Bronson Hill  0:00  

When it comes to using inflation, to your advantage, you know, I think a lot of us you see the pain at the pump, we’re, you know, paying more money for food, we’re paying more money for lots of things. And we feel we see we feel the pain of that. But the goal is how can you get on the other side of the equation to where as inflation goes up, you actually benefit in real estate is one way to do that. Because typically, you know, if you have debt that’s below the rate of inflation, which officially is six 7%, I think it’s more like 15% If you look at actual costs, so as long as your rates are below that, I think you’re still doing okay, are still doing still doing well. But there’s really two things you’re if you buy real estate or assets that pay you to hold them, you’re cash flowing while you hold them, but you’re borrowing with other people’s money. If you get a 20% or 30%, whatever the money you put down, you get an increase in the value of the property, you know, loans, your your, your value hasn’t gone up by 2030, or your equity has gone up by 23%. It’s a lot of doubled. So that’s an awesome thing. And you’re also paying off the loans with future dollars that are worth less right because of inflation. So it’s kind of a double positive. That’s why people most people become very wealthy, become that way through real estate. So I still love real estate, I still have assets that pay you to hold them and be able to use debt to use inflation to your advantage.

Announcer  1:18  

Welcome to CRE PN Radio for influential commercial real estate professionals who work with investors, buyers and sellers of commercial real estate coast to coast whether you’re an investor, broker, lender, property manager, attorney or accountant we are here to learn from the experts.

J Darrin Gross  1:37  

Welcome to commercial real estate pro networks, CRE PN Radio. Thanks for joining us. My name is J Darrin gross. This is the podcast focused on commercial real estate investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio. 

Today’s program is sponsored by Building Insurance and Risk when you invest in real estate. It pays to work with a real estate investor protection specialist to protect yourself and your investment in catastrophic loss. The experts had building insurance and risk focus on real estate investor protection. They provide you with multiple insurance coverage offers and a side by side coverage comparison. To learn more, go to BuildingInsuranceRisk.com. 

Today, my guest is Bronson Hill. Bronson is the Managing Member of Bronson Equity. Bronson is a general partner in 2000 multifamily units worth over 200 million and CO leads a large inperson multifamily meetup in Pasadena, California called FIBI Pasadena Multifamily. Bronson is also the host of the Mailbox Money Show Podcast. And he understands the investor mindset. Having spoken individually over the phone with over 1300 investors and having raised over 30 million for real estate and his ATM machine fund deals.  Bronson is the author of How to Use Inflation to Your Advantage. And as a regular contributor to YouTube and his blog. He is also the capital raising coach at Kingdom REI, a faith based group, helping investors find deals and raise funds for large real estate deals. And in just a minute, we’re going to speak with Bronson about how to use inflation to your advantage. 

But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple things you can do to help us out. You can like, share and subscribe. And as always, we encourage you to leave a comment. We love to hear from our listeners. Also, if you want to see how handsome Our guests are, be sure to check out our YouTube channel. You can find us on YouTube at commercial real estate pro network. And while you’re there, please subscribe. With that, I want to welcome my guest Bronson Hill. Welcome to CRE PN Radio.

Bronson Hill  4:23  

Darrin, excited to be here. I love talking about real estate and there’s a lot to talk about. So looking forward to talking with you and having a great conversation.

J Darrin Gross  4:31  

Well, I’m looking forward to it as well. Before we get started, if you could take just a minute and share with listeners a little bit about your background.

Bronson Hill  4:40  

Sure. Yeah. So I was a well paid medical sales professional making over 200,000 A year and I enjoyed it. It was good. I was going into heart surgery with surgeons and selling different devices in the operating room. And I yet I really saw myself you know working too many hours, as well as a lot have physicians that I worked with some were making really good money, I had a couple of cardiologists that were making, you know, over a couple million dollars a year, and yet they were working 60 or 80 hours a week. And I just thought, you know, this, that’s not really financial freedom. To me, financial freedom really involves freedom of time. And so I began to kind of explore how can I become financially free and in real estate was definitely an interest. I’d been doing some single family investing in another area where I had been kind of became an accidental landlord, and that it worked out well. So I started buying houses. And then my goal was to get, you know, 30 of these houses and Cleveland where I was buying houses. I live in Southern California, but I was buying houses with a partner in Cleveland. And I have a cousin who I just hadn’t seen in years, and he’s he’s a multifamily guy. And he said, you know, this sounds like a lot of work, why don’t you do multifamily? And I said, Well, I’d love to, but I don’t have the money. And he said, Well, you can raise the money. So I learned about syndication, which is basically just a fancy way of saying, you know, raising money from individuals putting it together to buy a larger, you know, investments such as a large apartment building. So it just kind of started slowly. I mean, I look back now, last four or five years, it’s just gone vast, and I’ve learned a lot, I was able to leave my great corporate job and replace my living expenses and my income. And so I love talking about real estate, talking about investing, talking about helping people, you know, diversify outside of the stock market. And so it’s been it’s been quite a ride.

J Darrin Gross  6:23  

I always appreciate hearing about where, where people start and kind of the journey and, you know, appreciate you sharing that with us. I’m curious. So how long ago did you first get started doing the single families?

Bronson Hill  6:40  

So I started, I moved to the state of Montana for a job. I was out there for a couple years. And the job ended. So I had a house, they decided to keep it. So that was in 2006. I purchased the house. And then in 2008, I’ve been moving away. But I had it for four years, over 15 years, or about 15 years, and then ended up selling it not that long ago. So I guess, yeah, about a couple of years ago. But that’s kind of how I got started

J Darrin Gross  7:05  

Got it. And then how recently did you start after talking to your cousin into the multifamily?

Bronson Hill  7:12  

It’s coming out in five years. So it hasn’t been that long. But I just, you know, was really curious. He said, read this book, go to this conference. Listen, this podcast, I did everything he said. And before I know it, I you know, started started a meetup in Southern California, found my first investor there who invested 100k, I was able to about six months later meet a partner who had a big platform, but wasn’t really raising money. And so we started raising money, we raised about 15 million together over the next 18 months. So there’s been some different, you know, journeys. Last year, we raised about 13 million. You know, again, this all just sounds so weird. somebody’s listening, like I just sounds that for a lot of money. And it’s like, Yeah, that does sound like a lot of money. So it’s, it’s, it’s something that doesn’t happen right away. But it’s something that’s happened just progressively over time. And it’s been kind of it’s been really fun to watch. Because it’s you know, here I’m able to partner with helping people grow their wealth passively outside of the stock market, which involves less volatility and risk and better returns, and then I’m able to grow my wealth as well. So it’s been really fun to see the alignment of interests as we get together. 

J Darrin Gross  8:12  

Yeah.  So in the last five years, how many deals have you guys been able to participate in that have gone full cycle.

Bronson Hill  8:20  

So we’ve had four that have gone full cycle, we’ve had a couple perform right about at projections, around 15% per year, two to three year holds, we had one that was about a 26% return for two and a half year hold. And we had one that was we had about 80%. And you know, IRR in 10 months, we’re just kind of an outlier, but we just had one that we bought at the right time, and everything’s for sale at the right price, we got a great offer, we end up selling it, and 1030 wanting or doing a tax exempt exchange into another property. So but yeah, so we like to provide, you know, predictable returns for investors.

J Darrin Gross  8:52  

No, that’s great. So, in the last five years, it’s been, you know, kind of low interest rates, compressing cap rates. You know, it’s been, there’s been kind of a fury of sorts in that, you know, there’s always been somebody wanting to buy the deal, because they want to get in kind of thing. And today, we’ve got the Fed trying to tamp down the inflation rate. And as just a point of reference, we are recording this on March 1 2023. And I believe the Fed has another meeting scheduled this month. And, you know, my question to you and kind of the topic that we are open to talk more about is how to use or how to make inflation work for you, or how to use inflation for your advantage. So with that, you know, and again, also coming from the environment we’ve been in with Low inflation and and relatively cheap money. And a lot of a lot of capital. What are some of the differences that you’re seeing here in the last year? In the kind of let’s talk about the deals and also capital raising? Are you seeing? Is there any difference in the interest and or the participation from the people that you’re talking with about raising capital?

Bronson Hill  10:28  

Yeah, I think it’s, I think it’s changed completely from where it was a year ago, I just did a panel with a guy named Neil bawa and Ken McElroy, a few others, and Nick came up that there was there’s been a 78% decrease in the volume of sales of large multifamily buildings. That’s really significant. I mean, that’s, you know, that’s like a, you know, like a fifth about what it was a year ago. So, you know, that’s, that’s pretty significant. I think when it comes to doing deals, it’s harder to find deals that work. Because interest rates have gone up, it’s been more challenging. So you know, a lot of times you’re having to look at deals, they were turning less than what you know, they were a year ago, just because of the interest rates being higher. Also, a lot of times the lenders are asking for more money Downs is that a 20, year 25%, down, it’s a 30 35% or higher 40% down. And so you have, you know, those really squeeze your cash flow. So again, you have to put more money down, you’re paying more for interest as well. And investor sentiment has changed to where it was easier to raise money. And now it’s, you know, twice as hard to raise or, you know, we’ve already raised the same amount of money. So it has been interesting when it comes to new multifamily deals, now, we’re really focused on the ones that we have, and the ones that, you know, we’re we’re trying just to make sure that, you know, we can operate well, my friend, Ken McElroy, says 2023 is the year of operations, I mean, it really comes down to especially when it comes to a value add deal, which means you know, for those unfamiliar, it’s you can buy brand new apartments, where you know, they’re they’re built in the last 10 years, there’s really not much to improve. But if you buy something that’s a little bit older, you can come in and do renovations, for example, in Jacksonville, where we have about 1500 of our units, we can come in and do okay, rents are $1,000, we know if we put $6,000 in per unit and do a light renovation, we can see rents go to about 1500. So it’s about a 50% upside, which is which is great, it’s just we’ve got to make sure that we’re able to do that and be able to sustain with the cash flow, and be able to really be able to grow that property. So So I think there’s there’s some new challenges that we haven’t really seen, in the past, it has it has changed a little bit, we’ve shifted a little bit to move least right now into more focusing on our ATM machine Fund, which is a very predictable cash flow, investment, monthly payout. You know, it’s been great. We have a carwash deal we’ve done we’re looking at an oil and gas technology deal. So we have some other things that we’re doing that are kind of in the alternative space. When it comes to using inflation, to your advantage. You know, I think a lot of us, you see the pain at the pump, we’re you know, paying more money for food, we’re paying more money for lots of things. And we feel we see we feel the pain of that. But the goal is how can you get on the other side of the equation to where as inflation goes up, you actually benefit and real estate is one way to do that. Because typically, you know, if you have debt that’s below the rate of inflation, which officially is six 7%, I think it’s more like 15% If you look at actual costs, so as long as your rates are below that I think you’re still doing okay, are still doing still doing well. But there’s really two things your if you buy real estate or assets that pay you to hold them your cash flowing while you hold them, but you’re borrowing with other people’s money. If you get a 20% or 30%, whatever the money you put down, you get an increase in the value of the property, your you know, loans, your your your value has gone up by 2030, or your equity has gone up by 23%. It’s a lot of doubled. So that’s an awesome thing. And you’re also paying off the loans with future dollars that are worth less, right because of inflation. So it’s kind of a double positive. That’s why people most people become very wealthy, become that way through real estate. So I still love real estate, I still have assets that pay you to hold them and be able to use debt to use inflation to your advantage.

J Darrin Gross  14:14  

Yeah, some of the I think the characteristics of inflation, I think are I think, I think for a long time we were not really concerned about nor did we it wasn’t it wasn’t really a concern. I think the Feds goal was always to have inflation at two to 3%. And I think for a long time there was like 0% inflation. I think a lot of people got kind of used to that. And it’s more about just getting in and out of a deal. The operations weren’t as critical as much as it was the ability to get out. And there was a line of people want to buy your deal. Kind of thanks to the that the you know, using inflation and in some of the tools that are some of the benefits of real estate provides. We’re not aren’t as much understood or needed, as much as I believe they are more now, just based on, you know, this inflationary cycle, I’m curious, you mentioned some of the hold cycles that you have exited on some of the properties that sound like they’re, you know, as low as 10 months or or 10 or 12 months kind of thing. What are you see the whole cycles like expanding as far as longer hold time and some of the deals now, and and then also, I want to ask you a little bit more about your your, your ATMs and the the carwash is how they operate in comparison to the multifamily?

Bronson Hill  15:43  

Yeah, so your first question on hold, you know, hold legs. You know, Warren Buffett has a saying the best holding period is forever. And I’m a warren buffett fan, even though Warren Buffett mostly invest in stocks, I’m not a huge stock investing fan in general. But I think there’s a there’s a great principle that right, you know, being able to hold for a long time well, about 85% of debt for large multifamily over 100 units is considered bridge debt, which means is typically two to three year two to four year type of stuff. And, you know, this is from, you know, REITs that are, you know, doing large deals, which they, they’re a little different, because they can always go into the market and raise more money through selling more shares. But for a lot of syndicators, a lot of people, there is some challenges there, because, you know, for a lot of people, their their debt is coming due, and if it can’t increase the income enough, they can be in a place where they are in trouble when they’re trying to get a new loan, or they’re trying to extend their loan. And lenders are going to be more picky and say, Hey, we just want you to, you know, hold, you know, put another 500k in an escrow account, just because we feel uncomfortable with what’s happening, and you have to do it. So, and that’s a challenge. And then there’s these situations of cash calls or other things that people you know, kind of could come up. So I think that, you know, it is it is challenging. I think that, you know, ideally people say, you know, I remember thinking, Well, why would you just get, you know, fixed that on everything, that just doesn’t make sense. Because whether your house you’re going to 30 year fixed? Well, the fix that typically we found is is typically five to 10 year agency debt. And if you sell early, there’s some disadvantages of it, because you can pay prepayment penalties, which can be in the millions of dollars. And so and we’ve paid them, you know, we’ve sometimes had deals where we’ve sold and you know, two, three years in and we sell them and it still makes sense to sell them, even though we’re paying millions of dollars of prepayment penalties. So I think there’s some real challenges when it comes to doing deals now, or at least at least with the lending side. So we’ll see we are seeing some deals now starting to have some pain there. Particularly some of these larger kind of class a newer properties, were seeing that there was a $500 million portfolio, a group called Veritas investing this in San Francisco, and they defaulted on a $500 million loan, right. And so we’re seeing that around the country in different ways. And it makes sense, it makes sense why that would be happening. So So where we are seeing some different pain in different areas, as far as shifting into some different things, and we just try to find, Hey, how can we manage what we have? And what are the what are the opportunities now for investors, my thought is if you’re sitting in cash, which a lot of people are just sitting in cash waiting, I really think the CPI is not a correct number. We call it some people call the CP lie, where it’s actually been changed several times since 1980. And if we use 1980 metrics, there’s a site called Shadow stats.com. And it says that if actual inflation that’d be about 15%, but they will substitute items in saying if you’d like apples in the price of apples doubles, they say well, you would switch to oranges at the same price, there’s a lot of substitution that happened happens. They also say things certain things are temporary. Or if you have a apartment or you’re living in an apartment, it’s a two bedroom and rent goes from 1000 to 1200 they say well you would move down to a one bedroom so they basically just kind of fudging these numbers to make them look good. And I think it’s really for a lot of people it’s kind of been like the Wizard of Oz pulling the you know, like pay no attention to the man behind the curtain. So when we actually look at things, I think it’s actually a lot worse than what it appears to be and really since the Federal Reserve has been in existence since 1913, the dollar itself has lost 98% of its purchasing power which is really hard to believe so when I go to you know In and Out Burger in Los Angeles was a great burger joint you know, you can see on the walls here burgers are 10 cents and I talked to my daughter is 10 years old. And you know, I say well, why didn’t why do we want to pay $3.25 for a burger is a burger just cost that much more as though that the dollars are actually worth less. So I think those are all kind of trends and things that are happening and I kind of jumped around there a little bit from multifamily.

J Darrin Gross  19:40  

I think but even just the perspective of inflation, I think, you know, it’s hard for certainly young people, but even myself I there’s an attachment point to the price of something that i i get comfortable with. You know, you mentioned the 10 cent You know, hamburger, or whatever I mean, I can, I can remember, as a kid buying a grilled cheese at the snack bar for 10 cents, you know, at the bowl, and it was just, you know, that was kind of the, I mean, you could feed a family for five bucks. I mean, it was just, you know, that he was, he was, he’s just, you know, crazy cheap, but like you said, if you’ve lost 98 98% of the purchasing power. That’s why now let’s say meals, you know, 60 bucks or whatever, compared to Yeah. But, but I guess the the, the question, and I think this is kind of, you know, where I think the the benefit of real estate, I’m kind of curious on your perspective, you know, with, with, if you have, if you’re holding cash right now, and inflation is, you know, in 15%, and you’re not earning any interest on that, you’re essentially going backwards. 15% every year. Right? Right. I mean, so you’re, if you have 100,000 Now, it’s not, it’s essentially 85,000, he combined with, you know, the same things with 85,000 Could a year ago, where is real estate, kind of like what you’re talking about, with that leverage, you know, if you’re, if you’re buying a, you know, $10 million property, and, you know, say you did get in at with a 25% down payment, even though now, you may need 35%, you if your rents go up, and your net operating income goes up, you know, there is the hope that the value will will go up, at least the rents will keep going up, to keep up with inflation. And you’ve got that sum. I mean, you’re in something that’s an appreciating asset, and being leveraged into a yearly, you, you like you described earlier, your, you know, your exit point is a multiple not just directly proportionate to the value kind of thing. So, I think that’s, that’s the, the earliest one I see. I’m just kind of curious if you have any kind of, you know, other other thoughts on that, as far as how, you know, the benefit of being invested in a, an asset that’s going to appreciate, or at least keep up with inflation?

Bronson Hill  22:24  

Ya know, in general, I mean, I could show a trendline from there’s a chart from Mother Jones about rent and inflation that they really go hand in hand. So since 1960, there’s a slight lag in actual rents versus inflation. But there really are, there’s a trend line, and it just, it’s almost in tandem, and you think it makes sense, because most people are renters, you know, a fair amount of people in the US are renters. I think it’s maybe it’s slightly more own than rent, but especially in metros, it’s a lot of renters, larger metro. So I think, you know, in general, if, if, you know, we’re looking to do is say, if I, you know, the question, really, my friend, Jason Hartman says, you know, compared to what, so if I leave cash in the bank, if I have just money sitting around or having in stocks, will stocks and bonds lost. I mean, if you had a 6040, stock and bond portfolio in 2022, you lost 20% of your value, just just in one year. And so a lot of times these things that we consider safe, traditional investments, I was actually an investment advisor for a number of years. And I just saw, you know, really, what Wall Street says is safe is really not that safe, versus buying things that we know, yeah, in five years or a number of years, you know, rents are going to keep rising, because they just can’t help but keep creating currency. And, you know, it came out that the federal official debt is around 30 trillion. If you look at all the obligations that aren’t quantified, it’s over, I had to get something like 120 trillion, or it’s just some huge number, they can’t quantify how much how much is Medicare, you know, obligations, how much is that worth, but you know, just this, you know, for over the next 10 years, the current administration said, we’re going to spend basically a two, it’s gonna be a $2 trillion deficit each year, over the next 10 years. So there’s no plan to like stop spending or slow it down or anything. So if we know that is going to happen, even if we go into recession, we know generally, even if there’s some kind of ups and downs, rents are going to continue to rise. And so I think over the long term, you’re looking at these trends, making sure we can obviously perform, we can manage, you know, properties well and things like that and work with good operators or, you know, we’re going to separate ourselves or you know, somebody’s investor looking at that, but I think it’s just really important to look at, compared to what you know, if I’m waiting for a deal, a lot of people Bloomberg came out with an article late last year saying Americans have in their bank accounts over $5 trillion, which is an all time high, the highest before that was 1.2 trillion. So it was basically it’s been about a four times what we had just a couple of years earlier. So most people are just kind of sitting on the sidelines with money in their bank account, and inflation actually is 15% now If you wait two years, you could lose 30 to 40% of the purchasing power. We’re gonna say, Well, I’m waiting for a deal. I’m waiting for a deal? Well, I don’t know, are we really going to see a 30 to 40% decline in the value of real estate, it could happen. But in the meantime, your cash is losing value, and you’re not cash flowing from what you maybe could be cash flowing in an a deal. So I think I think that’s one of the reasons we’ve looked at it saying, Well, what can we do right now that makes sense, it’s harder to find multifamily deals that make sense. But that’s why we’ve really, you know, our ATM fund, you asked about that earlier, I mean, this is a it’s the fifth largest operator of ATM machines in the country. It’s a monthly payout, it’s it’s a high return, you know, the operator has not missed or reduced the monthly payment in over 10 years of doing it. It’s amazing how it’s digital. As we become, there’s a segment about 5% of the population that operates in cash all the time, and the number of transactions has at least doubled in the last 20 years. So who is that? Well, it’s typically immigrants. It’s people that our cash workers or people that get paid under the table, people that get government benefits, which now come on debit cards. And so there’s all these people that you know, Digital’s were becoming people that people are still operating in cash. And so we’re seeing that and so it’s been a fun investment to be a part of

J Darrin Gross  26:10  

it. Tell me a little bit about the show you guys basically raising capital to invest in the the company, then are you actually own Do you own machines? Or how’s that? How’s the? Yeah, so

Bronson Hill  26:21  

this is the fifth largest operator in the country, about 50,000 ATMs, there’s kind of two types of ATM owners, most of them are mom and pop that might own you know, 100 ATM machines in LA, or in St. Louis, or whatever. And then there’s a couple of very large publicly traded companies that are multibillion dollar companies. This group is kind of in between those two, right? So it’s good to be to feel like it’s kind of a sweet spot. But how it really works is you know, we go into an establishment where there’s an existing, you know, ATM, and then we say, Hey, how’s it going with the ATMs? Oh, we’re happy with it. Usually, there’s a split the establishment, maybe it’s a, it’s a bar or a gas station or something, they get half of it, typically around half of the fees. And then the operator gets the other half. And so what we do is come in and say, hey, you know, we’d love to get you a new ATM machine. And I’d be great and say, Okay, we just need to sign another seven year contract, we can get you another new ATM. So most people Oh, that’s great. Sounds good. So we bring in an ATM and locks them up for another seven years. Now that cash stream is secured. And it’s, it’s surprising when you think, Well, I don’t use an ATM, I’ve never used it. A lot of people that invest in ATMs are not the people that are actually using them and paying fees. I don’t use ATMs and pay fees, unless maybe I travel internationally. But even then I try not to, but there’s some people that don’t take it out 40 to 100 bucks, once a week is just kind of the way of life. And so paying a $2 fee or two $3 fee is not really seen as it’s just a part of life. Right for a lot of people.

J Darrin Gross  27:43  

Is is there? I guess a you know, you kind of answered the question, even in kind of your setup here, the just the kind of the population that that uses cash. I mean, that’s not that’s not going away, that are not often going to Bitcoin, or some sort of I mean, the digital currency, I guess the alternative would be a credit card or, or, you know, some sort of a, just a plastic kind of a deal. But, you know, I’m curious, I mean, I guess people are using cash machine have to be banked. Right. And you have to have some sort of bank relation to get the cash. You know,

Bronson Hill  28:22  

sometimes sometimes I you know, the the ATM is really becoming the bank for a lot of people because you think about immigrants, or you think about people that are using ATMs. What’s the reason? You know, sometimes it’s too, you know, I mean, I’m just thinking out loud, but you know, for benefits, you know, maybe they want to not only have privacy and be able to use cash the way they want to use it, or it could be that you know, you call them kind of the unbanked or the underbanked. So for some people, it could actually be their bank, they could have a cash prepaid card, or some something like that, where they they load money on the card or, and that’s kind of a way that they do it so that you can do their transactions, they can send money, even internationally through a lot of these ATM machines. And so so we’re we’re seeing your usage is still there, they’re I guess, the primary risk I was looking at, in any investment or all, you know, what is the what is the main risk? And I think for that one, it’s just will people stop using cash or where they will go to a central bank digital currency? I think it’s highly unlikely that they will, we will do away with cash. Because I think that there’s two reasons. One is an issue of privacy. People say, you know, you gotta be able to operate in cash. So the government can’t see everything you’re doing in any transaction. Right, that that’s kind of a privacy issue. So politically, on the right, people would say a privacy’s important, while on the left politically, people would say, Well, who is it? Who would this actually hurt? If we did away with cash? What would hurt the immigrants, the, you know, the low income folks would hurt people that they would want to protect? I think I think politically there’s no will to do with cash. And so I think, actually, there’s, you know, many countries of the women it’s like some, like 12 countries of the world use us cash as their primary source of funds. And actually, I think it’s kind of shocking, but about 60% Some of the dollars that are physically printed, are outside of the US. It’s kind of amazing that it’s actually used internationally a lot. So we didn’t I mean, we could do it, but it would change a lot, particularly when it comes to the dollars kind of supreme spot, that could change a lot. And this is just another fun fact, they can see how many have been printed as far as $1 bills, or $100 bills. And you think, in the total number, you’d have way more $1 bills than $100 Bill is printed, but it’s actually almost two to one, it’s substantially more $100 bills that have been printed than $1 bills. Well, why is that? When we talk about physical printed bills, it’s because in other countries, they actually are using a lot more physical $100 bills, the story if you live in Argentina, or you live in Turkey or whatever, just buy $100 us bills, and it’s going to hold the value a lot better, even though we have the inflation we have it’s much better than the turkey inflation, which I think it was like 70% or something really high. Right. So people are doing that around the world as well.

J Darrin Gross  30:59  

That’s interesting that the the paper money and in you know, countries with more inflation is a is a good hedge on their inflation. Yes. That’s kind of interesting. Yeah. So in you said, or the firm that you guys are, are investing with? What’s kind of a minimum for people to get into the fund? What’s the minimum investment are

Bronson Hill  31:24  

you still is different the ATM fund, we do it in increments of 52,000. So that’s just, you know, 50 204 156, that’s accredited investors only. We also have our other multifamily or other types of deals you did 75 to 100. And our other deals, but it just depends on the deal

J Darrin Gross  31:42  

on it. And on the the multifamily there’s like an exit strategy or some sort of a plan to exit. What about on the ATM fund? Is it basically just to put your money in and you keep getting a monthly return? Or what’s the

Bronson Hill  31:57  

Yeah, so it’s a little different in that aspect. It’s it’s a high return. So again, this is not an offer for any investment. But currently, you know, how it has worked is, you know, 100k invested returns around $2,100 a month, every single month for seven years, starting the fourth month. And so it’s so much cash that you, you know, people have generally been getting around half of the money back in just over two years. So then you can reinvest. And then just over four years all the money’s back the line, it’s a seven year investment, the last three years is just cash flow. And then at the end of seven years, it just at the end of 84 months it ceases to pay. So it kind of ends, there’s no big lump sum at the end. And that’s that’s been a challenge for some multifamily investors get their head around, say, Well, hold on, where’s the big lump sum at the end? But because it’s kind of a unique for a time like this, though, where it’s like, well, what, you know, there’s this phrase called Tina, you know, there is no alternatives. If you can’t find a good alternative in the stock market, or in real estate or other things, what are you going to do with your cash for the next couple of years, something like this can be really awesome. And we’ve actually had three investors put around a million dollars each in the fund or more, just because they’re saying I just don’t know where I can find this kind of return and to be able to get on a million dollars around 21,000 a month. That’s a pretty solid return. And of course, every investment has risk everything. You know, there’s always caveats to everything. But I think just finding things that do have unique, you know, and I think this one thing I like most about it is the consistency of the cash flow over 10 years, you know, they haven’t missed a single preferred return payment monthly payment, or haven’t reduced it at all, which has been great doesn’t mean it won’t happen in the future. It just means it’s been super solid to this point.

J Darrin Gross  33:40  

Is that return is that a fixed return? Or is it vary based on the usage fees generated?

Bronson Hill  33:49  

So it’s considered a preferred return? So it’s 100% preferred return, in the sense that I’m sorry, it’s not 100% it’s, it’s 24.7% prefer return, but basically a 100% of that first 24.7% per year goes to the limited partners and so the operators take kind of the money above that. And so but in general, it it’s like I said it had that has not changed in the over 10 years since the inception of the funding, could it change? Sure. Is it guaranteed? No, it’s not guaranteed. It’s preferred but which is it’s an important distinction, but I really do like investment.

J Darrin Gross  34:25  

Yeah, it’s interesting. You know, I was talking with somebody else this morning about just you know, when you understand basically the math of multifamily deals where it’s you know, like NOI and cap rates and and expenses you when you look at other industries and you can kind of see the how the numbers work. You know, just basic business math kind of thing and just to see how a different deals work. That’s interesting, though, on the on the ATM machine. I mean, to have your money’s working for you. That’s the that’s the Big the positive thing there in the Oregon some cash flow. Is there any kind of depreciation or or leverage in that? Or is it basically is the money buying the machines for cash and then putting them to work? Yeah,

Bronson Hill  35:15  

so that’s the one advantage, there’s no leverage, there’s no interest rate risk is just going straight into the machines. And, you know, one of the one of the reasons this deal exists is because ATM machines in general, in the finance world, it’s perceived kind of like pawn shops or title loans. It’s just not perceived as a very high class type of investment. Which I mean, I understand, but I think one of the challenges too, is, is also at the cash business. So we’ve seen this as well, regardless what you think, but I have not invested in the cannabis business, which is all over California, I think, probably Oregon and other states as well. But there’s some issues that cannabis businesses have faced where they can’t have money in national banks, they can’t rent at just normal market rates, they gotta pay way more for a place because it’s federally it’s illegal, but statewise, it’s okay. And so it’s kind of a unique thing. And it’s a cash business. So a lot of these large banks, they have these anti money laundering type of policies, that they can’t take the money they can’t invest in, they can’t have certain types of things in these type of ATM deal. So it makes sense, you know, every time you want to ask the question, well, if the return is good, well, what’s the reason this is available in the market? And in that in this case, it’s because the financing options, there’s, it’s harder to get money for this type of investment because of some of the regulations that go around it.

J Darrin Gross  36:36  

Now, the whole cannabis businesses, definitely an interesting one with kind of laws and handle the limitations. They create opportunities.

Bronson Hill  36:44  

Yeah, exactly. You know, and I think if you’re willing to, if you’re willing to do it, other people aren’t or you just you kind of see it, okay, well, why is this here, what’s happening? And again, I haven’t invested in the cannabis business, I have some good friends that haven’t done very well in it. And I think that’s great. But you know, you gotta you got to do something that you both believe in, you see it, you understand it, you understand what the risks are? And, you know, I just, I understand why, you know, it’s, if somebody’s getting a, you know, a fixed return annuity of, you know, three or 4%, like, okay, that’s one type of return. But, you know, there’s a reason why this is much higher. And, you know, it’s just because a lot of other people don’t want to be in the business, or they don’t want to, or they can’t be in it because of some of the stipulations around it.

J Darrin Gross  37:24  

Right. All right. So if you were to give the listeners a tip, or, you know, a reason to do something right now, or how they can best protect themselves against inflation right now, what would you what would you encourage them to do?

Bronson Hill  37:45  

Well, I think always the first thing you can do as an investor, and that way, you know, I’ve been able to 20x my net worth in the last four or five years, but it really has come through education and networking. And so education, you know, reading books, read about 80 books a year, going to conferences, going to networking events, meeting people, because, you know, there’s a saying, and it says that you I think it’s John Wooden, you’ll be the same five years from now, except for the books you read, and the people that you meet, as he’s basically saying, you know, the, how you educate yourself, and how you network, there’s investments that are out there that, you know, if you don’t even ever learn about them, then they just, they’re just things you don’t know about. And so I think the biggest investment you can really make is in your own education. So I would say, you know, if you’re a passive investor, start going to a meet up in town, start listening to great podcasts like this one, start reading books, start, you know, meeting other people, particularly other passive investors, I think when you meet other people that don’t have anything to sell you, they’re just out there trying to do what you’re doing and trying to make money. We really kind of dedicated our show the mailbox, money show or YouTube channel, I’m actually writing a book now about passive investing, just to you know, passive investors just like these doctors I work with, but you really become a slave to their jobs, right? Even though they’re making great money if they’re, even if they’re saving money, if they don’t know how to put it to work to have the money work for them, then, you know, we still become a slave of a job, we still are not financially free. And when you can replace your living expenses, called your rat race number, right? You know, you can get out of the rat race, because now you’ve covered your living expenses. And you’re free, you can choose how you want to work or if you want to work or what your work is supposed to look like. So I think it all starts with education. And it all starts with really trying to learn more, meeting people figuring out what they’re doing, and just you know, taking action.

J Darrin Gross  39:32  

I love it. Hey, Bronson, if we could, I’d like to shift gears here for a second by damn an insurance broker. And as such, I work with my clients to assess risk and determine what to do with the risk. And there’s three strategies that we typically consider. We first look to see if there’s a way we can avoid the risk. And when that’s not an option, then we look to see if there’s a way we can minimize the risk. And if we cannot avoid nor minimize the risk then we look to see if there’s a way we can transfer the risk. And that’s what an insurance policy is. It’s a risk transfer vehicle. And as such, I like to ask my guests if they can look at their own situation, could be your clients, investors, the Fed, political environment, whatever, however you would like to compare and contrast or answer the question, what is the biggest risk? And, again, for clarification, while I am an insurance broker, I am not necessarily looking for an insurance related answer. And so if you’re willing, I’d like to ask you, Bronson Hill, what is the Biggest Risk?

Bronson Hill  40:45  

So I think there’s a lot of risks. And I think, you know, sometimes we see risks, and we don’t, you know, we tend to have inactions. I think inaction is probably the biggest risk for that I see, for most people, I’ve had now close to 1500 conversations with individual investors. And I just see analysis paralysis is real, we get busy, we have stuff going on, we don’t take action. And all sudden, we’re like, well, where’s, you know, gosh, I really wish I missed out on this, I missed out on that. And it’s not that we have to take massive action and you know, go from 0% invested in alternative deals to all of a sudden 100% invested. It’s just, you know, taking small steps and saying, you know, one of my things that I tell people is, you know, against analysis paralysis is, you know, go to meetups, give yourself a timeframe. Okay, in the next two months, I’m gonna go to this many meetups, I’m gonna, you know, get on deal sponsor list, we have our own deals that we do, we have people connect, and Ben wants to reach out and get on our list and hear about our deals, they can do that at Bronson equity. And, you know, what happens is as you do that, then you give yourself a time frame, you analyze, you know, five to 10 deals, and you say, Okay, I’ve give myself 60 days, and I’m going to invest in one or two deals, and you just do it, and you say, Okay, I’m gonna do this, and I’m gonna choose, and it’s probably gonna go just fine. And the big thing we have to get over is the fear of making a mistake, or that we’re gonna do it perfectly. And perfection really is a myth. Like, there’s no way you know, it’s all about learning. And so why don’t we learn even when we don’t do things perfectly. And so I think really, the biggest risk that I see is just inaction is just not actually taking the steps for eight years, or six or eight years, I went to meetups and didn’t do anything. I mean, I had about one rental, but it didn’t do any action. And it wasn’t until I was I actually made the decision that I’m actually going to change my life. And there was a point I remember where I had said, you know, I’m in my job, and I want to leave my job in three years. And I just made that decision is going to do it. And Tony Robbins says this quote, he says, it’s in your moments of decision that your destiny is shaped, in your moments of decision that your destiny is shaped. And so in that moment, my my, my destiny started to shift. And I began, I was able to do it in three years, I was able to leave my full time great 200k Your job, because I had made a decision that I was going to really just do whatever it took, and I was the I was working hard. I was hustling, but I knew it was a season. And I think for a lot of people and it doesn’t mean you had to do it the way I did it where you had to be fully active and raising big money and all the all the stuff but there’s a lot of people that make a lot of money. And there’s a money problem. And it’s not that I don’t have money, it’s that I have money, I don’t know what to do with it. Right? So that’s a problem. So you know, there’s gotta there’s ways you can educate yourself and really find ways to take action. So I think that’s the biggest risk is inaction.

J Darrin Gross  43:12  

Now let’s call it’s well said and definitely have been guilty of inaction, you know, the analysis paralysis before and and it’s easy, it’s comfortable to stay in the analysis, as opposed to the uncomfortable action. Bronson, where can listeners go? If they would like to learn more connect with you?

Bronson Hill  43:33  

Yeah, so my websites the best spot Bronson equity.com. I’ve got a free my free ebook How to Use Inflation to Your Advantage is about it’s about 50 pages. It’s got several other strategies that I did not mention on this show. But that’s a great way to connect. We also have our investor club where people can hear about our awesome deals, we’ve got some stuff in the pipeline that we’re working on that’s alternative outside of real estate as well as some of the real estate stuff we’re working on. And then I’m also on social media, a lot of channels have a YouTube channel and, and all that so but I appreciate you having me on Darrin, this has been a lot of fun.

J Darrin Gross  44:04  

Yeah, I appreciate it as well. Bronson I cannot say thank you enough for taking the time to talk. I have enjoyed it. Learned a lot and I look forward to doing it again soon.

Bronson Hill  44:15  

Awesome. Thanks. Thanks for having me.

J Darrin Gross  44:18  

For our listeners, if you liked this episode, don’t forget to like, share and subscribe. Remember, the more you know, the more you grow? That’s all we’ve got this week. Until next time, thanks for listening to commercial real estate pro networks. CRE PN Radio.

Announcer  44:36  

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