Commercial real estate might be the best investment vehicle to make your money work for you and have the time freedom. So, continue listening to learn the value of prioritizing cash flow more than wealth accumulation and diversification, and why you should elevate your mindset now.
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WHAT TO LISTEN FOR
A vital question to ask yourself about investing your money
How real estate can affect your investment portfolio
What makes multifamily’s resilience during a recession
The power of integrating the conveyor belt theory
Why you need to take advantage of the free knowledge about investing
I would love for YOU to join me at Jake & Gino’s 5th Multifamily Mastery Live event this November in Orlando, FL!
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Tim Lyons 00:00
that resiliency of going in between classes of properties really kind of made me feel good that like, we could be in an upswing and people are gonna gravitate up. We could be in a downswing and people will gravitate down.
Greg Lyons 00:12
Welcome to the passive income brothers podcast.
Tim Lyons 00:15
Here we take the fear out of real estate investing using real life stories of everyday successful investors. Let’s go. Welcome to another episode of the passive income brothers podcast. My name is Tim Lyons and today I’m joined by none other than my brother, Greg Lyons. How you doing today, buddy?
Greg Lyons 00:30
Tim, I’m doing wonderful. This podcast is a little bit different. Because Tim, I have a new chair. I have a dedicated podcasting chair, I’m not going to show it to the audience, because I don’t want any royalties or anything like that. But my new podcasting chair has wheels. And it’s just an absolute game changer. I think people can hear it in my voice,
Tim Lyons 00:50
you know, or buddy, I’m so proud of you the growth you’ve shown throughout this whole process and this whole journey, if I would have told you that you would have had a podcasting chair just two short years ago, you probably would have laughed me out of the room. So with that said, thank you for really showing that growth.
Greg Lyons 01:05
You know, it’s the vulnerability I think people like to hear, you know, when you have a podcasting chair, you have everything.
Tim Lyons 01:13
Well, Greg, I’m going to tell you that I’m still in my original staples chair, and I’m so cheap that I probably won’t buy another one. So with that said, I want to welcome everybody back to another week on the passive income brothers podcast. And you know what, with everything going on, with all the uncertainty with all the fear with all the I’m afraid to check my 401 K balance on everybody’s mind rising dollar rising interest rates, falling asset prices, falling stocks, you know, there’s a lot to be, there’s a lot to be worried about. There’s a lot to be thinking about, and what Greg and I have found over the last week, 234 weeks, actually, for a long time, but it’s specifically over the last couple of weeks, is that investors want to talk about real estate, they want Greg and I to be like, dude, what’s happening? What’s the crystal ball saying? Where’s the puck going? So that we can skate to it? And the answer is really, Greg, and I don’t know, right? If we had the crystal ball, we’d be you know, mega billionaires, but we don’t. But what we do have is a solid team around us. What we do have is the passion for real estate for investing for serving our investors for looking at good deals, you know, bouncing ideas off our team, our investment committee, our broker dealer. So when you have that, that provides what we call the three C’s, which is certainty, clarity, and confidence. And you know, listen, I haven’t been an investor, I’m only 40 years old, right? And before I got onto this journey, I was a 401 K kind of investor. But when you have those three C’s, you can sleep very well at night. And I gotta tell you, I’ve been sleeping pretty good at night. How about you, Greg?
Greg Lyons 02:47
It’s an excellent point. And man, the conversations that we’re having with investors right now are more like, Yeah, I can’t see the forest from the trees right now. I don’t exactly know what to do with my money. But what do you guys have? Because like you said, 401, K balances way down? Where do I put my money outside of equities and mutual funds and stuff like that, that single family housing market is astronomically high right now. So kind of finding a good quote unquote, deal is kind of not in the offering. So the conversations we’re having are, hey, remind me again, what you will do. Remind me again, what a real estate syndication is. And I think a lot of people are at that point where they’re saying, Maybe I should start, maybe I should take a second look at what Greg and Tim and cityside capital are doing. And that is, I think, one of the most important steps people can make. When they say, Yes, I do need to do something else, I have to look for something else to do with my money. And asking that question of when do I start is so important?
Tim Lyons 03:56
Yeah, it’s really getting clear on your why your investment thesis and philosophy and what you really want. I mean, it sounds so cliche, Greg, at this point to be on a podcast and say, time is valuable, buddy, you know, but it really is. And I gotta be honest, with everybody out there, there was a tragedy in New York City this past week, it’s really kind of set me back a little bit mentally. And I just really, like, time is everything right time and is Earth time with our family time with our kids time doing the things that we want to be able to do that time, Freedom means a lot to me. And that’s really what drives me to make some of my decisions, right, using data, right using my team, but it’s all about time for me, right? And then so how do I leverage that? Greg? Right. It’s like how do I allocate the capital towards cash flowing assets that can get me to the goal of the passive income number that I want to be at, right? And it’s just reverse engineering. And what I highly suggest everybody do is take a minute and just really kind of dream you know, have that dream. Go back to like that high school dreamer during chemistry class where you’re staring out the window thinking about that fancy car, but really, as an adult, it’s probably different at this point, you’re probably in your 40s 30s, late 30s, early 40s, maybe even your 50s saying, You know what I’ve been working, I’ve been doing the thing of being a good boy being a good girl socking away money into the 401k. I got to college degrees, I’ve been climbing the corporate ladder, I’ve been doing the things I shouldn’t be doing. And I just don’t feel like the needle is being moved. Right. And I think Greg mom used to say this all the time. What is the definition of insanity is doing the same thing over and over again, and expecting different results. And just not to go into too much of a tangent. There’s a great book called The Millionaire Fastlane by MJ DeMarco, I think his name is. And he talks about, you know, when have you ever heard like a video or a book or a podcast, or any sort of content that has somebody who got rich, quick with mutual funds, with ETFs. Not saying that their bed, not saying not really take anything away from them. But the slow and steady way to build wealth that we’ve all been taught from our parents from society, from Wall Street from the marketing machine, is really one way to do it. But to really expand your means and to expand what it is that you’re willing to learn about and dive into and become a dedicated doer, right? And say, Look, what’s available to me, how do I get involved? How do I look at it? Do my due diligence? How do I build out a passive stream of income that I keep on hearing about in these books and these podcasts, and I think that’s what today’s episode is really, really going to dive into. So I’m really excited to get going.
Greg Lyons 06:25
Well, you know, Tim, the thing that really struck me that you said, is daydreaming and chemistry class. And I don’t know if a lot of listeners know the boy, I call him the boy who’s the 15 year old. Judging by the early returns, he’s doing a lot of daydreaming in his chemistry class. But that’s a whole different subject. You know, burying your head in the sand is not something you can do. And I think our kind of real paradigm shift came right before the pandemic and into the pandemic term. So like, who gets into real estate syndications? Who gets into real estate, commercial real estate during a pandemic? And pretty much the only two donkeys I know are meeting you. So we could raise our hand and do that. But the paradigm shift of time was really important. You know, a lot of people during the pandemic kind of took that step back and said, What am I doing? Where am I going? What are my goals? And how do I want to spend my time, and there was a great resignation, and all sorts of things. But a lot of people use that opportunity to find another job to find another passion. And one of the most important things about being an investor is earning money. And if you have a high paying job, where you can take care of your living expenses, but then start investing in other things for that balanced portfolio, your stocks, or ETFs, or mutual funds, but also real estate, commercial real estate, multifamily self storage, that’s all part of a balanced, really balanced portfolio. And that’s what people need. Now, Tim, are we at that point where we’re having that pandemic inflation, pandemic inflection, I’m not sure. But it is a crazy time right now. But until you have that paradigm shift, you’re not ready to go look at something else. And truth be told, Tim and I were not born with a silver spoon in our mouth. So we started, you know, pretty much at the bottom, but we just kind of worked our way through and we’re very consistent with our investing goals.
Tim Lyons 08:30
100% I think it was Warren Buffett, don’t quote me on this one. But it was Warren Buffett who said, be fearful when other people are greedy and be greedy when other people are fearful. I’ve heard that a couple of times. And it never really meant much to me. But you know, during the pandemic, when we got started doing this, Greg at the time, I had a three family at the time, you had your new construction townhouse, as rentals. And, you know, I think we had to have a little bit of proof of concept. It was like, We got totally, totally brand new started in real estate, but we got a brand new start in the commercial side. And, you know, take it back to March of 2020. I mean, fear, uncertainty, lock downs, canceled rent movement. I mean, there was a lot of uncertainty out there, right? There was just a tremendous amount of unknown, right. And here, Greg, and I aren’t being like, Hey, we’re gonna start this company, and we’re gonna raise capital and, you know, go buy some deals, right. And it was a crazy, crazy time. But I mean, look, because of that uncertainty and that fear, there was good deals to be had, right? And we had an investing thesis that said, works, people need to live somewhere. Turns out people like to have a roof over their head at night when they go to bed, right. And there was this lockdown, and people were leaving the cities, and they’re going out to the Hamptons, and they’re going upstate New York, right? I mean, and all over the country, people are wanting to greener backyards and a little bit of space. And we saw that we said there’s an opportunity here to be in a little bit of a secondary or tertiary market with outside the city limits and you know, we actually just went full cycle On our second deal that we did together, Greg and I, with our partners, and I’m hesitant to say anything about returns on the podcast, because we are registered reps of a broker dealer and past results do not guarantee yada, yada, yada. But that was a deal that was done. I think we closed in December of 2020. Greg, and we just sold it in July. The end. I will
Greg Lyons 10:22
say, I will say, let’s have a round of applause for our investors, our early investors that got into that deal trusted that real estate was the way and probably trusted us to a certain extent that said, Yeah, I’m gonna throw into this deal. And they got a wonderful return. If you’re interested in hearing more details about that reach out to any one of us, Greg at City psycap.com, or Tim at City psycap.com. We could set up a call and kind of talk about that Greenville deal, but it was the courage of those investors during a pandemic, to invest in real estate and Tim, it worked out well for a lot of people.
Tim Lyons 11:00
Yeah, I mean, that wasn’t there’s something resilient about multifamily that really drew me in, I think I’ve made a joke on this podcast before that, like when I go on vacation to the Caribbean or something or Vegas, like, I don’t even gamble. Like if I lose 20 bucks, it ruins my night. And so when I could really dive into the data and look at where people are moving, where’s the growth? Where’s the population growth? Where’s the job growth, and seeing the resiliency that you know, even during a downturn or a lock down, people that were renting the A Class apartment, the brand new construction, tons of amenities? Well, you know what, they can drop down to the B to B class properties, right? Where it’s something that I would love to live in a B class property with a gym and a pool, right? Maybe some of the touch older, but not the brand new construction. And you know, in a recession or downturn, the B class rents are can drop down to the C class, and so on and so forth. So that resiliency of going in between classes of properties really kind of made me feel good that like, look, we can be an upswing, and people are going to, you know, gravitate up, but we could be in a downswing and people will gravitate down, and it was positioning ourselves in that little buy box where we could benefit and our investors could benefit from buying that property right, going in.
Greg Lyons 12:08
Yeah, and I think we have a nice mixture right now. And we have a lot of repeat investors that have done multiple deals. And we have a couple of kind of a class properties, which are newer vintage, but for the most part, we have some working class properties that are well positioned when it comes time to a downturn, the stock market being down, are we in a recession right now, that is a great debate. But at this point, in as we turn the page to October of 2022, the stock market is in pretty bad shape.
Tim Lyons 12:43
You’re not kidding. I mean, I obviously we’re students of investing. So we’re always talking about this, Greg. But, you know, before we hopped onto the show, I was just writing down some notes, Greg, and according to Yahoo Finance on my app on my phone, the s&p is currently down 24.77%. The Dow was down 20.95%, and the NASDAQ is down 32.40% year to date. And we’re recording this on October 1. When I’m talking to investors right now, Greg, people have told me more than once, I don’t even look at my 401k, my 403 b My 457. And I always just say to myself, like, that is a terrible way to feel to live, like not being in control. And in full disclosure, I went into the money market fund back in December, you know, with my entire balance of my 457 because, you know, the data was showing that there’s gonna be some turmoil, right? There was a scarcity of collateral on the Eurodollar markets, and you know, all these things and rises in interest rates. And I was like, wow, like, This doesn’t feel right. And I’m glad I did. But at the end of the day,
Greg Lyons 13:47
hold on, Tim, anyone missed that if they’re playing this on 1.5 or 2.0 speed just to get through it. If anyone missed you, patting yourself on the back, nearly breaking your arm patting yourself on the back. That’s right, as you moved your portfolio into a money market account did not miss the downturn. So oh my gosh, people. All right. Well, you know, I’ll let you keep going. But I think at the end of the day, it is moving away from the accumulation model. And, you know, working for 40 years, you get to 65 you get the gold watch and say, Alright, it’s time to live right now. But that accumulation model does have its, you know, positives and negatives. Because of times like this, if you’re 65 right now and you just lost 20 30% on your portfolio, maybe you can retire. So having that diversified portfolio is really important. Tim cashflow now is kind of what we’re after. And we talk about the conveyor belt a lot with our investors. You want to take people through the conveyor belt.
Tim Lyons 14:55
Yeah. 100%. And just to finish up one thing on the stock market, Greg We’re conditioned, right? We’re conditioned to invest in the stock market. And you mentioned the accumulation model. And just for the folks out there that aren’t quite clear on what we’re talking about accumulation versus cash flow, you know, accumulation is the socking away of money into mutual funds, ETFs dollar cost averaging, living frugally, cutting up credit card, clipping coupons, you know, so that one day when you’re in your 60s or 70s, you can retire a millionaire, you know, or multimillionaire, but you really sacrifice your life to get there. And
Greg Lyons 15:32
this is the Dave Ramsey is the Dave Right? To me, that’s
Tim Lyons 15:35
just not good enough. That’s not good enough, you know, I want to be 40 like I am today and taking vacation and doing things with my girls. So it’s just like that whole paradigm shift of what is important, like, how do you want to live? Do you want to live today? We want to live and be 65. But then how do you get there? What’s the best vehicle for you? So for me, it was commercial real estate. And, you know, so this conveyor belt theory came from one of our mentors, and basically just to use round numbers as an example, like, say you put $50,000 into a deal, passive income saved commercial real estate, multifamily deals, for example. And, you know, say it was a five year hold, right, a five year hold period, and say that we were hypothetically going to double our capital in five years, you know, from cash flow and appreciation. You know, if you have the means to put $50,000 A year into a deal, I want you to visualize this with me, picture a conveyor belt, and on year one, you put $50,000 onto that conveyor belt, right. And now it’s doing its thing bought a property, it’s cash flowing, you get distributions every month, or every quarter. And now in year two, it slides down, and now you put another $50,000 of your capital onto the conveyor belt and again, buys another property, maybe a different market, maybe a different asset, class, whatever. And then in year three, and so on, and so forth, right. So now $50,000, has gone onto the conveyor belt from years one through five. But guess what the business plan calls for a five year hold. So at the beginning of yours, six, say now that first $50,000 That went onto that conveyor belt is now theoretically falling off with a sale, right? Greg and I always talked about the conveyor belt with our own portfolio saying, Look, when that property sells, right, beginning of year six, say, we’re gonna take that doubled capital U, right, and we’re gonna put it right back onto the conveyor belt. Hopefully, that’s like 90 to $100,000. So now you can see that if you do 50,000, say, and this is an example, and we’re not promising anything, right, we’re not offering any securities right now, we’re just kind of really going through this, and we’re teasing it out. But now you can see that you’re now creating, right some velocity of money, right, you’re creating the wealth, your cash flowing, and you could choose to spend it however you choose. But if you kept it on an account, and then you got paid at the end of the project in year five, you can now say, double your capital. So now in year six, you put 100 grand onto the conveyor belt, right? Now it moves down year seven, the year two property falls off, and then you put that on to the year seven. So like, you can see how very quickly if you’re just putting money to work, let’s say one deal a year, 50,000 a year, within 10 years, you can see that velocity of not only cashflow increasing, but the appreciation and the growth of that wealth, really just you know, skyrocket. So Greg, I hope I did some justice to that conveyor belt theory, let me throw it back to you. You know,
Greg Lyons 18:32
it’s having the discipline sometimes to kind of think outside the box, it’s really, really easy to kind of go into the 401k, and elect to put 5% and 10% 15%. And that’s easy, right? Studying commercial real estate, finding out what’s out there. And kind of having the courage to put that $50,000 A year and maybe it’s $50,000 every two years. But as long as you stop putting your money to work on the conveyor belt, then when it turns over putting it right back on there, you know, if you do like a solid round of investing for one to five years, you’re going to have wonderful cashflow down the road, and then at 65. And when you’re retiring, you have that cash flow going as you get older into your 70s you have to take your required minimum distributions from your retirement plans. So it’s kind of like this whole big when you take a look at your portfolio. All together. It’s the distributions from your retirement plans is to cashflow to give yourself a nice life a comfortable lifestyle in retirement instead of just relying on that accumulation model where you’re just relying on that 401k
Tim Lyons 19:48
Right, I couldn’t agree more. And really at the end of the podcast, Greg, I want to talk to everybody out there about when I hear from a lot of my friends and family they’re like dude, you know We love you man like, and we see what you’re doing on social media, we listen to the podcast, and some of them have invested with us. And they say, How come my financial advisor doesn’t talk about this or I’ve had and Tim and Greg, kind of Tim, the fireman, Tim, the ER, nurse, find out about this and build a company around that. And you’re right. I didn’t invent this. But you know what I did. I aligned myself with the laws and finance and in 2012, basically, Obama at the time, President Obama has passed the Jobs Act of 2012. And inside of that act was that law was the democratizing of private equity and the private offerings, private placement offerings, because you know, to before then you had to know somebody with a substantive relationship. If somebody who’s doing these types of deals, right, where you had to have 1,000,010 million minimum investments into a private equity fund, or some sort of managed account like that meant if you didn’t have either the super high net worth, or you didn’t have that material participation, that material I’m sorry, relationship with a sponsor that was doing these types of deals, there was no channel for marketing for letting people know what’s available to them. So like, there was a really kind of like, segmented portion of our population that could take advantage of these things. And when I ever found out about that, that there’s 506, B offerings, 506 C offerings, what an accredited investor is, what’s a non accredited, but sophisticated investor, what’s the difference? And what’s available to them, that really, really supercharge what I was interested in and listen to, how do I get involved, right? So I highly encourage people, you know, like, listen, there’s tons of books out there, a lot of them just scratch the surface. But if you really want to get granular I can talk about this stuff for days, as Greg knows. So hop on a call with either one of us, Greg, or Tim at cityside, cap.com, we’d be happy to really kind of run through some of this with you. Because this is what we’re passionate about. This is what we’re sleeping well at night right now, even though there’s tons of turmoil, tons of fear, tons of uncertainty out there. And I’m not saying everything that we do is perfect, and you know, without any risk or anything like that. But you know what, right now, there’s risk adjusted returns out there, we’re trying to align ourselves with it. And with that, Greg, I will sign it, throw it over to you. Yeah,
Greg Lyons 22:16
it’s real estate syndications and learning about them. And getting involved with them has been absolutely life changing for me and for you. And for a lot of our investors. take that next step, learn a little bit more at cityside cap.com. We have tons of videos and blog posts there, dip your toe and learn a little bit, hop on a call, if you want to, you know, really kind of dive into it face to face meetings, Zoom calls are wonderful, more than happy to do it. We love spreading the word about real estate. It’s our investment thesis. It doesn’t necessarily have to be your investment thesis, but learning what different people do is so very important. Tim, this has been a wonderful podcast. So happy we made the time. And we look forward to talking to you the investor down the road.
Tim Lyons 23:05
Absolutely. And just Greg, before we sign off, I really want to tell people, we are at 98 five star ratings on Apple podcasts. That’s right. And I would love love to see that get pumped up a little bit by you guys who are really supporting us out there. And Greg and I are super, super grateful for all your support, all the emails, all the social media direct messages. So if you guys could just do us a favor and leave a rating and review and honest rating and review. Let us know what you liked what you don’t like what you want to hear more about. That’s what really Greg and I read all those. So thank you for that. And also Greg and I are going down to the multifamily mastery conference. Orlando, Florida, I believe it’s Greg right November 3, fourth, and fifth. And that’s what the Jake and Gino crowd and if you go into the show notes, there’s a link that you can click on to get $200 off of your admission ticket. I reckon I will be there. I think big rich, big Rich Lyons, our dad, I think he might make another appearance, Greg. He wasn’t making noise about that last time I talked to him. That’s right. So but yeah, we’ll be down there. We’d love to either get grab a bite to eat, get a beer, appetizers or just meet up and shake hands. So we’ll also be doing some podcasting from down there. So we’re really looking forward to that. And with that said, Greg and I are grateful for your support. And we look forward to seeing you again next week. Thank you for listening to another episode of the passive income brothers podcast. We would be grateful for your support of our podcast by giving our show a five star rating and review and subscribing to our show on your favorite podcast platform. Don’t forget to take inspired action after listening to this show, so that you can start building out your passive income streams. Finally, head on over to cityside cat.com to connect with us and find out more information about how to get started passively investing in real estate