j. massey

J. Massey is a full-time real estate entrepreneur, developer, investor, sales coach, and problem solver. He has a background in insurance and fiances and talks to Jason today about some of his fun real estate deals. J also shares some creative advice on how you can obtain cell phone towers as well as shares some insightful thoughts on the Memphis real estate market.

 

Key Takeaways:
2:30 – J talks about what his company does.
5:10 – Many big multimillion dollar deals are never done solo. You need partners to help you.
12:00 – J owns cell phone towers and talks about how he was able to purchase them.
16:15 – You should come from the standpoint of solving the customer’s problem. It’s not about you.
22:00 – If you’re a problem solver to your customer, they will refer you to other people.
27:00 – J looks for threats in the job economy and tries to invest in places with stable work flow.
30:15 – J loves Memphis and talks about why the Amazon drones won’t deter Memphis’s job market.
34:00 – You’re going to have an easier time with a class A tenant, but a class C tenant will make you more money in the long run.

 

Tweetables:
“Once people know you can solve their problem, they do whatever they gotta do to get rid of their problem.”

“If you have the legal right to own property and people to deal with, you can make real estate happen.”

“The fun and boring thing about real estate is it’s the same process. We do the exact same play every time.”

 

Mentioned In This Episode:
CashFlowDiary.com
CashFlowDiaryPodcast.com

 

Transcript

Jason Hartman:
Hey, it’s my pleasure to welcome J. Massey to the show. He is a full time real estate entrepreneur, investor, developer, sales coach, and problem solver. He has a great show called the Cash Flow Diary. He’s doing some very exciting stuff nowadays that includes raising capital for several interesting projects and I can not wait to hear about those, but I always like to get the background from our guest directly, but I’ll just tell you prior to real estate investing his background included insurance, financial planning as a licensed representative for the National Association of Security Dealers. You’ve heard of that, the NASD and the Securities and Exchange Commission, the SEC sometimes known as the Scoundrel’s Encouragement Commission, but J, I’m sure you’ll have a good comment on that and the California Department of Insurance and a registered investment adviser as well. Welcome, J, how are you doing?

J. Massey:
So far so good. Glad to be here.

Jason:
Good, good. So, did you like my Scoundrel’s Encouragement Commission, the SEC?

J:
To be honest I have never heard of that before. I will give you credit for the first two or three times, then after that that one is totally mine.

Jason:
Good deal. Well, hey, you’re doing some exciting stuff nowadays and you’re based, by the way, in my old hometown of Orange County and you’re doing some exciting stuff in different markets and even different countries. Tell us what you’re up to lately.

J:
Well, at the end of the day, I think every person is seeking a stream of cash flow. How do they generate it, different story, but that’s what it comes down to and that’s what we seek to do is provide cash flow in various different ways. So, we’ll deploy cash flow say in the commercial space. We have commercial properties where we then seek a triple net tenant to put in there to deploy cash for that way. We’ll also use apartment buildings as one of the other ways of making that happen and at the moment we’re also building from the ground up an a-class resort in the Caribbean, which everybody loves warm climate, right? So, that’s another way to be able to go out there and build cash flow as well.

Jason:
Where in the Caribbean is your resort?

J:
Yes, are you trying to book a ticket too?

Jason:
Maybe, I don’t know, depends where it is.

J:
It’s on a small island in Belize. A small island in Belize. It’s very beautiful. If you’ve never been there the food is awesome. The people are great and I promise you this, if you can get yourself down there, you will want to go back many, many times.

Jason:
Is that on Ambergris Caye?

J:
Yeah, yes. Ambergis Caye.

Jason:
Did you buy a resort there then or are you raising capital to buy a resort now or what exactly…

J:
We’re raising capital to actually build it, so it’s all cash kind of a deal, because there’s no construction financing for stuff like this straight out of the ground, but that’s okay, because there’s enough money between retirement plans and out there in the world people who want to use their capital in very strong and advantageous ways to make these things like this actually happen. So, that’s the fun part. I’ve always said that, you know, real estate is awesome, because people need a place to live, work, play or lay and this is a play type of real estate. You know, if you think of a movie theater it’s play real estate. The resort is play real estate and because we have this desire to go play, we can also turn that into a cash flow by simply being the one providing the location to let people go play.

Jason:
Good stuff, so take us through that deal a little a bit and let’s have people learn about how you’re doing that.

J:
Well, it’s a huge partnership. It’s not, I mean, I wish I was this super genius to be able to put it all together solely, but that’s not even close to the case. Again, many big deals like these are never done solely even only for risk purposes. However, at some point, yes, you gotta get control of the land or work with partnership deal with the land and once that land gets entitled, then you can begin building and that’s literally, I mean, I’ve skimped over that process, but that’s the process is learning how to get the land entitled and prepared to be built upon and then learning how to source the team that has the ability to build upon it. Not to mentioned once you start adding the international piece to it, you got tax concerns as well as labor concerns and just making sure that all of the, what is it, all the Is are dotted and the Ts are crossed to make all of those individual pieces line up to actually pull product out of the ground and make it habitable and useable.

All of that comes together and that’s part of the fun and the advantage as well as the stress of what it takes to put a deal together. You’re the one managing, we’re the one managing bits and pieces of all of that all the way to completion. Obviously, it’s not something, this is not a let’s do this in 90 days and we’re done. That’s not kind of the idea here. It’s a bigger focus and that’s kind of exciting and fun to be part of and that’s one of the extra benefits of real estate because it touches so deeply into our own lives we have the ability to affect the lives of others in very grand ways.

Jason:
Yeah, we sure do. We sure do. So, give us a little idea to the scale of that project and I mean like how many rooms would it be. If you wanna talk numbers and how much money you raised or how much you’re planning to raise, you know, kind of all of that stuff, feel free or if you wanna move on to kind of the next deal.

J:
Well, in this particular instance, you know, we are in the process of, I call it my own personal responsibility is approximately in the 20 million dollar range and we’re going to keep plowing through until we get it done, because that’s what it takes. Now, from that stand point, it’s obviously a larger under taking. We are talking many, many dozen of acres from build out. We’ve got common area, hundreds of rooms, so the plan is also open to, you’ve gotta build in stages and sections just to make sure you continually meet, but not oversupply market demands. So, one of the things that we stay flexible to is by building modularly; at least that word came out correctly; modularly, we stay flexible to downsizing the plan if need be, but obviously the intent is to go as large as we can possibly get it done.

Jason:
What about some of your other projects? You’ve got some apartment deals you’re doing, right?

J:
Yes, there’s an apartment in commercial deals. The apartment deals are relatively straight forward. This is where we tend to serve a customer of what I typically call or what most people typically call the C-class client, so we’ll go in looking for an asset that’s clearly not functional, reposition that asset, fill it up, and then refinance into various different ways and strategies and then do it all over again. So, right now we’re working on two of those.

There’s a 72 unit and a 182 unit building at various stages of completion, etc. We’re trying to put the finishing touches on the 72 unit, well, what I call the finishing touches. I mean, we still have a decent amount of way to go, but we’re almost there, and then the 182 unit is probably going to be a few more years before we actually complete it, but these things they do take time and that’s where we’re coming from.

Jason:
Where is this first apartment deal?

J:
Oh, both of those.. my apartment buildings are always in Tennessee specifically Memphis.

Jason:
Okay so, Memphis, and how many units?

J:
There’s two of them. There’s one that’s 72 and the other is 182.

Jason:
And, you’re in the acquisition stage for both of those right now?

J:
Oh, no. No, no. We’ve acquired them, we’re in the rehab stage, as in, that’s what we’re working on is the rehabilitation and putting the final touches on that. In fact, on everything in the US, we’re actually not in the acquisition stage on anything in the US. We either are disposing of stuff and/or finishing our rehab.

Jason:
Is that a sign that you think the apartment market is topped out? Because, I sold one of my apartment complexes a few months ago. I just, you know, I don’t really like to sell stuff that much, but man, these numbers are just insane, you know. It seems pretty frothy for me and I’ve got another one of my apartment complexes for sale now. You know, we’ve spent three years rehabbing and re-tenanting that property, you know, just slowly chugging through the units as leases come up, etc. It just takes a long time to do that and I don’t know if that’s how you’re doing you..I wanted to ask you…

J:
Say that again. I want you to say that part again, so that everybody else hears that. Yes, it does take a long time.

Jason:
I’ll say it with the inflection you want it, it just takes a long time to do all that!

J:
Exactly.

Jason:
But, now we’ve got that one of the market too and, you know, looking to do 1031 exchange and do something else, maybe a mobile home park if not another apartment complex, but it’s crazy the type of money flowing at these apartments now. Really, in all real estate, I can’t just say apartments, but when you buy something on a 10-cap and sell it on a 5, I mean, I don’t know. It’s hard to resist that deal and you wonder how it can get much better, but..

J:
Well, okay, if we’re going to have this conversation we gotta really talk about the monetary policy, the fiscal policy, and the amount of money that’s being thrown into circulation. It’s making its way over either from foreign countries and/or own printing press. So, it’s going to land somewhere and it’s going to affect those of us with the larger assets first. I mean, if you want to talk something crazy, okay, so people ask me all the time, J, why do you like cell phone towers? It’s because if I buy one I start getting phone calls from all of these hedge funds that want them and you wanna talk about insane cap rates. We’re talking buy a cell phone tower, do nothing to it, and you get a better cap rate on the tower than the building and it makes no sense, but that’s what they want.

They want the cellphone tower even though it’s still attracted to the real estate, even though they don’t care about the building, they just want the tower, because they’ve got excess money chasing predictable streams of income. That’s not going to change until, well, it’s just not going to change. So, on one hand, yeah, I agree with you. It’s absolutely crazy what I’ve seen and some of the people I’ve coached through processes of acquiring their properties what they’re seeing. I mean, that’s the crazy part is what I’ve seen in the DC markets and Virginia and even in certain parts of Florida or just Texas. I’m just like, really?

Jason:
I agree. It is crazy, but you know, I want you to talk about the cell phone tower market for a moment, because it’s really rare, that’s a very small nichey market obviously, and it’s really rare that you get to talk to someone that actually does that, you know. So, how long have you been buying cell phone towers?

J:
We’ve had this one, oh…what is this? I don’t know, about a year and a half maybe? Year and a half and I’ve been, to be honest, it’s something I was after for for a long time. I was like, I was trying to find a way to buy cell phone towers and no one could give me any sort of insight and then what ended up happening was I started looking for buildings that already had a tower. So, I was like, ah, if I can’t go through in the front door, let me go through the back door.

Jason:
That’s a smart idea. So, instead of buying the cell phone towers, you bought the building that happened to have a cell phone tower.

J:
Correct. Just like you can with gas stations and/or, you know, many other types of assets with real estate, you can separate the two and often times or at least in my experience, you get a better cap rate on the cell phone tower than you will the building, so even though we’re going to reposition the commercial building and put tenants in there, you still get a better cap rate on the actual cell phone tower lease than you do the building. So, the building could be, say, a 7 cap, but you might be able to get a 5 or 4 on the floor at least, which is..it doesn’t make sense to me, but it makes sense to them.

Jason:
Yeah, it doesn’t make any sense, but see that’s..what you’re doing is the same thing that the corporate raiders did mostly in the 80s. You know, they would find you could buy the company for less than the value of its component parts and that’s exactly what you’re alluding to here, right?

J:
I was probably in my teens in the 80s, when you’re saying that, that’s..what you just said, yeah, that sounds absolutely accurate. I did not have that context, so yeah, that makes perfect sense now that you say it that way. Yeah. I like it.

Jason:
Okay, so, how do you find those though? I mean, finding a building with a cell phone town rather than just buying the town, that’s kind of difficult to sort, you can’t really sort by that, right?

J:
You can, you know, realtors know. There are usually in the MLS listings if they’re..

Jason:
Oh, you’re using the MLS, though?

J:
No, no, no. You ask how could someone find them. They could find one by using that particular strategy, but no. Another way that you could find them and that I’ve seen them is when you research tax foreclosures. Those tax lends are often, especially when it looks like it’s a whole bunch of vacant land. There are a number of those vacant land parcels that probably actually have a cell phone tower on it. I’ve seen that before, for sure, and then the, yeah, the way that I always find most of my deals is I’m always looking for problems, not properties.

So, when I say problems, there’s simple script in fact, I’ll let everyone use this. Next time you’re talking to someone with a real estate license who is actively listing property, here’s what you say, you just simply ask them, do you have anything that could be seller fiance? Period. Just ask them that simple question, because that simple question, the answer to that question, I should say, lends to distress and distress lends to a problem, which usually is where the investors can play.

Jason:
Okay, good, good. So, talk about your work flow if you would a little bit, because in growing through all of these deals and finding, I mean, you know, one of the hardest part of our business is finding deals. My company brings deals to people, but that’s a hard part to find deals and especially if you’re doing creative stuff like you talked about, you know, the buildings with the cell phone towers or vacant land with cell phone towers. How do you find stuff?

J:
That is how..that’s literately what I do to find stuff is what I just said there, but the other way that I’m probably more known for is, believe it or not, I play a board game. I play cash flow 101 with people and ask, and I’m pretty good at asking for referrals or letting people know that we are problem solvers and if we can train our minds to be problem solvers, people will bring us their problems.

Jason:
Brings their problems, exactly.

J:
There you go. Once people know you can solve their problem, they drive, they fly, they swim, they run. They do whatever they gotta do to get rid of their problem so long as they know you can help them with it and that’s probably the major point of our branding. We do very, very little marketing for deals or properties. I’ve just always come from the standpoint of I can solve your problem. I may not completely understand all your problems the first time I hear it, but I can solve it or I can go get the people who can help us solve it. One way or the other. It’ll get solved, I just may not know everything at this moment, but let’s sit down, let’s talk about it, help me understand your problem, and once I do, we can go out there. Today, we just solved lots of different types of problems, so that’s literately how it works.

Jason:
What tips would you like to share with the listeners about investing? You know, I just wanna open it up for you, maybe a question I’m not asking that you get asked all the time, because, you know, you have people coming to you with their problems, as you mentioned, what would you say to investors, what would you say is some of their biggest hurdles out there that may be you can give them some advice on?

J:
Well, the number one thing I believe that prevents most real estate people from being the success they could be isn’t that they don’t know enough is that they don’t execute enough. In specifically in the marketing area. That’s one place. Then, the other thing I get asked all the time, like, all the time, J, how do I find the money? How do I find the money? How do I find the money? I get that, I don’t know, all the time. It’s a question we are consistently, constantly, persistently answering and the, I think, it stems from the fact that most people or sometimes we don’t see those who may have excess resources as having a problem, because we don’t see that having excess resources as a problem for some, I mean…

Jason:
That is a problem. It is a good problem, but it’s a problem.

J:
Yeah, it’s a problem. It’s a different type of money problem. When I say the words money problem, some people, you know, you have your own ideas of what that is, but the idea of, how could you have too much and that be a problem? Well, if you have..here’s another resource that I’m just going to mention and just think about, because in the right quantities it makes sense, but when you have an over abundance of it, you have a problem. Water, in the right quantities…we absolutely need it. Too little of it, we die, just the right amount of it, we’re fine; too much of it, we drown. So, there is and money is that same way.

Currency is the same way and unfortunately not enough investors spend enough time figuring out what the problems are of the individual who has excess capital, because typically is what they have is excess capital, but not excess time to deploy that capital. They don’t have the skill set or they don’t want to use their skill sets to go actually out there and deploy the capital. When you begin to approach it from that standpoint and the key here is this, it’s not about you. It’s not about you when you’re trying to help someone else with their problem. It’s about can you.

Do you have the skill set or do you have the team that has the skill set to be able to solve the problem. It’s not about you. I think there’s too much talk and addiction to the concept of the whole FICO score thing, which prevents people from actually going out there to actually create solutions for people and we take the path of least resistance and say, oh, the bank won’t give me money, I guess I can’t be a great real estate entrepreneur or anything of that nature.

Jason:
Yeah, don’t let that limit, for sure. That’s the great thing about real estate, you know? You can really apply some good creativity to it and, like you said, they stress over the money problem, but in the creative side of real estate, you know, good deals attract money. There are lots of sources for money and there’s lot of people out there that have the problem of, you know, too much money and they need to deploy it and they need to get it in play. That’s certainly is a problem now.

The caveat though, and I’m sure you’ll agree with this, is that you’re not going to get that money at Fannie Mae, Freddie Mac agency type rates when you burrow it, right. You’re not going to get a 3 decade long, fixed rate, you know 4% mortgage on your deal, okay? Especially if it’s a commercial deal, you’re going to pay higher rates on a commercial deals even if they’re conventional commercial loans. The rates are quite a bit higher, they don’t go for such long terms. They’re usually 5 or 7 year adjustable.s It’s just a different form of thing, right?

J:
Yeah, it’s completely different and I’m chuckling, because..yeah, that’s the other question I get too, J, why on earth would you do that? You have to pay more and I could just…

Jason:
Why would you pay 11-12%, well because the deal is good enough to make it work!

J:
It’s like, c’mon. Well, even, let’s just..Okay, sure, the deal is good enough, but let’s just think about this other cost, because I said it at the beginning or earlier, I said the other thing that we don’t do well as real estate investor, for whatever reason, once you say I’m a real estate investor, you forget, oh, that means I’m in business. If I said that I was selling a new widget or if I had a new cellphone or a new computer or a new way to do something, one of the first things out of my mouth would be, okay, how do I reach my market, how do I sell my product, how do I make sure people know that we’re in business and we would come up with the marketing plan and the sales model to go out there to the market place, but when we say, I’m a real estate investor, we throw all of that out the window like it’s not necessary and so here’s why I gladly will pay a little bit more, okay, now, this is not being ridiculous.

I’ll pay a little bit more, because I view that extra I would pay a private investor as marketing expense, because I don’t have to go out there and generate a new customer, because what do you think when you help somebody with their retirement planner, you help somebody put some money into action and all the things go well and even when they don’t, but you still stay in good communication. When all of that stuff happens, what do you think they’re going to do when they’re at the football game talking to their friends or when they’re hanging with people, birds of a feather, you know, flock together. That whole thing.

Hey, I got my guy and this was what they were able to help me with and everybody wants my guy. Everybody wants the hookup and if you were that person who has the ability to solve the problem, they’ll send you a referral and that referral could save you a ton of time trying to figure out what kind of business cards and marketing strategy and all of this other stuff that I need, I did not have a website until a little more than a year ago. I just didn’t have one! I didn’t need one. There was no need for a website.

Jason:
Give us some context for that. How long have you been, I don’t know, if I should say in real estate or doing these types of deals or, you know, what’s the right question?

J:
Sure, sure. I started in 08. June of 08 was the first time I got a deal done and I didn’t have a website until like the beginning of 2014. 2013? I’m trying to remember. It hasn’t been that long, that’s the thing. The website is a new animal to, you know, if you go there, you’re probably like, yeah, he really doesn’t know how to use this thing right, because it’s a new animal to figuring out how to make all of that work. What we know how to do, bar none, is generate referrals like no body’s business, because that’s a way cheaper marketer strategy and starting off the way that we did in real estate with, you know, literately no money, no credit.

When I say no money, I’m like, not even $75 to put together. We had a credit score of 398 and we were squatting in bank-owned property. My wife couldn’t..Sorry, I couldn’t walk or talk, she couldn’t eat or drink. That was our beginning. So, we had to come up with alternative ways to go to the market place.

Jason:
Yeah. Isn’t that great? I mean, necessity is the mother of invention, right? There you go. You got a story of struggle and you came through and you did something great with it, so that is very inspiring and, I mean, where else can you do that? You know, look at all the other things out there. Look at your background and your prior career. I mean, someone can’t come into the stock market, probably, and invest and, you know, grow wealth like this, and apply creativity to it. I mean, or can they? Am I wrong about that?

J:
Well, I know, well, you can’t start off in the same similar fashion, you just don’t have the same leverage opportunities. I mean, real estate provides leverage in ways that stocks and other places don’t. They just, you just don’t have it or there are some huge barrier to injury that prevents you from it. I mean, let’s take stocks for example, if I was to try to do any of the things that we do as real estate investor, the barrier to entry is going to be a license sponsored by your favorite three letters or the NASD, which is what you gotta do, you know.

That’s a limited barrier and you gotta have a sponsor and someone’s got to sponsor you through that training in order to get in to that game. The only thing that’s necessary for real estate investors is that you need to be able to have the legal right to own property and then you gotta have someone to deal with. That’s it. You don’t need, you’re born with..In most countries, you’re born with those two things. The legal right to own property and people to deal with. If you’ve got those two things, you can make real estate happen, which is why it’s an option for everybody.

Jason:
J, I want to ask you about your other commercial real estate investing, but also before we do that, on apartments, because, you know, I like housing. I’m just really a fan of housing. It’s simple, easy to understand. Single family homes, apartments, maybe a mobile home park, I just like housing. That’s what I’m a fan of, but you’re doing some more creative stuff and let me ask you about your apartments. Earlier you said that you do all your apartment stuff in Memphis, do you like Memphis specifically and not other markets or did you just happen to come across deals there that were really attractive or what you think about different markets around the country for apartments?

J:
Well, I did happen to come across the market place, but I had to justify staying. Hopefully that makes sense. It’s not like I was actively looking for a market place per say as much as I was actively looking for apartments. Again, I got Memphis, because I did the same thing I said earlier. I was asking a licensed real estate professional, hey, do you have anything that could be seller financed. He said, no, but I got a guy who has these apartments and where are they? It happened to be in Memphis and then I did the work to figure out that Memphis was a place that needed to stay. So, that’s kind of the thing.

Now, are there reasons that I continue to stay there versus other markets? Absolutely. There are lots of things that make me feel good about cities like Memphis, for example, the number one thing I care about. So, if you like long term real estate and, I get it, I love the game too. You should really, really, really like jobs and job markets. That’s really what you’re after. So, by setting the job markets..so, with that being the case, I gotta make sure my tenant has a place to work and one of the threats to the America job economy is the leveling of the technology to some degree, because technology makes it easier for anyone, any entrepreneur to get their labor costs near rock bottom by going to other countries. It makes it really, really for us to do that.

So, if you’re like any other entrepreneur, if you’ve got a choice, you’re likely going to seek the lower labor costs unless you’re on some other mission and that’s fine. The whole made in the US thing, I’m down with that. That’s great. However, not every person is and my tenant may work for an entrepreneur who does not have that vision and that’s the case, that becomes a risk to me, my apartment building, and I need to make sure that those jobs can not disappear to another country and I believe there are certain types of jobs that just can’t disappear to another country.

You know, technology jobs can disappear, customer service disappear, sales jobs can disappear, there are many types; especially inside sales jobs, those can disappear. There many types of jobs that can disappear easily to other countries. However, when we start talking about goods and services like shipping, that can’t disappear until we decide to no longer live in the US as an entire population, we’re just not going to use this continent to live on, those types of jobs are going to stay.

Jason:
I agree with you completely. Memphis is like the logistics capital of the United States, you know, with FedEx and the other shipping and distribution there and so, I totally agree with you. The one little concern I have about this though, I gotta just express it because maybe it has crossed your mind is Amazon.com and their drone delivery idea. We’ll see if that takes off, pardon the pun. Like, I was UPS right now or FedEx, especially UPS though, I would be a little concerned about that. Of course, there are bigger items and oddly shaped items that they won’t deliver with the drones, but man, the FFA is going to bend. I think Amazon is going to win and that’s going to happen. Who knows when it’ll happen, I mean Jeff Bezos said it’ll happen in two years, which was about a year ago. So, that’s only next year, right? Who knows, it may take way longer, but I think ultimately it’s going to happen.

J:
Being a drone owner myself.

Jason:
I like those drones, they’re pretty cool.

J:
They’re fun. I think, I honestly I think it’s a few more than two years away, because I mean, at some point, it’s still difficult enough to even get the proper insurance for these things and getting it used, then there’s going to be a licensing process, because all of this has to happen in order to make that happen. Now, you bring up a point. That’s just the different delivery method and I don’t think that is ever going to replace that. I don’t think a drone is ever going to replace the overnight delivery service from multiple locations. I mean, that’s going to be a challenge. Sure, once you get to within a certain local area that could work out quite well, I don’t know, but who knows the future.

At the end of the day, even if the drones did, they’re still so much heavy durable goods that I don’t ever see it replacing, for example, medical device delivery. There are so many hospitals, especially as we have an aging population, there are so many hospitals that are dependent on some of the most expensive medical equipment for hip replacement, joint replacement, and all of this other stuff that they don’t own it, they just lease it on the daily basis and those medical device companies co-locate near Memphis that they can get the overnight delivery service up to midnight, sometimes three, depending on where it’s going into the country, so it can still be there by that 8am or 10am surgery start time.

So, you know, there’s lots of intermingling that one technology, I don’t think is going to be able to easily replace, because it would have to, it’ll actually not only have to replace the air, that’ll also have to replace the ground. You gotta realize two major freeways, the highway 40 being one of them, intersect at Memphis as well as the Mississippi river. It’s not going anywhere and I can’t think of anything that would float on a river that a drone would be able to carry and then we’ve got the whole railroad system. We’ve got a number of the class a railroads that we still use that all hub there. So, now we’re talking about international shipments and goods from our imports, etc. So, from that stand point alone, I think Memphis is fine.

Now, you must also realize you don’t just suddenly go, oh, Memphis is great, that’s where I’m going, because I don’t think that’s going to work for you if you don’t have the mentality of being able to serve that particular type of tenant. I mean, it’s one thing if you’re used to serving..

Jason:
It’s a blue-collar tenant, no question.

J:
Exactly, you need to know that going there, because it operates differently. That’s fine and it should.

Jason:
Let me tell you something, you’ll like this, J. One of our local market specialists in Memphis said, and he’s got lots of rental properties and he was talking about our investors and what they’re doing in Memphis. You know, we’ve been doing lots of single family homes there for lots of single family homes there for several years now and he says, I just love Memphis. It’s like a town where everybody makes 40 grand a year and they are renters. It’s like, sort of the perfect thing, you know. It’s a good formula, you know?

J:
Yeah. You just gotta know that going in. This is not the market place where everyone’s, you know, it’s just not what you may be thinking it is and if you’re not the investor that knows how to serve that particular type of customer, then it’s still not your market despite all of these indicators that I’m telling you that make sense.

Jason:
Yeah. So, that is a really important thought that you brought up, is the investor almost has to be personality matched to the investment, because some investors, you know, the numbers are better in the class c type of investment, but some investors, they just don’t have the temperament to deal with it. You know, they want a class a thing and they’ll take a lower return to just have a different kind of tenant and sort of an easier deal. I mean, theoretically, there are, of course, exceptions to this, but I’d say on the whole you’re going to have an easier time with a class a tenant than you’re going to have with a class c tenant, but the class c tenant as far as a rent to value ratio is going to pay you a lot more.

J:
Correct. You’re starting to get into two concepts that I talk about a lot. One being investor identity and the other profit analysis quadrant, so that you can see the difference between what I call Walmart, Target, and Nordstom property and they perform from a financial basis. Most importantly, the most important person to first figure out what the investor identity is ourselves, the investor. I may be a Walmart investor, but that doesn’t mean I have to live in Walmart, it just means that’s where I invest. I can own a Walmart, I can shop at Nordstrom and it’s all fine.

Jason:
That’s what I say, you know, the old saying is, serve the masses, dine with the classes, but I say, invest in places that make sense, so you can afford to live in places that don’t make any sense.

J:
Right, you mean California?

Jason:
Yeah, California, but especially California on the water. You know, a really expensive nonsensical place that you’d never buy there as a rental. It doesn’t work.

J:
Not for.. well, I guess you could, but it wouldn’t be for the same reasons that most people would think. I mean..

Jason:
Yeah, it’ll be speculative.

J:
It would be completely different for many different other reasons. You could do it, not recommended, better uses of capital.

Jason:
Yeah, definitely. Okay, any more on that thought?

J:
Nah, I’m good.

Jason:
Okay, last thing, you’re doing a retail property too, right?

J:
Oh, yes, yes. Yeah, we actually just made the paper for that one. That was pretty cool. Yes, so we’ve secured an 1,800 sq ft commercial building that was previously a bakery and turning it into a retail store with a triple net credit tenant ace hardware, which is kind of nice to think about, but it’s still a long place none the less, but it is what it is, and that’s the whole thing is that you can put all of those pieces together. Again, the fun thing about, the fun and slash boring things sometimes about real estate is it’s the same process, whether it’s single family, land, multifamily, commercial, cell phone towers. We do the exact same play every time. The players change, the names change, the companies we are dealing with change, but there’s always every piece that still needs to be filled in and that literately is what it comes down to.

Jason:
It definitely is. Good stuff. J, give out your website.

J:
You wanna go to CashFlowDiary.com, just like it sounds or if you’re looking for the podcast, you can go over to CashFlowDiaryPodcast.com as well.

Jason:
Well, J. Massey, thank you so much for joining us today and sharing some of this wisdom. You’re doing some good creative stuff, so we appreciate hearing about it.

J:
Awesome. Thank you for having me.