[00: 00: 00 – 00: 00: 24]

What have you learned from the experience? What is it that you have learned? And I have this Nelson Mandela poster that’s in my office, that says I never lose, I either win or I learn. And I keep that there in this in my office because, yeah. There have been instances of my period where I made a hard money loan, and this is the reason why they don’t do hard money loans anymore.

[00: 00: 25 – 00: 00: 50]

Welcome to the share the wealth show where minority professionals can learn to escape the racial wealth gap and catapult 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.

[00: 00: 51 – 00: 01: 49]

Hey, guys. So we’re back again. This is the second part of the episode with today’s guest. I need you. If you have not heard part 1, go back to the previous episode and listen to that first and then come back and join us here today. but you’re not gonna wanna miss what they already said because then you’ll be lost with what they’re about to say. But in any case, you don’t wanna miss the whole, you need to hear the whole conversation This is why we split into two parts. There’s so many nuggets. It’s so juicy. Go back and listen to the first part. 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 looming, you’re even thinking maybe you should just wait it out.

[00: 01: 50 – 00: 03: 25]

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 investing accelerator. This is a mentorship program where I personally guide you through my 5 proprietary pillars so you can learn how to buy your first 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 an experienced 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 don’t 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: 03: 36 – 00: 04: 06]

I know I said a lot there. You did. You always seen a lot in each in each breath, and I can’t stop it. I gotta go keep listening because it’s just so good. But, um, you know, at the end of the day, time is the one thing we can’t get back. And I think what I might have mentioned this on our pre conversation about how I got started in real estate and just assuming the timeline would be much shorter than what it really was and is So I just want people to go into this knowing having a long term plan, but if you start in in in do it intentionally, and do your research, educate yourself, increase your network with people that you can trust, like you said.

[00: 04: 07 – 00: 05: 52]

There’s all this stuff going on, um, in the multifamily and commercial world right now about this bad actor. Who’s getting indicted. I know you’ve heard about the guy. Right? Who’s that? That something is something? I know his last name. he’s not in the multifamily space. He’s in triple trip — Oh. — space. MTX, Don? No. Not the crypto guys. Look, at least with retail. And he just got — Yeah. I’m just retail partners or something like that. He is indicted in the FBI and investigating him for bank fraud. There’s, like, a whole bunch of information behind that, but end of the day, what I want you guys listening to know is that you really have to take vetting your sponsors and who you’re investing with seriously and do all the background checks that Lee mentioned, like. That seems you’ll hear as a passive investor. All you need to do is, like, that the sponsor, but it’s like, how do you do that? How if you have limited resources and information, but I love the idea, like Lee mentioned, of going to the Kate Chamber of Commerce or going to the economic development committee in the cities where you’re looking at investments and make sure that what you’re being sold or pitched is actually true. You can double check the information that people are giving to you If you don’t know how to underwrite, you can learn or you can find someone who’s an expert underwriter. You can actually pay somebody to underwrite a deal for you who’s a non-partial third party. And just double check their numbers. You can do that kind of thing. So there are ways to really vet opportunities that you’re looking at. But I just want to let you know that Lee’s not, you know, doing too much. He’s making sure his capital is safe and Rolling it responsibly.

[00: 05: 53 – 00: 07: 33]

The first rule of the game is preservation of capital. Yes. Because if you lose your capital you’re gonna be on a bench. Right? And there’s a couple of things that happen when you’re on a bench. The first thing that happens is you’re gonna go through your levels of grief, right, because you lost money. Probably gonna say to yourself, I’m stupid, whatever, whatever, whatever. But until you get over that hurdle, you are you aren’t going to be willing to get back into the game. Right? And as you just mentioned, Nicole, time is your enemy when it comes to this. Right? Cause I know everybody may have seen it, but The Eve 1 of the world in my opinion is compelled interest. And just Google it. If you don’t want any. For 30 days, at the end of 30 days, you will have $5,300,000. One penny, but it needs to double every day for 30 days. But the whole purpose of that story is to help people who don’t know what compelled interest is to see it. And a picture is a thousand words. And if you put together Excel spreadsheet and you see it, or you just Google it, You’ll see that with cow pal interest, 30 days, a penny grows into $5,300,000, and it demonstrates the power of cow pal being.

[00: 07: 34 – 00: 09: 17]

Definitely. So I’m no. You are an active syndicator now. Right? Have you switched from the LP side to the GP side? Sorry? Have you switched tips from the LP side limited partner side to the general partner side, or are you still investing as a limited partner? I do both. You do both. Okay. I do. What made you wanna jump over to the general partner side? Well, on the general partner side, right, in, you know. You have to be doing more than just raising capital in order to be in compliance with the SEC rules. Right? So that’s first thing first. So we have to let your if viewers know that. But, also, if you have the ability to bring others into the deal, you should reap rewards from doing so. So that’s what helped me to move over to the LP side, but now my wife and I were building out our old portfolio of assets that we’re purchasing. Because we she’s a real estate agent. You don’t have to be a real estate agent to be qualified as a real estate professional. But also you’re gonna be in a position where you can all set at, uh, active income with passive income. So we’re gonna get that material a patient by having a small portfolio of, uh, all small multifamily that we’re going to self-manage our self. Right? In that way, now we’re taking this w two income, we’re offsetting it with passive losses. And, you know, at that point in time, the name of the game is swapped until you drop. We’re gonna just do 1031 until the day I die, and then there’s some cost basis for when my state takes over.

[00: 09: 18 – 00: 11: 03]

But that’s what I’m teaching my children to understand that, hey. If you wanna go and get your college education, perfect. Do it. Right? But don’t get caught up in trying to get to that CEO offers, etcetera, because first and foremost, this yeah. Your chances of doing that are like, trying to get into the NBA. Probably it’s even easier, I think, to get into a CEO spot than it is to get into it in in MBA. But you have to you have to work the corporate politics, and I believe that there’s a mental stress that comes on to, you know, other represented groups. From having the deal with the politics that are necessary in order to, you know, make it to that CEO office. And many don’t make it. They’ve burned out for 1 at for one reason or another, I think that you could actually be in control and actually grow generation wealth by making that bet on yourself. I always said that. I said if you bet on yourself, that’s the bet you can never lose because even if you don’t if even if it doesn’t go as you have planned it to, what have you learned from the experience? What is it that you have learned? And I have this Nelson Mandela poster that’s in my office that says I never lose. I either win or I learn. And I keep that there in this in my office because, yeah, there have been instances of my period where I me to hard money loan, and this is the reason why they’ll do hard money loans anymore, is that if the hard money loan isn’t in 1st trust position. You basically just gave someone a $50,000 check, and you’re in 2nd trust position. If that property doesn’t go as you have planned. The first person who’s in 1st trust position is gonna sue and take all of the equity or most of the equity.

[00: 11: 04 – 00: 12: 34]

So that’s one of the reasons why I stopped doing hard money is, especially in my area because unless you’re in first press position, He basically just did a, uh, a boy scout wall. Yeah. And I don’t wanna and I don’t wanna do that because first things first, you lose friends that way. You lose friends because everything’s gonna be fine, hunky dory, until they’re not able to pay you back. So the one thing that I would say is, to your viewers, is also make sure that you are conducting business as this you should be conducting business only your entity, whether that’s gonna be an LLC or some other uh some other into the designation. Right? You shouldn’t be doing business in your personal name. Right? First, you don’t want that reported on the on the county records. Right? So there’s just so many different levels to this, but at the end of the day, I wanted to help share my journey about how, you know, I lived from living, uh, in Duncan projects in Jersey City, New Jersey. To, you know, be I I’d call myself a paper millionaire because most of it is it is in assets. Right? Most of my wealth is in assets. Right? I don’t really need it to be a liquid. Right? It needs to be working in in some type of investment for me. So I’ve got myself the paper millionaire.

[00: 12: 35 – 00: 13: 44]

Oh, that might be a good title. Paper millionaire. No. For this episode. Anyway, wait. Something you mentioned I wanna touch you on before we hop off. You said you are doing the whole exchange until you die strategy, you know, 1031 exchanging, you know, increasing cost basis, all that, you know, stuff. I don’t know. I don’t wanna get too top until you drop. Oh, swapping to your drop. I like swapping to your drop. That’s a good one too. Swapping to your drop. Write is down. A state planning, generational wealth. Let’s transfer to that partner conversation after someone has either become a limited partner or become a general partner or started you know, buying multifamily in however fashion fits their situation. They’re building up their network, building their passion, all this stuff. They have portfolio properties. How are they protecting that and making sure it’s passing once in the next generation in the most effective way possible? Maybe even some protection strategy so we don’t get that whole 3 generations and your all the stuff you did is gone kind of thing. Do you have anything like that in place to kind of protect it past 1 or 2 generations.

[00: 13: 45 – 00: 14: 46]

Well, the thing about it is you gotta you gotta speak to an attorney, but you set up trust Right? And when it comes to the trust, you have the beneficiaries. The beneficiaries like, if literally, I have nothing in my name. If you were to basically Google me, you’re gonna find that literally I have nothing in my name. Right? So I’m not gonna come up on those documents, etcetera, so that says, oh, you wanna sue that guy. Right? But everything is inside of a trust and inside of a trust, you’d have the beneficiaries and the beneficiaries ought to trust these have to agree that if there is someone was to sue me, my trustees would have to liquidate my portion of the trust. In order to pay off that debt, and that’s never gonna happen because my trustees are my immediate family. So those are some of the things that, you know, when it comes to estate planning, it can get complicated very quickly.

[00: 14: 47 – 00: 16: 29]

But what I can do is tell people is If you still have a w 2 job, most of those w 2 jobs have something like a giant legal plan. And one of the how I got my is done is I leveraged my Hyatt legal plan, and they went out and it was for free. They said it was for free, but I was paying for it with every paycheck. They set up all my will, my living trust by enroll ir irrevocable trust. They set up the whole kit and can doodle for us. You know, you go into the office and you have to have witnesses and you do all over bunch of signing, but that’s where you start talking about protecting your assets, but then you also have to start talking about. Eventually, you grow your net wealth to the point where you can create your own family office. Right? And most people, when you get to that level, you don’t have enough capital or enough assets that you would be able to go into a single family home office. So you go on to a multi-family home office. Right? And now once you have the home office. Somebody inside of the family or a manager that you hire will be responsible for rowing the well. And this is how the wealthy people do it, you know, people like Elon Musk, etcetera. One of the things that people don’t realize is that wealthy people don’t sell their assets. Wealthy people take out low interest loans against their assets.

[00: 16: 30 – 00: 18: 30]

But instance, even if today with where rates are today, if you wanted to liquidate something, you would have to pay capital gains if you held it for more than 12 months. Right? And that’s gonna be at 15%. Right? If I have the network, why not go and get a loan at 6%. I basically just saved myself 9%. You see what I’m saying? And these are some of the things that, you know, I learned that by reading an article about what Elon Musk was doing. And I was like, oh, high net worth people, they don’t sell their assets. They take out low interest loans against their assets. And instead of paying the 15% capital gains, they’re paying 6% in interest, and depending upon how you structured the law, that might be already taxed. optimum. So there are so many different ways that are out here. You know, you can leverage like I did walk stability in town will write in his team. You’re gonna have to pay money, but if you have to pay $10,000 to get $40,000 in deductions, would you do it? Right? I would say I would do it all day every day, but I understand that everyone is not in the position in a situation where I am today. 10 years ago, 15 years ago, get here. I’m not gonna kill off take stacks in order to be able to get some advice from, you know, Billy Bob over here. But today, it’s said and done. And, you know, I’m now leveraging those 58100 pages that are in the tax code to reduce my taxable income. At the end of the day, I say to people, it’s not how much money you make is how much you get to keep. People talk people with, you know, high income jobs. They’re like, oh, I mean, $500,000 a year. $500,000 a year means that Uncle San is loving you every day. 37% off the top. That’s just for federal. Then you guys state, you got local and other taxes that you’re paying.

[00: 18: 31 – 00: 19: 24]

Uh, I don’t rock anybody’s hustle, but it’s the way that they wanna spend their time and what are their objectives. And one point that you made early, Nicole, is that people have to have a plan. Right? And the people who I work with. The first thing that we do is we set up a 1-year plan, a 3-year picture, and a 10-year target. Right? And all of this is not set in stone. Right? It’s a living document, but if you don’t have a destination, arriving anywhere makes sense. So the first thing that we start working on is, hey. Let’s go one thing to understand. And what’s your 1-year plan? If you’re a 3-year pitcher in your tenure target, knowing that it’s a live in document, we can change it when it needs to be changed. But we have to start out there so then we can map out the plan that we’re gonna put in place and then to execute.

[00: 19: 25 – 00: 20: 42]

Okay. Yeah. That makes complete sense. Oh my goodness. I feel like we could just talk forever and ever. Hand me back. There’s so much free. information in that brain that we just have not fully extracted yet. But, anyway, so what I’m gonna do now Actually, I do. I just go I will say, I am trying so hard. I hate my passive losses, my passive loss limitations. That one part forgot to mention him. We were talking about that. But I’ve been thinking about so many different ways to be able to access that, but I still have a full time too. Is there no way I’m gonna get along being a real estate professional? I even looked at, like, short term rentals, but then you have to material participate and then, like, That’s the whole point. If I do that, it’s a very management intensive, and I wanna get it automated so I can be hands off. So that doesn’t serve me either. And it’s just like, until I could leave this w 2, I’m basically just screwed it. I just gotta let that build up and just try to save that war to go against my any gains that I get in the future.

 So the passive loss limitations is a long term strategy too because it can help. It might not help you right now today, this year, but it can help you in the future. All is not lost. It’s all wrong. It’s not lost.

[00: 20: 43 – 00: 22: 08]

All is not lost, but what I can say to you is your w 2 today is your addiction. Right? And until UK, help yourself to realize that, you know, that that paycheck and the consistency of that paycheck. And those benefits that come along with that are your addiction. Right? And until just like an addict in anything, alcoholism, drugs, until you can break that addiction, right, you’re gonna be in that same place. But you gotta realize that Nicole, the addiction is what we have been told since we were babies. Get a good education. Get a good job. Right? Live the life. Right? Live the passive life of your you know, not keeping up with the Jones, etcetera. Right? That’s the life that we have been told, but we need to deprogram ourselves and say, oh, no. That’s There’s not the ways that this can be done. And then we put together a plan and we start taking action against that. I know what I was saying is sounds simple, but I know it’s there. 3. It’s slow. A lot of people. That’s why you have to have that conversation and set up that plan because only with that plan, they start to execute a goal without a plan as a wish or a dream. That’s how they did that in.

[00: 22: 09 – 00: 23: 13]

Oh, yeah. Yeah. And you know what? And I still like, like, what you’re saying? I the first thing I would say is, oh, no. I’m not addicted to my job because I can’t wait to get laid off. Like, they’re my job’s having laid offs, and I’ve tried to volunteer. You know, they’re not taking volunteers, but in any case, I know, like, as bad as I wanna get out of the w 2, I know when it actually happens, it’s gonna be a hard adjustment period because I am used to getting that or however in law 17 years I’ve been working here. I’m used to 17 years of a steady check every other week. Right? I’m used to having health care benefits that now has to look find a way to pay for myself. You know? And those things, I say I wanna get out of here, but I know it’s gonna hit me hard when it actually happens, and I have to, like, get all these other things in place, or I don’t have the consistency of that check. And that’s where you just gotta set up your plan and make sure you have the other cash flow from other streams of income come in, um, and then that can be consistent. You have, you know, your safety net, whatever you need, but just build it up slowly, and it will come in time.

[00: 23: 14 – 00: 24: 21]

Wait. Wait. Don’t go yet. Have you been looking for a way to get started in real estate investing, but you just don’t know how? You need the Launchpad. It’s brought to you by my company, Norvest Holdings, and the Launchpad is a free guide with a ton of resources I’ve compiled. to help you invest into your 1st real estate syndication. It includes terminology, book resources, video explanations, all the information that you need. Don’t know what a syndication is. I got you covered. How to find a good operator? How to even tell if a deal is good or not without having to know how to underwrite it all? It’s all in there. The launch pad is designed to help launch you into the next stage of your investment career and get you invested into your 1st multifamily syndication as a passive investor, meaning you can be a landlord and own a piece of a larger apartment building but still go about your day to day life without having to stop and learn every single detail about what’s under the hood and how it all works. The link to the guide is in the show notes. Make sure you sign up today. Again, this is a free resource and guide. And if you have any questions at all, please feel free to reach out to me. Now let’s finish up the show.

[00: 24: 22 – 00: 26: 12]

So in any case, we are going to transition to the final few questions that I asked every guest. Mhmm. And the first question is, Warren Buffett said diversification is a protection against ignorance. What do you take that to mean? And is he had does he have validity to that statement? Oh, you know, I’m never gonna be one to go up against Warrick Bostick because he has strengthened himself time and time again. but sometimes do you have the time to diversify, or do you wanna make that big bet and go all in? You know, I still have active, uh, accounts because I still have a w2 as well. So I leverage that and I’m invested in index mutual funds. I don’t do any actively managed funds. But even with that, I’m only invested in 2 mutual funds. Right? 1 is a small and midcap. Index fund index is the quote the premium word there as well as a S and P 500 index fund. I do not go with actively managed funds because it’s been proven in the data is there that actively managed funds do not outperform benchmarks on a consistent basis. They might have one good year or 2 good years, but over 5 years, they don’t have that consistency. So I say diversify, sometimes people don’t pay for diversification. Like, if you’re an expert at something, people pay you for that expertise. Right? So you gotta have a little balance of it, but I would say that, yeah, having multiple sources of income if I’m looking at it from that strength makes sense because there’s always gonna be highs and lows. Right? But, you know, diversification to a court.

[00: 26: 13 – 00: 27: 09]

Agreed. Agreed. Cause I honestly I think he needs that same thing, but that You’re diversifying because you don’t know enough about that one area to just go deep into one area. So diversification is protecting you against the things that you don’t know Right? And that’s a little bit about having that safety net and then but still creating that one area where you can go deep. So I like that. Okay. You play monopoly before? Yes. Who has it? Okay. You said who has it? Actually, one of my recent guests I love her. So I won’t talk a bit about her, but she has never played monopoly. I know. And it was my first one. And every time I have a guest, I’m waiting for somebody to say, No. They haven’t. She was the first one. I actually have one. But, anyway, we still got through the question, but boardwalk versus Baltic Avenue What’s your first purchase, you know, as a strategy and winning the game, etcetera, mindset, and why?

[00: 27: 10 – 00: 28: 45]

My last good friend Brian Briscoe says you buy real estate or wait. You don’t wait to buy real estate. So as once I’ve done past gold the first time, I say buy whatever comes up first. If you can get Baltic, get Baltic, but if you can get broadly, get Broadway, because in playing the game, I have bankrupted a lot of people by them landing on Boardwalk and having to pay me a ton of rent. So in that only do you buy Broadway? You buy houses to put on Broadway so that when they come, when they land on a U. Is gonna hurt? It does hurt. It does hurt. It’s a little bit of an investment upfront, but that’s where you get that. Those big payouts. Okay. But, yeah, but buy anything buy anything you handle first. Buy it and wait. Don’t wait to buy. Alright. What does wealth mean to you? Wealth means to me is being able to call your shots or your old timing. Right? If you wanna wake up in the morning and just be a bumming laying in the bed all day, you can’t. But if you wanna, you know, fly to my family from the leaves. So if you wanna fly the Belize and then, you know, go to Dan Greaga and just put your feet in the seat, you can’t walk to me allows for opportunities. Opportunities for you to be free and to do the things that you or just what you see fit and what to do with your time. So that’s what well drives for me.

[00: 28: 46 – 00: 29: 51]

Okay. I love that. Actually, that’s You are the first person I ever asked that question to. It was a new question I’d come with here. So thank you. We were my introductory. You broke the chair on that one. So oh, what’s the one thing that you need to take your business to the next level? I really to take my business to the net next level is I need a person in marketing. So if you got a person who’s out there marketing, of course, I’m not a marketer. Right? So I do different things, but, you know, I’m not really good at it. So, you know, after reading the book, who not how. You five had people who have certain superpowers and you paid them what they need to be paid in order to do the things that you need to do. And, honestly, you to get hit your goals. So I need a marketer, a person who could understand everything that I’m trying to do and wanna do it and build it out even more. Oh, you guys hear that? There’s a job offer there. If you’re into marketing, contact Lee. Alright. So That concludes the questions. And I thank you so much.

[00: 29: 52 – 00: 31: 19]

The last thing actually is just telling people how to get in touch with you whether they want to ask about your mentorship or maybe they wanted to passively invest or figure out anything that they could do in the wealth building Orino, or how can people reach out to you? Well, I’m on LinkedIn. We are on LinkedIn as passive r a i pros. Right? But, you know, phone number still work, and our phone number is 571-444-88474. And still email still works lee@valueinvestmentpartners.com short for VIP. We treated people well over here. Nice. I love it. Alright. We’ll have all those links in the show notes and Thank you again so much for joining us today. This was a great conversation. So many nuggets. Oh my goodness. I had fun. — here to talk more. We gotta do it again. It was — Yes. Definitely. Definitely. So everyone, it this episode has been valuable to you, and you have picked up the gems that Lee has been dropping, please don’t forget to leave us go reading and review in iTunes. It really helps us to get to the next level it to reach more people so that they can also get this information. We don’t wanna keep it to ourselves. We want to share the wealth. And until next time, we’ll see you later. Thank you.

[00: 31: 20 – 00: 31: 44]

Did you 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 bag. But if you know someone who would benefit from this information. Don’t keep it to yourself. Share the wealth and make sure to leave us a rating and review. We’ll see you for next week’s episode. Subscribe so you’ll be notified.