Professional Passive Cash Flow Investing with Jeremy Roll

Brittany Henderson: 00:00

I’m Neil and I’m Brittany.

Neil Henderson: 00:01

We’re a family on a journey towards financial and location independence. Each week, we interview successful real estate entrepreneurs about their chosen investment strategy, and rated based on how much money it took to get started, how long it took to educate themselves, how passive it is, and whether or not they could do it from anywhere in the world.

Brittany Henderson: 00:19

Welcome to the road to family freedom.

Neil Henderson: 00:23

This week, we sit down with Jeremy roll a full time passive investor in real estate syndications.

Brittany Henderson: 00:30

If you like our show, the easiest way for you to give back is to leave us a rating and review on iTunes, head on over to road to family freedom com slash review for links and instructions on how to do that we would be so grateful. All right, and I thought of us Let’s hit the road to family freedom.

Neil Henderson: 00:55

journey. Welcome to the road to family freedom.

Jeremy Roll: 00:57

Hey, thanks so much for having me, I really appreciate you having me on.

Neil Henderson: 01:00

Of course, we always love talking to you. So tell us a story about how you became a real estate investor.

Jeremy Roll: 01:05

Sure. So it’s actually it goes back a little ways. I don’t know how old people are listening to the podcast. But I’ve been investing in real estate for about 17 years, it’s always been passively. And so that goes back to 2002. And what happened with me that I was I basically, after the.com crash in 2001, I was just sick and tired of the stock market for two reasons, one of which is a little more obvious as a volatility, I’m really kind of low risk guys to watch the market go up and down. 30% a year was not for me. But the thing that wasn’t as obvious. And that bothered me more is actually the lack of predictability. So not knowing where my retirement account is being a day, a year, 10 years, 20 years because of the volatility, the stock market. And the lack of predictability really bothered me. And it just didn’t seem like a good retirement strategy for me, because I’m kind of low risk, I prefer to have more predictability. So I started looking for different ways to invest came across the general concept of cash flow for more predictability. And then I kind of came across real estate to be able to achieve that kind of lowering cash flow, which of course, there’s many different ways to invest in real estate, but I end up focusing on more the lower risk, more predictable cash flow. And that’s kind of what I focused on, since that was actually quite quite a while ago. Gotcha.

Neil Henderson: 02:10

You know, I often hear people talk about an unfair advantage, you know, trying to exploit our unfair, unfair advantages is very difficult for the average person to have an unfair advantage in the stock market, because you have people we have these hedge funds that have massive groups of people that are analyzing the stock at stock market on a daily basis. And even they get it wrong a lot of the time. So I totally get what you’re saying, you know, sort of more predictability and less volatility.

Jeremy Roll: 02:40

Yeah, and I actually have nothing in the stock market right now habits that 2007. So I’m going to make this statement. And I’m a complete amateur. But I believe a very high percentage of trades now are done for high frequency trading, which if you’re not familiar with that, and you’re about to talk to you and to look up that term, delta notice HSG, which is basically robot, right, very smart computer programs with people that have actually pipeline directly with fiber optic cables, I believe, into the stock market, where they actually they position themselves geographically right near the stock market, they have a quicker trade, and they do what’s called front running, which is basically they will buy that they’ll actually see that you want to buy it as an individual But sir, so fast that they actually can buy it from somebody else, and then sell it to you at a higher price in the middle. Even though you say just putting a bid in and just buying it within a second or two, you just happen to millisecond. So when you talk about unfair advantage is not just a lack of predictability, the volatility, there’s a lot more stuff that goes on the stock market that, you know, is quite an interesting, and I think there’s like, I think it did a 40 or 60% of trades are done that way right now. It’s a really high number. So anyway,

Neil Henderson: 03:41

does not I am familiar with it, it doesn’t surprise me at all. And it’s one of the reasons that I my stock investing basically just, you know, consists of Vanguard index 500 funds, you know, I just I stick I have a small amount of money that I stick in there, I’m betting on the the overall US stock market. But as far as you know, my active investing, it’s it’s almost always real estate. So yeah. So we’re big believers in beginning with the end in mind and the power of that. So can you tell tell us what your destination is? Where is real estate? Taking? You?

Jeremy Roll: 04:17

You know, that’s a really interesting question. What I would say is that, I’m hoping it takes me on the same path, but in a better and better way, meaning that I’m trying to grow a snowball of cash flow, and a passive, you know, structure. And I’ve been trying to do that now for 17 years, with a very long term horizon, I’m a very long term kind of song study kind of patient person. And I’m thinking that they in the next 10 to 15 years, my goal is to be at three x cost of living, which, you know, just to put into context, for those, you’re listening, I live two blocks, literally two blocks south of Beverly Hills in Los Angeles. And between, you know, My son, we’re looking at putting the private school next year, the cost of living where I am with kids, and everything else that goes along with this stratospheric, I mean, it’s really crazy. And so to get it three X, you know, cost of living in this area takes a long time. And it’s very challenging. And that’s my whole goal, you know, in the next 10 to 15 years. But on a more simplistic, simplistic level, it’s really just about continuing to build my cash flow snowball, so to speak, and just kind of as that grows, I kind of get more and more comfortable level that everything’s gonna be okay, down the line for me, gotcha.

Neil Henderson: 05:27

So let’s backtrack a little bit and make sure that people have an understanding of the type of investor that you are you are a completely passive investor, can you sort of explain to people what that is?

Jeremy Roll: 05:40

Sure. I’ve been investing passively since I started, I started passively because I was actually working at Disney headquarters, California, kind of middle level marketing brand manager for DVD and VHS for those of you are old enough to remember that. And essentially, I was just too busy at work, it was crazy busy, I was working on like, literally 600 product launches every year. And so I have to go past that, because I didn’t have time to be active. And so passes to me, which I realize is kind of different definition of everybody means that I give up control and exchange for diversification. And what I mean by that is that I’m investing in a deal where I’m a very small key, because I’m pooled with many investors, that typically called syndication or manage opportunities. And that’s kind of a legal term. And so I invest passively, in that I kind of do all my work up front. And then somebody else who is hopefully inexperienced manager is managing the entire opportunity. You know, if toilet breaks, in 200, unit apart building, they got a magic thing that’s going to fix it, I don’t, I never get a call about anything, I literally get a quarterly report. And hopefully a cash flow check, hopefully, it’s going to projections are better. And what I do is, again, if you remember I said I trade control for diversification. So I lack control, because I’m passive. And what I mean by that is that if there’s ever a vote to sell, or some type of other vote for some need, I am such a small percentage vote that it’s kind of not very meaningful, I have no control. But when I get an exchange, is that right didn’t take, you know, let’s say cost $30,000. To buy a house or an investment property, I can maybe put $50,000 into five different apartment buildings with a lot more diversification and just diversification across assets to begin with, in exchange for giving up control. And so that’s how I view being passive. Some people consider passive, the domain and let’s say, a pool of home rental homes themselves, and they have full control over the homes, meaning they can buy and sell them hire fire, property managers finance and refinance. But anytime they own them, they own the title, I actually consider that active because if toilet breaks, and you have a repair, you’re still going to get a call to authorize it as a tenant has to be moved out and moved in, you might get a call to authorize a tenant going in or out. And so to me, that’s not truly passive. My definition is that I literally have no control, and therefore I am passive. And I do that again, and you’ve managed opportunities, and most of what I actually investing is commercial real estate. They’re completely that larger opportunity. Gotcha.

Neil Henderson: 07:53

Okay, so you’re giving up control and exchange for diversity? You know, and often people talk about, well, you want to have a diversified portfolio in in the stock market, which a lot of people know, you know, investing in different industries, you’re investing in different. You may be investing in bonds, you may be investing in international markets, how does one go about diversifying when they’re a passive investor in real estate?

Jeremy Roll: 08:18

Yeah, great question. So I like to think about my diversification in three different ways. So I like to try to be diversified across asset classes, geographies, and operators. Okay. So asset classes, meaning I might be invested in some apart building some self storage units, some mobile home parks, some retail trip center, some office building, some industrial buildings, etc. Okay, that’s just on a commercial real estate side, I actually have investments in a single family time, and even some non real estate, but just giving some examples, I’m actually invested in every single one of those asset classes I just mentioned right now. And from a geography perspective, I like to be diversified across geographies, both because local economies can change over time. But more importantly, there’s a lot of different weather concerns. In other words, you know, if you’re in a hurricane prone area, you may want to invest in a certain asset class, but not others. If you’re in California, LA, you had all your investments in LA, and there’s a really better equation, you could be kind of overexposed. And I could go on and on about, like harsh winters, you know, winter weather. And so, so for me, you got to be diversified across geographies, and operators. That, to me is the most fundamental one, which is, you know, anyone who invested with me off, and I feel very bad. And if they had all their money with them, and they lost all their money that could have been prevented by them being diversified across operators, presumably, right, so they could have had somebody with made off and someone and so I’m not saying that it would, would have not caused a major problem for that person, but they wouldn’t lost everything. And so I kind of use the same approach with operators. Because in any opportunity, there’s always what I call these 1% risk. So you have a fraud, risk of mismanagement risk, you have a foreclosure risk that can happen as many different reasons, and many other risks that are very hard to predict. And so you can have to be comfortable in doing there are a lot of 1% risk that you’re getting involved with, you do invest in real estate. And the way that I like to mitigate them is to diversify those across operators as well. So again, if there’s a fraudulent operator, like I’ve invested with one that I’ve got three or four investments with, that’s not going to be fun, but like I currently in over 70, different LLC that I’ve been in over 100 over time, so it’s also not going to completely take me down like it may have taken down some people with made up so I am actually kind of I call myself hyper diversified, you know, being in over 70 things because I do it full time, I’m able to find those, but that’s not over 70 is probably unrealistic for someone who’s doing it on the side are working full time and try to find you. So it’s those I think there’s the occasion, again, is being diversified across asset classes, geography and operators. Gotcha.

Neil Henderson: 10:45

So when you made the decision to start investing passively, how did you go about getting yourself educated on the strategy?

Jeremy Roll: 10:54

Yeah, so that’s a great question. Um, you know, back when I started in 2002, crowdfunding didn’t exist online. And so accepting opportunities was very challenging. For those of you who aren’t familiar with the space, that the SEC mandates that most of these opportunities be private opportunities, meaning there are a lot, there’s not like use public transportation, and they’re not used public marketing, there’s actually been some new structures that have come into place that allow for that the last five years or so based on some new laws, but I would say a majority of the opportunities still work that way. And so long story short, is that that should be down to I originally learned on how all these work and educating myself or what I call opportunity exposure, that just means reviewing as many opportunities as possible. So if I want to learn about apartments that were once 200 units, or 300 units, I would go out there and try and find as many apartment opportunities I could read, read them all, compare them, see the similarities, differences, and then eventually learned through years of that, as well as going to educational events and local networking events and learning from others. So most what I did was opportunity exposure. And I kind of hold true to that the working day because I’m not aware of any specific book that explains an outcast investor can go you know, evaluate an apartment opportunity really well, most of the books are are actually written for the operators in terms of how they go out go about acquiring a property evaluating and then finding investors. So the difference between today when I started is that I had to go to physical in person networking event, find all these opportunities. Right now anyone who or anyone is accredited investor, which we can get a definition that can actually log on to many different web crowdfunding sites, like realty mogul realty shares, crowd street, and a lot of other large one. And they can go in in an hour in their pajamas, download 10, or 20, or 30, apartment opportunities, print them and have access to them immediately. I mean, these deficiency of that versus what I had to do literally go find people in person at networking events and ask them they had opportunity, that is a huge shift. So I’m not advocating that crowdfunding sites are necessarily the best place for bets are not a method, it depends on your circumstance. But my point is that it’s those are great tools for learning, even if you’re not intending on using a crowdfunding site for your actual investment. So that’s definitely the number one way that I learned. And it’s actually the route that I recommend in terms of it being the most efficient. Gotcha. So log into

Neil Henderson: 13:16

the crowd streets, the crowdfunding sites, download the opportunities, read them, get a feel for how each each business plan is structured, what they’re planning to do, how they plan to make money, and things like that, correct?

Jeremy Roll: 13:30

Yes. And in fact, I would go down to level like you can actually see, you know, what opportunity, so they’re going to have rent growth to 3% for your another one says 4% per year. And the other one says two and a half percent for your why is it because one operators being conservative, the other ones being aggressive? Is it justified or not. And you can start to learn all this by actually comparing like all the specific details, I also want to point out, if you are going to analyze some of the opportunities on the crowdfunding sites, just know that some of the crowdfunding sites will pull investors together into an LLC, man is the opportunity and kind of stay on top of the men, they charge fees for that. And so there’s a difference in returns the projected returns, if you’re gonna invest through a crowd, crowdfunding place, versus going directly in investing with the operator. So don’t I would actually pay less attention to the returns necessarily, and more attention to all the assumptions and everything else, because those are hold constant. In another words, if you’re messing directly with the operator with the crowdfunding sites, but just know that you may find the exact same deal from a crowdfunding site and from the same operator, the returns will be a little bit lower, presumably through the crowdfunding site, because it’s a fees. And and there’s nothing wrong with that. And probably sites actually be extremely helpful. I just want to make sure people know, pay attention to that, and to not necessarily worry about the return, or at least make sure they address them for the fact that the crowdfunding sites may be

Neil Henderson: 14:46

gotcha. And so you mentioned that in order to access these crowdfunding sites that you need to be an accredited investor, can you explain what an accredited investor is?

Jeremy Roll: 14:56

Sure. And that’s, that’s not 100%. true for all the crowd funding sites, they’re non accredited investors, that can also access some of the crowdfunding sites like realty mogul and realty shares, who have specific funds that were designed, and that allow non accredited investors, but they cannot access the actual individual opportunities that there are a non accredited investor, only those specific funds. So an accredited investor. And by the way, this is just, there’s no, you don’t be a member of the accredited investor. It sounds like a you know, it just an SEC definition. So my understanding of it, and I should have really started this whole thing by saying, you know, I’m not an attorney and accountant or an investment advisor or financial advisor. So anything I’m sharing today, just my perspective as an investor, but you’re also Yeah, I mean, it’s important people know, so. So my understanding of a current being an accredited investor is that either you have to get it that you know, if you’re single, you have to made at least 200,000 for the last few years and expect to make 200,000 minimum this year, or you have to have a net worth at least a million dollars, excluding the value, your primary residence is just network or if you’re married and file your taxes join, then you have to have made joint 300,000 or more for the last two years and expect to make 300,000 or more this year, or you had to have a combined network of a million dollars or more excluding the value of your primary residence. And so being in one of those two buckets, whether you’re single or joint qualifies you as being accredited just because you just under the SEC definition. Gotcha.

Neil Henderson: 16:19

And that’s what you typically for many of these opportunities, you need to be verified as an accredited investor, correct?

Jeremy Roll: 16:29

Well, for most of the crowd, I think for all the crowdfunding sites to look at individual opportunities right now, I’m quite sure that you need to be accredited to access those four, the crowdfunding sites that have the larger funds that are open to non accredited investors are structured in one way you can access those, but you’re not going to get access to like really reviewing a lot of opportunities, etc, unless you’re an accredited investor.

Neil Henderson: 16:48

Gotcha. Alright, so that sort of leads us into the idea of how much money someone would need to get started with passive investing. If someone was starting off, maybe let’s say they’re not, let’s go with two different scenarios. One for someone who’s an accredited investor, and one for someone who’s maybe a non accredited investor, how would they get started passively investing in real estate?

Jeremy Roll: 17:12

Yeah, for a non accredited investor, because it’s a little easier? Well, actually, that’s not true that it’s similar. So there’s two ways that I kind of see as the path of least resistance. One way is they can actually log on to realty mogul, or realty shares, or maybe a couple others online who have fun, diversified funds that don’t make sure that the cross a lot of properties, and they’re designed to take non accredited investors, their minimum investments are very low, I think they’re 5000, or maybe even lower, I’m not 100%. Sure. But that is a very quick way for a non accredited investor to get involved at a very small amount, okay. And of course, you got to read up on those funds, see how they work, make sure you’re comfortable with all the legal terms, everything else, but they’re there. And they can be researched very easily online. The other option for non accredited investors is that some of the private opportunities I mentioned you can find networking in person actually allow or non accredited about. So the other option is to go out there and network as much as possible. So some of your local real estate events, maybe some of your real estate conferences, and you will start to find if you ask around, you’ll start to find opportunities and build a network. By the way, another option is for non accredited, I don’t think it’s quite an easy to find it online, but bigger pockets calm, which I’m not affiliated with, but it’s a very large resource for real estate events. I think it’s a large largest online resource for real estate investors in the US as far as forums and blog posts. So you can actually go up there and maybe even ask the question, I’m not a credit investor, I’m starting new, where do you think I can find opportunities and see what people say it’s probably going to get some good answers. There are some suggestions for non accredited for accredited, definitely, you can find some opportunities across all the crowdfunding sites and like realty mogul realty shares and some others. And then you can also go to these networking events and trying to find those opportunity. Another option is that in some of the newer opportunities that are allowed to publicly market to solicit accredited investors, you may find some opportunities now advertise online, just come across them randomly for you may find them for example, on bigger pockets where they actually talk about their opportunity. So allowed to do that when is the last be publicly marketed. And that’s only for accredited investors. That’s the requirement in exchange for them fill out the public and Mark, there’s a few other requirements, but just simplify, in those cases, just know those if you’re going to invest in that type of structure, which is called a 506. See, like Charlie version of the more private structure, and I’m just generalizing, most of them are 506 be like, boy, if I was 60, like Charlie, that takes the credit investors only allowed some public solicitation or public marketing of accredited investors. And they require that you actually prove that you’re an accredited investor, by getting verified by a third party accreditation company, they’ll actually require you submit either tax returns to prove your income, or financial statements or some brokerage statements or whatnot to prove your network. So just know that if you’re going to go into anything that’s publicly marketed, probably they’re going to have that requirement at the moment, and therefore it just an actual hoop to go through. Whereas if you’re messing in a private opportunity, like a five would be like, boy, you’re accredited. Often, you’re testing and signing, that you’re accredited, and you’re checking off a box that you qualify under, but you’re not having to go through other hoops of proving that you’re accredited. And so just a little sidestep, I’m sorry, I could sound confusing, but it’s probably good to No,

Neil Henderson: 20:18

no, no. And, you know, we’re not expecting people to become experts in sec regulations right here on this podcast. So just understand that the the basic difference is accredited versus non accredited, advertised opportunity versus not, you know, a completely private opportunity. Those are typically that’s typically what you’re going to face, correct?

Jeremy Roll: 20:38

Yes, yes. And, of course, I am a very big proponent of networking. I mean, networking has changed, my life has gotten me access to all these opportunities that built in very large network over the last 17 years, I’m very happy, very lucky to have now. And it is, I think about every opportunity I’ve invested in, it’s literally through some type of networking effect. And I don’t even think I’m exaggerating, because I have to find everything through my network involved privately. market is so networking is changed my life and cash flow, it changed my life. And so if you put a lot of effort into your networking, you will begin to find good opportunities. And one thing that’s interesting about what you started this podcast with about having that unfair advantage, is I feel like you can get unfair advantage is probably not the best way to describe it. But you can certainly find, you know, start to find what I call unique deal or have access to more opportunities, which will eventually result in more unique deals by having a bigger and bigger network, right? Because I find some unique deals, sometimes people come to me with them just because of my network where you know, another person who doesn’t network as much won’t get them because it’s all privately marketed. So if you want to give yourself a bit of an advantage as a passive investor network as much as possible,

Neil Henderson: 21:42

gotcha. Typically, now, you know, you have you talked about how your goal is to is to keep building your cash flow, snowball. So do you have any sort of thought processes that you go through on how you plan to reinvest the returns? earnings? Does that make sense?

Jeremy Roll: 22:01

Yeah, I guess, to be honest, it’s not very scientific. And it’s one of the inefficiencies of investing in these types of opportunities versus stock market, for example, stock market. So you’ve got a dividend stock that’s paying a dividend. In many cases, you can actually have like an auto reinvest, for example. And then you’re perfectly compounding that money, right? The challenge with real estate is that once you excellent opportunity, as a passive investor, you get this lump sum cash back. And then the question is, where do you put it again? And that’s a particularly good question. Right now we’re having a call, because it’s 2018. And I find it extremely challenging to find anything that makes sense, because asset prices are very, very high. And so I’ve been very happy. It’s been involved in many different festivals this year. I think I’m currently at about 1215 right now, but I’ve got nowhere to put the money when I get the money back. And so my cash, my national snowball is getting a little smaller this year, because I’m not reinvesting as quickly as I’d like. So for me, it’s as simple as having enough of a network to have the pipeline of opportunities. So that was the the money does come up that you’re able to remember, that’s it. The other thing I would say is that during a different part of the cycle, when opportunities that are a lot more plentiful, that actually makes sense to me, there is some time that goes into, you know, I’m expecting a property to sell the next month. And I just find two new opportunities today, sometimes I don’t have enough capital to match up everything I want to invest in, and you got to make a decision, sometimes carved into this more diversification. And then other times, you know, it might be a few months before I can redeploy the money because I’m you know, the supply of opportunities isn’t there. So, it one of the challenges of optimizing this whole strategy is, it’s not really possible, because you don’t know exactly when new opportunities coming up, I mean, I can get off of this podcast with you in there now or getting new opportunity, or I cannot get one for the next month doesn’t the best I can say is that I try to keep some cash available at all times, so that I don’t have to miss opportunities that I definitely want to get into. But I will say that early on in my investing, that was tough, because I didn’t had very limited capital. And so there were many times where I wish I had to invest in opportunity just wasn’t there. And now it’s about growing bigger, I’ve just become a little more reserved about having cash available, I’d rather have more cash than less be able to deploy it and create something good.

Neil Henderson: 24:10

Gotcha. And you don’t typically use any sort of leverage to do this. It’s just your because the leverage is already on the on the asset, correct?

Jeremy Roll: 24:19

That is correct. I like to get into assets that maybe have 60 to 65 to 70%, loan to value leverage is typical deal that I invest in. So I know there’s different things you can do where you know, if you’ve got X amount of dollars in a bank account, you can then take a credit line against it, and then your credit lines at a very low interest rate. And then you can kind of take the spread. And I think that’s what you’re thinking of. But yeah, that’s not my personality. So it may be a great thing to do. And it may be a good fit for a lot of people listening. But you know, the thousand ways to invest in it does not fit for my personality. I don’t do that. Gotcha.

Neil Henderson: 24:50

Definitely, it definitely raises the risk quite a bit. So

Jeremy Roll: 24:53

yeah, yeah, but there, but the thing is, the argument can be made that if you do it really well, you’ll be way ahead of me in 2030 years, right? Or if you take more risk than me, you’ll be way ahead of me in 2013, but actually agree with? For me, it’s just a question of like, I’m a very low risk guy. So I just sleep better at night, and end up with a smaller snowball at the end versus Yes, you know, there are plenty of people listening probably take the opposite approach.

Neil Henderson: 25:14

Gotcha. No, it’s good to understand what your risk tolerance is. So, um, yeah, you are a full time passive investor, how much time would you say that you spend on your real estate endeavors? Each week?

Jeremy Roll: 25:28

Good question. I have been full time for about 11 and a half years at this point that we’re recording it. I’ve been investing in 17 years, or more than 17 years now. But it’s been full time 11 and a half years. And I definitely worked very hard. Because I am constantly looking at opportunities seeking to new people to build up my network further to get access to more deals. I actually have a private investor group, and I spend some time dealing with that as well. But that’s kind of a minority PC. And most of what I do is focused on my own investing, but I have that group as well. And so I will say that I haven’t ever run the numbers are how many hours I work a week. But I work really, really hard. Part of the reason is because I purposely not grown to be a business, I’ve tried to just stay to be an individual investor. And so you know, I work from home office, I don’t have any overhead. And so I’ve got to do everything. You know, I work day and night. And I basically spend as much time as possible my kids on the weekend, my wife, and I take some family time off, you know, dinner, and then a little after that I’m very fortunate because I work from home. So I do see my kids when they get home, etc. But I don’t really I’m not I don’t like it four o’clock when you know, they’re home, I don’t go and play soccer with them for half an hour in the backyard. I’m focused on work till six. So I am I try to be ultra efficient. But I do work very hard. I would say I probably work harder now than I did in the corporate world. But it’s, it’s much more fun. I love it. And I wouldn’t trade it for sure.

Neil Henderson: 26:45

Gotcha. So it’s basically I mean, it’s, it’s a full time, it’s a full time commitment or more, but obviously much more rewarding and, and more flexible.

Jeremy Roll: 26:54

Exactly. And you know, with my personality and that I was really like to optimize things, you know, being in over 70 LLC is it that’s a lot of work to get you and it’s a lot of work to actually continue on and build a snowball from there. So not everybody will necessarily have that approach. And you know, I suppose you can say, I think for some people who might be a little older, retired have a bigger snowball, for example, they can definitely do this much more part time than I do. But I’ve got that anxiety and pressure that I put on myself to get that snowball where I want to get to and I know it’s going to take years to get there still. So I really treated with full time full focus. Have you ever considered moving somewhere less expensive, Jeremy and maybe making this now making the snowball a little smaller? Yeah, that’s a great question. I it’s not, it’s not a week that goes by that I flaked out to my wife how much it costs to live here. So my wife’s family is a few different pieces of them are actually very close to us here. So I actually would have chosen to Alaska long time ago, and we’re just overhead but she wants to be really close to family with the kids growing up and everything else which I understand. So it’s a good suggestion that I am stuck. I you know, ironically, this morning, I read an article about I hope I have this right half of the world’s population will live on $5 and 50. cents us a day, okay or less. Right? So I push, I take these articles and send them to my wife, just a little subliminal messages, you know, because that’s an unbelievable statistics to me. And of course, that’s not really feasible probably in the US, I don’t think, but unless you’re on welfare, and really like dependent on the welfare but but my point is like, I pay attention to this stuff. And if I had a choice not to be living where I am today, I definitely would move at the same time. It is sunny every day. And I have that, you know, on the weekends, I’m always the thought of my kids even at night. And so there’s trade offs to everything. But yeah, it’s a good suggestion. But I definitely wouldn’t be living where I am if I had a choice. And the funny thing is that my line about being a passive full time passive cash flow investor, is that the key to being a full time passive cash flow investor is low overhead, right? Because you’re trying to cover your overhead with your cash flow, just like you’re saying. So I think you made a very good point. And it makes a lot of sense to be trying to do this. Yeah,

Neil Henderson: 29:02

no, I do the same thing to my wife, I sent her articles about, you know, Italian towns that are offering to pay you to move there and things like that. Occasionally, you know, and when we don’t live in a, we live in Las Vegas, which is not the lowest cost living place in the world, but it’s certainly not the highest. And you definitely can leverage your your snowball, if you move to somewhere that’s got a lower cost. But anyway, so yeah. But But roots are important. I also have in Part of the reason I am where I am is because of family. So it sounds like that’s very much your situation as well. So Yep. Okay, so I know you, I’ve interacted with you before. And I’m always sort of amazed at how good you are at following up and managing your calendar. So I’m curious of if there are any sort of systems that you’ve developed that help you automate your business?

Jeremy Roll: 29:55

Yeah, so good question, I am a little bit obsessed about kind of being on top of follow up. So it’s interesting, the first thing I’ll say is that one of the things that really helped me to manage it is that I use, and this may not be the best fit for everybody, because it’s kind of old school, but I use Microsoft Outlook desktop, that’s connected to a Microsoft Exchange Server. And what that allows me to do, which I think Google is now actually starting to actually offered directly and I mean, some plugin for Gmail before this, but I can time delay an email. And so I’m very strategic, because I came from marketing background about how I do that. So for example, let’s say that I emailed you, okay, and we were supposed to schedule a call. And the first thing I’ll do is, as soon as I send that email out, I’ll actually manually go and put a follow up note in my calendar for six business days later that I need to follow up with you again, if I haven’t heard from you. So that’s kind of step one that takes work to do for every single email. And what happens is that when I see that coming up all time delay and email out to your, for your time zones, you at 9am. Exactly. So I think you’re on Pacific, you get it at 9am Pacific. Now what I do, when I send out that follow up email is that I want Actually, I can actually duplicate email with a good control app. And so I duplicate two or three more emails and change the date of the next then for like six more business days, three different times. So now I’ve actually got four follow ups with you six days spread out. And that’s just something I’ve chosen business days, but I think it’s reasonable if you haven’t heard from somebody, and then if I don’t hear from you, after three or four follow up, depending on how urgent or how important is sometimes I’ll just drop it depending on who it is. And sometimes I like to then put a text or a call, and sometimes it’ll be before then. But the point is that I kind of pre think all of this. And most important step that I take, though, is putting a follow up note in my calendar there. So when I have to follow up with you next week, a lot of people may not do and it’s a lot of work. But once you get used to doing you just can’t go back, because then you’re just that allows you to be on top of it always. So definitely a lot of work involved. But it’s very rare that something falls through the cracks with me. But it’s obviously not impossible.

Neil Henderson: 31:54

No, but it’s a great, it’s a great thing. And I’ve been on the receiving end of it. And it’s always it’s very powerful because people think, you know, people forget, they get people get busy. And they sort of move on. And you know, it’s always a good reminder. And they often talk about one of the powers of advertising. And in a way, what you’re doing is advertising. You’re just you’re trying to be top of mind for people.

Jeremy Roll: 32:19

Yeah, this is another really powerful word, though that I think that is I’m really I think it’s very important that comes with this is persistent. So, you know, I’ve actually seen scenarios where somebody will send somebody one email down here back and they’re like, okay, I haven’t heard back from them. And I follow up with them to see if they heard back to the person I introduced them to a week ago. And it’s a very important contact. And I literally have to say, you know, you may want to follow up with them. They’re just not great with email, right? And but the reason why I try to be really on top of it is because persistence has paid off for me and so many times in life in so many ways. And persistence requires more work, let’s not joke about it. But that’s persistent can make a huge difference in life across many different things. And so really, my follow ups are really about my persistence, and also about knowing that it’s human nature that when I send an email to somebody, I probably get a response the first time, maybe a third to half of the time and a half the follow up one half, two thirds of the time. So if you’re not prepared and organized to follow up with somebody, you’re going to miss on one, one half to two thirds of human life possible networking communication, because if you just send one email and forget it, that’s it. So that persistence can make a huge difference in the long run between your success and failure across many things. So having that persistence alone, I’m just a huge fan of persistence, even though it takes a lot of work.

Neil Henderson: 33:39

Yeah, well, and real estate is such a people business that, you know, somebody may may limit, I don’t want to have to, you know, bug people multiple times, well, then you’re probably in the wrong business, because it’s a people business. And people are, you know, people need those kinds of follow ups. Also, there’s a marketing theory that talks about how the average marketing message takes some like 1010 contacts before it actually sinks in. And I’ve heard that used also, when people talk about marketing for for deals with real estate is that sometimes it takes you know, it’s it’s not the first contact that gets you it’s not the second or the third or the fourth, sometimes it’s the sixth contact that finally gets the person to go. Okay, yeah, I’m ready to sell now.

Jeremy Roll: 34:20

Yeah, it’s pretty amazing. And, you know, at some point, I do give up so someone hasn’t reply by the fourth or fifth follow up, then I just drop it, because what that tells me is that I may have to chase the person each time thereafter. And it does not this a challenge from a time perspective, but it’s an important person, I’ll just keep going. I’ll just keep going. And I’ll be the text to call, you know, eventually get that to happen. And I think unfortunately, a lot of people don’t have the kind of discipline flash persistence flash organizations to to get the likes that extremity, and I realized that extreme approach that I take, but it really is hugely helpful.

Neil Henderson: 34:55

Yeah. Have you ever hired any employees or virtual assistants to help you out?

Jeremy Roll: 34:59

No, I’d say one of my weak links for sure is that I probably would benefit from virtual assistant across many different things, possibly even a part time employee. And I’ve come close to hiring either those that have not done that yet. I know many people who have virtual assistants and I’ve felt, you know, once they figure out the right one to work with, they have a ton of success with them. So it’s funny because I don’t use one. But I from what I could tell, I strongly recommend one.

Neil Henderson: 35:23

Gotcha. So obviously, you know, we talked about investing your the way you diversify, and one ways you do that is with geography. So obviously, you invest long distance, what I’m just curious, what’s the furthest away an asset is from where you live?

Jeremy Roll: 35:38

Great. Question. So I do actually invest across many different geographies actually, on this anywhere in the US that it makes sense. That’s what I tell people when I mean by that is, you know, typically has to make sense from an economy perspective, possibly weather depending on the asset class, etc. But I live in California, I actually mostly do not invest in California at all, no investment in California, because I mess for cash flow. And most people invest for appreciation here, because there’s very little cash flow, very high asset prices. So I actually will consider anywhere in the US, including Hawaii and Alaska, I have not invested in those days, but I would, I would consider them for sure. I’ve come close in Hawaii a couple times. I will also invest in Canada, I’m originally from Montreal, I spent about half my left there half of my life in us. And I, I will actually have many Bessemer, the Canada still today. And that’s actually where I first started investing in terms of I was living here, but I started investing there. And so the reason why I limited to those two countries is because what I’ve learned over the years that I’ve seen interesting deals and believes in many different places. But what I’ve kind of concluded is that unless I have a network built up in a specific country, both to understand the laws of what I’m getting into. And more importantly, in case the deal goes bad and I need help for some things be taken over. And I don’t have a network locally there. I just passed, I don’t have a network in our country, I’m just going to pass. And so I have a network in Canada, for sure, certainly network in the US. And that’s what I limit myself to also note that there’s always the exchange rates, I’ve definitely been on the kind of good and bad and currency exchange in Canada as the exchange rates fluctuated over 17 years. So there’s also that risk, I should note that I’m actually I think I actually invested either directly or indirectly at about 43 states in the US at this point. It’s a little bit deceiving, because I invested in some funds that have properties, like you may have 80 or 100 properties spread out across 20 states. So it’s not like I’ve actually invested in 43 states and individual opportunities. But I definitely spend the vast majority of the state thus far.

Neil Henderson: 37:37

Gotcha. Do you ever have any sort of need or want to visit any of the opportunities that you’re investing in?

Jeremy Roll: 37:44

Yeah, great question. So I know a lot of people who are listening may be working full time, for example, I’d be harping the travel to the properties. But the answer is it depends. I’ve actually watched many properties I’ve invested in but not every single one that I normally almost require, I’ve never invest with somebody before, to actually walk a property with them and actually get them to tour me in a given area to make me understand why they like the area, what they saw about it and why they’re investing. And the other thing, too, that I think I’ve ever invested with somebody in it, I think ever is probably a strong word. But I certainly don’t not to invest with somebody unless I met him in person for a final gut check, no matter how many calls and how with them and what background checks I’m done to them, I always like having a final gut check in person meeting. And that is actually usually best spent at the property walking the property. That being said, I’ve invested, for example, with one operator for more than 20 times is based in Canada, and I’m those I probably walk probably 15 of those 20, maybe 1215 of the 20. But I haven’t walk maybe five to eight of those 20. And some asset classes are easier to analyze and understand from a distance than others. So you know, if you’re if you’re investing in a retail strip center on a pretty busy street with you know, 50 70,000 traffic counts per day, and you could tell us near the corner, meaning the there’s some very large retailers near McDonald’s, Walmart others and you use Google Maps, you can actually get a really good sense for exactly what you’re investing and exactly where it’s located exactly how the properties accessible. And you’re not going to get as much information without watching it, you won’t see the condition of the parking lot, the condition of the retailers themselves, how it appears compared to competitor, how easy is it really to access versus what it looks like on the map. But there are some asset classes that are easier to analyze and others that I get more comfortable with doing from a distance, but it’s only have you with people and already best with multiple time. So I have a very strong preference for watching properties in person for a whole number of reasons, not the least of which is that you can learn a ton just yourself and having an operator walk you through a property just learning terms of hearing their perspective on why they liked it on things you may not have thought of. And you can learn a ton about the people your best to make a bet on by watching a property having toured the area with you. Because at the end of the day, when you’re investing late, the most important thing is you’re making a bet on it not the actual property itself. That’s number two. My opinion number one is you’re making a bet on and you can learn a lot by having to market your property.

Neil Henderson: 40:10

Yeah, I’ve often heard people say that, that. Obviously the deal is important. But the operator a good operator can make a good deal bad. Best to say this, maybe you can say it for me.

Jeremy Roll: 40:22

Yeah, I’ll tell you the example. It’s probably make sense everybody I like people you know, I live right here Beverly Hills. And you know, you can buy the best property on Rodeo Drive in like the best location, hundred percent occupied great tenant right today and invest in that deal. But get the operator affiliates to the ground isn’t cooperative with the tenant loses the tenant to build and get foreclosed, we had a key back to the bank, he’s back to the bank, and we’ve got nothing and so it didn’t matter that it was the best property in the best location in this area is the way that the operator managed deal was actually what matter. And so that’s how important it is to have the right operator.

Neil Henderson: 40:57

Gotcha. And would you say that you you’re more comfortable investing in an asset that you haven’t seen with a operator that you’ve already met and had a previous relationship with?

Jeremy Roll: 41:09

Yes, typically, you know, depends on how long I’ve done the floor, and obviously asset classes. But it’s just, it’s extremely rare that I won’t walk a property with an operator for investment in the first time. And I always strongly prefer to walk up property in general. And so I say I probably walk well, I don’t like getting incorrect. And I don’t know, statistically but I hazard a guess that I’ve walked the majority of the properties I’ve actually invested in, in the case of larger funds, what I do is that you I don’t go and look at properties, right, what I’ll do is I’ll walk several properties, sometimes in the single area. And sometimes I’ll maybe go through a couple of states that are near each other and walk a couple here a couple there just to get a deal.

Neil Henderson: 41:49

Gotcha. So what do you think is the most critical skill for someone who’s interested in in investing passively to develop them themselves?

Jeremy Roll: 42:00

I would say that one thing that’s really important is accepting who you’re making a bet on. And what I mean by that is you eventually learn how to read between the lines of reading an opportunity read between the lines, when you’re actually asking questions to an operator, you’re like, pretend that you’re a you know, FBI investigator, and you’re trying to read between the lines, understand whether someone is really good to invest or where there was someone is not good to invest with. And it may have nothing to do with the actual returns projected or how the opportunity was presented, or even how some of the the actual answers to some of the questions. And what I mean by that is that, let’s say that, let’s say you’ve got two apartment deals next to each other one operator, and they’re both next door to each other, and you’re looking at the opportunity and then they’re both the exact same 100 units, okay, built in the same year renting for the same amount. One operator may say, okay, we’re projecting This is going to be 2% vacant for the next 10 years, because the market is extremely tight, and the current base rate is 1%. Okay, another operator may say, We’re currently Supercell bacon, but we’re going to assume that it’s going to be 8% bacon or 10%. Bacon each year going forward just to be conservative, because market may change. And it just, you know, we want to be conservative, that’s how we want to project. So you got one operator, who is trying to under promise and potentially over deliver for investors to to build long term relationships with people reinvesting with them many times. And then you have another operator who is being very aggressive, and arguably, maybe trying to make the number look as good as possible to have the returns look strong to attract investors with bigger numbers. And they don’t necessarily care as much about the long term investment, they care about getting your investment dollars today, and they’ll go into the next semester they have for next year. Right. And so clearly, I am always looking for the conservative operators looking to under promise and over deliver versus over promise and under deliver. And some of the way you find that out is trying to determine if they use conservative assumptions, I may ask the question to an operator, why did you assume 8%? Big configurator? If there’s a 2% vacancy rate today? If the answer is well, we like to be really conservative, that tells you the one thing right. Whereas I can actually ask the operator, the market vacancy rate right now is 5%. But you’re assuming it’s going to be 3% going forward? And they say yes, a really strong market, Denver has been really hot, for example, we’re getting a whole flood influx of people, we just expected to be really strong for the next five or 10 years. To me, that’s as someone who’s conservative, and really it didn’t even matter. The numbers didn’t matter. It was the answer. They gave us the why they did it didn’t matter. So that’s what I mean, by reading between the lines, you can get some of that information, the reading between the lines, just in reading it overview without even having to ask any questions. And then you can get some of this information by asking the questions that you can have certain questions just you can hear how they’re answering, as opposed to what the actual numbers are. So that skill has really served me really well over time, it takes a while to develop. But it really makes a big difference. Another thing I strongly recommend is to always do background checks on operators, I find that the majority, unfortunately, past investors that I’ve ever asked, don’t do background checks. And they’ve definitely saved me multiple time from what seems to be very questionable people. And I always recommend background checks, I run one every single managing member of every LLC that I was the manager LLC that I’m investing in. Before I make that investment, that’s very important. And another skill that I recommend is certainly to understand the asset class you’re investing in before you invest in it. And what I mean by that is, if you say to yourself, I like the idea of apartments, I can relate to them. I know they’re high in demand, the cost of living is very expensive in the US, but the apartments are going to be demand for a long time. I actually agree with all that right? The challenge is that if you just started out yesterday, and you don’t know what to look for in an apartment opportunity, in other words, you don’t know what’s the average rent assumption should be what the average inflation assumption for expenses should be, what’s the expense ratio should be? are they buying it the right way? Are they consuming, they’re going to sell it at a conservative price. I can go on and on. But there’s certain key thing is you have to look for. And until you understand exactly what to look for, you don’t really understand what you’re investing in. Right? You don’t you don’t you’re paying a good price or a bad price, you know, not what the operator telling you what the actual objective facts are. So until you get to the point where you can probably properly analyze an opportunity and really scrub through it yourself. And you actually get that 100% confidence that I know it, I understand it well enough that I know that the one I’m investing in, you should take the time to learn but not yet. And I think that’s very important. And actually in 2018 right now, I like to tell people that it’s a great time to learn, probably one of the best time to learn because as you’re learning, you’re not really missing out on much because most opportunities are. So most properties are so expensive today that, you know, if I said to you, 2007, this is a great time to learn, you’d be like, Oh, I get it, you know, I don’t necessarily need to invest today. But by the time this downturn in a couple of years, I’ll actually be really well educated. That’s kind of how I feel like where we stand today, you know, similarly. So they’re really great time to learn right now. But definitely make sure you understand what you’re getting involved with before you put your money into it.

Neil Henderson: 46:54

Gotcha. Um, if you could hit a magic reset button that allows you to go back in time, when you first started your investing journey. Is there anything you would do differently?

Jeremy Roll: 47:03

Well, first thing for sure, I would just start earlier. Now I got into this type of investing because of the lack of predictability of the stock market. So now I kind of went into more predictable cash flow. But the irony is that theoretically, I do really good job investing, I might get better returns in the stock market by crazy amount based on how do you feel typically work? So I would have started earlier, I would have had more predictability earlier but potentially a bigger snowball by now the earlier and younger is typically better. That’s the number one thing I would definitely do immediately.

Neil Henderson: 47:32

Yeah, that’s often the answer that I’ve gotten. Most people just say, started I wish I’d started earlier and gone bigger. Yeah. So I want you to imagine you’re standing in a room full of aspiring investors, more like people who have a full time job and families. And maybe they they’re looking for a way to get started the battling their way through, you know, fears and doubts and a lack of time or money, what have you, or what are tourists strategies you could recommend they focus on to maybe best ensure success.

Jeremy Roll: 48:05

Number one way for sure, take your time to get educated, whether it’s that local networking, real estate meeting, whether it’s reading, you know, opportunities, as many opportunities you can, I think the more you get educated, the more comfortable you’re going to get actually jumping in, because you’re going to feel more content, you actually know what you’re investing in. So that’s kind of like, definitely, number one. Number two is, the more you network, the more doors are going to open, the more you’re going to learn. And so one of the important things to do at the real estate networking meeting is to talk to other investors, ask them which courses are good and which courses are bad, where they waste their money learning, because there’s a lot of bad courses out there too, that cost a lot too much money. And so networking with others, and asking what they recommend to do when you’re starting can be a huge help. And so those are the two things coming to mind immediately that I would strongly recommend. And of course, don’t invest in anything you do not understand if you don’t understand it take more time to learn this path, because there’s always going to be more opportunities, especially this timing right now in general.

Neil Henderson: 49:01

So you actually started your own real estate networking group? Is that something you want to talk about?

Jeremy Roll: 49:07

Sure. Yeah. So I actually co founded in 2007, with one other partner, a nonprofit organization called for investors, by investors or FBI. And the reason why we started those meetings is because between 2002 2007, I did a ton of networking. And I would probably go to between one and three events a week in person in LA. And it’s funny, because unfortunately, a lot of these events are sales pitches, okay, that’s why they exist. But there’s a lot of people in the room, it’s somebody, they may get one 200 people show and so there’s a lot of really good networking opportunities around the room. And so what I would do that actually come to these events, I’d actually sit in the last row, I have my phone, and sometimes even physical work with me. And I actually do two hours of work, not listening to selfish. And when it was done, I was at a network with other people because there was a great critical mass of people. What happened is that the first meeting, I went to 2007 and a half when I left the corporate world, I actually literally said to myself, Oh, man, what am I going to do right now I have to not sit through this meeting for two hours and listen to the sales pitch. Because I don’t have any more work, I don’t work. So what I do is, you know, rather with my two hours of meeting, I can actually start my own meeting where the core foundation is that there’s no sales pitch. So our and we’re very hard for about that. So our philosophy is that we try to unite investors learn from each other exchange information, try to break even on the cost of venue, we actually lose money through f5 every year. And that’s been the way it’s been since the beginning. But the networking and opportunities that come from it have been invaluable. So by far worth it. And we’ve actually grown because people is beginning didn’t really believe about the no sales pitch. But when they started coming and saying we are for real and very hardcore about that. And we grew organically. And for meetup com, actually, which is a great resource. And we grew grew to become the largest series of public non institutional real estate meetings in California. So we have I have actually read a number three is that we have somewhere between 27 and over 30,000 registered users. We’ve had up there are so different meetings in Southern California, we only have about five or so maybe six that are active at the moment, some are dormant. And I’ve been really lucky. Because, you know, I benefited from a ton of networking, but you know, to no seven, but once I started my own meetings, and they happen to grow, because I’m kind of the hub of that whole me of this meeting. My network really exploded. And it’s gotten much bigger since so I’ve been very lucky as a result of that.

Neil Henderson: 51:26

That’s great. And if people want to know find out more about it, is there a website for its for investors by investors? Correct?

Jeremy Roll: 51:34

Yeah, you can go to for investors by investors calm Or another way is you go to meetup com, and then type in FIVI, the acronym into the search box, and I’ll show you the closest meaning to you. We do have a couple meetings out of state, but only a couple. The vast majority of our meetings are in Southern California. So we have most of them in Los Angeles. We currently have one active one in Orange County, we have a dorm one in San Diego. The reason why we haven’t expanded is because we will not stop take on a capital here. We haven’t known literally for a year, both to make sure that our proper real estate expert all for because we want to make sure they’re not going to be pitching anything. And so we have given up the potential to grow probably very large in exchange for making sure that there’s going to be no sales pitch type of environment. That’s really, really key. Gotcha.

Neil Henderson: 52:18

Well, Jeremy, thank you so much for sharing with us today. If any of our guests want to reach out to you what’s the best way they could do that?

Jeremy Roll: 52:24

Yeah, sure. I am happy to speak to anybody. You know, trying to learn if you’re new or if your experience you want to network, whatever, I’m happy to help any way that I can. Best way to reach me is through email. My email is Jay roll, which is JROLL at role investment, which is ROLL investment with an S which is plural.com. So de roll it roll investments. com is the best way to reach me. Great.

Neil Henderson: 52:49

Thanks again, Jeremy. And if you liked this podcast, we would really appreciate it if you take just a few minutes and leave a review for us on iTunes. It’s really simple as do just go to road to family freedom.com slash review for links and instructions. Thanks for listening. We’re doing this all again next week. Until then, safe travels.