Multifamily Ground-up Construction with Dave Seymour

Posted by Shannon Robnett Posted at December 28, 2022 Posted in Podcast

Dave Seymour has been sought after, as a no nonsense investor with zero tolerance for inefficiency and speculation. He has been doing business alongside investors of all experience levels and has helped many accredited investors on their very first deal. Dave has guided some of the largest investment firms in the nation through complex transactions.

Tune in to this episode and learn more about multi-family investing, COVID migration impact and Stimulus effects on the CRE market. Learn how to win and earn passively!

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Multifamily Ground-up Construction with Dave Seymour

Hey everybody, welcome back to The Real Estate Run Down. We are in season two and today, like every episode, I have got a killer guest for you guys. I’ve got Dave Seymour with me. Dave is working. Most of his stuff is in Florida. But as you’ll learn very quickly from his accent, he’s not quite from Florida. He’s not a he’s not an original one, though. He’s like a lot of people that have immigrated into Florida lately, but I think he’s got bigger roots to that. So guys, help me welcome to the Real Estate Run Down my buddy Dave Seymour. Dave, how are you, man?

Hold on, give myself a round of applause. Hold on. Hold on.

They do a good job for you. Wanted to make sure

The crowds are going crazy.

There you go.

Yeah, dude. It’s funny brother. I definitely. I’m definitely a mutt. You know what I mean? Like I’m a pick me up a place me over there kind of guy I’m from. I was born in London. Not many people know that. I’m actually an immigrant to the States. I came over in 1986. There were no walls up back then you could come in a lot.

You know. And I mean, at least I mean, there were some other guys that came over in the Mayflower so they kind of started this whole mess. Right? So

Yeah.

Right. They..

Threw the tea in the harbor. And then it got a little shitty after that. So

Yeah.

It’s all good. It’s all good.

So Dave, we’re yet now what are you doing?

So, look, long story short, I don’t know whether you’re familiar or even anybody else. We did that TV shop here called Flip in Boston. I was heavily invested in the single family stuff. Yeah, we did a reality TV show. And what that did was, you know, it definitely put me in a position where, you know, you get the exposure of a national expert. Now I’ll let you in on a little secret. First of all, you could be a complete and utter donkey. But just because you either have a book, or you’ve been on a TV show, you’re perceived as an expert, right? And I’m speaking from, I’m speaking from fact, right, you can be a complete and utter donkey. You got a TV show, and you must know everything.

Well, I mean, come on. And we got this place called Washington DC that’s full of donkeys and elephants.

Oh, yeah,

That’s it. All right. We don’t go, we don’t go down that road. So.

Okay,

Now we try to keep it to real estate. That’s complex enough. Right. The next topic we want to tackle after we master real estate is what makes women tick. And then we’ll go to politics, I think, Well, I think we’ll kind of go that hour, but you were on that TV show that got you a little bit of notoriety, you kind of brought that to the next level. What are you doing now?

So post COVID So COVID obviously through through a massive spanner in the works as we say back home in England, you call it a wrench, we call it a spanner at that time, pre COVID I just finished building out a pretty substantial hard money lending business for non QM one to four. And the business was firing fantastic Shannon, I mean, we were you know, we had seven or eight loan originators I had probably 15 million in the pipe and then COVID hit and we all went oh my god through a hands up and everything shut down as we know,

Right.

But what that did was was it put my hard money lending business out of business, because I was relying on a line of credit and then my notes were getting purchased by Wall Street and Wall Street stopped doing everything it was a crazy time there for about six months you know, blessing and a curse depending on how you look at it and post COVID coming out of that. And I was blessed enough to not have to rely on trading time for money so I didn’t have to worry about incomes. I had reserves and residuals. I could rebuild the next business while we did it. I reconnected with a real good friend of mine by the name of Walton. Oh Vicki Walter has been down in the Cape Coral Florida market for Jesus 30 years starting in Ohio with student housing. He’s been a developer, a builder and a mortgage company. But Walter was heavy into development and multifamily and in the Cape Coral Fort Myers market. So you got a couple of oil War Dogs, you know, shooting the breeze, what’s next,

Possibly go wrong? What could possibly go wrong?

Shannon just as a little sidebar, I don’t know how short or long your podcast is. But Walter is ex-military. He was spelled

Even better, right?

I was a firefighter and a paramedic. So when we talk about what can go wrong now. We’ve seen what can go wrong and

It sounds like that sounds like, you know, a priest, a rabbi and they walk into a bar. Yeah. Sounds like a story. So you would want to reconnect with what kind of troubles you guys stir up.

So we’re doing multifamily ground up construction development in Fort Myers Cape Coral area, as well as repositioning

Nice.

Oh, we’ll take a multifamily asset B class, you know, in need of a little love and attention. You either reposition the tenant base, you reposition the property, reposition the image, get your property management squared away, raise the rents a little bit you know, get Under the cockroaches in the cellar dwellers, upgrade the asset, increase the NOI and make more money. It’s not complicated. It just takes a lot of work to get it done. Right.

Yeah. So are you guys doing light rehab, you doing heavy lifts on that? What do you do?

It depends. So look, it’s interesting. If you look at the last deal we did, just as a little case study is a 14 unit acquisition in West Palm Beach that came to us fully rehabbed, zero tenants. And it was interesting because the rehabber didn’t have the skill set to tenant manage, we obviously did. So in a full cap market. We purchased the property for 2 million cash, syndicating with accredited investors bought the whole thing cash with their money, tenants in the building in less than 90 days obey pro forma market rents. Now in K in, in West Palm Beach, you know, the going cap rates anywhere between a three and a half and a four,

Right?

What 3.2 million, and we did that in 90 days, right? So

Then you then you refinance that repay your tenant repay your, your syndicator capital capital, and then you hold it out for the next 10 years, or what’s your plan with

No, I can put that value to work at a higher rate of return than just holding on to it. We’d like to turn the capital over.

Yeah.

That one there. You’re right. Refinance at the one year mark, fully reimbursed the syndicated capital, but they stay in the deal for one more year, then refinance or sell at the two year mark. That’s like 1.5, 1.6 or two years. Yes, no cash on cash IRR. I mean, the IRR is ridiculous, because it’s only running for a couple of years.

Right? Right. No, and, and you know, that’s where that’s where, you know, I’ve often found that you get really two different kinds of investors, you got those that want the appreciation, so I always tell them how much I care about it. Right?

Yeah.

Another kind of appreciation, too. But then you got the guy that wants cash flow. You know, and you really definitely need two different types in your deals. Because just like you found, if you go to someone like my dad who’s looking for cash flow, he’s not going to like your deal. Doesn’t matter how ridiculous the IRR is, he wants money every month, right? He’s looking for motorhome fuel and dog food to go see the world. And that’s what he and mom need. Right? I mean, dog foods for the dog, you know, the motorhome? And that’s just to clarify. Right. But you know, so you get the two different kinds of investors. And now are you doing stuff that you’re holding on to longer than that, that gets your cash flow for your people?

Yeah, yeah, we are some of the assets. We started to see the compression of the cap rate in the marketplace. So instead of going in and buying you know, as is cash flow and preying on a 10 year run to increase the NOI and a cat which is what look man it’s just be zero degrees on this shit well,

Yeah.

We bring in right accredited investor capital, that’s people’s retirement accounts, their dreams, their hopes their family, I got a responsibility brother

Absolutely.

Sleep at night, if I’m selling them on, on, you know, 10 year hopes. So for us, I like to do the cash flows on the way in yeah, let’s get cash flow on the way in. But at the same time, I want to offer appreciation not only in the exit three to five years, but Let’s appreciate that cash flow as well. So I’m not buying A class properties, you know, that a 3% return or a three cap. It’s not in my it’s not in my business model to do that. But what we found was which is why we moved back over to some of Walters skill sets and development was as I can build cash flow. You know, pretty fast in Florida. It’s all cinder blocks and Stucco those bad boys roll those blocks up you got a bunker, you make the outside pretty the inside pretty you turn it up, you’ve done and dusted as we used to say back in London, right? Yeah, something like that. I can build a cash flowing asset for my LP capital. 12 months, 18 months.

Yeah.

And give him a piece of the profit on the back end. So

You know, Dave, the other side of that is, you know, you and I kind of come from the same world there. I mean, I’ve been in construction and development for 20 years, you know, my listeners know that background about me. But what I you know, we built into an eight cap, sneezy deal, you just got to have the right kind of people. And then if you wind up in a situation like Oh, eight, right, if you’re done and dusted, I like that, I’m gonna keep that if you’re done and dusted, and all of a sudden, the market starts to go the other direction on you. You’re not in a bad position, right? You are your tenant tising at the market, and maybe you’re not going to make a one four or one six in 12 months, but you’re in a great position because you’re not the guy down the street to just pay for cap for something that’s trying to press the rents and now there’s nothing to press right. There’s nothing there, there’s no forced equity there. Right.

I look, I look for opportunities to be a passive investor as well as you know, the GP side of our active investments. Right.

Right. Right.

And I look I’d like to ask the question, not tell you for me. I walk away from 100 opportunities to do one.

Yeah.

And early in my career, I’d look back at some of the stuff I walked away from. And I go, Oh, man, they killed it. Right? They scored like, like a crazy man on that deal.

Yeah.

But I always factor in again, man, I’m my number one job. And I would say your number one job is to be a custodian of other people’s capital. Right.

And that’s the part that a lot of people don’t understand. When you step into that GP role. Dave, you are so right, you are holding their hopes and dreams, you’re holding the sweat off their back. And their goal really is you found out as you know, no, they’re not investing in you totally for the IRR. They’re investing in you because they believe you.

Yes.

They, they trust you. And, there’s a I wouldn’t say that there’s a lot of people out there. But you know, there’s, there’s a lot of people that don’t have the reverence for the capital that it deserves. But when you do have that, you really have that person’s unlimited trust, right? And you have that unlimited responsibility that says, I don’t care how bad this goes, or how good this goes. My number one goal is to make this thing happen until I die. Right?

Look, there’s a buyer beware scenario, right? Some of the biggest names that we could talk about in syndication and capital raising and deployment in multifamily acquisitions. I know some of those names. I know him personally. Because I’ve been that guy from TV, I get invited into certain, you know, environments that the average syndicator probably wouldn’t get an opportunity to, right? I’ve shared stages, investment stages and seminar stages with some of the big names. And when you get to talk to him one on one, you can really find out their true heart. And when a guy says, you know, I don’t care. It’s all about me. When a guy says my objective on every single interaction I have is where’s my money?

Right,

Dude,

Yeah.

I don’t like you. You’re not my You’re not my Huckleberry. I know that this is a, you know, it’s an aggressive business, right? I guess. I’m fully aware of that. But you know what, I am not going to leave collateral damage behind me. Because I am overly aggressive, I can promise you the frickin stars in the moon, and everything else. But I haven’t lost a dime of investor capital. In the 15 years, I’ve been in business, so I didn’t get to stop now. That’s that’s,

And that’s, and that’s the track record you’re really looking for, you know, if you’re gonna have deals that go better than other deals, you’re gonna have deals that don’t go well at all. But what are you doing with that trust? And with those being the custodian of that capital? And what are you doing to put that right, let’s kind of shift gears a little bit. And I wanted to clarify, before we move on this topic, when you say that guy from TV, we just want to clarify that it was from flipping Boston, not cops, right.

Was actually America’s Most Wanted.

I knew I recognized you. Anyway, guys. We’re having too much fun here. But let’s shift gears for a minute. And let’s talk about what has happened in your market because you’re in Florida.

Yeah.

That’s your main market. And you guys have had massive COVID migration. What does that really do? To the reality of your market? And to the reality? I mean, the reality is your markets growing . What does that mean? But also, what is the perception of what’s happening in your market? Right.

So there’s less statistics that we pulled this 1500 people a day moving to Florida? 100. Right. It’s still the number one retirement destination in the United States of America. I think Arizona comes in a slow second. So what does that mean? Well, statistics also show us that for every one retiree, it creates service jobs, either in health care, restaurants, etc, etc. Yeah. golf cart repairs.

We should probably be a little bit kinder. We’re not that far behind them.

We ain’t that far behind. And brother read that far, but I think I need a little more Botox.

Yeah.

We’re not that far behind. But what that does is it creates an incredibly dynamic market. And look, my skill set is not underwriting dynamics and stats and all of that stuff. I got an excellent couple of partners who deal with all of that. So I’d take everything from a big picture. But basically, it says there are way too many people looking for affordable housing, right. And I’m not talking low income, you know, like the housing challenge that we know about, I’m not talking about c minus d plus assets. I’m talking about good, clean, safe, tight, you know, affordable housing. So if you go into the market right now and try to find an asset at the six, seven cat by side, looking to reposition it to a 10. It doesn’t exist,

Right?

Because the amount of capital that is in the market that is just flooded Florida. It’s ridiculous. I mean, our strike prices. A year ago, we positioned ourselves to develop at strike prices. A year ago, we had these insurance groups that were coming in and doubling our offer 500,000 hard in 24 hours, right? 5000 hard in 24 hours, and we only need two weeks due diligence. What are you kidding me? I can’t compete with that. But again,

But then when you look at the competition, are they really competing with you? Are they really doing proper due diligence? Are they really being a prudent custodian of the insurers money if they’re willing to throw $500,000 hard in 24 hours?

You know, what, I asked the same questions, but they’re still doing it, Shannon,

Yeah, I know, and that’s where we have to, I mean, I’ve run into the same situations you have, where you just kind of have to back off the throttle a little bit walk away from some of these deals, because while reality, that’s the reality I’m talking about, the reality is just nuts. You can’t do that with your people’s money or with your you know, I mean, somebody said this the other day, you know, I treat my investors money, like it’s my money, and I said, Oh, geez, man, I treat my investors money better than I treat my money. Because I know, there’s credit cards, there’s stuff on my credit card that I forgot to cancel two months ago, and I don’t do that with my investors money, right? That’s what it is, they’re coming in at dawn $500,000 of their investors money out of a deal in 24 hours, that’s non refundable. Does that force them to go forward with the deal? Or does it force them to admit a loss, and then go harder in another one? Right, so

Here’s to your point, and I love this conversation, pre Look, man, I appreciate commonality. But I also appreciate a difference of opinion as well, right?

That’s a good one, we’ve lost that in America,

We have not only are you red or blue. So I look at these acquisitions at least recaps these large investment groups that are coming in. And the reason that they do it is because their capital basis is so strong, they can absorb those losses for three to five years, and still make, you know, the capital they need to make because of the size of their capital pool, and the multiple investments that they’re in. But here’s what I also know, when the pain gets too strong, they’ll have to do something. And that’s when you and I will be standing there, you know, three, five years from now, with a track record that’s proven a database of investors that love what we do. And we’ll be taking back some of these assets that they’ve picked up, because they can’t feel the pain anymore. We started in 2000, and 567, and eight are the California investors. We’re over here on the East Coast in Boston and New York and, you know, buying up everything because real estate can only go up, it can never go down. That was the mindset. And we got into a tsunami of discounted assets.

Right?

I could be wrong, brother Shannon, I haven’t got a crystal ball. But when I look at fundamentals first, and I see deviation from fundamentals, I see massive opportunities in the very near future, whatever that may be. But you know, we’re all doing the best we can with the information that we have. Right?

Right. Right. So let’s talk about fundamentals. Let’s talk about what all of these stimulus packages have done to get the fundamentals right. I mean, I heard a statistic the other day, and I actually checked it out 40% of the US dollars in circulation on balance sheets today did not exist 26 months ago. Yeah, it doesn’t exist. And it doesn’t matter which president you like, they both created some right? Again, we don’t talk politics here, we just look at the reality. If 40% of the money floating around in our economy is new. What did it do to the other 60% who have been hanging out here for a while? And what kind of impact is that going to have on rents, sales prices, or cap rates? What’s it going to do to all that?

It’s going to create a false economy. This is an opinion I’m not an economist, right? I’m a blue collar guy in a white collar world brother, but it creates a false economy of comfort. And what’s going to happen in my opinion, is this all of that free money that came into the marketplace, and I’m going to talk about the EDL not so much about the the the payroll protection, the PPP, those were small amounts of capital, but that EDI capital that emergency relief capital, that was substantial, right

Was pretty big.

And it came into the marketplace for business owners and entrepreneurs who had a track record and tax returns to support the loans, which a lot of us have. And looking at that. And then looking at the term so the term is 18 months, no payments, and then it goes into a three three and a half percent on the capital. 30 year fixed now, one can look at that and go, Wow, that’s fantastic. That’s free money. No, it’s not free money. If you haven’t been able to reestablish yourself fully in your business, whatever it may be, it’s going to create opportunities that I think are going to be unheard of. And it’s also going to create massive opportunities in commercial real estate, because a lot of that capital has now gone into there, and now they got this extra billpay that they didn’t have before everybody wants to own real estate, right?

Yeah.

We all know, it’s one of the pillars of long term wealth. So the false economy is my perception. And I’ll back it up with one commentary. I was hanging out with a friend of mine called Richard Davis, who owns a large real estate investment company down in South Carolina. And we were driving around, we were looking at stuff, etc. And we were having this exact same discussion. And he says, You know what I see, Davey says, I see exactly the same thing I saw right after the last hurricane came through here. He said, right after the hurricane, everybody was driving Mercedes Benz and BMWs. And the ladies had nice expensive pocket books. You know, he’s embellishing. But his point was, it was a false economy, because of all the emergency money that came into Charleston after the last hurricane.

Yeah.

I think we’re gonna see the same thing. So fundamentals transfer of goods and services for capital needs to get back on point.

Well, you know, and I use the analogy I was asking, I have a similar conversation with a friend of mine yesterday at lunch and, and I said, Hey, I said, you know, is this Are we heading into the place like it was, you know, we’ve all heard the story after World War Two, or took a wheelbarrow full of Deutsche Marks to buy a loaf of bread, you know, because the Deutsche Mark wasn’t worth anything, right? Are we headed to that place? And he says, Well, no, in World War Two, they were stupid. They kept going to the Baker with a wheelbarrow load of bread. He says, what they should have done was beat the guy up and steal the wheelbarrow. I said, Man, I said, you have got it figured out. It’s the wheelbarrow, because then you could go make a living, and he goes, No, you can sell it, man. So I guess I had everything wrong. But I do agree that with that inflationary period, you know, prices are gonna go up and, and people are gonna man, my house is worth $700,000, your house is still three bedroom, two bath, it’s still a shelter, it will trade at what it is it will not ever be, your house is not going to all of a sudden go, Hey, I have a four bedroom. Well, you know, so did the value of your asset go up or did the value of what you’re trading for that asset go down. And we’re also seeing a lot of that push into real estate to protect that, at quote, unquote, any cost that now when you go to go back from, you know, because you’re trading dollars for real estate, and when you try to go back from real estate to dollars, at some point in the future is where you’re going to wind up hitting that wall because you overpaid, that inflationary magic money is to depreciate to depleted

Yeah.

And now you’re back to a real dollar cost average of what the assets are worth. And you’re the one sitting there with no seat in the music stopped.

It’s such an interesting conversation brother, it really is because it’s, you know, you’ve got macro micro and everything, right, right. Micro Economics, by zip code, are so interested to really drill down into them, you know, what are we all doing? Right? Really, at the end of the day, what is the game plan? What’s, what’s the exit strategy, right? And we’re all gonna we’re all gonna take that dirt in that one day, what did we leave behind us? How good was the journey to get there? And you know, there’s that old saying that what is it? It’s the house poor? Right?

Yeah.

A mortgage on the property. And everybody is no longer house poor. They’ve got this equity in the home. And look, I was a rehabber for years. I love it when this market shows up. Because everybody wants to throw the imaginary money back into the house. Right?

Right.

So you know, builders are busy, construction is busy. Try getting a guy to come and you know, hang wallpaper in your kitchen. If that’s your thing. You can’t find them anymore. But to give you that micro example. I’m like you, right, we’re investors. I look at it as sticks and bricks and capital opportunities.

Right

And my business blew up in Florida. I mean, all my actions down there. I’m up here in the freezing cold in Boston and my guys, we’re all working down in Florida. So I went home. I don’t know what to call it six months ago and I walk in the door I go, baby girl, where are you? She says what so honey, I say I got great news. She was selling the house. The end of the street just paid 1.4 million for the house that was selling Let’s go baby go. I got a million dollars because you and I can work a million dollars and make it $3 million.

Yeah.

We know how to do that. Yeah. And she looked at me and the tears started coming down her eyes. I thought she was so happy. They were tears of misery. She was miserable. I’m like, What’s the matter? She gets a house. The kids are at school. So it’s all about the emotional attachment.

Right?

I’d love to tell you. I said, No, we’re selling. There was a there was I say, but she’s

Not. I noticed. I noticed you’re still alive. This would be if you just sold the house. This would be an interview from the beyond. Right? Yeah. I’d have to

Leave the session. Yeah, what perception you know, she’s the rock that I get to stand on. So I can look cool. She makes all the decisions.

Yeah.

But it’s like, you know, this, this influx of? It’s not free money. It’s always got to go somewhere. Money wants to move. Right.

Right.

So you got that massive movement of capital into the marketplace from stimulus packages and COVID Relief, etc, etc. And it creates a sense of false security. It really does. I would much rather see a marketplace where people were really haggling over goods and services, rather, like you can pay $4,000 over sticker for a Ford F 150. Right now.

Yeah. Yeah. And the sticker, we and we know the stickers inflated too, because we’ve never paid stickers before in our lives. Right.

And that’s crazy, right?

You know, here’s the funny thing, Dave, when you look at what you’re talking about, and I agree with you, right? But when we came through Oh, eight, everybody stopped building houses. But they didn’t stop having kids and people didn’t stop graduating high school and it didn’t stop getting married. And they didn’t stop. Well, a lot of them stopped moving out of their mom’s basement and they stayed there for the next five or 10 years. But the reality is, we’re up. We’re somewhere between seven and 9 million housing units short today.

Yes.

So how are you going to haggle? When you’re seven and 9 million housing units short. And a lot of people found out that locked down was 7 million to their closest friends isn’t their idea of a good time, and they’re now leaving where they’re at, where they have a perfectly good home, moving to somewhere that they like that has a shortage already creating an additional shortage, and you throw inflated money in there.

Look, here’s, here’s my answer to that, you know,

Go out and make money and worry about it later.

Put money to work and wait. Stop it stupid. It’s not the time to buy, right? I’ve had friends and family locally, and they’re like, Dave, you know, I’m in. I’m bidding on this, this freakin house. And I’m like you’re buying at the top of the market. Now I’m on my realtor told me it’s gonna go up next year. No shit. Sherlock, a kosher realtor, told you that they want to do the deal.

Right?

They’re not writing the check.

Right?

So for me, it’s hard. If Marybeth, my beautiful bride had agreed that day, I’d have taken a million dollars in equity. And I’d put it to work in passive investments. I’d have rented a nice little something down in Florida, the boys would have assimilated into Florida schools. We’d be sitting at the swimming pool instead of freezing our you know what skis off up here in Boston?

Dave, this is being recorded, she will see those comments. So just

Oh, it’s okay. loves me no matter what.

No.

I figure if when I come through the door, my wife still comes towards me and my kids don’t run away from me. I figure I’d still do it.

Right. But  You know, you did put something to work, you know, but here’s the other side of that. And this is what a lot of people you know, don’t understand is that your house isn’t an asset. Because your house is a consumed item. You are the one eating it. Right? I mean, I did the same thing. Two years ago, I sold my home. I don’t own a home. I own a lot of apartments. But I don’t own a home. I rent a home, right and rent an apartment. I got to a really nice place. Right? But nobody’s worried about me being homeless. But the reality is, if I’m looking at the same thing going man, I can put my stuff to work that will make me more income that allows me to pick where I want to live, how I want to live, and I can let the other guy make a decent return off of me.

Yeah,

But at the same time, I’m making that money, right? And because this is this economy isn’t gonna be here forever.

This economy Look, here’s my take on it. This economy right now Shannon is screaming, absolutely screaming for what’s called horizontal income. Right? We all know what vertical income is. Everybody goes out and gets a job tracing time for money and they hope they get a 3% raise every year and they don’t get beat out on a promotion. Right.

Right.

Maximize the ceiling on trading time for money. Doctors, lawyers, they’re still trading time for money. Right. If they don’t work, they don’t get paid.

Yeah.

There is this market right now. If that, you know, free flowing capital, that 40% that you described.

Right,

If that was working in vertical, in, in horizontal income streams,

Right.

That’s where the magic begins to happen. So what that’s investing in an apartment, investing in a business, buying a piece of a franchise, whatever it is that creates income while you’re not working. And none of us were ever taught that. I think, in my London education, I don’t think you’ve got it in high school, they don’t even teach you in college now. So you know, that’s what separates the class structure that we’re in today? Is that knowledge of, can you create, can you make money while you’re sleeping?

Right.

Is really the premise we’re looking for. And now’s the time to do that.

And, you know, this is the thing, especially when we’re seeing 7% inflation and 3% interest rates. Right,

Right.

So we’re gonna argue about whether or not we only have 7%. Right? How can you have 7% inflation with gas doubles? And lumbar triples? Right? I don’t know, I don’t, I don’t run those calculators. But, but if you’ve got 7%, inflation and 3% interest, you’re borrowing the money today and paying back in inflated dollars, right? I mean, you’re, you’re gonna get more from that inflated period for the rent that you’re gonna then take and peel off the set amount and pay back with. But here’s the other thing too. People go well, I can’t get I can’t get a line of credit on my house. That’s what happened to no eight. No, what happened in a way does everybody got a line of credit on the house when bought a boat and ski machine and, and, you know, then then a vacation home in Florida, they created more liability, that required them to pay it, that they were that vertical income that needed to come down from here and go into there. If you’re taking that out, and you’re reinvesting in it, you’re putting aside a reserve account, right? I mean, we saw when COVID happened, everybody, all the banks said, Hey, we got to double your reserve account. What from nothing to something, you know, we were all swimming naked in that area. A lot of people were when it came to reserve accounts. So like you said, a nice horizontal income, that is reusing the equity that you already have to reposition so that now you may have a million for value in your home, but your other assets are paying you for that, paying that payment. So now you can go have your life like you want. Right?

I, somebody said to me one time, the cost of capital is far less important than access to capital.

Yeah, that’s all there is.

You know what I’m saying like we are, we are groomed most of us. There’s a select few that aren’t. And you know, they don’t have the skill sets that you and I have. But you know, most of us are groomed, the high interest is bad. Most of us are groomed that debt is bad. And yeah, I looked at it today. And it’s been you know, it’s been a metamorphosis from my blue collar world to the world I live in today.

Right?

But I look at it today. Example, let’s go back to the EDL money, right? If you can take economic relief capital from your business at 3%. Pain in 18 months. If you don’t have that vertical skill set, sorry, that horizontal skill set,

Right.

Put that money to work. You shouldn’t take it

Right.

You don’t deserve it. You don’t have the skill set or the intelligence to put it to work,

Right.

But what if I took a half a million dollars in economic relief money? I called up Shannon, I said Shannon, what do you got on deck right now for investments. He says I got a sweet little, you know, 40 unit complex, we’re doing a slight reposition on it. You know, there’s a cash on cash return targeted out of eight to 10% you got 15% IRR over a three year hold. 

Are you in n my email?

I already described deals worth investing in. I gotta come Alright, let’s say that for a second. I put that 500 to work right and you want the deal. I gotta trust you know you love you like I do to know that you can put that capital to work. And then that money is now working. And where did the frickin money come from? It came from me in the first place because I pay taxes for the past. God knows how many years and yet you know that that mentality of cars boats leather coats, right Keeping Up with the Joneses?

Yeah.

Getting a new car every year, making sure you get a big shiny watch. It’s all garbage man. Garbage. Well, the money right?

And it’s especially that way if you have to be the one that has to go out and actually physically do the work for that watch. Or that boat or that car. Right? It’s another thing if now you’ve invested in a deal and that deal is now paying for that car payment that deal is now paying for. You know the other thing is and it’s creating tax relief also because you have the beautiful value of depreciation that comes with real estate, right?

I got a friend to your point right? You love this. I got a friend. He’s a high end watch. Freak. You know what I mean? Like he’s probably got three $4 million in watches. That’s his thing. Yeah, you know what he does? He buys them in his self directed IRA. Sorry, but listen, he buys Are we by him in his retirement account?

Yeah.

Oh, in that they’re in appreciating assets,

Right?

And I’m like, Well, how do you get to where he is? He said, I’m allowed to take them out of the IRA. Service them, clean them, wind them, change the batteries?

Yeah.

Like the intelligence of, of wealth oriented individuals is such a different mindset for most, right?

Well, here’s another thing, too. There’s a couple of companies out there, right now that you can rent the watch. Okay. Now, as crazy as you think it is to rent the watch, that’s not the argument to have, because there’s people out there that will rent the watch to look like they have a $10,000 Rolex, right,

Yeah.

But here’s the thing. If you are in the InVEST store, you’re gonna go out and you’re gonna buy a million dollars worth of watches that you love. And you’re gonna wear what’s not being rented. And you’re gonna depreciate those watches, right? Because they’re a tool in your business. So you’re gonna write off your business assets, people are gonna rent them, you’re gonna have this business that you’re just you’re the model. Now, we could argue that somebody could have found a better looking model than me. But at the same time, there’s a way for an entrepreneur to find a way to make what they want pay for itself, right?

Yes,

I do the same thing with airplanes. If you believe that, I mean, I have

Really, yeah, my partner Walter does it with boats down.

Yeah, all you have to do is find a way to make a business out of what you love, right? And whether that’s chartering the boat, you know, getting people to rent the boat, Airbnb, the boat, however you want to do it. You know, I have a flight school that teaches people how to fly, it creates great depreciation and creates passive income for my investors is a great mechanism. But it’s about being an entrepreneur and finding a way to take what you love. Create that horizontal income, that now what you love isn’t something that costs you money. It’s something that makes you money, and allows you to enjoy it, right?

You’re not doing this. So frickin could like these moments right now.

Yeah.

I forgot totally about the podcast and all of that stuff that we’re doing right now.

Yeah.

I was like, so in the zone. talking my language, right, guys?

Yeah.

Understand the topic of conversation to an nth degree. It’s like, I’m gonna start Googling airplanes and boats and watches.

Let me just run this scenario for you. This is what Walter does. He buys a $100,000 boat right. Now, in boats, you don’t even have to put 20% down, you could get away with five or 10% down, right? You’re gonna get a 5% interest rate. Okay? If you lease that boat to somebody else at 8% of cost, okay, so you got a $100,000 boat, you’re gonna lease it to them for $8,000 a year. That’s a pretty inexpensive payment, but it’s gonna cover yours because you’re just 5%. Now you’re gonna put let’s say you put $10,000 down. But you put that into service in a business and you depreciate the hunter grant, the IRS says, Hey, Dave, you’re in a 37% tax bracket. Here’s a check back that you don’t have to pay us $37,000. So you put in 10, you got back 37. And now you’re getting a 3% spread on the money you made. That’s a pretty good return. Last time I checked and you got a goal. You’re supposed to do it every once in a while.

How you love America. It’s been so very, very good to me. Thanks. I’m a drug dealer. My dad called me but he didn’t understand. David, I mean, real estate. If you’re not dealing drugs. Oh, boy. I said no, that I probably should.

You know, there was a couple of years ago when if you would have answered yes, your dad would have said Oh, thank God. I thought you were still in real estate.

Yeah. Oh, no. People used to say what do you do? I say I’m a real estate investor. And they go on, sorry.

Yeah, yeah.

Sorry. A hug.

Yeah, yeah. Here’s 10 bucks. I feel bad for what’s going on.

I get a cup of coffee and a cigarette. Yeah, it was great.

Yeah.

I love the conversation, man. I do.

Know and that’s what I love about this podcast. And this is why I created it so that I could connect with people that like you that have a vision for what they can do that are willing to help educate people. You know what when I first started syndicating, I used to think that I was begging people for money but then I realized that I have the ability to help people understand how to invest number one, help them do it well. Number two, and create something for them that they have no ability to create in their life. Right? When you understand that to see.

Yeah, to look man when you see the light go off. Classic example. Plastic Surgeon. Sorry, dermatologist New York City creates a skin cream line. P comes in pre COVID says I’ll give you a 90 million for your skin cream line. He’s like done yet. COVID comes but it’s not about that. They say it’s not 90 anymore. It’s 60 million. He goes, done. So I stopped communicating with him after this point. I said to him, “ What was your tax exposure? What did you use for shelter in that income? As I’m on this call right now? He goes, what does that mean?

Yeah, yeah.

It goes, I wrote a check for 30 million to the IRS on the 60 million that I took in.

Yeah.

And I’m like, Oh, my head on my head. I could have shown him deferred sales trust. I could have told him about Delaware trust. There’s like, so many so many things out there.

Segregation. Yeah, segue. Yeah,

Appreciation. 27 and a half years. Yeah. Why are you? How would you like a k one, to give you a ride off bigger than your actual contribution into an asset?

Absolutely.

For everybody? I’m not your accountant. I’m not sure it’s,

We don’t give financial advice. If you’re looking for trouble, we’ll help you with that. Right. But, and you know, that’s what, that’s what’s great. Dave, I’m sure you have one. I’ve got great people behind me to come up with these ideas. I put them on paper, I send them off to the right people that look at it, they go through the tax code, they do all this stuff. And they make the right decisions for us, right. But there are so many ways to do it. I heard a guy. He told me this 18 years ago, 19 years ago, he says it doesn’t matter how much you make. It’s how much you keep from the IRS. Right. And that last bit is the most important part. Because if you’re constantly in partnership with somebody who’s taken 37% and never producing anything, you’re in the worst position in the world. Sure. So positioning yourself to have that reality of, of getting, having your wealth grow for you is great, but then having protected wealth is even better.

The day I found out that I could create a self directed retirement account. I was livid. I was so angry at the crap that I have been spoon fed generationally, right. Right max out your, your 401 ks maximum out max, max everything, man, it’s free money, you know, like all the other crap that they delivered. And the day that I figured it out, I could take my own money and work it at almost a quadruple rate of return than it was working with somebody else in control of it. That was the day I said, it’s on like Donkey Kong, forget about it. Let’s go baby go.

Well, and the other thing too, though, you know, we all buy the marketing, right? I mean, it’s not really about accounting, it’s about marketing. And this is another thing that I think a lot of people do. This is the time of year that people are praying to their accountant God. They’re calling them up, and they go, Oh, my God, you got to save me. I made a boatload last year. You know, tax planning is called tax planning for a reason. It’s planning on how not to pay the taxes, then if you get into this world after January, it’s called Tax Prep. Because a cake is cooked. You know, there’s nothing to change here. But what people also believe, is they believe it’s their accountants job to teach them how to save money on taxes. And it’s not their job. There are so many resources that are out there and available for people to be able to get that accounting information that they need. There’s all kinds of books, there’s all kinds of classes. But the reality is, accountants organize your financial data into certain boxes that the IRS wants to see. And people forget that. So it’s up to you to understand that. And when you do Dave, like you do, you have the power to go and explode. Because you’re doing things in a tax preferred way. It’s not tax avoidance, right? You’re not scamming anybody. You’re taking the rules and using them the way the IRS wants you to, to create the best financial future for yourself based on your set of facts and scenarios.

There are two outlooks, basically and we, you know, I don’t want to oversimplify, but there are, there’s consumers, and then there’s entrepreneurs,

Right

As investors and then there’s savers, as the guy who’s watching the commercials right now, free, free. That talked about h&r block, there’s a little cream that just got set up in the mall.

Yeah.

There’s somebody sitting in there with 15 hours of tax analysis training, ready to take your, you know, your, your 1099 or whatever it is from your employer, right?

Yep.

They’re not all created equal, right? There’s the consumer mindset, the entrepreneurial mindset. And it’s interesting. I don’t know how it is for you. I’m assuming it’s the same. You know, my high net worth investors, my doctors, lawyers, accountants, attorneys, bankers, business owners. They don’t even understand what we understand as syndicators and investors in large commercial real estate. 

But if you look at those days, yeah, but if you look at what the way those guys were, were raised, if you will, in their field, they got really good at doing one thing really well. And then they were then they were shown, hey, you need this, then you need this and then the drug reps gonna come by and then this guy is going to come by and here’s your insurance guy, and they have this Picture and they look at all these guys and they look at them like that guy that selling them this product is going to look out for their best interest. And that’s just entirely not true. And so they stop at that point, self educating to go, hey, you know what, this is what I think we ought to do, right? What is this? I did it for me. You know, I remember somebody that came to me, we talked about a scenario, they went to talk to their accountant, and I said, So how to go and they got my accountant to say, of course, you can do that. And they were like, Well, why didn’t you tell me? And they looked at him and they said, Well, I’m your accountant. Right?

Right.

Like, like the miscommunication was there the whole time? And the account was looking for them? Well, it’s your life. You direct it. Right?

Yeah.

And it’s so funny how people get that confused and, and

Responsibility. Responsibility. Brother’s accountability. It’s a dirty word.

Right? Well, and it’s yours. It’s your life. Yeah, you know, you take responsibility for taking accountability for you’re gonna have a hell of a lot more fun. You’re gonna enjoy it a lot more when you do those things. Dave, what a great conversation, man. I could go on and on. What I love with those where do people find you other than Coral Beach, Florida and Boston at the wrong time of the year?

I look man, I’m old school, you can actually call me 781-922-4418.

I’ll put that in the meeting. Or we’ll put that in the podcast notes that call Dave’s only between 10pm and 2am. That’s when he takes a call.

That’s where you get the little moon little moon signal on the iPhone.

Yeah.

Right.

Yeah.

Dave Seymour spy MO You can find me on LinkedIn and all of that silly stuff. Freedom venture.com is probably the best place to go. See what we do. Get through the education first. If you’ve never, if you’ve never syndicated, if you’ve never been a passive investor, you know, you can’t. I’m not gonna take your money unless you know what the hell’s going on. Or you’re cut from the same cloth.

Yeah.

Let’s build a relationship and get to know each other, called GP with my new friend Shannon, right? Like we can, we can create a lot of fantastic opportunities with our knowledge base. And we create a lot of trouble and have fun doing it at the same time.

Right.

That’s how I like to go. So if you want to find me, you can find me.

Awesome. Awesome. Well, guys, appreciate you tuning in. Thanks for being with us today. And thank you, Dave, for making this a lively conversation. And if you guys want to tune into the Real Estate Run Down, don’t forget to like, share, and subscribe to the Real Estate Run Down on Spotify, iTunes, and wherever you get your podcasts to get your automatic updates, click the little bell. You know how it works. You will also find us on Instagram and YouTube leave us a reply or a review and a comment. I’d love to see who you want to see on the show next, and your comments about Dave and his conversation. Right. So guys, thanks again for joining the Real Estate Run Down. We’ll talk to you soon. We’ll see you later, Dave.

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About Dave Seymour:

Dave Seymour, a retired 16 year veteran of the Fire Service launched his Real Estate career over a decade ago, rapidly becoming one of the Countries top investors. Within his first few years, Dave transacted 10’s of millions of dollars of real estate and has become one of the Nation’s leading experts in commercial multi-family transactions.

His unabridged passion for business and Real Estate put him on the radar of A&E television network as well as multiple news organizations like CBS, ABC, CNBC, and FOX News. “Flipping Boston” aired on A&E for multiple seasons. Dave has been sought after, as a no nonsense investor with zero tolerance for inefficiency and speculation.

Dave is well-known for doing business alongside investors of all experience levels. He has helped accredited investors on their very first deal as well as guided some of the largest investment firms in the nation through complex transactions. Dave’s blue collar attitude in a white collar world is why investors seek his advice and want to invest alongside his team at Freedom Venture Investments. Dave has disrupted the Private Equity landscape allowing investors access to institutional quality CRE assets that have typically only been for the elite.

Visit him on this websites:
https://www.freedomventure.com/
https://www.daveseymour.club
Facebook:
https://www.facebook.com/DaveSeymourLive
Twitter: https://twitter.com/daveseymour343
Instagram: https://www.instagram.com/daveseymour343/
LinkedIn: https://www.linkedin.com/in/daveseymour343/

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