Our guest for today has closed billions with a B of dollars in real estate transactions as a real estate attorney, broker, and investor. He is a managing partner of Law Capital Partners, a private equity firm focused on multifamily and opportunistic acquisitions. He has gone from a former Big Law attorney to now the managing partner of his own firm, Bradley Law Ltd.
Let’s dive right in and learn from Seth Bradley and how we can stop trading out time for money!
[00:01 – 16:39] Opening Segment
[16:40 – 23:15] First investments by house hacking, flipping and wholesaling
[23:16 – 33:50] How are you finding the time? What are your systems?
[33:51 – 36:28] What does a Low-Income Housing Tax Credit (LIHTC) deal look like?
[36:29 – 41:19] Closing Segment
Tweetable Quotes:
“start buying back your time, just piece by piece.” – Seth Bradley
“A lot of these deals are very similar. So once you start looking at these same deals over and over again, they're going to look familiar and you're going to get more and more comfortable, comfortable enough to make that big leap to wire that first fifty thousand dollars.” – Seth Bradley
Resources Mentioned:
Connect with Seth! See the links below:
Go to their LinkedIn, Facebook, and Instagram pages to connect. Visit their
LEAVE A REVIEW if you liked this episode!!
Keep up with the podcast! Follow us on Apple, Stitcher, Google, and other podcast streaming platforms.
To learn more, visit us at https://invictusmultifamily.com/.
**Want to learn more about investing with us?**
We’d love to learn more about you and your investment goals. Please fill out this form and let’s schedule a call: https://invictusmultifamily.com/contact/
**Let’s Connect On Social Media!**
LinkedIn: https://www.linkedin.com/company/11681388/admin/
Facebook: https://www.facebook.com/InvictusMultifamily
YouTube: https://bit.ly/2Lc0ctX
Our guest for today has closed billions with a B of dollars in real estate transactions as a real estate attorney, broker, and investor. He is a managing partner of Law Capital Partners, a private equity firm focused on multifamily and opportunistic acquisitions. He has gone from a former Big Law attorney to now the managing partner of his own firm, Bradley Law Ltd.
Let’s dive right in and learn from Seth Bradley and how we can stop trading out time for money!
[00:01 – 16:39] Opening Segment
[16:40 – 23:15] First investments by house hacking, flipping and wholesaling
[23:16 – 33:50] How are you finding the time? What are your systems?
[33:51 – 36:28] What does a Low-Income Housing Tax Credit (LIHTC) deal look like?
[36:29 – 41:19] Closing Segment
Tweetable Quotes:
“start buying back your time, just piece by piece.” – Seth Bradley
“A lot of these deals are very similar. So once you start looking at these same deals over and over again, they're going to look familiar and you're going to get more and more comfortable, comfortable enough to make that big leap to wire that first fifty thousand dollars.” – Seth Bradley
Resources Mentioned:
Connect with Seth! See the links below:
Go to their LinkedIn, Facebook, and Instagram pages to connect. Visit their
LEAVE A REVIEW if you liked this episode!!
Keep up with the podcast! Follow us on Apple, Stitcher, Google, and other podcast streaming platforms.
To learn more, visit us at https://invictusmultifamily.com/.
**Want to learn more about investing with us?**
We’d love to learn more about you and your investment goals. Please fill out this form and let’s schedule a call: https://invictusmultifamily.com/contact/
**Let’s Connect On Social Media!**
LinkedIn: https://www.linkedin.com/company/11681388/admin/
Facebook: https://www.facebook.com/InvictusMultifamily
YouTube: https://bit.ly/2Lc0ctX
The Passive Investing Attorney with Seth Bradley
Dan Kreuger: [00:00:15] Welcome to Multi-family Investing made simple B podcast, where we take the complexity out of real estate investments, so we need to get started today. I am Dan Kruger and as always, I'm joined by the one the only Anthony Vicino.
Anthony Vicino: [00:00:28] How are you doing, Anthony? Doing fantastic. And I just want to let you know, Dan, that was the perfect and show. You nailed that. Well, we're not done yet, so we're not through it. We're not through. But that's that was a very strong start, but very smooth. Yeah, it was good for the people at a home interest of the hard bit. But now comes the really tricky part, because we have a fantastic guest with us today. I've had a good in-depth conversation with him a couple of weeks ago and thought we got to get him on the show because he's a font of knowledge, got a really cool niche that he focuses on. And so now comes the hard part. Dan, we've got to do the period you're ready for this.
Dan Kreuger: [00:01:03] See, there is a struggle. This is because I'm reading a BIOS, kind of like a script. I don't use scripts. I like conversations. I like organic stuff. So this is the one scripted bit. Let's get it out.
Anthony Vicino: [00:01:14] Well, we can always flip the script. We can put it on on on on our guess and say, hey, tell us about yourself.
Anthony Vicino: [00:01:19] Hmm. What do you think?
Seth Bradley: [00:01:22] I don't know, I mean, I can or Dan, you got him and we talked about this before we started.
Dan Kreuger: [00:01:27] I can't not do it. We've got to talk. Let's talk about let's bring him in. Yes.
Dan Kreuger: [00:01:33] Well, Seth Bradley, the one and only Seth Bradley is here. He's a real estate entrepreneur, an expert at achieving passive income as a highly paid professional. He's closed billions with a B of dollars in real estate transactions. As a real estate attorney, broker, and investor, he's a managing partner of Law Capital Partners, a private equity firm focused on multifamily and opportunistic acquisitions. And he's a former big law attorney and is now the managing partner of his own firm, Bradley Law Ltd., helping his clients with real estate and asset protection needs. It's also the host of a podcast, the Passive Income Attorney podcast, which I believe Anthony was just on recently. Keep your eyes peeled for that, educating attorneys and other professionals on how to stop trading their time for money so that they can practice when they want to, not because they have to almost got all the way through without stuttering.
Dan Kreuger: [00:02:26] S pretty solid. Pretty solid. Is that good enough? Yeah. You meet the muster.
Anthony Vicino: [00:02:32] I don't know which I'm more psyched for like that, Encho. Or just to have Seth here.
Anthony Vicino: [00:02:36] But Seth, there are so many things in that bio that are like wham bam big, big things. It's like, oh, let's dive into that. And then another thing comes up. Let's dive into that. Let's take it from the beginning. Let's go back to like when you were you know, you're doing your lawyer thing and you started to think about real estate or was this from the very beginning? Like, what was that switch for you?
Seth Bradley: [00:02:57] Yeah, so it's interesting because I don't know, when I started becoming interested in real estate, I've just always been gravitated towards it. I remember asking my dad when I was an undergrad, you know, let's buy this piece of land and build some townhouses on it, because at the time, people were building like these cardboard townhouses that were like, man, we can do that. Obviously, he can give you the money to do that because he's a smart guy.
Seth Bradley: [00:03:18] But, you know, as soon as I had some money in my pocket, so started my first big law job out of law school. I helped hack into a duplex within the first month of being employed. So I started that journey, started doing flips, started doing buying homes and renovations and all that kind of stuff, and then kind of scale from there. But I don't know if I had that kind of light switch moment for real estate. I've just always been gravitated towards it.
Anthony Vicino: [00:03:47] Yeah, I came in the same boat where there was never like this magic moment, we tell stories about like, oh, this is the moment the bug bit, but it just sounds like you were thinking about this from a really early age. And I'm curious, was what was your dad doing at this point where you're like, Dad, let's go do this? Like it sounds like you were entrepreneurial from the beginning, like thinking outside the box.
Seth Bradley: [00:04:06] Surprisingly, I came from a blue-collar family. My dad's a retired coal miner. My mom's a retired teacher. I was never exposed to entrepreneurship or real estate other than owning our own home, none of that kind of stuff. So that's kind of why I went down the pathway that I did. I went to medical school first because I thought and growing up, it's like, well, what's the best possible job that you can get? And it's becoming a doctor. So I went to med school, realized that I hated it, dropped out into my in my second year. I dropped out, didn't know what I'm going to do. I was like, OK, well, I'll go to the next thing. I got my MBA and then I went to law school because being a lawyer, I guess, is the next best job you can get to your job. You can get so went down that way. And all along I've just been confused, really.
Seth Bradley: [00:04:48] I've just been an entrepreneur at heart. I just didn't realize it because I was just never exposed to a grown-up.
Dan Kreuger: [00:04:54] Yeah, that's I think a lot of people could relate to that, it doesn't really, you know, the entrepreneurial approach, entrepreneurial approach to life is not really the path that's pitched to everybody. It's always college and then some kind of job. And if you're doing that, then you're doing as good as you could possibly be doing. And I'm sure your parents were more than, you know, overwhelmed with you go into med school and law school and doing all the stuff that probably was like fully encouraged from them. And so you're like, this is the right thing, I'm sure.
Seth Bradley: [00:05:22] Yeah, for sure. I mean, they're very encouraging. I mean, even when I dropped out of medical school, it was a hard conversation to have, but they were still like, OK, well, you do what you want to do. You know best what you want to do with your life. So they're always encouraging.
Seth Bradley: [00:05:33] But I just you know, the business stuff was just never part of my life until I got really into my MBA program and started being around business people and law school year-round business people. And that's when I started thinking outside of the box and kind of coming on my own, realizing that, you know what that confusion was about being a doctor or a lawyer.
Seth Bradley: [00:05:51] It's really about, you know, being an entrepreneur at heart.
Anthony Vicino: [00:05:56] Ok, Dan, I want to touch on this because it's really interesting, we get so wrapped up in self-identifying with the thing that we're doing right. Like you go to medical school for two years. That's a really big undertaking. And I'm sure there is a lot of, like, self-identity tied into that. How did you come to the realization of this isn't for me, I need to make a pivot because that's a really big, scary pivot to make out of.
Seth Bradley: [00:06:20] Right. You know, I think it came down to the first two years you're in med school. It's all academic.
Seth Bradley: [00:06:28] It's all like studying and learning all the terms and just learning a new language, basically. And then they tell you just get through the first two years, because after that, it's all going to be clinical and you're going to see patients and all this kind of stuff, and you're exposed to it on a limited basis those first couple of years, too. But when I was exposed to that, I was like, man, this is just more stuff that I don't want to do. And it's actually less something I want to do, even less than studying because I was actually really good at studying and academics. So when it came to the clinical stuff like, well, that's what I'm going to be doing for the rest of my life, and I realized I needed to get out right now.
Anthony Vicino: [00:07:01] What kind of advice would you give somebody who's listening to this, who's thinking about maybe making a pivot like that, whether they're like a lawyer and they're thinking like maybe I don't want to do this forever, but I've been doing it for so long. But now they have this kind of those golden handcuffs on they're so far along that road. Like, how do you make that adjustment?
Seth Bradley: [00:07:18] Yeah. And I come across that a lot with my investors get a lot of them are attorneys and they work in, you know, high paid jobs. And I think if you've gotten that far and this is not the way that I did it, I mean, my way was a little bit rockier. But the way that I tell them to do it is you've already achieved great success. You're making a lot of money or maybe start buying back your time, just piece by piece. If that's investing passively, fine. Invest in my invest somebody else's deal. If that's starting a side business, you're in your own free time or buying a rental property, whatever it might be, buy your time back piece by piece. And then once you kind of get to kind of a safer place, then maybe start stepping away. But you've got to start now because if you don't start now, you're going to end up at sixty-five seventy years old in your practice doing the thing that you don't want to do and you're going to be stuck is going be too late.
Dan Kreuger: [00:08:11] I'm curious to know when you said you basically got into your first deal via a House hack as soon as you were done with school after you got your first job secured. Was that done with the intent of scaling into bigger things as you've done, or was that just something you did because you thought real estate was cool and you're going to do this thing like did you at that?
Seth Bradley: [00:08:33] Yeah, at that point in time, I mean, I definitely wanted to buy that one by the next one and keep buying more. But big multifamily or big commercial properties weren't really in my head at that point in time. I just started my job. So it's like I was kind of in that bigger pocket type of movement where you start listing the Bigger Pockets podcast and read all the books and that kind of stuff.
Seth Bradley: [00:08:52] And it's like, OK, well, this house hack into a duplex and then by the next one. The next one. The next one. And then I think during my legal practice because I'm a real estate attorney, I started closing deals for these guys that are taking down these massive deals. Right. These hundred million dollar plus multifamily or otherwise commercial properties. And I started seeing that they're just regular guys like us. They're not Donald Trump or something like that. They're just regular people. And that's when I started kind of exploring that idea a little bit more.
Dan Kreuger: [00:09:20] Yeah, you know, it makes sense. I think a lot of these bigger deals seem to people like they're not really attainable. And so you probably just kind of wrote it off like, oh, that's a thing that, you know, another type of person does, but not me. I could totally do some duplexes to try plexus, but anything, you know, over ten million dollars is that that's like a pipe dream probably at some point. Right.
Anthony Vicino: [00:09:41] Right. It's interesting. Just a couple of minutes ago, Dan and I were on a property tour before coming to this podcast. And we were talking about the fact that the brokers that we deal with on a daily basis, fly so close to the sun. It's like seeing what we do. And yet so few of them actually take action investing in the things that they are literally like helping us transact. And we were like, why is that? And you probably see this in your business, right, with attorneys like they see what's happening. Why do you think that more people aren't actively taking that next step then?
Seth Bradley: [00:10:15] Yeah, I've thought about that too, like with real estate agents and brokers, I mean, especially them, because they're just really close to real estate. Right? I mean, they're in it and they just disappeared. Yeah. I don't know what it is, man. I think they just get caught up in the transactional piece of it and they just kind of see, you know, OK, I can get make a payday. And they just think about a lot of people do that, right? I mean, they get caught up in what's my next payday? How can I just get a big lump sum now and then? They're happy for a while and then they've got to do it again and again and again with really well, with attorneys. They're not always necessarily influenced by real estate. I was a real estate attorney, so it's a little bit different. But I think if you work in big law at a big law firm, you don't have time to kind of think about anything else when you're building twenty-plus hours a year. I mean, that's all you have time for. And then if you're just starting your family and you got all those kinds of things going on as well, you don't have time to think about anything else. So you just plug your money away into your 401k and that's your retirement. You don't really think about anything else. So I think it's all about kind of getting people over that educational hump that there are other things to invest in.
Dan Kreuger: [00:11:24] So now I'm curious how you obviously you've kind of zeroed in on you should really focus on helping attorneys kind of, you know, cross that that hurdle of starting some kind of passive income and things like that. Like how do you deal with that time constraint with people? Like how can they get educated in a time-efficient way so that they know enough to invest in a deal and start to make this a piece of their portfolio? Because I mean, everyone I know in this space, it's you know, they work all the time. And any time they're not working, the last thing they want to do is sit down and try to study up on something they're probably not all that passionate about.
Seth Bradley: [00:12:00] Yeah, it's tough. I mean, you have to have that initial phone call with them, try to educate them as much as possible, and just kind of show them, you know, the returns and the risk profile and things like that that they're just not aware of. And hopefully, it piques their interests enough to where they're like, OK, I need to look into this a little bit further. Maybe I can do it. That says and start buying back my time a little bit instead of just investing in the stock market and your 401k.
Seth Bradley: [00:12:23] So it is a hurdle, and especially for four attorneys who are very conservative by nature. And I think that's why no one actually went after that group before I did specifically. And they went after doctors and dentists and engineers and everyone else. But skip the lawyers, I think, because they're kind of a pain in the ass, really. And, you know, we're just conservative by nature. So it takes a little more to get us over that hump.
Dan Kreuger: [00:12:47] And you guys are scared to say that can be an intimidating crowd, but luckily, I mean, with the real estate thing, it is fundamentally a fairly simple business model to wrap your head around. And it's one of those things where the more you learn about it, the more it becomes a no-brainer, kind of the opposite of your medical experience, where, like, the more you did, the more you realized you didn't like it. I think it's kind of the opposite. Like every little nugget that you learn along the way. It's like, wow, OK, this is really good. This is really, really good. And then you get to the tax base, you're like, oh my God, which is probably a huge piece for the high-paid professionals. They see that. And that's like, OK, game over. This is the fact this isn't in the portfolio is ridiculous.
Seth Bradley: [00:13:26] Yeah, yeah. The tax benefits are a big piece of that education for sure because high-paid professionals get destroyed.
Anthony Vicino: [00:13:35] Mm-hmm. You mentioned something a bit ago that I want to bring us back around because I think it's so important. Is this idea of buying back your timepiece by piece and it doesn't have to be this one big, massive transaction. You have to 10x and go big, big, big right out the gates. You can just buy it back incrementally. And I love that idea. Success. Let's say I'm a high-earning attorney. I, I don't really love what I do, but I like it well enough. It supports my lifestyle. But I'm at this point now or I'm like, I want to start buying back my time so I can go to Cabo when I want to and enjoy the sun. Right. Like what are the first bit by bit steps that I need to be taking?
Seth Bradley: [00:14:15] Yeah, I mean, I'll give them some education to to to eat a little you don't chew on a little bit, you know what I mean? I mean, it's a lot of times they don't know what syndication is, even though they're smart and intelligent, they know their idea of real estate is really, you know, house acting or buying a rental or buying their own home. So they don't know about these big commercial syndications. And just like when we got started our journey, we thought that you had to have millions and millions and millions of dollars to take down these deals. But really, you don't you just need exposure to the right network and exposure to the deal. So it just comes down to educating them and getting them kind of comfortable with the idea that you can invest fifty thousand dollars, one hundred thousand dollars, something like that. Possibly it's not going to take up all your time. A lot of these deals are very similar. So once you start looking at these same deals over and over again, they're going to look familiar and you're going to get more and more comfortable, comfortable enough to make that big leap to wire that first fifty thousand dollars.
Dan Kreuger: [00:15:14] Yeah, yeah. Something I've, you know, like to tell people and something we bring up a lot on the podcast is from a past investor's perspective, the bulk of the work, if not 90 percent of it, is really on the front end, like initially understanding the business model and identifying some key operators that you want to work with. And then from there on, it's really pretty passive. You just have to take a quick peek at the deals coming down the pipeline. If if you've already learned about the business model, you've already vetted the operators. The ongoing work is fairly minimal. So it's just that kind of initial learning curve the people need to go through. That's probably the tough part. I'm guessing so, yeah. Exactly. Exactly.
Anthony Vicino: [00:15:52] Do you think that attorneys have an easier learning curve initially, like dealing with all the contracts and the legal fees, or do you think it's harder for them because maybe they come in with more conservative or preconceived notions?
Seth Bradley: [00:16:04] To me, I think it's been a little bit harder. I just think that they don't have a lot of time. That's one thing. So trying to take them from zero to one hundred there and ready to invest is difficult to do in a short amount of time. So, you know, the time constraints are one thing. And even though that they conceptually can understand contracts and things like that, pretty and business concepts may be easier than the layman. It's it speaking when syndications and RPM's and that sort of thing. Unless you're an actual corporate or real estate attorney, it's still a foreign language.
Anthony Vicino: [00:16:40] So let's go back then, I want to. OK, so we started with your duplex house hack. Walk us through what were the steps that took you from there to what you're doing now? And then let's talk about what it is that you do now.
Seth Bradley: [00:16:53] Yeah, I started with the House hack, did that a few times, actually, I moved from West Virginia to Charlotte for different jobs and back to Southern California State House each time during that time was also buying some other single families and duplexes in Charlotte and Cleveland and all over the place and doing flipping and wholesaling and you name it all, that kind of residential game.
Seth Bradley: [00:17:14] I was doing all of it. I didn't really even know about syndications at that point in time. I was really just focused on the kind of trying to scale that. And I think like a lot of people, I hit that wall and just really I mean, didn't even take that many doors. It took, I don't know, 10 to 15 doors before. It's like, man, this is just I don't know, this is too much. And I'm doing flips from two thousand miles away trying to manage these bottom barrel contractors and property managers that won't lose my property when it's vacant. And it's just like there's got to be a different way. And I started looking into scaling up and buying bigger. And then I started talking to people and networking and they were like, hey, you need to look into these syndication type of place. So I did. I ended up investing passively on a few deals and then kind of used my real estate attorney background as a platform to get involved with the active site of the syndications. So when I even still when I come into a deal, I kind of act as an in-house counsel is how I like to call it, because I'm not necessarily the real estate attorney or the attorney on the deal, but I will oversee what they're doing. I will have a second set of eyes on all the contracts and the contractor's agreements and things like that.
Dan Kreuger: [00:18:28] So it's hugely valuable. So I could see that's a nice little way for you to get involved in these deals and are still a relatively passive way. Yes, they're not boots on the ground doing all the work. You're you've got to pick the area that you want to focus on. And that's what I love about this business. As you can see, it's not a binary thing where you're either one hundred percent passive, one hundred percent active. There's a nice little area in the middle there. You could figure out the spot you want to insert yourself and really just own that piece.
Seth Bradley: [00:18:58] Yeah. And especially when you go outside of whatever your niche is. For me, it's multifamily. I know multifamily. But if I wanted to get into hospitality or something like that, because I think there is a need for that right now just because it's going to be coming back, but something that's not necessarily your needs. You can invest passively in that or invest in a hospitality fund or something like that where you can leverage experts and then maybe they'll share some of their knowledge with you to the point where you be comfortable enough doing yourself.
Anthony Vicino: [00:19:28] So here's real quick, you know, we just kind of dove right into the grilling of Seth and we blew right past the best part of the show. So I want to just pump the brakes real quick on a rewind. We're going to go back a little bit to the bad investing advice of the week and then we're going to dive back into grilling. So, Seth, real quickly, what is your bad investing advice of the week?
Seth Bradley: [00:19:49] Oh, man, so let me think about this, I think one that you hear all the time is that the money will find you. I think that's bad advice. I think if it's if it's a big deal and you're going to need a lot of other people's money, you probably need to start networking, start raising that capital and start meeting those investors beforehand. It can't be. OK, well, let me just find a deal. And nobody knows me. I don't have a platform. I'm just a guy that has to invest in real estate before. And I found a killer deal. Well, good luck trying to find five million dollars to close that deal with.
Dan Kreuger: [00:20:26] One hundred percent, we actually talk about that quite a bit at the end and me, and it's frustrating because that advice is pitched to so many people and it sounds really good on paper and it sounds really motivating. People are like, oh, man, that sounds great. But to your point, if you don't have a track record, you might have a really amazing opportunity that falls in your lap and it's not going to come to fruition that easily. And even if it does, maybe you don't want it to because you've never done it before and you're going to take millions of dollars from other people and do something for the first time with their money. That's a pretty risky proposition there. So I'd much rather see people start smaller as you did. And I did the same thing. Start with a 60 minute Anthony, started with some duplexes and quads and things like that. And even though we don't really like the small stuff now, I think it's a great way to ease into it and a lower risk way to build up that track record and that network before you start going after these multimillion-dollar deals. I think that's kind of an inefficient way for people to get started because I think they end up wasting a lot of time looking at these big things when really they should just be starting small and building up a track record so that somebody used that advice.
Anthony Vicino: [00:21:37] I'm going to use a sports analogy here because Dan and myself are not sports guys. And so this minority kills. Yeah. So I'm already lost. So let's dive into it. So my sports analogy is this.
Anthony Vicino: [00:21:49] It's like when you want to play in the major leagues, let's say that's NFL. That's the thing. That's like the big professional league. You don't just dive in having never played football and then your first game is playing against Oakland Raiders. Like that just doesn't happen. You're going to get hurt and your team's going to lose. So you start by playing and Pee-wee leagues and then you play in junior high, then you play in high school, then you play in college. And each time you might have the vision. I want to play in the NFL someday. That's where you're headed. But you're not ready to get there yet. You have to put in the time and effort on the smaller steps first and so you can prove out the competency so that when you get there and you're playing in the big game one, you're not just a liability to the rest of the team, which I guarantee you if you've never done big syndication before, if you've never done real estate before and you dive into your first deal, you're probably more of a liability to the team than you are an asset. So build up the confidence. It doesn't have to be 10x from day one. You can start small with the house hacking. It's a great strategy. Just recognize maybe that's not where you want to be in the end, but it's a great springboard to where you're trying to get to, right?
Seth Bradley: [00:22:56] Yeah. Keep the end goal in mind. But there's nothing wrong with going small first. And there's a lot of those folks out there that preach that they're like, oh, well, that's a waste of time. Like, don't do the small stuff, just jump into one hundred units. Plus it's like you can actually make a good bit of money on the small stuff too. So it's not a waste of time and it also gives you that experience.
Anthony Vicino: [00:23:15] Yeah, that's absolutely right.
Anthony Vicino: [00:23:17] So real quickly rewinding now, because you said something before that stood out to me, one is that, like, lawyers have no time, but then you're also telling us that you're like over here lawyering and you have all these, like small properties and small properties are time-consuming. So actually, like, how are you fighting all the time? What were you doing? What are your systems here?
Seth Bradley: [00:23:35] Well, I practiced for about six years and big law, and that's about as long as I lasted because you can't practice big law and do the kind of stuff that I was doing. I mean, trying to build two thousand twenty-five hundred dollars a year and then doing flips two thousand miles across the country. It's just not possible. I mean, you're just going to wear yourself out and you're all the partners are going to know that you're just not engaged. And because you've got to respond quickly to these guys. I mean, if you're an associate at a law firm, a big law firm, you know, we used to have a thing called the 20-minute rule. If you get an email from a client or a partner, you need to respond within 20 minutes. So that's how far away you can get from your desk. I mean, you've got your phone. I mean, you've got to be on at all times because they're paying you a lot of money to do really high-end work. So it's very difficult. So that's why I preach to some of these guys and some of these gals that are working for big law firms, maybe, maybe the Flip's and the TV shows aren't for you because you just you don't have time to do it. I mean, maybe some folks do, but. But they don't.
Dan Kreuger: [00:24:42] Yeah, now, one hundred percent real estate is if you're active in it, it's it's a full-time job if you're doing it well. And I think that's something that a lot of people kind of miss because real estate is always kind of pitched as this like passive income thing. And if you are the one person doing it and you're not a part of a team or a limited partner on syndication, then you're basically taken on a full-time job. It kind of creeps up on you when you did it your way. You know, the first couple properties that felt, you know, relatively like you know, like a side hustle or a weekend gig. But soon as you get to a few doors as you said, I think you said your point was like 10 to 15 where it was like, OK, this is probably close to 40 hours a week right here on top of what I'm already doing. It's if you want it to be done well, it's got to be treated as a full-time job and as a business. And if you can't do that, then you've got to have a partner, whether it's a partner in a JV or general partner of syndication, treating it like a full-time job because otherwise it's just not going to get done, right.
Seth Bradley: [00:25:38] Yeah, I think that's why I passive investing. So good for attorneys and doctors, people that just have those types of careers that just have so many hours that you have to that is involved. I mean, you can invest passively first, maybe invest passively with somebody will keep you in the know more than the next and then kind of keep you involved and you can learn the business a little bit. And then at that point in time, then you can kind of see if that's something you really want to jump into on the active side.
Dan Kreuger: [00:26:04] Yeah, I always tell people as well, and I'm talking to them that, you know, it doesn't need to be a binary thing. Right? You don't have to pick one or the other. You can be putting the bulk of your capital into passive investments in syndication. And if you actually do really like the business model and it's a passion project for you, you pick up a duplex or a quad on the side and you have a couple of those to do to get your fix, but it doesn't have to be one or the other. You could do a lot of different stuff. So I'm curious what types of things are you guys looking at right now because it sounds like I don't know, I don't think we were recording when we said this, but you just either closed or finished up raising for a deal just recently.
Seth Bradley: [00:26:46] Yeah, we're actually in the middle of a race right now for two hundred forty-six-unit property in Winston-Salem, North Carolina. So that's one of those markets that we love because there's a lot of deals getting passed around right now that are in downtown Dallas or downtown Atlanta or downtown Charlotte. These markets that have been super hot are still hot for a long time. And I don't know when you start seeing those deals and they have the same returns that they had a few years ago, you probably need to dig into that underground because there's no way you're landing those types of deals nowadays. So we've kind of pivoted and started looking at those secondary tertiary markets that still have those strong metrics that we look for the population growth, the job growth, the job diversity. And Winston-Salem, North Carolina, is one of those types of places that not a lot of people know about. If you're not from the Carolinas, you think in North Carolina, you think about Charlotte, you think about Raleigh, but you don't think about Winston-Salem. But then when you do your market research on that place, you're going to be like, oh, wow, that's a really great market.
Dan Kreuger: [00:27:46] And so it's primarily job growth and population growth that you guys are looking for. Do you look at other markets in the U.S. or you kind of focus on that southeast region,
Seth Bradley: [00:27:59] I really like the Southeast, been looking kind of in Phoenix and Tucson because I'm in Southern California? I've got a partner right now that we're searching in Albuquerque, New Mexico because he has a lot of contacts there and he's actually from Albuquerque. So we're open to other markets. You've just got to do that, that market research, and make sure it's something that'll work. Because I know you guys are pretty. You stay local, right? It's not. Yep, not.
Anthony Vicino: [00:28:24] Yeah. If I can't drive over and touch the building, it's too far away for me.
Dan Kreuger: [00:28:28] And I love that. I love that. And I wish I wish I had properties that worked for what we do in San Diego.
Dan Kreuger: [00:28:35] Yeah. It's I mean, it's a great place to live out there. But from an investment perspective, it's I mean, in the end, some stuff in L.A., I think right now, Oakland, Oakland, California, the other side of the state very far away.
Anthony Vicino: [00:28:49] Yeah, I don't know. California is a different kind of a different state. Yeah.
Anthony Vicino: [00:28:54] In the grand scheme of things and we talk about market cycles like that is pretty much the same, though, like the Bay Area and the South Bay, it's very hard to make numbers work on these types of deals. It's just a different beast entirely. So you have to look outside of your local market, which can be a bummer, but it can also be a blessing because then the whole nation is open to you as a potential option. I'm curious about this one. It's two hundred and forty-six units. One, how did you find the deal? And then two, what's interesting about the deal, like what stood out to you is like, yeah, this is the one that we need to go after.
Seth Bradley: [00:29:25] Yeah. This was sent to us from a broken relationship that was off-market, got out with a couple of local partners that's actually in Charlotte, North Carolina. So they're pretty close to Winston-Salem, at least in the same state. They're going to be the hands-on operating team. And sorry, what was the second question? I mean, just what's interesting about it. Yeah. Oh, yeah. So what's really interesting about the deal is it's a light tech deal.
Seth Bradley: [00:29:49] So low-income tax housing credits. A lot of people shy away from that because you see that on the market and you see it like tech. And when you're in the value add a business, you think, OK, well, my rents are going to be capped. So I'm not going to even look at that deal or I'm not going to give it a good look. But this particular one, if you took a second look at the rents, was almost five hundred dollars under the light tech caps. So really what happens is the light tech caps on a factor that it's the fact is a light tech property doesn't matter. And we've actually structured our exit strategy around that contract so that low tech contracts up in nine years. We're trying to exit in eight. So that's kind of a value add play for the next owner.
Dan Kreuger: [00:30:34] Wow, that's amazing. Yeah.
Anthony Vicino: [00:30:37] Yeah. Let's before we go too deep into too deep or too far from this one, this is an interesting thing. I don't think we've had anybody on recently who has talked about low tech. And so for our listeners, you know, our general audience is more on the passive side. And so they might be hearing these words a little bit and thinking like, I don't really understand what that means. So let's just break this down for them a little bit.
Seth Bradley: [00:30:57] Sure, so the government will give you certain tax credits when you go to perhaps you want to develop a building or do some renovations to a building in exchange for those tax credits, they'll give you money for that.
Seth Bradley: [00:31:11] But but the tradeoff is that there will be caps on how much you can charge for rent because they want to keep that housing affordable. That's the whole point of them giving the tax credit. And that's good and bad because you get money to redevelop the property or build the property. But you're trapped in this contract that's like that contract for a certain amount of years that you sign on for. So your rents that you can charge tenants are limited to a certain amount. So in the grand scheme of things, if the numbers don't line up right now, the market rent might be at, let's say, a thousand dollars a unit. But you're like to Kappas at eight hundred. You can't charge tenants above that eight hundred dollar limit. So your value adds or the amount of money that you can bring in is limited by the flight deck.
Anthony Vicino: [00:31:54] And what you're pointing out there is that you know, even with that cap, the rents were five hundred dollars below that. Right? Right. And so in Winston, I would assume these are probably like one bedroom, two bedrooms, and that would be like seven hundred for rent. And then the cap is maybe like twelve hundred is about right.
Seth Bradley: [00:32:15] Yeah, well yeah. So we have one, two and three bedrooms at this property. I mean just on average our rents right now currently around five hundred and the lifetime caps averaging around a thousand and we've projected only really to bump those rents up a maximum of two hundred dollars. And really we underwrote it at about one hundred to one hundred fifty, depending on the size of the unit.
Anthony Vicino: [00:32:37] That's a ton of potential rent. There is a lot of value.
Dan Kreuger: [00:32:40] Y y was the Delta so big on that. Like what was the story with the prior owner. Why did they have so much meat on the bone there?
Dan Kreuger: [00:32:47] I mean, I'm not exactly sure what that delta-like why it was so big, but they do base that off of the median income of the locality. So I'm not sure it's probably pretty rare that that Delta is that big because I've looked at a few like deck properties in Dallas and other places. And it was like, OK, well, you can only raise the rents, you know, maximum fifty dollars for the next 10 years. It's like, okay, well we're going to pass on that one just for our listeners.
Dan Kreuger: [00:33:16] Like Anthony mentioned, primarily people who are are on the passive side. So they might not appreciate how big of a delta that is. But if we're looking for deals out there and we see seventy-five to one hundred bucks of upside, that's exciting for us. One hundred and fifty to two hundred is amazing. I've never seen a five hundred dollar delta before that since. Yeah. We, we look for about a 20 percent delta. So you're dealing, you know, like a hundred percent and that's also kind of feel like unicorn deals.
Seth Bradley: [00:33:45] Yeah. Well, I don't think we're going to be able to. Yeah. I don't think we're going to push those rents up to that five hundred dollars more.
Dan Kreuger: [00:33:51] I mean over eight years you could probably make some serious headway. So yeah. Sounds amazing. So just out of curiosity, I don't know if you could talk about details, but what are these returns look like as far as IRR for the whole period, for the past investors? I'm guessing they're pretty juicy.
Seth Bradley: [00:34:07] It's really juicy.
Seth Bradley: [00:34:08] It's twenty-two point two percent IRR over an eight-year hold. So that's really high.
Dan Kreuger: [00:34:15] Given that hold, are there any limitations as far as,, being able to do like a cash Al-Rifai or something on a low-tech building? Is it kind of like you buy it, hold it, or can you still take advantage of that at some point?
Seth Bradley: [00:34:28] Now you definitely have to get approval, government approval to change ownership. So when you sell it to the new owners has to get approved by the government. It's usually not too big of a deal. But as far as refining and things like that, there's there are no limitations.
Anthony Vicino: [00:34:41] Okay. And did you guys have any kind of like, preferred return or utilizing preferred equity in the structure?
Seth Bradley: [00:34:47] Yeah, we had seven we have seven percent preferred return. I guess that is twenty-two point two percent IRR equal out to about nine point five percent cash on cash over of the term.
Anthony Vicino: [00:34:59] That's amazing. That's great. Those are great returns right there.
Seth Bradley: [00:35:02] Yeah, it's a killer deal. And you can actually you can find stuff like this in Winston-Salem. It's a really great market.
Dan Kreuger: [00:35:08] Yeah, I'm going to look at I mean, be down there because we're folks up here, but just kind of moved in, kind of dig in. Yeah. But sounds like we're relocating. Yeah. I mean, I love that that that that kind of sleepy market thing.
Dan Kreuger: [00:35:23] Right. You know, you're in a space that isn't on the top list that everyone's talking about, that everyone's running, that that's kind of like what we've got in Minneapolis, St. Paul. You know, we don't have to compete with a lot of out-of-state capital coming from the coasts, you know, bidding things up. So it sets you up really nicely to find some really great opportunities without a ton of competition. Yeah, fantastic.
Seth Bradley: [00:35:45] Yeah. Yeah, for sure. It did get Winston-Salem to get ranked by already Matrix number six projected for the highest projected growth, though, in this coming year.
Anthony Vicino: [00:35:56] Yeah, and it's interesting to me because, you know, our market, the Twin Cities, it's always in like that five to 10 ranking in these top 10 list.
Anthony Vicino: [00:36:06] And I find that people like kind of gloss over once they get past, like the fifth ranking and everything between five and 10 people just ignores. And all they talk about is like San Antonio, Austin, and like these hot, hot markets and everything else in the top ten is like Mad's. It's tertiary. Yeah. Yeah. Forget about it. Number no, not that big five.
Anthony Vicino: [00:36:29] Oh no. I love it. That's, that's super cool. I'm, I'm curious, how did you, how did you get hooked up with these boots on the ground. Partners. Like what was your like from a networking standpoint.
Seth Bradley: [00:36:41] Yeah. You know, I think I got an I got to give hats off to to the pandemic and just the LinkedIn networking that just took over last year. And everybody is just networking on LinkedIn and getting on Zoome calls and, you know, meeting it used to be weird. I mean, two years ago, if you met somebody on LinkedIn messaging or something, it would have been really strange. But now it's just the way that people meet. Right. Let's get on as some callers get on each other's podcasts and then eventually you meet each other face to face. So that's kind of what happened.
Seth Bradley: [00:37:09] We just knew each other through LinkedIn, and I lived in Charlotte, North Carolina, for a few years. So the last time I visited, therefore, we had a training session for the gym that I own out in Charlotte. So we ended up meeting up while we were out there.
Anthony Vicino: [00:37:24] Very cool. It's kind of like online dating, you know, 20 years ago, if you found somebody online and you told people like, oh, we met on a dating site, like, you're the weirdo, but now it's the only way to meet somebody like you, try to meet somebody at a bar like Noé. Now you don't meet people in person. I have learned on LinkedIn, that sort of thing. It's crazy how things have changed. Yeah. Yeah.
Anthony Vicino: [00:37:44] We just adapt or we die, right. Yeah. So so. Seth, man, I appreciate your time. This has been a fantastic conversation. Before we let you go that, let me get a good book recommendation out of you, a man.
Seth Bradley: [00:37:56] So Robert Soldini has got a few really good books, though. The most recent one I read was Dissuasion. It's really awesome. Is about, you know, trying to have influence on people, you know, before you actually state what you're going to state with body language or kind of some pretext or something like that. So that's a really great book. And I mean, onto a second book. And I don't know which one came before the other one, but I'm on to his other book, Influence right Now.
Dan Kreuger: [00:38:20] Yeah, influence with information. Yeah, I was going to say those both were on my list to read like almost two years ago and I forgot about them.
Anthony Vicino: [00:38:29] Oh man. There's like influence is pivotal. It's landmark stuff. It's really great. Persuasion is really cool in terms of setting the frame. Like we don't even realize how easy it is to like to manipulate or influence people's decision making. I want to share this interesting study that they did with people on the street where they walked up to just people walking on the street and they had a cup of coffee and they said, hey, can you hold this for me real quick? And then they just like, you know, reaching their pocket, pulled out their phone and then took the coffee back, said thank you and walked away. So I took like two seconds. Right. The only difference is they went to half of the participants and they gave them coffee and the other half gave cold coffee. And then about 20 minutes later, as these participants were doing something else, like walking into a mall, somebody walks up and says, hey, I'll give you five dollars to read the short story. And so they read the short story and then they're asked to rank the protagonist in the story and say, give me one word that, you know, identifies how you feel about this person. And the people who are given the copy said things like warm or generous. And the people who are given the cold coffee said things like cold or distant.So just really crazy stuff like precision, the Robertsdale, like brilliant. So highly recommend it.
Dan Kreuger: [00:39:42] So so I should walk around giving people warm things up.
Anthony Vicino: [00:39:45] I want them to like me as I'll take more time. Then you give them up, you give them a bomb. Pop noted. That's the cleanest way to my heart. At least give me a bump up here. You got a little success before we let you out of here, man. How could people get a hold of it if they want to? They want to touch base.
Seth Bradley: [00:40:01] They want to hear more from you, sir. Man Check out the podcast. Go to passive income attorney Dotcom. I'm on all social media platforms as well. Steph, Paul Bradlees, the handle on everything. I do have a great lead for you guys. And check out it's called the cash flow calculator, especially for passive investors. You can plug in all your past investments and see how they're all going to kind of come together and check out over a 20 year period to see kind of your cumulative returns and things like that. So it's pretty sweet. Yeah. So check that out at intelligent passive investor dot com.
Anthony Vicino: [00:40:31] Perfect. We're going to put a link to that in the show notes. So if you're listening to this, you're on the treadmill. You don't have time to write that down.
Anthony Vicino: [00:40:37] Just go check out the show notes afterwards and pop over there and touch base. We'll listen to the podcast. It's fantastic. And leave it to review because that's a great way just to spread the love and let him know that he's doing an awesome job. So I just want to thank you again for being here for you guys at home that have joined us. Thank you. Thank you.