Buying More Properties WON'T Make You Wealthy… But This Will | Ep 114

James: Most people you might be into this camp, think that more wealth comes from just buying more. Mm-hmm. More properties, more door, more units, more. Does that sound?

Jessi: Yeah, more is better.

James: You're wrong, actually. Um, it's, it's not quite that easy because I have seen people who buy a lot. And then up stalling out.

Whereas there's others who only have a few and just like, just pull away from the pack.

Jessi: All right.

James: Factor. So that's what I wanna talk about. Different factor today on the Furlo Capital Real Estate Podcast, where we dive into the intricacies of passive real estate investing and some of these types of things.

This is definitely an intricacy of it. Mm. And our mission is to equip people to build wealth wisely. Not just a lot of it. No. We do want you to build a lot of wealth, do it wisely, um, buy

Jessi: not by buying more houses.

James: Correct? Correct. Um, anyways, wanna encourage people to invest wisely, both property and people so that together we can build wealth while improving housing.

I'm James and this is my wife Jessi.

Jessi: I, I. I'm guessing where you're going with this.

James: Oh, lemme hear you guess. Let's see if

Jessi: you're right. And I think it has to do with,

James: this is actually a really good storytelling technique is to say, here's what I thought was gonna happen. And then, which is why I love heist movies, which I watched one today.

It was amazing. Ocean's 11.

Jessi: Yeah. That's pretty awesome. Love.

James: But part of the fun of it's, they tell you the plan and then you watch things.

Jessi: Yeah.

James: Not go through plane, like, oh no, what are they gonna do? So anyways, let's do, let's build that tension. What's that open loop? So I, where do you think I'm going with this?

I.

Jessi: Think where you're going with this is like this concept we tell our kids where, uh, it's better to build a business or a system that generates income as opposed to just like doing the job over and over and over and over and over again. Just like, just putting in more hours is like, yes, that is one option, but you're not really building wealth.

You're just doing a job.

James: Yeah.

Jessi: And so it's, it, I, I'm guessing it's a similar concept.

James: Yeah. That's an intriguing idea.

Jessi: But no,

James: let's see where I'm actually gonna take it. Uh, yes. So oftentimes like, uh, that mindset is people think, Hey, more properties just feels like progress. I mean, I know we have fallen into that camp.

Sure.

Jessi: Yeah.

James: I mean, it's visible, it's braggable. Oh yeah. It feels like momentum. And oftentimes there's monetary stuff as well. Mm-hmm. Um, but let's call this person the, the door collector. Mm. I guess the collector? No, the door collector, the collector. This isn't the marble. Um, where they just own a lot, but they can't necessarily explain all the returns and everything they're getting in it just 'cause they have a lot of doors.

Jessi: Okay.

James: And so, like

Jessi: too many that they can't keep track of things

James: or they, they're just choosing not to, right. They're just like, I just want more. Just gimme more.

Jessi: Yeah. They're like, this is the only thing I care about. I'm just gonna accumulate more.

James: But one of the problems that they can run into is that number one.

Capital can't get trapped. Mm-hmm. So talk about that. Number two, the complexity just can compound faster than their returns. Their um, and their optionality just kind of disappears over time from it. And so this is what, and what happens is sometimes they'll just buy. Uh, just complicated from previous weeks.

Messy deals.

Jessi: Messy

James: deals. Without thinking them through. Without thinking them through. Correct. Because

Jessi: it's

James: just another

Jessi: property.

James: Yeah, yeah. Yeah. So if you think about it, property count, that's just a vanity metrics metric. I suppose.

Jessi: It is something that people can wrap their head around, which I totally get why you would.

James: Yes.

Jessi: Focus on that. You know,

James: there's a, there, there's a guy, he's, um, he showed up to a few real estate meetings I've been to. Mm-hmm. And he, he throws out that like these Betty doors, which is genuinely an impressive number.

Jessi: Yeah.

James: But I'm also like that. Doesn't like

Jessi: that doesn't necessarily mean

James: cool.

Jessi: Yeah.

James: You know, um, yeah, like

Jessi: most success or

James: I wanna know some other stuff. Best

Jessi: returns or, yeah.

James: Or like, are they all really big deals? Are they small deals? Like

Jessi: Yeah.

James: What's the, what's the deal? Uh, yeah. The one, the moment metric, if you had to boil it all down to metric, usually says dollars. Um, how much money have you invested into deals?

That's the

Jessi: Oh. Invested in or gotten out,

James: whatever. Um, it's usually, it's, it's usually it's a combination of things. If you're, if you're talking to capital raises, they wanna know how much money have you raised? If you're buying it, it's like, well, how much, just, what's the value of the property that you've bought?

Jessi: Hm.

James: So those are usually the, uh, the numbers that people care about.

Jessi: All right,

James: but here's what you should do instead. Right. And what you need to keep in mind instead of like, let's just buy more, more, more, more.

Jessi: Mm-hmm.

James: First one. Capital velocity, that is super important. Mm-hmm. Okay. Do you know what I, do you know what I mean?

When I,

Jessi: I'm guessing how good your capital is working for you.

James: Uh, yeah. It's how often it gets reused.

Jessi: Oh,

James: yes. All

Jessi: right.

James: Yeah, so,

Jessi: so like, go ahead. You invest it and then you, you're gonna get your return and then you reinvest it.

James: Yeah. So like, you had the one person who. Let's say they buy, um, every year they buy a property.

Jessi: Mm-hmm.

James: Right? And over 10 years, they've got 10 of 'em. But their capital is now in each of the spread or Yeah. Spread across those 10 different properties. Uhhuh. It's fine, it's good. They had to find 10 good deals. But now, ideally, especially if they're doing fixer uppers, or maybe if they're not, they're just buying ready to go deals, the capital's stuck in there.

Mm-hmm. As opposed to the person who says, I'm gonna buy one deal and then I'm going to sell that deal and buy another one in addition to maybe the capital that they're saving. And what they're doing is they're just rolling. They're the capital from the improvements from that, from that first deal.

Mm-hmm. Plus whatever capital they're adding every single year, they're snowballing it into mm-hmm. So that, like, they might have, uh, might have the same amount of, well, they would have the same amount of capital invested. Mm-hmm. But the, and even the equity could potentially be the same in it, but they might have one where it's like, Hey, this is one really big deal.

Whereas the other one is like 10 doors, Uhhuh, and, and so it seems like the person with 10 other houses is doing better, but the person with one deal, because they've been rolling it into other, uh, into other properties, could potentially, could be better

Jessi: returns,

James: could be better returns, probably is better returns.

Jessi: Mm-hmm.

James: But yeah.

Jessi: Hmm. All right. I mean, maybe, I don't know. I, I like concrete numbers, so I'm like, all right. Theoretically. But like you're saying, either could potentially work. I I see how the snowballing can, the, the larger amount of a down payment you have because of the equity, you're, you're getting back on each deal.

You can, you can then like scale up,

James: correct,

Jessi: yeah. To different things.

James: Yeah.

Jessi: So the, it does matter what you're investing in, but

James: correct. Yes. To a degree, yes. No, it does. Uh, and you can think about too, if you have someone who, if we get to the end of the 10 years and they both say, okay, I wanna liquid out all my properties and buy the next thing.

The one who's got the one is a lot easier than the one who's got the 10, who's trying to line everything up and figure it all out

Jessi: and

James: mm-hmm. Um, could be an issue. I'm just saying you, you want to, like velocity matters, it's okay to have properties. Do the repairs, fix 'em up and then sell 'em and move on to the next project.

Mm-hmm. You'll actually make more money. 'cause I'll oftentimes too, and this kind of was implied, I guess, is a lot of the returns that you make are bought when you purchase. Mm-hmm. So if you can find a great deal and then you go and you do the things and therefore you can raise the rents, raise the value of it.

Once that's done, it's on a, like, it's on a very steady trajectory of growth. It's very predictable. It's whatever the rents were that year. Mm-hmm. You have to raise it. You're 3% on average. It's whatever appreciation was, you're one to 2% on average. Your expenses are also gonna go up a little bit. Like your growth every year is four 5%.

Whereas that first year when you were doing all the re all the fixes and everything, that might have been like a 20 or 30% growth rate. Mm-hmm. And so if you are. Once that's done, if you just keep holding onto that property, you're just, it's very slow. Mm-hmm. Whereas that other person who's rolling it.

Yeah. And so they're the property, they're not gonna have the same amount of equity at the end of the day. 'cause they kept. Compounding returns. Mm-hmm. Every year.

Jessi: Yeah.

James: It's harder. Like if you are, if you've got a job and you're trying to do other stuff, I get why you would just buy one property, keep it simple.

Mm-hmm. And have the tenant and eventually hire a property manager. 'cause it's more than you can handle like myself. Mm-hmm. Whereas the other one is more like, it's, it's hands on the entire time. You're constantly going to projects, you're going to want to, um, potentially invest with someone else like myself.

Mm-hmm. Who is able to put in that time and attention.

Jessi: Yeah. So those are more of the types of. Investments you're doing now.

James: Yeah.

Jessi: As opposed to just buying a bunch of doors, you are rolling it into Correct. A bigger deal, and then getting the equity out of that and then rolling that into the next deal.

James: I think of it this way, I am in those, in that first year, because we're chasing after those value add deals, I'm able to pay 12% interest.

Jessi: Yeah.

James: Because there's that much value in it that I can share it with my investors. Mm-hmm. As opposed to a regulars buy and hold.

Jessi: Yeah.

James: If you had a 12% interest loan, you're like, well, these numbers don't work. Like, yep. I know.

Jessi: Yeah.

James: That's why we don't do it.

Jessi: That'd be crazy.

James: Yeah. Okay. Downside protection.

Beats upside chasing mm-hmm. Is my second reason. So again, you got like, I would say beginner investors. Right? They care about appreciation. Mm-hmm. Do you remember how much you and I used to what we would value appreciation at? Nothing.

Jessi: Remember? Yeah. I, I didn't factor it in

James: zero

Jessi: because I was like, I, that's great.

You can, I want it to be profitable without that. And then

James: Right.

Jessi: If it's pro,

James: a lot of people, they build it into their models. Sure. And I get it, and I have it quasi built into my stuff now. It's more of a mathematical di vision as opposed to what the market's gonna do. Mm-hmm. But, uh, there's that, there's the internal rate of return for bigger investments.

Um, or they're just looking at like those best case scenarios. Oh man, this is gonna be awesome. Mm-hmm. And I've talked to investors where that's how they. That's how they think about it. Whereas, um, more seasoned investors, right? They, they care about like, well, what's the basis of, of the property in terms of like, how much money are we putting into it?

What are the debt terms? What is the break even occupancy? What's the uh, like the duration, the whole time risk mm-hmm. That's related to it. And, and they recognize that one bad downside event can erase 10 good ones.

Jessi: Yeah.

James: Good months, years, whatever. And so, uh, I like this, uh, this analogy. Wealth isn't built by how fast you drive.

It's built by how hard it is to crash.

Jessi: Interesting. Alright. Yeah. So you, you're putting things in place to not crash.

James: Correct? Yes.

Jessi: You're paying attention.

James: Yeah.

Jessi: You're not just. Pressing on the pedal, like pedal metal and

James: go for it. So it may not for make sense to just chase door after door after door after door.

Right. But instead say, I'm actually gonna create a really solid foundation with less doors I'm gonna have, it's gonna be less leverage. I'm gonna go for, uh, yeah. Just more stable over time. Mm-hmm. And that's okay.

Jessi: Mm-hmm.

James: Instead of getting potentially overextended.

Jessi: Mm-hmm.

James: Yeah. It's kinda seems

Jessi: smart.

James: Yeah.

Yeah. Yeah. 'cause things do go up and down. It's a thing. It's,

Jessi: yeah. I mean, it, it totally reminds me of that adage like, work smarter, not harder. Just like, yeah. You're not just, you know, putting the pedal in the metal, like nose the grindstone, just getting it done. You're like, nah, I'm gonna, I'm gonna think about this a little bit.

Slow down a little bit. Yeah. Make a wise decision.

James: There's some, as Jim

Jessi: calls

James: say, productive paranoia.

Jessi: Yeah.

James: In it.

Jessi: Sure.

James: Yeah. Yeah, totally. Uh, okay. Um, the structure of the deal is probably more important than the asset quality itself.

Jessi: Okay.

James: So you could have the same property with different outcomes depending on whether or not you've invested with equity or preferred equity or debt.

Mm-hmm. Those are very different, whether it's fixed or floating. Uh, just who controls what the decisions that are being made. Those are all huge factors on what your actual return is

Jessi: and that all, all, all of those types of things get determined in like purchase agreements. That phase of

James: Yeah.

Jessi: Property buying, right?

James: Mm-hmm.

Jessi: Mm-hmm. So you gotta pay attention.

James: Well, yeah. And as an investor, right, you're trying to figure out like, well, where am I in this stack? Because that depend on when I get paid. So like when we, a lot of deals, like when we're doing flips, we give debt to the investors. Mm-hmm. So they get paid first.

Mm-hmm. And then if there's anything left over, that's when I get paid. Mm-hmm. That's kind of how that works. Yeah. But there's other deals that I've done that are more like classic, uh. Syndications and, and that's where now we all kinda got equity. Mm-hmm. The bank has some debt, but then we also all have equity and that's split and shared in different ways.

And so yeah, you just wanna pay attention to that 'cause. Again, it's not just about, oh, there's these many doors, like the structure matters. Mm.

Jessi: Mm-hmm.

James: And

Jessi: Sure.

James: You know, and all the other stuff, uh, matters. Uh, execution is the wealth multiplier. Mm-hmm. Okay. So, um, we made fun of spreadsheet samura last week.

We're gonna do it again this week. Uh, spreadsheets don't collect the rent. And so instead what matters is like. The real drivers are them, are expense, discipline, you know, keeping track of that stuff. Yeah. Maintenance pieces of it. Tenant quality is huge. Mm-hmm. And property manager incentives are also a big deal.

Like those are the things that, um, that really drive the performance. Mm-hmm. And on a spreadsheet, yes, you should just get more doors. Mm-hmm. Like that's of course the answer.

Jessi: Yeah. It looks better, but

James: Yeah. But it's not necessarily, um, the, the number one thing that you should be. Looking at.

Jessi: Hmm.

James: And, um, and I, um, I do by the way, have, um, I've got a really sweet, uh, download on our website, furlo.com.

Uh, it's called, uh, good Deals Only, and it's this whole, uh, whole set of questions that you can ask sponsors like myself, um, about their investing thesis and, and how they go about things to help you uncover some of those other questions outside of just those top level numbers that you're seeing in deals to, to dig a little bit deeper.

Mm. So definitely. Check it out. Check that out. Number five is behavior over time. So I know we talked about velocity of money. Mm-hmm. And that's important, but you can also just. You could just overt trade, you could do too much. You could be constantly like, okay, I'm going from one to two, to four to eight to 16, or whatever.

Like, you gotta be careful of just like, of not selling too fast or panic selling, oh, you know, those kind of things. Or strategy hopping that. I gotta be careful of that one. Um, that one's. That one's a hard one. Mm-hmm. Uh, of saying, oh, now I am doing short-term rentals. Now, okay, now I'm gonna do midterm.

Mm-hmm. Now I'm getting into warehouses. Now I am doing co-living.

Jessi: Yep. Which I've done, like all of stuff. No retail,

James: but, uh, yeah, yeah, yeah. Like if you're jumping around, you never gain enough experience and expertise in, in a single field. Like, for example, we, uh, we've split. A house. Mm-hmm. And uh, the way we set it up was we had all debt and all of our investors got paid.

They were all super happy with the deal. Mm-hmm. I made very little money on it because of some timing stuff, and that's how it was. Mm-hmm. But I got to the end of it and I was like, yeah, the returns weren't for me, weren't what I thought they were going to be, but. Fundamentally, this is a good strategy.

This works. I will do it better next time. Mm-hmm. 'cause now I know what Pitholes pitfalls, pitfalls to look out for those pitholes pitholes. Uh, I know what pitfalls to look out for. Mm-hmm. And so the next one is just gonna be that much better.

Jessi: Hmm.

James: And 'cause

Jessi: Yeah, I can see that

James: I have that.

Jessi: But if you never did it again

James: Right,

Jessi: you wouldn't improve

James: Yeah.

Jessi: On your systems.

James: And we're in the middle of building a house right now as well talk about strategies. And it's funny, like we didn't, I like

Jessi: to think that you're, you are new, new enough that it's like you're looking at all of these different potential lanes. Seeing which ones give good returns, what works here, what fits with your Yeah.

Investment style. And you will narrow it down to be like, okay, maybe these one or two.

James: Well, where we're going well, and honestly a hundred percent. And I'm also like, yeah, I'm gonna learn a lot on this deal. Sure. Well, I make a lot of money off it. Probably not, but I'm okay. Like that's the learning debt.

Yeah. My investors again. If they're gonna make a ton of money Yeah. It's gonna be awesome for them. That's great. Happy for 'em. It's gonna be a great deal for them. Sure. And part of what I'm looking at though, is how do I combine some of those two things? Mm-hmm. Like, 'cause there are times when we find a house on a very large lot where we go, man, we should totally just split that lot off.

Mm-hmm. And we've done, and we've run the numbers on some of those things and the deals like almost make sense to do it and then sell the land. And sell the house.

Jessi: Mm-hmm.

James: But when you effectively sell yourself the land. A good deal and then build the house on it. It's like you're, you're, you're compounding strategies.

Mm-hmm. And all of a sudden you go, oh, this, this is only a great deal.

Jessi: Yeah.

James: And, and so that's part of our, like we've done a lot split. We're building the house and eventually we're gonna start to up to combine them into ones that, uh, that just work better. Mm-hmm. And, and actually. Improve, make housing.

Yeah. Better and, um, and make better returns for our investors. Mm-hmm. It's gonna take longer. Sure. That's like a, that's gonna be closer to like a year and a half, two year deal as opposed to a. You know, six months, six month

Jessi: deal

James: type of thing. Mm-hmm. But, or half a year deal.

Jessi: Yeah.

James: Um, but again, we're like, that's okay.

Mm-hmm. But, um, but anyways, it requires that patience, wealth building. It requires patience, consistency, and long-term thinking. Not just let's do more doors, whatever it takes to get more doors. Mm-hmm. Which I, you know, realistically, I don't think there's anyone who's out there who's just like, I want as many as possible.

I at least, I think probably

Jessi: not. I don't

James: know. I know there's a lot of people, like, I wanna do more deals. Sure. And you gotta be careful. I've talked to a, I've talked to a lot of beginning investors mm-hmm. Who they're just like, they just have money burning a hole in their pocket. Like, I want anything.

Just

Jessi: wanna get

James: something. Yeah. No, you want a good deal, not just any deal.

Mm-hmm.

James: And I think that's, um, I guess really important. So questions, if you are an investor that you might want to ask your sponsor before investing is. How does capital get recycled here, if at all? Mm-hmm.

Jessi: Mm-hmm.

James: I think is a really important question.

Um, and it's funny with our Baker Tower deal, because we bought the cell towers, we essentially use that as part of the down payment. It was a way of instantly recycling the funds. Mm. Which just made the returns for all my investors that much better 'cause we were able to leverage.

Jessi: I do, I have a follow up question.

James: Oh, it's too late for that. I'm sorry.

Jessi: Um,

James: okay, go ahead.

Jessi: It is more detailed into what you're talking about. When an investor does put their money in, do they give you permission to automatically invest it in another deal, or do you No,

James: that's actually a really important distinction. 'cause that becomes a different type of fund.

Jessi: Oh,

James: so there's, I know there's, uh, we're, we're, we're heading into SEC. You know, finance territory, uhhuh, but there are different types of funds that exist. And so the ones that I do, so there's, and this is from an equity standpoint

Jessi: mm-hmm.

James: Loans are different. Mm-hmm. That's a, that's, that's a different beast altogether.

Okay. But from an equity standpoint, like I have, um, like I do, oh gosh, what's the term for it now? It's um, it's like a, a specialty or specific fund. You know exactly what it is that you are buying. Mm-hmm. It is a special, it's a special purpose vehicle,

Jessi: I think is what it's called.

James: I'm probably getting that wrong.

Jessi: So you identify the particular property and its use and all the things

James: they know ahead of time. This is exactly what I'm investing in. Mm-hmm. Then there are, there's the, um, they have what's called a blind fund, which is the other end of the spectrum. Mm-hmm. And this is often. It's never a hundred percent this, it's usually the middle one I'm about to describe where you're like, do you trust me Aladdin style?

Right? And and you go, I'm gonna invest this for you and get you your money back. I think if I had to guess, that's the kind of fun that people like. Um, oh gosh, was it Murdoch? Or who's the guy who did the investing and. Um, I know you don't pay attention to that stuff. It's probably not him. Um, I probably just threw someone's name under the bus that I shouldn't, uh, he, um, maybe it was Epstein is the guy I am thinking of who he obviously got in trouble for other stuff.

Sure. But, uh, but essentially, oh gosh, I, I should have researched his headline. That's okay. I didn't know you were gonna ask me that question. Uh, anyways, he gave astronomically high returns to people. I think there was a movie with Robert De Niro. About him. I feel like it was rock. I have no idea anyways.

Um, that, uh, he would say, Hey, invest with me and I'll give you like, you'll get 15% year after year. And people did that. His was more Ponzi scheme esque. Yeah, but my point is it was a blind fund. They didn't know what they were investing in. They just knew they were investing with him into his investments, whatever those were, whatever he thought was a good one.

And then they would, uh. Get their returns.

Jessi: Like you'd have to have a lot of trust with that person.

James: Yeah. You have to uh, yes. Or be really ideas and there's lot of paperwork that the SEC requires you to fill out.

Jessi: Yeah.

James: To track that. 'cause they're in theory watching that he turned out like he was faking all of his information.

So that's a bad thing. You know, it's funny in a lot of ways, uh, Berkshire Hathaway, that's what it is. His is, um, Warren Buffett, his is a holding company, and he goes, I'll invest where I want to invest. Period. Now he goes, I've kind of got like a criteria in terms of returns. Mm-hmm. But by the end of the day, if you invest in Berkshire or Hathaway, you're investing in his portfolio of companies and what he chooses to invest in.

Mm-hmm. It's kind of a blind fund, but you know, it's public and, and so he does all the reporting and everything

Jessi: and his investments are kind of proven as well over time. So yeah.

James: Got a track

Jessi: record, theoretically

James: in theory, but then there's the middle group, which is, uh, a lot of venture capitalists run into this where they go.

We can't tell you who we're going to invest in or what we're going to invest in, but we're looking for investments like this. Mm-hmm. It fits a certain criteria. Uhhuh, uh, we're only investing in AI companies in the consumer space that have some amount of revenue already proven or whatever.

Jessi: Yeah.

James: Or on the real estate side, we're only investing in a class apartments in the Willamette Valley, somewhere between 20 and 50 units.

Jessi: Mm-hmm.

James: We don't know what those are, but we're gonna do 'em. And the reason why they're doing that is they aggregate. They're getting people to commit. Some of them will put their money in ahead of time. Mm-hmm. But a lot of them are just commitments for when they're like, so when we're ready you can go. Oh, so they can go off and make cash offers.

Yeah. That makes sense. And they're not sense trying to raise funds. It's kind of their, but the SEC has different levels of requirements for paperwork and things you need to do in order to, um, in order to whatever. Yeah.

Jessi: So if someone were to give you. Money to invest. You have a specific deal they're giving you the money for.

Correct. And then they're getting returned from that deal.

James: Yes.

Jessi: And then choosing to do that same thing again if want, if they want to. But you don't.

James: Yeah. If it, if I have, if we do a deal and then that closes,

Jessi: yeah.

James: I give them their money back and then I go, I have a new one. And it's like, it starts all over you.

Jessi: They, they choose

James: opt

Jessi: in to

James: the next one. There's automatic rollover to the next deal.

Jessi: Interesting.

James: At least. I don't, I don't do that, I'm pretty sure. But

Jessi: that puts me to a different category's. What, you said something like, uh, does the, does the, uh, investment get recaptured or reinvested or something? Yeah.

Recycled. Recycled and in my mind I'm like. It seems like it would just, like, you just keep putting it in. But I don't think that's what you mean. So that's part of No, it's a

James: very, like, and, and some investments start like that. Mm-hmm. So you do wanna know that kind of thing.

Jessi: Yeah.

James: Again, you could have someone where it's like, Hey, I'm gonna hold on your money for two years.

Mm-hmm. And we're gonna do as many flips as we can.

Jessi: Right.

James: You know? And that's, and that's how some people, like I could imagine if, if someday we got to where we were doing, uh, I know there's some companies where they do like somewhere between 20 and 30 flips a year. Whoa. Yeah. Right. They're just, they're constantly turning and burning.

That's one where they would have that semi blind fund. Mm. And they would say, we're doing flips. It's in this area. They look like this. This is the investment profile. We're gonna hold onto your money. They, uh, for a certain amount of time. Mm-hmm. And it literally is a fund. Mm-hmm. And, um, and then they go off and they just, they're just recycling and reusing the money, just going as fast as they can.

And then when they get to the end of that cycle mm-hmm. They go, okay, do you want your money back? Do you wanna invest in this new fund? Yeah. That we've started up. 'cause we're shutting this one down. We've got a new one we're starting up.

Jessi: Mm-hmm.

James: That makes sense. So totally a thing. I'm not at that scale.

Yeah. But it's a thing, so it's worth asking about.

Jessi: Cool.

James: Uh, for some of those bigger ones. Other things you want to ask is, you know, what breaks first if the market turns? Mm-hmm. Um, especially again, if you're, if you're going, if they're just going for more units, you wanna know, like, where, where are those break points?

And you're just making sure that they're thinking through the downside piece of it. Productively, paranoid. Mm-hmm. Uh, who controls the decision making mm-hmm. Process, especially in times of stress. Because again, if you are investing with someone who's like, we're just going for more doors, like they, they may ignore things and uh, yeah.

So again, more properties doesn't necessarily make you more wealthy.

Jessi: Mm.

James: Even though it is fun, it's those building those systems that compound capital safely and repeatedly, that's what builds wealth.

Jessi: Cool.

James: Yeah, it is cool. It's good to know.

Jessi: It's similar to the concept of like building a business as opposed to just putting any hours.

James: Yes.

Jessi: And it's a stretch, but

James: yeah. No, yours was good too. I liked it. So yeah, and if you are interested in learning more about the types of investments that we're doing and how you can get involved in that and hop into our little capital recycling program we got going on, um, you can check us out at furlo.com.

So with that, have a great day. Thanks for listening.

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