Are we headed for a recession? Worried about the economy? You're not alone.

Jeremy Roll is a student of market cycles and he's investing in assets that will do well during a recession. He's outlined the typical predictors of recessions and the asset classes he's investing in – so you can too!

Wouldn't it be nice to have someone else worry about the economy for you? Listen and learn!

Table of Contents:

• Where To Listen To The Podcast
• Getting to Know Jeremy Roll
• Unique Opportunities
• Opting Out of Income Restrictions
• If We Are at the Tail End of Asset Price Appreciation, Are We Headed for a Recession?
• Are We Headed for a Recession if the Interest Rates Are Increasing?
• If the Affordability Index Is 26, Are We Headed for a Recession?
• If Consumers Are Spending Less, Are We Headed for a Recession?
• How to Reach Jeremy Roll

Getting to Know Jeremy Roll

Darin: Jeremy Roll lives in California. He's an investor who lives off his investments. He's a believer of putting his money to work and doing so in the right asset classes, based on where we are in market cycles. He loves giving back and he loves teaching others.

This is actually the first time that Jeremy and I we're talking. He is a very experienced investor in a lot of different asset classes: real estate and other asset classes. And I came across his name after interviewing Hunter Thompson, who was on episode 56. He had great things to say about Jeremy. And he also said that Jeremy was a big part of the beginning part of his journey.

So I'm very interested in hearing what Jeremy has to say. Typically, the first question I ask is how many properties and how many units. But you are invested in a lot of different asset classes. So I'm going to just ask you how many investments and for how long you've been doing it.

Jeremy: Yes. So it's actually a funny time we're talking about this. Because tax time's coming up and we're recording it just before the tax deadline. And I'm in the middle of dealing with all these K-1s. And then inevitably, I can't get them all in time.

Darin: It's a good problem to have, right?

Jeremy: I already know. A hundred percent yes. It still is a problem though. But yes, my last one comes in probably in July or August or something, just randomly. Because I'm just in so many things. So I have been investing since 2002 passively, so 20 years. I've been doing it full-time since 2007, so 15 years.

When Asset Price Adjustment Is Coming Up

Jeremy: I'm currently in over 60 LLCs, easily been over probably 150 to 200 over time. So I'm hyper-diversified. And to be totally honest with you, I really don't necessarily recommend it. It's a little much. But because I do it full-time and because if you're doing it full time for that long, a lot of opportunities come your way. You end up really highly diversified over a very long period of time. So that's my situation.

Darin: That's fantastic. So one thing that was very interesting when I reached out to Jeremy was that he actually came back to me and said, "Hey, Darin, I'm on a little bit on the sidelines. Do you want me to come on your show?" And I'm like, "Absolutely. Look, we're late in the stage, in the cycle for both stocks, in real estate and other investments. And I want to hear your opinion." So with that, share your opinion on why are you on the sidelines?

Jeremy: Absolutely. And I should really warn everybody; I'm not a financial advisor or an investment advisor or an accountant attorney. So anything I'm sharing here is just my perspective as an investor.

So first of all, I tend to be really low risk, just personality-wise to begin with, to be fair. I am currently on the sidelines because I am concerned about asset price adjustments coming up. And the reason why I'm concerned about asset price adjustments coming up is a combination of increasing interest rates. What I think is a high probability of a recession. And I can get into a lot more about that, but in the nutshell, that's really why I'm on the sidelines right now. Now, when I say I'm on the sidelines, I'm still making actually many investments.

Cash Is Trash at the Moment

Jeremy: There's always investments that make sense at any time. I've had to pivot and really create a few buckets I'm focused on, that I wouldn't normally prefer to be focused on. But I think that makes sense right now.

Because I think also at the same time, the worst thing an investor can do right now is sit on cash at this inflation level. So Ray Dalio, biggest fund manager in the world, he's got a famous quote, cash is trash at the moment.

I couldn't agree more. I mean, you're just eroding through your cash if you're not deploying it. The big challenge of this moment is how do you deploy it? And I just had a call with someone this morning where the exact same conversation is, how do you deploy it in a safe manner if you're really low risk? While not taking too much risk for the return, but also making sure you're actually getting it working at the same time? That's a huge challenge today.

Darin: So can you answer that question?

Jeremy: So the best I've been able to do is the following. I'm focusing on three buckets for myself and what I'm investing in. And multifamily definitely falls into this, it's just a question of finding unique. So first bucket is what I call short-term opportunities. Because one of the concerns I have is, how do I keep my money going, but also maybe get access back to it in a year or two so that I can redeploy it? And what I think will be a better pricing environment from an asset price perspective. So one really easy example of that is I've been doing this since probably 2009.

Supply and Demand

Jeremy: But hard money lending, where you're lending money to someone flipping a single family home, you're the first position loan. If you really want to be a low risk, no leverage and the proper loan to value, my opinion about this year is that because of the really strong lack of supply of single family homes. I don't necessarily think we're going to have the same year over year increase in 2022 as we had in 2021. That was just a huge discrepancy between supply and demand.

I still think the supply is too low. I still think that even though, the year of your growth would be lower, I still think there's going to be growth. And therefore, I still think it's a good investment to make from a risk-reward perspective to get some of the cash working short term. So I'm doing some of that.

Darin: I think that's interesting. With that, bringing that towards multifamily too, I know one guy who is filling the gap on the multifamily side. So say a syndicator, it needs to raise 10 million for an acquisition, and they're going to close next week and maybe they're a million short. And they can continue to raise after closing but they need that million dollars next week. So I know somebody that will step in; do that loan, 90-day loan, short term. Then end up getting out quickly and can end up redeploying that. So do you do anything like that as well? Or just focus on single family homes?

Jeremy: Well, let's just say that I would do that under the right circumstance. So a lot of the challenge with the short-term loans is that there has to be a minimum return.

Invest if It Makes Sense

Jeremy: So let me give you a really easy example, and this is not what you're talking about, but just to make it really easy. So let's say that somebody wants a $25,000 loan for 90 days. And there're legal costs associated with it. You may have to have an attorney look at the agreement to make sure it's okay. You have your own time put in. And let's say that in 90 days, they're going to make 5%, which is actually pretty high because annualized that's 20%. It sounds great. But then when you run the numbers, you're making $1,250, which may or may not even cover the attorney's cost to even review the contract that that person has sent you.

And then what about your time? So it really depends on the scenario, what the interest rate is. Some of those short-term situations can be a really great risk profile, but the return has to be there too. But of course like I said, if it makes sense, I'll do it. So it just has to make sense from time and risk of reward.

Darin: The structure sounded, I had only heard the details on one deal because I had done a hard money loan when a couple of them way back when. But it sounded similar, points up front, 90 days interest and the dollar amount is higher.

Jeremy: Yes. When the dollar amount is higher, that clearly makes sense. But then you run into, okay, if you're going to do it safely, you got to make sure you're diversified. So don't overdo it. Even though that's an attractive opportunity today, I'm a huge fan of diversification.

Unique Opportunities

Jeremy: So just in keeping the risk. You just have to factor all this stuff into the exact scenario, but it could definitely make sense.

Darin: So short-term opportunities and the big thing there is putting your money to work, but then getting it back so you could redeploy it when there are better opportunities in the market. So what's number two and three?

Jeremy: Yes. So number two is unique opportunities. So in fact, it's funny because we were talking before we even started recording and I'm mostly on the sidelines. But if I told you, I invested in probably seven or eight multifamily deals in the last 12 months, you'd probably be surprised.

But it's actually true. Each single one of them was a very unique structure that gave me the comfort level at this timing. They were all tax abatement opportunities, where somebody was buying an apartment building under contract as a regular market deal, highly occupied. Then working with the housing authority to convert it to a partially, typically 50% income restricted building.

Then there's a lot of tax abatement. The deal I'm actually investing in right now that's live, it's 85% reduction in taxes. So you're actually reducing 41% of your expenses with no hit to the income. Because the key to that deal is that you have to buy a property that's so under market rents, that you're actually conforming to the maximum rents as an income-restricted tenant at the time without touching the revenue, it's already there.

Darin: You're going to have to go a little slower.

Tax Abatement

Darin: How does that work? So it's a multifamily deal, it's highly occupied, so 90% plus occupied type deal?

Jeremy: 95, 96. Yes, 90% something is occupied.

Darin: In that in itself could be an agency loan type of deal.

Jeremy: It actually is an agency loan.

Darin: So now when do you get involved? After they've already closed it? Or when the buyer is coming on and they've got an under contract?

Jeremy: No, just think of it as the regular acquisition, the regular due diligence escrow timeline. The difference is that the sponsor has already negotiated a structure with the housing authority in that local market. That they found the appropriate property that they could actually use this new structure for the tax abatement. So it's been prenegotiated with the local housing authority.

Darin: So they already have that under place when they're in contract?

Jeremy: Yes. So one contingency that exists in these deals is that the sponsor does not have to close unless the housing authority signs off on it. So they can pull out. Otherwise, it's like a normal deal, but the structure has been predetermined and prenegotiated with the housing authority.

Darin: So now let's talk a little bit about that tax abatement again. I don't fully understand it. So how does that work?

Jeremy: I know it can be a little complicated for sure. So the way that tax abatement deal works, is that the sponsor would have to prenegotiate the structure with the local housing authority in advance.

Target Buildings That Are Below Market Rents

Jeremy: And normally the sponsor's going to target a building that is way below market rents. Not just like someone who's claiming it in marketing material. But it's actually below enough market rents, low enough that it'll conform to turning half the building into an income-restricted building. With a certain below area to meet income requirements for half the tenants.

The strategy is that you can turn a building into 50% income-restricted and have no impact immediately on the revenues. Because the rents are already conforming to what the housing authority needs for those half units. It's really below market. But then the housing authority will allow you, and this is one example in Houston, a deal I'm investing in: where the housing authority then removes 85% of the taxes.

Darin: When you say the taxes, are you talking about property taxes?

Jeremy: Property taxes.

Darin: 85%?

Jeremy: 85%. So what it does is, in this deal, it's actually reducing the expenses by 41%, the total expenses overall. And by the way, these are class A buildings, real class A 2013, 2015 construction. It used to be 41% of the expenses.

So let me give you the real numbers for this to give you an idea of the impact. This deal is two property portfolio, $165 million acquisition. The cap rate at purchase is 3.34 cap in place. Probably a t minus 12 or whatnot. By the time you actually reduce the expenses and have no impact on the revenue the actual lender appraisal is coming in at 200.3 million. They're only raising $39.5 million in equity. So basically there's a $35.3 million gain in equity at closing because of this new structure.

Downside Risk Mitigation

Jeremy: Because the costs are so much lower. There's no execution or operational risk from an investor's perspective because we're closing under that structure. And we have almost two to one equity coverage. It's like 89% equity coverage. You're closing on a real third-party appraisal by the lender, the actual agency lender. It's not like someone making it up.

So the reason why it's attractive for me is not only I am now going into a class A building at this timing, at a 5.59 cap, real cap, on true class A property, that's like 97% occupied. My year one cash flow is projected to be almost 8%. But the bigger thing for me is a downside risk mitigation because I'm concerned about asset prices decreasing.

So that padding that I mentioned, that $35 million padding in the comparison of what we're buying it for versus what it's upraising for. That is a big deal to me. Because if property prices adjust, I'm starting off with all this value add padding, without any operational execution risk. That's how I get comfortable going into this deal versus a typical market rate deal right now when I'm concerned about prices adjusting.

Darin: That is huge. Look, for listeners' perspective, property taxes is one of the biggest expenses on these multifamily deals.

Jeremy: Especially in Texas.

Darin: Yes. And I'm in Texas. So it's huge. And so if you're getting an 85% reduction in that, that's translating, like you said into 40%, 41% less expenses. I mean, that's crazy. Now, how does that work on a go-forward basis?

Increase Rents Based on What Housing Authority Allows

Jeremy: Yes. On go-forward basis, and I'm not an expert in this. But my understanding is that the housing authority publishes the maximum rents you're allowed to apply to the property every year. I believe it's two years ahead. So the one challenge with it, is that from an inflation perspective, you can't just choose to increase your rents this year by more than they allow. Because it happens to be inflation this year.

You will catch up to that because their increases are based on inflation in the future. So you may catch it up to that in a year or two. But you may get one or two years behind on actually catching up for inflation. Also note that if they say, look, in two years from now, you can increase the rents up to 11%, which could very much be possible, it's truly indexed. The problem is at that timing, will the market absorb the 11% increase or not that you're allowed? You won't necessarily be able to push rents that much.

So you end up a little bit disjointed from an inflation perspective. 50% of the units end up being constrained by the housing authorities, maximum increase limitation. The other half of units are at market though. And so those aren't constrained. So that's the drawback. You end up in a 99 year structure, that's assumable by the next buyer. Then the other cool thing is that it's completely collapsible for a very small amount of very tiny percentage of the actual purchase price.

Darin: What do you mean by collapsible?

Opting Out of Income Restrictions

Jeremy: Meaning that if you are a future buyer, and don't want to deal with the income restrictions, you can pay the housing authority a fee to then remove the restrictions. Now you end up back at the regular tax rates. But you're not locked into this, into perpetuity.

Darin: That's interesting. When I've looked at any kind of deal, I have not spent a lot of time on deals that are not market-rate deals, that are low-income housing deals. But when I have looked at them, most of them have had, okay, it's 20 years and then there's a line in the sand. Then after that line in the sand, there's another 10 years.

It's a long time period to get out of it. So you're telling me that not only are the buyers negotiating this upfront and closing under these circumstances, so you know it going in. But a new buyer could end up opting out of it at any point in time?

Jeremy: Yes. I mean, for confidentiality, thankfully I haven't shared the address, but I don't want to start disclosing. So I'm probably not supposed to as an investor. But yes, it's actually a surprisingly low percentage of the acquisition price.

But the key though, my understanding is that to operate this type of building, I'm not sure, depending on the state. Some states definitely require a licensed and or certified somehow. The sponsor I'm investing with started, they own about two and a half billion of properties so they're very experienced. I’ve invested with them more than 15 times.

The Lowest Price Class A Property

Jeremy: But they pivoted to low-income housing tax credit and tax abatement deals at the end of 2016 when stuff was really expensive already. And one thing we didn't talk about, which I also like about this type of deal. It’s that you're the lowest price Class A property on the block. Because half the units are restricted and if someone conforms to that, you're typically going to have a waiting list.

So when you have a recession or downturn, you also have some nice built-in mitigation in terms of occupancy. Because again, you're the lowest property on the block for half the units. So it's a really good strategy, and that's why they started down the path of the strategy. Because it's actually defensive from a recessionary perspective.

Darin: Yes. That's very interesting. So that fits into your unique opportunity bucket? And you're investing passively into this deal, right?

Jeremy: Yes. Just another limited partner, passive investor.

Darin: Okay. So how do you get the call on this?

Jeremy: Well, I mean, in that case, it just happens to be a sponsor I've invested with since 2013, they happen to have shifted focus. I'm very conservative, they're very conservative. Now they have a lot of experience buying these low-income housing tax credit situations. So they're really good sponsor to make a bet on, even with that. Because even though it's much harder to operationalize.

Darin: You know them and they know you would look at a deal like this?

Let People Know What You Want

Jeremy: Yes, exactly. So I've invested in probably seven or eight of those in the last year. And again, there's always deals that make sense at any time. I mean, even the deal you mentioned before; the short-term deal, which is another unique deal. Finding that unique situation where they need that money for a bridge.

So staying on the sidelines doesn't really mean staying on the sidelines. But I am staying on the sidelines to market-rate deals, which is a better way to put it. And I'm pivoting into these three buckets in the meantime to get my money continuing to work.

Darin: Yes. So I also want to share with the listeners, this is an example of, you have to get your name out there. You have to let people know what you're interested in. Even if you're a passive investor, syndicators need to know, hey, you're looking for market-rate deals. Or you're looking for high cash-flowing deals. You're looking for deals in this market or that market.

Because some syndicators are going to blast out every deal to everybody in their database. But other syndicators are going to segment off and just show certain deals to people they think that it fits for. So it's important that you network with people to let people know what you want.

Jeremy: Yes, I couldn't agree more. And unfortunately, if you're starting as a passive investor, you're looking into it and you don't enjoy networking or don't have the time to do networking, et cetera. That's probably the most important piece of what I do now, granted I do it full time.

The Value of Networking

Jeremy: But that's how you find these unique opportunities. Everything's about networking and finding these types of deals. It’s just the way that this world works on the syndication side. So there are ways to invest where you don't have to network. You can go onto crowdfunding websites and other things where they're just a menu of opportunities presented to you. But if you really want to optimize what you're finding and everything, it takes a lot of networking.

Darin: Yes. And I think that some people, especially on the passive side, they may not see the value in networking. But you're not going to get invited into certain opportunities, into certain circles, unless people know that you're looking for something.

Jeremy: Yes.

Darin: So, hey, let's talk about the third bucket. What's the third bucket you look for?

Jeremy: The third bucket is opportunities and this is typically not real estate. But it's opportunities where I don't have to worry about the asset value or asset price decreasing. Because it's already going to decrease.

So if you look at my biggest concern over the next 12 to 24 months are asset prices adjusting down. The solution to that is, invest in something that I don't really care about the asset price going down. So a really good example is, I've been investing in ATM machines. This is clearly not real estate since 2008. The one thing I know about ATM machines is that they're a computer, a screen, bill feeder, and a keypad, and they're all going to close to zero. In the five to seven years, they're worth maybe 5%, residual value.

Invest in ATM Machines

Jeremy: So I don't care if they're worth even less than I thought they were going to be in a year from now.

What I care about is predictability of the cash flow going into a recession for that type of asset class. Is it going to get through? Is it going to provide me more predictable cash flow? Because I look for more predictable cash flow, I live off the cash flow.

That's just one easy example of, okay, I'm much more focused on the cashflow. Is it going to make it through recession? Is it going to make it through the seven-year projected term that I typically invest in with this fund or not? So that's another bucket that makes a lot of sense to me. I would say that one of the bonus elements of that type of situation is often the projected payback period is much quicker than a typical more stabilized asset. So that checks off another box for me, where I actually get, for example, it's a hundred percent bonus depreciation year one.

So with the projected cash flow and the bonus depreciation, and let's say 35% tax bracket, you're getting over half your money back projected in the first year. Then you're getting up to 85% of your money back within two years, assuming you can use that depreciation. So that's allowing me to redeploy almost all my capital back into maybe lower assets in the next 24 months. That's just another checkbox for that one. That's just one example.

Darin: Oh, that's huge. One thing that's interesting, which I didn't think about.

Long-Term vs Short-Term Opportunities

Darin: But I think it's very smart. What you do is that, when somebody's saying that they're on the sidelines, some people may sell out all of their stock and just be in cash. And we all know that inflation is eating away our cash. But you're not saying that. You're saying I want my money to be at work, but I want it to be short-term. I want it to come back to me quick, so that if there is a better opportunity then I could lock in at better returns.

Jeremy: Yes. And it's clearly tricky to find short-term opportunities, they have different risk profiles. You're not typically investing in assets that's holding its value or appreciating like real estate does. So there're pros and cons. But to your point right now, you just have to keep your money working.

Now, I will look at real estate and the other deal we just talked about in the tax rate, that's a 10-year fixed rate loan from an agency loan. So it's a longer-term deal, and that's actually my favorite. Because I'm looking for more predictable cash flow. I'd rather find something that's going to do that for 10 years than I have to find something for one year, 10 times from the next 10 years. So it's not my preference, it's just my pivot. It's what I'm having to pivot to at the moment.

Darin: I mean, this is probably an obvious question, but why do you think that we are at the tail end of asset price appreciation?

If We Are at the Tail End of Asset Price Appreciation, Are We Headed for a Recession?

Jeremy: Yes, good question. So I'm very quantitative. So I'm just going to tell you some objective facts, in terms of my own research.

There's typically three factors that cause a recession in the US. The first is in very high inflation, the second is very high oil places going over 50% of the long-run historical levels. And the third is increasing interest rates, to a substantial amount. We are actually facing all three at the exact same time.

Darin: All at the same time.

Jeremy: Yes. Which is, I'll say unusual, it doesn't happen often. And then furthermore, I'm a very big fan of watching the yield curve to help predict if a recession's going to happen and when. The yield curve just inverted in the last week at the two-year and ten-year, which is the one that most people follow.

Darin: I thought it was the five year and 30 year?

Jeremy: No, the five year and 30 year did invert, but the two and 10 inverted briefly actually a couple of days ago.

Darin: Oh, did it really? I did not know that.

Jeremy: Yes. I think it's going to be more continuous because now it's about four basis points spread. The last time I checked it today, it's just four basis points. But I think we're going to hit an inversion that's going to stick a little bit more probably in the next few weeks, if not sooner. But the bottom line is, it actually did invert regardless, even if it was just intraday happened, only for part of the day.

Are We Headed for a Recession Based on Historical Data?

Jeremy: And so long story short is that, historically when you have that inversion, you have a recession normally 6 to 24 months after and more commonly 6 to 18 months after. Of course what happens when you have a recession, you have people spending less money. You have less demand and you typically have a change in asset prices. Because during the recession we have less liquidity. Investors get scared, the stock portfolio is down significantly. They're not investing as much and prices adjust for all these reasons.

Not the least of which of the other reasons that we mentioned; inflation, all these other problems. And so I personally believe there's a 95% plus chance of a recession in the next 24 months, just based on historical data. The fact that the Fed is way behind in increasing interest rates most likely. There's just all these different factors together.

So, I'm waiting to see what happens. At the very worst-case scenario, what I'll say is my low-risk perspective on things, I need to see what happens with asset prices the next 12, 24 months. I invest for predictability.

Right now, there is a lack of predictability of asset prices in the next 12 to 24 months. And therefore I am on the sidelines and having to pivot to other things that make sense in the meantime. That's the best way to describe even why I'm on the sidelines for just regular market rate deals today.

Darin: Yes, that makes sense. Hey, I understand what the inverted yield curve is, but I think that some listeners may not understand what that is. Can you give a little bit overview on what we're talking about?

The Inverted Yield Curve

Darin: When we talk about the two to 10-year yield inverting.

Jeremy: Yes. If you have never heard of the inverted yield curve, I'd strongly recommend you do some research online to understand it better. Because it's a very important metric that is almost a hundred percent accurate in determining recessions in advance.

So the best way to describe the yield curve is that, if you think about it, there's treasury bonds and treasuries in general, that go from all different timelines; three months, one year, two year. I think there's a three year, five year, seven year, 10 year, 30 year and probably some that I'm missing.

Now in a normal time, think about this, if you want to own a bond for three months, would you expect your interest rate to be lower or higher than if you're taking the risk of holding it for 30 years? Well, the 30 year bond better be a higher interest rate, or it's not going to be very attractive so to lock you in for longer.

So normally if you look at what's called the yield curve, the interest rates go up as the length of each treasury bond goes up. So a 10-year should be a higher interest rate than a two-year, and a 30-year should be higher and straight than a 10-year: that's as normal conditions.

Darin: So listeners, think about it from your car loan or your mortgage standpoint. If you get a 10-year or 15-year fixed-rate loan, your interest rate is going to be lower than if you lock it in for 30 years.

Jeremy: Yes.

Darin: It's the same thing with the treasury yield curve.

Are We Headed for a Recession When Investors Are Getting Scared?

Jeremy: Yes. What happens is that when investors get scared, the opposite happens. Which is actually what's happening right now. The most common comparison that people use to help predict the recession is comparing the two year and the 10 year. When those invert, meaning that the 2-year yield is actually higher than the 10-year yield, it signals, the market's telling you that they think there's going to be a recession. They're scared. That's what the inverted yield curve is telling you.

What's happened now, is that most or likely most of the comparisons you can do have inverted. So we talked about the five and the 30. The 5-year yield is currently higher than the 30-year yield. The 2-year yield just became higher than a 10 year a couple of days ago, briefly, and will probably happen on more permanent basis. There's all these different parts of it, you could compare. And a lot of them are now inverted, and that's telling you the market's very scared.

Darin: And then from the listeners’ perspective, like okay, well that's different and I don't get it, but then what happens after? Like, okay, it's not supposed to happen that way. What it's telling you is that the 30-year, the longer dated treasury is lower than the shorter dated. So eventually you would assume that the lower dated treasury will come down, right?

Jeremy: Yes. That will happen eventually. Now here's the problem though, that we didn't discuss, which is that a lot of people don't think about. Is that if you're borrowing money, whether it's for a car loan, a residential property, a commercial property, that's often coming from a bank.

If Banks Have to Borrow Money at a Higher Rate, Are We Headed for a Recession?

Jeremy: And what the bank is doing is borrowing short term and it's lending long term and it's making the spread. That's how they make their profit, is that spread. Here's the problem, if a bank has to borrow money at a higher rate today than it can actually lend it and after the next 10 years, for your 10-year loan, fixed-rate loan, there's a problem. They're going to pull back and they say, "I'm not going to make this loan. It's not profitable." So we're already seeing liquidity start to get lower and lower as a result of this because the yield curve is inverting.

When you have less liquidity, you have less ability to actually get loans, to buy things. Which then slows down the ability for people to purchase assets of any type. And that starts to slow the economy and doesn't allow people to buy as many things. So that's already starting in the background and that's one of the side effects of actually having this inverted yield curve. But that's very important from an investor perspective.

Darin: Yes. So, like Jeremy said, it sounds complex. But just Google the 2 to 10 year spread, and the predictability of what happens after it inverts. How many times recessions occur between 6 months and 24 months afterwards. It's crazy how predictable it is. So the thing I learned is that these three factors that influence recessions, inflation, which is screaming high right now.

Jeremy: Yes.

Darin: Oil prices, which are screaming high rate now, and then rising interest rates. So on the rising interest rates, I want to ask you. Because I talk to a lot of syndicators and I hear two schools of thought.

Are We Headed for a Recession if the Interest Rates Are Increasing?

Darin: All the press is saying, there's going to be six interest rate increases this year and three or four next year. And then I have some syndicators that are, there's no way they're going to be able to raise interest rates that much. If they're going to raise it once or twice or three times, and then they're not going to be able to raise it anymore. If we're already inverted, can they make another interest rate rise? What's your take on all that?

Jeremy: Yes. So that's a great question. There are a lot of different ways to look at this. And of course, nobody knows the answer at the moment.

What's interesting is that in the ’70s and early ’80s I think, and by the way, I'm from Canada and I'm also born in '73. So I was not old enough to understand any of this at the time. I didn't really live through it realistically. But Paul Volcker had to increase interest rates in a very challenging environment. He actually purposely caused a recession to get the economy to slow down because inflation was so high.

I believe a lot of people currently believe that Powell is going to have to do the same thing. He's going to have to raise interest rates to cause a recession. And what's happened is that the market doesn't wait around for him to raise rates six times. The market is already up 1.25 to 1.5%, 125 to 150 basis points and respond to what the Fed is saying it's going to do. So the rates are already up. At this point the question is, how we're going to keep the course.

If We Have No Other Choice, Are We Headed for a Recession?

Jeremy: Basically just have the nerve to keep it going once the stock market starts to come down. People get more scared and the economy starts to slow down. And take it all the way to the finish line and get the real cleansing that we need of the end of a cycle. Or is it going to stop short, and actually to your point, not be able to raise rates too many times. Because of political pressure, because of the fact that stock market, all these other extraneous reasons. Nobody knows the answer to that right now. I think if you ask 20 people, 10 would say he's going to, 10 would say he won't. It's very subjective.

Darin: What's your feeling?

Jeremy: First of all, just being a very quantitative objective guy, it will bother me if he doesn't take it to the finish line because the economy needs it. We need the proper reset. When you look at the way that the Fed has behaved and supported the market, and it had just an unbelievable amount of quantitative easing over the past 10 plus years. I have a hard time believing they're going to take it to the finish line. But I hate saying that because I think they need to take it to the finish line.

So I'll tell you what though, the only thing I could do is sit around and wait. This is what I'm doing right now. I have no other choice. But I also need that to happen so I can get that predictability back. I need to know where they're going to take it to.

Are We Headed for a Recession if We Are on Quantitative Tightening?

Jeremy: Because if I buy something today, but then they raise it 15 times, well that was a mistake. Or if I invest in something today, I should say, and vice versa. So the most I could do if I want to reduce my risk is just wait it out and see what happens. See the hints and directions they're taking it.

I'll tell you what, I'm actually equally as concerned about actually, which is quantitative tightening. So I don't know how many people out there know this. But I believe the Fed, and I've heard different numbers. I've seen that the Fed actually owns between 28 and about half of all mortgage loans right now, in the US.

Darin: 28% to 50%?

Jeremy: Yes. I'm using a wrong number, there's a real number. But I've heard both, I've actually read both in the last few days. I don't know which is actually correct. But either way, it's a quarter to half, most likely is correct. So they're supposed to start something called quantitative tightening, which actually implies that they're going to start selling these off. They have a few trillion of these.

The problem is, there're no buyers out there, if they want to sell them all off, that's probably impossible. There're no buyers. And so at least there's not and nearly enough buyers. But by definition, when they go to start to sell them off if they actually do that, it's something they haven't started yet, but they said they want to do. If they start doing that, that should actually drive interest rates higher for loans.

Are We Headed for a Recession if the Secondary Measure Is to Increase Interest Rates?

Jeremy: Because they're increasing the supply of loans out there without the same demand of buyers because they were one of the buyers. So that's something I'm watching very carefully too. Because even if they can't get through all their interest rate increases, that will theoretically increase interest rates as a secondary measure. So it's not just watching interest rate increases themselves. This is a very important point as well.

Darin: Absolutely. So if you look at YouTube and listen to podcasts, there's some pretty high-level people that are out there saying that this is not just going to be your normal everyday recession. That it's going to be the next depression. That it's going to be huge based on all of the quantitative easing that there's been. All the pumping of money into the economy. What's your take on that?

Jeremy: Yes. I could tell you that the market meaning traders are already predicting that there's going to be three to four 25 basis point decreases in rates, in 23 and 24. Sometime in that timeframe. Because the Fed's going to hit the wall, they won't be able to continue increasing, it'll be in recession. And then they're going to have to provide a more accommodating policy to help get us out of the recession.

I will say this, I'm not saying this because I'm optimistic I have to go with what the Fed has done. I actually would rather they not do this. But I fully see them restarting quantitative easing again, to help save the market and all this stuff. And again, the question is, if Powell has taken to the zero-yard line on the football field, is he going to the 50?

If We Are Way Beyond the Line of Debt, Are We Headed for a Recession?

Jeremy: Or is he going to the 10? Or is he going to the zero? And that's something we don't know. But I do believe that whenever he stops, he's going to start providing a ton of quantitative easing again. I believe that there's a lot of reasons why that has to happen from a societal perspective, et cetera. And I don't like where we are.

I think we're way beyond the line of debt and having all other long-term structural problems because of it. But I have a hard time believing that the Fed won't step up and start being very accommodated very quickly. How they behaved for the last, it's frankly even 20 years. It's not even 10 years. So I have to go with what they've done historically.

What I have to do as an investor, is be objective and take historical data and extrapolate into the future. I can't really, as a baseline, assume they're going to change their behavior. I think that's not the smart thing to do. You have to assume they're going to behave similarly. So that's what I'm going with, but I don't know. We'll have to see.

Darin: We'll have to see. All right, your take on this; we've all heard this before, this time is different. So real estate prices, residential have gone crazy, multifamily, all kinds of real estate. It has gone crazy. We have had cap rate compression, interest rates down to historic lows. Now we're starting to turn the other way and that's what gives you concern about decreasing asset prices. But there is, this time is different. One of the arguments for that is, look, we don't see the stated income loans and the no doc loans in the residential market.

Are We Headed for a Recession if the Consumers Are in Good Shape?

Darin: These are people that actually have money and have jobs and have income. So that's why this market will not slow down and it won't go back. I'm not saying that's the case. I'm saying that, that's an argument I hear. So what's your take on all that?

Jeremy: Yes. Great question. So my first response, because I read this all the time now. One of the funniest things I think I read is, the consumer is in good shape. There's not going to be a recession. Because, was the consumer in good shape in January 2008? Sure, they had a ton of asset price value. Was the consumer in good shape before the.com crashed? They were actually in great shape, they were making a ton of money.

They're always in good shape, they're always in the best shape at the end of a cycle, until the cycle changes. So that's the first thing I will tell people, you just have to ignore that completely. That's not the way things work. I just find it hilarious when I read that.

Darin: But a lot of people think that, until the music stops, right?

Jeremy: Right. Yes. But the thing is if you believe that, then my argument is that you believe that we're never having another cycle. It’s just the cycles are done.

So when I ask people that question, I say, look, do you really believe that cycles are no longer happening? Nobody has ever said yes. Because if you do then that's okay. And actually that's a framework that works for that. But if you believe cycles still exist, then we will have some type of change.

If the Affordability Index Is 26, Are We Headed for a Recession?

Jeremy: Now, how much is a different story. You can have a very mild cycle. So what I would say is that the thing that people have to understand is affordability. So let's take single family homes. I'm going to give you some data. In California, and this research has been done by Bruce Norris, a really well-known investor who used to live in California, lives in Florida now, great guy.

He's done research for decades. He's been investing probably for 40-plus years, I think. And he shows us that in California, once you reach an affordability index of 17, you've hit the end. We can't go any further. That's when things start to actually rollover. Now, where are we today? I'm waiting on the Q1 California association realtors, affordability index to be published to see what happens with slightly increasing interest rates by that time. Plus housing prices continue to be very high year over year, we'll see. I think we are at 26 if I recall in Q4.

So there was still some room to go. But if you just want to be an objective person and not get emotional about this, you got to look at affordability and say, if prices doubled tomorrow in California, who's going to lend to the person that doesn't have the income to support that price? Nobody.

No responsible lender is going to lend to that person. There's going to be 1% or 2% or 3% of the population that can actually afford that loan. And if they're not the buyer, no one's going to get a loan for it.

If the Number 1 Thing We Need to Look at Is Affordability, Are We Headed for a Recession?

Jeremy: So objectively speaking, affordability is the number one thing to look at. Because, I would people that yes, all the circumstances are different, there aren't these no doc, no income loans. All these things are not the same. But if we hit the end of affordability, that means a cycle is theoretically done and then we will have an adjustment. What that would look like? I don't know, but that is the objective way to look at it.

Darin: I think that is a very smart way to look at it. I was living in south Florida back in the early 2000s. During 2002, 2006, I was working for a large bank on their trading floor, trading large loan portfolios between banks. And that was what I was saying, and I actually told my wife, let's sell our house. Prices are going up 20% in Florida and incomes are going up 3%. And at some point, something's got to give. But her response was, "Well one, where are we going to live?" And I'm like, "Oh, we'll just move into an apartment" Second thing is, "Well for how long?"

I'm like, that's the part I don't know. I don't know if this is going to continue to run for a year or another three or five years. She's like, "We've got two young kids. We don't want to live in an apartment for five years." So we didn't. It did adjust. And we could have sold significantly higher than we did. But that is a real thing, affordability at some point.

Are We Headed for a Recession if More People Are Renting?

Darin: I believe that will hit not only residential, but it will also hit rental rates. But the other side of the equation is okay, will people lose their homes and they have to move into apartments?

Jeremy: But again, let's go back to the same argument though. By the way, they're not necessarily wrong, so there was a large shift to rentals between '09 and '12 or '13. And apartments became extremely popular, it was the first most popular asset class at that time. Because it made logical sense, people were going to be renting more.

At the same time though, if you continue to compound rents at a 15% clip, what we've been seeing for another three years, you will not be able to find a qualified tenant. Because you are going to be careful as the owner to make sure you're renting someone who could afford the rent. Because you don't want them to just sit there and squat and not pay the rent. So everything has its limit. And of course, every market is different, but that's why I go back to affordability.

Just from an objective perspective, there is a wall to affordability for anything you look at. I mean, there's even a well to affordability for Ferrari. If they increase their prices by 10X, they would sell probably 5% of the cars or so. And they have a big problem. So it applies to everything.

Darin: Right. All right. So affordability. You didn't bring it up, I'm bringing up timing. When something seems obvious out of whack, how long it can continue to run before it corrects? So what's your take on that and where do you think we are?

Real Estate Takes a Long Time to Adjust

Jeremy: So real estate takes a long time to adjust and it's because it's an illiquid market. It takes a long time to sell a property. You're not selling an Apple stock and the next person selling Apple stock a millisecond later and the price is just constantly discovered. So this bid and ask spread between what someone's asking for property. What you're willing to pay, takes a long time to adjust. And it takes a long time psychologically for the seller to adjust downwards. That's how a typical end-of-cycle and beginning of adjustment works.

So real estate could take a couple of years to properly adjust, depending on what it is. I'm referring to residential here just to make it easier to understand. The other thing to your point is that a cycle typically lasts much longer than you expect it to.

But there are some telltale signs and I'll give people some right now. Because we haven't quite hit the recession period yet. So in 2008, I distinctly remember because I was actually on the sidelines between '05 and '08. I was very young, I was going to dinner parties with my friends, telling people there was going to be a house marketing crash. And they thought I was nuts. All of them thought I was crazy. It was a very long period of hearing that.

And in '08, I go get a haircut. My barber's, "Hey yes, I'm flipping a home." And that's when you know you're at the top. Everyone's doing it, that has gotten on the side, that is much more difficult to do.

Are We Headed for a Recession if There Are Adjustments for Startups?

Jeremy: And everyone's getting access to the loans to do it, that wouldn't normally get access to it, et cetera. So that's one easier way. Or you get into a taxi cab in 2007 and that taxi cab driver is flipping homes. I'm not even exaggerating, this is true story.

In 2020, I was telling people, you know how your barber and your taxi driver were flipping homes in '07? What were they doing in 2020 and '21? They were buying and selling crypto. Same thing, different time. And a lot of them were making a lot of money.

I'm not trying to single out crypto, I just think it's a similar indicator. I'm not saying that crypto's going to go down or up, I have no idea. That's one thing I definitely don't know. But the point is that's another indicator of the top to me. It's the equivalent indicator.

By the way, we've already seen a pretty large adjustment in multiples for startups. That's usually the first one to fall because it's the highest risk. And as of January, when the NASDAQ started to go down, there was a big adjustment in the secondary and private markets for startup valuations.

Darin: What adjustment was there?

Jeremy: It depends on every company's different, some of the profits, some of them are. But you got to have a 20% adjustment in the multiple right now. That's very realistic, compared to what it was. So something that may have been worth a hundred million dollars, literally in December could be worth $80 million today. Based on what someone is willing to invest at as far as a multiple of what it's worth today, or even buy it I'd say.

Are We Headed for a Recession if Inflation Rate Is Going Up?

Jeremy: That type of thing has already happened. Those are real numbers. So we've already seen that start. But again, these are the normal dominoes that fall and in fact, everything plays out like it's supposed to. We're having interest rates go up, oil inflation, we're having an inversion of the yield curve. We're having the really high-risk stuff already adjust in price. And then the other stuff just follows, but it takes a while.

Darin: We're talking about a lot of macro stuff. So inflation, and you Google inflation and you talk to people about inflation, they say real estate is a phenomenal asset class to be in inflationary times. Whether it be just your house. Say you lock in a 30-year fixed rate. So if there's inflation, you're paying the lender back with tomorrow's dollars, which are worth less. But your property is supposedly appreciating in asset value.

Then on the multifamily side, you're talking about, okay, well, we lock in our funding costs and then rents. If there's wage inflation, then rents should go up as well. So how do we get comfortable with, okay, well they say real estate's good in inflation, but a recession may be coming and that could hurt asset prices. So where do you fall?

Jeremy: Yes, I actually don't disagree. I think that assets in general, hard assets and real estate specifically are good for keeping up with inflation. The problem is that we're going to go from inflation to deflation. I'm not saying long-term deflation, but I mean asset prices.

If Consumers Are Spending Less, Are We Headed for a Recession?

Jeremy: By the way, and probably rents and the economy. The Fed is trying to actually deflate our growth right now. You have to understand that. That's how it's trying to manage the reduction of inflation. It's trying to get consumers to spend less, and it's doing it by increasing interest rates. So people won't be able to borrow as much. They can't afford to borrow as much and everything's going to slow down. So I do agree that inflation, by owning assets is good for inflation. It's not the same thing though when everything starts to adjust. It's just a different scenario.

Darin: One thing that I say is, I feel bad for people that don't own assets. Because my kids and my wife, will be saying, "Oh man, can you believe gas prices?" And I'm like, "Yes, it's terrible" I have to pay this price, but I'm so thankful that I own oil stocks that are going up in value at the same time I'm paying more at the pump.

But there's other people that don't have that side benefit. They are just paying more out of their income and they don't have the asset that's appreciating at the same time.

Jeremy: And by the way, here's a great example, I just read this yesterday. Because I live in California, I saw the statistic. If you bought a house in 1970, at that point of inflation, median price would say 275,000. You buy the house today, median prices across the entire state, medium price is 880,000.

Darin: Oh my goodness.

Jeremy: I'm sorry, I totally screwed that up. If you bought a house in 1970, it was actually much lower than 275.

Are We Headed for a Recession if the Disparity Between Rich and Poor Is Getting Wider and Wider?

Jeremy: If you adjusted that price today, for inflation, just inflation, you would be at 275. But that actual median price today is 880. So it's actually almost three times higher than what it should be just adjusted for inflation. The difference is that asset prices have increased way above inflation in this particular state for a very long time compounded. And now you're way behind. So that's another example.

I understand your point and like you're talking to someone who lives off cash flow. I'm fortunate to have all these sources and now I can pay for the extra gas ironically, from some of my own investments.

Or any other investment or whatever, it doesn't matter. But the keeping up, when you talk about keeping up, I'm very concerned for the long term. Because wages have not been keeping up the last 11 months in a row. Inflation has been higher than wage increases. People have fallen behind in the last 11 months. Even though they're getting high increases, it's not high enough.

Over the long term, if you don't own assets, you can easily fall behind because so much money has gone to assets and they become more and more attractive over time. So I cannot agree with you more. And I think it's going to have a worse and worse impact over time on the middle class and on people in the country, unfortunately.

Darin: Yes, absolutely. The show really isn't focused on that. But I think that's one of the biggest risks and Ray Dalio talks a lot about that. It’s the disparity between the rich and the poor. It just keeps getting wider and wider. You mentioned crypto just a little bit.

The Challenge of Investing in Syndication

Darin: But I know that you're invested in not only real estate. But you're also invested in businesses as well. But on the real estate side, I don't know much about crypto. I've been starting to try to read about it. And what's interesting to me is the underlying technology of blockchain.

To me, more so than having another currency to trade, is the underlying technology I think can be applied to a lot of different things. I liken it back to when I saw the internet and I was like, man, this is going to be huge. And I think that blockchain has the opportunity to be huge. What do you think about tokenization and blockchain and its impact on real estate and liquidity of real estate?

Jeremy: So this is a really important topic to me. I've done a lot of research on, in the last year or two. Because if you look at my situation, all the investments I have are illiquid. Meaning that, it's illegal for me to sell them in the first year, I believe, due to the SEC laws. And then after that, I got to find someone to buy it, we don't know what the value is.

I normally have to sell it at a discount if I want to because someone else is taking a risk on buying it from me. They don't know what it's worth and I'm not going to normally spend tens of thousands dollars on appraisal. Depending on what it is or how big the fund is. And so if I could have liquidity of selling some of my shares at any time, that's a huge game-changer for someone like me.

That's one of the challenges or the cons of investing in syndication, is they're very illiquid.

Tokenization

Jeremy: Now, couple of things I want to point out, first is use the word tokenization. I just want people out there to understand exactly what that is. Because in my opinion, it just sounds more complicated.

Tokenization just means digitization. It just means that you know how you sign a subscription agreement, you sign a paper and now that it's accepted and now you have shares. And it's on some ledger somewhere. Well, the digital version of it is just your digital ownership of it. It's that simple. I would urge people not to make it more complicated than that. Because if you just keep it that simple, it becomes easier to understand.

So the concept is if you're able to digitize your shares and you have some type of security behind it, knowing that you really own the shares, and that could be validated, then you could sell them electronically. So that's the tokenization part.

Now to be totally honest with you, I spent a lot of time, because I actually I've been an advisor with the RealtyMogul since before they launched in 2012. It's one of the biggest crowdfunding sites. And my thought a year or two goes, okay, what's next? What's the next big thing?

I thought tokenization was going to be the next big thing. I'm like, well, who better to look into this than me? That I'm going to benefit usually, if it actually happens. And actually, can I even help to accelerate the adoption? Through my network of sponsors, investors, other investor groups, could I actually excel?

The Hurdle Is Too High for Tokenization

Jeremy: I thought I could. I really did, because I have a big network. What I discovered without naming any names, is that the tokenization companies that can actually execute all this on behalf of sponsors and investors are currently charging, in my opinion for non-institutional deals, too much money to the point where the hurdle is too high.

This is based on me talking to multiple sponsors about the fees, talking to multiple platforms about the fees, and coming to that conclusion. Someone who wants this to happen coming to that conclusion. That I think it could happen eventually. I think the fees are the current hurdle.

And I think that once the fees are able to come down enough, whether it's just that technology costs less over time or whatever it's going to be, I do think that's going to happen. I think it's going to have a huge impact on investing in this type of stuff in the next five to 10 years. I'm not optimistic for the next one to three years though, at the moment.

Darin: No, that makes sense. If it becomes more liquid, it can get a lot more people in the game. It could also provide people like yourself that has a lot of illiquid investments and the ability to provide some liquidity if you need it. My experience also is that the more liquid a market is, returns tend to be squeezed.

Jeremy: Yes, I 100% agree. I do expect that will happen. And I expect as an investor, I'm going to have a choice. I can invest in a deal from the beginning that I know is going to be tokenized at a lower return, and have the liquidity option.

StartEngine

Jeremy: Or I can invest in a traditional syndication like I do today at a higher return. And I think that the terms for investors and other things may be a little worse, in a tokenized. Because I think the sponsor would be able to command that. Because they know they're going to be providing that huge optionality for the investor. So I 100% agree. And my intention is to have a portfolio that's combined of the two.

I want some higher return and some lower return that's more liquid. And that's exactly where I think it’s going to go. I want to just point out one very important thing about this. So I'm a seed round investor, so one of the first investors in a company called StartEngine, have you heard of StartEngine?

Darin: I have not.

Jeremy: They're the largest equity crowd funding platform in the US, for raising money for startups, the largest one.

Darin: So they're like an angel investor conglomerate type of company?

Jeremy: So basically, you can go onto that website, find at the moment over a hundred companies listed to invest in, and you can invest tiny amounts in a crowdfunding structure. I'm talking about $500 or more type of thing across all these different companies through crowdfunding. I think they've raised money for over 600 companies to over half a billion dollars have been raised. Now, they have their own, what I call stock exchange.

Blockchain

Jeremy: Technically it's called an ATS or alternative trading system. It's a stock exchange light that's been approved by the SEC, that's trading stocks on some of the startups right now. It's going to ramp up probably in the next year or two, hopefully.

Now the reason why I mentioned all this is because they don't use blockchain. And this is a very important point. Because one of the things I found, is that these companies that are trying to be the front runners of all this are just making things too complicated, in my own opinion.

They talk about this blockchain 102.4 secure technology. To be honest with you, I tell people I'm an investor. So think about buying a car, because actually my last job was at Toyota headquarters back in '06, '07, I'm a car guy. If you buy a Honda Accord, do you care whether it's just reliable to go from point A to point B? Or do you care enough to know that your suspension is 40% magnesium, 20% aluminum, 40% steel? It was made in this place? It is at this degree at this angle? No, you want the car, it feels smooth. And you want to go from A to B. All I care about is that it's secure and that it's using a decent technology. But more importantly, do I really care if it's on the blockchain or not?

If it can be similarly secure, probably not. So I mention this because we don't necessarily need the blockchain. It just has to be a digital form of the shares being held by a transfer agent in digital form just like your shares are today with an Apple Stock.

Complexity Is Intimidating

Jeremy: And it has to be someone else providing the secondary platform to execute on it. I may be missing something, but if my understanding is correct, I don't want people to get overly concerned about what is a blockchain. That's something I don't understand and because of the lack knowledge, now it's more risky and I'm afraid of it.

I'm hoping that some of the initial platforms aren't even blockchain so that people don't have to worry about that piece. So that it's just a quicker adoption as an example. And it doesn't necessarily need to be like that. I just want to point all these things out. Because I've gone to some conferences and heard a lot of people talk. I feel like one way or another it's going to happen, but it doesn't have to be too complicated.

Darin: No. And the use case has to make sense. It has to make it more efficient, and more profitable rather than just use it to say you used it and then it costs more. So I completely get you from that perspective. And terminology in any industry can throw people off. I mean, syndication, I think that word itself is intimidating. And a lot of people are just afraid to get involved, "Wow, that sounds too complex for me." And it's just a bunch of people coming together to buy an asset they couldn't buy on their own.

What’s Next for Jeremy Roll

Darin: So I understand your point in terms of tokenization, blockchain, crypto, it can overwhelm some people. Hey man, I wish we could talk for four hours. You are such a plethora of information and I'm so thankful to Hunter Thompson for pointing me in your direction. Because he had wonderful things to say, it sounds like you helped him out a lot, early on in his path. And you are involved in a lot of different investments.

When I walk away from this conversation, just the thought of, hey, at the end of a cycle like this focusing on short term so that I could redeploy, that's an interesting strategy, and something to think about. What your next big stretch goal? You've already done so much. What's next on the horizon for Jeremy?

Jeremy: It's a great question. Very generically, I only have two things that come to mind immediately. One is, I want to keep my cash flow snowball going and increase my networth over time. And certainly, my cash snowball is the most important thing that I focus on from business perspective. Because it's gotten me out of the corporate world and I want to stay out of the corporate world. It's 15 years later now and that's still going okay. But I don't want to mess that up. So that's number one.

Number two is, I've gotten to a point where I have a lot of different sources of capital and it's allowing our cashflow and it's allowed me to spend time on various things. So far I've been able to spend a lot of time talking to other investors, helping investors, being on these types of podcasts, just hopefully it's helping people. I actually co-founded something called For Investors By Investors, a nonprofit, in 2007.

For Investors By Investors

Jeremy: The sole goal was, how do you go to networking events without having a sales pitch. We didn't want to make any money, we actually lost money of it every year, so far. But that's fine because it's helping people. So if you ask me my other hope and goal is just to continue to help as many people as possible within the time constraints that I have. Because that is the huge challenge, I have kids and everything else. And so you want to talk for four hours, I want to talk to as many people as possible.

Neither are necessarily possible now. And so that's my other goal, it’s how do I continue to do that? Either in a more efficient way or reach more people just to help more people, without also really wearing myself out essentially. And that's something I just constantly think about and may have to change at some point.

Darin: Well, I thank you that you have that heart for giving back and teaching other people. For some people it's weird, for me in the multifamily space, it's been weird. Because there's so many people that do give back and help the next guy come in. The first-time investor come in. Sometimes you can be skeptical like, why is this person helping me? What I've learned is when people get to a point, it's not all people, but when certain people get to a point of financial freedom, financial time flexibility, the next huge joy in life is helping somebody else achieve that same goal.

Jeremy: Yes. I have a lot of calls each week with new people for example, I don't charge for that time obviously. And it has just become my mindset.

The Challenge for Jeremy

Jeremy: Now that I have the ability to actually bandwidth and the core foundation to be able to do it. But again, the big challenge I have again, is I work day and I actually work every night, and I do a lot of hours. But the trade-off is I can't help as many people if I don't work as many hours. So that's always the struggle. And that's why one of my goals is to figure out how to balance that better, or maybe do it in a more efficient way, et cetera. But I don't want to help less people. That's a big challenge for me coming up, in the next period.

Darin: Sure. So with that said, is there a way for people to get to know more about you in some way?

Jeremy: Yes. I don't have a website or anything like that. I'm just very conservative and all that. But you can either find me on LinkedIn I suppose and see my profile. You could check me out on this podcast, other podcasts, if it's helpful. I've been on over a hundred podcasts, just different topics. And you're always welcome to contact me directly for sure. Anyone's welcome.

So whether you're brand new and just want to pick my brain. Whether you're an experienced investor that wants to network, that's always a fantastic thing. If you have another investor group you want to network. If you're a sponsor and you want a network, just don't hesitate to reach out to me. My email is jroll@rollinvestments.com.

Darin: Well Jeremy, I really appreciate you coming on the show. Man, you have so much insight. And listeners, I hope that you really enjoyed that one. Until next week, signing off.

How to Reach Jeremy Roll

• LinkedIn
• Email: jroll@rollinvestments.com