Digital Real Estate: The Future of Passive Income

"RAISE CAPITAL LIKE A LEGEND: https://offer.fundraisecapital.co/free-ebook/"

What if there was one move that could scale your investment brand globally, unlock liquidity premiums and monetize your entire community?

See, this episode opened my eyes to the future of investing, and it all starts right now. 

Subscribe on YouTube:
https://www.youtube.com/channel/UCTOe79EXLDsROQ0z3YLnu1QQ

Connect with Ryan Miller:
Linkedin: https://www.linkedin.com/in/rcmiller1/
Instagram: https://www.instagram.com/makingbillionspodcast/
Twitter: https://twitter.com/_MakingBillons
Website: https://making-billions.com/

[THE GUEST]: Tyler Vinson is the CEO of REtokens, an innovative real estate tokenization platform and digital ATS designed to transform the way people access liquidity and invest in real estate.

[THE HOST]: Ryan Miller is an Angel investor, former VP of Finance, CFO of an insurance company, and the founder of Fund Raise Capital,  https://www.fundraisecapital.co where his strategies helped emerging fund managers and deal syndicators to report raising over $1B following his strategies.

Transcript

Ryan Miller  

My name is Ryan Miller, and for the past 15 years, I've helped hundreds of people to raise millions of dollars for their funds and for their startups. If you're serious about raising money, launching your business or taking your life to the next level, this show will give you the answers so that you too can enjoy your pursuit of Making Billions. Let's get into it.

Ryan Miller  

What if there was one move that could scale your investment brand globally, unlock liquidity premiums and monetize your entire community? See, this episode opened my eyes to the future of investing, and it all starts right now. Here we go.

Ryan Miller  

Welcome to the show. 

Tyler Vinson  

Ryan, honored to be here. It's just recently, I've been able to check out the Making Billions podcast, and it's really clear that you're able to bring a lot of value out for your community, and they are the type of people that appreciate leveling up and getting that competitive advantage out there in the marketplace. So happy to be here. 

Ryan Miller  

Yeah, it's great to have you, man. So let's jump right into it. So you know, on some of the things that I found, you've been in this industry for a long time. You once tokenized a church in Colorado, so we got to hear this story. How did you convince both the pastor and the SEC to let you turn sacred pews into tradable digital shares without sparking outrage or even regulatory issues? 

Tyler Vinson  

Yeah, it's a great question, and I really can't take any credit for convincing anybody, because what happened in that scenario is the pastor contacted us. He didn't know much about real estate. In fact, he didn't know anything about tokenization itself, but in the pastor's words, he just through prayer, felt like the Lord was telling him to tokenize and that's what he told me when he called me up. I actually first tried to help him in different paths, I wasn't sure that tokenizing the church was really the right thing to do. There's as a nonprofit, there's various ways to do different things. And typically when we tokenize real estate, we're talking about creating a security. And the more we talked that out, and I realized it was, you know, his objective to involve the community and both the different ministries and church goers and just a lot of people. It really started to sway me the other way, that maybe tokenization is a great fit for what he's doing. And in regards to SEC regulation, because it is a security we structured that under, I should say they structured that under Reg D, 506C, private placement, which allows him to raise capital under that exemption and so that's how we navigated the regulatory piece of it. 

Ryan Miller  

That's incredible. So what was the outcome of that? So you got it set up, you did a lot of things. This is a really interesting piece of real estate and project, if you want to even call it that. So, so what's going on? So what's the outcome? How did that work, once you got it stood up, you issued the tokens, what, what happened with the asset? 

Tyler Vinson  

Yeah, that one's still in process right now. I've talked to the pastor recently, and they're still completing that offering, and they're full speed ahead over there. So super interesting, if people want to look into that case study. And then, of course, when you tokenize a church like that, you're going to get all sorts of reactions. Most, all of the reactions were positive. Some weren't. And you know, they felt like that. They were mixing, I guess, business and religion potentially, right? And so it was interesting to navigate that through all of the media and the different things being said. But all in all, pastor was very excited, brought a lot of attention to his ministry, and he's getting a lot of people involved in what he's doing, and that's really serving his mission, which is what we want, is we want folks to be able to accomplish what their goals and objectives are with with tokenization, the it's designed to enhance what they're already doing.

Ryan Miller  

 Yeah, and I remember talking to you before, when we first met, and you're telling me this story. I think it's so cool. And the reason why I bring this up is you're right that could go it would take a little brave reef my words, not yours, but just to take that on, just because of the community element. Some people might agree. Some people not. But one of the things I found cool is it brought together multiple ministries in a great community project. 

Tyler Vinson  

Yeah, it really did. And again, fundamentally, this is what the pastor and the ministries were already doing. It just allowed them to do it in a whole different way, where now people could actually participate in the ownership of that church, not only different ministries themselves, but also church goers. And they really look at it as a legacy investment, where families may go there for generations, and that is an asset that they could potentially hand down for generations or in the future, donate back to the ministry. It just adds a lot of flexibility to what they wanted to do with a lot of inclusiveness, because it wasn't only for the church or only for the community they really wanted, although that was the primary driver, they were open to whoever wanted. It to participate, and what they were doing. 

Ryan Miller  

Brilliant. What a cool project to bring communities together. And whatever those communities are, who knew, right? So it's you can see that it's so much more than just doing transactions. It's just about bringing people together to do something really cool. So you know, with that said, you've been in this 23 years, which tells me you've lived through the 2008 crash. So I'm curious from that, during that time being in a real estate business that was, that was a tough time to be in real estate. Talk about some of those moments in that time in your career that have shaped how you structure deals today. 

Tyler Vinson  

Yeah, back then, you know, 2008 was definitely a big deal. I actually got into real estate investment, right about what 2002 somewhere in there. And it started out great. The market was pretty strong back then. And then, of course, in 2007and in my area, in the Pacific Northwest, 2008 is where it really hit home. And I learned a lot about leverage at that point in time. I had, you know, was learning from some folks in the space, and worked with a company that was working with a lot of leverage, and, you know, frankly, added speculation to real estate, which I don't think is ever a good idea. When I say that, I mean that, you know, rents would continue to go up, the prices would continue to go up. And it's so funny at these investment cycles, how people rent and repeat on that. But that really did shape the rest of my real estate investment career. I had some tough years after the great financial crisis. There 8, 08, 09 but in in back half of 2009, 2010 I came up with a real estate investment model that I still use to this day, and it really did form my opinion on how to move forward, how to be smart with leverage, making sure I was never over leveraged, keeping cash flow as the main component of my deals. And for me, when it came to leverage, it really shaped my thinking around long term leverage, and that can be hard to do in the commercial real estate world. So I got into a lot of creative deal structure to ensure that that we mitigated those risks. For example, most you know, banks will do five years, maybe seven years, on these commercial loans, but I would structure them with the seller involved and private investors involved, and we could extend it far beyond that, so we weren't ever going to get caught up and forced into a market to either sell or refinance if it wasn't in the best interest of the asset in the Investment Group.

Ryan Miller  

Remember, you tell me a story about someone, and I'd love for you to share about someone who wanted to invest, but maybe they were accredited, maybe they weren't, they weren't sure if they had enough money. Maybe walk me through a little bit of that and how that shaped what you're building today.

Tyler Vinson  

Yeah, that was kind of a common theme for many years. You know, at 2010 there, I started really building a nice sized multifamily portfolio, and got into commercial and storage and office and had accumulated a multi million dollar portfolio for myself. And, you know, just in general, real estate's illiquid, and as I was running businesses, I felt like that was kind of a problem to be solved, but continuously, you know, people that I knew, the story you're referring to was, was a friend from high school who wanted to get involved. And in fact, that particular story was, I was coaching my daughter's soccer team, and I'd come off the field, and this good friend of mine from high school comes up and says, hey, Tyler, how you doing? And after we exchanged big old hubs, we were good friends. She says, it's so cool to watch what you've done in real estate and the success that you've had there. She said, me and my husband, we've been working hard and we've been saving up, and we would like to invest with you, and we just kind of locked eyes, and then she answered, but we don't have enough money, do we? And that absolutely broke my heart, it really did. It wasn't the first time there was a story like that, but I wanted it to be one of the last. It was right about that time that I was introduced to blockchain and how some of the technology that was out there was changing, how ownership could move, where you could make the ownership of these real estate investments digital, and if you made it digital, then you could do a whole lot more with it. And that is really what shaped the combination of that, the fact that I had my own challenges with wanting to access equity that was locked up in real estate, and I had people around that wanted to get involved. They couldn't, because I was I could only take accredited investors, $50,000,  $100,000 minimums, and they just didn't qualify for that. And so that really became the genesis of me saying, you know what, I need to change the way that this is done, or be a part of that change. And so that's really where I made the commitment to found a company that was going to do something about it.

Ryan Miller  

And so now you were hybrid between at the time, they would call it hybrid. Now it's starting to be like an act, just a cool way to do it. But now we're starting to tokenize real estate. There's blockchain, and now we're moving it, and now that's where from what you've told me offline, that was kind of the genesis of what you're doing today. Was almost like a heartbreak where you wanted to help a friend out, they weren't sure if they could do it. You knew you had deals that could help them, right? There's a lot of rules, and I don't have to tell you that, of the kind of investors you can let into deals. So then you built this real estate blockchain platform that allows people to invest all because you were trying to do the right thing and help people out, I absolutely love that. So I would say you're one of the experts in that on tokenizing real estate. Talk about how you step by step, walk through, how do you set up a fully compliant tokenized real estate deal? 

Tyler Vinson  

Yeah, absolutely and your listeners will be the star of the cocktail party after this, because this will give them a real good idea on how to make the ownership digital. What's actually happening when we tokenize first? Let me just say that tokenization in its most simple form, is really just making that ownership digital. We're taking those LLC membership units or those shares that you typically see in a real estate syndication, and we're just adding a digital component to it. So I don't want people to get too lost in the term tokenization or blockchain, because to function in this world, to actually benefit from it, you really don't need to understand it. So that's where I'll start. But we'll geek out a little bit, and I'll talk about the technicals of it. 

Tyler Vinson  

You know, first and foremost, these are securities, and that's a big part of it. So when we talk about getting non accredited investors involved, we're still needing to follow securities regulation. We've just built an ecosystem that navigates that to get to that end objective and I'm happy to get into that, but let's, let's answer the question. So the first thing we want to do is have a token strategy meeting with you and make sure that the reasons you would want to tokenize, or some people call them tokenomics, but your strategy, it makes sense for what you're wanting to do with the digital ownership there. And people have different reasons they do that, that's really going to be the first step most of the time. The second step is a securities package. I mentioned that these are security so we need to get that legal package that you're going to see with most private placement offerings. A lot of what we work with right now are Reg D, 506C. So I'll just use that as an example of private placement. So we're going to get that ppm, that op agreement, that subscription agreement, you know, we're going to build out the offering memorandum. We're going to do all of those things, and then working with a platform like ours, once we receive that legal package and we've got, you know, the marketing material that you want to use, we on our platform, we build that out. Because what we're going to do is we're going to put that investment out there, available for investment to everyone who visits the marketplace, and that's a really cool feature. Once we get that legal package, that's when we're able to mint the real estate tokens and put them on the blockchain. So once we've minted the real estate tokens and put them on the blockchain, they're available for distribution. So as investors invest in the deal, they can be distributed these real estate tokens or security tokens on our platform, for example, we've got integrated custody accounts and things like that. But one thing that's really cool about digital ownership is you could custody them yourselves. Now we're built for institutional and they have to have third party custodian. So that whole web three infrastructure is built in back there with the transfer agent, with the escrow accounts, the custodial accounts, and the ATS matching engine, and all those things talk in kind of a web three infrastructure. You don't know what, need to know what any of that means. What it means for you is you'd be able to move things around like you would an online checking account. It's very much what we call a web two experience. So if you're used to online banking or some of these platforms, that's what your experience is going to be like. That's just kind of what's going on in the back end. And what we just just just described is taking an asset, tokenizing it, making the ownership digital and making it available to buy, sell and trade on what we call web three rails. 

Ryan Miller  

Brilliant. So what are maybe some key factors of success here? What would you say? 

Tyler Vinson  

So there's four different reasons that folks will tokenize really. The number one right now in the space is they want to be innovative leaders that has different benefits to different people. So when we talk about the benefits, we're not often including that, but I've found that that is really a driving force. We've got people that you know are in the apartment space, or people that run large manufactured home parks and things like that, and they said, we want to be known as the innovative leader in the space. We know that everything's going to be tokenized. We understand the future is digital. We understand there's going to be digital assets and digital currencies, and we want to be on the forefront of that and that we feel gives us a competitive advantage. The other benefits that we normally highlight is when you when you raise capital as a syndicator, you're normally limited to what your network is and what your individual promotional efforts are, but when you're working with a platform, and in particular, say, a broker dealer type platform, you can put your investment out there available, really, for anyone who qualifies that qualifies for that, to be able to invest in. Now, securities law plays in that. So you're going to potentially have, if it's a Reg D, you're going to still have accreditation and KYC and all those things, but they're all integrated right into the platform there, and you can have that exposure globally. 

Tyler Vinson  

The big one to me, the second one is the potential to trade on a secondary market. This is where you can use something like 144, rule 144 to take those Reg Ds and actually sell and trade with non accredited investors in the secondary marketplace and that does two things. It makes the real estate asset illiquid, or at least it gives it a pathway to liquidity, because you get both the GP and the LPS can list their shares or their tokens on this marketplace in whatever quantity they want. So be that harvesting profits, be that exit a deal, whatever they want. And on the other side, you have investors that normally never have access to these deals, that now have access. They got to go through KYC AML, but they can get involved in these deals at low dollar amounts that they typically could not get involved with so it really levels the playing field as far as access goes. 

Tyler Vinson  

And then, thirdly, I know a lot of my real estate syndicators out there probably say, Well, I don't want 1000s of investors in my deal. I don't want to, you know, have to manage all of that. And that's where the tech comes in. You can program compliance into the tokens, and we've got all sorts of excellent tech features, including the blockchain infrastructure that allows for easy management of a large amount of investors, because at the end of the day, the goal is for these real estate shares to trade just like stocks or crypto, and that's what we're doing here with the marketplace.

Ryan Miller  

Hmm, brilliant. So, you know, tokenizing it, you got a lot of investors. Potentially, you have all kinds of things, legal compliance, there's a lot baked into it. Now, it's one thing to tokenize or digitize, as you said, real estate, but it's sure we can do that. The technology exists, but it's another thing to find a good deal to tokenize. So I'd love to just swim upstream a little bit, because you've been a real estate investor even before you created this platform. So I'm curious on some of your frameworks, maybe talk about some of the frameworks that you've implemented and you'd be willing to share on just vetting properties and just maintaining deal quality?

Tyler Vinson  

Yeah, it's a great question this is where I think we really separate ourselves. You know, any broker dealer is going to have to do the compliance due diligence, and we're no different. We're going to, you know, make sure that the offering is compliant, that's reviewing the legal documents, that's making sure that the assets that are claimed in ownership actually are and there's, there's a long checklist of compliance, and that's what you see. The generalist platforms do that other broker dealers do that. But being a real estate specialty, a real estate exclusive platform, we're going to actually take a look at the quality and the fundamentals of the deal, because as a platform, we want to be known as having great opportunities on the platform, and so we want to look into that, you know, and verify that what they're using for, if they're using projections that that they make sense, if they've got a business plan, it makes sense, or if there is an established cash flowing asset, for example, that those numbers fall in line with what we think the market wants and will buy. We want something that makes sense for the investors to buy, and there's different projects and different returns and all that. But to over generalize, let's say we're just talking about an apartment building that somebody's owned for a couple of years, we're going to look at that cash on cash return. See what that cash on cash return is, what that vacancy rate is. We're going to take a look at kind of the deferred maintenance part of that, see what the overall return on investment projections are, and make sure that they're in line with the message that the issuers we're sending. Make sure that we feel like we're putting something that investors are really going to want invest in in the platform, and those are things we look at as a real estate exclusive platform. They give us an advantage, or I should more accurately say, give our investors and our issuers an advantage. 

Ryan Miller  

So what would you say are some high level components of a good deal? So you've seen a lot of deals come right? So you said first thing we do is review your strategy, make sure your strategy is sound. So obviously, folks, if that sounds right for you, make sure you have a good sound strategy. But from what you've seen, what are some types of investments or elements that make for a good investment? And typically, when I say good investment, it's good for the investor. So what are some of those things that investors you're noticing like to see when it comes to these kinds of deals?

Tyler Vinson  

 Yeah, what I love about a marketplace like this it hasn't been available in the past, is the ability to diversify. So when we're talking about real estate, we'll just talk about three buckets here, to again, oversimplify, one bucket is going to be cash flow. What kind of cash on cash return or cash flows involved? And depending on where you're at in your investment cycle, that may be the number one priority for you is, I want to maximize the cash flow here. So you're going to look at that. That's a metric that we're going to want to highlight. Another one is an equity play. So if somebody's doing a development or maybe a repositioning on a piece of real estate, taking it from a C class to a B class. Those projects don't cash flow in the beginning, but they have a very, very strong equity play on the back end. So while you may not get that cash flow, your overall return may be better than just the cash flowing deal. And then a third one that that is beautiful about real estate is you get, you get tax advantage, and now we have bonus depreciation that's back. We already had, you know, depreciation and amortization on these buildings, and that offsets the income, can offset the income that you receive from the building. And so maybe you have really strong gains on another piece of real estate, for example, and you need to offset that income. You may choose to invest in a property that is doing what is called a cost segregation and accelerating that depreciation. Real Estate's one of the assets that you can actually put money in your pocket, but your tax return shows a loss. And so that's an example of what somebody might look at when they're looking at the marketplace and some combination of that. Cash flow, equity tax benefit, or where's that balance for me, where it's got a cash on cash return that's acceptable, it's got an equity play here, and I'm going to get some tax benefit from it.

Ryan Miller  

Awesome. So those are the nice ones that you've seen come across your way, I love it. So I'm just curious about that. You can talk about how the ATS folds into that, how it helps investors get some liquidity, let's really unpack that. How does that work?

Tyler Vinson  

Yeah, well, we're in the very early innings. What we really want to do is create the ecosystem and the pathway to unlock this liquidity. I was just in a event in Dallas, and was talking to somebody that has a $10 billion real estate portfolio, and that's exactly what he asked me. He's like, you know, what are the benefits here going on? And this gentleman has no problem raising capital. So even though, you know we can participate in that initial capital raise, and there's all sorts of benefits there, for him, it was the secondary market, like you're talking about. And I said to him, because I know he has a huge YouTube following, I said, how many of your YouTube followers can actually invest in your deals? And that that was a real show stopper for him, because it's because most of them can't. So he's got a community, he's got a large following. He's got a lot of people that would like to invest. So what somebody like him is able to do is tokenize his portfolio, bring it on to the secondary market, assuming it qualifies for that, you know 12 month season and so forth. And now that whole community can not only participate, but they can trade with each other in this fashion. So LPS have a pathway to liquidity if there's a buyer on the other end of that, those buyers have access to these deals from this person that they normally cannot invest with, and that just creates a whole new level of scale. And then when we consider the fact that the secondary market has global potential, because you just have to go through KYC AML to participate in the secondary marketplace, it allows these issuers, these syndicators, to scale their brands at a level that just hasn't been available in the past. And at the same time, allow school teachers, firefighters and the server at their favorite restaurant to participate. 

Tyler Vinson  

What, one example I like to give is as let's say, you've got, you know, you this could be a single mom, a college grad, or maybe even a baby boomer that hasn't quite saved for retirement. And they move into an apartment building, got a new job, and they're making some money, not accredited, very limited options. I mean, they can invest in the stock market or treasuries or now crypto, but real estate is normally not on the radar. So they live in their apartment for a little while and what happens after 12 months, rent raise? Normally, every 12 months they get a rent raise, and they don't take to that too well, right? That's normally not a good thing for them. And then if we're in an inflationary environment like we've seen in the last five or six years, you have those that have assets gaining a lot of wealth. And there's nothing wrong with that, believe me, I enjoyed that as well, but those that don't have assets get pushed down the other way, and that's just not sustainable over the long term. But now with tokenized real estate, let's say that that that person with the new job has has saved up 1000 a few $1,000 and they're interested in investing, and they, you know, get on a platform, let's say REtokens.com, something like that, and they see that the building that they live in is is on the marketplace, and they can actually invest in that. So now they're able to invest in the very building that they live in. So now when the 12 month piece comes in, that rent raise comes, yeah, maybe they don't get super excited about the rent raise, but guess what, they caught a piece of that of everybody in the union. And normally when the rent race comes, hopefully the net operating income is going up in the building, which means the value of the building goes up, which means their token value went up as well. And if we do get a highly inflationary environment in the future, which is very possible like the past. Instead of getting pushed down the other way, they actually own a piece of the real world asset and can actually ride that inflation wave. And what we've seen with, say, the crypto industry, is when people are able to get involved with the investment, even at a small level, it makes them really interested in educating themselves on how it works. I think that's one great thing that that crypto did, even though there's a lot of you know, potential problems in that space. One of the nice things is it started getting people to ask questions like, what is money? How does this fractional banking system work? You know, why, why, why are things happening the way they are? What are the companies behind this? And that's the same for real estate. If they're able to get involved, they can start investing in and some of them will choose to actually do their own deals and raise capital for it that way. So it's still fantastic for it's really a win, win, win across the board, it's a win for the issuer or the syndicator, the sponsor, because now they've unlocked liquidity and scaled their brand and leverage technology for automation and compliance, which is always a big one that's that's been part of the problem is, is through this, we're able to automate a lot of that compliance the LPs, who invest originally, maybe you do do an accredited investor only deal. Guess what, they have pathways to be able to sell their shares or their tokens, whether they want to harvest profits, or maybe they have a life event, or they want to just, just live off of it, or maybe they want to invest in other projects that that issuer has, they have that. And then the third win is, of course, for that end investor, and there's going to be likely a delta. Real estate has something called an illiquidity discount, and that means, due to the fact that it's illiquid, it needs to trade for a higher return or a discount on the price. But when you add that liquidity component to it and in a good marketplace, it has the potential to actually have a liquidity premium. So on top of the returns that the sponsor issuer is returning to those initial investors, there's very likely a Delta made when they sell on the secondary marketplace and so everybody wins across the board.

Ryan Miller  

Gotta like that. You know, when I'm fortunate enough to be able to support or help someone like an emerging fund manager as an example, or any deal syndicator, it's like, where do I start? And what I like to say? And this ties into what you said was the best place to start from, from what I've seen, in my opinion, is what I call quadruple F, right, friends, family, fools and followers. And so what's interesting about what you talked about is that unlocks that follower account. Most people know, friends, family, fools, kind of a silly term you throw around, but in this day and age, there's a follower and like that gentleman who had a $10 billion real estate portfolio and a huge YouTube following, and you're saying, How can you monetize? How can you get some of your YouTube followers into your deal? And so you found a way to unlock that fourth F, which is through tokenization and I absolutely love it, brother, you are doing some magical things. So, you know, with that said, I'd love to know just how, how do these assets get traded? Walk me through a little bit of that. Let's really unpack this.

Tyler Vinson  

Yeah, absolutely So earlier, when. We talk step by step on what it looks like to tokenize. I talked about that web three back in where you have a transfer agent and the custodians and the accounts and ATS trading system. So here's how this actually works. We'll geek out on a little bit, and then I'll bring it home to simplify the advantage here. So when you trade private shares of real estate ownership, like this private placement, you need a transfer agent involved. They're still considered the source of truth with the SEC, and they need to make the transfer. You also need to trust who you're trading with, right? And so both the seller of the asset or the token, and the buyer who may be using Fiat, or maybe they're even using Bitcoin or USDC, that's all available on the platform. It doesn't mean the seller needs to accept that there can be a conversion, but they have these custody accounts, or in the web three world, we call them wallets, but you can just sync them as your account, and then when their trade on the ATS, there needs to be a match that says, okay, the seller wants to sell, the buyer wants to buy. The technology makes the match and all of these things need to happen simultaneously for the trade to play take place. So the seller has listed their token on the ATS for a particular price. The buyer sees it. They select that they want to buy that one or more, because the matching engine can obviously do multiple transactions. And so what's going to happen is instantly, the transfer, the custodian, the transfer agents going to send messages to the custodial accounts. They're going to confirm that they have the appropriate amount of assets to do the transaction. They're going to make the transaction, it instantly updates the transfer agent ledger and then you know the blockchain as well, and the match is made. And now the buyer has the real estate asset or the token, and the seller has the cash or the Fiat. And so that's technically how it works on the back end, the experience that we're going to have as users as simply, you know, going onto the marketplace, like any marketplace, you got to create a quick account, enter your bank account information, etc, so it can transact, but you're just going to click a couple of buttons and be able to make the trade. It's really going to be that simple.

Ryan Miller  

Wow. So I and you mentioned that this real estate platform backed by the ATS that doesn't really exist right now, and, I mean, I can't be the only one, but this seems like it's changing how people think about investing in real estate. Are you getting a lot of those reactions with some of your clients when they start to hear what's possible, and are they starting to see how this is literally the future of investing?

Tyler Vinson  

Yeah, there's no doubt about it. There's other digital broker dealer ATS is out there, but they're not real estate exclusive like us, that's what makes us unique. We really felt that that was our place, with our real estate background and expertise that we wanted to make a place for Main Street versus Wall Street. We love Wall Street, right, but a lot of real estate investors are Main Street. In fact, Wall Street likes to get into Main Street investment and but, but real estate investors are a little more tribal, in my opinion. So we wanted to have a marketplace where when you go to it, you know you're investing in real estate. That's what's on there, you're able to look at them in that particular fashion. And so yeah, the RWA space, or real world asset space, that's what we call it, when we tokenize these real world assets, is absolutely taking off. And this real estate, in my opinion, is one of the industries that needed it the most, because prior to a digital secondary marketplace for tokenized real estate, to try to trade these private shares of real estate, first of all, you're not really going to do it in any small fashion, because you're getting their attorney involved, your attorney involved. You're negotiating this, you're doing manual paperwork, it takes a long period of time, you know that's why it doesn't happen. There's not really a marketplace for that. But now, with the platform, a compliant platform, with so much of that compliance automated, it's much easier to do that and do it in smaller amounts and and people love that. And like I said, a big part of it, I was in some meetings today, and they were asking, well, what should I, you know, price this token at, and should we fractionalize it and everything? And he ultimately decided he's going to do $1,000 shares on the secondary market. And you know what was cool about that is it would allow people to invest at the $1,000 level, which is pretty much unheard of for these are great apartment projects in Texas. And so people could invest in that. But some of the family offices he works with could invest at the 300,000 dollar level or $800,000 level, right? And so it allowed, it gave the deal the flexibility to be able to sell to both in the same environment and that's that's pretty rare. 

Tyler Vinson  

So, yeah, people are excited about that's going to give this brand the ability to scale in a whole new way. And that's what he's excited about, because he really feels like and I agree completely for him, and the other gentleman mentioned that this is a huge competitive advantage if you are able to have a quality brand. Because remember, underlying this is still fundamental real estate, we still want good, fundamental real estate deals, like we talked about before. Well, if people are enjoying success in investing in their brand on the secondary market, right? How much advantage does that give you now on your primary raises, where your investors can see, hey, you know there, there's outlets for liquidity here, I may be able to make an additional delta. This is obviously a good brand. I love that there's a full ecosystem and so they really are excited about the competitive advantage that brings them on the primary not just those secondary benefits. So yeah, like I said earlier, it's long overdue for the real estate industry. There's so many asset classes that have benefited from this digital era of blockchain and digital ownership, and it's time that real estate benefits as well, and private shares of real estate should trade just like stocks and crypto. And I think that's the end result here that we're looking at.

Ryan Miller  

Brilliant. So when it comes to investing, and you have NOI and all that, I'm curious. I know you've told me a few stories, so there was something that you did. I don't want to spoil surprise, but talk about some of the asset appreciation and how some of those token holders have actually benefited.

Tyler Vinson  

Yeah, we're still really in the early innings, where we just got our licensing within the last 60 days. We've just got this secondary marketplace launching in the next 60 days here. But one example I can point to is really the most famous or popular example would be the Aspen coin, which is the St Regis in Colorado. That was one of the first tokenized real estate projects, and it might be the only tokenized real estate project that's trading on a secondary market today. And just to give you an idea, they originally sold those real estate tokens at $1 a piece, I believe. And last I checked, they were trading for around $3 a piece. And because when you, when you tokenize, you're opening up, you're opening up the deal to a lot of pent up demand that didn't have that access. And so that really compresses the cap rates, as we say, or increases the value and that's a great example of a property that's really benefited from tokenizing and selling real estate tokens.

Ryan Miller  

So, so with that, maybe you can share a little bit, because you've been involved in a lot of real estate broker dealer there's, there's all kinds of things that you've been involved in. What are some of those regulatory pitfalls, say, between Reg D, Reg A, secondary trading pitfalls, maybe talk about some of that.

Tyler Vinson  

Yeah, compliance is so important, and some people you know don't really give it the attention that they need, and certainly that can come back to bite them, and it can. It can be bad for investors too. There's, there's reasons it's in place. Some of the things we see out there is that the documents are not properly put together in the first place. They just are not adequate from a disclosure standpoint. They get nervous about telling investors that they could lose their money, which is always part of the disclosures, and so they're not done correctly in the first place. Another one we see is they get unlicensed people to help them raise capital, and people don't realize that raising capital for a deal or a security like this, for especially for a fee, requires a license, unless you're a general partner in the deal. So we really see that come to play a lot of times. Other mistakes, is not properly, you know, separating the banking accounts. For example, if they're doing an acquisition, they're taking something down, and they take in money from investors and put it into their operating account before they own the asset. Well, potentially, that could be fraudulent, right? And what happens if they don't close on the asset, right and now they have the money, there's a problem, I think, you know, there's one recently in the news. I'm not going to say any names, and we'll see the accuracy of it, because you never know what the media but supposedly, they had raised money in a fund, a tokenized Real Estate Fund, sold those and never actually closed on the assets. And obviously hadn't returned the investor money and so that's a real problem. And so if you're an investor out there, I think that's just more reason to make sure that when you're investing, that you know what you're investing in, you have some education. And in our case, we certainly believe in using a regulated platform, something that these are compliant deals, that, you know, somebody's looked at these and verified, for example, that the ownership is there, because that that fund, that real estate tokenization fund, would have never been able to trade on our platform, because when we did our due diligence, we would have seen all sorts of city violations involved in there. And then we would have also seen that they did not actually own the properties that they said they did so that would never make it to our platform. Therefore, those investors that are likely losing their money on that deal would not be in that same situation, you know, if they if the compliance was properly done, if they were investing on a regulated platform. 

Ryan Miller  

Wow. So this is pretty serious stuff, and I'm so glad you could talk about the regulatory stuff. You know, it's probably not the sexiest side. It is so important we talk about that as well paying people who are not properly licensed to do that. I mean, what, what a mess that can turn into, is just not understanding the regulations, but they are set up to not just protect investors, obviously they are, but also to protect folks who are doing the deals as well. And so I think really understanding that, or having someone, a broker dealer, that you're working with, or other professionals, because that regulatory element is huge, and especially as we navigate that, we had someone on our show who's the former chief risk officer the SEC, and he talked a ton about regulation in the crypto space and how it was neutral, and then it was possibly a little adversarial, and now it's ally. And so the SEC is growing their legs right alongside all the investors and everyone else. And so especially in this sector, it is so important to make sure that you're fully compliant with all of the laws in the SEC so I love that. You know, shifting gears a little bit, I'd love to talk about some of the macro implications of tokenization and how that helps to close the wealth gap. What are you seeing there?

Tyler Vinson  

Yeah, we talked about it a little bit earlier, where, you know, inflation, for example, that can certainly create a larger wealth gap, or access to wealth, building investments like real estate syndications can widen that wealth gap. So we believe by creating this access and the ecosystem for folks to be able to invest, that they will be able to narrow that gap. And then on the other side of it, when you have equity, so much equity, it's estimated about $20 trillion of investment, real estate, private investment, real estate. And in the US that equity just sits idle, right, and when you tokenize it and create a marketplace where it can trade. You add a whole new velocity element to the money and the profitability, where you can move it around to maximize your portfolio. You can maximize your returns, you can diversify in different ways. We talked about that a little bit earlier, and yeah, we really are wanting to spearhead a big part of this ecosystem for digital assets, and specific to real estate. Again, we've seen it in treasuries being tokenized in funds and now stable coins. All of these are part of the future of capital markets, it's a digital world. And crypto stable coins, securities and now real estate will all be able to trade with each other, and should be able to trade with each other, giving investors, you know, maximum choice and maximum freedom in what they're doing with their investments.

Ryan Miller  

Brilliant. So with that said, what are some say three bottom line action steps that someone should be looking at if they want to launch a tokenized offer tomorrow?

Tyler Vinson  

Yeah. So one of the things we would talk about right away is what their goals and objectives of doing that are. I think often in these private placement deals, and in particular in real estate, people will get really complicated waterfalls going and in structures, because they're not thinking about the fact that these may need to trade in the future. And if you have seven different, you know, waterfall layers, you may need to create seven different tokens. And if you've got seven tokens under your particular address, let's just say it's a single building, it's going to be very hard for an investor to decipher that and make a choice through that. So one thing we're talking to issuers about is to think about that for the long run, if secondary trading is something they want to do, and 9 times out of 10, that's a big part of what they want to do is create a secondary trading environment. You want to have a trade friendly token, so you want to think about what investors are going to look at on that secondary market. Maybe keep it a little more simple, so you can get more volume in trading in your token, because the more volume in trading in your token you have, the more likely that that value is going to increase, and certainly the liquidity would increase at that point. So instead of over complicating it, think about the fact that for the next decade or two or three or longer, people may want to trade that asset. It doesn't have to be that way, somebody could still sell the property in total if they didn't want it out there anymore, you still have all the abilities you have under traditional finance and traditional real estate syndication. But now if you could create a brand that has tradable assets, we talked about the scalability of that, and so I think that that'll be different is to think about scale and volume when they're putting these things together moving forward.

Ryan Miller  

That's incredible. So with that said, what's one critical mindset shift that fund managers must adopt in order to win in this game of tokenization?

Tyler Vinson  

Yeah, I think to go along with the scale and volume, you're really able to monetize your community, or your followers, people that are fans of your brand. And so that really is, I think, a shift in how you're looking at things, in addition to the scale and the volume, and you're going to have options for diversification and be able to optimize portfolios in a totally different way, at a totally different speed, and you're just going to want to be on your toes for that. We've got all sorts of technology out there, AI is playing, it plays in our platform and what we do. But that's a lot of what the future looks like for fund managers is being able to use these AI tools and transact these assets very rapidly, including assets like real estate that it typically was not possible to really do that before.

Ryan Miller  

So Tyler, this has been absolutely phenomenal. If our listeners can remember only one takeaway from our conversation today, what would you say? 

Tyler Vinson  

I would say that the future is digital, and opportunity is going to be unlocked on things that it was previously locked away, and the future is one where real estate will trade like stocks and crypto.

Ryan Miller  

Brilliant. So just to summarize everything that Tyler and I spoke about work with a broker dealer just to ensure compliance. The second one is seek for innovative ways, like tokenization to monetize your potential followers. And finally, seek for shifting how you do deals in order to capture liquidity premiums, instead of eating liquidity discounts, you do these things, and you too will be well on your way in your pursuit of Making Billions.

Ryan Miller  

Wow, what a show, I hope you enjoyed this episode as much as I did. Now, if you haven't done so already, be sure to leave a comment and review on new ideas and guests you want me to bring on for future episodes, plus, why don't you head over to YouTube and see extra takes while you get to know our guests even better, and make sure to come back for our next episode, where we dive even deeper into the people, the process and the perspectives of both investors and founders. Until then, my friends, stay hungry, focus on your goals and keep grinding towards your dream of Making Billions.