Seen vs Unseen with Jimmy Vreeland

Microphone 8 2

Podcast Transcription

Dave Dubeau [00:00:09] Hey, everyone. Dave Dubeau here with another episode of the property Profits Real Estate podcast today zooming in all the way from St. Louis Jimmy Vreeland. Jimmy is a very accomplished Real Estate entrepreneur trainer. He is a focuses on turnkey properties. He’s got over 100 of them in his own portfolio. He’s helped other people get into hundreds and hundreds of these. He’s got a military background. In fact, Jimmy, I think you’re the first guy I’ve interviewed who is a graduate of West Point, so that’s pretty darn impressive. And he’s also he’s served a lot in the military, became a ranger. He served in Iraq. He served in Afghanistan. He got out of the military in 2008 and plowed straight forward into corporate America, becoming a very, very successful sales rep and then said, You know what? Enough of that stuff, enough of this working for other people. Time to do my own thing jumped into real estate. Investing in 2014, started focusing on single family homes in and around St. Louis, built up a significant portfolio and then started offering turnkey rental properties to other investors. And then in 2018, he started in the training business in helping people get involved in real estate investing and learn how to do it properly. How’s that for an intro, Jimmy? I cover most bases.

Jimmy Vreeland [00:01:30] That’s very complimentary. Thank you.

Dave Dubeau [00:01:33] So welcome to the show, Jimmy, and I think we were talking a little bit off camera here. One of our favorite topics is the whole idea of raising capital, and you’re talking about the visible versus the scene versus the unseen or the visible versus the invisible. So what the heck does that mean?

Jimmy Vreeland [00:01:52] So have you ever seen that? It’s not really a book. It’s a pamphlet from the 1860s by a French economist, Frederic Bastiat, and it’s called the scene versus the unseen.

Dave Dubeau [00:02:02] You ever heard of it? I have not. So you’re going to be educating me about that here today.

Jimmy Vreeland [00:02:07] Yeah. So you can google it. So, Frederic Bastiat, it was a free market. Economists like so 1860. They had lived through the French Revolution, where the, you know, the reasonable people were guilty guillotine hundreds of thousands of people in the street. And so it sort of really nasty side, hypothetically well-intentioned people saying, Hey, I missed the government, I’m here to help you. He’d seen the dark side of that. You know, France was reeling from 50 years after the French Revolution, which ended in chaos, murder and dictatorship. What a way to start off. The podcast on a positive note did so. So he’s looking around and he’s like, he’s also an economist, and he was a wealthy economist, another real estate investor. And so he’s looking around and he’s like, Wait a minute, what’s going on here? Like, everything that is seen is way overvalued from what is unseen. And so, for example, you know, things going on today. A politician says, I’m here to solve this problem. Let’s take any hot button issue we’d like to do today. Why don’t we start with the minimum wage, right? So I’m going to raise the minimum wage day. What is the scene about that for most people? Why does it get any traction?

Dave Dubeau [00:03:27] Why is it getting any traction? Because bottom line, in my opinion, the politicians trying to buy some votes is basically what it’s all about. I mean, in my thoughts.

Jimmy Vreeland [00:03:37] Well, I would argue the scene on that is like, we want everybody to have a living wage. We want everybody to be paid and play like I’m an employer. I employ 25 people. Trust me, nobody wants every employee. I want everyone to employ to be fairly compensated and compensated well. No doubt. So, yeah, yeah. But this idea gets traction because the scene is we all want people to be compensated well. And at the end of the day, we don’t want anybody to be poor. Right? Fair enough. So that’s the first order effect, the scene. And so the I’ve seen, though, is, look, if you look at most studies and I’m not an economist, I just play one on the internet occasionally to my Real Estate customers. Most studies show that when you raise the minimum wage, it raises unemployment because of a basic, you know, basic supply and demand. There’s not enough demand for the labor at the bottom market minimum wage price. Mm-Hmm. And so that’s the overseeing the second and third order consequence.

Dave Dubeau [00:04:38] That makes sense that it makes. There’s a ripple effect, obviously, right? So employers can’t afford to pay that new minimum wage to as many people as they used to employ before. So you got higher unemployment. The people that are working make a little bit more money, but there’s more people not working. And then that’s how jobs get outsourced overseas.

Jimmy Vreeland [00:05:00] Yeah. And the politician who wanted everybody to see the first order effect so they could get what they wanted reelected has no skin in the game, does not care about the second, third or fourth order consequences. Like we all want people to live life the way we all want people to do well. But you know, you can’t always and that people always overvalued the first order effects. So in real estate, you know, you could say the 2008 crash the scene was, I’m going to flip the house. I don’t care what my risk is. I don’t care how I got structured. I don’t care. I just see the appreciation happening right now. Right. And the seeing came in and said, you know, people got burned, had poor terms on their loans. They didn’t see that there was a bubble coming. And they got crushed because they at least didn’t give a wink to the young scene and say, Hey, maybe I should consider this.

Dave Dubeau [00:05:55] Fair enough. Yeah, it’s definitely

Jimmy Vreeland [00:05:58] so like, unless there’s one thing I see something on social media, I see something in on the TV. I love seeing the scene and I’m like, All right, what’s the complete opposite of that? What is not being seen? And then generally, that’s where I take to invest. That’s where I take you and spend my time. That’s where I kick to talk about have fun with.

Dave Dubeau [00:06:16] Yeah. One of my early marketing mentors, Dan Kennedy, had a saying that basically, do you want to be successful? Look at pretty much what everybody else in your industry is doing and do the exact opposite. Chances are you’ll have a pretty good chance of success there.

Jimmy Vreeland [00:06:31] Yeah, I want the academy like that.

Dave Dubeau [00:06:34] Yeah, yeah. Yeah, makes sense. All right. So how does this apply to raising capital?

Jimmy Vreeland [00:06:39] So what is seen? I believe the you know, what scene is it’s hard to raise capital. Yeah, it’s hard to get people to lend you money to buy Real Estate Georges of more right now in the current market. Yeah. Capital is begging for yield, walking on its hands and knees for yield. Like I’m going to banks and they’re like, Please borrow money for me. And, you know, when I first started, it wasn’t like that. So for new investors, I think you got to get over. It’s a confidence issue that you don’t believe that money is begging for yield because here’s what I see on the street in St. Louis is, you know, three or four years ago, a bunch of hedge funds started buying up houses and we knew about a wholesaling. We started wholesaling the hedge funds, and I’m like, What’s going on here? I thought Wall Street was awesome. I thought Wall Street was safe and secure. And I’m like, These guys, these guys are the masters of Wall Street, right? Why? Why? Why are they

Dave Dubeau [00:07:42] buying single family houses in St. Louis, right?

Jimmy Vreeland [00:07:45] Why are they buying the why are they overpaying? Hmm. The big question is why were they overpaying? And the answer to me is. They’re now looking for a 10 percent cash on cash return. They’re looking for any return right now. Wow. Because capital begging for yield like, you know, 10, 20 years ago, there are no long term fixed annuities anymore. There’s no pension funds, there’s no big, secure investments anymore.

Dave Dubeau [00:08:17] That’s a fascinating idea. Hold that thought for a second. Hi there. This is Dave Dubeau and Real Estate. Investors hire me to raise capital the right way. Why? Because most of them are stuck with too small of a portfolio, and they don’t know how to attract investors and raise money for their deals. So I help them to connect, capture and close their ideal money partners. Bottom line when you’ve got a deal, you’re going to have the capital to do it, so go ahead and book a no cost capital clarity session with me at book a chat with Dave. Com. Again, that’s book. I chat with Dave. Dot com. Well, I mean, it just got to kind of make sense, you look at what the interest rate is that you can get on a mortgage at a bank. And it’s so ridiculously low you just extrapolate, how is how is anybody else making any return on their investment in traditional investments? Exactly.

Jimmy Vreeland [00:09:11] Well, then you got to you got to go look for the unseen. Yeah. How do banks make money? Is one question. The next question is, do banks even loan out their own money? So do banks even loan out their own money?

Dave Dubeau [00:09:22] No, no, they don’t. Very little of it.

Jimmy Vreeland [00:09:25] Yeah. So even in interest rates at 10 percent and interest rates at three percent. The what’s it called the spread between rates arbitrage. Yeah. The arbitrage with banks that interest rates at three percent and 10 percent are the same. Their cost of capital is different, but the margin they pull off, it is the same. Wow, no. So it’s like banks don’t care. They need to get their margin. They need to push money out the door. Right?

Dave Dubeau [00:09:56] Yeah, that’s what they’re in business for.

Jimmy Vreeland [00:09:58] Just because this I love this idea of getting excited about it, like everybody right now is houses are so expensive, right? That’s the scene. The unseen is that everything’s for sale because interest rates are so low, because your cost of capital is so low, like run the math, what you’ll spend on interest over the course of a 30 year loan. Like in the states, it’s 30 year loans for most houses. What is it again?

Dave Dubeau [00:10:24] Well, you can have 30 year amortization. However, it’s typically five to seven year terms for those mortgages. So yeah, we can lock it in as long as you guys can.

Jimmy Vreeland [00:10:33] But like, if people are interested, do the origination calculator. Take out a $100000 house, see the interest you’ll pay at five and six, five, four and three percent. That’s your long term cost. The price of the house is everybody is wrapped around the axle on the price of the house at a price of lumber. If you’re a house builder, who cares? Your long term cost of capital is almost close to free right now, which has its other fourth and fifth order consequences that can be dangerous. So just over salvage, second third order consequences play the whole game, but

Dave Dubeau [00:11:11] so walk us through. If you don’t mind, because this is this is a new concept for me. It’s probably a new concept for some of our followers, as well as to what would be some of those third and fourth level consequences around super cheap money right now in your mind at this time.

Jimmy Vreeland [00:11:27] Historically, this isn’t an opinion super cheap. It just prices create booms, which are followed by bust. Yeah. Okay, so that’s the big black swan. Scary thing. And then super interest rates are also correlated with the government’s putting a bunch of money right now. So they need to get this money into circulation allows the government get money into circulation.

Dave Dubeau [00:11:49] Capital works, projects, social projects, you name it,

Jimmy Vreeland [00:11:54] like bonds, which are then leveraged into loans which are then sold to investors. All right. Yeah. So, you know, there’s no low interest rates without inflation, which leads to hyperinflation. Mm hmm. So to me, it’s like you got to be hedging yourself right now against inflation. You got to be hedging yourself, staying liquid, which is like a complete paradox. You want to collect a bunch of these worthless dollars that are daily losing value. And yet you want to. So you want to protect yourself inflation what you need dollars for and then you want to protect yourself for a boss, which you need dollars for. So you got to collect a bunch of worthless depreciating dollars to protect yourself. If there is a crash that you are liquid enough to make it through and answer all your loan payments.

Dave Dubeau [00:12:42] Yeah, scary stuff.

Jimmy Vreeland [00:12:44] That’s scary. Not if you don’t know enough to be prepared for it, but

Dave Dubeau [00:12:48] for the vast majority of people that are, you know, kind of bumbling through life, which is a lot of folks, me included. Sometimes it’s cause for pause,

Jimmy Vreeland [00:12:57] that’s for sure. Yeah, this is one of the best rules I learned in the army. Like, you can do really scary things. If you’re trained for it, you can do really scary things with a minimal amount of risk if you’re trained.

Dave Dubeau [00:13:10] Makes sense, so how would that apply for, you know, Joe Public, who’s watching this, Joe, investors watching this, they’ve got a few properties in their portfolio. Things are going along all right for them. They’re listening to you. They’re going to holy crap. Now what do I do? What would be some suggestions you would have for folks in that kind of a situation, Jimi?

Jimmy Vreeland [00:13:30] So you just know real estate doesn’t fail. Real estate investors fail, and they fail because they’re not likely because they can’t service their long term debt. So, for example, when I first started, I went, I don’t know if you can tell him talking for 20 minutes kind of a higher if the guy, right? Yeah, definitely. I see your name later. So I would if I had, I was scrounging every dollar I had. I was trying to put in the Real Estate twenty six thousand seventy. If I found a quarter under my couch, I would put it in the Real Estate right. I had no liquid reserve. And so I got to a point where I was like, Whoa, I’m really house rich and cash for like, this is an untenable position. OK, so that’s actually how I started turnkey. Well, I got. Luckily, there was a big market for people who wanted, you know, rented out properties. And so I was able to liquidate and get myself in a better cash position.

Dave Dubeau [00:14:29] So a few properties, you got some cash, you got a little bit of a war chest in the sit in a bank liquid. Therefore, you felt carryovers, said Shudder when the crap hits the fan.

Jimmy Vreeland [00:14:40] Yeah, so every I would say, every real estate investor needs to have a liquid reserve of cash. And I know it’s tempting because I used to put the cash in my bank and be like, I’m not getting any return on this money and it’s depreciated. I got to push it back out. It’s like, no, those little depreciating green dollars are your permission slips to take on debt to at least buy yourself time.

Dave Dubeau [00:15:04] Fair enough. So what give or take? What percentage of your net worth? Do you think you should have liquid?

Jimmy Vreeland [00:15:13] I didn’t like to wake up one day and do this, but I built to have it. You know, I want to have six months of debt payments sitting liquid, and I don’t like banks, so I put them in Real Estate to higher life insurance policy because cash inside life insurance policies at least keeps up with inflation and with very little minimal risk.

Dave Dubeau [00:15:38] All right. Very good advice, Jimi. Well, it’s obvious that you are a smart guy and you put some serious thought into things in your study, the market and your study of the economy. If people want to find out more about you and they want to connect and they want to learn alongside you and learn from you, where should they go? What can they do to check out?

Jimmy Vreeland [00:16:01] So they should go to cash flow tactics dot com. Mm-Hmm. And then they can also go to Rio and Bash Capital com. If you’re looking for education. Me and my partners, Ryan and Brad, we teach all this stuff. We love teaching it top notch education. And then if you’re looking to lend money to buy property, go to Rio and in-dash capital Dakar.

Dave Dubeau [00:16:24] All right, there you go. We’ll have that definitely in the show notes. Jimi, thank you very much for some insights for giving us a good swift kick in the ass. A little bit of a shake up and a wakeup call there.

Jimmy Vreeland [00:16:36] I really appreciated that, right?

Dave Dubeau [00:16:38] Yeah. Well, maybe it’s the military or the I don’t know. Oh yeah,

Jimmy Vreeland [00:16:41] drill sergeant, do you

Dave Dubeau [00:16:42] worry a drill sergeant do or what? What’s going on

Jimmy Vreeland [00:16:45] now that my drill sergeants always made sure to give me special punishment, but I do have a giveaway. OK, give away for your audience. What is it? Five day? We have a five day financial challenge where you just square on your numbers, see how much cash flow you have versus your net worth and its cash flow tactics. Dot com slash five day challenge

Dave Dubeau [00:17:06] five day jobs. That sounds really, really good. People can do that at any time, kind of thing.

Jimmy Vreeland [00:17:11] Yeah, people love it.

Dave Dubeau [00:17:13] Awesome. Awesome. I will definitely put that in the in the show notes as well. Jimi, thank you so much. It’s been a lot of fun. Awesome fun. All right, everybody. Take care. See you on the next episode! Well, hey there. Thanks for tuning into the property Profits podcast if you’d like this episode. That’s great. Please go ahead and subscribe on iTunes. Give us a good review. That’d be awesome. I appreciate that. And if you’re looking to attract investors and raise capital for your deals, then we invite you to get a complimentary copy of my newest book right back there. There it is the money partner formula. You got a PDF version, an investor attraction book dot com again. Investor attraction, book dot com. Take care.

Listen to The Podcast