Jul 16, 2019
James: Hey audience, welcome to Achieve Wealth Podcast, where we focus on value add, real estate investing across all commercial real estate. Today we have Paul More from Valence Capital. Paul also has a podcast called How to Lose Money and also a frequent contributor to BiggerPockets. He produces live video blog content on a weekly basis, he's also the author of The Perfect Investment book, 'Perfect Investment creates entering wealth from historic shift to multi-family housing'. And has a forthcoming book on self-storage investing. Hey, Paul, welcome to the show.
Paul: Hey, it's great to be here, James. Thanks for having me on.
James: Well, really really happy to have you here. So you have been an inspiration to me because I've read a lot of your articles on Bigger Pockets. So I want to go into some of the articles in BiggerPockets which is like, for example, recently you wrote about real estate tsunami, right? And the other article such as, 'Why do some people will continue to overpay for multifamily?' Can you explain what's your thought process behind these articles?
Paul: Yeah, you know a lot of what I'm trying to do is warn people that there is a market cycle, you know, and a lot of people who are successfully investing the last decade since the crash, don't realize that it's going to come down, it's going to change. It may not drop drastically like the last bubble that burst in 2008. But here's the thing, I just read a book called Mastering the Market Cycles by Howard Marks and I think you and I might have talked about that book before and you know, there's always people saying it's different this time.
And the truth is I want to tell people, especially newer people on BiggerPockets, no, it's not different this time. There are things that change every cycle and yes, we may be hovering around a different mean of the cap rate, you know might not return to an average of eight and a half like it did historically, maybe it'll return to an average of seven or six and a half, I don't know but I do know that it's not different. It's always--there's a book out there that I think it's called 'It's Different This Time: eight centuries of financial Folly.' And it explains going all the way back to I believe the 1200s, how everybody always thinks it's different this time, but it's not. And we need to be very, very careful to not overpay for multifamily or any asset class.
James: Got it. So don't you think with the tenants, the renter's base of millennial who just moved more into becoming renters, don't you think we're going to have a continuation of multifamily boom in general?
Paul: Yeah, I absolutely do and I actually believe that if I was going to invest a million dollars and it had to stay locked up for a hundred years if I had to pick one asset to put it in, it would be multifamily. Because I truly believe that the multifamily, you know, the nicer ones at least they're being built around Austin or around me here in Virginia, I believe they're still going to be lived in as apartments, a hundred years from now. I'm not sure that Self Storage will still be popular in a hundred years and I don't know where mobile home parks will be, I think they'll be around but multifamily is certainly on the way up.
The problem is, there's a thing called supply and demand and there could be a situation where people are overpaying for assets in the wrong location. I mean, there's some overbuilding going on, like there is, in any cycle in any asset class. I'm just trying to warn people don't be taken in, be really, really careful. I was at a conference in December, James and a very famous multifamily syndicator got on stage. He wasn't scheduled to be there, I guess they invited him up when they saw him there and he said, hey, go ahead and overpay for multifamily. It's okay to overpay. Just get in the game you need to get in. And I thought he was kidding and I thought that there was going to be a punch line to the joke, but there was none, he was not joking. And his quote actually turned out, I wasn't sure I heard him right, I was shaking my head kind of bewildered and his quote actually went out all over the Internet later. So I was correct, I heard him right and I just don't agree with that.
And I tell you, Warren Buffett, Charlie Munger, Howard Marks, a lot of great investors, you know would not agree with this. And so, I'm trying to side with the more conservative great investors on this one.
James: Got it. Got it. And what triggered you to write that book? I mean, there must be something that triggered you to write 'The Historic Shift to Multi-family Housing' and you also mentioned, "The Perfect Investment', what are the components of multifamily do you think that has that perfect perfectness?
Paul: There's a lot of books out there about how to get into single-family and the BRRRR Strategy on BiggerPockets and wholesaling, flipping, building a portfolio. There are lots of books on apartments, but I didn't see one that was specifically geared to people to help them to realize how they could make the jump up from a few duplexes to being part of a large scale commercial multifamily project. And so, I wanted to write that for those people and it really struck a chord. I have a storytelling fashion manner and in the book, I tell a lot of stories and it really struck a chord with a lot of people. I mean people are telling me that it's the most pivotal multifamily book that they've read and I still believe everything I wrote in it, even though I wrote it three years ago.
Some of the statistics, you ask what makes multifamily so great. A couple of the things are; number one, the government. Now, the government tinkered in the housing world in 1995 or so. They said everybody that can fog a mirror should be able to buy a home and they pass laws that motivated, let's say, to put it lightly, motivated Mortgage Companies to give mortgages to anybody even if they couldn't prove they had good credit or even if they didn't even bother to prove their income. I had a guy I know who was making about 40,000 a year, James and he bought a $600,000 mansion as his second home and I think it was to impress his family back in his hometown. Well, he didn't impress them much when the notice went out in the newspaper about four months later that he was in default and it was foreclosed on but anyway, that's what happened. Well, in 2005 that bubble began to burst and from 2005 to 2015 well, first of all, from '95 to '05, homeownership rose to from 64% up to 69.2%. From 2005 to 15, it dropped back to a historical level of about 63%. Every one point drop means 1 million new renters into the renter pool and of course during the recession and then the aftermath of the recession, there was a lot of building going on so there became a supply and demand imbalance. That's number one.
Now number two. There are four demographic factors. Number one and that is Baby Boomers. They're the smallest group of renter's but they're the fastest-growing group. And the statistics say that when a baby boomer 50 60 70-year-old rents, they never buy again and that's happening more and more. And part of the reason, James, is we learned during the recession that our home, our single-family home wasn't what our grandparents told us, it wasn't our greatest investment. A lot of people, you know, were leveraged to the hilt and they lost their homes.
And so, another group that saw this were the Millennials, that's the second demographic group. And they realized single-family homes is not my greatest investment and why should I be tied down to a, seemingly, overpriced home with a 30-year contract in this part of town when I might have new friends or new adventures or a new job opportunity on that other side of town or that side of the country next year? And so, Millennials also have record amounts of student' in credit card debt, and they don't want to get tied down and they don't have a huge propensity to save. So Millennials rent far more than buy. Now, that's changed some, a few years since the book but, you know, Millennial still have a propensity to rent more than buy.
A third group is immigrants. Immigrants, on average, rent more often and for longer than folks who had their descendant, you know that was born in America. The fourth group that I didn't cover in the book is Gen Z and I was really surprised. As far as I know, the Gen Z group is the only group that came right on the tail of another large demographic group and they're actually about the same size, about 78 to 82 million strong. And so, this group we can only guess will be renting more than buying. So those are some of the factors. I will tell you that because of all this, multifamily, large-scale multifamily has almost a zero default rate Nationwide. In fact, from what I understand, well, I mean I can tell you during the Great Recession, multifamily was only at, I think, point eight percent default rate, I think it was point four percent default rate, in fact, with Freddie Mac specifically. And Freddie Mac, on the average for single-family homes, was a four percent default rate. So it was only 10% of the default of single-family and now it's virtually zero. It's about 98 or 99% less than single-family homes. So the default rate is very low. Again, the risk compared to the return is very favorable for multifamily.
James: That's a very long but it's a very detailed explanation for why multifamily will continue to be in high demand for a lot of people who need housing. The other thing I want to add is a lot of things are moving to the cloud. A lot of work is no more like I have to drive to somewhere to work, right? So everything is in the cloud right now. So it's easy for people to move and change jobs and go live somewhere else and everything is in the cloud, right? So with the technology changing, you know, you just make more sense to rent. Do you think we are becoming a renters Nation?
Paul: You know, Germany has about 60--let's see, we have 63 or so, maybe 64 percent home ownership right now. Germany has about 42 and Dallas, Texas near you is below 50. I imagine Austin might be below 50. We're older cities, you know, more mature cities that don't have a huge amount of migration coming in right now. Like Detroit is over 70% homeownership. And so I think if you look at the trends, I think we're becoming more and more a renter nation and it remains to be seen how it will shake out in the coming decades though.
James: Yeah. Yeah. Yeah. I'm going to be posting a chart which shows all the cities in the US and it shows the homeownership difference from 2010 to 2018 and you will see some of the Cities there, it has like almost thousand over basis point change in the home prices well, and how are people going to afford it in the cities. So, you know some cities are going to be more renters city, faster than everybody else. So that's very interesting. I mean, what are the things that all multi-family investors need to be careful of at this stage of the Market cycle?
Paul: I think just you know, the Euphoria of potentially overpaying or potentially buying a C-Class property and treating it like it must be a like a B class. Yesterday on our podcast, we had Monique Calm and Monique is really large, really big in the female commercial real estate space. And she said her biggest mistake was buying a D-class property in the euphoria of 2016 and treating it as if it was a B-class property. And, of course, those are very different things and she got out by the skin of her teeth after losing a lot of sleep and through a lot of pain and I think that's a really big risk. I think the risk, anytime you're at this hype part of a market cycle the risk is, you know, believing that it'll never change. As I said, things are different this time. Well, no, things are probably not different this time. It's going to burst.
Now, it may not drop like a rock as it did in the fall of 2008, I don't think it will but that's a risk and we got to be really careful not to overpay.
James: Okay got it. Got it. But do you think the information about multifamily is also very widely known right now? It's no more hidden investment asset class ready. So do you think that can cause the whole Market to shift as well? Maybe our circle is whoever we know in multifamily. I may be wrong by saying everybody knows about multifamily because I still find a lot of investors who don't know about multifamily yet. Do you think because of the knowledge that has been disseminated by social media and lot of clubs and lot of groups and just there's so much of information out there about multi-family, do you think that would impact what's the next recession or the crash that's coming?
Paul: So let me ask you, James, do you mean because there's so much information out there that there are so many more investors coming in at might keep the market, keep the price up a little bit?
James: Yeah. So many less sophisticated investors are coming in so, for example, mobile home parks, like five years ago, nobody wanted to touch it. But now there are so many people who want to do mobile home parks. Self-storage was not known, the same thing with multifamily 2010; nobody wanted to touch it because it's considered expensive. It has always been considered expensive for me. But do you think just because of the information and the knowledge that people have right now about how to run asset management of multifamily, you know that could change the landscape?
Paul: It's possible. I'm not sure. I think that amateur, I shouldn't say amateur, most investors tend to buy high and sell low and even experienced investors do that. We discussed this on my 'How to lose money podcast often and so you know whenever there's a motion involved, it's very, very hard to predict the timing and the future. I can tell you the higher things go the lower they will go later because the same people who were the most euphoric to buy at the top are the same people who think they've never ever buy again at the bottom. And, of course, Warren Buffett and others us, you know, you need to buy when things are the opposite of what they seem and we know that.
James: Correct.So what do you think we should be doing as multi-family investors who know how to run, how to do asset management, how to buy deals? I mean, we already have the knowledge, right? So a lot of people who already have the knowledge but what should they be doing like at thisMarket cycle?
Paul: I think being very, very careful. I keep beating the same drum actually, James and that is just really really being wise. Having a default of know; why not have a default to say, hey, I'm looking at this multifamily deal. I'm going to start out by saying, I'm not going to do it. Then letting the numbers, letting the demographics, letting everything else convince you that you should do. You know, it's as entrepreneurs and investors we're naturally an optimistic bunch, we naturally want to do things, we want to say yes. And then, once we are way down the road with it, you know, then everything looks good. And even the things that look negative, we somehow in our minds twist into something positive.
Well, what if we started out with a no and let that be our default and then we let the numbers and everything talked us into it? I think that would be a good way to go for any kind of investment.
James: Yeah, that's absolutely, really good advice. So let's move on to your recent adventures, right?So you have been looking more into self-storage. I mean, investing with self-storage, even though you said you're investing with another operator, right? So is that right, self-storage only? Are you do also mobile home parks as well?
Paul: Yeah. About a year and a half ago, we were beating our head against the wall, trying to find multifamily that made sense and we finally decided, hey, let's expand outside of multifamily. So we started researching self-storage and mobile home parks and we found out the formula to do it. We found out how to do it, what made sense, what were the best steps and we were pretty much on paper or in a book, we were able to understand what to do; what the steps were to do a very, very profitable deal. Well, that didn't mean we had done it and I had to look at my team and say, guys, you know, we know how to do this, but we're late and the market cycle prices are high in all these asset classes. Maybe we should invest with some experts who already have a team, who've already been doing this for decades.
And so we decided, as a company, to pool our resources and our investors' resources together and invest with operators. And so we spent a long time, last year vetting great operators, and we're still doing that now. Trying to find great operators to invest with and then, investing with them in their best projects. And by doing that, we're getting the benefit of all their years of experience, their acquisition pipeline. A lot of them have great off-market deals that I don't have access to and the expertise to drive the highest income and the highest value and the highest return on equity for the investor.
And so that's what we're doing. In fact, Wellings Capital has put together two funds recently to allow people to invest in these other experts, these best-in-class operators deals.
James: So do you get similar loan terms like in self-storage as well? Like is it a non-recourse type of loan or do you get like government loans like Fannie and Freddie? So my government loan I would say.
Paul: Yeah, Fannie, and Freddie love self-storage and mobile home parks. In fact, the interest rates for mobile home parks, surprisingly, are lower than multifamily, quite a bit lower and Freddie and Fannie allow at least Freddie Mac allows syndicators to refinance and to take basically additional equity out of the property twice in the first five years. And those two refinances are at the same interest rate as they went in at, guaranteed upfront and there's no penalty. So it's a great opportunity to you know, get in below to sometimes below 4 percent interest and then pull out safe Equity to hand back to the investors which we love to do. Because if we can hand them all their money back in the first five years, well, they can go out and reinvest that and then the money left in our deal is really essentially zero, so they're effectively getting what is called an infinite return on their investment at that point.
James: Yeah, I remember Fannie Mae entered mobile home parks like two years ago. I mean, that's where I was looking at mobile home parks. And that's the time like Fannie Mae came in and I was surprised even when they started itself they already told everybody about, hey, you can do a multiple refis on the same project, which was very interesting because it's hard to do on a multi-family. There is prepayment penalty, you have the fees and you know, it's just so hard to increase the value so much and you know, we had to do double refire within a short time. And so that's interesting. Is that the same thing in Self Storage as well? Does Fannie and Freddie loan non-recourse loans in self-storage?
Paul: I'm not as familiar with Fannie and Freddie's take on self-storage specifically because a lot of the operators we worked with either use, one bank, in particular, is called Live Oak Bank, and they're very aggressive in Self Storage, especially the smaller deals. And then there are some REITs. In fact, the REIT that owns U-Haul and I'm struggling to remember the name of the REIT, actually does a whole lot of the debt in Self Storage. There's other Regional Banks like BB&T and others that provide loans as well for self storage. Those seem to be the most popular with the operators, we've been working with at least.
James: So what about challenges in self-storage? Because self-storage is pretty easy to be built, right? Anybody can build something because it's cheap and if you find land. So aren't you worried about that kind of coming into self-storage?
Paul: I am worried about it. In fact, I thought about doing a self-storage project myself, 20 years ago this year, in 1999. And my concern was, well, I built it on the edge of town here and there are all kinds of farmland just outside of City Limits. Well, as the town keeps expanding what if another nicer self-storage facility comes in and a year later, I'm in trouble? And you know, there's truth in that so there are very important things you have to look at when you invest in a self-storage deal.
For example, we just invested in a Minnesota deal, it's near Minneapolis and it's in a town. It's in a suburb that has already changed the zoning and said no self-storage is allowed in the city limits unless they're in an industrial part. Well, that bodes really well for this self-storage project because it's right in the middle of a bunch of Townhomes, single-family developments, multifamily some retail. It's right there on the main Boulevard in town and it's a perfect location. And now that the competition is relegated to industrial parks, it made it a really good opportunity. There are other factors we look for in evaluating self-storage.
And for example, we want to see less than an average amount of square feet of Self Storage in a say a three or four-mile radius around this one. So here's how you look at it. You look at the total square feet of Self Storage in it, let's say a 4-mile radius, and then the total people in that radius and you're looking for the national average might be around seven square feet per person. Well, if you're in a market like our Minneapolis one, where the average square feet per person was only two and a half square feet, then you can basically say that that market is undersupplied. And so, it's undersupplied because you know, it's much less than the national average. And then places like Florida, Texas, California, the average square feet per person is likely much higher because they don't have basements typically and they're rarely using their attic because it's so hot. And so those have even higher demand than the national average. But those are the kind of things we look for as we evaluate these things.
Another one that my friend invested in was in a basically a sleepy town called Marietta, Georgia. It was sleepy years ago. Now, it's a booming suburb outside of Atlanta and this, you know, 1978 facility was looking pretty tired. Well, he bought it and he is making into a gleaming beautiful facility right on the main boulevard in town.
James: Awesome. That's very interesting on how Self Storage has changed throughout the years. But I think if you look at like the last 15 years, I mean, I did a lot of analysis on asset class and Self Storage is one thing that has never dropped in demand since past 15 years.
Pauk: Yeah. It really hasn't.
James: Yeah, there's no data that shows that it has dropped a lot. So that's a really good asset class. So right now, you are like investing with some operators, right? So, how did you choose your operator? What was your criteria? What did you look for in them that you feel comfortable about them and you know placing you and your funds money?
Paul: Yeah, so we're looking for you know things like high character, high ethics, high integrity, you know, can we really believe what they say? We're looking for competence a second see, you know, we're looking for people who have a phenomenal track record, happy investors, professional, you know bookkeeping and operations. We're looking for people who have weathered the storm and we'd like to know how they weathered the storm, what they did during the recession, what they learned from it and what they're doing now to protect themselves against the next downturn? We're looking for conservative, people who are not taking on way too high of Leverage. We're looking for operators who might be better operators than they are many razors and they might need some money to you know, fund some equity, to fund their deals. We're looking for operators who are willing to give us a better deal than a retail investor.
And what that means to me, is that as a fund we might get a better ROI than an investor coming off the street to them. Which means that we can offer when our fees are factored in, for running the fund, keeping the lights on. We're giving our investors still a better or about equal deal to what they would get if they went directly to them. We're not vetting operators. A lot of people ask me this one; are you vetting them based on geography? And I would say if I was an operator myself, I would absolutely be looking for the right geography, but we're actually trying to merge; we're trying to bet on the jockey and let them pick the horse. Let them pick the geography.
So for example, I'm talking to a guy in the Pacific Northwest, which I know very, very little about. I'm heading out there June. We don't know that area really well, but he does and we trust him to make the right decisions to invest in those areas like, Washington, Idaho and, Oregon.
James: Got it. So is this like 506C offerings? Is that what they do?
Paul: Yeah, so we are a 506C which gives us the maximum flexibility to invest in a 506C or a 506B syndication.
James: Got it. Got it. So I want to take one of the points that you mentioned in terms of, you know, selecting the operator, right? So how do you know they have a good track record?
Paul: Well, I mean, if they're making this offering if they're reporting their track record and they're going back and showing line-by-line the different deals they bought you know, they're going to have to tell the truth on there or they can get in trouble. But another thing we do is we talked to some of their references, we talk to investors that invested with them. Sometimes we'll try to find an investor or two that they didn't know that we asked you know that we happen to run into. We really look to people who have gone before us in this business.
A lot of people know and maybe you know, Jeremy Role for example. He's in LA and Jeremy has a phenomenal track record of investing and he's very very conservative our first conversation, years ago I was trying to pitch him to invest with me. He said, well, I'm probably not going to invest in your deals. I'm probably a lot more conservative than you are. So he started that's what I said a while ago. He started with the default of no and by saying no first, I had to try to convince him that it would be a yes. But anyway, Jeremy is super conservative and when he really likes an operator that gives me a reason to believe that we're going to like them too.
James: Yeah. I know Jeremy and his investment criteria, which is really conservative and I interviewed him on the fourth or fifth podcast. Once I launch people can listen to that podcast as well. And let me see. Is there anything that you want to share in this podcast that you have never shared in any other podcasts or your own podcast?
Paul: Oh that's gonna be really hard to think of. I talk a lot so I can't think of anything that would be completely unique. I will Circle back and tell you briefly that one of the reasons Self Storage demand has never gone down at least, you know to this point--now, by the way, that doesn't mean there couldn't be a market that's oversupplied. I heard of a self-storage facility last year that was foreclosed on because it was in an oversupplied Market you got to be smart.
But think about it, James, in a good Market, people are filling up their Amazon carts or their Walmart cards and they're buying more stuff and they need a place to put it. In a bad Market, people are often downsizing from a let's say 4,000 square foot home to 2,000 or 2,000 to an apartment. They need a place to put their stuff and for a relatively small cost, they can put their stuff in self-storage. And think about this if I was charging $1000 a month for your apartment in Austin and I raised, may be low and I raise the rent by 6%, you might move rather than pay me $720 in the next year. But if I was charging you a $100 for a storage unit and I raised it 6%, you're probably not going to move, spend a Saturday, get a U-Haul, get your friends to pack up your junk, I mean, your treasures and move them down the street to save $6 a month.
Tenants are very very sticky in self-storage. It's very similar to mobile home parks. If you raise the rent 10% you know, are they really going to move down the street, spend $5,000 to move their trailer down the street to save $30 a month on lot rent? Probably not.
James: Yeah, and also the leases are monthly right? So that makes changes in rent much more quicker and rapid right?
Paul: Right. Yeah, a lot of self storage operators raise the rent twice a year.
James: Got it. Got it. That's very, very good to know. So throughout your real estate life, is there any proud moment that you think make yourself proud even until now that you think you really had a huge contribution to someone or can you describe that moment?
Paul: Yeah, I mean there's probably a few I think I can tell you about my worst deal and my best deal. I'll try to do it quickly. My worst deal was a 5-acre subdivision that I bought, excuse me; a five-acre piece of land that was Waterfront. I bought it in 2006. I was flipping Waterfront lots at this Lake and I really believe very speculatively, by the way. I really believe that the road in front of this five-acre lot was going to be made from a private into a public road and that would allow me to subdivide the land. Well, that wasn't the case. There wasn't going to be a public Road. And we were wrong and we went into the Great Recession with $860,000 in debt on that five-acre piece of land and we were paying that debt along with, we had two and a half million dollars in total debt, my family did and that was part of our business. And my partner left and that left me with all the interest in January 2008. Well, I told my friends and I told my family, we're going to start giving our way out of debt, which was kind of crazy. But I really believe my back was against the wall and I had to try something and so I really believed in, you know, the law of sowing and reaping another people call it karma that I would give and it would come back to me.
So we started giving a very significant check, a very significant amount of money for us, at the time, every single week we gave it to nonprofits and to our church and we really believe that it would pay off. Well four weeks later, I had a light bulb moment, a light bulb idea to take the law that would not allow me to subdivide and sell off this land and turn it on its head and actually subdivide and sell these four, now actually 5 1 acre parcels. So we did that; we sold the land, we sold four of the five lots in the fall of 2008 and I was completely debt-free 13 months later.
James: Wow. I'm a strong believer in the law of karma, right? So that's really good. Very inspiring story. Thank you for sharing that.
Paul: You bet.
James: Yeah. I know. Why do you do what you do? I mean, you have a lot of things that you have done for the past, you know throughout your life, right? But why do you continue doing what you're doing this?
Paul: Well, you know you wrote a book on the power of commercial real estate didn't you?
James: The Passive Investing in Commercial Real Estate.
Paul: Yeah, exactly. Well, I mean I can show and you can show, a real estate investor how to take $100,000 in over 20 to 30 years turn that into you know, three to five million dollars. The power of commercial real estate investing is really amazing and it's more amazing when you think that the tax laws favor us so much that you know, it's possible to do what I just said. It's not guaranteed by any means, but it's possible to do that and pay very little taxes along the way.
Once I discovered that you can drive, you can force appreciation in Commercial Real Estate, I was completely hooked. For example, let's say you're Chip and Joanna Gaines Jr. And you can beautifully renovate a house from, let's say, half million dollar house, what's that? Dan?
James: They're in Reco, right?
Paul: So yeah, right. There are a few hours away from you right now. So let's say you can renovate that house from a half-million-dollar house up to a million dollar house. But if you're in a neighborhood of $400,000 houses, you're probably not going to get your million out of it because values are derived by comparable properties. Not so with commercial as you know, the commercial value formula is the value, is the net operating income divided by the cap rate. And so if you can find a way to increase the operating income and if you can possibly find a way to compress the cap rate and there are ways to do that, then you can dramatically increase the value of that asset. And if you take leverage into account, then you can even more dramatically increase the value of the equity. And so $1 increase in income per month at a commercial property, take that $1 that's $12 a year divided by a normal cap rate of 6% or 0.06 and that $1 of $12 excuse me .06 is 200 dollar increase in value.
So if you can go around and find ways to save or add a dollar to your income, every month, then you can dramatically increase the value of the property and even more so, increase the value of the equity in the investors pocket.
James: Yeah, it's just so amazing the commercial real estate. The defaults appreciation play is just so powerful. Especially if you can do value add on top of it. I mean, that is the value add; cash flowing plus the force appreciation value add that's the power of it.
Paul: Yeah, right, really is.
James: Awesome. Awesome. Thanks for that explanation. So Paul why not you tell our listeners, I don't see any questions coming in. So we're just going to go ahead and listen. If you guys want to type in any questions in our Facebook group. Go ahead and do that. Paul, why don't you tell the listeners how to get hold of you and reach you?
Paul: Okay, great. My website is wellingsCapital.com and they can reach out and fill out our contact form and reach me there.
James: Awesome, Paul. Thanks for joining us today Paul, and thanks to the audience for joining us today. Hope we gave a lot of value to everybody and that's it. Thank you, and bye.
Paul: Thanks, James.