As we celebrate this podcast’s first anniversary today, we’ll talk about why education should be the foundation of all your investment decisions and why now is the best time to buy tangible and valuable assets. Don’t miss out on this special episode!


Why you should start investing in real estate now
The greatest mistake you can make as an investor
A reason why most people invest in risky assets
How real estate can help people build wealth
Benefits of learning how to invest in real estate


The Millionaire Fastlane by MJ DeMarco | Paperback and Audiobook


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Full Transcript
Greg Lyons  00:02
Sometimes those little things like getting into a real estate syndication once per year for five years. That’s the process. And that’s the event you could start having down the road when you put your money on a conveyor belt. Welcome to the passive income brothers podcast. Here
Tim Lyons  00:18
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 Goins. and today I’m joined by none other than my brother, Greg, how you doing today, buddy?
Greg Lyons  00:33
T. I’m doing fantastic. And the number five two comes to mind right now. Sure. This is episode number 52. We are one year into the passive income brothers take a bow. Seriously.
Tim Lyons  00:48
I mean, when we started this podcast, I mean, it took us forever just to wrap our heads around starting a podcast and it was overwhelming. And do we have time? And what are we going to talk about? Is anybody even going to listen? Is anybody going to come on our show? Like all these things, and now we made it to a year ago, right? And it’s doesn’t seem like it’s a myth. I feel like I’m on episode number four or something like that. But it’s been an incredible journey.
Greg Lyons  01:11
Well, it took me minimum seven months to buy a microphone. That was a hurdle I was not willing to get over. So that took a while. And we still don’t have enough time. Somehow people listen, but it has been an absolute blast to do this. And I can’t believe we didn’t start sooner. That’s
Tim Lyons  01:29
it. I mean, it’s like so many things in life. It’s a journey, right? And whatever you’re committed to defiantly committed to making happen is gonna happen. And right now we’re celebrating one year behind the mic. So congratulations, buddy.
Greg Lyons  01:42
Thank you, big guy.
Tim Lyons  01:43
So today is going to be a solo show with Greg and I to take us into Season Two of the passive income brothers podcast. Season two, I
Greg Lyons  01:51
like that. You’re like, oh, I
Tim Lyons  01:53
slipped that in there, right? Oh, that’s nice. So we’re coming into December of 2022. And there’s still a ton of uncertainty, there’s still a ton of fear. There’s a looming recession slash maybe possibly, we’re already in recession. And there’s just a lot going on, right yet. There’s still deals going on, there’s still investments being made. And I just wanted to take a step back with this show to kind of just highlight some of the journey, the mindset behind some of the things that we’re doing and what we’re trying to provide to some of the aspiring passive investors or active investors or whatever, just like by chatting about a few items. But before we get into that, to celebrate our one year anniversary, it would be huge if you could leave us a rating and review on whatever podcast platform that you listen to us on. Because we have some incredible guests lined up for the upcoming year. And it just serves to help us to get those guests and to have that credibility and to get those year bowls as we like to call them onto the show because it supports us and it supports getting better content out to you. So we’d be grateful if you could do that for us. Today, actually, right now, pull the car over and do that right now. Thank you. So Greg, I want to shout out a few stats to you that I just pulled up prior to recording. The s&p is down year to date, and these are from Yahoo Finance, the s&p is down almost 17% the NASDAQ down 29 and a half percent. The Dow is amazingly only down 7.89%. Bitcoin is down 77% from a tie in April. And existing home prices as per the St. Louis Fed and NAR National Association of REALTORS is up by six and a half percent. So yes, I might be biased because I’m a real estate investor. But when you look at some of these numbers, right, it really reinforces our investment thesis about real estate. Number one. But number two was really the mindset. Greg, we were just at a conference where a speaker named Luke Wren, who’s a phenomenal coach, speaker, entrepreneur, business owner, Tony Robbins disciple, and he was talking about prices being too high, and people will wait till there’s a correction, being like, you know what, I’m not going to get him right now. I’m going to wait until the prices come down. And then they say prices come down. But they’re not enough. I’m gonna wait a little bit more. And usually when prices come down, Greg is a little uncertainty out there. So people get nervous, but then prices tend to correct. And there’s blood in the streets, and there’s fear and uncertainty and there’s high interest rates, and then people still don’t take action. And then maybe there’s a pricing rebound, right, a couple of years later or a year or two later. And then people missed the boat and his whole thing, Greg was, look, there’s never a great time to do some of these things, right? But you got to take action, right? You got to get into the game. You got to get that education and Align yourselves with people that are doing the thing that you would like to do. So Greg, I know that what he got
Greg Lyons  04:56
well, so I think we’ve normalized kind of the opposite. and downs of the market, right, and we say over the long term, yeah, I’m going to get 8% in the market or 10% in the market, that doesn’t really take into account commissions and tax benefits and all those sort of things. But, and that’s great, you know, plenty of exposure to the market, that’s all well and good. But we normalize these 20% correction sometimes, and it only happens once every 10 years, you know, stuff like that, when we look at kind of real estate, and the wealth building effect that can have on you, real estate is not marked to market, it is not valued every day. And when you’re gonna buy and hold things, for years on end, you typically come out in pretty good shape, there’s always market cycles, and we’ll get into that a little bit later, that have an effect on valuation. But if you’re willing to hold your property and keep it in your portfolio, there’s typically going to be a pretty good outcome. And that’s really important. And it’s just a different way to kind of allocate funds in your portfolio, equities, bonds, real estate all play an important role in what you’re trying to do.
Tim Lyons  06:04
100% Greg, and I just wanted to stack on top of that, like, we’re so used to having our iPhone or Android, whatever you have in your pocket, and we just whip it out, right, and we start checking stocks and bonds and portfolios, you log into your bank account your brokerage house with ease, right, and whether it’s good or bad, we can do that. But with real estate, it’s not like that, right. And it’s almost about trusting the process. And speaking about process, Greg, there’s a book out there called the Millionaire Fastlane by MJ DeMarco. And while we’re talking about this topic, it struck me because he has a chapter like deep in the book almost towards the end, where he talks about the journey of investing or the journey of becoming that millionaire in the fast lane, right. And it sounds kind of cheesy, but if you really listen to that book on Audible, or read it, you’ll understand why he has the fast lane, the middle lane and the slow lane. But he really talks about the people who are looking for that big hit, right like on their journey of investing, they’re looking for that Bitcoin billionaire status, right. And he calls that the event. And people just looking for the event that’s going to set them up for life, when in fact, they really need to focus on what’s called the process, right. And he lays out the process for doing stuff like this. And it really that resonated with me in a big way when I listened to that book on Audible, because there is no big event, right? Unless you have like a liquidity event from an IPO share, you worked in a tech company went public, or you sell something big whatever, like, yes, those are events in life. And that could certainly help you. But for the average, Joe and Jane Doe that are investing in real estate or whatever they’re doing, it’s a process, right. And in that process, it’s a lot of education. Like we can’t just make these rash decisions, like Oh, I heard about real estate, or I heard about Bitcoin, or I heard about stocks or something like that, like everybody else is doing it. So let me do it right. And the FOMO kicks in, it’s really about education, getting into the room with folks, we’re doing the thing that you want to do that they’re rolling in the right direction, going to meetups joining finance club or something like that. But once you do that, it provides a sense of clarity, some direction, right, and then you can make a good decision based on some of that information.
Greg Lyons  08:17
You know, Tim, whatever analogy you want to use, a lot of times MJ DeMarco, The Millionaire Fastlane, he does a really nice job of kind of putting in the different lanes, but most of us are in our nine to five jobs, right. And that can be a very lucrative nine to five job. We do our dollar cost averaging. And those things are just kind of on autopilot, right, we show up to work, we put our money in each month and our 401k and stuff like that. But the event that people dream of is selling their internet company that they never started, right? It’s selling their whatever business that they never started. So we just talked about that action. Sometimes those little things like getting into a real estate syndication once per year for five years. That’s the process. And that’s the event you could start having down the road when you put your money on a conveyor belt. And those are the important things that when you’re looking to build wealth, do it in a process form, dollar cost averaging, investing in real estate, whatever it is, but you have to do it. You can’t keep dreaming about it.
Tim Lyons  09:23
Right? Yeah, I mean, everybody has this millionaire idea right about starting some sort of business. They want him to tell you, right, you’re at a party like I can’t tell you. You gotta sign this nondisclosure agreement before I tell you my big idea, right? Like everybody has a big idea. It’s the process and putting it into action that is actually maybe going to move the needle for you.
Greg Lyons  09:40
Our big idea was this podcast, holy cow.
Tim Lyons  09:45
Look at us now, buddy. But yeah, so like, I just wanted to chat a little bit about some of the news, Greg in what the current events about in relation to this event versus process mindset. FTX is in the news a lot. They are a cryptocurrency. company where they were a cryptocurrency company with billions of dollars of assets under management and I use the term assets very loosely because I am not a cryptocurrency guy. It’s not that I totally hate on it. I just don’t, it doesn’t align with my investing thesis about cash flowing assets that are paying you each and every month. So I have not gotten into it. But anyway, some of the biggest institutional players out there, Greg, there’s an article that’s been floating around some of the major news wires, were basically involved in either angel funding seed funding, in different rounds of dx is capital raises. Companies like Sequoia Capital, which has hundreds of billions of dollars of assets under management, they just had a $214 million right down to zero on their bet on FTS Ontario teachers pension fund, right $95 million down the drain, Tiger global and the list goes on Blackrock Private Equity Partners. Now, on one hand, I’m like, What are these guys thinking about? Right? Like we do, you know, at least in real estate, right? We do like this intense due diligence on the operator on the asset on the market, like, we’re dotting our eyes and crossing our T’s for our investors, because we don’t want to lose any money or do anything, right. And I’m like, I’m hearing these big names in FTX. And I’m like, What are these guys? Like? Do they not do any due diligence? Was it FOMO? Or do these guys just have so much money, and that they can take these bets and the hits, they look like all stars, and if it loses, so be it. And the problem that I see with that, Greg is that because interest rates were artificially low for over a decade, people on fixed income. So like for a great example, Ontario teachers pension fund, I don’t know anything about their balance sheet. But I’m gonna say that a big part of it, it’s probably in a bond or fixed income portfolio that was yielding close to nothing for the last decade. And what that does is it pushes people and institutions further out on what’s called the risk curve. So now they do have to go investigate other assets that traditionally paid them income so that they can pay their pensioners out those distributions. So did it push them that far away from quote, unquote, real assets or equities or whatever, into something like FTX for them to lose $95 million? I mean, that’s insane to me.
Greg Lyons  12:19
Yeah, it’s really interesting that when you push yourself a little bit further out on the risk curve, Bitcoin Aetherium, stuff like that, if you understand it, that’s fantastic. I just don’t understand it. And I guess I’m just not willing to learn it at this point. But when you hear like real estate is risky, you kind of take a step back when you look at someone like they call them SPF sam banksman. Freed, who is the head of s FTX. He was this brilliant person. He was eccentric. And I think people are drawn to that a lot of times, kind of that Trojan horse out there, but he’s got it all going on. He’s got 16 billion of his own portfolio and just sometimes we follow the wrong people where the every day blocking and tackling is the real estate is where Sam Backman free goes to live. It’s the bricks and mortar sometimes of where people spend most of their time in their home in their apartments, stuff like that. It goes back to the horse and jockey analogy that we use a lot. And when we talk about real estate syndications, the horse is the property. It’s the 200 unit apartment building a 300 unit apartment building. But the jockey a lot of times, who’s the operator of the apartment building, right? They’re the most important people in the entire deal. You’re betting more on the jockey that they can get through a downturn, they can navigate higher interest rates. They can get tenants out when they’re not paying the jockey is sometimes the most important thing. And that’s why all the due diligence we do on our operators, which may seem like overkill is really important. So you’re not running into the same bank. Winfrey’s of the world that are just kind of taking his crypto and going to play somewhere else. Yeah,
Tim Lyons  14:00
and I totally agree. It’s no I can trust Greg, we always talk about it, right? Like, you can know I can trust your financial advisor and you could have a negative 20 Negative 30% balance right now in your capital account that your brokerage, because that’s just the reality of it, right. There’s been a ton of articles as of late on the death of the 6040 portfolio, right. 60% equities, 40% fixed income, like bonds and stuff like that. I mean, bonds have had a disastrous, disastrous year. And for folks on fixed incomes, I mean, they’re getting hosed. Right, it’s actually pretty sad. So I would just encourage everybody wasn’t like, obviously Greg and I are very bullish on real estate and pays us every month. You know, out of the 17 projects that we’ve been a part of all but one are paying distributions at this point. So there’s ways to get around this type of thing right and when I say we post distributions, people are still there accruing their preferred return and there’s stability of capitals all there and ever It’s like that. But like in crypto or stocks, like when you get a 20% hit, you got to come back to zero and then start making your money again. I mean, it’s just about whatever your thesis is about investing. Ours is obviously very bullish on real estate. But if you have a different one than actually, I’d love to have you on the show. But Greg, what do you want to say?
Greg Lyons  15:20
It really begs the question Is now a good time to invest in real estate, right? What part of the market cycle are we in? And when you kind of take a step back, you think about, you know, kind of the time that we’re in, and if you go back to the great financial crisis, right? In 2009 to 2014, there were fewer buyers after the GFC there was less liquidity less financing available on the market. And things were just kind of slow, fewer buyers 2015 to 2018, market stabilized apartments were appreciating prices were going up. But there were great deals to be had. As you were coming out of a rough patch 2019 to 2022. There was a super run up in valuations right up to six months ago. It was the valuations were going crazy, because of the printing of money. There were tons of syndicators throwing money into the market deals were expensive because of cheap debt and high demand. So that kind of brings us to today, even the last three months, interest rates have gone absolutely crazy. So it’s really kind of dried up deals and stuff like that. So today, we look at ourselves and say, Hey, are we in a recession right now? And I don’t think anyone could really answer that question officially. But that’s neither here nor there. But today, prices are pulling back, there’s less demand from syndicators. Inflation is raging and interest rates are surging. So where does that leave us? Right? We’re in a market cycle right now where we’re probably coming back to the buyers time in the market. And then right now is the time when you kind of get in and say, Hey, I think there may be an opportunity here not to make money in our one time event, not to become a millionaire, like MJ DeMarco says tomorrow. But getting your money in right now for refinance down the road, a sale down the road. That’s where you start making your money. And that’s the most important thing because inflation is causing prices to rise. The recession that we’re on the horizon of probably 20 to 23. Prices are going to start coming down. So there’s a buying opportunity right now.
Tim Lyons  17:28
Yeah, I mean, Greg, we’re still buying, right? I mean, we just literally did two back to back races, right. And if you’re a part of our investor club, you would know that so anybody interested in joining our investor club, head over to cityside And click on the form to join our investor club so you can see our deals, but it’s all relative real estate, because it’s all about the underwriting and the spreadsheet, right. So Right.
Greg Lyons  17:49
Well, Tim, to that point, if deals are working right now, in this high interest rate environment, there’s going to be an opportunity to refinance and a sale in a couple of years. Right. So if you’re able to cashflow now, with a five or 6% interest rate, now’s the time to buy.
Tim Lyons  18:06
Yeah, I mean, our last two deals, Greg, I mean, we had two fixed rate loans, 10 year Commercial notes in the fives, right, five and a half 5.6 something, I should probably know these numbers off the top of my head. But so listen, it’s all relative, right? So like people hadn’t called an investor last week, and they said, Well, Tim, you just went on a buying spree all last year? Did you buy it at the height of the market? Or is it too high? And I said, Yeah, you know, that’s a great point. I said, but I said, when we underwrite these deals, and we write down underwrite them conservatively, right? With the fixed rate debt, with the conservative rental increases, and, and our y net operating income projections, it still worked, right? We’re still paying investors, we’re still able to able to cash flow. And the point of that is all right, yeah, we might have gone in at edit certain basis, but we’re not selling it tomorrow, we’re not flipping this thing in six months, right? We’re gonna hold on to it for a couple of years through it another market cycle, maybe interest rates are down by, say 200 basis points. That’s a phenomenal time to refinance, right? So it’s all relative, right? And that’s why like, the more education you can get, the more people you can align yourselves with, with the know like and trust factor, that is going to be your key to your process and your success, because it’s always a good time to buy real estate, if the numbers work if the debt is correct, if the rents support the property if the market is growing population growth, job growth, right, so there’s all these things so I mean, if you’re just thinking that like look, I’m gonna take my ball and go home and I’m gonna have my 300k in a savings account and lose six and a half 7% and inflation. That’s one way to do it. Sit on the sidelines until everything becomes more expensive, or get educated now, get your process your thesis on paper now and start taking that action.
Greg Lyons  19:51
It’s um, you know, now’s the time, now’s the time to invest because there’s fear in the market. Right crypto just exploded. The market is lousy. We kind of went over that, you know, at the beginning, it kind of reminds me of the Warren Buffett, quote, be greedy when others are fearful, be fearful when others are greedy. And we are going into that time right now where there’s fear, there’s no doubt when people are retreating and prices are dipping, this is the time to go in this is when money is made. This is when you build wealth, there’s going to be more inventory coming on the market, right? In the next six months or so, cap rates have risen, prices are pulling back, less buyer demand right now, syndicators are not bidding up deals at this point, there is going to be an opportunity. And we’re seeing that in the deals that we’re finding right now. And you have to attack when people are just kind of fearful. And now’s the time. Yeah,
Tim Lyons  20:46
there’s gonna be an incredible buying opportunity with people that bought with adjustable rate mortgages or bridge debt in the last couple of years. And now that it’s coming in do, right, and they either have to sell or refinance, and maybe that refinance doesn’t work. So now they gotta sell. But they may not want to announce it to the world that they have to sell, right? So it’s going to be an off market deal. Good opportunities are out there. So, Greg, before we close up, I just wanted to take a moment with our one year show. And maybe you could just tell the listeners before I tell them, how has this journey kind of changed your Lisa and the kids lives by passive investing? You often talk about how this, you solved your own problem. So I love that story. If you want to just take us out with that. Yeah.
Greg Lyons  21:26
So in 2019, we had accumulated a little bit of cash. And we went to our financial advisor and said, Hey, what should we do with this right now? I kind of want to get into real estate, what do you have for me? And I remember saying, I said, you know, are there pig farms in Georgia? That will give me a return. I remember saying that. And everyone kind of laughed and everything because I have an awkward way of doing that to people anyway. But there wasn’t a great answer. And as we got into 2020, and Tim, you and I started knocking around, where do we want to be in real estate and we really drill down into multifamily. And we thought we were going to be the operators of these apartments, but we kind of niche down into capital raising, because we enjoy talking to people about real estate about investing and cityside capital has been life changing for me. Because I have that focus, I have my own thing. And that was just so important to me. And to be able to bring real estate to so many people to place 1031 deals to solve those problems for people to get regular nine to five people into these different real estate deals. It’s been an absolute pleasure to build this company, as far as we’ve taken it so far. And then to start the passive income brothers. I mean, to see you once a week on Zoom has been I mean, that appointment in my life, you cannot be to
Tim Lyons  22:52
x party. No, I mean, I just pig farms in Georgia, I’m not quite ready to start investing in those quite yet. But I mean, that was it. I mean, like Greg and I have a front row seat with our company. Now, having gone through the licensing process, getting our series 82 and our series 63. And starting, basically a boutique private equity company cityside capital, we get a front row seat to evaluate deals. And since we spent the time in 2019, getting educated taking the action, right, I mean, learning how to speak the language of commercial real estate, I mean, now we have a front row seat to these deals, and we can pass on them if we don’t like them. We have direct access to the operators get clarity, we have an underwriting team like so for me as well. Like, for the listeners who don’t know my story, I still work as a tenant in the New York City Fire Department and I used to be an ER nurse for nine years. That was my side hustle. So when I finally got tired of the nine to five, the hourly grind, I should say trading my time for money. I retired as a nurse, I blew up my 403 B at the hospital right at the time I took 100 grand out of my other retirement account for the Cares Act. And I went to work, right I use my savings, I use all their retirement money I just talked about. And it’s been a life changing for me as well. Because now to have cash flowing assets coming in, it takes the pressure off don’t have to work the overtime as much, or at all basically I get in trouble for not working overtime. So it’s one of those things, but you know, it took a couple of years. Greg right. And we put some money on the conveyor belt that we always talk about. And now he’s going to come back to us. So anyway, if people are interested head on over to cities like and fill out the investor form. So you can get on our list to kind of see what the deals that we’re we’re sending out to our investors deals that we invest in ourselves. And we’re gonna hop on a call. It’s really simple as that it’s
Greg Lyons  24:41
so true. And if you just want to talk real estate, right you want to bounce some ideas off us We love talking about real estate, and well that leads you to investing in one our deals Yeah, maybe who knows maybe two years down the road. But kind of getting that exposure the different ways people think for us it’s fantastic and for the investor it can be a worthwhile Well, 2030 minutes
Tim Lyons  25:01
100% I just want to remind everybody to before we close out, Greg is that 2022 is the last year for 100% bonus depreciation. If you’re not familiar with that, definitely Google bonus depreciation real estate and you’ll find that 2022 is 100% 2023 will be 80. And it’ll sunset in four years. So, anyway, with that, Greg, I’m grateful for your listenership out there. This is it for us for this week. And thank you for being with us for one year. And we look forward to serving 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 to connect with us and find out more information about how to get started passively investing in real estate