$500MM and 31 Years in Real Estate: Lessons for Passive Investors with Brian Burke

Brian. Thank you for joining us today. Thanks for having me here. Hey, it’s great talking with you again. We got to talk face to face. A couple of years ago now before COVID, when we could actually do things in person, it seems like a distant memory now. But for our listeners out there who don’t know about you and your business, can you tell us about what you do?

And then we’ll dive into what we’re going to discuss today. 

It’s hard to believe it’s been that long since we saw each other Taylor, but time flies, even in the midst of a pandemic. Yeah, I’m the president and CEO of Praxis capital, and I’ve been investing in real estate for a little over 31 or 32 years now.

 About 20 years ago, shifted some of my focus into multifamily. Previous to that, I was just doing single-family fix and flip. And then, after a few years of doing both multi-family and fix and flip, I changed the focus of my business. Even more into multifamily and less on the single-family.

In that 32 years, I’ve bought, fixed, and resold about 750 properties. About, 700 plus of those were single-family homes, but about 3000 multifamily apartment units and growing all across the country, if probably on real estate. And I don’t know, six or seven states now. So it’s been a good career that I feel like I’ve got to do it all over again.

I got another 31 years left in me. I hope.

Good. I’m glad to hear it. Relatively recently released a book with bigger pockets on passive investing. And can you tell us a bit about the book and then I have some questions about your experience in writing the book? 

Yeah. I had a friend of mine that Was probably going to be set for life and did a 10 31 exchange and invested the proceeds from that 10 31 exchange into a passive real estate offering in a tic investment.

And this was, I don’t know, about 10 years ago and maybe a little longer. And turns out the sponsor she invested with was a crook and basically all the money was gone and she lost her entire life savings. So instead of being set up for life, she was basically penniless and after seeing. Being a passive investment sponsor myself and talking with investors over the years and hearing their questions that they’re asking.

I realized that there was just a void of knowledge. People were asking the wrong questions or they certainly. Didn’t fully understand the investments they were making oftentimes, and I felt like there needed to be a source for people to turn, to, to learn more about passive investing the right way.

And I did some research and found that lo and behold, there was no real source for that information. So I decided that if I could save one person from making the same mistake my friend did then, a 350-page manifesto on how to do this was probably going to be worth it. 

Awesome. And I certainly appreciate that you put that out there because you’re right there, there wasn’t anything before and that’s what I’m trying to do with this show, but alas, I don’t have a book, but what I wanted to ask you at least get started.

Okay. Writing the book are things that if there’s anything you learned along the way, you’ve got this extensive experience as a real estate investor, but, I’ve found it more broadly. We learn best when we teach things to other people. And I’m curious if there’s anything that as you’re writing the book that you maybe didn’t know or didn’t quite understand that you got a better understanding.

Through writing the book. 

Yeah. Probably 325 of these 350 pages is a brain dump taking 30, 31 years of real estate investment experience and talking to hundreds of investors that just blurting out everything I know. But of course, I had to lay some technical foundation alongside that and.

The part of the technical foundation of passive investing is the legal framework that makes up the entity structures and passive investing rules and reg D and all these other things. So I did some really deep research on that as part of this book research. And one of the things that I learned, which was a commonly repeated belief.

Is that you have to have a pre-existing relationship with the sponsor. That is offering these securities if you’re not an accredited investor. So an unaccredited investor has to have a pre-existing relationship with the sponsor in order to invest an accredited investor does not necessarily have to have a pre-existing relationship.

And, you read that all the time. You hear people say it all the time, and of course, Yeah, everything that you read and see as gospel. And it’s completely untrue. The whole thing is just bunk. And I learned that through my extensive research and trying to understand the legal framework.

So I thought that was interesting. Yeah. 

$500MM and 31 Years in Real Estate: Lessons for Passive Investors with Brian Burke

"The part of the technical foundation of passive investing is the legal framework that makes up the entity structures and passive investing rules."

That is interesting because that’s something that I have certainly heard repeatedly and shoot I’ve, I’m almost certain that I’ve said that before. I’m not a hundred percent certain that I’ve said that before. What is it? What does that really mean? How has our understanding been wrong in that way?

 

It means you’re going to jail. Taylor, you told people the wrong thing. How dare you give people misinformation? No, I’m just kidding. Yeah. A piece of fake news. Yep. The distinction is so basically where this comes from is this concept of a preexisting relationship comes out of reg D rule 5 0 6 B that says that you can raise money.

From accredited investors or from up to 35 non-accredited investors so long as they have sophistication and knowledge, the investment they’re investing in, et cetera, et cetera. And then somewhere, somehow or another, this commonly held belief of a preexisting relationship came into play. Really?

What 5 0 6 B is saying is it’s saying that you can raise money from people, but you cannot. Advertise, you cannot have a general solicitation. You can’t put a billboard up on the freeway. You can’t create a website with Google ad words that say invest in this offering without violating the provisions of the securities laws.

Now, the burden here is, you don’t, you want to be able to show that the investors that invested did not come from a general solicitation. And so one of the most commonly used Ways to show that is to show that you had a preexisting relationship. No, this guy didn’t come from a billboard on the freeway.

He came because he is my brother-in-law’s best friend from high school. And we know each other all the way since kindergarten. And that’s why he invested in this deal that would show that they didn’t come to you by virtue of a general solicitation. So a preexisting relationship is one way. To prove there was that they didn’t come to you from a general solicitation, but it’s not the only way to prove that they came from a general solicitation.

But it is probably the easiest way. Now, if there are other ways that you can establish that they did not come to you via general solicitation then you can still comply with the framework. Of the regulations by offering securities to a non-accredited investor without general solicitation, you just have to be able to show that where they came from.

Interesting. So if I’m interpreting what you’re saying correctly, it sounds as if I have, Mike’s investor and he’s already in my ecosystem, I have a relationship with him. I send him a deal and then he does. Interested not interested, whatever. And without my saying anything to him, to this effect, he takes it to his brother who I don’t know, and says, who is also not accredited, and says, Hey, check this out.

And his brother Bob says, oh, I’m really interested in that deal and reaches out and says I’m interested. I’m Mike’s brother. You didn’t solicit me. Is that kinda what you’re getting at that you, how you could establish that? 

Yeah, that’s kinda what I’m getting at and, to roll this all up the smartest thing for anybody to do that’s raising money is to get legal advice from their council a hundred percent because everybody’s legal counsel is going to have a different level of tolerance as to what they think they’re going to be comfortable having their client out there doing.

So before you take your investor’s, friend’s money talk to your lawyer about that first, before you make that decision, but you’re on the right track. What I’m saying is that there are situations where there could be someone out there that you don’t have a relationship with who could make an investment in your offering under the right set of circumstances, as long as you can prove if you were ever at.

That they did not come into this investment by virtue of some type of general solicitation. Now, where this gets tricky is what’s the definition of a general solicitation and how loose or tight are you with that definition? So could you say that the email that you sent to your investor was a general solicitation to your investor?

And then that subsequently resulted in him sharing it with somebody. So it, could it be fruits of the poisonous tree? I don’t necessarily think so, but of course, this is where your legal counsel comes into play because they are there to keep you out of jail. And let’s remember as an investment sponsor there’s more than civil liability at play here.

Investment sponsors can be criminally liable. If they violate the rules. So it’s just very important that you get legal advice from your counsel but do know that there can be exceptions to some of these widely held common beliefs. You just have big deep enough to find them and have counsel that’s from.

Nice. I appreciate that. And that is definitely very important to talk with your lawyers. Now, most of our listeners here are going to be more on the passive investing side. They’re going to be someone who, if they haven’t read your book yet, which I know many of them have, but not all of them. They probably should, if they want to invest in syndications.

And, I think it’s a very cautionary tale from the beginning about your friend who did that 10 31 and two, a tenant in common and went bust and I guess had to keep working their day job. But I suppose I wonder if there are any other cautionary tales or major stumbling blocks that you have come across that have caused, other passive investors to lose big.

In situations where they could have avoided. 

I think people have a tendency to play this game in reverse and the biggest red flag that I can see that shows me that they’re playing it in reverse is when they ask me, how do I find it. A passive investment deal to invest in. As soon as you asked me that question, I, 100% know you’re not approaching this correctly because you don’t want to go out looking for deals to invest in what you want to be doing if you want to be looking for sponsors.

To invest with that’s the way I want you to think about it because when you’re out there looking for sponsors, you will spend all of your time on one thing. And that will be looking at their track record looking at their character, understanding how they operate, how they think, how they underwrite, you want to know left and right.

Everything about how that sponsor conducts themselves. After you’ve found a few sponsors. Pass all of your tests then instead of going out, looking for deals, you’re just waiting for them to bring you one. And that’s really the way you should be approaching this business as a passive investor. So the biggest mistake people make is they skip the step of spending all their time doing due diligence on the sponsor.

And instead, focus all their time on focusing on real estate. And they’re like what’s the cap rate and what’s this, and what’s bad. And what’s the debt service coverage ratio. And they think that all these numbers are going to protect them. But really the biggest risk that people are adding to their investment portfolio when they invest passively is the sponsor.

Real estate is a risk, whether you invest directly or in a passive offering, but the sponsor is a new risk. You’ve got to underwrite that risk. If you want to avoid making a big. Nice. 

That is a fantastic point. And I’ve had folks come to me in that way and ask questions like that. Like looking for deals.

I think there is maybe an over-reliance on the numbers of the underwriting, which are really just numbers on a page until it’s all said and done. And you sell the property, hopefully at a profit. It’s just all theoretical. And this brings to mind if we’re winding the clock back to when. Pandemics didn’t happen.

We didn’t have pandemics. This is the modern era. We don’t get pandemics all the way back into a what 2019, when we were at that conference, you gave a fantastic talk on underwriting and looking into the future for multifamily deals and especially in light of what you’re saying about some of the overall Alliance on what’s the cap rate, what’s the debt service coverage ratio.

I still want to bring it. How has your underwriting changed? If at all, as a result of COVID, we’ve had, all these eviction moratoriums, which seem like they’re going to go on indefinitely no matter what the Supreme court says. So what are you doing about it in your math? 

We haven’t changed much.

I’ve always been accused of being overly conservative. I think my acquisitions team calls me the grim reaper. So we’ve after surviving the last great financial collapse, which is probably the worst real estate collision we’ll ever see in our lifetimes and managing to come out. The other side of that.

Obviously, I learned a lot of lessons that have helped to bring me to the point where I’m still here doing this. So I’ve already changed. I changed my underwriting. 15 years ago. That’s what I hear. Or 13 years ago, somewhere back then. That’s when I made my shift. So when COVID happened, it was kinda like, eh, this is what I’ve been preaching all along.

This is the stuff I’ve been telling everybody else to be ready for. And here it is. The only thing there was was only one cat. Is that everything I told people to be aware of and underwrite like this because that could happen. Didn’t really happen. Nothing really happened with COVID. There was a there was this weird two sets of.

Real estate performance markets, where you had like class a and B pandemic, what pandemic, and then you have class C and D that’s like a, Hey, does anybody know the number for a collection agency? And so that’s how the real estate market got ended up getting split. And we had some properties that were just getting stomped on and then we had others that were.

Over month record, high collections, and no amount of underwriting would have done anything for that. It wouldn’t no amount of underwriting could have predicted which of those properties were going to perform the way that they did in either direction. So all you can do when you’re underwriting is be planning for safety but.

Real safety comes from the way you finance the property. And you just don’t want to get too far over your skis because that’s where you get into the most trouble. And I try to avoid doing that 

Well I’ve seen investors lose properties as a result of financing and not understanding things like prepayment penalties, particularly in markets where.

Rates are declining, things like that. Can you be a little more specific about what you mean by being careful with your financing and not getting over your skis? That just means putting a lot of money down because then you’re impacting your return. So what do you mean by that? 

You’re right.

That everything you just said was absolutely true. And Hey, that made my day. I know. Yeah. I guess I don’t need to say anything. You set it off. So let’s talk about financing, cause this is big. The biggest issue is people will finance properties incorrectly in several different ways.

One of the common things that I see, one of the big mistakes is people’s finance, a short-term hold with long-term debt. And the way that you’ll see this come up is you’ll see this where you have some way. It’s okay, we’re going to 

fix up some units. And then we’re going to sell the property in two or three years and they go get 10 years fixed-rate financing.

So now you’ve got this huge yield maintenance penalty that’s hanging over your head. And if rates decline, that number gets bigger. We bought a property recently a couple of years ago, I guess it was the seller who had to pay a million and a half dollars to their lender just to pay off the loan. And that was in yield maintenance penalty.

We have another deal right now. We were trying to negotiate an acquisition. The seller wanted. Net a certain number of dollars in order to make the transaction financially feasible for them, but they have an $8.5 million yield maintenance prepayment penalty. And when you add that on the property, doesn’t pencil, they’re going to have to eat that themselves.

They can’t ask me to eat it and have it still perform. So being careful about matching the type of debt you’re using. Then, the time that you intend to hold it as one, but when you said something about, you’ve seen people lose properties in foreclosure, I’ve more than seen it. I’m on the other end of it.

I’ve out of the 750 properties, I’ve bought 700 of those that were probably foreclosed on. Wow. Because we, I was buying properties at the courthouse steps. At foreclosure sales heavily during the economic downturn. There were times we were buying three houses a day on the courthouse steps. And I’m talking about properties that are, that were worth three or $400,000 that had five, six, $700,000 in debt on.

And when the property value fell and then you add on all that defaulted interest and foreclosure fees, they were way over their head. I’ve bought an apartment complex one time for less than half of the amount of the loan, in fact, I’ve done that twice. And I’ve bought several apartment complexes, REO from the bank after they’ve foreclosed on them.

And so by far the people that we’re losing these properties to foreclosure were ones who had financed too much. They took out too much debt. So to your point about if you put down more money, you’ll have less debt, but how you impact your return. My answer to that is yes. But, so what investors need to think about is the risk-adjusted return that they’re seeking to achieve.

That’s the key. It’s not about returns and I, I’ll get this all the time. People call, what are the returns. What else do you want to know? Because if I tell you what the return is, it’s not going to answer any questions for you. What the real question is how much risk am I taking and what is the return?

Is that worth it to me? And so if I tell you that the return is 12%. Or I tell you the return is 20%. Which one are you going to pick? A lot of people would pick the 20% one. Then if I told you the 12% return deal, we have a 60% leverage, but on the 20% return deal, we have 90% left. Now when you factor that and you go, I heard this guy once on a podcast talking about how all the overleveraged people were, the ones that went and foreclosure your return could easily be zero or negative, where you could lose all of your money on that 20% IRR.

And you’re a lot less likely for that to happen on the 12% deal that has low leverage because if something happens bad in the market, the guy with little leverage can sit back and wait. And that’s a luxury that people that have too much leverage can’t do they have a note payment burning a hole in their pocket that lender will be knocking on their door, whether they’re getting enough income to cover that debt service or not.

"Always put your investors in the first place. The only way they're going to trust me is if I don't let them down."

That is, I guess the double edge sword of taking out debt on these properties out. I do wonder if again, happened to me. When someone reaches out to you, especially with an apartment complex, again, this is a situation that happened somewhat. Recently, somebody reached out and said, Hey, we’re in a tough spot.

We have a huge yield maintenance penalty, but they’re not being realistic with the price like you were referencing. This person has a huge yield maintenance penalty. You’re not going to eat it. So how do you handle that follow-up until, eventually when they’re really staring at foreclosure, maybe they’ll get to the point where kind of becomes reasonable when they just want to get out of it. Have you been able to navigate that or did most people just say I’m riding this the whole way? 

A yield maintenance penalty doesn’t necessarily mean that they’re in distress. So you know, they, their payments could be low enough.

Their leverage point could be low enough. They could own the property for another 10 years and that’s just fine if they really want to sell. They have to be realistic on the price and meet the market. If they really need to sell, then they must meet the market. They have no choice. But if it’s like, Hey, yeah, we’ll take an offer now.

We’d love to get out of it or we’ll sit and we’ll wait for this yield maintenance to bleed off and it will, over time, it will bleed off. Either rates will go up or time will just bleed the yield maintenance penalty away. The philosophy on this is that there’s always more fish in the sea. If you want more money than I can pay you I’m moving on and buying something else you on the other hand are stuck with your property and your $8 million yield maintenance penalty.

And that’s your problem. But what you cannot do is you cannot transfer your problem to me and ask me to solve it for you. All I can do is pay you market value. And discipline, I think is one of the most important things that any buyer can have because it’s easy to get wrapped up in. I got to find a way to make this deal work.

When in reality you don’t. 

Yeah. So I guess that the yield maintenance penalty is really only relevant. If the folks are in other distress and they’re bleeding cash they need to sell, but they’ve also got this big penalty looming over their heads. If they do sell. Just sit on the property and wait for it to go away.

That’s a terrible position to be in. I could just imagine no worst spot than being at a property that is bleeding cash and you can’t get out of it because your yield maintenance throws you upside down. And again, this is why I go back to preaching this same story about make sure your financing and your business plan are in alignment with one another.

And that you’re underwriting carefully and not taking on too much debt. If you’re leveraging reasonably chances, are you shouldn’t find yourself in a position where the property is bleeding cash and you can’t hang on. But if you leverage too much and you did that with long-term fixed-rate financing.

Man, that can be a really, you’ve painted yourself into a corner and all you can wait for is the paint to dry and hope that you don’t starve to death while you’re waiting for that. Yeah. 

Which I mean, that is one of them, I think somewhat counterintuitive things about commercial real estate financing through, is folks think, okay, I’m buying a single-family house.

I get a 30-year mortgage at a fixed rate. That’s a pretty good deal. You’re not probably going to have any prepayment penalty or anything like that. But when you get into the commercial space, The lender is still going to want their money and you’re going to be the one that has to pay it. If you signed terms like that.

Remember the lender is making you a loan. But then they’re turning around and they’re selling that debt off somewhere else. They’re securitizing it or whatever. And so they’re guaranteeing their bondholders that they’re going to get a certain rate of return. Now on a residential mortgage, that’s a hundred grand and it’s pooled in with billions and billions of dollars of other residential mortgages at a hundred grand.

If you pay off. It doesn’t even move the needle, but if you’re borrowing $20 million on a multi-family play that $20 million moves the needle on that bond performance. And they absolutely have to make sure that that they’re performing for their investors. So it’s a cascading effect where everybody has to be taken care of.

And that’s why those yield maintenance penalties are in there. And you just have to. Decide for yourself whether that’s worth it. I tend to prefer floating rate debt where I’m taking the risk of interest rate movement. I’m not transferring that risk to the lender, which you are doing in a fixed rate environment, but I’m eliminating yield maintenance risk.

I can get out of my debt. Tom. I won’t just pay a 1% exit fee to me that’s pretty reasonable. And in exchange for accepting some interest rate risk that I can buy a cap for, by the way. I’m okay with that. And I’ve got a, I got a whole paragraph or paragraph that doesn’t sound like much. I got a whole chapter on financing in the book that describes all the various aspects of commercial real estate finance and where they hit.

Gremlins are. And what’s going to come up to bite you and a comparative analysis of each of these modes of finance that you can see for yourself, which of the different options are gonna be more suitable, in any given investment thesis. 

Awesome. I appreciate all of those insights right now.

We’re going to take a quick break for our sponsor. Brian, I’ve got three questions. I asked every guest on the show. Are you ready? Yeah, hit me up. Great. First one. What is the best investment you ever made other than in your education? 

I don’t know. The thing that comes to me is the most recent sale.

We just sold this one property for 60, $2 million that we just bought for 40,000,002 years ago. I think that was a pretty decent investment. I think. And it was an interesting play because I bought two properties next door to each other from two different sellers represented by two different brokers, combine them into one property run out of one office with one staff, which saved about $300,000 in annual expenses, which gave it an immediate, like 6 million or $8 million boosts in value.

And then was able to bring the rents up substantially after renovating some units. So it was. That was a pretty decent play. 

Why not refinance? Just, return the cash and sit on it for a while. 

Why not take 15 million while the market’s there to give it to you?

I say that you can never go broke making money. And why not? See, there are times to take chips off the table and seal in your gains. Otherwise, you’re just taking on more debt and you’re hoping that the market will continue to do whatever it did. And ultimately I would make. A lower rate of return for my investors by deploying that strategy because I got the most lift in value in the shortest amount of time.

So if I can bring the value of 20 million in two years, I guarantee you 100%, I cannot do that again. Another 20 million in another two years. And in fact, I’m on a percentage basis, I’d have to do about 30 million in two years in order to repeat the performance. So if I can do 20 million in two and.

25,000,005, which one’s really better. 

That’s true. That is a good point. That well-taken well taken. We had the best investment. Now we go to the other side of that coin, the worst investment. What is the worst investment you ever have? 

You said not to include my education on the best investment question, but you didn’t exclude that from the worst investment.

So I’ll, so I’m going to, I’m going to give you an answer. That’s going to cover both the worst investment I ever made. Was the best investment I ever made in my education. And that was, I bought a property in 2008 for half of what the guy before me paid for it. So I thought that was brilliant, but unfortunately, it was about six months before the worst of the great financial collapse came along and destroyed the economy.

So right after I closed escrow, I got the occupancy from 80% to 99% in that way. For about a week. And then the whole world came to a collapse when bear Stearns went down and Goldman all that stuff, everybody was losing jobs left and right. And people were vacating my apartments left and right. And then I got to this point where I was joking that half the units were empty and the other half weren’t paying.

And that was a joke, but it was still. Somewhat true. And I got the property to where finally, at one point it was making just enough money to pay the expenses, but no money left over for debt service. And so I thought, no problem. I’ll just dip into my own pocket. I’ll make the loan payment surely by next month, we’ll have the occupancy backup, et cetera, et cetera.

Guess what? That didn’t happen. So the next month another 15 grand comes out of my pocket to make the loan payment and the following month. Dean grant comes out of my pockets, make the loan payment that repeated itself for about three years, man. I made this loan payment out of my own pocket. And finally, the market came around and the economy started to improve and occupancy came back up and it began to barely cashflow.

And finally, I sold the property and I was able to get enough for it to get all the money I put in, to keep it afloat. I got all that back. I got. My investors, all of their money back. And I even got them a little bit of a profit, which I think was a huge win. Considering a lot of other guys I knew in that same situation, we’re handing the keys over to their bank.

But to me, that was the biggest lesson I could learn on over leverage. And this was a situation where yes, I paid half of what the guy before me paid. And I was. What do they call that? When you have an alcoholic and somebody hands them a drink that, that was the situation I was in the codependency and the lender was my codependent.

They said, look, We’ll give you a hundred percent financing on this property. You just take it off our hands. And I’m like this, I read about this in a book. This is what everybody’s supposed to do. You’re supposed to get them with no money down. This is how real estate investing works. This is the best thing ever.

All I have to do is come up with the money to do the renovations and I’m golden. I’m going to make a killing for all my investors. Guess what? That didn’t happen that way. And so I learned the hard way. Not by foreclosure, but by taking money out of my pocket every month, why taking on too much debt is a big hazard in this business.

And that was the worst investment I ever made, but it was the best lesson I ever could have learned had that not happened to me. I would not be where I am today. So knock on wood. It was also maybe even the best investment I ever made. Wow. 

That is quite the lesson. My favorite question here at the end of the show is what is the most important lesson you’ve learned in business?

And it does. 

The most important lesson is that you always have to put your investors in the first place by business is entirely driven by capital buying real estate as a capital intensive business in order to do I have to have a lot of investors that trust me. And the only way they’re going to trust me is if I don’t let them down.

And so the most important thing you can do in this business is to put them first place. And the case in point was that deal. I just told you about my worst deal. Why did I take 15 grand out of my pocket to pay the monthly mortgage payment? If I didn’t. I’d have a foreclosure on my record and I have a hundred percent investor loss.

Here I am, 31 years into this business, 20 years of it with investor money, I’ve never lost a nipple of investor principal. And being able to say that is enormously important for the growth of my business. And so doing right by your investors while it’s hard, it’s not the easy way out when things are going rough.

When things turn around. That is going to be the one thing that you get to hold on to. That’s going to fuel your growth in this business as an investment sponsor, and it will build trust in your investors. And that is more, is worth more than anything. 

Brian, thank you for joining us today. It’s been great reconnecting with you and I hope to see you in person.

When the world gets, but gets back to normal and I don’t know, 20, 25 or whatever, but for folks out there who want to track you down, want to find you on the internet, want to find your book or anything like that, where can they find you? 

Got to go to a few places. You can find me www.praxcap.com. It’s our company website.

It’s P R A X C A P.com. You can find me on Instagram @investorbrianburke. You can find the book at www.biggerpockets.com/syndicationbook

Nice. Thank you for joining us once again to everybody out there. Thank you for tuning in. If you’re enjoying the show, please leave us a rating and review on Apple Podcasts.

Five stars. If you don’t mind, that helps other people learn about the show that helps us rank higher in the apple podcast ecosystem. And I’m always real with you guys. It helps me feel good because I get to see that you’re engaging with me. And you’re escaping the wall street casino along with us. If you know anyone who could use a little bit more passive wealth in their lives, please share the show with them and bring them into the tribe.

Thank you for tuning in once again. I hope you have a great rest of your day and we’ll talk to you on the next one. Bye-bye.

Brian Burke's Book: The Hands-Off Investor

About our Guest

Brian Burke

Brian Burke is President / CEO of Praxis Capital Inc, a vertically integrated real estate private equity investment firm.

Brian has acquired over half a billion dollars’ worth of real estate over a 30-year career including over 3,000 multifamily units and more than 700 single-family homes, with the assistance of proprietary software that he wrote himself. Brian has subdivided land, built homes, and constructed self-storage, but really prefers to reposition existing multifamily properties.

Brian is the author of “The Hands-Off Investor: An Insider’s Guide to Investing in Passive Real Estate Syndications” and is a frequent speaker at real estate investment forums and conferences across the country.

Episode Show Notes

Brian Burke is President / CEO of Praxis Capital Inc, a vertically integrated real estate private equity investment firm.  Brian has acquired over half a billion dollars worth of real estate over a 30-year career including over 3,000 multifamily units and more than 700 single-family homes, with the assistance of proprietary software that he wrote himself. Brian has subdivided land, built homes, and constructed self-storage, but really prefers to reposition existing multifamily properties.  Brian is the author of “The Hands-Off Investor: An Insider’s Guide to Investing in Passive Real Estate Syndications” and is a frequent speaker at real estate investment forums and conferences across the country.

 

[00:01 – 07:37] Opening Segment

  • Get to know Brian Burke
  • Brian shares about himself and his real estate investing
  • Grab a copy of his book, The Hands-Off Investor

 

[07:38 – 12:28] Understanding through Teaching

  • Understanding more through writing a book
  • Fake news: Pre-existing relationships
  • How you can raise money from people but you cannot advertise

 

[12:29 – 31:06] $500MM and 31 Years in Real Estate: Lessons for Passive Investors  

  • Why you should get legal advice from your counsel
  • What’s a general solicitation?
  • The best path, biggest risk, and greatest mistake by a passive investor
  • The Grim Reaper: Changes in writing as a result of COVID
  • All you can do is planning for safety
  • The Downside of Financing Too Much
  • It’s Always More Efficient to See
  • Brian talks about yield maintenance and returns

 

[31:07 – 42:38] Closing Segment

  • Quick break for our sponsors
  • What is the best investment you’ve ever made other than your education?
    • His most recent sale
    • “You can never go broke making money.”
  • Brian’s worst investment
    • The best investment he bought with his education
  • What is the most important lesson that you’ve learned in business and investing?
    • “You always have to put your investors in first place.”
  • Connect with my guest. See the links below.

 

Tweetable Quotes:

“If I could save one person from making the same mistake my friend did, then writing a 350-page manifesto I had to do this right and it’s probably going to be worth it.” – Brian Burke

“All you can do when you’re doing underwriting is planning for safety.  But the real safety comes from financing your property.” – Brian Burke

“Discipline is one of the most important things that any buyer can have.” – Brian Burke

————

Connect with Brian Burke through Twitter, Instagram, and LinkedIn.  Visit their website https://praxcap.com/

 

Invest passively in multiple commercial real estate assets such as apartments, self storage, medical facilities, hotels and more through https://www.passivewealthstrategy.com/crowdstreet/

Participate directly in real estate investment loans on a fractional basis. Go to www.passivewealthstrategy.com/groundfloor/ and get ready to invest on your own terms. 

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About the Host

Taylor on stage

Hi, I’m Taylor. To date I’ve acquired or partnered on over $250 Million in Commercial Real Estate Investments. I help busy professionals invest in multifamily and self storage real estate through my company NT Capital

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Real Listener Reviews

Extremely useful podcast
Extremely useful podcast
@thehappyrexan
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Short, impactful with excellent guests. If you have a full time W-2 job or business and are looking for ways to get involved in real estate on the side, this is for you.
Simple & effective information!
Simple & effective information!
@jjff0987
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This podcast is worth listening to for investors at all levels. The information is simplified for the high level investors but detailed enough to educate seasoned investors about nuances of the business. I recommend!
Awesome Podcast!!!
Awesome Podcast!!!
@Clarisse Gomez
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The host of Passive Wealth Strategies for Busy Professionals podcast highlights all aspects of real estate investing and more in this can’t miss podcast! The host and expert guests offer insightful advice and information that is helpful to anyone that listens!
Great podcast!
Great podcast!
@Owchy
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Love all the information and insights from Taylor and his guest. Fun and entertaining. Highly recommend.
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