#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_02] 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. So my apologies if you try to make your commute and you're like why is the jump seat to Vegas taken today? Well, I guess tomorrow or whenever this airs. Well, yeah, my apologies in advance, but yeah, you know, we're in Las Vegas actually Tait's in Las Vegas. My team is part of my team is there. We're excited.

[00:00:42] [SPEAKER_02] 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. We're 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. So I'm really excited for that. There are going to be on site offering actually actual on site consultations for listeners.

[00:01:28] [SPEAKER_00] It's just going to be a fantastic two days. So we're kicking things off 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 the happy hour and rolling into two jam packed days.

[00:01:46] [SPEAKER_02] I'm super excited. 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 today than to kind of prime the pump, so to speak, to talk about this stuff because Jeremy Roll has been on the podcast. He was on like years ago on our podcast, but he's one of the LP sort of he's like the LP extraordinaire.

[00:02:14] [SPEAKER_02] He's the LP extraordinaire. Exactly. He's the guy. He's the guy that basically has done like hundreds of these 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. But we're talking to Jeremy Roll from Roll Investments and he helps or he really just is a passive investor.

[00:02:39] [SPEAKER_02] He actually was in the corporate world. 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 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 airline that they're at, like because it's kind of too good of a job.

[00:03:02] [SPEAKER_02] 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, 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.

[00:03:15] [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. And, you know, passive income allows you to do that. So the show is called Passive Income Pilots. We're finally actually talking about passive income. 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_01] I am good. Thank you for having me back. I really, really appreciate it. I know it's been a while since I was on here and I know that you guys have grown tremendously. So congratulations.

[00:04:10] [SPEAKER_00] Thank you.

[00:04:11] [SPEAKER_02] Yeah. You know, Jeremy, last time we talked a lot about, I think, investing passively in 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 kind of what's your background?

[00:04:37] [SPEAKER_01] Absolutely. So my name is Jeremy Ruhl. I'm located in Southern California near Newport Beach. I'm originally from Canada, from Montreal. I grew up, lived my half my life in Canada and then moved down to the US. I actually started off before all this full time investing as a passive investor, started off in the corporate world like a lot of people. Worked at a couple of Fortune 500 companies. Last two were Toyota headquarters in Los Angeles and Disney headquarters. So I really did work in, you know, large environments and a couple of startups.

[00:05:06] [SPEAKER_01] Have over 10 years of corporate experience. Have a work and MBA 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 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 2007. So almost 20 years.

[00:05:32] [SPEAKER_01] But I've been actually investing in managed opportunities like syndications since 2002. So 24 years, almost 25.

[00:05:40] [SPEAKER_02] Jeremy, you know, that's interesting that you talked about investing after the dot-com bubble 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.

[00:05:55] [SPEAKER_00] It's just up and to the right, man.

[00:05:56] [SPEAKER_02] Right, it's just up and to 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. 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.

[00:06:20] [SPEAKER_02] Like, can you give 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_01] Yeah. And it's funny because, you know, back in 1989, for those of you who 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. I may have been a bit of a remark in the U.S., 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_01] What I try 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.

[00:07:42] [SPEAKER_01] But in multiple cycles, ironically, as a stock market and bond investor, my reaction to the dotcom 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 yeah, there's a lot we could talk about. I've invested for a long time. And I think that I actually am expecting a stock market crash based on the current valuations as Warren Buffett is technically because of his own valuation metrics, et cetera. And I'm trying to prepare myself to be able to run towards the stock market when that

[00:08:11] [SPEAKER_01] 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 let's stop on that, because the AI bubble, I mean, even Ray Dalio is calling an AI bubble, right? And no one knows when this thing is going to pop. And one of the interesting things that he points out is that the bubble bursting does not mean

[00:08:42] [SPEAKER_00] 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 10 years, how do you think this thing is going to play out?

[00:09:06] [SPEAKER_01] Yeah. So important to everybody, 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 the last person you want to talk to is someone who hasn't owned 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

[00:09:36] [SPEAKER_01] you've never heard of Ray Dalio and you're listening to this, 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_01] 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 because it's very important. So, if you look at probabilities and past cycles, I'm going to point some things out that are interesting.

[00:10:34] [SPEAKER_01] First of all, 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 which 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_01] 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 may not agree with any of this, but at least go educate yourself on this.

[00:11:31] [SPEAKER_01] 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 in the next few years, if not sooner. I'm expecting what's called a lost decade. It's not just me. Google the term. Very important.

[00:12:00] [SPEAKER_01] We've had multiple lost decades based on being at these highest ratios. And actually, there's been a couple of 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_01] That's right. The concept. So, in fact, crazy statistics, you know, the NASDAQ, I think, peaked in 1999 or 2001, whichever it was. I don't think it got back to even until 15 years later. Right. 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 2001.

[00:12:49] [SPEAKER_01] 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 try 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 is 100% certain. But my mind works in the probabilities.

[00:13:19] [SPEAKER_02] All right. I have a lot of questions. A lot of follow-up here. So, okay. First objection. I'll do an objection. I'll do a counter what you're saying. So, yes, the past is the past and, you know, the ratios are what they are. But, you know, the reality is, like, back in 1996, 7,300 publicly traded companies. Today, 4,300 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 so the valuation is going to continue going?

[00:13:49] [SPEAKER_02] Because there's just so much money chasing so fewer public companies. Like, what are your thoughts on that?

[00:13:53] [SPEAKER_01] 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 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_01] So, that's the number one thing I would tell you to look at regardless of the number of companies, 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 can be really, really dangerous. And so, 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.

[00:14:46] [SPEAKER_00] Yeah.

[00:14:47] [SPEAKER_01] Okay. And 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 until you're at close to a peak, because this is actually natural and normal. 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, you're going to look back in retrospect, and if

[00:15:16] [SPEAKER_01] 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_02] No. So I got to 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 however many percent, right? So I'm not going to put you on the spot for what your portfolio has actually done, because I doubt you have this. Maybe you do have this number. You're pretty objective in your data.

[00:15:55] [SPEAKER_02] But okay, so how has your portfolio done outside of the stock market compared to the stock market? Yep. 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_01] Yeah. Good question. So remember, 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 outperformed 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.

[00:16:44] [SPEAKER_01] 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. Now, I want to say, though, that I was an extreme case. I went in 100% alternative illiquid type assets, and also the cash flow from those assets completely changed my life, got me out of the corporate world, and just gave me 20 years out of the corporate world. And I'm so fortunate, right?

[00:17:14] [SPEAKER_01] And now I'm actually trying to reverse course a little because I'm not over 50. I got to get into a 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, but at least start my positioning where I actually won't have a lost decade, but won't have normal

[00:17:42] [SPEAKER_01] returns in the stock market year, probably be below average. I'm just looking at past history.

[00:17:46] [SPEAKER_02] All right. One more question. I know, Tate, you can take it away after this. So our average listener is going to be an airline captain flying the line at a major airline and 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 we really preach kind of diversification, which

[00:18:12] [SPEAKER_02] is put some of the money, have liquidity, have money in the market, have some hard assets, and then maybe do some passive investing, truly passive investing where your arm's 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 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 a hundred grand or 50 grand sitting around, you know, and they, they, they need to place it in something with those factors at play.

[00:18:42] [SPEAKER_02] Like kind of where would that money go first?

[00:18:43] [SPEAKER_01] Yeah. So before I'd even get to that, I would just, cause 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 be, 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. And I think it's very, very important. So what I would say is I'm a huge fan of diversification.

[00:19:13] [SPEAKER_01] In fact, I'm currently in over 60 LLCs 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

[00:19:38] [SPEAKER_01] of recession that maybe would 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_01] But 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 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 positions.

[00:20:37] [SPEAKER_00] So 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 4, 5, 6, 7% passive income per year. That's not on 100 grand. You're talking, you know, $5,000 to $7,000 a month. That is not changing anybody's life. So how did it snowball from your first one into life-changing passive income?

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

[00:21:09] [SPEAKER_01] 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 in over 200 over the past 24 years total. So thanks for the clarification. Yeah, no, no problem. You know? So, well, when I started, there were two things that kind of make my answer not a perfect fit for what you're, I think, intending to help audience with. Number one is that I first started investing actually in Canada, even though I was based in the U.S.

[00:21:38] [SPEAKER_01] and with currency risk, which I don't think is such a good idea in retrospect. But the reason why I did that is because 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 happened to be doing at the time when I really didn't have that much knowledge. That was back in February of 2002, first deployment. Between 2002 and 2007, what happened with me is that, again, my goal was not to leave the corporate world.

[00:22:06] [SPEAKER_01] It was 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% in a year with all these crashes, was the wrong personality, kind of lower risk, slow and steady mindset that I had. And the 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. And so I started to look to invest and came across the concept of syndications,

[00:22:32] [SPEAKER_01] but more importantly, kind of lower risk, more passive cash flow in stuff that was more stabilized and kind of a little bit, 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 I started to rent my money from stocks and bonds and the cash flow with the goal of actually having a W-2 paycheck and the cash flow, not with some grand, great plan to get out of the corporate world. So that's important to know.

[00:23:01] [SPEAKER_01] Between 2002 and 2007, 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 corporate world. 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're getting cash flow from a property,

[00:23:29] [SPEAKER_01] 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 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 fully amortized, very successful between 2004 and 2012, was a friend of mine had a web hosting company. This is pre-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.

[00:23:56] [SPEAKER_01] 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 were a 50% cash on cash return for three years and the plus the 5% buyout, okay? So here's the good thing about that.

[00:24:24] [SPEAKER_01] You invest $100, you get 50 back a year, crazy cash flow. The bad thing, if you live off of that money, the $50 back a year, and then you take the 5% buyout, you've got nothing left. It's very dangerous. Okay. But you have a tremendous acceleration of cash flow up to seven to 10 times normal. 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 107, frankly, because of the last dry moment I have with the manager,

[00:24:53] [SPEAKER_01] 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. So I had to very strategically rotate from those fully amortized into mostly non, you know, sorry, yes, fully non-amortized deals into mostly fully amortized deals. And so that I would actually not have that risk, right? And hopefully I'm not getting that backwards.

[00:25:21] [SPEAKER_01] 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. And I had the fortune of having very high returns. If you're compounding that 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, was trying to be as careful as I could about it, was diversified. That was just one example.

[00:25:47] [SPEAKER_01] 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, $5 million in a debt fund that pays you 10% is $500,000 a year. And really, for me, that's the holy grail is having the same amount of income that an airline would pay me in a pure cash flow passive deals so that flying can be for fun. My 401k can be for fun. Everything is just for fun.

[00:26:34] [SPEAKER_00] And obviously, you wouldn't want that entire $5 million in the exact same debt fund. You'd want that diversified all over the place. But you can find private. I mean, you can hard money lend. You can buy notes. Both Ryan and I have credit funds. There's all sorts of places that you can put that $5 million that pays you roughly high single digits into low double digits. And it's just amazing to be speaking with somebody who has hit that threshold.

[00:27:03] [SPEAKER_00] And that's what you do professionally now is just rotate that cash.

[00:27:07] [SPEAKER_02] Yeah, and tying it all together to Jeremy's point earlier, which is like diversification, right? So you get to retirement as an airline pilot, and you have a pile of cash in your 401k. And the market corrects when you turn 65. And all of a sudden, 40% to 50% of your nest egg is gone. But then you have this $5 million and these limited partner LLCs, debt funds, whatever. And you're getting that 500K or however much you've put in there.

[00:27:35] [SPEAKER_02] And then you also have 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 an article in the Wall Street Journal probably three weeks ago about airline pilots and their volatility of their financing.

[00:27:57] [SPEAKER_02] And it basically gave a captain at United a couple million bucks, $2.5 million in their 401k, and how he had done it pretty much all traditional. So now he's making 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-

[00:28:18] [SPEAKER_00] You've got your RMDs. You've got, yeah, the taxes on the withdrawals. And 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. So-

[00:28:40] [SPEAKER_02] 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. And they're just desperate for that last little bit of, you know, tax break.

[00:29:09] [SPEAKER_02] 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 from some of these airline pilots. Right. So they're going to 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_01] Absolutely. And so I'm not a 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 so everybody understands, I'm just going to try and keep it really simple because of depreciation benefits, sometimes acceleration depreciation by many methods.

[00:30:00] [SPEAKER_01] It's actually very common for me to invest X amount in an apartment building, for example, get X amount of cashflow from it, which you would think would all just be income. You're getting this thousand dollar check and yet your taxes are showing negative amount owed at the end of the year. Right. And actually, Ryan, you probably have even more extreme and more interesting scenarios in mind,

[00:30:26] [SPEAKER_01] which actually completely is just that I've been part of before with 100% bonus appreciation or accelerated appreciation, sometimes over 100% appreciation in some situations. But just the point is that even if you're just playing it simple and conservative with this, often the cashflow you're getting for 10 years could actually have a negative tax impact every year. Now you do eventually recapture it. It's not like they're not paying the tax. This is very important to understand as well.

[00:30:51] [SPEAKER_01] The tax is deferred, but that deferred tax for all that years can allow you to compound, which we talked about before, which is one of the beauties of this. And so I'm going to be honest. I always said that, you know, the government encourages certain investing through the tax code and some of it seems unfair. And I'm going to be honest, like I think that some of the rules dictating all this is unfair. And I understand the point of it. They want people to make capital investments to accelerate hiring growth and help the economy.

[00:31:19] [SPEAKER_01] And you could be part of that and be on that side of the fence where you're legally getting all of these very, very great tax incentives and breaks. And, you know, it's a very long topic we can cover. But the bottom line is if you're not familiar with any of this or even if you're investing in syndications, don't understand it, please make sure you at least educate yourself on it. If only because the next time you invest in something, make sure you factor it in. It's part of, you know, the return equation of what you're looking at.

[00:31:47] [SPEAKER_02] A hundred percent. Yeah. I mean, if you want to pay the most amount of tax, work for an airline, right? And be a W-2 employee, right? I mean, here's how bad it is, right? As an airline pilot. I mean, you know, this is awesome. 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, you are not set up to save any money on taxes being an airline pilot.

[00:32:16] [SPEAKER_02] Like, you used to be able to get all these deductions and all that. But 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 really what it's all about. It's like the government incentivizing behavior. Okay. I want to switch to, I know you're up against time. And I want to get, like, where are we today? What are you investing in right now?

[00:32:45] [SPEAKER_02] What do you like? What don't you like? Kind of what are you seeing in the market? And what's kind of your outlook?

[00:32:52] [SPEAKER_01] 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, 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, Ryan, I don't quite know where you are, but whatever that building is here, and if you sell for me to a dollar, there's a good chance I'd probably take it. Right?

[00:33:18] [SPEAKER_01] 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 across many different asset types.

[00:33:48] [SPEAKER_00] And to be clear, we're talking about commercial real estate here, just for anybody that... Yes, yes, yes. I'm sorry. Thank you.

[00:33:54] [SPEAKER_01] Yeah. And that's a lot of what, you know, we invest in to get the cash flow. Right. Right. 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 a stock market crash, which is typical. Right. So, I've been waiting for that because, again, I'm trying to be objective.

[00:34:19] [SPEAKER_01] In the meantime, I have a lot of money saved up in short-term 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 of investing. Because I still think some asset prices have lower to go.

[00:34:42] [SPEAKER_01] I think that 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. I don't know what it's going to get to, but I'm kind of anticipating that. And I'm waiting, which is not easy and very frustrating, but that's what I'm doing.

[00:34:59] [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 Turbine. I'm sure there are a lot of investors at Spartan that are your airline captain that's only had stock market investments for a long time. They're starting to get their first K1s. And they're going, hey, how come this thing is late, first of all? And number two, how do you deal with it?

[00:35:26] [SPEAKER_00] They've been doing TurboTax their entire life, and now they've got this K1 that has state-level income that it's reporting. You're in 60 of these things. What would you say to those people, and what are some pieces of wisdom that you can pass along for dealing with, let's say, 60 K1s that you have in your personal portfolio?

[00:35:43] [SPEAKER_01] Yeah. So first thing I'll say is a great question. First thing I'll say is that 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. You'll have more risk to an extent because of that. And B, you have to deal with these K1s, which is kind of a fact of life, unfortunately. So my understanding is that these K1s are the tax forms you receive from the LLCs you're investing in. And my understanding is that they're due March 15th, but then they can file extensions like any other company. Those, I believe, are due by September 15th.

[00:36:12] [SPEAKER_01] And if you ask me the most common timing in which I receive my K1s, 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. But here's the thing. Your personal returns that you have to extend, I believe, are due October 15th, so there's plenty of time to deal with it. So it is a bit of a frustration, and I'm chasing K1s.

[00:36:40] [SPEAKER_01] My accountant actually keeps a spreadsheet for me, and then he updates it every time I send him one. And then 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'm in is cash flow. Those funds may be in 20 or 30 companies, and they have to get every single K1 before they can send me the K1. And if just one company comes in September 1st, they can't send it until September.

[00:37:10] [SPEAKER_01] So there's all different scenarios. So 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 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 K1s, you're going to be paying a boatload of money for the firms to deal with these.

[00:37:35] [SPEAKER_01] 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 on that because I've never done it on my own. But on the positive note, you're being handed the entire tax breakdown.

[00:38:00] [SPEAKER_01] And so if you only have a few and you know how to plug it into a 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.

[00:38:10] [SPEAKER_02] Great advice. 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 wisdom that you shared today. So how do people learn about you and get in touch with you?

[00:38:25] [SPEAKER_01] Yeah, yeah. So I'm going to be honest. You can't learn much about me except for maybe you Google my name. And I've been on over 200 podcasts over the past 10 years, which you can watch. You're welcome to. I don't have a website. I don't have social media. I'm just very much under the radar. 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 directly through email. And 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.

[00:38:52] [SPEAKER_01] My email is jroll, J-R-O-L-L at rollinvestments, R-O-L-L investments with an S dot com. So jroll at rollinvestments dot 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. It's incredibly generous. So thank you, Jeremy.

[00:39:15] [SPEAKER_01] 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 getting a whole diversified set of opinions and people on here, which is great. So thank you.

[00:39:26] [SPEAKER_02] Love it. Well, thanks, everybody, for tuning in. And if you're coming to the show this week, see you soon. Take care, everybody.