#170 - The Get Rich Slow Strategy for Passive Investors with Jeremy Roll

[00:00:00] [SPEAKER_00] Welcome back to Passive Income Pilots, everyone. Tait Duryea and Ryan Gibson here for another week of financial education and we are in person in Vegas for the Passive Income Pilots Conference. How are you doing Ryan?

[00:00:12] [SPEAKER_01] Ryan Gibson I'm doing good and hey, I'm so sorry commuters if you were trying to catch that jump seat into Vegas. I'm so sorry that we just clogged every single jump seat going to Vegas with over 250 people coming to our conference. Uh, so my apologies if you try to make your commute and you're like why is the jump seat to Vegas taken today? Uh, well, I guess tomorrow or whenever this airs. Well, yeah, my apologies in advance, but yeah, you know, we're in Las Vegas Uh, actually Tait's in Las Vegas. My team is part of my team is there. Uh, we're excited

[00:00:42] [SPEAKER_01] We're hosting the very first ever Passive Income Pilots Conference in Las Vegas at the M Resort We've got I think what over 10 speakers coming talking about Tax and asset protection Talking about investing self-storage oil and gas. We're talking about strs. We're talking about active versus passive or Hitting it all

[00:01:02] [SPEAKER_00] Hitting it all trust and estate planning. What's what i'm excited about is we've got some of our friends from Nevada Corporate Headquarters Who are going to be here and i'm personally going to be taking them up on some consultations because I have a Revocable living trust set up that i've not finished With my wife. Uh, so i'm really excited for that Um, there are going to be uh on-site offering actually actual on-site consultations For listeners, uh, it's just gonna be a fantastic two days So we're kicking things off

[00:01:31] [SPEAKER_00] This evening as you're listening to this because this is airing on wednesday october 7th We're going to be at the raiders tavern at the m resort and casino this evening kicking things off for the happy hour And rolling into two Jam-packed days. I'm super excited

[00:01:47] [SPEAKER_01] Well, one of the topics that i'm actually going to get on the stage and talk about is vetting alternative investments How you find them how you vet them how you walk through them But there's no better guest Uh today than to kind of uh prime the pump so to speak to talk about this stuff because Jeremy Roll's been on the podcast. He was on like years ago on our podcast, but he's one of the uh, lp uh sort of um, he's like the lp extraordinaire He's the lp extraordinaire. Exactly. He's he's the guy

[00:02:16] [SPEAKER_01] He's the guy that basically has done like hundreds of these Uh random alternative investments. He finds them he vets them. He looks at them very objectively He does a ton of market research and he's super conservative Very conservative about what he does. I think this is very fitting for our show Uh, but we're talking to jeremy roll from roll investments and he helps Um, or he really just is a passive investor. He actually was in the corporate world

[00:02:40] [SPEAKER_01] He worked for companies like disney and toyota like corporate headquarter fortune 500 companies and He then started investing and now had generated enough passive income to leave the corporate world Uh full time so you know, I don't I don't think our pilots that are listening to this are trying to leave You know, the the airline that they're at like because it's kind of too good Of a job, but also I think what we're trying to do is we're trying to get another Income stream from passive investments that will supplement, you know

[00:03:09] [SPEAKER_01] Our 401k when we retire and things like that and this is such a great episode to kind of dive into how he does that

[00:03:14] [SPEAKER_00] Yeah, and supplement your income today because your 401k is a later vehicle And I know so many pilots that would love to fly 50 hours a month instead of 80 or 85 Exactly and you know passive income allows you to do that So the show is called passive income pilots. We're finally actually talking about that Welcome to passive income pilots where pilots upgrade their money

[00:03:42] [SPEAKER_00] This is the definitive source for personal finance and investment tactics for aviators We interview world-renowned experts and share these lessons with the flying community So if you're ready for practical knowledge and insights Let's roll Jeremy Roll. Welcome back to the show. How have you been?

[00:04:00] [SPEAKER_02] I am good. Thank you for having me back. I really really appreciate it It's been a while since I was on here and uh, I know that um, you guys have grown tremendously. So congratulations

[00:04:09] [SPEAKER_00] Thank you

[00:04:10] [SPEAKER_01] Yeah, you know, Jeremy Roll last time we talked a lot about I think investing passively And alternatives outside of the traditional stocks bonds mutual funds Which I think a lot of our group is really excited to hear about but you know, I want to get into kind of how you snowballed like 50 to 100k a year of investing in alternatives like over time I think that's really interesting. But before we get into that, can you kind of just who are you and uh, kind of what's your background?

[00:04:37] [SPEAKER_02] Absolutely. So my name is jeremy roll i'm located in southern california near newport beach I'm originally from canada from montreal, uh, grew up I live my half my life in canada and then moved down to the us Actually started off uh before all this full-time investing as a passive investor start off in the corporate world Like a lot of people worked at a couple of fortune 500 companies. Uh last two were um, uh Toyota headquarters in los angeles and disney headquarters

[00:05:03] [SPEAKER_02] So I really did work in you know large environments and a couple startups have over 10 years of corporate experience Have a work in mba Uh from a long time ago now And I essentially came across this type of investing back in 2002 for those of you who are old enough to remember that After dot-com crash that was the real Catalyst for me to look at different ways to invest and um, i'm sure we're going to get into it But the passive cash flow like truly changed my life and it's actually hard to believe i've been doing it full-time since 07

[00:05:30] [SPEAKER_02] So almost 20 years, uh, but i've been actually investing in in you know managed opportunities like syndications since 2002 so Uh 24 years, uh almost 25

[00:05:40] [SPEAKER_01] Jeremy, you know, that's interesting that you talked about investing after the dot-com bubble Uh Burst right in early 2000s I kind of feel like the stock market There's like no end in sight, you know, there's the return just up into the right Right, it's just up into the right and like you've obviously been investing for over the last 20 years and you've sort of seen this You know, everybody goes running into the stock market or everybody goes running into real estate

[00:06:08] [SPEAKER_01] And then the bubble bursts on both things, right? Like the bubble burst on the stock market the bubble burst on real estate a couple times and then all of a sudden like everybody runs away from the thing that bubble burst like can you give your your perspective on that considering you've been through probably what one two Maybe three cycles at this point like how you kind of think about the market

[00:06:30] [SPEAKER_02] Yeah, and it's funny because um, you know back in 1989 for those of you are old enough to remember that My father was actually involved in commercial real estate as a broker And his entire life was devastated when that crash happened And so that was a long time ago now we were in canada may have been a bit of a remark in the us But I believe it was pretty bad in both cases. So i've actually been through many cycles now and felt that directly so You know, it's funny. You mentioned about the bubbles bursting and people running away from it I think that's a natural and emotional inclination

[00:06:59] [SPEAKER_02] What I tried to do which is really not easy, but I do have a Helpful personality for it is try to be as objective as possible with the data And if you're going to be objective with data You actually should be running towards a bubble bursting instead of away from a bubble bursting and that's actually what honestly Frustrates me the most when I see a crowd running away from a bubble bursting because you know, if I could sell you Uh, my shirt for a hundred dollars and you don't want it But you would take it at fifty dollars Why are you running away when the shirt's on sale at fifty dollars?

[00:07:29] [SPEAKER_02] Right and that's exactly what emotional reaction does for people and I know it's not easy but Objectively speaking, that's the better move and that's exactly what warren buffett does right and And um, so we can get more into that. But yes, i've seen multiple cycles Ironically as a stock market and bond investor My reaction to the dot-com crash was to get into these types of investments So I ran away from the stock market myself back in 2001 2002 learning the lessons right, but um

[00:07:55] [SPEAKER_02] But yeah, there's a lot we could talk about i've invested for a long time and I think that Um, I actually am expecting a stock market crash based on the current valuations as warren buffett is technically because of his own valuation metrics, etc And i'm trying to prepare myself to be able to run towards the stock market when that happens as an example

[00:08:13] [SPEAKER_00] Let's talk let's pause on that for a second because I know we want to get into a lot of passive investing passive income You are like the limited partner extraordinaire. I can't wait to get into all that. But but let's stop on that because You know the the ai bubble. I mean even ray dalio is is calling an ai bubble right and and no one knows when this thing is going to pop And one of the the interesting things that he points out is that

[00:08:40] [SPEAKER_00] The bubble bursting does not mean that the technology is a failure. It just means that the money that's piling into the companies Is making them overvalued right and people think that they're investing in the technology But they're investing in the companies. So what are your thoughts on stock market valuation right now? What if you had I know you don't have a crystal ball, but if you had a crystal ball for the next five or ten years How do you think this thing is going to play out? Yeah, so um

[00:09:08] [SPEAKER_02] Important to everybody know i'm not a financial advisor investment advisor just all my perspective as an investor and honestly, I am a stock market amateur I literally will tell you I've had no publicly traded stocks since 2007 I do follow it carefully because I think it could actually have impacts on real estate the type of investing you do and the economy But you know The last person you want to talk to is someone who hasn't done you know own a stock in 20 years But i'm about to hopefully fair enough So yes, so but with all that disclaimer being said What I would say is that first of all if you never heard of ray dalio and you're listening to this

[00:09:38] [SPEAKER_02] I would strongly recommend you pull up some videos of his on youtube He offers free videos amazing videos. He was the founder. I believe the largest hedge fund in the world bridgewater He has kind of since semi-retired and he's kind of gone on a crusade to help people Understand how the economy works and the larger kind of empire cycle works Who better to get educated from than the largest hedge fund owner in the world who understands this stuff and has done decades in it for free? Right, so go and find him on youtube

[00:10:05] [SPEAKER_02] I could not recommend him more and the reason why I think he's particularly important right now Is not just from an ai bubble perspective and just a general bubble discussion But frankly from a us empire perspective and where we are in that cycle. He lays it out in many stages Very clearly I fully agree with his analysis and he's done like 500 years of research to actually back that up So I just want to put that as a side note is very important. So if you look at probabilities and past cycles I'm going to point some things out that are interesting first of all

[00:10:34] [SPEAKER_02] No one ever knows exactly when a bubble is going to burst. No one can predict the exact timing. It's very very difficult What I will say though is that I don't believe we've had a time in over 100 years in us history Where you've had such high ratios in the stock market and such a big concentration of earnings growth Expectations within just a few handful of stocks. I'm going to give you guys a statistic that I read this morning would blew me away Where we haven't actually had a stock market crash after to correct all this. I don't think it's existed

[00:11:02] [SPEAKER_02] So if you look at historical data and try to predict the future There seems to be a close to 100% probability that we're going to have a stock market crash at some point And if you actually overlay all of the previous stock market crashes that occurred at these ratios You would actually expect a 40 to 55% Correction which I know sounds insane, but it's happened multiple times in the past and our levels currently are insane levels if you look at the charts So if you're not familiar with any of this, you know, you may not agree with any of this

[00:11:29] [SPEAKER_02] But at least go educate yourself on this so as an investor you have an opinion and you've actually got an educated opinion You can 100% disagree with me. No problem But just make sure you've educated yourself on where you think we are today to help avoid any potential landmines coming up Which is what it's really all about So here's what i'm expecting based on history. I'm expecting a stock market crash somewhere in the 35 to 55% range at some point Um in the next few years if not, you know sooner

[00:11:54] [SPEAKER_02] I'm expecting what's called a lost decade. It's not just me google the term very important We've had multiple lost decades based on being at these highest ratios And actually there's been a couple of uh, very like wall street journal had articles about this the last year or two Ray Dalio and others mentioned that that was the most likely scenario Okay, and that's very important, especially if you're hitting retirement age to understand

[00:12:15] [SPEAKER_00] That's basically just the stock market generally trading sideways for about a decade, right?

[00:12:19] [SPEAKER_02] That's right. The concept so in fact Crazy statistics, you know the nasdaq I think peaked in 2000 99 or 2001 whichever it was I don't think it got back to even until 15 years later Now that's not even adjusted for inflation. You were down 35% real return in 15 Years imagine how devastating that is if that's 100% of your retirement portfolio. Those are real numbers In fact, the s&p 500 Didn't actually regain to its highs in 2008 from night or 2001

[00:12:49] [SPEAKER_02] It actually didn't quite hit the highs and came back down again and also had a lost decade And so this wasn't just you know for tech stocks So all these things are really important to understand as far as how they can impact you and the type of investing you're doing So my opinion is just based on historical data and trying to like Extrapolate into the future. So it's not even I tried not even to make it an opinion in terms of being subjective I just try to be objective. So that's the highest probability scenario It's important anything can happen. Nothing's 100% certain but my mind works in the probabilities

[00:13:18] [SPEAKER_01] All right. I have a lot of questions a lot of follow-up here. So, okay Uh, first objection i'll do the objection to do a counter a counter uh counter what you're saying So, yes, the past is the past and and you know the ratios are what they are But you know, the reality is like back in 1996 7300 publicly traded companies today 4300 or or less All right, so you've got you know a lot more money going into a lot fewer businesses doesn't that make it?

[00:13:45] [SPEAKER_01] So the valuation is gonna is is gonna continue going because there's just so much money chasing so fewer public companies Like what are your thoughts on that?

[00:13:53] [SPEAKER_02] Yeah, that's a very interesting point So i'm going to give you a couple of data points to consider I wouldn't say as a counter but just consider with that right, which is number one It's a very important to watch margin debt Which is very very high right now because what happens is that regardless of the number of stocks or shares outstanding or companies outstanding You can invest in if we're at a very high point of margin debt that's been taken against the current holdings And things start to unravel that accelerates the selling And so regardless of how many companies exist

[00:14:21] [SPEAKER_02] So that's the number one thing I would tell you to look at regardless of the number company Because I think you're going to be surprised at where the margin debt sits right now, which is pretty high risk Okay, number two is concentration risk is is can be really really dangerous And so the one of the statistics I read this morning that blew me away and I hope I have it right 10 stocks in the s&p 500 comprise 68 of the earnings growth Yeah Okay, and

[00:14:47] [SPEAKER_02] I believe 452 of the 500 stocks are flat or down in 2026 yet the index is up What is it 10 or 15%? That doesn't happen That doesn't happen until you're at close to a peak because this is actually natural and normal Like again being objective you go back and look at history this has happened before multiple times But it's also a signal that we're getting towards the end of what appears to be an obvious bubble And I'm going to say this right now

[00:15:14] [SPEAKER_02] You're going to look back in retrospect and if this all does crash you're going to say oh yeah that was kind of obvious Like there was a circular craziness going on in AI We looked at Warren Buffett's ratio and all the other ratios and it was at the peak Like there's some various obvious objective things you can look at right Right

[00:15:31] [SPEAKER_01] No, so so I gotta I gotta follow on to that. Okay, so you said you haven't bought publicly traded stocks since 2007 Right and I can hear the people that are listening to this crawling about like I've been invested in the market and i'm up, you know, however many percent, right? So i'm not gonna put you on the spot for what your portfolio has actually done because i'm I doubt you have this Maybe you do have this number. You're pretty uh objective in your in your in your data, but okay

[00:15:57] [SPEAKER_01] So how is your portfolio done outside of the stock market compared to the stock market? Yeah, um, you know if you could be specific about it great But like just generally like if you had all the money that you put into your alternatives And versus what you would have done in the market like how do you think that that would have netted out?

[00:16:14] [SPEAKER_02] Yeah, good question. So remember We the way cycles work is that some things work better at different times than others That's just the nature of cycles and they're not all happening at the same time So if I had to just give you a really simple answer I outperform the stock market between Call it 2007 and 2017 And I underperformed the stock market between 2017 and 2027 but Part of that underperformance is related to the increase in interest rates that occurred several years ago that impacted a lot of my asset values

[00:16:43] [SPEAKER_02] Whereas we haven't seen that impact on the stock market yet for numerous reasons We can get into in my opinion and I think it's coming And I think that's when you'll be able to really judge what happened over that 10-year period. I'm like we're quite there yet Uh now there I want to say though that I was an extreme case I went in a hundred percent alternative illiquid type assets And also the cash flow from those assets completely changed my life got me out of the corporal and just gave me 20 years

[00:17:11] [SPEAKER_02] Out of the corporate world and i'm so fortunate right and now i'm actually trying to reverse course a little because i'm not over 50 I got to get into more liquid situation in case somebody has to be for my wife and more importantly i'm trying to position myself to do this At the timing which we're discussing where i'm in a lot of treasuries right now for liquidity With the hope that we will see the bubble burst and i'll be running into the bubble trying to get discounted shares To not necessarily avoid a lost decade because you can't if you're in it

[00:17:38] [SPEAKER_02] But at least start my positioning where I actually won't have a lost decade But won't have normal returns from the stock market here probably be below average if just looking at past history

[00:17:46] [SPEAKER_01] All right. One more question. I know tate you're you can take it away after this um We talk so that so our average listener right is going to be an airline captain Flying the line at a major airline and their their company is dumping 18 of their paycheck They're effectively putting 70 000 a year into a 401k with their eyes closed And then they have this excess cash and they're you know, we we really preach kind of diversification Which is you know, put some of the money, you know, have liquidity

[00:18:16] [SPEAKER_01] Have money in the market have some hard assets and then maybe do some passive investing truly passive investing where your arms length like in a syndication or something What do you think about that diversification strategy? I mean, you're kind of Really playing it outside. They're they're basically handed that 401k for free But like what would you what advice would you give to that person? That's like got that extra 100 grand or 50 grand Sitting around, you know, and they they they need to place it in something with those factors at play Like kind of where would that money go first?

[00:18:43] [SPEAKER_02] Yeah So before i'd even get to that I would just because I see most people don't do this I always tell people Educate yourself on the economy and the the that cycle on the real estate cycle on the stock market cycle And determine what you think the best allocation is to begin with based on timing And again, just do your best but don't become don't don't not do any research I think that's very dangerous and I think a lot of people do so that's just a side note. I think it's very very important So what I would say is i'm a huge fan of diversification

[00:19:12] [SPEAKER_02] In fact, i'm currently in over 60 llc's myself Which is not necessarily as somebody I'd recommend to anybody But it just happens over many years and what I was doing and I was very concentrated in this type of investing So the more diversified I think someone could get to an extent the better There are different ways to position yourself defensively or offensively depending on where you think we are in a cycle So for example On the syndication side i've been defensive for many years now in anticipation of recession that maybe

[00:19:40] [SPEAKER_02] With some asset classes or strategies could do better in session than others But similarly if you're building a stock portfolio and you're looking at different etfs to keep it simple What happens in a lost decade international stocks always outperform? I mean they have historically for example And if you haven't considered those you can look at those so to me It's not even just a question of diversifying in general. It's a question of properly diversifying for the moment Right, and I think that people should be paying attention to both

[00:20:06] [SPEAKER_02] But I what I couldn't agree more with the concept of diversification, you know all eggs in one basket is the exact opposite

[00:20:12] [SPEAKER_00] So jeremy I want to jump in here and talk about your limited partner positions I called you the limited partner extraordinaire earlier and and and that really is true I mean you've got over 60 positions right now I know for a fact that at one point in time you had over 100 Which is more than Anyone i've ever heard of I mean i've heard of people having positions in 15 maybe even 20 But i've never heard of somebody having more than 100 limited partner partner positions so

[00:20:38] [SPEAKER_00] Maybe to walk us through your first deal or your first few and talk about how that snowballed because you said the cash flow changed your life, but a lot of syndications Are only going to offer four or five six seven percent passive income per year. That's not on 100 grand you're talking You know five to seven thousand dollars a month. That is not changing anybody's life So, how did it snowball to from your first one into life-changing passive income?

[00:21:06] [SPEAKER_00] And maybe we can take it from there

[00:21:08] [SPEAKER_02] Sure And just to clarify i've never been in 100 or more at once. So sorry for any confusion I typically been in over 60 at once but i've been over 200 over the past 24 years total So thanks for the clarification though yeah, no no problem, you know, um, so um Well when I started there were two things that um Kind of make my answer not a perfect fit for what you're I think intending to help audience with number one is that

[00:21:34] [SPEAKER_02] I first started investing actually in canada even though it's based in the us and with currency risk Which I don't think is such a good idea in retrospect, but It the reason why I did that is because lifelike lifelong friends of my family were syndicating I knew I could trust them and frankly even more importantly I knew I can learn from them Like much more than an average person I'd invest with so that's actually where I started in the asset classes They happen to be doing at the time when I really didn't have that much knowledge that was back in february of 2002 first deployment

[00:22:00] [SPEAKER_02] Um between 02 and 07 what happened with me is that again my goal was not to leave the corporate world It was to be to get out of stocks and bonds because I hated the stock market for two reasons The volatility watching stocks go up and down 30 percent in a year with all these crashes was the wrong Personality kind of lower risk slow and steady mindset that I had And the um lack of predictability of my retirement account for 10 20 30 years watching all this volatility So between the two that was the wrong fit for me

[00:22:28] [SPEAKER_02] And so I started to look to invest and came across the concept of syndications, but more importantly uh kind of lower risk more passive cash flow and stuff that was more stabilized And kind of you know a little bit, uh, you know basically not having too much of a story But hopefully producing consistent cash flow and the cash flow levels were higher back then okay at that exact timing And so, um, um I started to rip my money from stocks and bonds and the cash flow with the goal of actually having a w2 paycheck and the cash flow

[00:22:54] [SPEAKER_02] Not with some grand great plan to get out of the corporate world. Um, so that's important to know um between 02 and 07 I rotated some of my money into syndications and some of it went into what I call more active higher cash flow Investments so i'll give you an example Because I didn't have enough baseline capital to invest x amount get an 8 cash flow return or 7 cash flow return actually get out of the corporal

[00:23:20] [SPEAKER_02] I did not have enough. Okay, so what I did is I went into a combination of what I call fully amortized investments like we're talking about Which means that you know You're getting cash flow from a property, but they're using some of the money to pay down the mortgage And over time you're paying down the property you're amortizing the the loan balance, but you're getting lower cash flow as a result, right? Versus fully amortized So my best example of what I did is for fully amortized very successful between 04 and 12 was

[00:23:46] [SPEAKER_02] A friend of mine had a web hosting company. This is pre like amazon cloud and he created his own mini, you know in a Data center would create his own mini cloud that was secure for companies He needed to buy tens of servers from dell to run this in a secure private, you know network He brought me a contract the lease from dell and said hey, this is a 28 Lease interest rate over a three-year period with a 5% buyout Do you want to do this as an investment instead of dell making the money off of this? And let me tell you the numbers off of that

[00:24:16] [SPEAKER_02] Were a 50 cash on cash return for three years and the plus the 5% buyout. Okay, so here here's the good thing about that You invest 100 dollars you get 50 back a year crazy cash flow the bad thing If you live off of that money the 50 dollars back a year and then you take the 5% buy you've got nothing left It's very dangerous Okay, but but you have a tremendous acceleration of cash flow up to seven to ten times normal

[00:24:40] [SPEAKER_02] Okay, so what I did is I was able to successfully compound returns like that in some odd scenarios Along with the stabilized cash flow and when I left the corporate world in min 07 Frankly because of the last draw moment I have with the manager where I actually had enough cash flow built up to live off of and I made that decision Even though that wasn't my plan. I had a problem I had too much amortized cash flow if I lived off of it. I was going to go just going to eat through the capital

[00:25:04] [SPEAKER_02] So I had to very strategically rotate from those fully amortized into mostly non Amortized deals and so that I would actually not have that risk Right and hopefully I'm not getting that backwards but the bottom line it took me about five years to get away From having too higher percentage of those types of deals And eventually to your point before You know cash flow and reinvestment and stuff compounds and snowballs over time

[00:25:33] [SPEAKER_02] And I had the fortune of having very high returns if you're compounding at 28% interest rate And that 50% cash on cash for years and years and years you get far pretty quickly So I got very lucky which try to be as careful as I could about it was diversified. That was just one example And then I was in a position where I was just able to grow it over time slowly And to your point, I think one of the most important things to understand in this space is that this is a get rich slow Strategy This is absolutely not bitcoin or a get rich fast strategy. That is not what we're talking about today

[00:26:03] [SPEAKER_00] Well, and I think if I can really set the stage here I mean if anybody hasn't heard me say this before you know five million dollars In a debt fund that pays you 10% Is 500 grand a year and and really for me That's the holy grail is is having the same amount of income that an airline would pay me In in a pure cash flow

[00:26:27] [SPEAKER_00] I'm going to go passive deals so that flying can be for fun. My 401k can be for fun. Everything is just for fun and Obviously, you wouldn't want that entire five million dollars in the exact same debt fund You'd want that diversified all over the place, but you can find private Yeah, I mean you can hard money lend you can buy notes you can invest, you know both ryan and I have have uh credit funds

[00:26:50] um

[00:26:50] [SPEAKER_00] There's all sorts of places that you can put that five million that that pays you roughly um You know high single digits into low double digits and It's it's just amazing to be speaking with somebody who has hit that threshold And that's what you do professionally now is just rotate that cash

[00:27:06] [SPEAKER_01] Yeah, and tying it all together to jeremy's point earlier, which is like diversification, right? So like you get to retirement as an airline pilot And you have a pile of cash in your 401k And the market corrects, you know when you turn 65 And all of a sudden, you know 40 to 50 of your nest egg is gone But then you have this five million dollars And these limited partner llc's debt funds whatever and you're getting that 500k or whatever however much you've put in there

[00:27:36] [SPEAKER_01] And then you also have you know, maybe another source of income through active income or otherwise And now all of a sudden the stock market doesn't really make Or break your retirement and I think that's what we're trying to preach to The community there was a jeremy there was an article in the wall street journal probably three weeks ago about airline pilots And their volatility of their financing and it basically gave a captain at united You know a couple million bucks, you know two and a half million dollars in their 401k

[00:28:04] [SPEAKER_01] And how you know he had done it pretty much all traditional So now he's making a a good income from that in retirement, but he's having to pay all the taxes on it You know, so you know, that's kind of like get your rmds. You've got yeah

[00:28:19] [SPEAKER_00] Yeah, the tax taxes on the withdrawals and let to your point ryan If there's a big market correction right when if you don't have another stream of income And you're going to have to liquidate assets in order to make your required minimum distributions and live on that cash You don't have any control over You know, you got to sell the assets when they're down because you got to generate the liquidity to live on it

[00:28:39] [SPEAKER_01] So yeah, so I wanted to kind of switch that like jeremy You know talk about the benefits of taxes like tax benefits to some of the stuff that you're doing Because I think that's where you know pilots sometimes get a little cross is like They're taking the traditional contribution to their 401k to take the tax reduction today and their income right like they're trying to You know, they're making 500 000 to a million dollars a year

[00:29:04] [SPEAKER_01] And they're just desperate for that last little bit of uh, you know tax break and then but you get to retirement and it's like Got to pay the taxes now right and and these retirements. I mean i've seen 401k balances of over 10 million dollars from some of these airline pilots, right? So they're gonna have huge rmds on traditional money Another like benefit of this bucket in alternatives is some tax advantages like what have you experienced? What have you seen in that arena?

[00:29:30] [SPEAKER_02] Yeah, absolutely and so i'm not a you know disclaimer again, sorry I can't help it, but i'm not an accountant or anything like that So this is my understanding and perspective as an investor, but The tax benefits are oddly enough probably some of the best aspects of this That I had absolutely no clue about going into it And that I you know learned over time and it took me a while to really appreciate the extent of it So just everybody understands i'm just going to try and keep it really simple because of depreciation benefits sometimes acceleration depreciation by many methods

[00:31:48] [SPEAKER_01] A hundred percent Yeah, I mean if you want to pay the most amount of tax Work for an airline right and and be a w-2 employee, right? I mean here's how bad it is right as an as an as an airline pilot I mean, you know, we're this is off like I love the job like don't get me wrong there, but Here's how bad it is. They take the taxes out before they send you a check Right, so like you know

[00:32:12] [SPEAKER_01] You are not set up to save any money on taxes being an airline pilot like you used to be able to get all these deductions and all that But this raising the standard deduction in 2017 Erased all that stuff So now like you're left with nothing so you have to do this type of investing activity like putting in more housing or Helping generate jobs in the economy to get rewarded with tax breaks and that's that's really what it's all about It's like the government incentivizing behavior

[00:32:38] [SPEAKER_01] Exactly, okay, I wanted to I want to switch to I know where I know you're uh, you're up against time and I want it I want to get like where are we today? What are you investing in right now? What do you like? What don't you like kind of what what are you seeing in the market? Um, and what what kind of what's kind of your your outlook?

[00:32:54] [SPEAKER_02] Yeah, so Again, i'm just one person's opinion. So you know everyone if you're trying to figure all this out I take many opinions into account before you, uh, you know create your own opinion, but i've been very much defensive on the sidelines for a long time With exceptions i'm always looking at opportunities because there's always exceptions and you know, uh, you know Ryan, I don't quite know where you are But whatever that building is here and if you sell for me to a dollar is a good chance. I'd probably take it

[00:33:18] [SPEAKER_02] Right, so there's always unique opportunities out there and it's never worth being completely closed-minded You always still have to continue to review opportunities and look for the odd man out even in challenging times Which I think we're in right now, but general mindset is that i'm on the sidelines. I'm waiting For end of cycle reset. So to me in the passive investing space In march of 2022 the fed raised rates the first time that started a chain of events that reduced asset values quite tremendously

[00:33:46] [SPEAKER_02] Across many different asset types Um, in fact

[00:33:50] [SPEAKER_00] We're talking about commercial real estate here just for anybody that uh, yes

[00:33:54] [SPEAKER_02] Yes, yes, I'm sorry. Thank you. Yeah, and that that's a lot of what you know, we invest in to get the cash flow um, right That essentially those prices crashed across many different asset types definition of that over 20% reduction um, and But I think we're still missing one piece of the ingredient for full end of cycle reset which is a Actual recession Combined with the stock market crash which is typical, right? Right

[00:34:24] [SPEAKER_02] liquidity, sorry short-term treasuries that i'm kind of laddering and rolling all the time in anticipation of deploying the capital And where my capital i'm hoping for it to go is a combination of the stock market like we talked about at the right timing at discounted timing Combined with more of this type investing Because I still think some massive prices have lower to go I think that um Cap rates will probably continue to go higher which means the multiple on the cash flow to go lower Which means that tate I think that we're going to have better cash flow in the future

[00:34:53] [SPEAKER_02] I don't know what it's going to get to but i'm kind of anticipating that Um, and i'm i'm waiting which is not easy and very frustrating, but that's what i'm doing

[00:35:00] [SPEAKER_00] Love it. I don't disagree with you jeremy. All right one more thing I wanted to bring up because with 60 positions I think that you might have some good little Tips tricks little pieces of wisdom here. We have a lot of investors at at turbine I'm sure there are a lot of investors at spartan that are you know your airline captain That's only had stock market investments for a long time. They're starting to get their first k ones And they're going hey, how come this thing is late? First of all And number two, how do you deal with it? You know, they're they've been doing turbo tax their entire life

[00:35:30] [SPEAKER_00] And now they've got this k1 that has state Level income that that it's reporting You're in 60 of these things. What would you say to those those people and what are some some pieces of wisdom that you can pass along for dealing with? Let's say 60 k ones that you you have in your personal portfolio

[00:35:45] [SPEAKER_02] Yeah, so first thing i'll say is a great question first thing i'll say is that You know, this type of investing probably isn't worth it if you're going to go into one two or three or four things because a You won't be probably diversified They'll have more risk to an extent because of that and b you have to deal with these k ones Which is kind of a fact of life, unfortunately So my understanding is that these k ones are the tax forms you receive from the llc's you're investing in And my understanding is that they're due march 15th, but then they can be they can file extensions like any other company

[00:36:10] [SPEAKER_02] Those I believe are due by september 15th and if you ask me the most common timing in which I receive my k ones It's between february march And july I get the last stragglers Between july and it used to be august and I mean this year I literally got my last one on september 14th or 15th, which is the deadline, right? Um, but here's the thing your personal returns that you you have to extend I believe are due october 15th So there's plenty of time to deal with it

[00:36:38] [SPEAKER_02] Um, so it is a bit of a frustration and i'm chasing k ones My accountant actually keeps a spreadsheet for me And then he updates it every time I send him one and then he's you know I actually kind of keep a parallel spreadsheet and then we're both in sync about what to do And then to be honest, I don't even bother Really chasing them until august because I just want to make sure i'm actually going to get them by september But until then, you know, like i'm in some venture funds for example because not everything i i'm in is cash flow Those funds may be in 20 or 30 companies and they have to get every single k one before they can send me the k one

[00:37:08] [SPEAKER_02] And if just one company comes in september 1st, they can't send it until september So there's all different scenarios Do you have to get comfortable with the concept you're going to have to extend your taxes most likely? At least you should probably assume that as a base case I have used a Kind of smaller mom and pop accountant For uh, since I started investing in this type of stuff to handle it You can hire a larger firm What I found though is that when you get up to many k ones

[00:37:33] [SPEAKER_02] You're going to be paying a boatload of money for the firms to deal with these and so by dealing with a smaller accountant I've been paying about a third of what I would probably have to pay to a larger like top 10 or 20 accounting firm So what I will say is that if you're going to hire someone to do it If you could find someone smaller you will save a lot of money If you are planning on doing it on your own I cannot comment to that because i've never done it on my own But on the on the positive note you're being handed the entire tax breakdown

[00:38:01] [SPEAKER_02] And so if you only have a few and you know how to plug it into a You know quicken or whatnot you very well may be able to do it on your own I just can't comment on what that process looks like great advice

[00:38:13] [SPEAKER_01] Jeremy it's been so nice having you on we appreciate all your wisdom and your prior time coming onto the show and I think our community is going to really benefit from the the wisdom that you shared today. So How do people learn about you and get in touch with you?

[00:38:26] [SPEAKER_02] Yeah, yeah So i'm gonna be honest I you can't learn much about me except for maybe you google my name and i've been on over 200 podcast over the past 10 years Which you can watch you're welcome to Um, I don't have a website. I don't have social media. I'm just very much under the radar Um, but you're absolutely welcome to email me you'll find me on linkedin, but I don't check those messages often So the best way to reach me is is directly through email and I honestly if anyone's new or just wants to network or if I can help Anyway, I mean just don't hesitate to reach out i'm happy to help any way that I can

[00:38:54] [SPEAKER_02] My email is uh jroll j-r-o-l-l At roll investments r-o-l-l investments with an s.com So jroll at rollinvestments.com is the best way to reach me and you are absolutely welcome to watch those other podcasts I mean, I really I do these with the hope of just helping people. So hopefully they're helpful including this one

[00:39:12] [SPEAKER_00] Love it. Uh, it's incredibly generous. So thank you jeremy

[00:39:16] [SPEAKER_02] Oh, absolutely and I want to thank you guys for doing this too because it's all about helping people with the education obviously And uh getting a whole diversified set of opinions and people on here, which is great. So thank you

[00:39:27] [SPEAKER_01] Love it Well, thanks everybody for tuning in and uh, if you're coming to the show this week. See you soon Take care everybody

[00:39:38] Bye