything you can, listening to all the podcasts, reading all the books, even going to meetups. You basically have a degree from YouTube University. Right? But you still feel stuck. You don’t know how to actually implement what you’ve learned. You’re nervous about taking the next step. And what the economy like it is, especially with the downturn moving, you’re even thinking maybe you should just wait it out. I know you’ve heard that real estate makes more millionaires than any other asset class, but you know what else? Mira millionaires are made in a downturn than any other market cycle. So now is the perfect time to jump in and really get started. I’m super bullish on growing my portfolio this year, and I don’t want you to miss out. So I’ve decided to start the micro family invest seeing accelerator. This is a mentorship program where I personally guide you through my 5 proprietary pillars So you can learn how to buy your 1st commercial multifamily property and scale while not biting off more than you can chew. By focusing on 5 to 20 units. That’s what I call micro family. And so you can also get hands on guidance from a spurious micro family investor, me, who’s been right where you are, nervous about how to start. And so you can also create the cash flow needed to give you freedom and options to build the abundant life that you were destined to live. So I’ll be limiting the first cohort to 5 students because they will have direct access to me, and I will be heavily invested in their success. The first group is gonna start in January. So if you’re ready to grab 2023 by the horns, schedule a free discovery call with me today. The link is in the show notes. Let’s hit the ground running in 2023. I look forward to seeing you on the inside, and now let’s get back to the show.


[00: 07: 33 – 00: 08: 38]

Hello, my beautiful people. Welcome back to another episode of the share of the wealth show. This is the show where we talk about strategies to grow per checked and build minority wealth. And today we have with us, Mister Lee Johnson, who is I don’t even know how to describe him. I feel like it’s a man of mystery. Like, I I’ve met Lee from, like, where he’s, like, always on every Zoom meetup that I’m been with, that I’ve been there just, you know, even in this in just attendance, and he’s always there. And he’s always just, like, so most of the time, Clint is just quiet. It laid back in the background, and then he’ll talk and drop bonds of knowledge. And I’m like, Novan, who is this man? He’s done everything. And I’ve just been fascinated. So I’m glad that we had actually surprisingly, Sarah Dimitously met in person. And now I’m I was able to grab him for the show and to share all his wonderful knowledge with you guys. So, wait. Hi. How are you? Thank you for joining us today, and let’s get ready to share some knowledge.


[00: 08: 39 – 00: 09: 19]

Thank you, Nicole, for having me. How are you this evening? I’m doing well. I’m doing well. I guess I don’t know how much of our pre conversation has to share, but we literally were just talking about dental hygiene and making sure our teeth. Yeah. And I beg you what it’s changing. What is it? My gross a couple of people out. — about teeth that that does support them. Yeah. And, everyone, make sure you’re rushing its blessing. When you get older, you end up getting a lot of, um, suspicious spots. If you aren’t extra diligent. But, anyway, I’ll leave it at that. You don’t wanna have to go and see a power of balances. So sure? No. No. Okay.


[00: 09: 20 – 00: 10: 31]

So I went over your bio and whatever we’re gonna talk about at the beginning. So what about your journey. We how did you what’s the background of Mister Mann Lee? Like, how did you start? How did you get into what did you start with? Did you always know you were gonna be in real estate? What are you doing outside of real estate? Like, just Give me the breakdown. How’d you get to where you are? Well, I’m gonna age myself just a little bit, but I got started at real estate by staying up late at night, my grandmother would always tell me to turn off the TV. And I was watching Caulton Sheets and you know, I had a little bit of money and I filed a way so that I could order some VHS tapes. You remember VHS tapes? And I put those VH tapes in, and I listened to the caution sheets telling me that in, uh, I would be able to buy real estate for no money down. I didn’t believe him and I didn’t have enough of a strategy plus that I have confidence because no money down means you’ve knocked any of your money down. Right? No money down just means that you have to use some other person’s money to do that.


[00: 10: 32 – 00: 11: 47]

But, you know, I grew up in Jersey City, New Jersey, most people who live in Jersey City, New Jersey, they don’t have a lot of money. Right? They’re not gonna be able to say, hey, kid. I trust you. I’m gonna, you know, loan you 5000, 10000 $20,000 in order for you to go and purchase a property. So, you know, that was high school. I had you know, I was watching soul food and all of the other movies out there. And I said, let me go to college because my aunt was at college, and my aunt is only one year older than me. And, uh, I went up to her school, and there was a party going on. And I and had a great time at that party and I said to myself, I can do college like this, you know, watching school days and all of those movies like that. I was like, this college thing to work for me. So with the college, you know, got my degree in computer science from a fairly Dickerson University, but you know, long story short, I didn’t have a pass. Right? I didn’t have a pass. I was making a little bit of money, you know, and I thought at that point in time since, you know, I was making way more money than my parents because I was this IT tech guy, and I’m a programmer blah blah blah that I was good enough. Right?


[00: 11: 48 – 00: 13: 27]

But you know what happens 6 months after graduation. 6 months after graduation, I learned that Stallie Mae was going to be an integral part of my life and it scared the hell out. So I said, hey. I gotta go and find me another job. So at that point in time, I was working with Quest Diagnostics in, uh, TDborough, New Jersey, and I found me in my other job that allowed for me to travel on the road. And for about 3, 4 years. I was on the road traveling in in doing so. I got rid of my house. I got rid of my car. I had no expenses. So that allowed me to say, and I was over there in Seattle, Washington. And I was at this long term hotel, but it was like an apartment like a studio, an apartment, but it was a long term hotel, and one of the ladies at the desk, front desk, Mayaju, she told me because I had been there for 18 months. She said, hey. I just bought a condo. I was like, damn. How were you able to buy a condo? And she was like, you know what? I’ve been working with this guy over here at Edward Jones, and he helped me to save up enough so that I would be able to buy my first property. So sit down. I went over here and I saw this man at Edward Joel and I said to the dean, do what you did for her, for me. And at that point, they’d tell me I might have been making, you know, 75, $80,000, but the kicker was I was on for damn. I didn’t have a car payment. I didn’t have I didn’t have to pay for my own food. Right? So I was just power money into the bank.


[00: 13: 28 – 00: 15: 07]

And when I met with this guy at Edward Jones, my g, he sucked that stock. Right? He only had me invest in whatever was in Seattle. It’s b yeah. Microsoft, Starbucks. Right? but he told me one important thing, and this is, like, a part of the journey that I tell everyone. He told me with your income, this was before uh, when you could deduct your mortgage interest, right, you can still do it today if you itemize, right, but it doesn’t really make sense. But he told me that your income, you need to buy a house. So as that that project was over, they moved me into Virginia. And I thought my aunt and her husband, Arnie, and they live in Virginia Beach, and my cousin was down there to Bedroom Apartment in a gated community. That’s about 5, $600 a month. But, no, I moved up to Northern Virginia, which is right outside of DC, and a one Bedroom apartment was gonna cost me $1100. So I remember the advice that the only bit of good advice that the Edward Jones guy gave me, and I went to purchase the house because I was looking for apartments, and I think my mortgage at that time was, like, 11:36. And they wanted me to pay for my one-bedroom apartment, it would have been 1100. And if I wanted a 2 bedroom, it was gonna be, like, 1300. So I was in a much better position to purchase a home at that time rather than rent. But long story short, you know, I didn’t have a plan.


[00: 15: 08 – 00: 16: 20]

I bought that house and 2000 by 2004, 2005. I was able to sell it for 400,000. And I purchased it for 121,131. So I took all of the proceeds from that house. Right? Paid off my student loans. Right? because that was the first thing that was wearing me the most. And the rest of it, I went and bought another house, and then I had started investing in real estate from that point on. And that’s what started my journey into real estate for quality sheets to graduating to buying that first house. If it wasn’t for that first house, Nicole, I don’t think many other things that I’ve been able to accomplish would have been accessible at that point in time. So, you know, as you go through your journey, you don’t know which of those terms that you made were the ones that actually made the most sense, but I can tell you without, you know, any hesitancy that I believe that what made it work for me at that point in time was purchased in that first house because that gave me liquidity in order to be able to go and move into of the investment vehicles.


[00: 16: 21 – 00: 17: 48]

And, you know, today, you know, having invested in 25 different multifamily syndications, Right? That’s what I do, and it started out when I got back from Singapore because I lived in South Africa for 2 years where I met my wife. and she’s from Botswana. And, uh, I did another 18 or so once in Singapore. Right? So I had 2 stints where I was on per diem. When I came back in 2014, I was literally flushed with cash. And, you know, since she’s, uh, not American, you know, we had to go through the whole immigration thing, get her the gap, uh, her documents, her green card, and everything like that. So it was a struggle for her. So I said to myself, let me rather than have her because she’s educated. Right? Rather than have her go and do the 9 to 5. Let’s focus on buying a business or building a business. So we explored 711. We explored day cares. We explored many different franchises. and we landed or let’s do some fix and flips. So in 2014, we did our first flip. We took a boot camp class. And in that boot camp plaza walked up to the instructor, and I said to him, I’m gonna do a deal within the first nine No. 1st 30 days. So within next month, I’m doing a deal. And we did our 1st deal within 14 days.


[00: 17: 49 – 00: 19: 20]

Now it wasn’t the perfect deal. At the end of it, I stressed myself out, but I walked away from the table with about 40 3, $45,000 And from there, we just started doing flips. Right? The flips don’t make sense if you make more than a $150,000. Right, because flips are taxed at personal income. Right? And since I was already in the high tax bracket, to power more tax well, more income on top of that means that, literally, I was writing 5 or 6 digit checks to open set. Right? You don’t wanna you don’t wanna do that. But at that same time, I read a book uh, tax free wealth by Tom Wilright. And from that book, he told me that the government, while the tax code is about six thousand pages and two hundred pages of the tax code is dedicated to telling you how the government is going to tax sheet. The rest of the 58100 is about how you could minimize your taxes. In addition to that, the book talks about how if you do the things that the government is wanting you to do. Right? They’ll give you incentives that will save you money and allow you to keep more of what you have earned. So these things that the government really wants you to do if you’re an entrepreneurial.


[00: 19: 21 – 00: 20: 59]

The first thing they want you to do is create jobs. Right? If you create if you create jobs, you’re gonna be in a very good situation. Number 2 is they want you to build housing, create housing for people. And if you are in a position where you’re able to create housing for people, you are in an excellent position. And then you follow that out with, uh, reading, uh, cash flow quadrant. Right? Bravo Kiyosaki risked that point at Rich that port ad series, you are all set because now you understand how income is generated and which was on tax at different rates. Right? And if you go with the e, you are, uh, you have earned income. That’s tax. At this point in time, it can go up to 37%. Right? But if you are in the eye, the eye for capital gains is taxed at 0.15 or 20%. Dependent upon how long you are holding on to the asset. So if I know all of this now, do I wanna continue focused on building my career so that I can make 300,400,000 500,000 and be taxed at 37, 38, 39 percent? Or do I wanna start spending more of my time focusing all on what I can do to increase my earning potential using passive vehicles.


[00: 21: 00 – 00: 21: 29]

And that when I found multifamily syndication and Jean Toll Bridges, it’s a whole different business. Right? and that helped me to understand, oh, this is how big deals get done. Right? Someone put together the deal, but they were able to raise capital from other people in order to make this whole thing work. And when I stated that out, oh, it was off to the races from there. It was all to the races from Nick.


[00: 21: 30 – 00: 23: 26]

Wow. That was so much information. That was a great story. I have Okay. There’s so many places that I could I could go with that, but it makes so much sense. You gave so much strategy just within that story of people who, if you are high earners, the type of real estate projects that you should be looking for that are beneficial, and even just the point That doesn’t make sense to flip if you are a high income earner because you’re just adding to your earned income I mean, it’s so it’s like, I know that, but just saying it in that way, it just kind of like, duh, they’re Like, it makes so much sense. Right? I go so really quick, because I don’t want to spend most of the time on rehabs and slips because that’s not — Yeah. I mean, mean, if someone wants to do rehabilitation, but this is not what this call is about. But how did you went to a meetup. You said it was a meetup or a mentorship program that you joined about doing the flips. It was a meetup, but in you know, nowadays a lot of meetups, they try to sell you something. Yeah. It’s not really where you just come and hang out and network and learn. Yeah. But at that meet up there, there was a boot camp. And it was a weekend Saturday Sunday boot camp class. And what I liked about that boot camp class was that everything that I needed in order to be successful was in that room. They had a contractor. They had a wholesaler. They had a hard gluttony person. All I had to do was stay within that circle of trust and I would be successful. And, you know, 1, slip 2, flip, 5, 6, 10 flips. All of it was in that room, and we were able to be successful at that point in time. Right? But, you know, all of those because, yeah, you’re not gonna be in a position where you work your way up to 25 syndications, right, overnight. Right? But all of those were stepping stones that allowed me to get to the point to where I am today.


[00: 23: 27 – 00: 25: 48]

So in my system, I tell people, or my mentees per se, I tell them leverage your job. Right? You got your receipt. leverage your job, but use that as a bid pull. To raise the capital that is going to be necessary for you to make other investments. Forward, we didn’t talk about how people are no longer staying at a job for 10, 15 years. Right? I tell people, take the stranded 401 keys that you have. And if you trust yourself, you put it into a breach system, you’ll be able to accelerate your early potential. Like, a lot of people when they quit a job, Nicole, They’ll take that full well, a lot of people just leave it where it is. Not a good idea. I say for those who do move it, they typically move it to wherever their current 401k provider is with a new employer. I say take that money and set up a EQRP, which is an enhanced qualified retirement plan, or you can set up something called self-directed IRA, I say take that money, right, and if you trust yourself, right, like, What I have done is I have something called a checkbook IRA or is a IRA LLC. So my LLC, I’m in control of the other day, I needed to wire $70,000. Right? I didn’t have to go to my custodian and say oh, can you approve this? I was in control of it. So I sent $70,000 with one of my investments now and I had I just went to the bank, but some people, if they might be, you know, getting in trouble with money and whatever have you, they might not trust themselves enough to say, oh, I will dip into it because, literally, you just write a check. Right? and some people are better off when they have a custodian who looks at the investment and approves it, but I’ve been doing this now for about 20 years.


[00: 25: 49 – 00: 26: 42]

So I’m comfortable knowing that I’m comfortable one that I don’t need to touch those monies, but 2, right, I know how to do my diligence on an investment to make sure that it’s, uh, it’s gonna return to capital. And as you very well, Mil, you’ve been investing in this game for a while. From 2019 all the way up to 2023. Well, 2022. It’s amazing. opportunity to be a multi fan. Amazing, especially if you were investing in the Sunbelt States, uh, Texas, Florida, the Carolinas. You literally only had to have a heartbeat in order to be able to put together a deal and an exit with some type of, you know, 1.82.0 equity multiple on a deal.


[00: 26: 43 – 00: 28: 02]

Okay. I have to I have to pause you because you keep dropping so much stuff. If that was no better, uh, stop you because I wanna hear the next thing you’re gonna say. But okay. The main thing I wanna get to, send your beginning stages, because I wanna prep people who maybe have not started. So how do they get to your level? So that beginning stage, even though all of those people were in the same room with you. What gave you the mindset and confidence just to say, oh, I have all the people here. That’ll let me just go do it. Like, how did you Did you get enough information from one boot camp class to be able to actually execute an entire flip? You know what I mean? And then, like, getting to the point where now you feel like you trust yourself enough because you’ve been doing it so long. You have the skills to analyze deals. But how does someone get to that point? What if they have an old IRA that they want to transfer or for 1 or whatever? They wanna transfer roll that over into a checkbook or even a custodial account, but let’s say they wanna do checkbook so they have control, how do they get that confidence in the mindset and the knowledge to know that they can trust themselves or, like, to just execute because you executed very quickly You know what I mean? And a lot of people will be in that room and still not take that as an acute to execute.


[00: 28: 03 – 00: 29: 14]

You’re right. And One of the things was I am the SIP Doris reader. Like, if I have a little bit of downtime, Right. Rather than, you know, scrolling through my social media or whatever have you, I am in my Kindle reading a book, right, learning, learning, learning, because There was a certain point in time where I didn’t have access to well. Right? And I just thought that hard work was going to be the vehicle that would get me to the places that I needed to be. I had to learn, right, you know, got my undergraduate degree, got my master’s degree that, hey, the more money I make, the more money uncle Sam is gonna take, and there’s a good a balance off of that. But one of the things that I also had to learn was that the higher you are on the ladder the harder it is when you fall. So those were some of the things that were competing with me, but I had confidence because, you know, I’m already running, you know, multimillion dollar projects.


[00: 29: 15 – 00: 32: 12]

When I was in South Africa, I had a 100 and people who were reporting to me. And that went into tens of 1,000,000 of dollars, but, you know, in South Africa, it’s a Rams. Right? So I had that confidence that if I educate myself, right, I would be able to execute all my knowledge, right, and also, remember, I said inside of that rule, there was a circle of trust. Right? I had built out relationships with everyone in that role to make sure that I was gonna be successful. There was one individual. I’m not gonna name names because he might be one day watching this podcast, but he went outside of the circle and lost a tremendous amount of money because he went with his old contractor. The property was about an hour an of drive from him. He would drive them, like, take out of his day, drive them up to the property. No one would be working on the property. And the worst thing about that is that when you’re doing these flips, you have a high interest loan and 10% interest on $300,400,000 that’s a lot of money that you have to pay per month. Right? So what I said my first time out and even still today, When I work with people, I work with people who I trust. Right? Literally, you all you know, I know it’s cliché to say that that person has to be like family to you. But literally when you sign that paper, you’re in a marriage. You’re in a marriage for 5 years. So It was that real estate camp that actually started me going in, you know, after you do a flip, you get $40,000 you gotta hold on to about at least 50% of it because Uncle Sam is gonna come for you. But what we did is we were flipping all of these tires. And I was saying to myself, after 2 years of, you know, writing 5 digit texts to Uncle Sam, I said, no. No. No. This I ain’t doing this for this. No way am I doing this for this? And what I did at that point in time is I read Jean Tobers just bought. Because what I was gonna try to do, I live in a tier 1 city, a tier 1 MSA metropolitan statistical area. And to purchase a property in DC proper was gonna be about a 150,000 to $200,000 a door. This is no twenties 2017, 2018. Today is probably about 250 to $350,000 a door. Right? So I sent them my cell purchasing a property where I live wasn’t gonna make sense. So I said, well, helping I purchase property where I am not.


[00: 32: 13 – 00: 33: 15]

And that’s what that was the vehicle that opened up the door to syndications and, you know, doing Google surges and things of that sort. The first couple of times I didn’t execute. Right? I didn’t execute because, literally, someone was saying, hey, we want you to send us 50 to $75,000, and I don’t know them from Adam. So what I’d do I went back to my circle of trust and inside of my circle of trust, it was a group that were doing multifamily syndications. Right? And you’re not you’re not gonna believe this, but that property, we did it 2017 2018. No. Late 29th. Yeah. 2018. That property just sold. Right? 5 years of delivering steady. Castimal distributions on a quarterly mark. Right? 8% preferred. I’m gonna have a 2x multiple on that one.


[00: 33: 16 – 00: 35: 01]

Let me break down that story just a little bit. So this was the first investment that I was using my self-directed IRA. Because a long time ago, I had created a self-directed IRA, but I didn’t do anything with it. I didn’t know how to do anything with it. Right? So I put it back into a 401 k or at that point in time, uh, a traditional IRA. Right? But this time, I had checkbook access. So, Sirpean Trust, I’m I met. Her name is Christie. I met Christine at a Panera Bread. I had a check for a $100,000. And literally, I gave Christine at five times, and I took it back six times because I was nervous to give someone a $100,000 $100,000 chain. Right? But circle of trust again, she knew my circle. I knew her circle We gave them a $100,000 check. And since that point in time, you know, that $100,000 was peeling off, you know, 88 how much is it, though? Yeah. $4000 a year. We’ve been collecting on that, and now we’re about to get the principal back and I’m figuring that it’s gonna be about a 2 x multiple. So that $100,000 is transformed into $200,000. Plus, the cash flows that I’ve been reaping from that point in time. Now I have a bigger problem is that now I need to put $200,000 to work. Whereas, you know, there aren’t in a lot of deals out here nowadays that are making sense. Yeah. It’s an iterative process. You work your way often to bigger deals. And the only thing that is changing is the amount of zeros that are in the deal.


[00: 35: 02 – 00: 37: 11]

And what I’m wanting to clarify for some people who may not, um, get from what you were saying is that I’m assuming that that deal that you’re talking about is you were a limited partner investor in that deal. Yes. Okay. And so whatever the first 5 or 6 deals you did proceed — 1st 20. 1st 20. 1st 20 deals I was on the LP side. Right? I just I took money and I invested it, you know, invested and invested it. And what I did is I worked with a number of different operators so that I can understand who’s good and who’s not so good. Who do I wanna continue to invest with? and who I would never invest with ever again. And, of course, there’s some people that worked out very, very well, and there are now other people who I would never touch with a tense poll. So one of the things that I would stress to your you to your, uh, viewers is the fact that they need to put together a great system for doing their due diligence. Right? like underwriting, even if you’re not leading a deal, someone that’s gonna tell you they’re gonna send you an offer and they a random or, um, as we call it, and they’re gonna say, tie in the sky. Guess what? We’re gonna be able to, you know, hit so many returns right, hit so many benchmarks by you investing with us. How do you know? If you don’t know how to do and carry out your old due diligence, so you have to figure out how it is that you’re gonna carry out your own due diligence from getting on a plane or drive into wherever the property is. And looking at the asset, going to the officer, uh, economic development going to the Chamber of Commerce. Visiting them in Looking and asking whether or not if the information that you found inside of the O. M really have life. If you don’t do that, you know, the old saying in the hood was that a fool of his money is so sectary. Right?


[00: 37: 12 – 00: 38: 15]

So those are the things that I would stress to anybody who’s giving into this game is Learn how to do your due diligence, right, because every there’s a lot of people out there who are just looking to you know, part you from your money, and they’re not gonna be ethical and keep to their promises. Right? So you know, I handed that check over 5 times, pulled it back 6. Right? But I built up the stomach, the gut, to say that this was possible for us to do, and this is how we could do it. And I handed over that check. And from there, Probably within this week. I believe she sent out the email last week. That’s it by this week. The final number should be known and probably before the end of the year, I’m hoping that the distribution doesn’t happen to next year because of the whole tax situation. But, also, since this is IRA money, it doesn’t really matter too that much.


[00: 38: 16 – 00: 38: 49]

Okay. Yeah. Well, since you do have IRA money, but you have invested with non IRA money since then. Correct? So my question too is and just to let people know, You’ve gotten all this cash flow from distributions and equity multiples and all of that. But at the end of the day, have any of your properties even able to write off a loss even though you had cash flow because if you get it to the multifamily for the tax benefits, right, so you wouldn’t get as much tense would you have that extra income? So how was that all set?


[00: 38: 50 – 00: 40: 16]

Great question to Nicole. Great question. The thing about it is when you’re investing as an LP, right, you’re collecting cash flow distributions. But when you’re working with, you know, value add opportunities, so those are older assets that you’re gonna do some type of renovation plan on them. You plow a lot of money into it. Right? And then you couple that with a call segregation, which increase which accelerates the depreciation schedule. Right? And what that property is going to generate is law offices, although you received cash from collecting the rents and other amenities. The problem that you had is if you aren’t a designated real estate professional and the big and you have material participation, those losses just approved. So you can’t write those off against active income. Guess what I was when I found that out the first time. Literally, I was going from tax adviser to tax adviser open that one of them would tell me exactly what I wanted to hear. They didn’t tell me what I wanted to hear. Eventually, I went through my stages of grief, and I came to the fact of saying, there’s gonna be capping beans at some point a tie.


[00: 40: 17 – 00: 43: 08]

In last year, there were 3 of full properties that sold. Right? We had capital gains, but we were able to wipe out those capital gains. Right? By leveraging those accrued losses from the many years before. So at the end of the day, it was a win I really don’t get into people advertising and say, oh, get the cost segregation and do 100% depreciation issue.

Unless you are a real estate professional with material participation, it’s just gonna accrue. Right? And since this is a five-year-old, what does, uh, a 100% depreciation do to help me out this year? In my experience, Nada, Right? Somebody you know, I am not a tax professional by far, but from my personal experience, and that’s what I do, Nicole. Is I get a certain amount of energy by helping people to understand that, hey, when you do a fix in the flip, it’s not like what you see on HGTV. Right? It’s a lot of stress. Right? But you can make some money if you do it right. And the same exact thing is what I’m helping people to understand about multifamily investing. I have searched high and low in between, and I haven’t found a better opportunity where one can invest money, a real wealth, right, without having to get their hands dirty. And this is this is how I evangelize the people is that, yeah, you work hard for your money. Now is the time to go and put it to work, and it should be working 24 hours a day 7 days a week, 365 days a year. And those are the systems that I share with my mid-teens to say, hey. This is how I did it. And if you wanna be in a position where I am, right, about to walk away from my 9 to 5, then these are the things that you can do for yourself. And it’s tested by me, of course, but it makes sense. It just makes sense for me, and I’m happy to share and evangelize with as many people who don’t know who comes in backgrounds like I come from, you know, single parent with, you know, 6, 5 siblings. We’re 6 in total. Right? So if I can do it, anybody can do it. Right? Because we didn’t have a silver spoon in our mouth, and I always tell people much less that we had us born in Alabama. It was a plastic storm that we stole it from McDonald’s.


[00: 43: 09 – 00: 44: 26]

So that’s what I tell people. If it’s I can do it. I think that they can do it. They just need to be that they have to work on their trust system. And once they have worked on their trust system, they will understand that, hey. If you leverage the trust and you follow the system, you can reach the goal. Just the same. because a lot of people out there, they’re treating 30 to 40. Right? Literally, you get out of college. I tell you, you work 40 years by the time you so you graduate when you’re twenty You work 40 years. You’ll be 60, 59 a half. You can start accessing your 401 case. Right? Why not trade in 7 to 10 so that you don’t have to work 30 to 40. And if and if you follow the system, literally, you get back your entire day to do as you please. Right? Because at that point in time, we will have built up your net worth to the point where if it yields a certain return per year, that yields can cover your annual expenses and literally 24 hours out of the day is yours to do as you please.


[00: 44: 27 – 00: 45: 05]

Okay, guys. Don’t kill me, but I’m gonna have to cut this episode short. This is too juicy, and we need to do this in a part 2. So stay tuned for the next episode that airs, and you can hear the rest of our conversation. Did love this episode of share the wealth show, be sure to connect with Nicole by following her on LinkedIn, Instagram, or Facebook. If you picked up any of the gems that were dropped by today’s guests, make sure you not only put them in your bed. But if you know of someone who would benefit from this information, don’t keep it to yourself. Share the wealth and make to leave us a rating and review. We’ll see you for next week’s episode. Subscribe so you’ll be notified.

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Nicole Pendergrass