TGCI 102: An Engineer turned Full-Time Investor

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Episode 102: An Engineer turned Full-Time Investor

Copy of EP #18 - 2 Guests

Summary

In today’s show, Pancham interviews Jerome Myers – a leader in multifamily development, founder and Chief Inspiration Officer of DreamCatchers and The Myers Development Group.

Jerome was already successful in corporate America – already built a 20MM division and a 30% profit margin. But after a phone call on Christmas Eve, he decided to leave corporate America and started everything all over again!

Now, he has built his own company that has a multi-million-dollar portfolio, been featured on top podcasts, and has been guiding investors through the Myers Methods!

 

In this episode, learn how his qualities as an engineer helped him in the real estate game. You’ll also get to discover what investment strategy works for you, how investing can provide fulfillment to your life, and the 4 challenges in investing!

PanchamHeadshotTGCI
Pancham Gupta
Screen Shot 2021-02-22 at 10.24.39 AM
Jerome Myers

Tune in to this show and enjoy!

Copy of Quote #00 - 1 Guest

Timestamped Shownotes:

  • 1:44 – Pancham introduces Jerome to the show
  • 3:11 – How his venture started from a phone call on Christmas Eve
  • 13:29 – Focusing on joint ventures investments
  • 18:22 – The 4 challenges to overcome for rookie investors
  • 21:08 – Having a positive mindset amidst the pandemic
  • 25:51 – How his 5-hour morning routine contributed to his success
  • 28:17 – Taking the Leap Round
  • 28:17 – Fix-and-flip property as his first investment
  • 28:43 – His fears when he first invested outside of Wall Street
  • 29:36 – His investments that did not go as expected
  • 32:06 – Why investors should never invest in something that they don’t understand
  • 33:37 – Jerome’s contact information

3 Key Points:

  1. Investing is not about replacing your income but rather replacing your expenses.
  2. Different investment strategies would best fit depending on the type of investor you want to be. A joint venture works best for active investors while a limited partnership works for passive investors.
  3. Investments are negatively affected by the pandemic and that’s the reality of it. You just have to take advantage of the system.

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Read Full Transcript

Introduction

Welcome to The Gold Collar Investor Podcast with your host, Pancham Gupta. This podcast is dedicated to helping high-paid professionals to break out of Wall Street investments and create multiple income streams. Here is your host, Pancham Gupta.

Hi, this is Joe Fairless. If you wanna diversify out of Wall Street investments, then listen to The Gold Collar Investor Podcast.

Hey, this is Mauricio Rauld, founder and CEO of Premier Law Group and if you are serious about investing in real estate, listen to The Gold Collar Investor podcast with Pancham Gupta.

Robert: Hi, there. I’m Robert Helms, host of The Real Estate Guys Radio Program and if you want to have better results in your life, you gotta put better ideas in your mind. You’re in the right place here at The Gold Collar Investor Podcast.

 

Pancham Gupta: Welcome to The Gold Collar Investor Podcast. This is your host Pancham, really appreciate you for tuning in today. Recently, I was talking to one of the Hyperion professionals and they were asking me about our latest offering that we are actively raising capital on it’s based in Wilmington, North Carolina. After we discussed everything they asked me what makes you different from all the other syndicators? That was a great question. And believe it or not, no one had asked me that question in the last four years.  My answer was that we do not have decades of experience, or we have not seen many, many real estate cycles. But I told them that we are very quick learners and have been learning with every deal that we are doing with every month that goes by having an engineering background actually has helped us in refining our processes as we grow.  We have a clear set of criteria that we’ll look at before we go through different steps in the acquisition or our operations. But the most important thing that I told them is this, we have surrounded ourselves with great mentors, coaches, teams, who have done this many, many times before. Anyway, why am I talking about this? Well, my guest today is Jerome Myers. To my surprise, he has been talking about why engineers make great investors.  Jerome Myers left corporate America to guide people to leading lives of significance by focusing first on living a centered life. Often these people are already in positions of leadership but feel that they are not they are there alone. As a result, Jerome creates opportunities for these epics performers to connect with each other so that they can develop solutions to their toughest challenges. Hi, Jerome, welcome to the show.

 

Jerome: Oh, glad to be with you. Thank you for having me.

 

Pancham Gupta: No, I it’s always a pleasure when you talk to an ex engineer, you know, I’m an engineer by background and my wife is an engineer, my so many of our investors are engineer. You know, I’m sure the listener who’s listening on the many, many engineers listening today. So, people please pay attention to this show, you’re going to have a lot of golden nuggets here. So, are you ready to fire up my listener  break out of Wall Street Investments?

 

Jerome: Man, I am the guy who helps people exit the matrix. So that question goes without saying we got to do this. We’ve got to get them out. We got to get them fired up.

 

Pancham Gupta: So, are you the Morpheus?

 

Jerome: I am.  Go to LinkedIn, you will find him.

 

Pancham Gupta: Awesome, man. So, Jerome, tell our listeners about your background, and more importantly, the person behind that background.

 

Jerome: Yeah, so just at the highest level, I’m a corporate America dropout, I’ve built the $20 million division for Fortune 550. I was employee number two; we ran out to about 175 employees. By the end of the year, we did about $20 million in revenue with 30% profit margin. And my reward for that was a phone call on Christmas Eve, hey Jerome, we’re gonna lay about half the folks off, we want you to be a part of that. We really want you to pick the team going forward because you’ve got to run hard with them again next year. But if you don’t, we understand we’ll do it for you.  Click five o’clock on Christmas Eve. And then Christmas Day through New Year’s figuring out who’s going to continue on our team going into the new year. Fast forward, Thanksgiving, or two days before Thanksgiving. Everybody’s in a huddle. Hey, don’t spend your check on Black Friday. I’m not sure what’s going to happen. And I remember as I said that thinking to myself, I promised myself I would never do this again. And it was at that moment that I decided that at the end of the year, I was going to leave corporate America. And so, I’ve did all the things you’re supposed to do man, I got good grades. I got into a great school. I got a good degree, got a good job, got married, got two kids white picket fence, who huge house and what I learned was that my ladder was on the wrong building, right? And I was putting all this money away, my 401k and I was giving it to Wall Street and telling them you know how to do this better than me. And when I decided that I was going to leave corporate America also decided that I was going to bet on myself and I was going to invest outside of Wall Street. When I was in college, me, and my buddy -Darren-, were sitting on the stoop of sophomores, engineering students. And we were doing what they do, right? We were doing math in our free time. And that’s what every engineer student do. This time, we were counting money, I was paying $395. I had two roommates; they were doing the same thing. He was downstairs, he was doing the same thing with two other roommates. We multiplied out the complex accounts making about 700 grand a year, we never seen him, we never talked to him. Like, whoa, how can you do that? You mean, we don’t have to trade our hours for dollars. But we didn’t know how. Right and that’s the game. Nobody markets this stuff. They don’t teach you how to do it. And so of course, we continue to finish school got our degrees when I got jobs. But then I said, when I was leaving corporate, I’m gonna get that dream off the shelf. And I’m going to invest outside of Wall Street, I’m going to invest in real estate as an apartment owner. And so, we started on that journey didn’t work out like we thought it was going to upfront. But eventually, we were able to get to the space where we are now.

 

Pancham Gupta: Great. So how long ago was that Christmas Eve when you got that phone call?

 

Jerome: So that Christmas Eve, it was 2015. And then I finally left corporate in 2016.

 

Pancham Gupta: Great. Wow. So, you know, when you actually made that decision, right, that you’re going to quit the corporate in 2016 and you did it. What was going through your head? Did you have everything figured out by then? Or you were like, you know what? I’m gonna quit and then figure it out.

 

Jerome: Yeah, I didn’t have anything figured out. I thought I did what I did, right. So, build a big business. 30% profit margins, had an MBA at a professional engineer license, project management professional. Like if there was a certification, Six Sigma, Master black belt, I probably had it right. And so, I went and told the banks about all that great stuff. And they said, Ah, yeah, you don’t have the right experience for this. Like, what do you mean, I just want to borrow a million dollars to go buy this apartment building. So, I can be like the guy that I thought I was gonna be like, in college, and like, Yeah, no, you need somebody with experience. I said, but I just built this huge business, and I got all these certifications. And I got an 800 credit score. That’s not good enough, right. And so, we went through this iteration, and I went to about 10 different banks before it was like, Oh, yeah, well, no, this isn’t really gonna work for you this way. You need somebody who’s done it before, who can help walk you down the path. makes complete sense today didn’t know what I was getting myself into. But that’s what I thought was gonna happen. And it just didn’t work out the way that I thought it was going to initially. But we got there.

 

Pancham Gupta: Yeah, exactly. That’s the important thing. Right? So, let’s talk about that a little bit. Like how, when you actually quit, because I’ll tell you a lot of people, myself actually also included as part of this, like, where we’ve chopped out our part, like want to quit the corporate America and person who’s listening. Maybe he’s one of them that wants to quit, but there is no clear path in front of them, you know, because they’re making good salaries engineer, computer science engineers, specially they’re making lots of money right now, especially stock markets going crazy. So, you know, and they’re thinking, you know, what, I have this big house, white picket fence, two cars, kids, all that good stuff that the high salary can buy you, but they don’t like what they’re doing, or, you know, that’s what you were going through as well. And what advice would you have for them,

 

Jerome: I think that everybody is placed on this earth to do a thing, right, there’s a unique mission for each one of our lives. And a lot of times, what we decided to do is go do the thing that pays us the best. I was guilty, I know a lot of other people are guilty. And what I can tell you is that if you can create income that you can touch today, not putting all this money into a 401k that you can’t touch until you’re 60 or however old it is, then you can buy your time back, which allows you to do the thing, regardless of what the comp is, right? And that is what I think is most important for us as people because having a ton of money and no fulfillment in your life is miserable. I remember when I had the 6000 square foot house, my Nissan GTR, because I’m a car guy, man, I got all the things right. But the reality was, that was the lowest point of my life when it seemed on outside of the highest point. And I’m sure there’s somebody who’s listening today who’s having that same essence is like, oh, well, yeah, I can go buy a new Tesla, or I can go buy this other thing. But when you actually go to work, you don’t have to feel like it means anything, it matters, you’re making a difference. And so, when you get to that place, and you start asking those questions, then the question is, okay, so what can I do? Right, and not everybody’s meant to be an entrepreneur, but there are ways to get your money to work for you. And so as long as you have that gap, where you’re able to create some savings, I encourage folks who want a way out and want to create some recurring income subscription revenue. I call that rent. Right? Some people call it subscription revenue, they want to build an app and they got all these people downloading it and all this other stuff. Now rent, multifamily building, create cash flow, reinvest that cash flow more often than not, forced appreciation so that it’s worth more, sell it, harvest the equity by a bigger stream of cash flow. And you do that two or three times, and you’re free, because the cash flow that you finally bought is big enough to actually support the thing you want it. And we believe in owning more, we’re not big syndicators, we do joint ventures, so that it’s a smaller group, where the people who actually own the deal put all the money in the deal with the idea that owning more of it is better than just getting a very, very small piece of it because that to me looks very much like a rip in the stock market, except that it’s not as liquid as it would be in a stock market. And so that’s our game.  We want people to own a lot of the deal and do that, improve the property, improve the valuation, create equity, harvest equity, buy a bigger cash flow, and do that over and over and over again, until you get to a place where you don’t have to have the income from your job. And one last thing I’ll say, on this point is, a lot of people think, oh, I have to replace my income. You don’t, you have to replace your expenses. If you replace your expenses, and hopefully, you are spending all the money that you make, but just keep in mind if you’re a six figure earner. And I don’t know where the actual break is, but maybe at 150, I can’t remember, but probably 50% of that money is going away anyway to taxes. And real estate is tax very different when you get the income from real estate. So, the money that you think you’re making, and it’s good bragging rights, I make 150,000 or 200, or 400, or whatever the number is, you’re probably living on half of that, if not less. And so, the number gets a whole lot more achievable when you think about it in those terms. 

 

Pancham Gupta : Absolutely. Absolutely. So, let me ask you this, you know, you are an engineer by background, and I was looking at some stuff that you did, and you are actually a firm believer in engineers, great make the great multifamily investors. Why do you say so? 

 

Jerome: Analysis? Right,

 

Pancham Gupta: Or paralysis?

 

Jerome: No, I hope you don’t get paralyzed, right? 

 

Pancham Gupta: Yeah

 

Jerome: I think engineers in some way, shape or form are comfortable with ambiguity, right? They’re making assumptions and this thing works across the frame. And so that’s what this is, you’re buying a business, you’re making assumptions on what you can do, what levers you can pull in order to improve the financial performance in order to make the property worth more. And I think that analytical mind is what it actually takes in order to be successful as an investor.  You’re prudent, you’re great decision maker, and you ask tough questions and look for ways to improve things. And I don’t know an engineer who doesn’t do those things. And so that’s the main reason why. And the other piece side of this is, usually they have a little bit of money. Usually, engineers are financially responsible, so they got a little bit of cash in the bank.

 

Pancham Gupta: Absolutely. And I actually was asked this question very recently by someone, like, why do you think your team is different? And believe it or not, I actually had answered it very similarly, what you just answered, right. So even though I’ve never spoken to you before about this.  Alright, so let me ask you this, right, like as a passive investor, like you said, something that you are mainly focused on jayvees not syndications. Can you expand on that a little bit? Like why do you think? Or why do you prefer JVs over syndications?

 

Jerome: Yeah, and so

 

Pancham Gupta: and what’s the difference? Maybe it starts with that?

 

Jerome: Yeah, let me give the disclaimer, right. There’s some people who want to be active, right, they actually want to have a roll. And so, I’ll go to my favorite metaphor to describe this. When I was a kid, I wanted to be a fighter jet pilot.  I live close to army base, the Jets would fly over,  the Blue Angels were everything for me, they would do their tricks, and was like, the coolest thing in the world would be if I could be a fighter jet pilot. I ended up being a little bit too tall and weighing a little too much in order to do that, but it never went away. And so, I think about a joint venture like a fighter jet, right? Everybody has an active role. You don’t just see people as passengers in a fighter jet. There’s somebody flying it. There might be navigators, probably somebody’s looking for bad guys. It might be somebody shooting, but at the end of the day, there are no just people hanging on going on for a joyride. That is meaningful for me because you know, I played sports for a long time and I didn’t really like people that want a team that didn’t actually play. It just kind of got a jersey and got the hang out. I want everybody out there working as hard as we were working when we were playing. Fast forward to the syndication.  Syndication models for those folks who don’t want to have an active role limited partners, right. And most people haven’t flown recently, but for those who have, and you can think about it, so you’re walking down the terminal, you get to the thing you handle at the ticket or the guy, they scan it, you go into the jet bridge, you get there you wave at the stewardess, as you get on the plane, you look into the cabin, you everybody looks into the cabin, so they can see the pilot and the co-pilot makes sure they’re not nodding, right? And they don’t look back at you. And so, you go to your seat, and you sit down, and then you wait until you get to the destination. And that’s to me what a syndication is if you’re a limited partner. Now everybody that I talked about all the important people the pilot,  co-pilot, steward, stewardess, ticket taker, all those folks get paid to be in the game, right, and you as a passenger pay to be on the plane. And so, if you’re a limited partner, you’re giving the general partnership, all the folks who are working a percentage of your dollar. So, let’s say the splits are 80-20, just to make things simple. For every dollar that you put in, you get 80 cents of equity, the 20 cents of equity goes to the general partnership. And that pays them to get you from point A to point B safely and successfully. That if for some people is great. And I kind of do a toss-up on how much money do you really have? I think a lot of people are rushing to the I quadrant instead of what’s in the B quadrant. I’m talking about Robert Kiyosaki cashflow quadrant, right. So, there’s an E S I and a B, I think the vast majority of people should be business owners, because that’s where I think most wealth is created. And so, the folks that are in a general partnership are business owners, right? The investors, the limited partners are just putting their money in and they have their money to work. And I think that, for me, personally, you can make a much bigger return as a general partner or a business owner than you can as an investor, you know, investor returns are usually capped into something less than 20% range. And I think it can be as low as negative, right. But as an owner, like I have a friend who has a, you know, heals urgent care clinics, right, his return on investment is 30 to 50%, depending on what’s happening. And so, just like that’s the business, operating the real estates of business. And so, if you want to be an active operator, and it’s not for everybody, then I encourage people to do the joint venture route, right. And then you can take that joint venture structure and go run a syndication. Or, if you want to be passive, you have no interest in real estate, that analyzing properties, just talking to property managers isn’t exciting to you at all, then what you want real estate in your overall portfolio. And the limited partner makes total sense, because you’re going to get better returns than you would with the read or some crowdfunding thing. And so those are the two ways that I will characterize, and I probably made it a little bit longer than I had to, but I decided when I talk about playing, so please forgive me guys

 

Pancham Gupta: No, I can see the passion of Blue Angels in your eyes and so that’s gonna stick forever, right? That’s not going anywhere. Cool, so thanks for explaining that. You know, I want to talk to you like as an investor, maybe a passive or active investor who’s looking at a JV or even a limited partnership, what are some of the challenges that they must overcome to kind of start investing into outside of stock market? Let’s say,

 

Jerome: Yeah, I think every investor is overcoming four challenges. The first one is knowledge, right knowledge is foundational, you want to know, and really understand whatever you’re investing in. And this is the part where I think it gets a little hairy, the SEC wants to protect people who don’t have a whole lot of money from investing in things that they don’t understand. And so, this is why they have the game of Wall Street and financial advisors and planners and all this other stuff. If you can get really educated and evaluate the risk and really understand the operator and the person that you’re giving your money to, then I think you can place that capital with a lot of confidence, right? From knowledge, then you move the deal flow. And so, there’s a lot of leads out there. And people think their deals, same letters, different order, very different things. A lead is something that you should just leave over there for somebody else to buy. The deal is something that you should buy because you can actually make some money with it. Right? Once you start getting some deal flow, then you need to experience because just buying it right isn’t enough. You need somebody to walk you through the process of operating it, making sure back to the bank telling me No right, making sure that you’re actually going to be able to make this thing through successfully. And then the final thing is capital. Everybody goes to capital. First, I gotta have money because I’m going to go buy this thing. No, you don’t have to have the money to go buy the thing, at least not initially. It doesn’t do you any good to have money. If you don’t have experience? If you don’t have a deal, it doesn’t do you any good to have experienced. And if you don’t have knowledge, it doesn’t do you any good to have a deal, because you don’t know what you’re looking at. Right? So, it all starts with knowledge, then deal flow experience and capital. And if you can follow that stack, it’ll save you at least two years, because it took me about five, to figure out that that was the order that everything goes in. And it doesn’t matter what you’re investing in, it’s all the same thing. You need to understand it from a knowledge perspective, then you got to find some actual opportunity, some deals, and then have somebody was experienced around it, because that money’s always made in the operations. And then the money always comes in last, especially if you’re having in the bank. 

 

Pancham Gupta: Well, I think only engineer person with an engineering background can explain it in that order. You know, I can totally see that you’ve thought about this. And makes total sense to me. Makes sort of sense. I want to switch gears a little bit. And I want to talk about, you know, this COVID-19 19 pandemic, and you know, it affected so many different people. And because of this, are you have you changed your strategy number one, and also want to talk about what’s the power of keeping the positive mindset, depending like, doesn’t matter what’s going on around you?

 

Jerome: Yeah, so have we changed our strategy? The short answer is, yeah, I hesitate because we always were really keen on operations. And we had our key performance indicators. And we wanted to run a tight and, you know, we were trying to make the property do everything that we could maximize efficiency, because that’s what engineers do, right. But the other side of that was, we were kind of on this path to start doing some new construction or some new development. And we’re in the process of building 120 unit building here in Greensboro, North Carolina, beforehand, everything that we were looking at was we want to buy existing properties and figure out how to fix them. And our mentors in the business said, hey, look, this is a great opportunity, while things are slowing down to add some new supply to the market, especially if you can add it in a place where it doesn’t traditionally get new addition. And so, we’re able to find a site and go down that path. And the thought is will come online when all this is kind of resolved. And it will allow us to be first to market when things start to I think turn for the better. I think that we’ve been riding an imaginary wave, I think eventually that wave is going to crash. And we’re going to have some adjustments, especially in the stock market. And then we’ll come back up as we always do. But I do think there’ll be a correction and adjustment. And it’s only a matter of time before that thing happens.

 

Pancham Gupta: Got it? Got it. So, you’re mainly focused on development at this point? Is that fair to say because of this?

 

Jerome: We’re focus on development and operating the things that we have already, as best we can.  It makes it really difficult to handle collections when people at your property don’t pay, right? And you don’t have a way to evict them. And you know, is that for all of our properties? No, we have properties that have 100% collections. But we do have one that isn’t working as well as we would like for it to work. And we’re not the only one, most people won’t talk about that, because they want people to believe that everything works all the time. But that’s not the reality of investing, there are going to be some impacts, there are going to be some implications. And some people are really impacted by COVID. And others are just taking advantage of the system. And it’s up to us as joint venture operators and the property manager to weed that out, and then do what we can in order to make sure that our property continues to operate as it should. And that we can actually take care of it and make the investments necessary. So, you know, we stock all that up, add all that together. And we end up in a place where Hey, we want to spend some money on new construction, because we think that makes a ton of sense. And we want to operate the stuff that we have. And if we find a property that is trading at a truly discounted price, then we want to pick those up because we believe in the asset class long range, even though we’ve got a blip and you know, you think about the course of someone’s career, having something that’s a little rough for a year 18 months is nothing compared to kind of the lifecycle of the career.

 

Pancham Gupta: Yeah, absolutely. Absolutely. So how have you in this pandemic, managed to keep a positive mindset?

 

Jerome: Yeah, man. I think for me, the biggest thing is just being around a ton of positive people. Knowing that if everything isn’t working for you, it doesn’t mean that things aren’t working, you just might not be in the right room. And so, for instance, we have four deals that we were working on the first half of last year, and they all fell apart when the mask went on, the deals went away from me. And so that was, for some people would have been crushing, because significant amount of income is tied to doing that many projects, but you just pivot, you adjust, and you make some adjustments to your strategy, your approach. And then you find the people that you need in order to make the thing happen, you know, net worth is really determined by your network more often than not. And so being connected with the right people is a game changer, for sure.

 

Pancham Gupta: Got it. Cool. So, thanks, Jerome for sharing all that. My final question before we move on to the next section of the show is, do you have a morning routine that you follow? If so, what is it? And do you think that attributes to your success?

 

Jerome: The answer to the last question is yes. Now for the morning routine, because this long, it takes about four or five hours each day, which most people aren’t going to be ready for 

 

Pancham Gupta: Wow

 

Jerome: It is what it is right? And so, we wake up between four or five o’clock each morning, we start with meditation and that’s about 30 minutes long, followed up by 30 minutes  reading, then we do an hour run, we’ll come back and journal. And then followed by some educational listening. And that could be podcasts, that could be a video on YouTube, it could be some education from like a training or that we bought for self-development, whatever that is. And then if we get some more time, we’ll get into some more reading or something else just to kind of round out the time. And then we go out into the world filled our cup full and ready to give all that we can.

 

Pancham Gupta: Wow, that’s quite powerful routine there. So, you kept on saying we is it you and someone else you do

 

Jerome: No, it’s just me, but we’re plural

 

Pancham Gupta: You and your red pill, you know. Alright, great. Thank you, Jerome. We’ll be back after this message. Have you ever wondered why the rich keep getting richer? What is the secret that they know? But you do not? What if I told you that? Wealthy people make their money work for them in two different places? Yes, the same dollars invested into different places, and working hard for them while they sleep. They utilize these special accounts that have been in existence for more than 100 years. Do you want to learn more about these accounts, then you are in the right place? Listen to the episode number five by going to thegoldcollarinvestorbanking.com/banking show, I repeat thegoldcollarinvestorbanking.com/banking show or visit thegoldcollarinvestor banking.com. So, let’s move on to the second section of the show, which I call taking the leap round.  In this round, I asked these four questions to every guest on the show. My first question for you, Jerome is When was the first time you invested outside of Wall Street?

 

Jerome: Man. So I was in corporate America. And I started building up some savings. And so, I put money into a fix and flip. I put a lot of money into several fix and flip projects. But that was the first time that I’ve put money on the street outside of Wall Street.

 

Pancham Gupta: Got it. So, did you have any fears that you had to overcome when you put the money in your first fix and flip? Are you doing it, or did you put it with someone else?

 

Jerome: No, I put it with someone else and it was in a second position so tons of fears, right? It wasn’t secured by the property per se. You know, there’s things that can go wrong with fix and flips, the market can turn.  A person can underestimate the construction budget, I can keep going on and on about all the things that can go wrong with a fix and flip. There’s a reason why banks don’t lend on those deals. But we decided that we believed in an operator and we believe that the asset was going to be stable, and that the time horizon made sense for the risk and the interest rate, which was in the 20s was worth what we were putting it on the street for so that was for sure something that we were concerned about.

 

Pancham Gupta: Got it. Got it. All right. So, my third question for you is can you share with us one investment that did not go as expected? 

 

Jerome: Oh, man, every investment doesn’t go as back did right. I mean, when you make your model and this is for anybody out there who’s listening, when you make your model, when you make your pro forma your projections and you give it to somebody, you know that some of those numbers on there are wrong. Now are they close enough? Is it  a proximation? Yes, I think what everybody shoots for is for their income number that they project to be lower than what they actually get, and their expense number to be higher than what they actually experience and if it works out that way, then it’s great, you get greater returns for the folks that invest. But if those work out the other way, then you don’t you won’t perform on the performance people will say, particularly for me, I think one of the ones that didn’t work out the way that we thought it would be, I think it would be great to talk about this one, which, in due diligence, we were looking at a deal. And we went into one of the units and the AC wasn’t working. And we didn’t understand why we tried to turn it on. The person who was in the unit had taped off all the vents. And we didn’t understand why. Well, after we bought it, we found out that a raccoon or possum had gotten into the attic and fallen down onto the furnace and was seared on the furnace. And so, they taped off the vents because it had the smell of death in it. And so, we had to replace that whole unit. And inside and out, which is a pretty big expense, usually four to five grand. And so, we had to add that in. And fortunately, we negotiated some money in to help because we weren’t sure what the problem was. But you know, that wasn’t what we expected to happen. We thought it was just going to be a yeah, just boom, boom, boom, it’d be really cheap, something less than $1,000. but ended up being a much more significant expense. We’ve had projects where we’ve underestimated the rehab budget, and it’s okay on a single family home when you do that. But when you multiply by 10-15, 20-30, 40-50 units, that number grows pretty big. And most people don’t can’t write a check to fix that. So, you know, there’s a lot of things that can go wrong. But that’s just a couple of examples of the things that we’ve dealt with so far.

 

Pancham Gupta: Got it? Cool. Cool. So, my final question for you is, what is one piece of advice would you give to people who are thinking of investing in the main street that is outside of Wall Street,

 

Jerome: Don’t ever invest in something that you don’t understand.  Spend the time and the money getting educated on the investment.  You’re taking the person on Wall Street out of the equation. And so, you need to be able to do their job, which is effectively evaluate and vet the deal. And just remember, all of the money that you put into Wall Street is going into one of these large companies where people are getting paid a lot of money to operate the business. On the other side of wherever you place your money outside of Wall Street is somebody operating a business, make sure that that person can actually operate a business because if they don’t operate the business, you’re not going to get your return and you might not get your money back. Vice versa. If the person can operate the business, you can get your money back and it really have to return depend on how much of the deal you own. And so just remember, like, we’ve disassociated we think it’s just a ticker. No, like there’s a whole company behind the Tesla ticker, right? It’s not just Elon, it’s all these thousands of employees who are making the products go was generate profit. And we just kind of romanticize it as it just this magic box, and then money comes back. That’s not how it actually works.

 

Pancham Gupta: Great advice there Jerome. So, you know, you’ve added a ton of value. how can listeners reach you or connect with you?

 

Jerome: Yeah, the best ways for your folks to go would be my jeromemyers.co, jeromemyers.co. It’s M Y E R S 

 

Pancham Gupta: Great. Thank you for that. We’ll put that in the show notes. And thank you for your time here today, Jerome.

 

Jerome: This is awesome. so grateful to be with you. Thank you again for the opportunity to share.

 

Pancham Gupta: Thank you for your time here. Thanks. I hope you learned something from Jerome Myers. Thanks for listening. I appreciate you if you have questions email me at p@the goldcollarinvestor.com. That’s P as in Paul p@thegoldcollarinvestor.com. This is Pancham signing off. Until next time, take care.

 

Thank you for listening to The Gold Collar Investor Podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollarinvestor.com and follow us on Facebook at The Gold Collar Investor. The information on this podcast are opinions. As always, please consult your own financial team before investing.

Copy of EP #18 - 2 Guests

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