Note: Audio transcription has been automatically transcribed

Welcome to The Executive Real Estate Investing Show. This podcast is for you, the busy business owner or executive looking to create generational wealth. Here, we’re going to show you how to do that through real estate investing from multifamily to industrial and everything in between. You will become a real estate investing expert. And now, here’s your host, Michael Holman.

Michael Holman: Hello, everyone and welcome to another episode of The Executive Real Estate Investing Show. As always, I’m your host, Michael Holman. And today we have a very interesting show. We have Isaac Bennett, it a little different. I feel like I’ve been saying this, a little different from a lot of like the core, group of guests that we oftentimes get on the show, which is interesting. What I love is he’s looking at alternative assets as a whole. He’s got a recording right, he’s got the rights to songs.

He’s got all sorts of things and I love it. It’s interesting. What you find is throughout this conversation that develops, he has this very fundamental way, he’s looking at the principles of certain assets, and he is going to drill, and he doesn’t ever specifically say it through this interview. But what you find is, if you listen to it, I’d almost recommend listening to it twice, you see that there is this really specific investment principles that he is following on every deal. Whether that’s owning the rights to a popular song, or whether that’s investing in Real Estate, he has figured out what it is that he wants to do. He’s made his plan and sticking with it. And it is fantastic, I love that about Isaac. I love that about the conversation. Really excited for the interview.

As always, before we get started, though, I want to remind everyone go hit subscribe, if you’re liking the Real Estate, if you’re liking the advice, go ahead and hit subscribe, you get this every single week we do one a week, it comes out on Mondays every single week. It’s fantastic. Also leave us a rating and review. Lastly, go out and check out www.ExecutiveREIShow.com. Lots of great stuff there. Lastly, before we get into this interview with Isaac, we are going to have today’s executive tip. Today’s executive tip is to find what you’re best at. I don’t even care if you do anything with that right now.

But I want you to identify what you are better at than everybody else in your specific field. Just find it, because once you find it, once you recognize that, once you realize that you have this thing that you are just better at than everybody else, that’s when you can start honing in and start making that a business. Isaac is going to talk a little bit about this and it’s really, good. That is today’s executive tip. But without further ado, we’re going to get right into this interview with Isaac Bennett.

Hello, everyone, and welcome to another episode of The Executive Real Estate Investing Show. As always, I’m your host, Michael Holman, I have a very special guest with us today, Isaac Bennett. The thing that I love about Isaac that I’ve read right off his bio, when we were talking just a little bit is sales. He has a lot of sales experience. And one of the things that I honestly, truly believe is that anyone who’s going to be really successful in business has to have some level of sales skills. It doesn’t matter if you’re a business owner, you do not have to be a VP of sales, to need sales skills, need to be able to sell yourself, your brand, your product, whatever it is that you do. It’s really, really important. I’m really excited to get into this with Isaac today. Isaac, welcome to the show.

Isaac Bennett: Michael, it is my pleasure to be here. I’m really excited and I love your background. If you’re listening to this, Michael is sitting in front of the most beautiful, scenic, snowy, mountainous landscape. It’s just amazing. I’m super impressed already.

Michael Holman: Utah, we have a lot of mountains out here, and it tends to snow a lot so it’s perfect. I’m glad we framed that up. We were just talking, people who’ve watched it on YouTube probably you’ve seen it but if you’ve only listened, we have the mountains behind us. At one point I was debating do I get a virtual background or where do I go and I thought you know what, make sure the shades are up, have a window open and let everyone see the mountains behind us.

Isaac Bennett: It’s perfect. You nailed it.

Michael Holman: I appreciate it. Isaac, love for you to introduce yourself to myself and the listeners.

Isaac Bennett: Yeah, so my name is Isaac Bennett, as Michael said, and I’ve got about 16 years of sales experience in a variety of executive roles and otherwise, and about a year ago, my wife and I felt called to start our own brand holding business. To really push forward the things that we were doing entrepreneurially from 7pm to 10pm and give it our best hours. I got to tell you like it was a terrifying move, but we are so thankful that we did it’s been an amazing thing. Our brand is called the YOUARE, and then all our agencies beneath that are just suffixes of that prefix. We have You are Well, You are Home, You are Abundant, You are Secure, and You are Good.

Michael Holman: Awesome. I love it. Would you take just a second maybe explain all the different YOUAREs?

Isaac Bennett: I sure will. The idea here is that we want to touch every portion of people’s lives that we’re passionate about and believe that you need to have sort of a good holistic life. You have you are well, which is all health and wellness, we have a director of that, who is a dietitian and a personal trainer, and she’s helping people in that regard. Am about health and wellness. We have you are home, which is our reality business, which my wife runs, it’s a broker through EXP you are home.

We have you are secure, which we’ve got on the back burner right now, which is a Midwest dealership of a cybersecurity solution, through intrusion. Then we have you are abundant, which is probably what we’re talking about today. That’s our alternative asset syndication business, which I run and then we have you are good, which is purely on profit, we give 20% of our net income back to charitable and missional organizations as we have profits.

Michael Holman: Awesome. I love it. One of the things that I’ve seen in kind of a theme through people who have come on the show is this idea that we talked about business, we talked about Real Estate on this podcast, but this idea of a broader view of life than just that. How oftentimes, the things like our health and our wellness have a big influence into our Real Estate business whatever other business we’re running. I’d love to get you kind of your thought process. You started all these different brands, talk to me about why you started so many at the same time versus, maybe saying, hey, I’m going to start this one, and then this one, and then this one, what drove you to say, hey, we need to start multiple brands here?

Isaac Bennett: I think the idea is that it was one brand with a flywheel effect with the agency surrounding it. I think it’s important to understand where YOUARE came from. What I really found is that I’m not particularly motivated by money, I’m much more motivated by helping people and leaving a legacy and that sounds like maybe a little high and mighty. I guess I’ve just found that the money doesn’t do it for me, it’s really the impact that you can have on others that I find interesting.

YOUARE was birthed from this idea that if I was trying to lift somebody up, I found myself always saying you are first. I might say, Michael, you are enthusiastic, or, I would say to my five-year-old niece, Collin, you are beautiful. I found that it was difficult to actually encourage someone or exhort them without first saying you are, so each of these agencies are things that we’re passionate about, for instance, I’ll give you one example.

You are well, I had a two-decade long struggle with depression and suicidal thoughts really, really dark, really dark and addiction and other things. And finding my way out of that to health and wholeness is a passion project of mine. It was almost like I couldn’t start a business if I didn’t have a component that helps people with their mental and spiritual and physical health. I knew that it wouldn’t be a whole business if I didn’t have that. So that gives you an idea of the thinking kind of.

Michael Holman: I love it and I think that that’s so important. Because as you start these businesses, as you get going, this is something that even I can tell you like me, myself, I’m dealing with right now, is things are just so busy. On everything that I find that there are some things that at times struggle, oftentimes, health and wellness is usually one of those things that’s like, well, I got so much to do, here’s four hours of sleep for the next week. Which I know isn’t right, it’s not how it should be. But it’s so hard to take a step back and say no, this is important, and it means a lot. I love this idea that you’re looking at things holistically.

Isaac Bennett: That’s exactly right and it’s funny that you use sleep as an example because you mentioned sales in the intro. Ten of the first twelve years of my career, were traveling internationally, I traveled over 50 countries. I was jetlag pretty much my whole life. I had horrible sleep patterns, and I find that really a vicious cycle with my depression. At one point, when I left that job, I said, you know what, I’m not doing that anymore and the one thing I will not sacrifice is my sleep. Eight hours a night, I don’t care what else is going on. I do it every night, and it’s eight hours and I never sacrifice that. I have to tell you, I feel like a different person.

Michael Holman: That’s awesome. I’m going to start taking some of that advice, Isaac. I’m not getting as much sleep as I would like to admit right now, while talking to you making me feel a little sheepish, but I love it. So it’s super important. One thing that I want to back up to, because I kind of talked about it in the intro, we talked about sales, you have had this sales career, I’d love to for just a second, because so many people struggle with sales. You have a lot of people, for example, they might be really, really great at a certain trade, they might be really great at a certain business, they’re getting a business started. Sales always seems to be one of those things that is just a struggle.  I’d love for you to talk a little bit about your sales background. What did you sell, what were you in sales for? You talked about traveling internationally. I would love to get a quick background of that.

Isaac Bennett: Right out of high school, I got my first sales job. I was working 70 hours a week or so selling cars, new Chevy’s and sobs and I did that for two and a half years. So you can imagine being an 18-year-old really fresh faced, I was about 15, trying to sell cars to like 65-year-old curmudgeon farmers in central Illinois.  I think I’ve probably got like a ridiculous life education and a couple of years, they’re getting treated by people who didn’t want to be talking in the first place about sales.

I did that first learned a ton and had a ton of fun and then I went and worked for a company that sold mining products. I was their international Sales Manager, and then Sales Director eventually, and just traveled my entire career for 10 years overseas. You name it, pretty much I’ve been there and done it and all these different languages and unbelievable experience. Learning culture, learning how to deal with different people, learning what worked, where what didn’t work, where. So that was really interesting.

Then my last job, I left that in 2019, my last job was two years as the Vice President of Sales for sort of a midsize manufacturing company that sold parts to companies like Caterpillar and John Deere. That was more of an executive role a little bit different. But you are so right.  If you can’t sell, then you better have somebody on your team or a partner who can sell a vision and sell an idea. I don’t think you can have a successful business without it because it’s so intertwined with marketing and customer service, and all these other things that you really have to understand.

Michael Holman: Completely agreed Isaac. I’m going to put you on the spot here for just a second, because you have this phenomenal sales career. I’m going to ask you to take all that, bundle it all up for a second, and spit out just a few of what the things that you’ve learned over those 16 years that you think could help other people who are maybe struggling with sales or maybe just getting started or people who aren’t necessarily these experienced salespeople. What advice would you give to them?

Isaac Bennett: Two things. First, you have to touch a lot of people and I don’t specifically mean cold calling, because cold calling is a bit of an art. It’s a different thing. I mean, intentionally getting yourself in front of high impact people in whatever your lane is and making sure that you’re doing it every single day. Because one leads to the next to the next to the next to the next. If that’s outside your comfort zone, you lean into that. Because when we find things outside of our comfort zone, that’s where gains are made.

It’s just like lifting weights the gains are made when it starts to hurt. This is what I would tell anybody, you have to be in front of people, even if you don’t feel like you deserve to be, even if you’re an introvert. I’m an introvert, believe it or not. That’s the first one getting in front of a ton of people. The second one is counterintuitive and is the single most important life lesson and sales lesson. Stop talking about yourself. In sales, you should be asking questions 90 to 95% of the time, about the other person, about who their kids are, about what they’re doing, about their business, about their life. If you can get the other person talking to you and feedback, immediately, you’re going to be more likeable, immediately. And you’re going to learn and know things. So many salespeople, even some successful people, they just run their mouth constantly and nobody likes it. So stop talking and start asking really good questions and listening to the responses.

Michael Holman: I love that well and to add from that second point that you made. Not only do you become more likeable to other people, but when you start asking questions, you start understanding what it is their needs are. Anybody who’s been in sales, understands that we’ve all had that moment, that we just we made the assumption on what that person needed and what they wanted. And we just went in to connect with you and we’re blasting them with all this good information, it’s perfect. You’ve had the polished pitch. Everything’s good, only to come out later and find, what you were trying to talk to them about was not relevant. They didn’t care. That wasn’t the driving factor, and you don’t know that unless they tell you at some point. Love it. I think that’s phenomenal.

Isaac Bennett: The way to boil that down is to be interested not to be interesting. The most interesting people are the ones who are most interested. If you start recognizing that you’re trying to be interested in what the other person is saying, you will find yourself being incredibly interesting to those people. I hate the term but it’s a cheat code it really is, be interested, and you’ll find yourself surrounded.

Michael Holman: We just outlined one of the points in how to win friends and influence people right there. I love it so we pretty much just summarized it. It’s true, the point that they make there too, is genuinely interested. It can’t just be for show, people can see the courtesies or whatever. But you have to be genuinely interested in whatever that other person is talking about. Anybody who’s getting started in business, who has been in business, who feels like sales is one of those things that’s constantly an issue or struggle, listen to what Isaac is telling you right now.

You can go back and re-listen to it because those are the things that will exponentially help you. Even Isaac, you mentioned, you’re an introvert. How did you find a role? Most people when they think of sales, they do not think of introverts and surprisingly, I have a number of friends in sales and a lot of them are introverted. How did you make this connection between sales and introverted and navigate through that?

Isaac Bennett: I think when I was 18, I was young enough and dumb enough and naive enough to not really know who I was. I had no clue and still learning. But I think it was like, oh, you’re friendly. You can talk to people, you’ll be in sales, and it probably wasn’t until much later that I realized that it took a lot of energy from me talking to people because I was an introvert. Then I just embraced it and realized, like, well, look, this works this way if asked questions, let other people do the talking and it’s a lot less of your energy.

So there’s sort of a natural overlay. As I went on, I found that the best salespeople that I knew, they got in front of a ton of people, but boy, they listened. They asked questions, and they listened. And generally introverted people are better at doing that anyway. I think, especially for extroverts, and I’m not getting extroverts down. I love extroverts, I love being around them. But you have to check yourself, you have to check yourself and make sure that you are to your point, that you are intently listening and engaging the other person and not just dominating conversations. Does that make sense?

Michael Holman: Absolutely 100%. It is a cold-blooded extrovert that is something I certainly struggle with in my life all the time. So I hear you, Isaac. I appreciate that. I think that’s fantastic. Isaac, one of the things I’d love to do is switch gears just a little bit getting into some of the Real Estate. You talked about two of those segments of your brand, were focused on Real Estate, you had a Real Estate agency, and you also had a syndication company.  What Real Estate are you currently investing in right now?

Isaac Bennett: Great question. We’ve done a lot of deals and primarily, we’ve been either the sole owner or the syndicator, the largest shareholder, the GP. We’ve managed all these deals in our career. We’re making a transition right now. I had a good wise friend who is a season ahead of me, tell me like, hey, if you were to focus on one aspect of this, what areas do you think you’re the best at? I think we’re probably the best at knowing people, understanding who’s credible and who’s trustworthy. I think we’re good at doing due diligence, know a good deal when I see it across many asset classes.

And he said, that’s what you need to do, then figure out how to make that your business. That’s really helped me hone into this idea of, we want to connect investors with the best operators and vet those deals for them, and then negotiate because we’re bringing large checks to deals. Negotiate better terms with those A plus operators because we’re bringing a lot of money. I’ll give you one example of a deal we just did. He’s given me permission to talk about this. Our partner is REM Capital, who some of your listeners may be familiar with, that’s Robert Ritzenthaler, who’s now a good friend of mine.

We just partnered on a 772-unit, multifamily deal in the Midwest and some really nice growing cities that we like in the Midwest. We acted as an intermediary, we brought our own syndication to that deal. Got advantage terms for our investors. We don’t charge any fees. So we’re not here to scalp.  I’m an asset guy, I am not a commission guy. I want to own an asset. Our compensation for that is on the GP side. We’re taking the risk right alongside with everybody. But we’re not charging our investors fees. So it’s purely value add for them to come and work with us. That’s one example of something we’re doing. Then there’s a number of other ones that we can get into, but I’ll leave the answer there. So it’s not too long.

Michael Holman: You’re telling me that you’re going across multiple asset classes, I’d love to get a broad stroke of what are those asset classes and where are they located right now?

Isaac Bennett: We’re opportunists. As you look at markets, right now, they can go from pretty reasonable to very expensive in a flash. I think we’ve seen that happen specifically with self-storage. And we’re starting to see it more and more and more mobile home parks, too. They’re becoming much more competitive. Multifamily has been very popular now for six or seven years and it’s gotten really expensive. We were looking at some other areas, we invest internationally in Belize with high end resort property.

There’re very specific reasons that we’re there. If anybody’s interested in Belize, reach out to me, and I can educate you. A year’s worth of education in an hour. There’s a reason to be there. But we like that space a lot. I’m working with a private tech company, actually as a partner, to help them raise money for their business. This company is unbelievable, the upside is unbelievable, but you’d never know about it without the right connections. We’re bringing investors to that deal, the upside there is just staggering. That’s a private market deal. We’re working on an oil and gas deal, which is pretty interesting right now.

We have invested as an LP in mobile home parks, even though I think those are getting more expensive. That was a year ago that we did that. Across several assets royalties, we own music royalties, and can find some solid deals in there as well. It’s really underwriting, we’re looking at deals all day, every day and tossing out 19 out of 20 of them not even looking at them. But you’re finding that gym in there that could be interesting. Another example, I’m starting a business in the post frame building industry, which is blowing up. So there’s a value-add business there that I brought a partner to. Alternative assets in general, we love Real Estate, but it’s getting harder to find good deals there, so we’ve broadened our scope.

Michael Holman: I love it. One of the interesting things is you talk to people. Some of us Real Estate people get our heads in the Real Estate sand a little bit and it’s hard to pull ourselves out. It’s one of the things that you often hear from some people, and I think it’s wise advice. I love the broader alternative assets. People don’t realize a lot of times when you go out in the world, and you’re dealing with big institutions, you get these syndicators, that are kind of fresh, and they’re thinking Real Estate, Real Estate, Real Estate, they don’t realize that Real Estate is an alternative asset by definition.

A lot of those institutions, they are classifying Real Estate, the same as they classify, like you said, their private equity investments, their other investing strategies, which I think is interesting when you start looking at it like that, because these alternative assets, these private markets, you find that there’s a lot more room and potential opportunity. Which is good and there’s a lot of great things about that. It’s just less regulated. So I think people get a little more nervous surrounding private investments, is that been your experience as well?

Isaac Bennett: Yeah, there’s more of an educational hurdle there. Most people understand Real Estate, at least at a deep enough level to really get it. But what I’m finding is that you can set yourself apart by having ideas other than Real Estate, there’s a whole lot of people who do multifamily. If you’ve got a couple things in your bag that you say, I’m going to really learn this sector, and I’m going to underwrite it, and I’m going to figure out what a good deal is compared to a bad deal. First of all, you become way more interesting to people.

We’ve done four deals in Belize, and just that fact, make people go, he’s coloring a little bit outside the lines here, we owe him a little better, it makes a huge difference. One piece of advice I would give people is do one thing that’s different than everybody else’s doing. Even if it’s the 1% of your portfolio. Go do one thing that you can talk about, like for instance, here’s another example. We own Willow Smith, Will Smith’s daughter, we own the rights to her song Whip My Hair. Dumb song maybe, very popular still plays all the time. We get paid a lot for it. It’s also interesting to talk about when you’re at a wedding and you request the song people like what and we are like yeah, we own this. We’re getting paid. Fun to talk about.

Michael Holman: That is a great party starter right there. You ever need something to talk about you just brought a whole new idea. I might have to go look into something because I need to start that small talk. My wife’s good at small talk. I’m good at big flamboyant talking once I get going. It takes a little while to get going, but it gives you a party starter for sure. I love it. I think that’s interesting and Isaac, honestly, this is something that I’ve taken to heart too because like you said, there’s a lot of multifamily syndicators out there, there’s is, and it’s kind of growing at an exponential rate as multifamily continues to go up.

Specifically, I look at like our business, and we had this idea, about three or four years ago, because we’ve been in development for a long time. That’s kind of been our bread and butter. But it’s hard when you start back in 2019 2018, it’s hard to not start thinking, man, we could get a lot more, let’s zero in on multifamily, it’d be a lot easier to get to 2000 units, if we bought existing rather than, because if we go out and buy them, the financing is easier. Oftentimes we get non-recourse, there’s all these benefits, you don’t have to spend two years building the thing. We honestly thought about that.

I remember sitting there in a meeting with all the partners, and we were looking around saying, is this something we’re going to pursue? And we said, no, we went the opposite direction and we said no, because what sets us apart, what makes us different, what we’re good at is development. We like new development projects. That’s what makes us good and that’s been the best thing we’ve ever done. Once we finally let go of all of those things that really didn’t matter and that didn’t fit what we were good at, what we liked and what we wanted. All of a sudden, things took off like crazy, and it’s been a fun ride ever since. I love that you’re talking about this because sometimes people get into such the shiny object syndrome, where they just want to bounce around to thing to thing, or they see something that’s working really good. So I love that you’re talking about that right now.

Isaac Bennett:  I say that like 95% of people should not even manage Real Estate, you shouldn’t go buy onesie twosie things. Most people should not do that, they should invest passively, with a great GB. You are touching on something which is ground up development of which 99.9% of people should not do because it’s enormously hard. It’s like trying to hit a 96 mile an hour fastball on the outside corner. Nobody can do it except five people, and if you’re one of those five, you have the ability to focus on that and exponentially grow that and by all means you should do that.

So your ground up development is my due diligence and underwriting. Because we cut our teeth reading guys like Howard Marks and John Hussman and Jim Rogers and guys like that in the equity markets, where what we learned is how to evaluate businesses across every spectrum and understand what makes them tick and go. I spent 15 years doing that on my own and then I recognize this applies to syndicating, too. I need to be the guy that connects the right people with the right underwritten deals. That’s my ground up development. That’s my specialty. I think we’re on the same page, it’s just you have to find what that lane is for you.

Michael Holman: I agree a 100%. so anybody who’s listening, whether you want to get into Real Estate, whether you want to grow your business, I think this type of advice is the thing that can help you get that. Sometimes people don’t zero in on the things that they are really good at and that’s sometimes can drag you down. I love it. Isaac, this has been a really fun conversation. We’re going to start to wrap things up here a little bit. There’re two questions that we ask everybody who comes on the show, you included. So first question, Isaac, what is the best business advice that you were ever given?

Isaac Bennett: I kind of already led into one of them. Can I give a two-part answer, am I breaking the rules?

Michael Holman: You can give as much or as little as you want. The more sage advice you want to give to everybody. We’ll take all of it.

Isaac Bennett: Three-part answer then. The first one is the one I’ve already said. I just want to reiterate, to be interesting you must ask questions and intently listen. If you can make that where you’re an 80 to 90% question and answer, and then intently listen, watch your career and your life soar. Your relationships will soar. That’s the first one. The second one is by durable assets. The wealthiest people in the world. They don’t think about cash flow, they think about the durability of their asset. I’m not one of the wealthiest people in the world. However, that single piece of advice, which is a Tony Deaton piece of advice, buy durable assets. When you think like that, you start to think differently.

If you plant that in your mind and think is this a durable asset, and I will tell you, most multifamily, especially built since 2010, is the opposite of a durable asset. Depreciation is not just a line item on your balance sheet. So, buy durable assets and the third one, and this has protected me so many times that it feels like a proverb, or something is position size. You should become an expert at position sizing your portfolio using some sort of beta adjusted system, whatever that is, whatever that makes sense to your mind and I’m happy to talk to people about that if they want to know how we do it.

But you need to position size in such a way where your maximum downside does not take you under. I think that has saved me. It saved me more times than I care to admit both equities and in other things. We’ve never lost money on Real Estate. But part of that is tailwind, structural tailwind. I would tell people that if they can put that into practice understanding position sizing in their portfolios, it will dramatically alter not just your safety, but it improves your upside as well. It’s a strange fact. But it does.

Michael Holman: That was too good for us to not talk at least a little bit on both of those. First thing I’m going to say is on your point number two, define what you mean by durable assets for everybody?

Isaac Bennett: I think it’s different for everyone, when I think of a durable asset, the first thing that comes to mind is gold. I’m not telling people to run out there and buy a bunch of precious metals. However, I do own a bunch of precious metals, and I have strong thoughts about the best way to buy them, the best way to invest in it. I think that we have been inculcated in this idea that money is something dramatically different than what it is. I’m not sure that most people really, truly take that to heart. When I measure the value of things, I measure them against something that has a fixed denominator like gold.

For instance, when I’m looking at the Dow Jones or the S&P 500, I measure down to gold or S&P 500 to gold. That’s the way I think about it because there’s a fixed denominator there. You get into some people like well, you’re always thinking about it in in dollar terms. Well, not necessarily. I’m thinking about it in ounces terms. Some people are putting Bitcoin in this place, I would say way too early for that, way too early. We need to see more Lindy effect on Bitcoin before we go there. So that’s durability. Another thing that’s durable, something like farm ground, farm ground is super durable, older property that has wonderful structural integrity that can be retrofitted with newer finish, electrical, all that kind of thing.

But it has really durable, it’s going to last a really long time. Unfortunately, we don’t make stuff like that anymore and so that’s a bit of a problem. I love land. I love covered land plays, I love mobile home parks, from the standpoint that you’re making a ground play, you’re, it’s basically a covered land play. All of those things are durable in a certain sense. I think there are some equity companies that are really, durable and capital efficient. Coca Cola is a durable company. Hershey’s is a durable company. There are countless other examples of durability, but something that is counter cyclical, anti-fragile, all the other buzzwords that you can find out there kind of a lot now, but they matter. They really matter and you should seek out things that are durable.

Michael Holman: That was fantastic. Isaac, I feel like you and I could get offline and have like another four-hour conversation, you’re speaking my language right now. All right, on that third one, now I can’t even remember what the third piece of advice was because I want to talk about that.

Isaac Bennett: Position sizing.

Michael Holman: Position sizing, thank you. Talk to me just a hair, just a moment. Tell me about position sizing. What do you mean by that? Because that’s a term that I’m sure 90% of the people who are listening to the show probably look at and say I don’t know what he’s meaning he’s talking about betas. What in the world is beta? Isn’t that a fish or something? Tell me a little bit, let us dig in a little bit enough to get somebody so that they have a very broad level of understanding.

Isaac Bennett: I think that if you if you want a reference to go read somebody like Porter Stansberry talks about this a lot, Dan Ferris talks about this a lot. I’ve gleaned a lot of my information from them over the years. Nothing of which I talked about is unique to me or anything like that. I’ll never take any credit for any ideas because I’m just standing on other people’s filters constantly. But when I talk about position sizing, you’re talking about, when I’m establishing a position, and let’s talk about this from an equity standpoint.

So say you have $100,000 portfolio, and you’re going to go buy a stock and you’re thinking about how to risk adjusts that against the rest of your portfolio. You back into this by thinking, how much am I willing to lose on this stock? And you think, okay, I’m willing to lose $1,000, I’m willing to lose 1% of my total net worth, my total portfolio on this stock, that means you can lose a $1,000. Then you think, okay, how far am I willing to let this fall until I am going to sell and I’m going to hit that. Say you’re willing to let it fall 20%, what would that mean? That would mean that you can make a $5,000 allocation to it.

If you allocate $5,000 to it, that’s 5% of your portfolio, which is big a big position. You can lose your stock should be at 20%. Because then you’re going to be down 1000 bucks. That’s your risk adjusted position sizing. That’s one way to look at it. Maybe you say, I think my stock could be 50%, then that changes the calculation. Then at that point, how much can you risk? You risk $2,000, that’s your position size. When you think about it in paper assets, which I rarely do anymore, but if you think about paper assets, that’s the easiest way to define what that looks like.

What I would suggest is that no matter what you’re buying, you should always be thinking about that risk adjusted beta in your portfolio to say, if this goes poorly, if it doesn’t cash flow for a while, if my assumptions are wrong, my performer, my underwriting is wrong. How much am I willing to lose before I have to cut bait, and that’s what I’ve sold. When you start thinking about it like that, and you start thinking invest like that, that’s a good book, by the way, I need to do thinking invest. When you start thinking like that, it changes the entire perspective of how you invest, because you’re not breaking rule number one, which is don’t lose money.

That’s rule number one. I think about everything in that way, where beta comes into play, the higher a beta, the more volatile it is against some other measured basket of whatever you’re comparing against. Then there’s mathematical calculations that can take you to saying basically, if it’s twice the risk, you should risk half as much to get to that same type of level of what I’m willing to lose. I try to think of everything at least figuratively in some beta adjusted way, which is again buying farm ground, this is probably point five betas, I’m buying resort property, this is two betas. I understand how to position size it with the rest of my portfolio. Long winded answer am sorry, I apologize.

Michael Holman: No, I love it and what it is, is giving people a broad perspective. Because these are things that oftentimes in 30, 60 minutes, whatever time that we have together here on this podcast, it’s hard to really dig in. People can spend years learning about these things, but they’re important things. I love that we’ve opened up the curtain a little bit for people to go, hmm, this is interesting. I’ve never thought about the type of asset I’m buying and the riskiness level of it and how that should affect how much I buy of it, or how little I buy of it.

I love it. I love that we just open up the curtain. Fantastic, Isaac. Second question, 10 minutes late. That’s okay. I think you might have taken the record for the best business advice that we’ve ever had. Which I’m, honestly, you’re welcome. I prodded that out of you, so I appreciate that. Second question. What Real Estate investing advice would you give other business owners or business executives?

Isaac Bennett: Be careful not to overpay for yield, especially in place yield. I think a lot of people, especially these days are buying cap rates and that’s not going to end well. They have to get lucky to be honest. I’m still a structural believer in Real Estate for a long time and I think we’re structurally underdeveloped, it’s going to be good for a long time, you’re going to do well developing for a solid another 10 years, I think. But be careful buying yield, especially if you’re in a single tenant, industrial, commercial type thing that can disappear overnight, and then all sudden, you’re sitting on something that has zero yield, what is that going in cap rate mean now?

 Nothing, it means nothing. Probably don’t ever buy on a cap rate. You want to buy on the ability to improve a property or improve a situation, improve the business, improve something, and then sell on yield, sell on cap rate. You want to be selling on a multiple while you’re buying on a business theory. Because Real Estate is ultimately all about adding value to something and I think even ground up is that way. You’re ultimately adding value, you’re improving something. I think that’s the big thing that people struggle with is they buy yield and yield can just change so fast.

Michael Holman: I completely agree. Sound advice for those who are looking. I’m seeing a theme here, Isaac, because we’ve talked that you definitely have a focus and even though you have these broad assets, you have this broad number. There is a very specific focus that you have in your investing strategies. That’s become abundantly clear. The words like durable, the words like risk adjusted, those are all things that are popping up time and time again, and you see this theme.

If you’re listening to the show and you go back and you listen to it again, let’s say you listen to it twice, I think you’re going to see what I mean, there’s these themes. How you can be invested in 20 different types of things. But all those 20 different types of things have the same core mechanics, the same core, I keep wanting to say belief, but that’s not the right word.  But at the core, the principles the reason behind the investing is very similar. So I love that. All right, Isaac, we have to wrap up. How can people get a hold of you?

Isaac Bennett: I’m active on Twitter Isaac C Bennett. Our website is a people brand which is our tagline companies YOUARE tagline is A People Brand. A People Brand forward/ investor is where you can go sign up and come talk to me if you want. Email me Isaac@ People Brand, feel free to do that and if you want Michael to put my phone number in the show notes, you can text me or call me anytime I’m easy to access. I like to talk to people despite being an introvert. I do like to talk to people, feel free to reach out anytime. I love these types of conversations. These conversations give me life for sure.

Michael Holman: Fantastic. We’ll get all this in the show notes for anybody who’s interested in getting in touch with Isaac. Isaac, thanks for being on the show.

Isaac Bennett: I am so happy. Thank you, Michael for having me. It’s really fun.

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