#991 Keith Wasserman on Buying Billions Of Dollars Of Real Estate

Keith Wasserman is the Founder & Partner at Gelt Inc, a multi-billionaire real estate asset management firm. In this conversation, we talk about the real estate market, interest rates, raising capital, why real estate is still one of the best assets to invest in, how you can invest with Gelt Inc., and what Keith expects to happen in the real estate market in the coming months. Keith joined us in our Miami studio. To see the video of the segment, go to "The Best Business Show: LIVE" YouTube Channel ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp ======================= The Pod Pro Cover by Eight Sleep is the most advanced solution on the market for thermoregulation. It pairs dynamic cooling and heating with biometric tracking. Go to https://www.eightsleep.com/Pomp to check out the Pod Pro Cover and save $150 at checkout. Eight Sleep currently ships within the USA, Canada, and the UK. ======================= DeFi Technologies represents what’s next in the digital economy -- providing simplified, trusted access to crypto, decentralized finance and Web 3.0 investment opportunities. Institutions and investors can gain diversified, secure, compliant, and easily tradable access to a diversified set of industry-leading equity products and protocols, through a single stock purchase on a regulated exchange. Currently listed on U. S. (OTC: DEFTF) and Canadian (NEO:DEFI) exchanges. For more information or to subscribe to receive company updates and financial information, visit our website at http://defi.tech =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Keith Wasserman is co-founder and CEO at Gelt. Gelt's a multi-billion dollar real estate asset management firm. Keith also happens to be incredibly intelligent and he even thinks he's a little funny, which I tend to agree with. In this conversation, we talk about the real estate market, the macro environment, the Federal Reserve, inflation, interest rates, raising, all sorts of capital in good and bad times, and what Keith would say to somebody who's just starting out trying to build an asset management firm. I really enjoyed this conversation with my friend Keith, and I hope that you guys enjoy it as well. Before we get into this episode, though, I first want to talk about our sponsors. First up is LMAX Digital, the number one institutional

• 0:47Anthony Pompliano?

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• 1:30Anthony Pompliano?

  This episode is brought to you by Eight Sleep. Eight Sleep is the single best product that I have purchased over the last three years. It completely changed my life. I'm not joking, pay attention. The Pod Pro cover, which goes over your mattress by Eight Sleep, is the most advanced solution on the market for thermal regulation. It pairs dynamic cooling and heating with biometric tracking. You can go to eightsleep.com/pomp to check out the Pod Pro cover, and you save $150 at checkout. They currently ship within the United States, Canada, and the UK. Now, I told you, it changed my life. It helps me sleep deeper, helps me sleep longer, I feel much more refreshed, and I have better energy. You want to know how I have relentless energy every single day? Because I sleep on an 8-sleep. Seriously. Go check it out. 8sleep.com/pomp today.

• 2:15Anthony Pompliano?

  This episode is brought to you by DeFi Technologies. DeFi Technologies represents what's next in the digital economy. They're providing simplified trusted access to crypto, decentralized finance, and Web 3 investment opportunities. Institutions and investors can gain diversified, secure, compliant, and easily tradable access to a diversified set of industry-leading equity products and protocols through a single-stock purchase on a regulated exchange. DeFi Technologies is currently listed on the US Exchange at DEFTF Stock Ticker and the Canadian NEO Exchange at DEFI. For more information or to subscribe to receive company updates and financial information, visit their website at defi.tech.

• 2:57Anthony Pompliano?

  I'm really excited about what these guys are doing. I've become an advisor to the business, and I highly suggest you go check them out. Go to their website at defi.tech today.

• 3:06Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:29Anthony Pompliano?

  All right. Next up is Keith Wasserman. I'm super excited about this. Yeah, you're sitting right there. Keith is just gonna do his own thing.

• 3:38Speaker 02

  I'm gonna host Pomp today.

• 3:41Anthony Pompliano?

  I'm very excited about this. How are you?

• 3:43Speaker 02

  I'm doing good, man. Thanks for having me.

• 3:44Anthony Pompliano?

  All right. Let's just jump right into it. 2008, 2009, global financial crisis happens. That's when you started Gelt, I believe.

• 3:51Speaker 02

  Correct. That's when we got started.

• 3:52Anthony Pompliano?

  Did you think the housing bubble is bursting? Now's a good time to invest in real estate and I should get in? And it was like a master plan? Or was it like, eh, I need to do something. This is interesting. Let me get started. And it just happened to be a good timing. How much of it was intentional versus serendipitous?

• 4:09Speaker 02

  So the intentional part was my cousin was out in a city called Bakersfield, California, two hours north of LA. And they got hit by the housing bust even first before LA started. Dropping and we he said wow these like four unit buildings that previously sold for 500 grand. We could pick up for 150 grand. So they were 25 cents on the dollar ish and I'm like it's a no brainer. If you could rent out like two of the units, you're cash flowing three of three or four units. You're cash flowing like a pig. So it was sort of like, you know, we didn't plan on building a huge enterprise, but we started with one and it seemed like a good opportunity. And they were like, oh, this is pretty cool. And then we did another one and another one and just built on itself, you know?

• 4:46Anthony Pompliano?

  What were the mistakes you made in the first one? Everyone makes mistakes in the beginning. What were the things that you look back now? You're like, man, I was so dumb. I didn't know X.

• 4:54Speaker 02

  Yeah, I think some of the most important lessons we learned early on were A, just because something's cheap doesn't make it a good investment. So these buildings were in the roughest parts of town. It was all we could have afforded back in the day and you know, it was a great learning experience. Cutting our teeth, you know, renovating these dilapidated buildings, leasing them out. But the tenants were really rough on the units. We dealt with a lot of vacancy issues, section eight kind of tenants. It was just a different ball ballgame. And then we started, you know, buying in a little higher quality areas. And on paper, the returns didn't look as good, but they actually were much better, the returns, because of the quality of the tenants and the underlying real estate.

• 5:31Anthony Pompliano?

  At what point do you say, hey, we want to go from just buying things that we can afford to like, let's go build an actual business here and raise capital and like operationalize this?

• 5:39Speaker 02

  Yeah, I mean, it was a full year. We bought the first fourplex and then another one. And then we brought in one investor and then another. And it was a year of buying these little four unit buildings. And a full year later, I spoke to a few different people in the business and they're like, you could create a real sizable, scalable business doing this, like real estate syndication business. So we went out and we bought a 78 unit building and people asked, how did you make that jump? Essentially, I brought on two gray haired partners that helped me. One, being my father, he helped us qualify for the larger loans because we didn't have the balance sheet. We couldn't qualify. He helped us by his law firm did all the legal work. And then he helped us with his reputation by bringing in family friends to invest with us or clients of his firm.

• 6:23Speaker 02

  And then we brought in another gentleman named Adrian, who had a lot of experience running larger multifamily properties. So we put together Little group of eight people. We went and bought this 78 unit building in Bakersfield. At the time it was like 3.9 million. We raised 1.3 million of equity from around eight people. Our like acquisition fee, we just rolled back into the deal, didn't really take any money out. And that's how we learned, just with good mentors and partners and you know, just kept rinsing and repeating one deal at a time.

• 6:48Anthony Pompliano?

  How much harder is it to do a four unit acquisition for 78 unit acquisition?

• 6:53Speaker 02

  So I always tell newcomers, it's the same amount of time and energy to buy and renovate and oversee a small building as compared to a big one. In some circumstances, the bigger ones are actually easier to operate because they have onsite professional management and the maintenance tech's onsite. And it's more efficiently run actually, and you can make more money, you know, the bigger the property versus the smaller ones. So we've just been over the years pushing the envelope, trying to buy larger and larger properties. And it's worked.

• 7:22Anthony Pompliano?

  And how did you think, you said it was about 3.9 million, you raised 1.3 million in equity and then took out debt for the rest. How did you think about the ratio there and why that specific ratio?

• 7:33Speaker 02

  Yeah, we, you know, we kept it, at the time you could have got higher leveraged loans just because the cash flows were so great. And prices were pretty depressed. We always stress test the deals and we're like, okay, what happens if rents drop, you know, five, 10, 15, 20%? What happens if occupancy drops, you know, from 96 to 88 or whatever? And you know, when is that break even point occur? And then when are you in the negative? And we're very conservative. We raised a lot of extra money upfront. So if there is a time when there's downturn and like we had in 2020, we've been doing this now 13 years. We've, we never had any months where we actually had, were in the negative until COVID hit. And then collections started suffering on two or three properties, we were in the negative.

• 8:17Speaker 02

  But instead of going to investors and being like, we need to, you know, cover the mortgage payment. We had ample reserves in each bank account to fund that, you know, for extended periods of time. But I'm rambling on a little.

• 8:27Anthony Pompliano?

  Well, when you think about the, it's interesting, right? Like you go and you raise extra equity upfront, what does that do to the financial return? Does that improve the return or is it?

• 8:35Speaker 02

  It lowers it a tiny bit, but what we, my pitch to investors is. It's capital preservation. I never want to take a permanent loss of capital in the game of compounding. It kills your returns by having that permanent loss, right? So instead of hitting a 15 IRR, I'd be happy with a 14 IRR and just consistently not ever having a zero. You don't want to, it's a, it's a different game than the VC game where you actually want zeros. You want to take the, the highest risk and, you know, invest in companies that are out there and, and maybe other people don't see something. And sure, a lot of them are going to go to zero, but, and that's why you do it as a, as a portfolio. You have a lot of them, 20, 30, 40, whatever, angel investments. If you see in real estate, it's like, you know, you're not going to hit the hundred X, thousand X, but you're going to have, you know, over 10 years,

• 9:20Speaker 02

  three X, four X, maybe five X. And if you bought in oh nine, you know, some buildings could be a 10 X with cash flow and equity appreciation, but also, also all the tax benefits, which a lot of people don't understand using depreciation and the ability to 1031 exchange.

• 9:35Anthony Pompliano?

  We're going to get to taxes in a second. Before we do that, uh, talk to me about what the average return looks like. So when you guys go buy, now you guys are buying hundreds of units in, in a single property. Is this something where you guys go in and say, hey, are down the fairway, you know, a great deal looks like we buy X number of units and it's a three X return in five years. Like, well, how do you think about this is what we're looking for?

• 9:57Speaker 02

  Yeah. Um, our strategies changed a little since inception. So like oh nine, 10, 11, we were buying a lot of buildings that were older, built in the 60s, 70s. That, that's where we saw the opportunity. Um, over the years, we found it. It was hard to hold those buildings long-term. They were just getting really old and had major, you know, plumbing issues and, you know, big repair, big ticket items. We're, and now in the last few years, we've been exchanging those into like 2010 and newer buildings primarily that we could hold longer term that does, they don't have those capital needs. Plus the return profile, like, um, we're pretty similar between the newer ones and the older ones. So we're taking the time to prune the portfolio, sell off a lot of those older buildings, exchange into the newer ones.

• 10:36Speaker 02

  And also geographically, we're, we're heading back to California where, you know, the, the, the headlines, oh, you know, political risk, people are leaving, yada, yada, but risk adjusted, now the returns are actually higher there than in other markets like a Phoenix or. Vegas.

• 10:50Anthony Pompliano?

  Why? Why are the returns better?

• 10:52Speaker 02

  People are scared, you know, and right now, Phoenix is on fire and rents are growing. But it's always been historically a very boom and bust market, same as Vegas, you know. Uh, when it's a Vegas relies on the gaming sector, you know, for the economy and Phoenix has diversified a good amount and there was a ton of people moving there, but you know, it's if you look back historically, during the last recession, rents dropped 20% in Phoenix from peak to trough. And there were buildings that were, you know, half vacant. Um, they had an immigration bill passed. Around 100,000 people left the, the, the city. It was, uh, blood in the street. And that's when we, when we went in there in 09, 10, I'm sure we'll be back into these markets when there's a, you know, uh, the next correction. It's cyclical. It's going to happen again at some point. I don't know when and how, but you know.

• 11:33Anthony Pompliano?

  Yeah. When you look at, uh, buying one of these properties, how much of it is, uh, hey, we just want to buy the property. We want to get the cash flow, the tax benefits, and then the capital appreciation versus, uh, I think you guys have also built other companies that service, uh, firms like yourself, but also service properties. Like, how do you think about almost like the empire building aspect of this?

• 11:54Speaker 02

  Yeah. So I am pretty always thinking and opportunistic and curious. And, um, we did other asset classes. So like we were into the mobile home park space for a while. Uh, we bought eight mobile home parks. We bought an RV park in, in Monterey that did really well. Um, what I've learned over the years is really focus and, you know, if you focus, it'll just compound in your energy and everything will be on that one thing. So we did well on those mobile home parks for the most part, but it just took away our energy from our core business of, you know, buying apartment buildings, uh, building apartment buildings. We also started doing self-storage, which has actually done really well. We're probably going to continue just, you know, doing that a couple of deals a year, every year on that front as well. Um, but I've, I've learned that concentration and focus is really important.

• 12:38Speaker 02

  We did start a company called De Musso, I think you were alluding to. So we saw a big need in our industry to, um, help, help the, uh, property managers and landlords, um, uh, go as a hundred percent digital collections of rent. Right now, you know, people have a checkbook sent sometimes just to pay one check a month rent. Otherwise, why even have that checkbook? There's so, it's so antiquated. So we're helping our, our, our management companies. And other ownership groups like ourselves help transfer them to digital age and go 100% digital collections. We're active on 350,000 units. So Gelt is a customer, but we have a lot of the other top 50 like property management companies as customers and we're processing north of $5 billion a year in rental payments and that company's grown really quickly. I'm not involved in the

• 13:20Speaker 02

  day to day, but we helped seed it. I'm on the board and we just saw a need in our space to do that. Opportunity, yeah.

• 13:27Anthony Pompliano?

  I had Chris from Fort on and one of the things that he said that I just stuck with me was he's like, you know, look, I spent a lot of time company building, right? Like I'm an investor and when we buy real estate, you strike me as very similar as well. Like there's a lot of other things other than just like, is this a good deal or is it not? There's fundraising, there's organization, there's hiring, there's all these things. Talk to me about that aspect of what you do on a day to day basis. Like where do you spend the most amount of your time?

• 13:51Speaker 02

  Yeah, it's a great question. So in the beginning, it was just me and my cousin, we had to do everything ourselves, but even from then, we sort of delegated. Well, he was more of the call it the inside guy dealing with the actual construction of the property rehab and dealing with the contractors. And I was more of the outside guy dealing with the brokers and fundraising and the lawyers. And so we had good division of labor from the beginning. And then we just kept hiring up one person at a time where we needed to, where we weren't the best at that and it wasn't the best use of our time. So we hired asset managers and then accounting people and acquisitions and just kept growing where we had holes and where also our time wasn't best spent. So a lot of people get stuck in micromanaging and doing everything themselves and but it limits the type of

• 14:34Speaker 02

  organization you could build. So today, you fast forward to today, my role 100% is just fundraising pretty much. When we're buying a building at the end, you know, we have the investment committee, we discuss, my partners and I, but ultimately, I'm really just involved in fundraising. I'm not involved in the asset management, you know, operationally. I have a partner that oversees the staff. I have a partner that oversees like construction management and I'm pretty much focused on just fundraising for these deals. Realty is very capital intensive. You gotta have a lot of cash to buy it.

• 15:05Anthony Pompliano?

  You're popular on Twitter. That's the first time I ever came across you.

• 15:10Anthony Pompliano?

  Talk to me about the fundraising strategy. Where have you found success and what hasn't worked?

• 15:14Speaker 02

  Yeah, so, man, I mean, when we first started, my cousin Damian and I were in the car listening to Napoleon Hill, Think and Grow Rich, and like, we're figuring out, how do we raise our first $100,000 to buy these little fourplexes? And it was like, wow, we, you know, we didn't know, we had never raised money before, but raising money is really an art. And I think I keep learning every day and how to master that art. I think, you know, we started with family friends and then clients of my dad's. And my sphere of influence, you know, you start with your circles, like, I'm in LA, I'm in the Jewish community, I'm in YPO, I'm in Tiger 21, I'm, you know, and now Twitter opens the audience to the world, right?

• 15:55Speaker 02

  So I've been meeting people from all walks of life and in different parts of the country that I would never have gotten in front of, and I'm not salesy at all, I just like to talk about what I do, you know, educate people, and if they're interested in participating, then they could reach out to me. And we have a lot of people that have reached out from those kind of mediums, you know, LinkedIn, Twitter. I go on podcasts like yourself, and I meet really cool people like that I become friends with from there.

• 16:23Anthony Pompliano?

  What is the normal process look like? So you guys identify a deal, you say, this is interesting. Do you have to fundraise before you go put the LOI? Do you, like, just walk me through, like, how do you actually acquire it? And then what does the timeline and sequence look like from a fundraising standpoint?

• 16:36Speaker 02

  Yeah, so the process is, you know, we get, my acquisition guy, we look at like 100 deals. Out of 100 deals, we'll maybe offer on five to 10, and hopefully get one, you know, awarded to us. Once we're awarded a deal, we're negotiating a purchase and sale agreement. We simultaneously are doing all of our physical inspections, lease file audit, due diligence. We're putting together the offering memorandum. Once that's done, we send that out to the investor base. So it's literally an email blast that goes to, we have around 14 or 1500 current investors. And then I have another, maybe 3000 people that are, that have voiced interest, that just haven't pulled the trigger yet. Once we send that out, it's sort of like a first come, first served commit. And then usually we call the funds within a few weeks. If anyone

• 17:20Speaker 02

  Runs late past the deadline, we then open it up to the waiting list to make it fair for other people that didn't get to get in, but you know, we're a little too slow to commit. And then we close on the transaction, usually around 60 days from inception, from signing the contract to close. I'd say, you know, we, we, it's a little scary raising money deal by deal because we don't have quote unquote like discretionary committed capital like a fund would. So we take on some risk, but we have large lines of credit and our own cash to backfill if we ever are short on a raise, which typically doesn't happen anymore, but it still could theoretically. And our deals are getting bigger and bigger. So we, we, we have to keep ample, you know, liquidity to be able to do that just in case.

• 18:01Anthony Pompliano?

  Why not raise a discretionary fund?

• 18:03Speaker 02

  It's a great question. So I think a fund with taxpaying people, I don't think real estate is a good vehicle to do a fund. I think for like VC and private equity for real estate, I think it should be done deal by deal because you never really, if you do sell, you always want a 1031 exchange and roll that over to avoid, to defer paying the tax. I think if you're in a fund, it's like a 10 year lifespan and then boom, you have to sell all the assets. Why sell these golden geese laying golden eggs? Real estate's like a generational kind of thing. You want to, you know, I'm not into the never sell camp because we do sell occasionally, but don't sell ever and return money because then you have the, the capital gain tax plus something called recapture. So all the money you've been saving in, in taxes over the years from the depreciation comes to a head

• 18:47Speaker 02

  and then you got to pay that out. So like, let the money compound without the taxman getting his pound of flesh, right? And that way we could do this doing deal by deal. In a fund, you know, it's a 10 year thing and it would make it easier fundraising, like getting committed capital and then calling it over time and stuff. But, and then also on a fund, you have to deploy the capital within a certain amount of time and you're going to be, you're going to be doing deals you probably shouldn't be doing. You're in a fund business versus like a real estate business.

• 19:12Anthony Pompliano?

  Let's talk about the tax benefits of real estate. So when you go and you acquire one of these large apartment complexes, what are the benefits you get upfront in terms of you make the purchase and within some, you know, 60, 90, 120 days, what are the benefits?

• 19:25Speaker 02

  Yeah. You have something called depreciation and what we do is cost segregation. Accelerated depreciation, you pay for a report like I think we use CBRE or other firms and they'll, you know, break down the components of the building into different 10-year lifespan this and it accelerates the depreciation. So you create really large losses in the first year and you could use that, you know, those losses to offset any income from, from real estate income. If you're, if you're not a real estate professional, if you're a real estate professional, you could use those losses against any income. So I always, I always recommend if someone could qualify as a real estate professional, they, they should talk to their CPA and figure out if, if they could do that.

• 20:03Anthony Pompliano?

  What is the definition of that?

• 20:06Speaker 02

  The biggest hurdle is like the hours you have to spend like over 700 hours a year. But I know people that have married, you know, real estate professionals and then like they, they, they use the, the losses from the real estate against their spouse's, you know, income from whatever they do. And it's, um, you know, it's, it's a pretty effective way to save money and it's legal. Yeah.

• 20:25Anthony Pompliano?

  What is the depreciation that you get if I'm going to use these cost segregation studies? And for those that don't know, the doors, okay, we're going to depreciate that over 10 years rather than 30. We're going to the windows, the doorknobs, like all kinds of crazy stuff. If you buy something for, let's say a hundred million dollars, what is the percentage usually that you can get?

• 20:41Speaker 02

  It depends on the location, how much building versus land. You can't depreciate the land. But a real life example, we, we bought a, a building in Ventura, California. It was around $12 million purchase price. It created losses in the first year of around $3 million, which means you could use, like, if you have 3 million of income, if you're a real estate professional, you could, you could use that 3 million of losses and it wipes that out completely. And, uh, or, or if you're not a real estate professional, you could use it against other real estate income.

• 21:10Anthony Pompliano?

  Yeah.

• 21:11Speaker 02

  So, and that flows through to our investors. Like, let's say, you know, an investor puts in 5% of the money on a deal. They get 5% of those losses on their K1. And we've had deals for many years that are still, still showing losses. The first year you create that huge loss of that cost egg, but then it's, I think it's over 27 and a half years. If it's like a multifamily kind of building, it's a, on a straight line depreciation schedule. And, uh, yeah, it's, it's pretty, pretty wild.

• 21:34Anthony Pompliano?

  So right after the first, the initial purchase, you get the cost segregation study, you get the big bonus depreciation. And then what are the? Tax benefits as you continue owning that property.

• 21:42Speaker 02

  Yeah, it's it's it drops from that first year, but it's still like, you know, the over 27 half year. You know, and if you spend a lot of money doing the rehab and stuff, you could write that off also. So it's I've we've had buildings five, six years that even though they're throwing off. You know, seven, eight, nine, 10, 15%, whatever cash flow, they're still showing losses because of that line item. It's a phantom expense. You're not actually spending it, but you expense it. And eventually, yeah, when you sell the building. If you take the cash, you'll have to all those savings of the taxes over the years is called recapture. You then have to pay it. But if you exchange and don't take any money, you know, roll 100% of the proceeds into a like a like size property.

• 22:22Speaker 02

  It's like same size or larger. You have to replace the debt essentially and the equity and yeah, you just kick to keep kicking the can down the road. And then when you pass, there's a step up in basis for your errors and stuff, which is pretty remarkable.

• 22:34Anthony Pompliano?

  This is the game.

• 22:35Speaker 02

  This is the game, man. The rich play this game and like, you know, anyone with that's an accredited investor, you're you're saving money. You know, I recommend parking money in real estate with with good sponsors. You could buy your own properties too. We have investors that purchase their own properties and invest with us. There's no right or wrong.

• 22:51Anthony Pompliano?

  Explain in more detail the 1031 exchange, because I think a lot of people don't understand how much of a game changer this is.

• 22:57Speaker 02

  Yeah, I'll give a real life example. So six years ago, we bought a large property in Denver for 74 million. It was like 500 some units and we just sold it in January of this year for 141 million. So it was a huge gain. The investors, I don't know, maybe 4X plus net of our fees and stuff. They they had the opportunity to roll that into a brand new building we bought in downtown Long Beach that was in lease up. And yeah, you know, most investors will roll with us into the next opportunity. And they didn't pay any taxes on that. And over time, you know, our goal, we could pull out principal through refinancing events.

• 23:38Speaker 02

  Which when these loans loans come due, you have to pay it off. So either get a new loan or sell the property. We'll get a new loan and pull out cash, hopefully get a bigger loan than the previous loan and those dollars also. Or tax deferred, it's a refi proceeds, loan proceeds, it's not considered income. So that way is another way to get money in principle out. I know people that have had buildings 30 years that, you know, like they pull out so much money on these things and.

• 24:03Anthony Pompliano?

  And they still have the asset.

• 24:04Speaker 02

  And they still have the asset. Yeah, I have a mentor that bought a building 30 years ago for $3 million, $3 million. Maybe put 600 grand down, him and his investors. And now every year, the property throws off $3 million. It's pretty remarkable. Plus, you know, he's pulled out millions and millions of dollars. It's the ultimate long game for preserving wealth and growing wealth safely. Risk, best risk adjusted returns in my mind.

• 24:25Anthony Pompliano?

  Why do they have the tax code like this?

• 24:28Speaker 02

  That's something I don't, I could assume it's just because the voting people, you know, the people with the money, they lobby for this. It's.

• 24:34Anthony Pompliano?

  Is it that or is it because they actually want to incentivize investment? Or maybe those are the two same things, right?

• 24:40Speaker 02

  It does incentivize investment for sure. And this type of investment, I just, look, I legally take advantage of whatever is legal. Tax wise, you know, push the envelope and make sure it's kosher and legal. And this is all in the tax code and, you know, we're doing it.

• 24:55Anthony Pompliano?

  Yeah. One of the messages that we have for people almost on a daily basis is like, there's this thing in America where people are like, oh, the tax people. You know, the rich people aren't paying taxes, they're not paid taxes. And it's like, hold on a second, there's not two tax books. There's not like, rich people get one set of rules and other people get a different set of rules. It's the code is there for everyone to use.

• 25:14Speaker 02

  Correct.

• 25:15Anthony Pompliano?

  Now, there are things where, hey, you got to own a business. Well, okay, people figured out if I own a business, I get certain things or I got to own real estate. Or, you know, it's not just if you are a W2 employee, you have all these things available to you. You have to put yourself in a position to benefit from certain rules. But the rules are there. And so you said it earlier, it's like, rich people are doing this, like, go learn how to do it. And then you could do exactly what they're doing, like the rules are available to you as well, right?

• 25:38Speaker 02

  Yeah, for sure. They make it a little tougher though, for like, we only could work with like accredited investors, right? So you have to earn, I think it's over 250,000 a year or have a net worth of a million dollars excluding your personal residence. There's still millions and millions of people that will qualify for that. But yeah, they make it harder. I think some, you have to go through certain procedures to be able to accept money from non-accredited investors. Some sponsors do and stuff, but um definitely, you know, once you become accredited, it opens the doors to that. But yeah, to build wealth, you know, I think Naval had a great thread on this, you know, talking about how to create wealth. And it's literally owning equity, you know, creating business investments, you know, it's it's tough when you're W2 for sure to to to um.

• 26:21Speaker 02

  You know, you pay a lot in taxes and but everything, if you were able to save, should be invested in over a long period of time. If you if you do the math and compound it, market, you know, eight to 10% kind of returns if you invest in indexes. It creates wonders over a long period of time.

• 26:34Anthony Pompliano?

  Talk to me about the current real estate environment, like obviously we had a 0% interest rate environment. Mortgages, etc. was so cheap. They were trying to incentivize people to go borrow and and invest or spend capital. We now have kind of swung the other way and we obviously have over, you know, five, five and a half percent residential mortgage rates. What are you seeing in the market changing maybe between, you know, summer of 2021 and now summer of 2022?

• 26:58Speaker 02

  Yeah, so I mean, real estate, you can't just lump it all together, but like from what we're looking at, multifamily, 200 unit and up Denver and West stuff we're buying. Prices are off around five to 10% and it's not because the fundamentals are slowing down like rent growth is. I've never seen rent growth like this. I mean, we're seeing it in some markets. It's like 20% year over year rent growth. The problem is the interest rates have risen so quickly, it just puts a damper on the returns when you do your modeling. And yeah, we're borrowing at now around four and a half percent on a 10 year fix, whereas it was like sub 3%, you know, pretty recently.

• 27:33Anthony Pompliano?

  Does that change your appetite to go buy things? Is that big of a difference?

• 27:36Speaker 02

  Yeah, we're more cautious now. Um, we if we are buying like we're buying one deal now, we're buying it with only a 55% loan. So very conservative, you know, leverage amounts.

• 27:49Speaker 02

  We're doing, we're still selling and exchanging, but on new cash, we're sort of very cautiously optimistic now. It's like we're. I think the inflation thing is a real story that should be.

• 28:00Anthony Pompliano?

  How does that impact either assets you already own or assets you're looking at? Like, so if there's high inflation, that's probably driving a lot of the rent growth, right?

• 28:08Speaker 02

  Yeah, but eventually people aren't going to be able to afford these things. And like the cap rates will rise too, and that puts a damper on values. So I think we've had a double whammy over the last 10 years of cap rates compressing, which means it's like multiples, the multiples expanding and rents and rents growing. But now I think you're going to see the cap rates started popping up a little bit along with the interest rates. And if rent growth slows a little bit, there's going to be some, you know, issues, especially with some of these borrowers that are doing these short term, like variable loans that are high leverage and stuff.

• 28:45Anthony Pompliano?

  Do you think that there could be a re, do you think that there could be a recreation of the 2008, 2009 crisis where there's like over leverage in the system and prices go down and everyone's screwed? Or do you think we're not there?

• 28:55Speaker 02

  I don't think it would probably be at that level, but, you know, on the single fam, because people generally on single family, for example, are putting more down payment and they're, you know, financially more secure in 06 or whatever. And everyone and their mom was able to get a mortgage, you know? So I'd say I'm starting to see houses sit longer. It's going to lead to price cuts. The inventory is low though, so that'll, you know, help also the soften the blow of, but definitely mortgage payments have doubled. Like, you know, I was lucky enough, I refi'd my house and I locked right before this run up, but it's, it would have doubled my mortgage payment if I didn't, you know, have luck of locking in time. And, you know, plus the stock market being down is a double whammy. People have less perceived wealth.

• 29:38Speaker 02

  I mean, it fluctuates, but right now if they were worth $100, it's now they're worth $80. Or if they were in a lot of the tech heavy stocks, maybe they're worth, you know, $50, $60 on that 100. So it's definitely wealth is down.

• 29:50Anthony Pompliano?

  There's a lot of real estate folks that I've talked to or, you know, I hear their various kind of thoughts. Don't buy your primary home rent and then go buy the investment properties. How do you think about that? Is that good advice, bad advice? Is it case dependent?

• 30:06Speaker 02

  Like I always tell people, our investors, if they don't own their home yet, I think owning a home is a good, you know, thing and, and, you know, certain countries, it's, there's more renters versus homeowners. And at one time, I remember the stat was like, I think we were up to 69% homeownership before the 09 recession. It dropped to like 60% for every point of drop in homeownership. It was like a million new renter households that were formed. I think it's crept up a little bit, but yeah, I always recommend, you know, it's, it's stability, having a home and, you know, it's generally people's largest investment because it's a forced savings. Right. They pay the mortgage down over the years and it appreciates in value.

• 30:46Speaker 02

  And I mean, it depends where the home is at and stuff, but like in certain parts of LA or probably all LA would have been a great investment over the time. It just depends like, you know, if you need the cash to, you know, do other things with, but if you have the cash and you have the, you know, amount of money to service the debt and then some, buy a house. I think it's okay.

• 31:08Anthony Pompliano?

  You mentioned 10 year fixed rate debt earlier. Is that what you guys normally target?

• 31:12Speaker 02

  Yeah. So yeah, primarily 10 year fixed. You, we could get a little longer term probably, but the negative thing is they have these big prepayment penalties on the loans. So, but we're very conservative shops. So like we, we've been doing those since inception and when we went to sell buildings, the buyers, they didn't want to assume those loans because they were above market interest rate. Now, um, yeah, we locked in a rate at 2.99. That's way below market. So it is, you know, people would assume that and it'll add a lot of value to the purchase, I think. But we did it really just to have sanity and know for 10 years, this is your mortgage payment and like, you know, and it forces you to hold long term. When you put on the slap on those long-term fixed rate loans.

• 31:52Speaker 02

  And I think real estate, the way to create that wealth is holding buildings long-term and, you know, playing the long game versus. Flipping, you know.

• 32:00Anthony Pompliano?

  When do you know to sell?

• 32:02Speaker 02

  We've sold for different reasons. So the first few years, we sold to create a track record. We did return capital to the investors versus exchanging. Nowadays, we only try to exchange. We have that track record. We sold because some of the buildings are getting too old and have major, you know, cap capital needs and we'd rather exchange into newer buildings and what other reasons to sell. If the loan's coming due and we feel like it's a good time to, you know, place the money into something else, we'll sell. But typically, yeah, try not to sell too often.

• 32:33Anthony Pompliano?

  I want to ask a couple of questions. You tell me if you can't talk about it or don't want to. When you go to get a loan, how many financial institutions do you talk to? Do you make them compete with each other? Like, how do you optimize as a real estate investor to make sure that you're getting the best?

• 32:47Speaker 02

  We always go through a mortgage broker, for sure. Yeah, typically, so if the investment sales team is like, let's say CBRE, we have contacts at CBRE that are, that handle, you know, the mortgage brokerage and farming it out, you know, making the different lenders compete to try to get the best, you know, price terms, et cetera. Yeah, we always, we feel like that's a cost that's worth paying.

• 33:11Anthony Pompliano?

  So you guys go through a broker? You don't do it directly?

• 33:13Speaker 02

  Correct, yeah.

• 33:14Anthony Pompliano?

  Why do you go through a broker?

• 33:16Speaker 02

  Just because they make the lenders compete, you know, we, and nowadays, a lot of the loans we were getting were agency, Fannie and Freddie, but now we have life companies involved in the mix, banks, debt funds, like a lot of different, you know, lending institutions. And they really, you know, make them compete and we get the best, best value, you know, for doing that.

• 33:35Anthony Pompliano?

  When you look at a deal, what is like the one or two metric you think are the most important to pay attention to?

• 33:39Speaker 02

  Yeah, we're into, you know, something that's an ideal deal for Gelt. We want to see it cash flowing from day one or able to have meaningful cash flow fairly quickly through some kind of renovation program. We model conservative rent growth. Typically, we're not a pioneer and we're not the first one to, you know, upgrade units in a certain market. We have comps that show that, you know, if we upgrade the unit, this is what the kind of rent will achieve. And, yeah, and we do it with moderate leverage. We try to, you know, hit like a two and a half to three X equity multiple over 10 years is sort of like the, with the conservative underwriting, that's what we're trying to hit. We've seen a lot greater than that just because of the market.

• 34:21Speaker 02

  But yeah, I think I think during tough times, you're going to see, you know, who are the real players and who could withstand the tough times and versus the people have just been momentum guys, you know?

• 34:32Anthony Pompliano?

  In a recent interview with The Hustle, you mentioned this like flight to quality that you saw during COVID. Explain that.

• 34:39Speaker 02

  I think you're referring to like the property quality and stuff.

• 34:44Anthony Pompliano?

  Yeah, like people like there was a flight to quality in terms of what people were looking for.

• 34:48Speaker 02

  Yeah, especially us. I mean, we saw a lot of struggles on the portfolio of the buildings that were more blue collar, lower income, you know, collections were lower in those kind of markets. So we sort of peeled off some of these troubled buildings that that were having hard collection issues and also the deferred maintenance and capex needs and exchanging it to a lot newer vintage buildings in better locations where collections remain a lot higher. Those people weren't as affected by COVID with job loss. And we also are trying to buy in more areas with higher barriers to entry like Southern California as well.

• 35:22Anthony Pompliano?

  When you have a deal, how much cash do you try to keep in the bank? And I'll measure it maybe in like months of covering a mortgage or if there is some sort of downturn, etc. Is this something that you think of it similar like an individual, hey, we need three to six months of like a rainy day fund? Or how do you?

• 35:37Speaker 02

  Yeah, we definitely keep a reserve like slush fund, rainy day fund. I learned that early on from my mom, actually, who did some real estate investment. My parents own some properties and they're like, you always want to have that, you know, reserve. So it's not like a definite number. It differs deal by deal. We'll let it drop a little bit over time if the deal is really doing really well and it's in good shape. But yeah, we typically on these large deals, we'll keep, you know, at least a million bucks or so like, you know, in the bank, sitting there. So we have a lot of cushion and room to go before we have to do any capital call. We've never had a capital call in the history of our firm. On some of the construction projects, we've gone over budget and we've lent personal capital to the deal so we don't have to, you know, go to the investors and bother them.

• 36:22Speaker 02

  But we've prided ourselves on never having a capital call and never losing a dollar of principal for the investors and we plan to keep it that way.

• 36:29Anthony Pompliano?

  I love that. I asked for questions from Twitter and they did not disappoint, as I'm sure you know. So I'm just going to read through and we'll do kind of rapid fire here. Tyler Hoag said, how can you assess whether a real estate investor is any good when essentially everyone made money over the last decade?

• 36:43Speaker 02

  Yeah, that was a great question. I liked that one from Tyler. Yeah, I think there's a lot of people that have made a lot of money just from leveraging up like crazy and the market's been good. But during the tough times coming up pretty soon here, you're going to see who's, whatever this Buffett's saying is, you know, swimming.

• 37:01Anthony Pompliano?

  Water goes out.

• 37:02Speaker 02

  Yeah, when the water goes out. So I think, and there are some people that actually were in the wrong kind of asset classes. Not everyone in real estate made money. Most of the people in multifamily did. But I know people that, if you look at some of these office tower trades, they're trading for lower dollars than they were 10 years ago even. Like, it just depends on the type of real estate you've been buying. But we've had tailwinds in multifamily with huge rent growth. And I think definitely the more conservative shops like us that are planning to be multi-decade and we're always prepared for the worst, we're going to be able to go through these tougher times versus people that are more transactional, buying and selling and flipping. And so far, yeah, those groups are okay,

• 37:47Speaker 02

  but they could have a world of pain if things change. It seems like it's happening right now.

• 37:54Anthony Pompliano?

  Omar Morales asked, is he a net seller or net buyer this year?

• 37:58Speaker 02

  That's a great question. So Omar's my buddy here in Burkadia, here locally in Miami. Great guy. Shout out to Omar. Hardest working broker I know. 28 years old, very successful, very curious. Love that guy. I'd say net seller, probably. We have a lot of properties on the chopping block. Most of them we're going to try to exchange, though. So that produces a buy. But yeah, I know some very smart groups that have a different structure, they're more fun and stuff, and they've been net sellers, especially in this very low cap rate environment. They were selling stuff last year for like three caps and everywhere, even in the Midwest and stuff where historically you don't see a lot of rent growth. So some of the smartest

• 38:43Speaker 02

  money I see are selling right now.

• 38:44Anthony Pompliano?

  Yeah. Adi asked, if you could go back in time and change one decision you've made along the way, which one would it be and why?

• 38:52Speaker 02

  It's a great question.

• 38:55Speaker 02

  The one that eats away at me the most is selling our Phoenix portfolio. We had 2,500 units in Phoenix. We sold in around 2017. Values have over doubled since then. And I mean, everything we then use that money to buy has gone up too, but like, Phoenix has been on fire and that sort of burns me. We'll be back in that market at some point, but you know, that's the one that got away.

• 39:17Anthony Pompliano?

  Yeah, that's okay. You did okay. Bijon Matines asks, what's your opinion about fractionalized real estate investments through NFT technology?

• 39:26Speaker 02

  That's an interesting one. I mean, I don't know enough to talk about that, but I think there is, you know, real estate is sort of an industry that doesn't change much with technology too quickly. There are some interesting kind of prop tech companies out there and stuff. It's gonna be interesting to watch. We'll see if that's, is that the killer use case? How's that gonna work? I see a lot of like decks on people trying to do stuff like this, but none of them have taken off really yet, but we'll see.

• 39:52Anthony Pompliano?

  Ricky, excuse me, Ricky Schmidt asked, I'm a real estate broker in Charleston, South Carolina. Currently, there's 1,700 houses in inventory. The average pre-pandemic was 5,500 to 6,500, so about 20% or so. Loaning standard in home equity is higher than ever. Softened from euphoria, yes, but where do people think the inventory to crash the market will come from?

• 40:16Speaker 02

  Yeah, it's a great question. Yeah.

• 40:18Anthony Pompliano?

  I got like the smartest audience on Twitter.

• 40:20Speaker 02

  Oh, man, you got some good people following you for sure. I'd say, yeah, the inventory percentage wise, it shot up a lot, but historically it's still very low, he's saying. But they're, you know, I don't know if it'll be inventory that crashes the market, or just if the rates just keep rising. I mean, that's gonna put a damper on home values and I think it'll, it'll damper the crazy growth we've seen in home values, but it might even lead to some, not just softening, but some decline in value. But definitely, you know, you need to see probably more inventory, but that's a big percentage jump and it could continue probably.

• 40:52Anthony Pompliano?

  Yeah. Somebody who, they're not actually using a name, said, for a couple with young kids who wants to buy a house in the next couple of years, what are some recommendations to prepare that we might not think of? They're already trying to get out of debt, raise their credit score and increase income, but what else could they be doing?

• 41:09Speaker 02

  Just buy a house with within your means, right? I mean, you don't want to buy something bigger than you could chew that you're like struggling to make the mortgage payment. And like you want to sort of live under your means and then you could always buy a bigger house at a future date. Right? Like, um, and, uh, don't like in the, one of my mentors is like, in the next two, three, four years, the house or the real estate could be worth less than you pay for it, but who, but who cares? In the long run, it's can be worth more in, in, in terms of income producing property, the, the cash flows can be a lot greater over the years. And, uh, you gotta have that long-term mindset. Same as the stock market, right? If you're buying a good company and you, you gotta set it and forget it, right? Like you could be down, all the best companies have had big drawdowns over the years.

• 41:51Speaker 02

  I mean, the, the most notable one, Amazon had like a 90% drawdown. I don't know how many people had, had the stomach to withstand that and hold it. But if you did, you, you'd be up gazillion percent, you know?

• 42:01Anthony Pompliano?

  Yeah, Bezos did.

• 42:02Speaker 02

  Mr. Bezos did, and look at him now, big Bezos.

• 42:04Anthony Pompliano?

  Exactly. Veronica Y, who says, my country is a developing country where population is still growing, uh, stably. We've never experienced a housing market crash like in the U.S. Investment is still deemed, uh, investment in property is still deemed a safe haven. And then she says, is U.S. property investment still a good investment due to U.S. declines of population? And maybe I'll, I'll edit a little bit of like, how do you think about real estate along with population growth or contraction?

• 42:31Speaker 02

  Yeah, I mean, one of the biggest mistakes we made is we bought in a small community where there was flat population. It wasn't growing and we weren't able to really push rents aggressively. It was when we were trying to go into the mobile home park space and with a big bash. And we bought like a 400 space, three park portfolio in rural Pennsylvania. And, you know, at, at the time it looked good on paper, but there was no rent growth. So we tried to buy in areas that are growing and, you know, there are cities in the U.S. that like are shrinking. And we, we try to avoid those kinds of areas. We try to buy in areas that are growing and if they have higher barriers to entry, that's, that's a, that's even better. So, um, but you, real estate in the U.S. is, is a safe haven. We have a lot of international investors that park money here because of our political stability.

• 43:14Speaker 02

  And maybe they could have higher returns potentially in other kind of developing countries. But U.S. is like, I mean, I'm biased, but I think the best country, the safest place to park capital still. And, um, I think it'll continue to be.

• 43:29Anthony Pompliano?

  Somebody named Scam Balls on Twitter. Asked, uh, what you think about metaverse real estate and will you buy some?

• 43:38Speaker 02

  I mean, I'm, I'm, I like the concept of NFTs and, you know, I think there's gonna be a lot more cool companies that are formed with really killer use cases. And I'm an early adopter. I bought my CryptoPunk, like, I don't even know, like, I first heard the, um, a podcast with, uh, what's his name? One of these big VC guys that was talking about it. Um, I forget, Kevin, uh,

• 43:59Anthony Pompliano?

  Kevin Rose.

• 44:00Speaker 02

  Kevin Rose, yeah. So I, I'm like, wow, this is pretty cool. So I had a few bucks in Coinbase sitting there and I'm like, it doesn't bring me much enjoyment. And this little CryptoPunk NFT, it's like art and I bought that and it went up like 10x and then it's back down. But, um, with the Metaverse and land, I mean, there's like, I don't know, I feel like there's unlimited, it could just create more and more, just like you could create more and more NFTs. That's why I'm like, I only buy the iconic one, like one of the first projects. I'm not going and buying any, you know, PFP 10,000, you know, I think there's gonna be a gazillion of them, but there'll be some, you know, over the decades, things that were done early on, that'll be like, wow, this is, has historical value and people, you know, relate to it and like it. But, um, yeah, I haven't bought

• 44:40Speaker 02

  any land in the Metaverse and stuff. But I think, I feel like with, with, um, there's gonna be more like, you know, Facebook, they changed their whole name to Meta, right? They're betting the future on that and it's coming, you know, with, with the goggles, glasses and being out and about and having, you know, the, the augmented reality and different forms of advertising to people and it'll, it'll, uh, make life, it's gonna be different for sure.

• 45:03Anthony Pompliano?

  Yeah. Punk3054 asked, uh, what your worst decision in business? We'll, we'll hold the answer you already said, but, uh, your best decision in your personal life?

• 45:13Speaker 02

  Oh, that's a great question. Best decision in my personal life was, uh, marrying my wife.

• 45:17Anthony Pompliano?

  I was gonna say, man, you gotta say that. You're gonna get in trouble.

• 45:21Speaker 02

  Yeah, no, I, I mean, I, I, uh,

• 45:23Anthony Pompliano?

  She's fantastic.

• 45:24Speaker 02

  I, I totally married up. I mean, I, I, I love that we created this cake together. She's like my biggest fan. I push her, she pushes me. We've created a beautiful life together with three amazing children. Um, we work together pretty much. She spearheads all of the ground up development for us. Um, she, her projects that she spearheads are some of her best performing ones. You don't see a lot of female developers and I think she's very Conservative in nature and always plans, what's the worst case scenario? And she's hit it out of the park. She buys in areas that are like changing and she follows where all the restaurants are going and sees where they're getting permits and stuff. And she's really early and she's a prolific developer. She's done really well and she's an amazing person.

• 46:10Anthony Pompliano?

  Four to eight asked, at what point during lockdowns and panic did Keith and Gelt realize that they would bet big on LA? When everyone else was leaving? And then the second question is work-life balance possible, like actually possible?

• 46:23Speaker 02

  Yeah, so the first question is when did we start doubling down on LA? We already had a few projects in LA and during LA, actually, our collections remained pretty robust. Our buildings in LA are pretty high quality and either newer or major renovations. And they did well and we're like, yeah, we just started seeing these other markets that got crazy heated and you know, valuations going kooky and we're like, let's just start buying more, doubling down on not just LA, but core and fell SoCal. I mean, we bought some great deals in Long Beach and Anaheim. And we're looking in, you know, all these sort of core Southern California markets where I feel like there's less bidders on stuff now.

• 47:06Speaker 02

  And you know, I think things are gonna, the pendulum swings. LA and SoCal, it's always gonna be a great place for people to live and raise family. And you have some influx of people leaving, but I think you're gonna have new people come in.

• 47:19Anthony Pompliano?

  There was another question here.

• 47:22Anthony Pompliano?

  What were the trigger points that you used to increase your team size? Like, when did you know to grow?

• 47:28Speaker 02

  Oh, that's a great question. Oh, I forgot the work-life balance on the last one. Work-life balance, I'm a professional delegator, so I think I've created that work-life balance and I get to work the hours I want, when I want, and that's what true financial freedom and wealth is, right? I have an excellent team that are killers in the different, you know, departments that they're in. But I think that whole remote, we're still remote. I'm allowing the team to be remote. And I think they're enjoying it. They don't have the hour commute each way. They're able to pick up their kids. They want at this hour, they're working probably more hours, but on their own time and terms. Not every job you could do that, obviously. Some have to be in person, you know, with other people. Um, and, and dealing with customers that come in or clients or whatnot, but I'm a big believer in giving people flexibility.

• 48:13Speaker 02

  And, uh, you know, they're, they're still held accountable and doing great work though for, for us. So I think like work-life balance is, it, it's, it's achievable. Um, but you gotta really manage your time properly, especially when you have kids and stuff. But I feel like I'm so much better working in hours I do work. Um, I'm not fooling around as much, you know, really working.

• 48:33Anthony Pompliano?

  Um, growing team size?

• 48:35Speaker 02

  Team size, yeah, we, we just kept hiring when we had holes and we needed, you know, more people. So like, uh, it's pretty, uh, scalable in my business because I don't do property management. We outsource that, that, that requires the most people. Uh, we would have probably 250 people if we did property management. We have 20. I'd rather have a smaller team and not have to deal with personnel issues, hiring, training, firing. And that's what has helped us scale and really focus on finding good investments and, and letting the day-to-day, you know, collection of rent, fixing, repair, maintenance. We oversee the property management company, you know, and make sure, um, they don't overspend. And, and every major ticket item, we have to approve and we oversee the major CapEx items. But the day-to-day operation, we, we let them do it and we pay them a fee.

• 49:19Speaker 02

  Um, but yeah, we haven't hired that. I mean, we have 20 some people and every year we, we had like one or two. It's not like a huge need to hire up and stuff, which I like. It's, we hire, we have a ton of applicants, people that want to work with us and we gotta be choosing on who, who we pick.

• 49:34Anthony Pompliano?

  Uh, I have two more questions. One of them's business related and one is personally related. But, uh, on the business front, your Twitter bio just says one word, compounding.

• 49:44Speaker 02

  Yeah.

• 49:46Anthony Pompliano?

  Why? What, what is it about compounding? Why is that so important and why is that enough to put as the only word in your Twitter bio?

• 49:53Speaker 02

  Yeah, man. I, I like it. Keeping it simple, sweet and to the point. I'm, uh, I believe everything in life, the best things in life are compounding, relationships, obviously investments. Um, I even got my tattoo recently. You see this little chart up to the right? That's compounding, baby. That's what we do. We, we, each one of these is my, well, there's five of us, for the five of us in our family. So it's double meaning, but I feel like. Consistent, you know, every day you put in the work and make little progress every day. And then it's like you look back 10 years and it's pretty amazing, you know, you don't see it day to day, but over the decades, you see like, wow, this is tremendous growth, you know? So I think compounding is everything in life. Just being long-term, most people are not long-term thinkers, being sticking to the plan, you know?

• 50:37Speaker 02

  We talked about Bezos, you got Elon Musk, like just stick into the plan and, you know, Elon Musk had that master plan he put out there right when he started and it's been the same since day one. He kept focused on doing that, you know, starting with the, with the first car, the Roadster, and then the Model S, and he had a whole plan on what he was gonna do and he stuck to it. And the best thinkers are just ones that are persistent and don't give up and just keep compounding over time.

• 51:04Anthony Pompliano?

  I love it. One of our sponsors is Eight Sleep. What is your sleep schedule?

• 51:09Speaker 02

  Oh, man.

• 51:11Anthony Pompliano?

  What do you do? You, you, I feel like have so much going on and you're so effective at it.

• 51:16Speaker 02

  Yeah, it's tough with three kids that are waking me up at all hours of the night. You know, the 21-month-old, you know, he's crying for milk in the night. And then the three-year-old is, he's, he's lost his patsy in his crib or his blanket's not folded right. I mean, we, yeah, sleep is important. Not getting consistent sleep could make you a little deranged. I need, I need to invest in an Eight Sleep bed ASAP and then some sleep training for, for our children. But, um, yeah, I, I try to go to bed at a reasonable hour. I'm not one of those early.

• 51:47Anthony Pompliano?

  What time?

• 51:47Speaker 02

  I go to bed probably 10, yeah, 11 at the latest and probably sleep till 6:30-ish.

• 51:54Anthony Pompliano?

  Yeah, so you get eight hours?

• 51:55Speaker 02

  Yeah, pretty much. Try to get that, yeah, I'm not, my body, I wouldn't function on, on four hours like some people could do.

• 52:01Anthony Pompliano?

  Yeah, I used to be able to do that and now no more.

• 52:03Speaker 02

  Yeah, it's, it's, it's not worth it. I mean, you, you're, you're better off getting a good night's sleep and, and being well-rested and just crushing it during the day versus, you know, try to pack everything in.

• 52:13Anthony Pompliano?

  I um, I don't think that people understand the sleep thing until they do it. Like when you're younger, I actually think there's some like weird thing about like, I have so much to do at the school, like school in America starts so early compared to like many other places.

• 52:28Speaker 02

  Way too early.

• 52:29Anthony Pompliano?

  And then it forces parents to get up because they gotta wake the kids up and like all this stuff. But to some degree, once you realize the power of sleep, you're like, dude, this is amazing. What am I doing?

• 52:39Speaker 02

  Yeah, I agree. We're transferring our kid to a different school and it starts like an hour later and it's gonna be better for us and her.

• 52:46Anthony Pompliano?

  Game changer, man.

• 52:47Speaker 02

  Yeah, that wasn't the reason, but it was like, that's pretty cool.

• 52:50Anthony Pompliano?

  Yeah, I love that. All right, where can we send people to find you on the internet?

• 52:54Speaker 02

  Yeah, man.

• 52:55Anthony Pompliano?

  Or find out more about Gelt.

• 52:55Speaker 02

  Just hop on the Twitter to, you know, shoot me a message, a DM. It's Keith underscore Wasserman is Twitter. I'm active on LinkedIn is another one. Shoot me an email. It's Keith at Geltinc.com, G E L T I N C dot com. I'm open book and if you have any questions, just try to make it specific. I get a lot of people that are like, I have 10 to 50 minutes of your time. I'm like, no, just go to POMP's podcast. I talk, I'm on a lot of podcasts, you go listen, listen to me, but ask me specific questions. I'll give you specific answers, you know, and I formed relationships with people over the years that have, you know, that have done that, so.

• 53:34Anthony Pompliano?

  I love it. I, I'm enjoying watching you have fun because I can tell that you're having fun doing it.

• 53:40Speaker 02

  You gotta have fun, man. We're having fun here, you know, I know you're, but you're a hardworking man, back to back interviews. I'm probably number three or four for the day and, but you gotta have fun, you know, you got it.

• 53:49Anthony Pompliano?

  That is the, that's the whole key. All right, well, listen, thank you so much for coming on. I hope everyone enjoyed this. If you don't know shit about real estate, Keith's a great guy to follow on Twitter. Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you subscribe on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry, we've got you covered. Head over to pompscryptocourse.com. We've developed a curriculum with the top teams across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period. Go to pompscryptocourse.com to learn more and I'll meet you guys for the next episode.