Jesse James Built a Legend. Investors Still Fall for It Today. | Ep 138

James
I think this intro will work better if I do it backwards. I'm James, and this is my wife, Jessi, and we're going to be talking about Jessi James. And um because why not?

Um and honestly, he was around at the same time as on our previous episode when we were talking about the tycoons. So this is perfectly. The timing is perfect.

And yeah, and I think there's things that we can learn even from the outlaw abandon. Jesse James. Yeah.

Um it's gonna be good. Um sometimes it's known as Team Rocket. Yes for a certain generation of people.

For those who are Pokemon fans, pretty fun. But yeah, we're gonna talk about that today on the Furlo Capital Real Estate podcast, where we dive into the intricacies of passive real estate investing, whether it's legal or illegal. Hopefully not illegal.

Yes, and our mission is to equip people to invest wisely in both property and people, hopefully legally, so that together we can build wealth while improving housing. Again I'm James, and this is my wife, Jessi. And usually when we introduce ourselves to people, we will say, it's better if you go, Jesse James, and they go, oh yeah, I totally get it.

It works really well.

Jessi
That's true.

James
So yeah.

Jessi
You get called Jessi sometimes.

James
I do, I do. And it was funny the first couple times that that happened, I wouldn't say anything. I was just kinda like whatever.

Who cares? And then what would happen would be like a month or two later They would suddenly wait, wait, what's your name? And I was like, oh, it's James.

Why didn't you correct me? So now whenever times I do it, I just go, now anytime somebody does it, I'm like, James. Oh yeah, that's right.

Yeah, it's not a big deal. I'm the Jessi. But yeah.

Do you know who Jesse James is? I know they were outlaws. They?

You mean from Pokemon? Brother Sister? What do you mean?

It's it's one dude. He was an outlaw. Alright.

Jessi
Weird. Okay, in my brain, it was always two people because we're two people. Okay.

Jesse James, single dude. Did he What like J E S S E. I don't know. Did he ne like never like was with another person?

Oh yeah, no.

James
This is like this is part of the famous story. He was just just on his own. No, no, no. He was with other people. That's part of the famous story.

Jessi
Oh. See, okay. So that like he was a group of bandits.

James
He was part of a group of bandits. Gosh, did I write down what it was. He was part of the uh oh yes the the James Younger gang.

Jessi
Yeah there you go. He was he had a gang.

James
He was a gang.

Jessi
See? So they were bandits.

James
Great. All right. So what I want to talk about today is oftentimes we talk about like vetting the deals.

I want to go back and talk about vetting the storyteller. the the sponsor, the person giving the narrative, because I think that that's important. And um there's a whole bunch of interesting things about this.

So what I'm gonna do is I'm gonna first go through and kind of give a brief history lesson who this guy was. I think it's interesting and then it'll give the context for Some of the bigger insights. Okay.

Okay? Is that fair?

Jessi
Like there there is you have to do a big caveat of like we are not promoting criminal activity.

James
Right.

Jessi
Like we're taking maybe insights That is not one of them. Correct.

James
Don't break the law. Don't break the law.

Jessi
Okay.

James
So, um like I said, he was um born he was during the Civil War time period when w was when he was born. And so he was a farm boy. He was born in eighteen forty seven.

And so Civil War was 1860s. Yeah. Okay. And it was in Missouri, sometimes known as Little Dixie.

So it was like in his twenties. Correct. Yeah.

He had of uh 16 was when he really got involved. Um he had a dad, he was a Baptist preacher. No way.

Died during the California gold rush when he was three. So classic. There's some bigger like dad just not in the picture.

He was a PK. Well he wa his dad died when he was three. But yeah.

And so I think it's like he didn't have a farm. More so that. And there's so many trends where you see people headed down the the criminal life and they don't have a good father figure.

So there's a lesson, there's a freebie lesson there. His mother, um the Zelda, uh she was Z-E-R-E-L-D-A. Zerlda. Zerelda?

Zelda here?

Jessi
I haven't seen it. I gotta see it. Zerelda?

Strange name. Zerelda. Sounds like um gypsy or something.

James
She was big time, pro-Confederate. Person. Wow.

And so at the age sixteen, he joined the Bushwhackers under Bloody Bill. And so he wasn't a soldier. He was an ill regular guerrilla raider.

Yeah. On the Missouri-Kansas border war, which um The book I read about on the Civil War, uh they definitely talked about them and yeah, they were annoying people and they didn't follow any rules, so they weren't part of the real thing. Afterwards, 1866, uh they've they formed a gang.

And they did the first uh daylight bank robbery in the US during peacetime history and they took sixty thousand dollars Yeah. And they killed a bystander. Over the next decade, it was the James Younger gang.

They robbed 12 banks. Seven trains and four stagecoaches.

Jessi
See that's what I I always picture the trains. Yeah. Like they're they're like jumping on and off trains. I don't know.

James
In my brain. That's just what they did. They did that seven times.

Yeah So totally. Uh they did kill at least eleven people along the way and they were in a whole bunch of states. Um yeah, so they weren't like This wasn't like Oceans 11, hey, we're doing real precision heists how we're figuring all out.

We're doing confidence schemes and we're getting getting getting in, getting out before anyone knows. Like, no, they were smash and grab type like your classic We're just going for it. Wow.

Um then in eighteen seventy-five there was a detective named Pinkerton. Okay. And he raided the family farm trying to get them and he threw an incid an incendiary device.

Uh-huh. little bombs um into the house at night and he killed Jesse James's nine year old half brother Archie and he blew his mom's arm off So here's what's interesting is total out but the public, they got upset at Pinkerton. Right?

And so he looked like the villain. And so this is kind of the first time that So again, like if Jesse James started to like anti-hero kind of, right? Yeah.

Kind of crazy. Yeah. And then um and then in Northfield.

Jessi
Why would Pinkerton blow up his farm?

James
I think he was just like I didn't like this is like Wild West Outlaw.

Jessi
He knew it wasn't there. He was off robbing trains. Dude, I don't know.

James
He thought he was. He was like, I'm gonna I'm gonna smoke him out. Maybe he did.

Yeah. Uh-huh. Anyways.

Yeah, crazy history. So um in September of 1876, there was the first national bank in Northfield, Minnesota. The townspeople fought back.

Jessi
Oh, what?

James
Yep. That's crazy. Two king two gang members were killed right away.

Wow. Um younger brothers. Um It was the younger is like last name.

Those brothers, they were hunted down, captured, sent to prison. There were only two that were left, Frank and Jesse from the gang. And so they vanished for three years under a false name in Tennessee.

Uh-huh. Just disappeared. Yep, yep.

And then uh again that was eighteen seventy six and then in eighteen seventy nine Mr. James was bored, broke, and a little restless. And so he reformed his gang. But this new crew wasn't quite as good.

They were a little sloppier, less loyal, more paranoid, that kind of thing. Yeah You know, you can you can just imagine the one more, you know, one more, what do they call it, uh, you know, rate or go for the game. Yeah, yeah.

One more deal, one more grab. One more heist. Yeah, one more heist.

You can you could hear it. So they are in um so they're doing it. There's another guy, his name is Robert Ford.

So you were Um yeah, I had asked about him in the previous one. The previous, that's right. That's right.

I was like, yeah, that's about Ford. This is a different dude. Not Henry Ford.

This is Robert Ford. Yeah, yeah. Different dude.

He's a 20-year-old. He's new to the gang. And he admired Jesse.

And so in eighteen eighty-two, they're like in the middle of doing something, and uh Jesse takes Takes off his belt and his gun so he can stand on a chair to to dust this picture frame. And it was at that time Ford shot him in the back of the head and killed him. But he admired him.

Turns out um he was he had um struck a deal with the governor to collect a reward for killing him. And very Judas in the group. Wow.

And once again, people were more upset about the backstabbing. than about the actual crime itself. Oh my gosh.

So that's the story in brief. So let's talk about some insights. Wow.

Jessi
Right? I mean there's a lot of l lessons I can learn from this of what not to do.

James
Well Yeah, that's fair enough. That's fair enough. So um one of the things that's interesting is that his track record isn't the one that everyone necessarily remembers

Jessi
Yeah, I mean yeah. In general I'll remember he was a thief, but maybe they remember Pinkerton and this other guy who killed him.

James
Yes, and that's the thing is it was the Pinkerton and it was Ford. Yeah. Like those events more shaped Who we think of today, which is why everyone kind of fondly it's like a weird like oh Jesse James.

Yeah. It's like it is kind of weird. He was a ruthless outlaw.

Yeah. But so it's So the lesson, right, is when you are talking to a sponsor, they obviously we we we'll put rose-colored glasses on. You know, we don't yeah, like failures happen, but we may not talk about 'em or brush them on the rug or try to minimize them, do stuff like that.

And and so you um it's important to try to like, which is really hard to do, like, hey, can you back up some of these stories that you've told about? Maybe you can look at financials and see outputs and stuff like that. Um yeah, kind of crazy.

What's your uh what's your gut reaction to like, yeah, you know, it's hard sometimes to to get the the real truth beyond the story.

Jessi
I I don't know. Like my initial thoughts are you need to ask a lot of questions to really get to know somebody. But also like Like you were saying, he had the this group of friends and like people you ran life with who even this guy who ended up Turning on him for looked up to him, they honored him, they liked him, they believed what he was for, you know.

Yeah, sticking it to the man or whatever. I don't know why he robbed things. He was She just wanted money.

I don't know.

James
Yeah. It's good at it.

Jessi
But um it it's interesting to me because it's like that same thing can happen with a sponsor if you get someone who's doing shady deals, but they're really likable and Yeah.

James
You know, you look up to them and they've had some success. On bigger levels, we have some guys who like they were super high up and they had a lot of influential friends, and turns out they were doing some pretty shady things. Yeah.

Jessi
Which is like I think more so than more so than like vetting the sponsor pre-that having your own set of standards and ideals heading into it is important. And then finding a sponsor that aligns with that, maybe. Yeah, that's fair. That's a piece of it. It's not everything.

James
But that's good.

Jessi
Yeah. Determining whether someone's trustworthy.

James
It's difficult. Yeah. Um, number two is that like, man, insiders and those people, those friends, they will defect when the math stops working.

Yeah. Which in his case, it was after that Northfield Um when they were when the townspeople fought back. When they fought back.

Yeah. And it dwindled down, like he never really built back what he had. Yeah.

And it's kind of forcing it. It's like team of which again it's hard to try to suss out when that happens. Um, but um that's something you gotta try to do.

And you can look at that capital network and be like, man, are they scrambling to get new money or do they have return investors? A little mix of both. Like um Those are those are signs.

It's an interesting way to pay attention to.

Jessi
Is your gang falling apart?

James
Yeah.

Jessi
Is your gang falling apart? Yeah, yeah, yeah. Like yeah. Both of those are bad, but it's like you kind of want his gang to fall apart.

James
Yeah, no, that's fair. That's fair. Uh how about this one?

Which again, this is gonna harken back to last week if you haven't listened to last week. I highly recommend it. Talk about the tycoons.

It's great. I I I didn't say this last week, so we'll say it now. Um I have been reading a whole bunch of books that span the history of the United States in celebration of the 250.

So the Tycoons was the next one right after the Civil War. I'm also gonna, the next book I'm gonna start reading is uh about the Wright brothers. Should be good.

And then I'm into World War I. That'll be a heavy one. Yep. But uh Rat Brothers will be fun.

Uh so this reconstruction era of the banks and the rails made for really easy marks. Mm-hmm. Right?

Uh lots of growth was happening. Yeah. Not a lot of security.

They just weren't figuring things out yet.

Jessi
Well yeah, it was all new and they were just trying to grow.

James
And so this gang was able to exploit the you know the gaps between oh this is new and interesting and oh we have regulation and we have things figured out we have processes in place for it. And so they were able to do it. So Sometimes you get really hot asset classes, right?

And and they could also have very similarly thin controls. When short-term rentals first got started, yeah. Surprise.

Yeah, it was like, what's going on here? Cities and municipalities were like, whoa, these are kind of like hotels, but not really. What do we do about them?

Yeah. And one of the big pieces of advice that I've received is don't start up a short-term rental. unless the city has already passed their first set of laws to do it because otherwise they could come in and be like, actually you can't do this anymore.

And um so you want to pay attention to like where are we in this cycle of investing? Is it the super hot? It's hypey.

I would argue similar things are happening right now with AI where I would not get super committed. and um you know all in on a single AI provider company, whether that's ChatGPT or Cloud or whatever, they may not be around in five, ten years because they could implode, they could get There could be regulations that come in and say, actually you can't do this, you can't do that. We're already starting to see pieces of that.

Yeah. That's just another area of man, it's just kind of wild west. And you're thinking about like

Jessi
using AI to like uh shore up your processes or your systems or or on any level.

James
I'm just saying in any way, I would just be I would be very slow to say, oh, I've designed a system that only works with Open AI.

Jessi
Yeah, because it's so new. It's going to change. Correct. Yeah.

James
Obviously you don't want to sit on the sidelines and wait forever. There's a balance here. But if you are doing that, like if you are doing short-term rentals, like you just gotta know, hey, this is what I'm walking into.

This could be a thing. Uh cottage clusters are a new thing in Corvallers in Corvallis. So it used to be, hey, you could build a multifamily um type of building.

Like maybe you can get six or seven units on a on a piece of property. Well now you could still do that, maybe like four or five, but they are individual homes with their own four walls as opposed to a mini apartment building.

Jessi
Huh

James
one of the advantages of it besides just looks cooler on a big a block of a building is as far as the city's concerned so far this is kind of that like so far they look at that as a whole bunch of single family homes And so they will often approve them a whole lot faster on the permitting process. And if you get one, you get them all. Yeah.

As opposed to a big multifamily building, like, well, we got to look into it. And There's certain things you have to do when a building hits a certain size. Like you gotta have the fire suppression systems and stuff, whereas there are a bunch of single family homes, fire alarms, you're good to go.

So there's It's just different. Yeah. But it's this new hot thing and people are still kind of figuring out well, what does this look like?

When do I do it? Because development costs are genuinely more because You're building four walls that are all separate. Interesting.

So that's just a that's another example of the one that we are currently going through. It's interesting. I'm not saying don't invest in it.

Yeah. But just recognize that, oh yeah, this is this area where things can change rapidly on us And that's okay. I'm for Jesse James it was pretty successful for a bit.

For a bit. Then it wasn't as successful. So yeah, yeah.

Um I'm curious, how would you explain that type of risk to just someone who's outside the real estate world. You know what I mean? Like this idea Like a new flashy trend or well just the idea of when you're investing, beware of new flashy trend.

trends like how would you explain it to someone who's like, I don't I've I haven't done any investing in real estate.

Jessi
Well I think most people can understand that concept of um like a fad or a new trend in other areas where you if you jump on board right away and you put all in and then it just changes like it you you lost whatever you put into yeah you know that particular whether it's financial or time or energy or whatever.

James
So you'd be like Yeah, this investment looks cool, but are we so early that we're not sure if this is my face or MySpace or Facebook? Right. Or do we know? Yeah.

Jessi
Which I suppose around it. Yeah. And You know, if you're if you're consciously making the decision to take on more risk, because you're like, well, I don't know if this is gonna be around, but I'm gonna see what happens.

That's one thing. If you're just like, this is amazing. I'm going all in.

It's a it's awesome. Just we're just gonna do all of this forever. It's like

James
Diamond hands? Maybe not. Yeah, yeah.

You know, so no, I gotcha. All right. No, that's good.

That's fair. Um, and then just to kind of reiterate what we said earlier, like sympathy. It's not the same as reputation.

Obviously, people sympathized with Jesse James after Pinkerton doing his thing. But again, as we mentioned, he wasn't still wasn't a cool dude. He still robbed places and stuff a criminal.

Still a criminal. Totally true. So there's a twist.

I don't know. I left this part out of the narrative.

Jessi
Interesting.

James
So afterwards. After what? After Jesse James Was done with it after he was killed, I guess.

Oh, yeah. Um, there was a guy, his name was John Newman Edwards with the Kansas City Times. Okay.

He was an ex-Confederate. And um he had a goal of rebuilding the ex-Confederate political power in Missouri. Okay, so he was from Missouri and he wanted to like rebuild them back up because again What happened and they were like they were trying to rebuild.

And so he was looking for local heroes to help boost up His you know, his state. Yeah. So he picked Jesse James as his hero.

And he started comparing his robberies to King Arthur's Knights of the Roundtable. And wrote a 20-page, which is a lot, newspaper supplement glorifying the gang. And one of the things that he claimed that they did was they robbed the rich to give to the poor.

Oh my gosh Robin Hood. Is based off of this guy writing about Jesse James.

Jessi
That's what Robin Hood is based off of. Yes. So hen h Harold Pyle, Henry Pyle, whoever wrote the original Adventures of Robin Hood Based it off of this newspaper article?

James
Okay, now you're gonna make me doubt myself. I'm like 70% certain that that's true. Yes. That's wild. I'm I'm I mean They're related.

Jessi
I don't know when it was I don't know when Robin Hood was I don't know, and I don't have a way of looking it up.

James
Um so there's some homework. Um I'll look it up afterwards. But yes, that very much sounds like Robin. That's what he was trying to claim that he was.

Jessi
But Jesse James never did that.

James
Never did any of that. Yeah, no, he was still gonna do it. 'Cause they had to split it.

Yeah, yeah, yeah. But I mean this is still the version that most people believe. That's again one of the reasons why there's a favorable Yeah.

Uh outcome because it was like, oh yeah, he was Oh yeah, he was kind of good. Yes, sure he stole, but he was only from the rich.

Jessi
It's definitely this The Carnegie's vigilante anti-hero like Mentality. Yeah, yeah. Like, well yeah, he did steal, but it was for good reasons. It's like, no, no, it was not.

James
Yeah, yeah.

Jessi
So dude, that is a totally other uh tangent of a topic. Okay. Which I feel like maybe we should dive down at some point.

Somehow it's gotta be related to real estate. It's this idea of the media, how the media influences people's mindset, decision, investments, whatever. Like this whole this guy wrote a 20-page paper that was published, like he had a bias that wasn't true.

James
Yeah.

Jessi
And yet he wrote it and put it out there and people were like, oh yeah, yeah, yeah. Like Jesse James, who's for the people or whatever. And it's like, no, he wasn't. I don't like what are you talking about?

And so it's I feel like this is like super related In the whole like, where do you get your information from and is it true and not? And how do you know? Yeah.

Yeah, yeah, yeah. Is the media influencing one way or another?

James
Yes, is the answer. Yes. Thing to try to suss out.

Yeah. And you shouldn't r rely on a single news source of of things. That's the that's the huge takeaway.

No, that's a that is a big question. And it's there's no easy answer.

Jessi
That's wild.

James
Yeah.

Jessi
Totally skewed the historical perspective of this guy.

James
So even if he was just even if Robin Hood already existed and he was trying to liken him to him um Then uh then yeah, he was still trying to make him out like, Oh, he's a great guy. That for Missouri's creates great people, we're awesome again.

Jessi
So did he rebuild this Confederate was Jesse James, not this other guy.

James
Yeah. Sounds like it works. It worked out for Jesse James pretty well. And at least his he didn't care.

Jessi
Um he was dead, but yeah, pretty crazy.

James
So uh some things. So you want to ask who wrote the track record? Where's it coming from?

That comes back to the whole narrative piece. Like who's in charge of this And you really wanna try to separate like when when you're looking at a deal, like the narrative and the deck versus what the actual numbers are behind it. The numbers are important.

We often often talked about how the f the legal documents are really important. Yeah. That's that's That's important.

Um you you also um I think it's good to ask about like what happens with failed projects, like his robbery. Um in Northfield. Like tell me more.

What happened there? What did you learn? What would you do different?

I also think it's important to have some of those succession plans. 'Cause he didn't really have a plan after his gang got decimated and the people he brought in to help weren't great. Obviously one of 'em was Judas Bad.

Yeah. And um yeah, you just want to be aware of like Great story stories are great. You should do them.

But you just really want to make sure that you verify what it is that they're what they're telling you as well.

Jessi
Know who you're working with. So there you go. Jesse James. Mr.

James
Outlaw.

Jessi
Nice.

James
Yeah.

Jessi
We're not outlaws.

James
We happen to share. Micro outlaws. How we can.

Jessi
Interesting. Yeah. Um I would just call that like a rational human being. Oh.

James
That's fair. That's fair. Um yeah. We're normal.

Jessi
Maybe that maybe that's just my uh perspective.

James
We're too biased. Green zone. It's like, oh, you just try to follow the rules and if you get caught, you're like, I'm so sorry

Jessi
Yeah. Yeah, that's us.

James
Um but yeah anyways, so there you go. There's Jesse James. There's some interesting lessons there.

And and we don't try to invest like he lived, but we do try to look at deals and try to be as straightforward as we can on them. And so if you would like to learn more about that and how it works and how we operate, you can check us out at Furlo.com.

So with that, thanks for listening. Have a great day