Education: The Foundation of Real Estate Investing Success – Ken Hosac

Ken Hosac  00:00

If you’re going into an inflationary period with risk of recession, you want to be in hard assets. And so as I was flying away, I was actually grateful that I’m heavy in real estate because I think real estate is exactly the kind of assets you want to be holding when you have high inflation.

 

Greg Lyons  00:16

Welcome to the passive income brothers podcast. Here, we

 

Tim Lyons  00:19

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 two absolute rockstars that are actually related in some way. So I’m really excited to get into this today. But right how you doing today?

 

Greg Lyons  00:37

I am doing fantastic, Tim. And you know, for all of you HR professionals out there, this is family ties 101 Right here. So if you have to shout the podcast off right now do so. But leave a review before you do it. But we have none other than my brother in law on today, who I would probably classify as one of the smarter individuals that I know, I’ve learned a ton from him over the years. And I’m just like, I’m so excited that he’s going to be on the podcast today.

 

Tim Lyons  01:07

I want to stack on top of that, Greg, that Ken came here on his own accord. You know, we did ask any gladly said yes. So just so the listeners know, don’t have any sort of contract that said Kenya gotta come in and talk to the people here today. But really no

 

Greg Lyons  01:20

strong arm techniques, either, mostly because I can’t strong arm them. But none of those techniques were used.

 

Tim Lyons  01:26

Absolutely. Just for the listeners know, I mean, Greg, yeah, he married a wonderful lady Lisa, and she has a wonderful family. But Ken and I have actually had a couple of calls through the years. And I’m gonna have to agree with you, Greg. He’s actually one of the most thoughtful, and smartest guys. And I’ve kind of come across because of this intentionality, and some of the experiences that he’s had. So without further ado, I want to bring on Ken Hosac. To the show. I don’t sit again. Hey, great. Great to be here. Yeah. So just to kind of continue with this kind of flow can you know, you’ve had a wide variety of experiences, and you had a great education coming out of the gate, right. Went back for a masters had a couple of different careers. So you know, why don’t you tell the listeners a little bit about kind of where you got started, what you kind of done so far, and then we’ll tie in some real estate to that.

 

Ken Hosac  02:14

Yeah, sounds good. So yeah, kind of the basic overview, you know, grew up in Colorado, Junior High in high school, went out to the Bay Area for college and stayed there for 14 years. So it was very, very lucky to be able to go to Stanford and get a technical degree after being at a public high school. So a lot of private cancer. And in the Bay Area, total, 14 years moved to Seattle for eight years. And I moved out to Boise at the end of 2005. My father is a real estate developer. I was in tech and I’m the black sheep in my family. Everybody is in real estate except for me. But he invited me out to help develop a downtown condo project called city sidewalk since about 80 units. I had the pleasure of working with Greg there were both of us learned a lot about real estate. And I’ll tell you where I really got my teeth or learned for the first time I didn’t even know what the word passive income was. But my wife and I got married late in life. We were you know, kind of right around 40 years old. And as a single woman in her 30s. She wasn’t sure that she was actually going to get married. And it was really trying to be self reliant. So she, she was in the mortgage industry, she started buying single family, triplex, etc. And I remember one day, because I had my full time tech job, I was out in the middle of the night, catching up with some goop I got from Home Depot on a leaking roof in the middle of a storm. And I came back and they said, you know, Laurie, we’ve got to sell this. We don’t have time for this. And she kind of teared up a little bit and explained why it was so important to her. She said, Look, I bought this with the idea that I was going to pay off a 30 year mortgage, and that I would retire on this income, that the rent would pay, you know, be my retirement. And I looked at her I’m like, that’s the thing. I didn’t know.

 

Greg Lyons  03:54

So So not only was Ken additive to the family, from a smarts perspective, Laurie is right there with him.

 

Ken Hosac  04:01

Yeah, no, exactly. So yeah. So anyway, it kind of set me off on this quest. So this is kind of you know, we’re talking back in 2010 2011, when we had a negative net worth, because both of us were in real estate and oh eight. We did fine on that kind of project. But we weren’t about to do another project. So I went back into tech, join this company that I had met with three people. I joined them when they were 40 people and I thought it was gonna be there for a year or two. I had no idea how long the downturn was going to be. And I had no idea how great this company was. So I was there for almost 12 years on the early executive team. And we got purchased acquired by a big company from Sweden called Ericsson for over a billion dollars and it really set me up a couple of years to go back into my passion real estate development real estate investment.

 

Tim Lyons  04:48

So I want the listeners to know I mean, I think Ken’s glossing over some of this but here we have Stanford educated guy got deep into tech out of the gate right did well got married while he was in the mortgage industry. She was an active investor, right. And I really give her a ton of credit for being in her 30s. And having the foresight to know that look, maybe the traditional route of a 401 k or a 403, B or whatever this might not cut might not cut it, right. And being in the mortgage industry, she understood the dynamics of cash flow of shore and debt service coverage ratios. And you know how powerful that could be to maybe do a refi in five or seven years. So I really want to give a shout out to Lori on that one. But so now you step in Ken, and you come from a real estate family. And for those of you that don’t know, the Hosek, they basically built a lot of downtown Boise did a lot of development, your uncle’s your dad, very engineering kind of focus families. So now you get married you back to Boise, and you do a development, you just jump into development deal family, you know, tradition, and that’s where Greg can kind of cut his teeth as well. But you know, just take a minute, Ken, like just that didn’t work out the best, you know, that was 2007 Eight, right. And obviously, we all know that the global financial crisis, or some people call it a monetary crisis occurred and liquidity dried up, no one can get mortgages. So tell us a little bit about that. Because what I really want to drive home is that there’s so many ways in real estate that you can do active or passive, right? There’s a ton of ways and they don’t always work out the way you want it to. But you didn’t take your ball and go home, because it’s a whole nother chapter or two after this. Yeah,

 

Ken Hosac  06:22

I would say coming from the tech world. And I was, you know, in tech, I didn’t want to be a developer, I didn’t want to sit in one of 10 cubes with nine other engineers working on the same thing. So I had this opportunity to do procurement, project management, and then kind of switched over to product management, business development, sales, things like that. But really, the similarity between tact and real estate development, it was striking, it’s all about developing a product or creating a product talking to customers finding out a need. And so you know, on the development side, my dad was a one man show, and he needed some help. So especially since he lived in Southern California in the winter, so it was matter of get an architect to design it, get a contractor to build it and get a bank to lend you money and then deal with all the draw requests, get a sales and marketing firm to sell the unit. So learned a lot. But yeah, you’re right, I remember when oh eight hit oh nine. And one of the worst days of my life was sitting out with Steve. And I think Greg was there to outside the project with an auctioneer, trying to auction off about four or five units to meet the bank covenants, you know, because the bank covenants required some sales. So it was a big learning experience. Another thing I learned, I remember when things were hot, taking off, my father was very, very rigorous about cutting costs and not going over. And I remember I was telling him, everyone else has granite counters, and everyone else has this, that and the other and I remember it, he told me he goes, Look, we’re gonna do granite counters on the top, but we’re gonna do granite tiles on the bottom. He goes, never assume because you’re in the peak of a market that it’s always going to be hot. And so I think he really cushion the blow. And you know, we didn’t lose the project. We didn’t go bankrupt or anything. It’s just there wasn’t anything else to do. So, yeah, music, it’s kind of like musical chairs, the music stopped and I had to go get a chair and a chair happened to be outside of real estate for sure.

 

Greg Lyons  08:13

You had to go landing with their next Tech endeavor. And wasn’t a year it was, you know, a decade or a little bit more than a decade. But you had a nice exit, which allows you to kind of get into or kind of re enter the real estate world. And I think over the last year or so you’ve been doing a lot of really interesting things, not only with masterminds and going to conferences, but you’ve kind of found your niche in a couple of different areas. You do a little passive investing, some active investing, some development, kind of tell the listeners all the different ways that you’re kind of involved in real estate now.

 

Ken Hosac  08:48

Yeah, no, you’re absolutely right. Going back. While I was at in my tech job, my w two, I knew I wanted to buy real estate. And so I started kind of studying on the side. And I wanted to buy an office building. And so I was looking for an underwriting model. And as I was Googling and came up with Episode One of bigger pockets, you know, Brandon was on there. And he was very awkward. That was the first video he had done. And Josh was trying for 20 minutes to figure out how to dial in. But you know, he had this financial model for his birth strategy where he by, you know, fixed up rehab, rent refinance, and whatever the other artists repeat. But anyway, use that plus, you know, five other websites to really come up with a good financial model for how to underwrite an office building. And then I looked at three buildings, and I took it to a banker that we knew a family banker and said, I’d like to review this with you and tell me you know, here’s my thoughts on it. Tell me which one you’d like. And she ended up saying, Okay, here’s the one I liked, and here’s why, etc. I ended up buying that building with my father. I couldn’t afford it on my own. But my father said he’d invest with me as long as he was in control. So he was 52%. And I was 48%. And he said, you have to do all the work. So that was it. Back in 2017, so I was kind of doing some of that on the side. Well, I knew that as soon as our company either had an acquisition or an IPO, I wanted to go back into real estate. And I told the executives that and so they were kind of hiring around me preparing for that day. But when it happened, I hit the ground running, I would say my undergraduate degree was BiggerPockets, in terms of listen to over 100 episodes there, and my graduate degree was probably I would say, the real estate guys syndication mentoring club, Greg, you and I went to their conference a little over a year ago syndication summit in Dallas. And it was amazing, I learned what I didn’t even know. I mean, I didn’t even know what I didn’t know. And then PhD program had been kind of their inner circle mentoring club. But what I’ve done since is a really tried to have a portfolio, I want to make sure that if I invest my money, it’s not with a single entity, a Bernie Madoff type thing where you get a call one day, and it’s all gone. So I’ve really spread it around. And the active investment side, I have some office buildings that I bought at a discount because we’re vacant, etc. So I’ve been working really hard to stabilize that and use that income to replace my w two income. And then on the passive side, I’ve been investing in probably about seven or eight different syndications, most of them through you guys, but I would say 80% apartments, but I’m in two self storage projects, and then a office building project in Charlottesville with Greg. And then on the development side, I bought some land on the busiest road in Idaho, just down the street from the busiest intersection. And I’m looking at developing a self storage project there. So it’s using kind of the roots what I learned over the decades, listen to the decade listening to podcasts, but really leaning on the mentorship, the club the learning, kind of like what you guys have done with Jake and Gino, it’s just been amazing.

 

Tim Lyons  11:52

Well, I’m ready to do some push ups. Anybody else out there? Because so here’s my biggest takeaway from what Ken is just talking about, right? Super smart, dude, great jobs, right tech, this other thing came from a real estate family but didn’t get into real estate right away, he starts to have that passion for real estate, you know, little by little single family properties, duplexes with the wife, doing some minor repairs, does a development deal, right doesn’t really know everything about it. But he builds that parachute on the way down with the guidance of his of his father, and then realize that he has a passion for real estate and goes out and buys office buildings and buys land and does some more development and does some passive investing. And that’s what I really truly love about real estate, Ken and Greg is that there’s so many ways to do this, right? But it’s really getting educated. And I think, on paper can your resume probably jumps off the desk, right? But then you go to a conference at the real estate radio guys conference in Dallas. So you just said I was amazed of all the things I didn’t even know, right? Because when you surround yourself with a tribe of like minded folks that are rowing in the same direction, right? And they’re trying you know, what I love about real estate so far, Ken is that like, every rung that we’d go up to somebody else has their hand down on the ladder trying to pull us up. Right. And now Greg and I are trying to do the same thing for other folks they’ve been so giving in that manner. So, you know, talk to the listeners a little bit about like, the conferences and what they do for you. Did you have any limiting beliefs about attending these conferences? Right, it’s time away from the family. It’s money. It’s all these things? And then mentorship and coaching and masterminding? What does that all mean, in the grand scheme of things for you? Yeah,

 

Ken Hosac  13:37

so the real estate guys, I was first introduced to them. Actually, from bigger pockets. I was listening to a BiggerPockets episode, and they were interviewing him. And they basically described how they both got wiped out in 2008, with that great real estate recession, depression, and had to start over and they said up until a weight they were just kind of fat and happy developers investors and just didn’t pay attention to the economy. And they said after 2008 That’s where they really decided we have to focus on the economy and really understand how it works, what the signals are. So I think my first introduction to them was going to their syndication some and I thought, you know, maybe for my not for this development, but maybe in the future at all. Use syndication as a way of raising money to be able to do a bigger development project. Well, I sat through this summit, and realize the way I was gonna raise money was not legal. It’s just, I can get in trouble with the SEC, because the way I was gonna raise money is I was gonna bring in through just an LLC, passive investors, you can’t do that if you’re doing it as a joint venture, everybody has to have an active role. So I realized, Okay, I am gonna use syndication for my career development, even if I’m, you know, just bringing in a little bit. The other thing I learned there, and then I’ll go kind of the deeper economics is the way I’ve structured my entity holding structure. I had my operating company on my different LLCs and that’s completely wrong. You know, if you’re operating companies That’s where you’re gonna get sued, you want to basically have that at the bottom and have a separate holding company. So, you know, I’ve had to restructure all the LCS. And that’s been a lot of work. And I learned a lot about branding, marketing tax strategy, just all the foundation it’s in a lot of it is just how to run a small business, how to be a entrepreneur, how to organize it. But through them, I started attending more of the bigger picture Summit. So they have an Investment Summit in Belize, I went to the BiggerPockets conference three weeks ago, BP con in San Diego about three or four weeks ago, I just got back from the New Orleans investors Summit, which is the longest running Investor Summit. And you hear a lot of different perspectives. And I’ve really enjoyed actually stepping up and seeing this big picture not being the smartest guy in the room, for sure, but just soaking it up as much as I can. And regardless of where you believe the economy’s going next year, whether it’s going to be a soft landing a hard landing, or fall off the cliff like 2008, I think the key thing I’ve learned is you got to be prepared for each scenario.

 

Greg Lyons  16:09

There’s no doubt about that. And just to kind of go back to you know, when you’re first getting into real estate, you really leveraged other people, and your dad getting into the real estate guys mentoring club. And I think that’s what Tim and I have done. But that’s what we’re also doing with this podcast, we are kind of putting our hand down and lifting people up and leveraging our relationships, just like you’re building relationships at different conferences with different operators, lawyers and accountants, we’re trying to do the same thing, and help the investors or the people that are listening to this podcast, when you talk about going to these different conferences when I go and Tim, I know you’re still mad at me for not going to the New Orleans investment conference. I mean, if people are watching on YouTube, that daggers that I’m getting right now, but just ridiculous. But it was a mistake, buddy, my bad anyway. But can when you do go to these conferences, it’s I always walk away from them hop on the airplane on the way home and go, Oh, my gosh, there are so many things that I was not even thinking about so many things I learned or people that I need to be in the room with going forward. And those are so very special. And I think when like it’s like when you put a pro forma out in front of someone and say, this is the way I project, our project to go. Every single time basically those performers are going to be wrong. They’re either going to be below or they’re going to be above it’s just kind of a projection of where you think that project is going. Same thing with the New Orleans investing conference, you probably heard 15 Different people talk about where they think the economy is going. But really no one has any idea. Being prepared is so important. So walking away from those conferences can Where do you feel we could ask you? What do you think the economy is going? But how are you preparing yourself and your business as an active passive end developer investor going forward? Yeah,

 

Ken Hosac  18:06

it’s a great question. If you’re going into an inflationary period with risk of recession, you want to be in hard assets. And so as I was flying away, I was actually grateful that I’m heavy in real estate, because I think real estate is exactly the kind of assets you want to be holding, when you have high inflation. And, you know, and if you’re in commercial real estate, and in multifamily is considered commercial, really, you want to make sure that the cash flow from those investments covers the mortgage. And then you know, in the past, again, learn this from the real estate guys, in a really good market, your asset is the office building, for example. And your liability is the loan that you get to buy it. In this kind of a period high inflation, it’s the opposite your asset is the loan, you know, I have a 10 year loan with a low interest rate that’s fixed. And your liability is the building or the tenant, if the tenant moves out or the building burns down, it takes your cash flow away. So it makes you kind of look at things differently. But I think if I look at one of the things I learned at the New Orleans investment conference is they really focus on what’s your asset allocation. And I really didn’t know so I came back and kind of figured that out and looked at okay of all the assets my wife and I own, what is our asset allocation, and we realized over 90% of our assets are in investments, which is good, tried to live pretty frugally. And other investments, 80% of it is in real estate. That was my biggest takeaway coming away. In terms of preparing on the development side. The two biggest impacts for a developer are construction costs and interest rates. So those are the two biggest costs. And so I’m really coming away from that I’m still working on getting the entitlements, the site approval, etc. But really it maybe if I finish that this spring, I’m either going to greenlight it or pause for six months and if I I pause for six months, then I’ll do the same thing green lender pause. But what I do is I want to be ready. If interest rates come down, if construction costs come down if subcontractors a year from now are hungrier for work than they are today. That’s a great time to be building a project. And then, you know, again, on the investment side, I’m a big fan of syndications passive investments that do well during a recession and multifamily apartments and self storage are two of the best performing assets during a recession. So it’s really the takeaway is just really paying attention to the asset allocation and making sure that I’m in the right spot. I’m grateful, by the way that my investment in stocks and bonds is less than 10%. I’m grateful that my investment in bonds is stock is less than 5%. is, you know, you see the bloodbath going on right now. And I’m glad that I’m able to sleep at night. Yeah,

 

Tim Lyons  20:55

well, you know, what, Greg, and I have a metric that we use candidates called ROI is return on sleep, right? And even though that’s like, it’s comical, in that sense, but you know, I put my head on the pillow very comfortably at night, knowing that hard assets, like you said, especially during inflationary times, hard, tangible assets, is what you’re gonna hear us gonna be the buzzword, right. And then for anybody out there, that 6040 portfolio, I mean, they’re getting destroyed, right? So the 6040 portfolio or that timeline, portfolio, mix that, you know, you’ve been sold your 30, you gotta be the 7030. If you’re 40, you gotta be in the 6040. If you’re 50, you’re maybe 5050, like, and so on, and so forth. That has been the crux of the financial consultants. sales pitch for the better part of the last couple of decades, is not working right now. Right. And I think what we’re seeing can and by doing this podcast, going to conferences and talking to investors is that the quote unquote, old way of doing things is just maybe not hitting people the way it used to hit people. And I think a lot of people now they have the internet, now they have the ability to travel, you know, travel is coming down and the over the last 1020 years, they’re finding out there’s more to investing than putting your money in a 401 K, there’s more to investing than doing what your mom and dad did. There’s more to investing than putting into a Vanguard ETF. And then one day being able to enjoy the fruits of your coupon clipping scrimping saving paycheck to paycheck type of living, right? So hearing somebody like yourself being so heavy in quote, unquote, alternative assets, right, which I’m still not clear why real estate falls into the alternative basket being that it’s been around for millennia. But you know what? It is what it is? So it’s a couple of things that you said, I just want to reiterate. paradigm shifts, right, I total paradigm shift. Greg and I and our mentor over Jake and Gino, they talked about education times action relates to your results, right. And the education piece is so so important, right. Mike, you said you got a Bachelor’s with the bigger pockets, a master’s with, you know, going to conferences and a PhD with a mastermind. I mean, that’s the secret sauce to a lot of what is going on in our space right now. And being educated on taxes, right, reading Rich Dad Poor Dad and going right into the Cashflow Quadrant, highly recommend and then go right into tax free wealth by Tom wheelwright. And that trifecta of books will really give you a solid foundation for what is what Ken is talking about today. And then the second one was having your mortgage as your asset. And a couple of episodes ago, Greg and I talked about on a solo show that we did is that 25% of the homes in this country are free and clear of a mortgage. Right. So they’re really not at risk of, quote, unquote, crash or being in distress. And an additional 25% of mortgages in this country, have a interest rate of sub 3%. And let that sink in. Because today, October 21, I just read an article, a Wall Street Journal this morning, that rates are approaching 7%, nationwide, they’re like 697, or something like that. So in a matter of weeks, months, weeks, whatever the mortgage rates have more than doubled. So I mean, your asset is really, truly that low mortgage rate on a 30 year fixed rate mortgage. I mean, that is tremendous, tremendous leverage. When inflation is the headline numbers are a plus. So again, I want to hear from you as a successful tech entrepreneur, as a successful real estate investor. What made you pivot into real estate? Right? And you just said 5% is in stocks, maybe 5% in bonds, right? Because you want to have a little bit of diversification. But what really truly drew you towards the alternatives versus the conventional type of investments?

 

Ken Hosac  24:49

Yeah, by the way, the people that made up the name alternative that was Wall Street in Main Street, that is the main street people like us, it is a primary investment. So it’s not auto I think really what opened my eyes up for just seeing the opportunity to generate cash flow and really understanding what passive income is. I loved working in tech I love the people I work with, even volunteered with that company for free to do new employee introduction, onboarding, for a year after I left, and I really appreciate my time there. But ultimately, it’s w two. And you know, it was a good w two, but I wanted the financial freedom, the flexibility to do my own thing. When I got out, I have an uncle who is also a pretty big passive investor. And when I told him I was developing, he said, Why would you do that? That’s a job. Just being passive. And I realized, I’m not retired, a lot of my friends think I retired, I retired from the corporate world. But I’m probably working as hard now as I was before on the active investments in the development side. So yeah, the pivot for me is this was an opportunity where I could do something on my own with a higher probability of success. The small tech companies, you know, venture capitalists, when they invest in them, they have a portfolio of 10 of them. And they hope that one or two take off, I don’t want to be rolling the dice and wondering am I going to be in one of the eight that don’t really make it or one or two that take off and plus, it’s, you know, you’re talking about a six to 10 year commitment, if you go that route, I find real estate is much more predictable. It’s a safer investment. There’s a reason that banks will find that 75% of a building today, maybe it’s lower than that, because the value of real estate for the most part goes up, or at least the dollars that it’s denominated in are inflated, you know, but you’re basically the the dollar value of your real estate goes up in general. And it’s a more predictable investment. And it’s more predictable use of your time, as opposed to rolling the dice with startups. So and having been I went through a couple other startups that didn’t really make it that low. And it’s not fun to use the worthless stock options as wallpaper in your room. So, so yeah, and I just I love the other people. There’s a lot of enthusiasm. There’s no competitors in real estate, really. I mean, there are some local, but you know, everyone else is trying to really bring people up like you described pulling you up the ladder rung. And I like that community. So it’s really no looking back for me. That’s

 

Greg Lyons  27:27

great. That’s great. And just kind of expound upon your passive investing journey. A lot of our listeners are aspiring passive investors, aspiring active investors. And Tim, I think this is episode number 48. I think this is the first time we’ve had a real live investor on the podcast. This is number one, I

 

Tim Lyons  27:51

think you’re right, Greg, I think you’re actually right this time. Yep. Right. Okay.

 

Greg Lyons  27:55

So mark this day down as the first day I was right. But Ken, you’ve invested with cityside capital, you’ve invested with others along your passive investing journey, kind of take the listener through how you’ve been able to get comfortable investing your money with other people where you’re not active vetting operators looking at deals and the people that you’re putting your money in with? Yep,

 

Ken Hosac  28:19

absolutely. Great question. I think being having active investments, office buildings, I don’t have partners in those. So you know, when it comes to underwriting, it comes to managing it comes to leasing it up with if it’s commercial, or, you know, really, I’m doing all of that myself. And because of that, I know underwriting, I know how to look at investments, I know how to look at the cash flow. And if it makes sense. And Greg, I remember back when you and I were looking at investing in this office building in Charlottesville, and that was one of the things I did is I recreated their model. And just to make sure, I always recreate it in my own spreadsheet to make sure I understand it, and looked at it and basically gave you my feedback that I think it’s pretty good investment worth doing. So the other thing is just the track record of the people. And I know one of the things I appreciate about you guys with cityside capital, and the way you’re structured, is you have that SEC registration, you’re working with a broker dealer, and your broker dealer is focused on people who have done 810 projects who have been through cycles before very, very mature. And so for me, I actually don’t spend as much time going through it as I did that office building with you because these are proven operators that know what they’re doing. I mean, I always look at the market. I always look at I do look at the underwriting. But I’m not recreating it in a spreadsheet. So, you know, from my standpoint, I’m really putting my time and effort into my own active investments in the development and then really, because I want to have a portfolio I don’t want to put all my eggs in one basket. You guys represent a significant Part of that portfolio, which is why I’m investing with you guys.

 

Tim Lyons  30:04

And I love that. And you know, I’m actually just curious, when did you find out about the passive investment route in investing? I mean, coming from a real estate family? I mean, your sister does real estate, your brother does real estate, your dad, right? But when did you find out about the passive route of like 506 B and 506? C offerings?

 

Ken Hosac  30:22

Yeah, I couldn’t even told you what that meant until I went to the syndication summit a year ago. So for me, again, the concept of real estate is buying something on your own, or maybe with like, in one case, I bought something with my father where it was 48%. And that’s kind of what I thought it was all about this office building that I talked about with Greg was really the first time I had invested in something that you’d call a syndication. I don’t even know if that is a syndication, maybe it is a joint venture. But it was really, you know, looking, going into this syndication Summit, and also looking at what you guys were doing. And I think the third thing is my uncle in the Bay Area, who is a significant passive income investor. When I had my exit from my tech company a couple years ago, I called him and I said, Look, you’re probably the only one in the family that I can really talk to you about, where do I park my money? Or where do I invest. And so I went side by side with him into syndication for a self storage facility. And, Joe, I would say over the last year, I’ve kind of become an expert on syndications. And I’m looking at doing a syndication for my own development projects. But I’m also looking at putting together syndication fund, as an opportunity fund to go after distressed assets over the next year. Because, you know, again, hope for the best plan for the worst. This is part of the plan is if there are opportunities to basically buy distressed asset or help owners do a workout with their bank, I want to be ready for that.

 

Tim Lyons  31:58

I love that. I want to talk more about that with you, and maybe offline. But this has been a phenomenal, phenomenal show. So far. I really feel the transference. Watching and hearing your journey, right? This hasn’t been like a lifelong thing for you, while the passive investing piece with Uncle right. But real estate has been a big part of your life. And I just love how it’s been active development, passive back to development back to active passive. I love hearing stories of successful guys like yourself, right? And it hasn’t been linear. If you looked at a chart of your real estate holdings. I’m sure it’s not just up into the right. On a chart, right? There’s been probably some blips here and there, right. But you stayed with it. And you’ve done well. And I just love, you know, highlighting that journey. So thank you for coming on and sharing that with us again. And now I want to just jump into the three questions. So are you ready? Go for it. All right. Can you know that we’re in high inflation times, right? We just had a new handle or eight and a half, I believe, percent on the CPI 6.5 or 6.6 on the core PCI, which the Fed apparently loves to deal with. Right. So in a high inflation time, there’s a saying from Robert Kiyosaki that says savers are losers and debtors are winners. And to the uninitiated, that can sound a little bit crass. Or maybe you don’t understand what he’s talking about. What does that mean to you?

 

Ken Hosac  33:22

Yeah, absolutely. And it is a little bit crass. But he’s absolutely right, if you kind of unpack what he’s saying, I think we all have people in our family who have been saving their entire life. And really, as they get older, they’ve been putting their money into, frankly, more bonds. And those bonds with the low interest rates, I think it’s criminal, that has been doing to all these people who have been saving, and as they got older, rotating into its bonds, because that was what they were going to live on. And so now that the bonds aren’t even tossing off enough income, you know, it’s 0%, or 1%, or 2%. There’s a lot of people that have really, really had, you know, their retirement, their golden retirement destroyed with these low interest rates. You had high inflation to that. And so now their fixed income and what they’ve saved in head and bonds is now becoming, you know, worth eight, nine 10%. I don’t think the inflation doesn’t actually measure the full impact of inflation. And that’s a whole other story, but I think it’s probably closer to 10. You know, that’s criminal. So I think that I really believe in the portfolio approach. And I really do believe that during inflation, you have to be in hard assets, not just cash in the bank because you are going to get behind on them.

 

Greg Lyons  34:39

And no doubt, I think the old adage doesn’t always apply anymore, the 6040 stock and bonds and you know, kind of the things that you come up hearing about the way you save for retirement doesn’t always work and just encouraging people to look what’s out there. You know, it may not necessarily be real estate, you can invest in a call I wash a laundromat and you could do whatever but kind of really taking the time to educate yourself. And that kind of leads us to our second question here, one of our other mentors, Jim Rohn, had a great quote where he said, formal education will make you a living self education will make you a fortune. What does that mean to you, Ken? I think this is like tailor made this is right in the wheelhouse where you can? Yeah,

 

Ken Hosac  35:22

you know, I feel personally blessed to go to a great public high school in Colorado. At the time. I mean, it was one of the top rated public high schools in the nation, based on certain metrics, and then obviously, being able to go to Stanford, I feel like I had this foundation. But it’s really it is it’s a credential. I mean, I think that it gives me the confidence when I go into business meetings and whatever feel that people aren’t gonna blow smoke up my nose, because I can call them out if they’re trying to talk over my head, etc. But I look back over this last decade of my real estate education, you know, again, starting with basics, starting with, you know, the purple book and bigger pockets, ton of podcasts, things like that. It’s just been a passion. And I love learning. And you know, that’s not formal at all, all the books to me that you talked about that I think they’re right here, in terms of the three that you mentioned. So I just love it, I would encourage people, you’ve done a lot of interviews, we’ve all met people in this industry, it really doesn’t matter where you went to school, or if you went to school, it doesn’t matter. It’s just what are you doing, to basically bootstrap yourself and become a better person. And it doesn’t have to be real estate education books, it can be organizational books, or visionary books, you know, how to help you kind of plan? Where do I want to be in 10 years? And what am I going to do over the next year to get there things like the that’s all part of the education that you mentioned in that question?

 

Tim Lyons  36:51

Love that. Can you really just hit the soft tosses out of the park? Man, I love it, I got one more for you, before you go. The last one is these days, if you’re at a cocktail party can or you got people on the boat, and you’re talking about investing in someone says Ken isn’t investing in real estate risky, you know, my uncle Charlie lost money one time, and bla bla bla bla bla, how do you feel the question like that?

 

Ken Hosac  37:18

I’ll tell you, and that comes up a lot. Because people do they see what happened in a way to no nine. And they think about the people that really were on the wrong side of the equation. They don’t really think about the people that took advantage of that in 2011 2012 2013. But I think the thing that’s important to understand is you can lose money in anything. And so there’s no question about it, it’s just to be an investor, you have to know what you’re doing. Or if you’re investing through other people, you have to make sure that they know what they’re doing. And as long as they you know, have that big picture, if they understand how the cycles work, you can make money in real estate at any part of the cycle. I mean, that’s a really, really important thing to understand for people to understand. So. But I would just I think the way I answered those questions is just talk about my experience, both on the active passive side, and basically say, tell them, I can’t afford not to invest in real estate, you’re always gonna have some bumps, don’t put all your eggs in one basket. There was a local company here in Boise called bbsi. That went bankrupt, I think when Greg when you were living out here, and a lot of people had put everything there. I mean, so I really think having a portfolio approach is really important. And again, this is one of the reasons I like investing with you guys is, you know, you have multiple operators, I don’t think with my investments with you guys, I don’t think I have one investment this with the same operator. So you know, if something goes, one of my projects just has, you know, we had a hurricane and swept through Florida. And it’s fortunately the our project in Sarasota was okay, I came away with some broken trees and fences, but nobody was hurt, nobody was killed, etc, went through. But when you have a portfolio approach, both in terms of which operator, but in terms of where the projects are located. That’s really important. And I

 

Tim Lyons  39:09

love that. And I just want to stack on top two things. We already talked about education and times action, right? And that’s huge. But also like, just like you said, you’re investing in people, right? And if you ever read the book or heard about the book, who and not how it’s really life changing, and you’re not so much investing, sometimes I feel like in multifamily with Greg and I, but you’re investing in Greg and I, right. I mean, like we have the relationship with you. And you know, the kind of diligence that we’re doing, right? So it’s really about execution risk, and the asset, you know, is going to probably make money but it’s really Who are you trusting who do you know can do the things they say that they’re going to do? That’s really true with any investment but especially in real estate. So, Ken, I want to thank you so much for coming on our show, man. I’m super grateful for you for the conversations for the guidance at times and if people want to find out More about you what you’re working on if they want to just connect, how can they do so? Yeah, so

 

Ken Hosac  40:04

I have a very simple, humble website, it’s Hosek ventures.com H O LSAC ventures.com. And then probably the best way to connect with me is through my LinkedIn profile. So you can type in Ken Hosek, I have one of those names where if you type in Ken Hosek, it’s certainly one that comes up HLS AC and my handle on LinkedIn is K Hosek. K h LSAC.

 

Tim Lyons  40:27

Ken, thank you so much for sharing that. We’re gonna put all that in the show notes. I want to thank all the listeners for spending another week with the passive income brothers and we will see 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 cap.com to connect with us and find out more information about how to get started passively investing in real estate