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In this episode of Alt Investing Made Easy, hosts Sarah Florer and Roland Wiederaenders welcome Trevor Thompson, Vice President of Investor Engagement at Massive Capital. The conversation explores Trevor's journey into real estate investing, the unique approach of Massive Capital in offering investment opportunities, and a new development project offered by Massive Capital in Richmond, Texas. The discussion also delves into the importance of financial education, the structure of investment deals, and the significance of aligning interests between investors and sponsors. In this conversation, the speakers delve into the complexities of investment regulations, the importance of trust in investor relationships, and the current state of the real estate market. They discuss the impact of recent economic changes on investment opportunities and the cultural shifts in housing preferences, emphasizing the need for education and understanding in navigating these areas. The conversation highlights the significance of creating value through real estate investments and the evolving nature of the American dream.
“Don’t wait to invest in Real Estate - invest in Real Estate and Wait!”
Please contact Trevor from Massive Capital about the 506(c) offering presented in this episode, or for any further information, at K. Trevor Thompson https://www.linkedin.com/in/ktrevorthompson/
Please visit https://massive.capital/ for more information.
Takeaways
- Trevor emphasizes the importance of starting to invest early.
- Massive Capital focuses on transparency and education for investors.
- The company seeks unique investment opportunities and partnerships.
- Investing in real estate can lead to financial freedom.
- The structure of deals at Massive Capital aligns interests of investors and sponsors.
- Trevor's journey highlights the power of compounding income through real estate.
- Massive Capital operates in the value-add multifamily space.
- The new investment opportunity in Richmond targets a high-income area.
- Understanding 506(c) deals allows for broader investor participation.
- Education is key to helping investors make informed decisions. General solicitation under a 506(c) offering allows for attracting investors through the internet.
- Investors should start with friends and family to build trust.
- Self-verification for accredited investors simplifies the process, but this can only be done in a 506(b) offering.
- Choosing the right investment team is crucial for success.
- Market cycles create unique buying opportunities for strategic investors.
- The American dream is evolving with changing housing markets.
- Renting is becoming a more viable option for many individuals.
- Real estate investments can create generational wealth.
- Understanding legal complexities is essential for investors.
- Real estate offers significant tax advantages for investors.
Chapters
00:00 Introduction to Alt Investing and Massive Capital
07:11 Trevor Thompson's Journey into Real Estate Investing
10:03 Massive Capital's Unique Approach to Investments
17:08 New Investment Opportunity in Richmond, Texas
25:07 Understanding 506C Deals and Investor Relations
29:25 Navigating Investment Regulations
32:51 Understanding Investor Relationships
36:40 The Importance of Trust in Investments
38:30 Market Trends and Future Opportunities
42:38 The American Dream and Real Estate
44:40 Cultural Shifts in Housing Preferences
48:14 Creating Value Throug h Real Estate Investments
Creators & Guests
Host
Roland Wiederaenders
Co-founder of the Alt Investing Made Easy podcast, investment advisor, and corporate securities attorney with expertise in private investment funds, corporate/securities issues, mergers and acquisitions, partnership structuring, and federal income tax matters. Roland is also a member of Grable Martin PLLC.
Host
What is Alt Investing Made Easy?
Join attorneys Sarah Florer and Roland Roland Wiederaenders as they navigate through the maze of market jargon and reveal the secrets of diversifying your portfolio. Whether you're a seasoned investor or taking your first step toward financial freedom, we empower you with the knowledge and insights you need to thrive in the dynamic landscape of alternative assets. Get ready to transform how you invest, inspiring a new way of thinking about your finances, and discover how to make your money work harder. Dive in with us, and let's make investing in alternative assets easy, giving you the confidence to navigate the financial landscape, one episode at a time.
Treavor:
I waited till I was 58 years old to figure this out. Don't wait. You know, they say, don't wait to buy real estate by real estate and wait.
R/S:
Welcome to Alt Investing Made Easy, where we explore the complex world of alternative assets. I'm Roland, a securities attorney, investment advisor, and your co-host. And I'm Sarah, an investment advisor and corporate attorney and your other co-host.We'll guide you through real estate, private equity and more, making complex topics accessible. Tune in for insights that empower your financial journey. Let's make Alt Investing easy, one episode at a time.
Sarah:
Today we're here with one of our other law firm clients, Massive Capital, represented by Trevor Thompson. And we're very excited to get into details about Trevor and about Massive Capital.
Roland:
Yeah, thanks, Sarah. I'm really excited to be here with Trevor today. This sort of fulfills one of my objectives with this webcast is we're advertising ourselves, but we're also advertising our clients and helping them sell deals. And Trevor Thompson serves as vice president investor engagement of Massive Capital. Massive Capital is a real estate investment and development firm that has offices throughout Texas, and they've got
investments throughout the United States. Trevor will tell us more about Massive, but I just I'm really excited to be here. Massive Capital, I'm excited to be here with Trevor for sure, but Massive Capital has other persons that I've worked with in the past of Sanjay Agarwal, Shriar Khan and Michael Bailey. And now we've got Trevor serving in an investor relations role and he's just a perfect guest for Alt Investing Made Easy to present the investment opportunities that Massive has. And, as we mentioned, they have one now that we can talk about because they're relying on 506(c). But just to give you a little background on Trevor, I first met Trevor through, again, relationship with Phil and Shanoa Grove and hope to have them on as a guest in the future, but Trevor also attends with Sarah and me a weekly discussion, a commercial real estate discussion group. And we've gotten to know each other there and Trevor's kind of a leader of that group. He fills in whenever Ken's not there. And I like Trevor's background. He has a great background in sales. He has really diverse background, worked with Guinness World Book of Records, and he's actually had lunch with Michael Jackson a long time ago. Anyway, like I said, very pleased to have Trevor on our show today.
And just a quick disclaimer before we get too far into it, please note that while there is an investment opportunity being presented here, we can't say - this isn't a Jim Cramer deal where we're saying buy, buy, buy. We can't make an investment recommendation without knowing your specific circumstances. We couldn't make a recommendation without having an investment advisor client relationship established. This also doesn't constitute legal advice, even though we are attorneys. But what we're doing here today is presenting Massive Capital as a potential alternative investment opportunity. And while we can't make a specific recommendation, we for sure can speak to the integrity of their team, the integrity of their process and their people and how meaningful that is when you're looking at the investment opportunities out there. That integrity is one of the most important things that we would recommend you evaluate with respect to whoever you're investing with. So Trevor, welcome to Alt Investing Night.
Trevor:
I'm excited to be here. It's been a good friendship and I've learned a lot in the few years I've been working on the real estate space.
Sarah:
That's wonderful. So Trevor, we want you to introduce yourself after we've given some information to our audience about you. Maybe there's something else you'd like people to know. So who are you? Who is Trevor Thompson?
Trevor:
So I'm originally from Niagara Falls, Canada. And in high school, I worked for Ripley's Believe It or Not. Then 18 years with Guinness World Record, as Roland mentioned. Then I spent 20 years with iFly Indoor Skydiving, opened 46 of 80 locations.
And I think the most interesting thing that's parallel to what we're talking about, I was always interested in real estate investing, but I was terrified of toilets, tenants, and trash. And I didn't want to do what most people do, which is go along and buy some multifamily houses, be responsible. I don't want a phone call at midnight, my toilet's not working or whatever it is. And so as Roland mentioned, you know, I got connected in with Phil and Shanoa and their work and I actually went to a weekend seminar about commercial real estate investing and they presented this thing called syndications. And I'm going to be honest, I said to myself, where have you been my whole life? Where have you been? It's like I found my lost love. This is exactly what I want to do. I want to invest in real estate, want to take the power of all the reasons why you would invest in real estate. But I didn't want to actively at the time manage the deals. And then so I joined that group and it's, you know, Roland mentioned Sanjay, six years ago, I made my first two passive investments in a syndication deal. And since then I've been super active. So I've invested passively 20 times in the six years. Eight of those have gone full cycle.
And then I started thinking I really enjoyed this. I never thought I would find something else I was passionate about. And I'm going to tell you what I'm passionate about is I want people to start earlier than I started. I didn't start doing this till I was 58 years old. And we all know the power of leverage using bank debt. But what most people don't talk about is the power of compounding your income. The fact that until you make money in your sleep, you will work till you die. And I was going around the Monopoly board, not buying the real estate, not winning the game. And so my life just totally changed when I figured this out. I did a couple of deals before joining up with Massive Capital and I started watching them and thinking, how can I get involved? I liked what they were doing. We created this role for myself, which is perfect fit for them and me. And then since then now I'm a sponsor on deals, 12 deals now and nine of those with massive capital in almost two years I've been with them. Again, it's like, it's just amazing how life has just blessed me after I finally made the decision to learn about this space. That's a story.
Sarah:
Yeah, that's great. And you know, it's right along with our theme and one of our passions, you could say, which is financial education and learning as early as possible about things. Even just responsible, know, financial management of your personal finances, but investing being the next logical step for young people to start getting into. So it's really nice that you've highlighted that point.
Trevor:
Alot of people don't think of the power of it. And I've got a very quick math. Okay. Now this makes a lot of assumptions. Put a hundred thousand dollars into a real estate deal and double it in five years. So it becomes two. Invest the two, it becomes four. Invest the four, it becomes eight. Invest the 8, it becomes 1.6 million. Invest the 1.6 million, it becomes 3.2 million. A lot of assumptions, it's assumed that you've always doubled, it's assumed that you've had no tax implications, but who's life would this change? Everybody's. Everybody's. would give you the choices, and I talked about financial freedom, and a lot of people say, well, what does that mean? It it means something different to everybody. Depends who you are, where you are. So it could be pursuing your passions. could be putting your children in college. It could be legacy, leaving financial freedom for your family. It doesn't matter. It's the fact that what we're doing here and what we're talking about here allows you to achieve this thing called financial freedom. And what you do with it is absolutely your choice. But if you don't make the choice to start investing, you won't have that choice.
Sarah:
That's really great advice and thank you for highlighting that because eventually we may have episodes entirely dedicated to the topic of financial freedom. Maybe you'd be happy to come talk about just that.
Trevor:
I love it. I'm so passionate about it. It's interesting too. All of my career things have been passion projects and I'll be honest, when I left I thought I'm never going to find it again. I actually totally found it again and I hope it comes across just this message of being able to help people achieve something that I missed and I waited too long to start and I'm so glad I did.
Roland:
Well, that's great, Trevor. you know, having that emotional connection to whatever we do is super important. It gives us great motivating power. And what I think we'd like to suss out now is what allowed you to create that connection with Massive? What was it about Massive Capital that really hooked you and hooked your interest?
Trevor:
So I think it was the fact that, first of all, I loved I love their transparency, I love their energy, I love their mission and it melded with my mission which was to create a community. So we offer a lot of education. So every Wednesday night we do a free educational webinar. We have a ladies group called She Every Other Week, they do an educational webinar. We're always about educating people, helping them to understand.
And of course the caveat is while we're doing all that, of course we're also helping them with their investments. So it's just this big win-win. I started following them to the point where I showed up at everything they did, even if it wasn't massive related. And then we just said, do we combine? How do we make me better by being part of them and them better by me being part of them? Which again,
The synergy was so important in it, but it came so naturally because, you know, and I've known Mike for about four years and then Sherar for about three. So I've known them for a while.
Sarah:
You want to tell us a little bit more about Massive? I mean, I've actually joined the She Group. I have to check my emails. signed up. I need to find, figure out and get that on my radar to join those biweekly seminars.
Trevor:
Its the first and third Tuesday at 6 p.m. Central.
And again, they have great speakers, great content. So a little bit about Massive Capital. I refer to ourselves as an entrepreneurial syndicating group. So when I say entrepreneurial, we're not doing the traditional things that a lot of people are doing, right? We're looking for unique investment opportunities. We're looking for ways to bring value. We're looking for partners to partner with. So Massive Capital has done 15 deals.
But the majority of those deals are with partners where combining with us, we allow them to go to the next level. So it could be that we're a key principle on the deal, we're the experience on the deal, we help raise the cap. There's a lot of ways, but by being on entrepreneurship, where no deal is exactly the same as the other deal, it allows us to be so flexible and nimble and to get into different asset classes and geographic locations where we do have local boots on the ground because we are all Texas based other than some of our team is most of our team is remote.
Sarah:
So how does that work? Do you have different people who specialize in different asset classes and like based on their individual backgrounds or is everybody kind of in a common background and experience? I mean, can you talk about some of your colleagues and maybe your areas of specialty?
Trevor:
Yeah, so we've started out in what's referred to as the value add multifamily space. And that's where you buy an existing asset and you force appreciation by adding value. So you put some capital into the improvement. You do all of the things that a typical business would need to go to the next level. And a lot of people don't understand this. We're actually not buying an apartment complex. We're buying a business that operates out of an apartment complex. And we're applying business strategies to that apartment complex. We often buy them from unsophisticated operators. So they may have been well, but they just don't have the resources to take it to the next level. We inject some capital expenditures to fix it up and then we sell it for a multiple of what we bought it. And that's a very interesting and stable business model. And so that's what Massive Capital does on of many of the deals have done. But then we decided we needed to have some diversification. So we've done a few development type deals and the one that we mentioned earlier at the beginning of this. It's going to be a new build retail. And again, what we looked for being a bit entrepreneuristic, we looked for a partner that we could join together. So we found a developer and they needed us and we needed them. And so again, it made this perfect marriage where, you know, they had a skill set that we didn't have. We had a skill set that they didn't have, but together we can produce more. And of course, when you do that, that adds greater value to your investors. So it's not like we're learning something new. We're established with people that are experienced in a space. And that's what our flexibility has allowed us to do. I really like that story. Not only does Massive have a team itself, it's not just one guy that we're relying on, but Massive goes out and seeks to team up with other people.
Roland:
I really like that idea because it's really emphasizing the power of working together and gaining areas of expertise that maybe, it requires a certain degree of humility to say, we don't know about that, but we've got this partner here and he's going to be providing us with the necessary information. That's really admirable to me.
Sarah:
It's really also, think, you know, like you said, Trevor, with your own personal journey, the fact that there are people out there who welcome people with less experience so that they can help them gain that experience and then also receive a contribution from them. So it's an it's an exchange. It's not just like you're going out. Oh, I don't know anything. This person helped me so much. You have something to contribute either. Also, I think that sounds like it's something that's really when you say, entrepreneurial or the synergistic parts of Massive Capital, it sounds like that's actually what brings a lot of good energy into the situation, into the investments, because everybody that's there is working together and learning from each other. And that's, you know, probably an ideal way to keep an organization stable
Trevor:
And then one other thing that's unique about the group, again, if you buy, I bought Amazon stock, they don't care about me. They don't know me. But when our folks invest in our deals, we refer to them as our partners and they are our partners. The way that the syndication split works, they're actually our largest partner. Obviously the bank is the largest financial contributor, but the person that owns the majority of what we're buying are our investor partners. So the way we've structured our deals, they actually own a piece of something. So it's pretty unimaginable, right? Before I learned all this, I never thought How could I be a partner in a $20 million apartment complex? Never dreamed of it. Never thought it was possible. And the coolest thing is we make that possible. And we try to create that where people feel part of what we're doing.
Roland:
Well, Trevor, maybe tell us the new investment opportunity.
Trevor:
Yes, so we have a new opportunity. It's in a place called Richmond, which is a suburb of Houston, Texas. If anybody knows anything about Houston, it's west of Houston and it's where all the money is going. Because people are moving west of Houston, just to give you an idea, the median income in the area where we're doing this development is $167,000. It's a new large development, 461 acres and they're building over 1,600 homes, 250 A plus retail or part story apartment complexes. They have a school that's been built. They're building one of these new high-end pickleball and the main entrance that comes in down from Katie comes down into where we're going we have 1,000 feet of frontage and we're building a 62,000 square foot destination high-end lifestyle retail. It's a little bit different. This is not a strip mall. This is where all of those folks, if you think about it, all those folks that have moved to that neighborhood, right? One thing COVID has taught us, we like to do things in our neighborhood. And again, so we have this young generation with a high disposable income. And our goal is to create a lifestyle center where it's a place where they can meet. They can get the things that are not normally accessible, and it's minutes from their house. I mean, the apartment complex, you can walk.
So if you think about it, 250 apartments, it's going to be five to 750 or 1,000 people living there. They can just walk over and grab a cup of coffee, get their nails done, get a massage, go out for dinner. The kids can go somewhere, the adults can go somewhere. So our goal was to create this destination lifestyle retail center. And so it's a great opportunity. Some of the things that make it a little bit more unique is it's a shorter hold and buying the land so we bought seven acres within the 460 acres. We're developing this so we're raising capital right now. We're going to spend all of 25 building it. We're going to spend 26 leasing it up and then we're going to sell it to a final buyer. And the goal here is to create a 1.6x multiple estimated, remember not guaranteed returns. It works out to about a 21 % IRR, which is a very important number, your internal rate of return. It's the time use of your money. A lot of people don't think about that. But I want to go further and talk a little bit about how we partner with our partners. So we have a thing that's called a 7 % preferred payment. What this means is until you as an investor make 7 % on your money, me as a sponsor, massive capital, we don't make anything. Then if we produce less than a 17 % IRR, the split is a 70-30. So you'll make more of the profits. You'll make 70 % of the profits. If we achieve our goal, the number I talked about, it goes to a 50-50 split. Okay, so let's make sure we unwrap this. You get paid first. If we don't do good, you get paid more. And if we do good, we get paid more. Think about how that aligns everybody's interest. And of course, we use Roland and his group
to create this structure, to make sure that it's all documented well and how are we going to achieve this business plan. So without a good document source, without all of our operating agreements, again, this is the glue that kind of combines it all together and we put it into a large document. We talk about, believe me, a PPM is many pages of how I could lose your money. Okay, that's what a PPM is. But it's also very important that when you read it, you're looking for how do I get money and what limits and what triggers. So again, this investor first approach where you get paid first. We don't achieve our goal, we get paid less. If we achieve our goal, we get paid what we promised you, you would get paid and we get paid more. And very important to look for people that are putting deals like this together. And again, our partner, Realty One in this particular deal. This is the 15th development with this same company. Okay, we produced higher returns, but we want to be very careful. It's always good. We wanted this is good return. Our goal is to exceed them. But again, we have this the structure where if we don't exceed, we don't meet what we promised, you're going to get paid a little bit more of the percentage. So it's a way to align interest. And that was one of the things that really drew me to Massive Capital. You know, as a very active passive investor before I joined them, this is exactly the deal structure I always looked for. And again, with the help of a great syndication attorney and a lot of other folks on the team, we can present this to investors and explain all of the nuances of our particular opportunity.
Roland:
That's one thing I've always appreciated about you, Trevor, is you've taken the approach of taking that information, education, you know, trying to give people information about what it is that you're doing and you give them so much information that the right decision becomes inevitable, so to speak. And for sure the way that you all have structured that return profile and the alignment of interests, it really does ensure that, you know, that the investors know that you're on their side and you're doing everything you can to get those returns because it's once you get them the returns then massive gets its reward.
Trevor:
Yeah, well, and it's also a long-term vision. You know, I've been doing this for a while and we were actually looking at recurring investors. I had one person I met at one of those meetups that we go to together and she's invested with me five times in a four year, three year period. And again, we want that, right? We want to create a relationship. We want to create this thing and I never say just invest with us, right? I believe in diversification. I believe in, you have to make sure the opportunity matches your need. So for example, this particular opportunity, if you need some depreciation to write off something, this is not the opportunity and we'll tell you that. And we'll try to provide an opportunity that has those things. So again, as an investor, you want to look at, you know, risk reward. Timeline what things are valuable for you, you know, and this is a particular deal if you're looking for cash flow This is not the opportunity for you because we're gonna build it and we're gonna sell it and you're not gonna get anything till we sell it and That's just the nature of this particular business. We're on some of the opportunities. There might be some cash flow.
Sarah:
Trevor I think it's really cool that you the way that you presented what a preferred return is. And you already talked about the PPM, but we have some other things we thought we'd just talk about that are things that you communicate to your investors. And Roland, did you want to talk about integration?
Roland:
Yeah, this is a really good point. And when we were planning for this, Trevor, as you know, we talked about this that I said, well, Trevor, does Massive have any current 506(c) deals? And you said...well, we actually just started today and we moved from a 506(b) to a 506(c). Tell us what that means. So it's a very nimble way for us to be able to do business. And I'm not going to speak to the legalities of it because that's why we have you on our team. But the concept of it is, is as a 506(b) investment, there are some caveats. OK, you do not have to be an accredited investor but we have to have it a previously existing, substantive relationship. Bit of a gray area what that means is, but it means I have to know you, you have to know me, I have to know you understand the risks. And to be honest, just trying to be honest in this thing, I'm not taking your last dollar. I call this protect grandma's money, and it's a great rule. It's a really great rule. Because I love my grandmas, you know, and I don't want anybody to take advantage of them. So the concept of it is this allows people that are not accredited investors who we've educated because you have to remember we spend a lot of energy educating our investors it allows them the opportunity to be able to invest in something that's normally reserved for accredited investors only it also provides us another opportunity Massive Capital actually has a mastermind program and again a lot of folks that have joined our program, they don't have a big list of accredited investors already, They're talking to their friends and family. Okay, they're trying to start their real estate dream on the active side and this also produces an opportunity for us to partner with them, them to bring their friends and family into our deal, and establish themselves on the sponsorship side. It creates this vehicle. And then of course, what we do is once all of our friends and family have had an opportunity to invest, we have a period where there's a, I call it the hard line in the sand. Okay. And we always add a few extra days just to make sure that this, you know, we don't blur the line and then you must be an accredited investor. Simplistically accredited investor is someone with the individual income of 200k, a family income of 300k. A net worth of a million not including your personal residence. And the government has decided that if you have these requirements, you should be smart enough to make your own decisions. Therefore, you can invest in the syndication. I'm here to tell you it's not true. Many of my sophisticated investors are a lot smarter than my accredited investors because they worked really hard to get those dollars. Remember, we are taking your life savings and trying to grow it. It's a big responsibility. And I take it, you we take it very seriously, which is one of the reasons why I enjoyed working with Massive. But this allows us, and we normally run it for four to six weeks as a 506(b). And then once we switch it to a 506(c), I can talk about it here. If we were doing this interview five days ago, I would be breaking the law. Not very good thing to do on your lawyer's podcast. Talk to you about a deal. Okay, well you just couldn't do it. It's not the way we can do it. And so it allows us to be able to switch, well now I can talk about it on our Facebook, on my LinkedIn. I'm going to the lunch today and I can talk about it. I can tell people, hey I've got a webinar coming up, would you like to jump before that? I don't even speak about it just in case in a public environment someone else overhears me. So it's very important line in the sand. And again, we work really hard to respect that and to do it properly. I do not look good in orange, even though my wife says I bought too many orange t-shirts. You know, we don't want to do it. We want to abide. Rules are in place for a purpose.
Sarah:
Well, just a comment is it's hard to avoid Orange inAustin when you're a UT fan.
Roland:
That's really good. And this idea of general solicitation, and that's what we're doing now. We're working with you to generally solicit, know, using this medium of the internet to create a little advertising piece for Massive Capital. We're also selling our services, of course, but we really want to attract investors to our clients’ deals. you know, it's a change in the law really. It came about in 2013 when the Jobs Act was a statutory authority for allowing for the first time the use of general solicitation in connection with the sale of securities. And that's exactly what we're doing today. But the condition to that is that you can only sell to accredited investors. And that's what you were really describing Trevor is that you have, know, our clients, it's not unusual to have that circumstance where they're going out to friends and family. And that's where when people ask us for advice about, you know, where do I start raising money? You know, I say, well, go to your friends and family, the people that believe in you. You have these relationships, these trust relationships, go to them. you know, sometimes your friends and family aren't accredited, but you still want to give them the opportunity to invest with you because of the trust relationship and you're helping them grow into accredited investors. If you are really successful for them, you're going to grow their investments and eventually they'll hit that million dollar net worth number. And one other thing too that I'd like to mention is when we are a 506(b), you can self-select as an accredited investor if you are, and I call that the easy button. I've invested 32 times. Only once proved that was accredited. Because I invested in 506(b) deals, I self-verified. So I didn't have to send all my financial reports to somebody. I didn't have to go through it. But once we switched to a 506(c), we use a third-party verification system to verify that you are. It's linked in with all of our portal. So you send your documents to them, and then they send us back verification. We don't verify you. It's done by a third party. And again, some people, I personally don't like to do it. And you know, so we've done it that way. And we are only allowed 35 investors. I want to make sure I'm clear to that. And again, I call that they're putting a ceiling of protection. So if for some reason, something happens, you know, we're not like letting hundreds of people into a situation where they're at risk and they should.
Roland:
Well, just and to make the point 35 non-accredited investors. Yeah, yeah. then up to really 500 is the total overall and that has to do with the Exchange Act reporting. Once you get up to 500 investors and you have any non-accredited investors there, then you become subject to the Exchange Act reporting requirements, which means that you have to file the 10 Qs and 10 Ks and 8 Ks. We talked about that.
Sarah:
Trevor, can I just make an observation and that is Roland, I don't know if you've made this connection, but you just explained in very direct, clear, simple way what actually has some complex regulations underneath it. And we've discussed that already on this video podcast, but you've actually just exactly proven the point that we're trying to achieve with the education that we're offering here, which is, you know, you don't have to be a lawyer to understand these things. There are people out there that can understand them and explain them. You know you're a businessman and you have a lot of experience, but at the same time, you've just communicated very simply what people need to know in a way that I think is clear and most people could understand. Thank you for that. also thank you for proving our point that is that people can understand these complex areas. You don't need to engage in hand-wringing or whatever when you start thinking about legal matters.
Trevor:
It was quite interesting because I'll be honest, I deal a lot with first-time investors. I am the first initial point of contact. Somebody comes through our system, I'm one of the first initial point of contact. I've tried very clearly to make it easy to understand. I was super intimidated by it. I mean, I remember the first time I read it, PPM. You know, this is this is like it's it's overwhelming and you know kind of what am I doing sort of thing? And so I'd like to go back and make one other point: Who you give your money to is the most important decision. It doesn't have to be us or me but who you want to give it to somebody we always call it that you know like and trust. Okay. We're going to be in a relationship on the deal I just spoke about for three years together. You want to make sure that we care about you and we care about our investors and we care about the, you know, that we are people that you want to do business with. Okay, that's super important. Then you need to understand, you know, I call it the jockey. So, you know, we're the jockey, you bet on the jockey. Then there's the horse. The horse is we're talking about development, we've talked about multi-family, and then the arena is the location, right? So again, I've talked to it. If we were building this strip center in Lubbock, Texas, it would not be so good to folks in Lubbock. It might not be a great investment. It works because we're in a very high income, young family environment. It works for us to be able to put something like this there. And again, you need to understand that's the track. That's what's important. And you want to make sure that somebody understands is first of all is the right jockey has picked the right assets and the right partners and the right location. So those are very important things. And then of course all of the legalese and all of the other things again we don't do our own PPMs. As smart as we think we are we hire experts. We don't do our own accounting. We don't do our own. We do have in-house legal counsel but to be honest they mostly manage other legal councils. Okay, and we do that just to kind of make sure that we're, you know, it's very important that all of these things are structured well, because again, at the end of the day, you are trusting me with your life savings. And it's, you know, while it's Massive Capital, all of us at Massive Capital think it's me. And that's also the power of Massive Capital, right? It's us. We are responsible for you.
Roland:
Its, you know, your fundamental integrity and the qualitative measures of what makes a good investment, their quantitative measures. You have to take take into account both. But I just think so frequently a good manager can make a mediocre deal great, but a great deal can be destroyed by a bad manager. Absolutely. And you guys are good managers that have good deals. I can really say that. But just because I know of the integrity of the people. It's like you're saying in the process, I'm part of that process, you know, I've got a little bit of a bias, Sarah is too.
Trevor:
But yeah, it's a great partnership and it's really why, you we were so excited to have you on and you representing us. making an environment that is investor first, you know, this concept of this preferred payment, you know, this concept of we call it a waterfall, how the splits may change at the end. Some of our deals have them, some of them don't. Okay, and it depends on the risk reward of the deal. Also on our risk, okay, this particular deal we're talking about is a full recourse loan versus on a multifamily, it's not a full recourse loan. What does that mean? It means they're coming after us if we don't pay the loan versus just taking the property back. there's a, everybody needs to balance the risk reward out with an investor first focus.
Roland: That's wonderful. I think, you know, investors are going to want that. They want to know that their needs, their goals are the first priority. really, the deal doesn't happen without them. So that's, from my perspective, the right attitude to take. I love hearing all of that.
Sarah:
So Trevor, could we ask you just some forward thinking? you know, obviously, the state of the economy, nobody can predict that going forward necessarily. But what's your view on what opportunities you see coming up in 2025, where the markets are? Maybe November is a bit of a turbulent time, I mean, with the election and everything going on, but looking forward for the next 12 months, what just from your experience, what's your sense of what might be, what might be coming up.
Trevor:
First of all, want to acknowledge that we've never been in an environment with more noise than there is right now. And very negative noise, right? So forget the election, which is making a lot of negative noise. You know, there's this big thing, that real estate's in distress. Okay. There is some distress. About 4 % of all multifamily properties are on a verge of foreclosure. Okay. 4 % of how many multifamily properties have you...
In the UnitedStates. It's a pretty small number, but it makes the news, right? And people start getting terrified. Okay, there are definitely going to be some buying opportunities because markets have cycles. Okay, we just ended a cycle where real estate really had high values. And then of course, we had this craziness with the interest rates where nobody's ever seen a hockey stick. I'm old enough to remember when I had a 14 % home mortgage. Nobody's probably old enough to remember that. Maybe we're all out of note. it was super high. OK, we all got spoiled at 3%, 4%, 5%. OK, so there was a lot of things that happened. But what this is creating is a buying environment for, again, people that can strategically look for it. We didn't talk about it today, and I can because it's a 506(c), but we bought another multifamily property and we assumed an existing loan with a lower rate.
Okay, different things to protect the investors, right? There were certain things that happened and you know, if you bought a flexible rate mortgage, you're in trouble right now. If you buy a flexible rate mortgage today, you're going to be in trouble tomorrow because we all believe interest rates are going to come back down a little bit. So why in the world would you lock yourself in for three to five years or 30 years high? So
There's a lot of things that change, right? And so again, it's very important. We think this is going to be a great buying opportunity for people that can be creative and look for those unique investment deals. So again, just to give you a concept, okay, in our mastermind, we have 90 students. We are underwriting over 300 deals a month. Okay, we're making 30 offers and out of all that craziness, you know, maybe getting one every three months. Okay. So we're kissing a lot of frogs to find the prints. Why are we doing that? Because we want to find those unique opportunities. So I do believe, you know, they used to say survive till 25. I think now it's going to be, you know, you're not going to thrive till 26. We'll see. I think there's still a little bit of turmoil just again, because we all anticipated interest and even interest rates drop, it had no dramatic effect on the marketplace. They need to drop a couple of times to have a dramatic effect and I believe they will. And again, never has there been so much negative media. I mean, it's overwhelming. I mean, how in the world can people feel like they can invest? I refer to investing in real estate as investing in America. I do believe the American dream, I'm Canadian, right? And I do believe the American dream is live in a well and real estate. You just have to be careful and invest with the right teams and the right people in the right deals.
Sarah:
And again, those are very important things for people to understand. It's interesting that you talk about that American dream, because I think when you're in the United States, you know, I lived abroad for many, many years and I've just come back for 2024. And I was reflecting on this American dream concept, because now that I've been here a year, basically, it's easy to lose sight of the opportunities and things that we have with this negative news world that we have here. And yet when you step out of it, even just as close as Canada, which Canadians, of course, you know, view the United States as completely separate culturally and everything. I don't know if Americans always do Canadians as completely separate culturally. Objectively speaking, I think the rest of the world looks at us as North Americans. But I do think it's great to hear you say that because it is true. I don't think you can find any place else in the world that's got the entrepreneurial opportunities that the United States has. There are very entrepreneurial cultures out there, India being one of them, I would say. But I do think that it's good to step back and recognize that you have to use your smarts and, you know, and there's a great amount of education available to help you with that. But you also there is a chance.
Trevor:
The Canadian American thing I ever heard was Robin Williams said, Canada is a nice family that moved above a biker bar. That's awesome. There's one other thing too I want to talk about that's a little bit different, a little bit different than our opportunity here. There has never been a bigger Delta between the cost of home ownership and the cost of rent. That has made a 60 % gap in the last three years. So where home ownership was a little bit more of a dream. It's not going to become a reality for so many people. And unfortunately, so many people are going to be lifetime renters, which again, if we go back to our value add scenario, it's taking an apartment complex that's not very nice, not very safe, and making it at least a pleasant place to work for those who can't afford home ownership, but want a safe place for their family to live. That's a great burden on us as syndicators and sponsors to be able to create that. Because unfortunately we've created this where people are just priced out of owning a home. I don't know if it will ever balance out again, but there's never been the four years it's gone like a 60 % delta where like a $1,500 mortgage or loan, sorry, rental property, sorry, $1,500 mortgage payment is now a $3,000 mortgage payment. In theory, the same asset because of the interest rates and the growth of the value of homes.
Sarah:
It's interesting you say that because I think there's also a bigger story there, which is that...this emphasis in the United States of home ownership, of course, who doesn't wouldn't want to own their own home, but you can also own an apartment, right? You can. There's, you know, Europe and I don't know about in the big cities in Canada, but generally in large urban areas, many, many people live in apartments, very small ones that are worth a lot of money, actually. Take London, for example. And there's nothing wrong with that per se, there's a lot of flexibility that comes from that. And I think that future generations, you know, there's a lot of perhaps less emphasis on having a lot of things that my grandparents and parents probably valued, like china is a great example, huge sets of china, those types of things. so, and there's this flexibility that also comes when you're a renter, right? In terms of you have, you don't have to worry about maintenance and perhaps lawn care and all of those kinds of things. So it's also kind of like a cultural shift to me into what other places have already come to like European cities and some of the big cities in North America and other parts of the world, is living together in multifamily housing, renters or not, is actually also potentially good for the environment in terms of sustainability. And it just takes a shift in mindset that maybe it's okay.
Trevor:
It's so true and I got to be honest one of the most eye-opening things is I read rich dad poor dad and find out that my home is actually a liability not an asset. I'll be honest I still have a struggle to wrap my head around that right? still have a struggle to wrap my head around that but if you think about it investing in syndications you are buying real assets so again you're buying assets that produce cashflow income or multiply like I gave that earlier example if you can imagine a hundred thousand dollars in 25 years going to 3.2 million dollars on those you know their wild assumptions, but it's not too far off. That is truly creating generational wealth for people And and and it's a very important thing that people have this in their in their financial plan.
Roland:
I think that's the one thing that we all can really connect on is that what we're trying to do and with Massive's work and with our work as attorneys, investment advisors, we're trying to create value for people. And that's a very noble calling to me.
Sarah:
And it's also, mean, we're here, our podcast is about alternative investments. They're more than just real estate, but real estate, think, is so fundamental because in the end, we all need a roof over our heads. God willing, the sense that, of course, that's a whole other topic is the people who don't have a roof over their heads, and maybe we could do something about as a society. But in the end, this is, you know, something that's still connected to what's really available on the actual earth.
Roland:
Well, Trevor, anything else we don't want to. I'm going to give you opportunity to say more about yourself and Massive. Yeah, just make sure you connect with us. can reach out. LinkedIn is the best place to find me or any of the Massive partners. I love connecting with people on LinkedIn. If you go to my LinkedIn, there's a link there to book a call with me. I love talking to people about real estate investing, anything. It's, again, I really just hope people will come on the journey with us. That's what excites me. Don't wait till you're, I waited till I was 58 years old to figure this out. Don't wait. They say, don't wait to buy real estate, buy real estate and wait. It's very powerful.
Sarah:
Trevor, I feel like we need to capture these few little sayings. You've had a few little lines that are so great. Wish you...Maybe we can. Well, they'll come through in the transcript and maybe we'll put a few down in the notes because you've got some great things that are really good.
Trevor:
Well, I didn't create them. I just borrowed those. So that's OK. We'll just borrow them again. They're super powerful and they're complex, but they're easy. Right. Very complex. Like real estate is not a get rich quick scheme. It is not. Some of these people sell it, know, the house flippers and all the things sell it as that. And yes, there are some people that done very well. But at the end of the day, it's slow, prudent investment of your money to grow it in a stable environment and in one of the most tax efficient environments. Again, this is an accounting call, but it's a very tax friendly environment for you to be able to invest your money. You're earning it at the lowest type of gains, capital gains, you have a lot of things you can write off on depreciation and other factors. And again, it's one of the best investment vehicles that the government is seeing fit to also make one of the most tax advantaged investment vehicles. It's like you've got this double win.
Roland:
That's great. Well, thank you so much, Trevor. That seems like a natural place for us to stop. Today, what we found out about is Trevor is a person, individual, his philosophy, his sales style. We've also found out about Massive Capital, who they are and a current investment opportunity. And we're going to make sure that we include links to get in touch with Trevor and Massive in the show notes.
Sarah:
Thank you for watching everyone. If you enjoyed this episode, please like and subscribe.
Roland:
And remember everyone, take aim with your alternative investing strategy.
Sarah:
See you next time.