David McIlwaine-Breaking the Golden Handcuffs

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Transcript

1:01

I mean that's that's a big plus. Man. I was, you know, I talked with a guy, I was in the office. I've been super slant. I talked with a guy yesterday and I was like, and I found out he is 24 and his wife's pregnant. And I was like, man, I just don't hear that too much, man. Not much anymore. I think I thought I was, hey, I thought I was the last of the Mohicans. You're not quite the last A. You don't hear married at 24 and B. You don't hear pregnant at 24. Yeah, I was, I was married at, I think I was 24, I don't remember. And then we were pregnant at 26, so I'm like, man, you got me beat. Good for you. And it's like a plan thing. He's happy about it. He's excited about. So Mr. David, we'll go Sales. Sales guy to sales guy. All right. The love of the game. Live by the sword. Die by the sword. Live by the container. Die by the container. And so we will just kinda kick off now. Awesome. Hello everybody. Welcome to another episode of Chain Reaction with myself, Jeff Davis. Today we have a very special guest, a very close personal friend of mine, David McElwain, who is the owner operator fellow excuse me, I was gonna make a joke there. Edit. Fellow janitor of Mac assets, And we've, we've actually just been talking a little bit about our backgrounds and, and how we came to meet each other actually. So David, please introduce yourself. Well, thanks for the invite. As a fellow janitor, I can look around to the, my right and there's my vacuum cleaner for my office. Yeah, good. I wear, I wear it proudly. You know, I spent 20 plus 25 years working for a division of Viacom in the advertising and sales world. And I left the advertising and sales world to get into real estate in the middle of a career change where I had experienced as a high performing c r o and as a senior VP and a regional vp. Layoffs back to back in the course of less than 18 months, each of them unrelated to performance. And the first layoff, I actually made the ninth consecutive quarter in a row of quota the day before the quarter started. And in that one I got laid off. I went and I became a C R O in a tech company. I reversed seven quarters of revenue decline to revenue neutral, and then revenue positive, and I got laid off there right after we closed a series B round of funding. So I experienced a couple times where the first one was a merger and the second one was the cash flow of the company. Mm-hmm. and I experienced several times that corporate America didn't have my back when it came to performance. Right. They had my back when it came to their needs. and as a sales executive, I had my people's backs. However, there was only so much I could do. And with the first job with the division of Viacom and went through a merger, I ended up myself and a third of my staff were laid off on the same day. Everyone at my level and above was eliminated, and it taught me something that I had seen happen time and time again that I forgot. When I was a little kid, I watched my dad get laid off twice and I thought, I can't trust a company. Fast forward 25 years, I've been with this employer for 17 years and I get laid off without a performance issue. Just a merger. Had nothing to do with territory skill success. and everything to do with politics that the c e o of the company decided he didn't need. The regional VP level leadership. Yeah. Yeah, and, and then I go into a tech company as a C R O and the tech company decides that they don't need a Salesforce. Wow. And it's fascinating because we're going through this right now. Again, in 2023, you're seeing a hundred thousand plus tech layoffs have been announced this year alone already. And we're in the first quarter still. Yeah. So with that came to come with that reality. I sat around and said, I'd seen this TV show before I didn't like it, and I got into real estate. Mm-hmm. so. A a, as your listeners may know, you do a little bit of real estate. I do a little bit of real estate and that's how we met. That is, that is how we met. We were in a mastermind and we have what we call accountability calls every week, but it's really just kind of, BS calls me and you it. It's moral support, you know, this moral support, this being an entrepreneur. Yeah. You know, when you're in a corporate sales environment, you talk to your fellow sales members mm-hmm. and you talk to your supply, you talk to your organizational structure, and you learn what the pulse of the market is and you know what the pulse of the company is. And that's the same thing that happens in the real estate world. We just learn it through peers. As opposed to superiors or subordinates. And I think that's mentors and, and you know, people have been there and people who are getting there, so. Right. Exactly. It's crucial. One of the things that that got us kind of kindred spirits, right? Salespeople, we're sales guys, so we're always chasing the deal that the love of the hunt and. Walk me through that. Right. You were a sales guy. And 17 years. It, it's always been my kind of feeling like, all right, man, sales, that's a safe position until it's not you know? Right. My own personal, so I've never been laid off, but I've seen it. Right. My industry we're heavy m and a as well in in transportation and logistics. And we're gonna go through it. I think you gotta put a word on the back of that sentence. I've never been laid off. Just add one word yet. Yet, right? but. My concern with, so what got me into real estate was bringing stability to my income. Right? Because the commission structure was volatile. Very much so. So just that aspect was what got me interested in, in making a, my own income, not be able to be negotiated by a third party or by my employer or by anybody. Just I control the. I control these things. So it's a, takes it into a whole new dynamic where a company says, here's what we think about the sales organization, our sales are, and I, I can't imagine. Yeah, it's fascinating, right? So you're talking about negotiating your compensation and, and I have a great story where when I was, I, I sold on a GLO regional national basis and I co and I customized our universe for what the advertiser was going to market to based on the advertiser's needs. Much like in the shipping world and the logistics world, you customize the performance to what the customer's last mile is and everything in between. Mm-hmm. and when I think about. There's a lot of similarities because every customer's a little different. The timeframes always change and you create relationships, and then you continue to renegotiate contracts and implement based on something that's under macro relationship umbrella, and I'd been pretty successful at this one Christmas Eve, literally Christmas Eve. I'm negotiating my bonus pool for the next upcoming. The previous year that I was negotiating, I had a bonus pool of$200,000 as my target. Okay. We got, we got a piece of private equity in from a Russian private equity shop, a Harvard MBA in a Yale PhD in mathematics. Were in the C-suite running the show, and they decided that a$200,000 bonus pool was too fat for the sales executives to have. So the Harvard n b a calls me on Christmas Eve and says to me, I'm making your bonus for next year, a hundred grand. And I'm like, hold it. I had a$200,000 bonus opportunity this year, and now you're gonna make it a hundred thousand and you think I'm gonna get excited by that? And he says, yeah, it's a hundred thousand dollars. You didn't make your$200,000 bonus this year. I said, okay. What was the year over year growth? From, from a 200 K bonus pool? Well, you had to do 18% year over year growth. Great. And actually, I believe this was 2007 or 2008, I had this conversation. So the world was in in free fall. Yeah. So we had a 15% year over year growth for a 200 K bonus pool. It comes down the next year. He wants me to have a 13% year over year growth for a hundred k bonus. Wow. Yeah, it's, it's it. I remember I had this fight vividly because it was at one 30 and my son was singing in the church performance at three o'clock with the animals on Christmas Eve and the youth choir. Yeah. It's weird how we remember certain things very vividly. I was so angry I couldn't see straight. Yeah. And I remember fighting with him about Motivat. as salespeople. Motivation is crucial to what we do. Yes. I've always been taught early on if I know what my end buyer's motivations are and I can fulfill them properly. Mm-hmm. it's gonna be a home run for everybody. Correct. If I ignore their motivations, it's never gonna work. Mm-hmm. I worked for a billionaire in Houston and he used to say the number one thing you work you, you have to know first and foremost is what the motivation is of the client You're working. Yes. And I went back to the salesman to this se, this chief sales guy, and I'm like, you're cutting my commissions. No, I got in this huge battle. I told'em no on Christmas Eve, no And this is the power of the sales guys, cuz everybody out here knows this. As sales guys, we bring in the rain, it's the engine to the, the entire. everything. Money cures all right. Right, right. Yeah. It revenue answers all questions. every time and, and I had revenue. I had a lot of revenue, so, so it's a great illustration of where you want control and destiny over your income and some things in the sales world, you just can't control. You can't control that. I couldn't control that my company was bought by a Russian PE firm and that they decided that the bonus pools could be no more than 18% of total compensation. And my bonus pool had. You know, 32% of total compensation, whenever the numbers were, and therefore it was broken. I had a bunch of MBAs from some Ivy League school telling me what I needed to do. Yeah. How much you could make, right? Yeah. I'm not gonna go into how, how ironic it is. Those guys, those guys were all gone two years later and I was still there. I'm not gonna get into the irony that a Russian company is telling you how much you can make. Well, let's, let's focus on what we're here to talk about So yeah, so you talked, you know, merger and acquisition. You talked 2008. I, we we're in weird times, man. The Fed did bump it up again today, like yeah, it just came out I think an hour and a half ago. A quarter, another 25 bit. Another 25 bits, three bank failures. It's weird times right now. What do you foresee in terms of, you know, we'll talk about what we do on our commercial, really? What do you think? M and a, which technically that's what we do, right? We're merger and acquisition. We're always acquiring. But what do you think in corporate m and a? Is that going to be active this year, or are there going to be just layoffs so that companies. Clean their balance sheets. You know, that's a really interesting question. I haven't thought much about that, so I'm a little bit on the back of my heels answering that. So if I don't sound really intelligent, let me walk through it out loud. We'll edit it out. Okay. Outstanding. So what I would say is that m and A requires debt. Ah, and the cost of funds is high. I just finished rereading a book that was written in the late eighties by. It's called Liars Poker. Liars Poker by Michael Lewis. And I really like it. And it talked about the, it was, it was the same time as the Solomon Brothers bond failures and Bonfire. The vanities was also written at the sa about the same timeframe, and it was, it, it starts to talk about the leverage buyout and the hostile takeover and how they were doing it, issuing corporate debt as part of their securitization of corporations instead of just using bonds and they securitized their Stock equity offerings. So I go to this to say, what's gonna be the new product to create m and a in Wall Street? Wall Street guys are paid to do two or three things, right? They're paid to promote stocks, they're paid to finance purchases, and they're paid to sell and buy money. So I see, I see that. Right now the market's a little stalled. And I see that the market will continue to be a little stalled till we figure out what's going on. The bank failures are kind of interesting. I think there's a, I think there was a classic run on SVB created by Peter Thiel. I had lunch this week with a good friend of mine, I've known since I was like four, and he used to work at Silicon Valley. And so he kind of gave me a little bit of his interior take. He hadn't been there for over a decade, so it's a little bit removed, but he is like, look, the bank has basically run really well. They had a void in the chief risk officer for eight months. That was a problem, right? But somebody pissed off. Peter Thiel. Because Peter Thiel got on on Twitter and said, get your money out. And then every VC and private equity hedge fund guy that had shares in a startup pulled the money out that became a bank run. The other part of the failure of SVB, as I see it, and what the Wall Street Journal has reported as well, is that they were holding their bonds at a par value on their books, and when they went to sell their bonds, they sold the bonds for 30% below. because it was a fire sale and the market wouldn't buy'em. And that's an issue of accounting rules with gap. The accounting rules say you can keep the value of the bonds at par until they're liquidated. So if you look on the books, they look fine. It's just like everything else in every other company, the people that know how to look in under the hood can figure out what's wrong. You know, Barney Frank was on the board at. The New York Bank, I forgot the name of it already. Yeah, signature. Signature, signature. I keep wanting to say Synchrony, but that's not right. Signature. And he wrote the Frank dot Act post 19, post 2008, and his contention was that the F D I C seized it, not because of a risk, but because they didn't want the contagion to continue and they were afraid that there would be a run. Now, I don't know if that's fact or fiction yet. So I, I saw that in an article. I think it was on wall Street Journal or New York Times or Business Week. I read national pubs. I don't read localized pubs on this kind of stuff. So, yeah that's, that's where I got that from and I don't have it. Nailed. So the bank failures are putting a pressure on the Fed, and I'm kind of surprised the Fed raised the rates by 25 pips. The Fed has three different obligations. One is inflation, two is unemployment, and three is financial in insti financial stability. Okay. And you know, I talked to him, one of my partners here today, and he said that inflation won the case on inflation. Kind of an interesting. So get back the question, what do you what? Pardon me by that. Inflation wins the case on inflation. So by raising the rates, the Fed is basically saying we're more worried about interest rates and we're more worried about inflationary pressures than we are about bank de bank destabilization or cont. The other interesting thing about this is in the, in the lending world, cuz as AC as acquirers of real estate, we're always walk watching the 10 year treasuries and we're watching what the fed funds rate does in relation to the 10 year treasuries. And the 10 year treasuries have dropped when they came out with this announcement. But the spread between the 10 year treasury and what the mortgage originator is gonna cost charge us has gone up. So the spread used to be 150 basis points or, or 200 basis points. And now I saw some emails this morning showing spreads of 300 basis points. So there's a lot of cushion in that spread. And you know, in the, in the logistics world there, I call that gp, gross, gross profit. Right. A lot of GP in there right now, man. Yeah. So that's a good thing for the mortgage lenders. Yeah. It's a good thing for the bankers. Yeah. Yeah, they're there. Everyone in any business is trying to put offload risk onto somebody else, right? As a private equity firm, I wanna offload my risk onto the seller of the property by buying it cheaper. As a seller, I wanna offload my risk of the property devaluing to the buyer. you know, in the logistics world, you wanna offload the risk of damage to the containers or damage to the products inside to some other party. Yes. Or to an insurance company. You know, as a, as a, as a pr, as a operator of real estate, I want to offload the risk of fire to my insurance carrier. We're all trying to offload risk, and that's what the mortgage bank bankers are doing. And so the m and a guys are gonna try and offload risk as well. Mm-hmm. Well that was a very astute, you, you did sound like you were prepared for that question. That was really good. And, and I even had to ask a follow up cuz I didn't know what to follow, you know what that meant, that little quirky. So I will tell you that I liked. You know, this requires debt. Wall Street guys are paid to do the three things, and that's a, that was good. I like that. If you just think about it, what's Wall Street? Do they buy sell and they buy and sell? Yeah. And what do they buy and sell? Well, I guess equities, right? It's, it's money. Shares of stock. It's money, right? Yeah. Shares of stock are. Correct. You're trading risk. Yep. The money. Yep. So let's talk real estate. Giddy up. Yeah, we are. So you and I, we do multi-family properties. We like apartments. What what is new in your world and what types of deals have you been engaged in and, and what are you. Looking for in a multi-family property. Well, thanks for asking. I'm a general partner in over a thousand apartment doors across the Southeast and the Midwest. US. I've got a development that I'm working I'm a JV with in Denver on some single family homes that are attached. Our premise is that we're going to bring value ads to Class B and class C properties in metros where there is stable growth and it's not the bell of the ball that everybody says they have to be in. Mm-hmm. I'm trying to be a little contrarian. I am kind of a contrarian by definition, and I don't really. Want to be in the Sunbelt going forward. So we're buying in the Midwest. We're buying in Kansas City. We're looking, looking in in Omaha, we're looking in Denver. Denver's not the Midwest. Yes, it's the mountain west. I'm also kind of looking in populations of around a million people. So what we are seeking out is a place where the mar to market rents are large enough. To justify the purchase in and of itself. And then we have an upside of value add repositioning. So we're gonna do a medium risk profile and we're gonna give a medium risk return as opposed to a very high risk profile and a very high risk return. So our objective is to go in and first and foremost, like Warren Buffet says, and rule number one, never lose. From there, we're going to, so our first goal is, is a safe deployment of capital with a solid, simple return. So we're looking for 15 IRRs, sometimes a 13 irr, sometimes as high as a 17. Over time, that equates, if you look at this, it's kind of interesting. The stock market talks about a return percent. They never talk about i r. the real estate talks about i r R. The real estate industry talks about I r R, but never talks about a return percentage. I r r is an internal rate of return based on a, a compound of time. The stock market six a hundred year average or so is about a 6% return over the life of the stock market. Wow. It it's not very, Maybe it's seven. I, I'm not a hundred percent sure. I need to look that up and, and, and beat the drum on this. But when I sell a, when I sell a 15 i r r, that's an 11% annual return. Okay. So we're somewhere in that window of double digit annual returns. Okay. With preservation of capital being the primary. And you'll see people out there talking about, Hey, if your money's in cash with inflation going up, you're losing 8% a year in that dollar not being invested. Well, yes you are. However, if you're a retail investor and you've got a hundred thousand dollars in cash, is it more comfortable to have that a hundred thousand dollars in cash or to take a risk you don't believe in? Hmm. And so the economics of the, of the finance guy saying it's in cash and you're losing money just cuz it's in cash. Discon discounts the emotional part of people's net worth and their, and their wellbeing financially. Yeah. Let me give you another example. I paid off my house after one of my big commission checks and I called my broker. He's like, that's a terrible thing to do because you. Won't get any more appreciation on that debt. He's absolutely correct. My wife at the time, who's now my former wife, wanted no payment As a volatile commission guy, we wanted to be able to weather the ups and downs of my income, which could vary by 150 to$300,000 a year. Right? Big variables. When I was doing nothing but commissioned sales, I paid cash for everything and carried no debt. Mm-hmm. terrible decision for my net worth. Great decision for sleeping at night. Yeah. And that's part of the golden handcuffs I talk about in my podcast. Okay. Yeah. You know, it's like what? When we invest, we have to make decisions that are best for us, not necessarily best on. That's a, that's a very good point. Maybe I've never thought of it that way. And, and I guess that's why you know, we can't look backwards, right? Like, oh, I should have done this. I like to sleep at night. You know? Man, I wish I could look backwards and fix it cause I'd change a whole lot. Yeah, yeah. Oh yeah. Don't do what I did. But that's the thing is, is we being salespeople and, and having somewhat of a volatile swing. And it's not necessarily, you know, going down to zero, but it is a volatile mm-hmm. pay structure that the average Joe, the engineer has a very consistent pay stub. Whereas as a salesperson, you do have a consistent pay stub that maybe is covering X. Maybe it's your base, maybe it's your draw. Maybe it's your guaranteed minimum compensation package, whatever it may be currently is something, but it is. You know, as a salesperson, you, you wanna make the most out of your commissions whether it's the most on a vacation, your family, your, your life. But you know, I do know that there's a number of, yeah, there's quite a bit who will go and on$150,000 in commissions one year you're buy a$600,000 house. And that's just cuz they just figure. It's gotta, the road's gonna go on forever. It will grow. Right? Right. But our customers go through m and a as well. And cycles. And cycles. Right. Look at, look at logistics in 2021 and 22 versus 23. I thought I was gonna be a millionaire forever. Well, the key to being, the key to being a millionaire forever. Yeah, is to buy real estate to buy real estate. Yeah. So, so I think I will, but I thought it was gonna be a logistics millionaire forever. And absolutely that's the way I stay. That's the way I've been able to keep it is by, for my real estate investing. Yeah. And what you're talking about brings up a thought for me, which is that when I was a commissioned sales guy, I lived on my base. Lived on the base, absolutely. I lived on the. The base income, the base salary. I had a draw against commissions earnings, so I had, I was always in the hole equal to my base every month when I started the month. Okay. Yeah. And so I had to get to even, and then I had to get to gain every month. right. So, you know, you hit a, a very popular term, especially with us, right? Golden handcuffs, Uhhuh, because the way that our commission structure usually works, and, and I think many, is you're paid on performance completed. And so if it's a quarterly commission, you're, you're waiting, right? If, if the quarter ends March 31, that commission might be paid out June or. Right, so all the tabulations are completed. You're not going anywhere until you get that big commission check. And that's a cycle, right? That's every quarter. And you're waiting, and you're waiting and you're waiting or even if it's monthly, and especially in some industries, they hire their management based on an annual. mm-hmm. So you might be below par on your, on your salary, but they will pay everybody out of a bonus pool and they will get you above par on with the market rate of pay based on your annual bonus. So a bonus could be a hundred to$150,000 to get you. To where your peers to get to hold are. Yeah. To, to get you to where your industry peers are. Painful handcuffs. Very painful handcuffs. Right. This is not golden parachute stuff where a C E O can bring a company to the brink of bankruptcy and he still makes a couple million. This is couple 50. Yeah. we, you know, we didn't get that lucky, so, you know, what's your answer to. You know, that's great. So I've, I, I'm a former Golden handcuff wearer and I started this podcast Break Your Golden Handcuffs because I wanted to help people break them. And so in the scenario you just laid out, what I would talk about is lifestyle choices. At the zenith of my handcuffed wearing, I owned four houses and didn't rent any of them and a boat, so I was a. Because I was living a heck of a lifestyle. It was fabulous, a great time. But when the Fiddler stopped and the music ended, I was looking for that chair to keep myself alive, and I had to liquidate. Mm-hmm. and I lost money on some of those deals. I learned a tremendous amount as a human being. And so the thing I talk about with the golden handcuffs is live on the. Yeah. And then view the bonuses as stewardship opportunities. Right. I used to ask myself, how do I steward this income? Mm-hmm. and I made a couple really good decisions. So when my children was, were born, they're 15 months apart and I got really fortunate, I had some huge years right in there and I was able to fully fund their 5 29 plans. Wow. So 20 years later, both of my kids are now in college and they, their school's a hundred percent. And most of their grad schools probably covered as well from the 5 29 plans for one commission. Wow. Literally one commission check two different times. Educated my children. That's amazing. Yeah, it's a great story. Right? But you know, here's the thing. You could, I, I've got a friend who says, go buy a house when your kids are. Same story. You steward something. So in the real estate world, go put in the GP investment. If you put in$75,000 and as an LP in in a real estate investment and they do a 15 i r r. And roughly five years that 75 is worth 150. You do it again and another five years at one 50. If you keep getting a 15 i r r is worth roughly 300 grand. So now you are 10 years in and you're 75 is 300. Yep. Do it one more time. Mm-hmm. And you're 15 years in that 75 is now 600. Yep. Compounding. Well, yeah, it's compounded in returns, right? Mm-hmm. and you reinvest all the dividends that you receive, and you let the dividends accrue and you don't spend them. And so part of the way to break your golden handcuffs is to make them golden tools. Mm-hmm. So you take a lumps, I take a lump sum commission check and I li if I can live on the base or I can live on the base plus three commission checks and I get five or I get three commission checks I live on and I get 12. I was in a 12 cycle commission check. Okay? So I would live on three and I'd keep the next nine to build what I called them, wealth building all. And every year I would kind of have an idea cuz 70% of my revenue was sold 12 months in advance. So I would then have to deliver 30% of the revenue in real time, which is really hard because our upfront sales cycle was so significant that that last 30 points of of quota was humping it every day. Okay. So, I would take that commission and I would, I would allocate in my head base is gonna pay for X, Y, and Z food, shelter, clothing, luxuries are gonna be commission four. Cars are gonna be commission three. You know, say retirements commission two, whatever it was gonna be, I lay it out a little bit, and then if I had a really good month, I could go forward on a commission goal. So on commission eight, if that goal was luxury and I had a really good month and I made a$20,000 commission check, I could take the luxury goal, which was gonna be a$5,000 expense, and I could bring that forward, and then I'd have that incremental money. The biggest mistake I. Is that I didn't buy rentals as a single family rental guy when I was doing this. Hmm. I could have bought rentals for 50 grand that are now selling for seven 50. Oh yeah. You're up in Colorado. Yeah, I'm in Denver. So it's a little different game. A little different game. But I, but the, I but the idea of the golden handcuffs is you, you start thinking about them not as day-to-day pain points, but as opportunities to create huge forced savings event. That other people don't have. If you get a$10,000 commission check once a month and that, therefore you're gonna get 120 K in commissions a year, that if you can live on their base, you can really do something with. Or if you need to live on 60 of that one 20, you live on the first six commission checks and the back half of the year is all gonna be bonus savings or bonus invest. Yeah, and I think the biggest challenge, the biggest thing to break the whole golden handcuffs is to forget about consumption. My son, who is a second, my second born, is going to school in Scotland and he came home over Christmas break and he said to me, Hey dad, you know the biggest difference between Europeans and Americans? I'm like, no, what is it? He said, Europeans value experiences and Americans value possessions. Yeah, I was talking to a good friend of mine who's a sales guy in the high tech physical materials structure who sells headphones for Zoom conferences, and he's had a really good couple years. He talks about chasing memories over money, but there's no reason you can't do both. In a sales role, we get paid for performance, so when we perform really well, take a percentage of it. And allocate it for future wealth building. Don't allocate it for consumption. And that's how I was able to stay accredited as an investor through a really nasty divorce. Several downturns and a, a career change was I had built enough wealth from my golden handcuff. To be able to handle the storms. And this year the storms are all around us. And as sales guys, we know there's gonna be ups and downs. Mm-hmm. And so when you get the up, you bank it. And by banking I don't mean you put it under a mattress, you put it in the investments that you believe are solid. Invaluable. Absolutely. Yeah. Yeah. And I'm not bashing the, the, the stock market, but how has the stock market been so volatile and why? Well, no one knows what's going. So, do you want all your eggs in the stock market? One of the things I talk about is if you're a W2 employee, and most of us are, or you're 10 99 either way, and your income is tied to a company's execution of a contract that you sell, mm-hmm. and then your retirement in that 4 0 1 plan, plan is tied to the company's stock, which is an outcropping of your performance and your team's performances. Where's your diversification? Right. And I preach and, and like I, I remember my broker one time told me, I want you to buy advertising stocks, And I said, hell no. I'm not buying my competitor. I'm not gonna give them more capital to beat me with. And then furthermore, I know the industry, my income's tied to this. My retirement is tied to this. I wanna go by REITs. Yeah. Yeah. So I love all that man. I love all that. It's amazing cuz we talk every week and I haven't heard some of this stuff from you. Yeah. Well we don't talk about this. Yeah. Right. Yeah. To your list, to your listeners, I would say make a. And make a plan for where you want to be. I u I, once a year, my wife and I would do a cross country road trip and we would write our goals. Mm-hmm. we would have an idea of where our sale, my sales were gonna be baseline. I would know plus or minus 20% what my base income would be. And then we would design what our wealth building moves were gonna be. And so my wife was pregnant with my first daughter and we were making that drive in November for the following year, and I had already sold 70% of my year at that point in time. So I was able to forecast my daughter my first child's 5 29 plan contribution five months before she was born. Wow. That's awesome. Yeah. So I took those steps that you have laid out, and I would agree with everything you said. And, and, and what I did was I took control of, I, I took my commissions. and, and I bought rentals here. Yeah, right. You know, and I, I like that model, you know, because commissions are highly taxed. So a huge chunk was going to retirement, and then I could couple you know, if it was a big enough. Commission check. That's a down payment on a rental. Right? And let's go to the tax roll for a second, right? I'm not a tax advisor. I'm not a tax account. I'm not giving tax advice. Jeff, are you a tax advisor? Are you giving tax advice? I, no. I hire a CPA for mine. I hire a CPA as well. But let's talk about that. You get ordinary income taxed at the full boat as a highly compensated sales executive. Yeah. And you're getting capital on what you can do with your 401k to no more than 2% above the average in employee's. Four. Oh. contribution. So in my case, I was tapped at like 6% contribution and then the I R S caps, what you can put in your 401K in the first place. Mm-hmm. every year the number changes. And I don't know what the current number is to you. I don't remember. I mean, it could be capped as 16,000 or, or like, I, I think it's like 2021 or something like that. Every, I looked it was 16,000. Every or every employment organization in, in 401K has its own cap. Okay. And then the IRS has a maximum cap for the, the state country. So if you buy into a passive investment in real estate, you buy into an l l. And you can combine the L L C and another L L C, and you can create an L L C for real estate holdings that might allow you to create offset expenses. You can also do things like cost segregation, where you depreciate the property and the deals I have done in the last 24 months, we've had. Something like a 70 to 80% depreciation in year one. So if you put in a hundred k, you would get$70,000 in tax losses right then and there. And, and thanks Jeff. He looked it up. The, the maximum contribution for IRAs is 22 5 this year. I'm sorry, for four 401k, maximum four one contributions 2025. So what this means is you can create a tax strategy, not for tax, avoid. But tax strategy to allow yourself to keep more money in your pocket. And there's a whole bunch of different ways to do this based on what your situation is. Yeah, and the way I like to think of it is I'm giving myself a basically a tax-free raise because that passive, that passive portion is we're able to offset. those gains. If, if I have a 5% cash flow off of my a hundred thousand dollars investment, I get to offset that$5,000 income. And I think about it very similar, but somewhat differently. I think about I'm gonna invest my dollars, my investment dollars are gonna grow tax free. Yeah, because let's say that you can only defer 25 K if you're a passive investor. You can only take a maximum 25 K in passive. Losses, then everything else is carry forward. Mm-hmm. So you invest a hundred grand over four years, you've taken all your loss and then you have carry forward with anything thereafter per per investment. And that obviously will allow you to basically gain back your taxable basis and eliminate tax ca. Capital gains taxes. So if I put in a hundred and I make a hundred with capital gains, I'm gonna make 85. But with cost aggregation and bonus depreciation offsets and carry loss carry forward. I'll be able to keep that in incremental 15 and therefore I've actually made a true a hundred percent return as opposed to an 85% after taxes. Correct. And the numbers we talk about are net of fees to the, to the general partners as well, because you don't care about gross fees. You care about net net to you and your pocket as an investor. And that's all I care about as an investor as. I want to know how much I make. Yeah. What's my number? Selfish. How do I get selfish? I'm selfish. Right. It's honest, very honest. So yeah. I love it. And it's really true. Right? And, and for anybody in my audience that we haven't talked to about it, man, I've done the rentals, I've done flips. I like the syndications. It's the easiest pathway. It's plug and play. You get all the same benefits. That's what it is. Yeah. With a whole lot less risk. I talked earlier about offloading risk. Yeah. When you buy a rental, You hold all the risk. You hold the risk of tenant occupancy. You hold the risk of fire, you hold the risk of insurability, you hold the risk of unemployment. And if you have one house and you have one vacancy, one 12th of your income for the year is gone. And if it takes you 60 days to fill the occupancy, one sixth of your occupancy is gone. With the syndication, you amortize that risk over a whole lot larger pool. And that's one of the reasons I'm his big supporter of it as well. So David, if anybody wants to learn more, how can they get in touch with you? Well, thanks for asking Jeff. So I did, I mentioned a couple things. I've got a podcast launching in mid-April called Brick Bricker. Golden Handcuffs. Mm. And then my company is Mac Assets, m a c assets ass ets.com. You can reach me there in my email info. Mac assets always works. Cool. We'll have it in the show notes. And of course everybody, I appreciate you listening. If you have anything any kind of comments, would love to hear your, your commentary, your questions Hit us up in the chat and the comments section of the podcast. And as always, we are sponsored by Bridgestone Capital, passive Income for Supply Chain Professionals. Would love to hear from you. This is, Signing off tails from the supply chain.