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Location Independence Through Intentional Investing and Lifestyle Design
Episode 19 • 18th September 2023 • Truly Passive Income • Truly Passive LLC
00:00:00 00:37:56

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On this episode, we welcome Brian Davis, a real estate investor who started buying rental properties shortly before the 2008 house collapse. After that expensive lesson, Brian went on to co-found Spark Rental, a platform for educating others on passive real estate syndications.

Brian walks us through his journey from investing his own money to pooling funds as a club. We discuss the club's diversification across operators, geographies, asset classes and debt terms. Brian also shares how he designed his location-independent lifestyle, his family's adventures living abroad, and the intentional choices they make around communities, schools and investing.

Timestamps

[00:00:22] Brian's start in real estate and early lessons

[00:02:19] Most valuable lesson from the recession

[00:06:20] Back to fundamentals of analyzing deals

[00:08:31] Forming a real estate investment club

[00:11:19] Club's process for vetting deals

[00:18:07] Pursuing diversification across strategies

[00:21:01] Starting the overseas expat life

[00:25:11] Different asset classes get different loan rates

[00:27:54] Dollar cost averaging over market timing

[00:34:05] Living intentionally to reflect values

Key Takeaways

  • Brian started buying rental properties before the 2008 recession, when he lost money and learned valuable lessons about analyzing deals.
  • After co-founding Spark Rental, Brian discovered syndications were an easier way to invest passively in real estate.
  • Spark Rental's investment club pools funds to make syndications accessible to small investors, pursuing diversification across operators, geographies, asset classes and debt terms.
  • The club vets deals thoroughly, leveraging the community's collective intelligence to ask sponsors tough questions and uncover risks.
  • Brian designed his business and investments to enable a location-independent lifestyle with his family across the world.
  • He believes in steadily dollar cost averaging into diverse real estate deals rather than trying to time markets.

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Facebook: Truly Passive

Twitter: @trulypassive

Download Our FREE Passive Investor Toolkit

Everything you need to get started in passive investing - Download Here

Mentioned in this episode:

Sponsored by Nomad Capital

Looking to invest in self-storage? Nomad Capital converts vacant big-box retail spaces across the Southeast into climate-controlled storage, with a target of 20% annual returns. Our fund combines low leverage and high depreciation for strong growth and valuable tax benefits. By buying properties at deep discounts, we often achieve break-even at just 40% occupancy. Join a proven model in a resilient asset class that continues to deliver, even in today’s market. Learn more at nomadcapital.us/tpi. Accredited investors only.

Transcripts

Neil Henderson:

Brian Davis is a real estate investor who started

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:

buying rental properties shortly

before the:

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:

After that expensive lesson, Brian

went on to co-found spark rental,

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:

a platform for educating others on

passive real estate syndications.

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:

Brian walks us through his

journey from investing his own

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:

money to pooling funds as a club.

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:

We discussed the club's

diversification across operators,

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:

geographies, and asset classes.

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:

Brian also shares how he designed

his location independent lifestyle.

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His family's adventures living abroad and

the intentional choices they make around

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communities, schools, and investing.

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Welcome to the truly

passive income podcast.

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I'm neil henderson

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Clint Harris: and i'm clint harris

today We are excited to have brian davis

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with us brian He started as an account

executive handling investment property

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loans, then started buying rental

properties, and later started writing.

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And he's writing for BiggerPockets,

Inman, Money Crashers, and

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RETipster as a real estate expert.

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He's also a limited partner investor

and co founder of Spark Rental, which

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we're excited to talk about today.

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And he and his family spend most of

the year traveling in South America.

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In fact, since the last time,

the first time I talked to you,

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Brian, was Maybe a month or so ago.

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And then the next time I talked

to you a couple of weeks ago,

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you just finished a move to Peru.

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So you are, you are living it.

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You're location independent, man.

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You're out there.

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How are you today?

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Brian Davis: I'm doing great.

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Thank you guys so much for having me on.

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Clint Harris: Yeah, absolutely.

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Excited to have you here.

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Um, tell us a little bit about besides

that brief intro, um, who you are,

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how you got started and, and kind

of your, your journey, especially

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through real estate investing that

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led into being a limited partner.

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Brian Davis: Sure.

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So like so many people, I fell into a

career out of college, not really having

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any idea what I wanted to do with my life.

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My stepdad was friends with a guy who

owned a subprime mortgage company,

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which in the early to mid aughts was,

was all the rage, as you guys remember.

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Um, but it became clear quickly,

as I started working for the two

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guys that owned this company,

uh, they did not need another.

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Loan officer doing subprime loans, but

they really wanted was someone to do

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hard money loans for them personally.

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You know, they had this,

you know, a standard normal

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mortgage lending company that

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lent nationwide, but on the side, they

also lent their private money, uh, as

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hard money loans to real estate investors.

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So I started doing that and I was

watching all these real estate

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investors making money hand over fist,

you know, again, it's the mid aughts.

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Uh, you know, and just around the time

when I had built up enough money where

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I was excited and I was jumping in.

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Investing my own personal money in

rental properties,:

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you know, the rest is history.

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And I, I lost my shirt on a lot

of those initial investments.

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Uh, it was an expensive lesson.

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Most people at that point, uh, run away

and never invest in real estate again.

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If I had done that, then I

wouldn't have gotten anything for

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all of that money that I lost.

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Instead, I looked at it as tuition, right?

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It was the cost of education

in real estate investing.

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And I went on to work for a

company that, uh, offered.

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Online products for landlords

and real estate investors.

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And then went off on my own, started

Spark Rental with a co founder and,

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um, you know, that, that has been

its own journey, but all, all along

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the way, I've been investing in real

estate in some way, shape, or form.

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So yeah, I don't know where you want

to, where you want to take that aughts.

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Neil Henderson: So pre 2008, correct?

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Yes.

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Yes.

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So, so you were, you were, you

were buying rental properties pre

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2000 pre great recession, correct?

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Brian Davis: Yeah, probably the

worst time in history to, to buy

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rental properties or investment

properties, but some valuable lessons.

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All right, so

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Neil Henderson: that's my next question.

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What do you think was the most valuable

lesson that came out of that hard lesson

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from investing during the great recession?

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Brian Davis: Sure.

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So, you know, this is going to

sound very basic and fundamental,

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but you know, I, I didn't know how

to actually, uh, forecast rental

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cashflow accurately up to that point.

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Yeah.

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Uh, and some of that is because of the

hubris of youth, you know, I was in my

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early to mid twenties, I, you know, I had

that, you know, I'm going to go it alone

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and, you know, try to figure it all out

on my, on my own, instead of getting a

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mentor, getting a coach, getting people to

sit down and say, you know, no cashflow is

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not the rent minus the mortgage payment.

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You have vacancy rate, you have

repairs and maintenance and property

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management costs, even if you plan on.

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Managing a property yourself, uh,

that's still a labor expense, right?

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So if you're comparing a rental property

to say an ETF, you know, a totally

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passive investment, uh, you know, whether

you're managing the property yourself or

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someone else's, it's still a labor cost.

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So in all of these sorts of things that

You know, today it sounds so simple.

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It sounds so fundamental, but I

just, I didn't know that at the time.

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Um, no one told me and I was too

dumb to go out and get someone to

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tell me, to teach me these things.

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Uh, so really fundamental stuff like that.

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I was also investing in low income

neighborhoods in Baltimore city.

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I'm from Baltimore originally.

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And I, I had to learn the hard way that in

lower income neighborhoods, you have some

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hidden costs that don't show up on paper.

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Easily, um, you know, you have more damage

to the rental properties than you have

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in say a class a neighborhood, right?

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Um, you have to take that into account.

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You have higher rent default rates.

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You've spent a lot more time

chasing down tenants for rents.

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And, um, you know, these are things that

again, don't show up easily on paper.

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Um, and until you actually dive

in and start investing in some

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of those neighborhoods, you don't

necessarily have a grasp for that.

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Uh, lower income neighborhoods in

rental investing is really a niche.

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I didn't fully appreciate that as

a, as a 24 year old, uh, investing.

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Uh, so yeah, I mean, I had to learn

some of those lessons the hard way.

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Um, you know, I had to learn some

of the section eight lessons, the

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hard way that every single year, the

section eight inspector is going to

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ding you for a whole bunch of stuff,

regardless of what the condition of

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the property is, because they're trying

to prove to their supervisor that

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they hit every house on their rounds.

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Right?

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So you're going to have some, some

maintenance and repair expenses,

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regardless of how perfect the condition

of your property solely because

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of these, these external factors.

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Right?

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Um, you know, all those sorts of lessons

that, you know, you certainly don't

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learn any of that stuff in school.

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Uh, you have to learn that either

the easy way from a mentor who.

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Guides you through that stuff or

the hard way, you know, learning

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those expensive lessons yourself.

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It's a long winded answer, but hopefully

some, some, some nuggets there for

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people who are new to rental investing.

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That's perfect,

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Clint Harris: Brian.

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I'll be honest with you.

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I feel like I'm listening to you.

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Tell my story.

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It's the same, it's the same thing.

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So my first foray was my wife

and I had girlfriend at the time.

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Eventually wife, we bought

nine single family homes.

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Luckily it was after the crash, but we

were, we were picking up the same thing,

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the lower income properties that on paper,

they pencil out really, really well.

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Uh, the reality is the hidden capex

expenditures of that class of tenant.

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I wasn't in with section eight,

but it was not much better.

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Frankly, it would have been better

to have section eight and have the

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stability that comes along with that.

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But on paper, it looks like

it's cashflow and grade.

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It's the 2% rule.

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You rule you're in good shape,

but every time somebody moves out.

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You go in and they're sad situations.

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The kid's bedroom door is kicked in or

the appliances are ripped up or whatever.

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And a year's worth of

cashflow disappears like that.

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Like it's gone.

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Right.

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So on paper it pencils.

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The reality is, um, that I had

to learn that exact same lesson.

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And for me, the metamorphosis was from

there was multifamily property, because

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then you have one mortgage, but multiple

rental units to kind of help out.

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And then that.

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Kind of just goes from there to larger

multifamily and then self storage as well.

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But one thing that brought up is during

that time period in your 20s, which

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that's the same time I started investing.

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My only resource was going to the

library and written DVDs and books on CD.

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Like that was, there

was no community, right?

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I think that that's one of the things

that's so special about what you guys have

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done with Spark Rental and I kind of want

to segue into that is that I think one of

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the most valuable things you can have at

in your arsenal as a real estate investor

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is community and people to talk to.

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Like you said, there's mentors, there's

gurus, there's people that That you can

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hire and save yourself years, right?

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Cause you're learning from their

mistakes instead of making your own.

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But community is something that is

wildly important, especially among us

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real estate investors that all we'd like

to do is talk about real estate, right?

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We, a lot of times we overshare, but

it can, it can be a really good thing.

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So tell me a little bit about.

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So, um, how you got invested as a limited

partner into syndications, you used

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the word passive a couple of times.

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I'm sure it was looking at, okay, I'll,

I'll use my capital, but other people

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can use their time and experience.

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And then how you use that to form a

community and some of the values that you

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see come from that Spark Rental community.

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Brian Davis: Sure.

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So let me give you a little bit

of context for how we got started

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with our co investing club.

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Um, and then I'll explain

exactly what we do.

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Uh, so we have a course on real

estate investing, uh, trying to build

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passive income and achieve financial

independence largely through real

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estate, but also through other means.

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And what we discovered

along the way is that.

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Most people are less interested

in learning how to fish than

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just being given the fish.

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Um, I know that's, that's counterintuitive

and it goes against the, you know,

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that, that cliche of, you know, teach

a man to fish, feed him for life.

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Um, but as we were trying to sell this,

this course about real estate investing

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and, you know, everything you need to know

to, to succeed in real estate investing,

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what we saw was that people really wanted.

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Access to regular real estate

investment deals with other people.

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Uh, they wanted other people to, to find

them deals and, you know, hold their

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hand a little bit going through it.

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So we experimented with this idea of

going out and buying single family

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rental properties as a group with

our students and, you know, walking

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them through the whole process.

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partnered with the ground and we did a

couple of those and they, they were fine.

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And they ended up making

money, um, but it was.

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Way too much work.

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It was, it was, there was a reason

why no one is really doing that.

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Um, it was too much work

and too little money.

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So my partner and I, we liked the

idea though, and we got a lot of

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positive feedback from our students

and from people, you know, who

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weren't students, but were interested

in doing something like that.

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So we discovered passive real estate

syndications, and we thought maybe this is

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actually the better way to go with this.

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You know, you don't have all those,

those headaches, uh, of actively

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investing in real estate, but you

get all those benefits, you know, the

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tax benefits, you get, uh, you know,

the, uh, the cashflow and all, all

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those advantages of direct ownership.

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Um, but we don't have to actually

be, have boots on the ground.

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We don't have to be trusting

a partner who is not.

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Vetted as professional real estate

syndication, uh, syndicators often are.

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So I had done a little bit of

passive syndication investing

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myself in the past, but we, we did

a couple of experimental passive

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real estate syndication investments.

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As a club with our students and

we just got great feedback on it.

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The process was relatively

simple and smooth.

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Um, it was a lot easier than

going on trying to buy properties.

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So we, we decided to build an entire real

estate investment club around this idea.

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Uh, we call it our co investing club.

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Every month we propose a new passive

real estate syndication deal.

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We are not syndicators ourselves.

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We're not raising money.

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We're not taking a cut of

the money that's invested.

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We're not selling securities.

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Otherwise we'd be running

into trouble with the SEC.

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Um, we're just charging a flat fee

as a membership fee or opening it

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to our previous course students.

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Um, but every month.

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We get together on a call.

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We bring on the syndicator to

answer questions about the deal.

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Uh, whoever wants to invest in that

deal can do so for 5, 000 or more,

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uh, instead of the typical 50 or a

hundred thousand dollars required

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for real estate syndication deal.

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So it makes it a lot easier

to, uh, spread your money among

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many different syndications.

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It also makes it easier to

invest with smaller amounts.

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Um, a lot of us don't have 50 or a

hundred grand just sitting around

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collecting dust in our checking accounts.

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Or even our savings accounts.

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So that's, that's how our club was born.

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And you had asked about

the value of community.

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I'll give you one very

quick example of this.

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We, a couple of months ago, we

were vetting a deal as our club.

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Uh, it was deal in Dallas,

I think in Dallas, Texas.

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Uh, in a suburb and I'm not from Texas.

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I don't, I've never been to Dallas.

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I don't know a lot

about the Dallas market.

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Uh, it turns out that one of the members

of our club lived five minutes down the

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road from this apartment complex and was

telling us firsthand about the scarcity

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of good rental housing in that market,

uh, about the, the wait times for, uh,

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nice apartments in that neighborhood

and in that market, it just brought

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such a, Uh, Such a fresh perspective,

that ground level perspective to the

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deal and to us sitting down as a club

and vetting that deal that we just

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never would have had otherwise, right?

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No matter how much you, you

read about a market, it's not

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the same as having someone who

lives five minutes down the road.

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Right?

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So, you know, she, she was saying, I

know this apartment complex, I've driven

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past it every day for the last two years.

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Uh, it's a nice place to live.

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People want to live there.

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Um, yeah, we just never would

have known that, you know, without

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that, that having that community

to vet these deals together.

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Clint Harris: And that's a,

it's a two way street there.

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Like we, I've heard of examples that come

from the same thing of somebody, something

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looks great on paper and then a local

person will let you know, Oh, there's

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a major socioeconomic dividing line.

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From this, you know, whatever it may

be, a reservoir canal going through,

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or like we had a property recently

that the, on the map and everything

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looked fantastic, but there was a

major creek going back behind it that

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people had to go a long ways around.

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On the map, it looked like you had direct

access, but it was miles to go around.

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It's, it's examples like that.

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There's good and there's

bad and there's ugly.

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And those, those boots on the

ground is wildly valuable.

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Plus it's dozens, if not

hundreds of sets of eyes vetting

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the operators and the deals.

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Brian Davis: Oh yeah, absolutely.

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I mean, we have.

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Uh, questions that come up in these,

these vetting sessions that would

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not have occurred to me or, or to

my partner necessarily, um, but

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they're great questions and, and

they're, they're questions that are

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worth asking the sponsor, right?

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Uh, and you know, some

of our community members.

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We'll think to ask those questions.

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So yeah, like you said, having

more eyes on a deal, having more

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people asking questions, it just

makes for a better vetting process.

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Neil Henderson: Well, so often

I found in dealing with LPs, you

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know, Clint and I are on an investor

relations team for Nomad Capital.

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And it is very often the experience

that you describe, which is

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you would think most investors.

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Would ask a huge amounts of questions,

but in reality the average investor,

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she's like, how much money do you want?

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What's my return?

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When am I gonna, when

am I gonna get it back?

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And beyond that, that's the

extent of the questions.

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Um, and so I think it's a lot of times you

can feel as an LP investor, like you're

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sort of just shooting off into the dark.

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Uh, and you're going, well, I, I'm,

I'm going to give my money to this guy.

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I've never given my money to him before.

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I hope it works.

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And you're, you're counting on the

fact that you probably understand the

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asset class to some extent, otherwise

you wouldn't be investing in it.

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But you're really relying

on the syndicator to execute

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the business plan correctly.

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Uh, and so having that group intelligence

with a community of investors who

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have maybe invested with other

syndicators, the sort of know, all right.

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I know that I invested this guy

and, and what went south was, was a

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reason I should ask this question.

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Does that make sense?

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It

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Brian Davis: makes total sense.

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And, um, you know, like you said, people

who have invested in these types of deals

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before they know better questions to ask.

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And, you know, the more people

you have asking those questions,

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the more likely you are to get

to one of those questions that.

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You know, maybe we'll uncover

an uncomfortable answer.

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Maybe not what you wanted to hear,

uh, or maybe confirming your, your

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hypothesis that this is a good investment.

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So it makes total sense.

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Um, you know, I also think that at any

given moment, the, the questions that

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people are asking tend to be what's.

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What's been bouncing around the, the

atmosphere in the industry at that

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moment, um, but the, the greatest risks

are usually the questions that people

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aren't paying a ton of attention to.

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You know, right now everyone is very

aware of interest rate risk, right?

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Because interest rates been rising

for the last year and a half.

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So people are aware.

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Oh yeah.

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You know.

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Rents don't always stay near zero,

even if central banks would love them

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to, even if spend happy governments

would love them to, um, but two years

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ago when sponsors were selling deals

for record profits and, you know,

343

:

everyone was super excited about, uh,

investing in real estate syndications,

344

:

you know, people were pouring their

money into deals at that point.

345

:

Maybe they should have been asking about

interest rates, even though no one was

346

:

talking about it then now everyone's

talking about it, of course, and there's

347

:

probably some other risk that no one is

talking about that's that's out there

348

:

right now, but the more eyeballs you have

on these deals, the more likely you are

349

:

to get some of those questions that maybe

aren't on everyone's minds at that moment.

350

:

Clint Harris: So I got a question

about we're doing this call.

351

:

You're in Peru and.

352

:

Have bounced around, had an

extensive travel experience.

353

:

I'd love for you to tell us kind of about

that, where you've been and what you do.

354

:

But also, I'd like to know what your

diversification strategy is for the

355

:

community that you've built in terms

of, I know that that's an important

356

:

component of what you're doing.

357

:

And that's why you guys are actively

looking for operators and different

358

:

geography, asset class, et cetera.

359

:

I'd love to hear about that.

360

:

And if you don't mind me asking about

what your personal Kind of goals are

361

:

and what for the things that you're

specifically investing in, what you're

362

:

looking for and how that fits in with

the lifestyle that you've created, you

363

:

know, pursuing financial independence,

but also doing it in a way that

364

:

creates time and location independence.

365

:

Brian Davis: Sure.

366

:

So diversification is actually the

number one goal of our investment club.

367

:

Um, you know, alongside making

these investments available to.

368

:

Non accredited investors, you know,

mom and pop investors, people who

369

:

aren't super wealthy, the typical,

uh, you know, millionaires who

370

:

are investing in these deals.

371

:

Um, and fortunately we can, we can serve

both of those goals at the same time by

372

:

pooling our funds, reducing the amount of

money that you have to invest per deal.

373

:

Um, you know, if you have 50, 000

to invest, you could either plug

374

:

it into one deal by yourself,

or if you invest with a club.

375

:

At five grand a piece, that's

10 different deals, right?

376

:

So you can spread your

money among many more deals.

377

:

So as far as pursuing diversification

within our club, we aim for every type

378

:

of diversification with these deals.

379

:

So we try to work with as many

different sponsors as we can.

380

:

Right.

381

:

We try to invest in as many different

geographical markets as we can.

382

:

We try to invest in as many different.

383

:

Property types as we can.

384

:

So, I mean, obviously the bulk

of these deals are multifamily

385

:

because that's the bread and

butter of real estate syndications.

386

:

But we also try to invest in

other types of properties, too.

387

:

We've done a deal.

388

:

There was an industrial property

deal Where the property itself was

389

:

actually a minority of the investment.

390

:

The company was the broader investment

there We've invested in retail properties.

391

:

We have not done any self storage

yet, but we are very excited

392

:

to invest in self storage.

393

:

And that's actually what connected the

two of us in the first place, Clint.

394

:

Uh, that's why we reached out to you.

395

:

Cause we love what you guys

are doing with self storage.

396

:

Uh, we would love to invest

in mobile home parks.

397

:

So yeah, we want to diversify in every

way that we possibly can across the board.

398

:

Um, so, and that is.

399

:

Critical to our mission.

400

:

Um, you know, one, one sponsor can

make a mistake when one city, one

401

:

market could have a correction.

402

:

But if you spread your money among

enough sponsors, enough cities, enough

403

:

types of properties, you're going

to build in some protection there.

404

:

Um, just by having your, your fingers

in so many different pots, as it were.

405

:

Um, and you know, if, if the market

does crash, then having money in all

406

:

of these different deals on different

timelines means that, you know, maybe

407

:

one of these deals or two of these deals

might run into some interest rate risk,

408

:

if that's a problem at that moment,

when that deal needs to refinance or

409

:

needs to sell, but it's not going to

impact some of your other deals that

410

:

maybe have a different timeline, right?

411

:

Maybe those have loans that are

good for another two or three years.

412

:

And you can wait out the interest rates.

413

:

Uh, you can wait for lower exit cap rates.

414

:

So, uh, it's a long winded answer

there, uh, but to, to get to your,

415

:

your other question, um, as far

as us, my, my family and I living

416

:

around the world, we, we started our

erseas, uh, our expat life in:

417

:

We moved to Abu Dhabi.

418

:

We thought it would just

be a two year stint.

419

:

Um, my wife is a school counselor.

420

:

She helps.

421

:

College or, uh, high school juniors

and seniors get into colleges and she

422

:

was doing that in the US and she knew

that I really loved international

423

:

travel that I wanted some adventure.

424

:

So she unbeknownst to me, she joins

a headhunting firm for international

425

:

schools and, uh, and started.

426

:

Interviewing with these schools,

we found a school that we were

427

:

intrigued by and Abu Dhabi.

428

:

She got a job offer.

429

:

So we decided, ah, let's go have a

little two year adventure and then

430

:

we'll move back home to Baltimore.

431

:

And of course, that's

been over eight years now.

432

:

We never looked back.

433

:

We just fell in love with the lifestyle.

434

:

We get great benefits through her schools.

435

:

We get Paid furnished housing, uh,

or, you know, free furnished housing.

436

:

We get paid flights home

to the U S every year.

437

:

We get full health benefits

for the whole family.

438

:

Um, our daughter gets to go attend some

of the best schools in the world for free.

439

:

Um, So, yeah, we spent

four years in Abu Dhabi.

440

:

We spent four years in Brazil,

uh, in Brasilia, the capital.

441

:

Uh, we just left there, uh,

you know, six weeks ago.

442

:

So, um, yeah, and just moved to Peru.

443

:

So it's, it's been fun.

444

:

It's been an adventure.

445

:

Uh, I get to, uh, operate a company

that is a hundred percent telecommute.

446

:

Uh, that was not an accident that

was very much by design, uh, to

447

:

help, you know, to help enable

us to live anywhere in the world.

448

:

Um, and it's, yeah, it,

it's, it's been fun.

449

:

It's, it's something that I would not

have guessed that I would have done a

450

:

decade ago, but, uh, but here we are.

451

:

Neil Henderson: Brian, uh, one, one child.

452

:

Brian Davis: Yeah, we our daughter

just turned three last week.

453

:

She was born in Brazil.

454

:

She has dual citizenship, has

two passports, uh, an American

455

:

and a Brazilian passport.

456

:

Uh, she speaks just as good Portuguese

as she does English, and now she's...

457

:

Learning Spanish here in Peru.

458

:

Neil Henderson: That's great.

459

:

And is your plan to, is she going

to go to local schools there

460

:

or is the plan to homeschool?

461

:

What's the plan?

462

:

Brian Davis: Uh, no.

463

:

So she, she gets full free tuition

at the school where my wife works.

464

:

Uh, and that was one of the

reasons why we chose this school.

465

:

Um, it's pre K through 12.

466

:

So it does have, you know, so Katie can

work, you know, with the high school

467

:

juniors and seniors, uh, and our three

year old daughter can go to the, you

468

:

know, the, the pre K program there.

469

:

Um, but as she gets older, so my wife

loves to work at, uh, international

470

:

baccalaureate schools, IB schools,

which are, is one of the most rigorous.

471

:

Um, curriculum programs in the world.

472

:

And, uh, so our daughter Millie

will get free tuition to some of the

473

:

best schools in the world, including

this one where we're working now.

474

:

But if we were to move

elsewhere, we would be choosing.

475

:

An outstanding quality school

that would be quite expensive or

476

:

difficult to find in the U S wow.

477

:

Clint Harris: I love that you're so

intentional with the life that you

478

:

built for yourself, the company that

you built with knowing that it gave

479

:

you the opportunity to be location

independent, uh, and, and doing that from

480

:

wherever in the world you want to be.

481

:

You're very intentional about the

schools that you're choosing, the life

482

:

you created for your daughter, the

languages that she speaks same way.

483

:

You're intentional with.

484

:

The type of diversification you guys

are looking at, uh, and you're kind

485

:

of picturing the life that you want

and building it backwards, right?

486

:

Starting with the destination in mind

and kind of building those steps out.

487

:

You said something earlier

that jumped out to me as well.

488

:

When you were talking about the

diversification, um, was talking about

489

:

the difference, different interest

rates as well, and I think that.

490

:

Especially talking about diversifying

across asset class, geography, and

491

:

operator, one of the beauties of

syndication is also gives you the

492

:

opportunity to diversify across time

because you have different properties that

493

:

are maturing at different times, right?

494

:

1, 3, 5, 7, 10 year holds, whatever it

may be, that's a fourth dimension there

495

:

and you just mentioned interest rates.

496

:

And obviously that's all the

rage right now, especially

497

:

anybody with variable rate debt.

498

:

There's a ton of that coming around.

499

:

Anybody using bridge debt for

multifamily, there's, there's

500

:

obviously some risk there.

501

:

But one of the things is that

different banks have different

502

:

amounts of money they're willing to

lend for different asset classes.

503

:

And we're getting interest rates.

504

:

So I think another aspect of the

diversification that is really special

505

:

besides the ability to diversify,

like we said, across location

506

:

operator asset class and time with

the different graduation periods of

507

:

the project is that you mentioned.

508

:

Uh, the interest rates and the

variable rate debt that's out there

509

:

that's maturing for especially

bridge debt and multifamily apartment

510

:

complexes and things of that nature.

511

:

One of the things that is really

evident right now that's kind of

512

:

rising, cream rises to the top for us

is that different banks have different

513

:

amounts of money that they're willing

to lend for different asset classes.

514

:

And you're getting

different interest rates.

515

:

Commercial interest rates are

fairly significantly high.

516

:

I was really happy that the

project that we are closing on in

517

:

a matter of weeks, we just got 6.

518

:

175% on our interest rate.

519

:

And it's wildly different than what

we would get if we were taking the

520

:

same amount of money and going to a

multifamily apartment complex or a

521

:

mobile home park or whatever it is.

522

:

There's various levels of

risk and there's various.

523

:

You know, risk is associated with the

interest rate that the bank is willing to

524

:

lend at and different banks have different

buckets of money that they're willing

525

:

to put into different asset classes.

526

:

So that's an added benefit of

your diversification strategy.

527

:

The different asset classes, even in

a tight interest rate market, like

528

:

we're currently in, allows you to have

diversification among the debt terms.

529

:

I think that's kind of, that's a

fringe benefit that people don't talk

530

:

about very much, but you guys really,

honestly, are diversified across

531

:

five different strategies there.

532

:

And for most people, they only

ever think about three of those.

533

:

So that's pretty neat.

534

:

And I, and I think it is very

intentional the way that you're doing it.

535

:

Brian Davis: Well, it is.

536

:

And you know, I am one of those

evangelists who goes out and tells

537

:

people don't try to time the market.

538

:

You know, it's true for stocks.

539

:

It's true from real estate.

540

:

You know, the most.

541

:

Informed people on the planet, you

know, the, the best analysts on

542

:

the planet can't tell you exactly

how the market is going to move.

543

:

And again, that's true for stocks.

544

:

It's true for bonds, it's

true for real estate.

545

:

So if they can't do it, it's total hubris

to think that you can do it, right?

546

:

I mean, it's just the height of arrogance.

547

:

So, you know, I'm a big fan

of dollar cost averaging.

548

:

So every month.

549

:

I invest the same amount in real

estate, but it's different projects.

550

:

Like you said, on different

timelines and different asset

551

:

classes with different operators.

552

:

Uh, so yeah, I'm a huge fan

of dollar cost averaging.

553

:

It's what I do with my stock investments.

554

:

It's what I do with my

real estate investments.

555

:

You know, like I said, every month

we propose a new deal in our club

556

:

every month, I'm investing my

in that deal, uh, knowing that.

557

:

Over time, I'm going to have the benefit

of the, uh, the average market performance

558

:

there, which in these real estate

syndications deal is quite strong, right?

559

:

And same with stocks, you know,

over, over the course of time,

560

:

stocks perform pretty well.

561

:

Doesn't mean that in any given moment, the

stock market will perform well, or that

562

:

any given syndication will perform well.

563

:

But if you just keep investing money

slowly and steadily every single month.

564

:

You're going to come out

ahead in the long run.

565

:

Neil Henderson: Uh, you, you literally

stole my question, Brian was, I was going

566

:

to bring up dollar cost averaging, and

that's essentially what you're doing.

567

:

You're, you're diversifying across

asset class, geography, and sponsor.

568

:

And then we all Clint brings up time and

that's essentially dollar cost averaging.

569

:

Because you don't know, you know,

is multifamily going to be really

570

:

strong over the next five years?

571

:

Maybe, maybe not is self

storage going to be better.

572

:

Well, if you're, if you're taking your

money and you're seeding it around

573

:

a different operators, different

asset class, different geographies at

574

:

different times, chances are, you know,

you're not going to have to sit there

575

:

and figure out whether or not you're

investing in multifamily at a good time.

576

:

Uh, just like you're, you're not

deciding whether or not you're investing

577

:

in the stock market at a good time.

578

:

Just, you're just putting your money

in, you're getting their return.

579

:

Um, and so I love that.

580

:

That's really great.

581

:

Brian Davis: Yeah, you

know, um, is it Darbar?

582

:

I think it's Darbar.

583

:

They, they release a report every year

on comparing the average mom and pop

584

:

investors returns to the market at large.

585

:

And the average investor is usually

earning around half the returns

586

:

that the overall market is returning

specifically because people are,

587

:

they're trying to get cute, right?

588

:

They're trying to get clever, trying

to time the market they're in and out.

589

:

Um, and that is a recipe for disaster.

590

:

So.

591

:

You know, save yourself the trouble,

save yourself the time, just keep

592

:

investing slowly and steadily

practice dollar cost averaging.

593

:

Um, and you know, you don't have

to, you know, there's less of that

594

:

frantic running around, right.

595

:

And, and trying to, to, you know,

outsmart the market, forget about

596

:

all that, just invest your money.

597

:

Neil Henderson: Brian, one more thing I

wanted to ask you about, you know, when

598

:

you, one of the things we love about

location independence is that it's, it's

599

:

a sort of double leverage when you are.

600

:

Investing in real estate, one of the

power, true powers of real estate

601

:

is you're able to use leverage.

602

:

And once you become location

independent, where you're, where you're

603

:

earning your dollars is divorced from

where you're spending your dollars.

604

:

It allows you to, it allows

that double leverage.

605

:

Are you, have you experienced that?

606

:

I mean, obviously you're.

607

:

You are, you know, you're in Latin America

where I imagine the cost of living is

608

:

probably lower than Baltimore, correct?

609

:

Brian Davis: Well, Baltimore is

probably not the perfect example to

610

:

use because Baltimore is a, uh, a

particularly affordable East coast city.

611

:

Uh, but your, your broader point

is absolutely correct that, uh,

612

:

regionally speaking, uh, Latin

America has a much lower cost of

613

:

living than the United States.

614

:

Um, And I mean, I can give

you the perfect example.

615

:

We just moved into an

oceanfront apartment.

616

:

We're on the 13th floor

of an apartment building.

617

:

We have a balcony overlooking the

Pacific ocean and we're paying

618

:

1, 300 a month for our apartment.

619

:

I would challenge you to find.

620

:

Any probably anywhere in the U S

but especially any major city, uh,

621

:

where you can rent an oceanfront

apartment with a, a water view of

622

:

the sun setting over the ocean for

anywhere close to:

623

:

So yeah, you're, you're

a hundred percent right.

624

:

Uh, geo arbitrage, you know, is the

technical term that people throw

625

:

around, uh, where, yeah, you're

earning money in, in one currency or,

626

:

you know, at one, uh, income rate.

627

:

And spending money for your lifestyle at a

location with a much lower cost of living.

628

:

So, uh, yeah, it's, it's definitely

something that we take advantage

629

:

of and, um, and have been doing

so really since we moved abroad.

630

:

What are the drawbacks?

631

:

Uh, the biggest drawback is this

personal, uh, it's being so far away

632

:

from family and friends back home.

633

:

Um, you know, we try to go back home

twice a year, um, you know, both for

634

:

my wife's summer break, or at least

somewhere in the northern hemisphere,

635

:

um, and, and at her Christmas break,

um, doesn't always work out that way.

636

:

Um, You know, my, my daughter does

not get to see her grandparents or

637

:

her cousins or her aunts and uncles

nearly as much as we would want her to.

638

:

We don't get to see our, our

family members, our friends

639

:

as much as we would like.

640

:

Um, that's the biggest

drawback to what we're doing.

641

:

Um, and I would say it's, it's really the

only major drawback to what we're doing.

642

:

Um, but you know, you can, you

can go home as often as you want,

643

:

if you're willing to pay for it.

644

:

And if you're willing to have

the inconvenience to do so.

645

:

Um, one of the reasons why we.

646

:

Chose Lima is that it's relatively

easy to get to Baltimore from here.

647

:

Uh, it's about a five hour flight to

Miami and then another two hour flight

648

:

from Miami to Baltimore from here.

649

:

Significantly easier than getting

back and forth from Abu Dhabi or even

650

:

from Brasilia, which didn't have great

international, uh, flights, at least

651

:

to, to Washington, DC, Baltimore.

652

:

So, yeah, you know, again.

653

:

It's all about intentionality.

654

:

Um, it's, that's something

that I'm really big on.

655

:

I'm really big on lifestyle design

and not everyone likes that term.

656

:

Some people find it pretentious.

657

:

I do like it.

658

:

Uh, I think it is important to be

intentional about everything you

659

:

possibly can in your life because

it's, it's your life, right?

660

:

I mean, and you want it to

reflect your values, your goals.

661

:

Um, and that is what we're

trying to do ultimately.

662

:

Again, probably a long winded

answer, but that's what we're up to.

663

:

Clint Harris: That's perfect.

664

:

I love that.

665

:

And in fact, I don't think I have

anything else to add on that.

666

:

That, that's exactly what I, I mean,

I see everything that you're doing,

667

:

the community that you've created, the

decisions that you're making for your

668

:

personal life and for your family, the

amazing life you're creating for your

669

:

daughter and how well traveled and well

rounded of the person she's going to be.

670

:

Like, I can only imagine the type

of emotional intelligence that

671

:

comes from just being surrounded

by so many different people.

672

:

Thank you.

673

:

around the world.

674

:

And yeah, of course,

there's drawbacks, right?

675

:

Like there's always going to be pros and

cons to everything, but the world is also

676

:

more connected now than it ever has been.

677

:

Right.

678

:

So I think it's, it's, it's

the life that you choose.

679

:

You clearly have been very intentional

about that choice and the way that

680

:

you're choosing to invest and also

bring other people along with you and

681

:

help in that process of investing in

education, which is really what I see.

682

:

You're doing more than anything

is educating other people that

683

:

giving them the tools to be able to

make those intentional choices for

684

:

their themselves and like pick the

financial velocity that they want

685

:

to have for the rest of their lives.

686

:

So that's excellent.

687

:

I'm really glad you

ended with that thought.

688

:

I don't have anything else.

689

:

Neil, how about you?

690

:

Neil Henderson: Brian, thank you so much

for sharing with the audience today.

691

:

If any of our listeners want to reach

out to you and find out what more about

692

:

what you're about, where, where would

be the best way for them to do that?

693

:

Brian Davis: Sure.

694

:

Uh, come to sparkrental.Com.

695

:

Uh, we have all kinds

of free stuff on there.

696

:

And like Clint, Clint mentioned,

we are huge on education.

697

:

We have.

698

:

Over 400 articles on our blog, which we

update regularly and published irregularly

699

:

do a weekly podcast where you have a

free class on syndication, investing and

700

:

how that works and the pros and cons.

701

:

Um, yeah, we, we are big on education.

702

:

You can reach out to me

personally at any time over email.

703

:

Brian@sparkrental.Com.

704

:

Uh, you can also reach us

at support@sparkrental.Com.

705

:

Uh, we're on all the major social

media platforms at spark rental.

706

:

So.

707

:

Please don't hesitate

to reach out anytime.

708

:

Uh, you can check out some of our

free tools at sparkrental.com/free.

709

:

Uh, if you want to start there and

like I said, don't be a stranger.

710

:

Reach out anytime.

711

:

We're, we're very

accessible and available.

712

:

Neil Henderson: Excellent.

713

:

Clint Harris: Well, Brian Davis,

Spark Rental, thank you so much.

714

:

Really appreciate your time, especially

in such a different time zone,

715

:

uh, I'm assuming maybe, maybe not.

716

:

Um, is it, is it the same, is it July 3rd

there at, uh, let's see, what time is it?

717

:

Brian Davis: Uh, no, we're, we're

on central time this time of year.

718

:

When you guys change the clocks,

we switched to Eastern time.

719

:

Clint Harris: Well, excellent.

720

:

I appreciate you making time for us today.

721

:

Thank you very much.

722

:

I'm excited to be connected with

your community now and see what

723

:

you guys are doing moving forward.

724

:

So thanks so much for making time for us.

725

:

Brian Davis: Thank you guys

so much for having me on.

726

:

It was a pleasure.

727

:

Neil Henderson: Thank you so much

for listening and watching the

728

:

truly passive income podcast.

729

:

If you liked the show, if you think

it would be useful for someone else,

730

:

the greatest compliment that you

could give us would be to share the

731

:

episode, leave a comment down below.

732

:

Or leave us an honest review.

733

:

If you have any questions, don't

hesitate to let us know down below

734

:

and remember with truly passive income

comes freedom of time, place and the

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:

freedom to pursue your higher purpose.

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