“Find out where people are going and buy the land before they get there.” — William Penn Adair
It’s no secret that real estate has been challenging lately.
It’s getting harder to find good deals.
It’s been even harder to find deals that actually make sense.
As someone who operates real estate deals, I would say it’s now 4x or 5x harder to do a deal.
Instead of putting 20% down, you’re putting anywhere from 30% to 50% down.
You have to raise more money!
Investors are also less likely to give money when interest rates are higher.
We’re seeing some deals where cash flow is going away.
If you currently are invested in multifamily deals, you may be able to relate.
We’re hearing about cash calls and deals not working out.
The question I have been asking myself is:
What is the best investment asset class out there?
Today, I’m giving you three of my favorites.
Let’s jump in!
1. My 3 Favorite Alternative Assets
I have three favorite alternative asset classes.
Real estate is considered an alternative asset, even though I think it should be called a real asset.
Wall Street has done a good job telling us its alternative.
In general, I don’t mind the alternative title.
It makes me think I’m doing something differently than other investors.
That’s how people become wealthy!
Not by following the herd, but by doing something different.
My three top favorite investments right now are from my own personal portfolio.
This is not pitching any sort of deal or offer!
These are just the investments I’m interested in.
ATM Machine Funds
The first alternative investment is ATM machine funds.
I was a little skeptical when I first heard about this.
A few years ago, I decided to take a chance by investing and ended up loving it!
As a passive investor, it’s been the most predictable monthly cash flow I have.
It has high returns and depreciation that’s actually better than real estate because of the physical equipment
When you sell multifamily property, you need to recapture the years you didn’t use.
That could be a 20-to-30-year depreciation.
With ATM machines, you don’t need to do that!
It’s equipment, similar to laundromats.
It also depreciates zero which means there is no tax recapture at the end of the investment.
It also has incredible tax benefits, which I talk about on our YouTube channel!
Private Equity Roll-Up
The second strategy I love is called a private equity roll-up.
A private equity rollup reminds me of those tasty fruit roll-ups.
This strategy is also very tasty!
They work with car washes, dental practices, medical practices, physical therapy, retail, gas stations, you name it!
Here’s how it works:
If somebody has one gas station, it’ll sell for maybe 5x or 10x the earnings.
If you have 50 gas stations, they’ll sell for 20x the earnings or more.
I’ve done this as a passive investor as well as with our group.
We previously have offered a profitable car wash group called Tommy’s Express.
If you have less than 10 of the car washes, they typically sell for 10x the earnings.
But if you’ve got 50 of them, you can sell for 20x to 30x the earnings.
You’re getting none of the deal’s cash flow and also there’s a chance to share in the upside.
Oil and Gas (Energy)
The last investment is one I’m really bullish on: oil and gas in the energy space.
We’ve made investments in the technology side of oil and gas.
I’ve also invested passively in steady cash flow deals that offer some taxable benefits as well.
There’s some opportunity to reduce ordinary income if you’re a general partner in one of these deals.
I don’t have any specific recommendations for this one, but it does exist with a high upside!
Some believe that we’re in a commodity supercycle right now.
That means we’re on the upswing for commodities.
They’re printing so much money.
There’s an incredible need for energy.
There’s a shortage of energy development because of green technology.
Lots of upsides!
2. How Do You Find These Deals?
Over the past 4 years, I’ve had over 1,500 one-on-one phone calls with high-net-worth investors.
One of the questions they commonly ask is:
How do I find these deals?
There definitely are some secrets to find great deals.
The first is networking.
Going to events is crucial if you want to be in the investment space.
We run a real estate meetup once a month in Los Angeles.
Typically, 80 people show up and it’s an awesome time!
When I’m there, I’m always asking people what deals they’re doing.
I hear about unique deals this way.
It’s a great way to get in the deal flow.
If you’re open to national conferences, there are tons of great ones in Dallas, Texas.
I gave a keynote speech at the Vertical Street Ventures conference in Phoenix, Arizona as well as the Multifamily Wealth Project in Las Vegas.
At these events, people will let you know about what they’re doing, particularly in other alternative assets.
You can also listen to podcasts, hear about deal flow, and get on people’s deal lists.
When you do that, you’ll notice a lot of what real estate people are starting to do.
I also have a friend named Josh, who is has done some maximum passive stuff, and he asks:
“Have you heard about any unique deals that I should take a look at?”
That’s a great question!
When you ask that question, you’ll easily hear about so many amazing deals.
3. How Do You Vet These Deals?
Another question I get a lot is:
How do I vet these deals?
How do you vet a car wash deal?
How do you vet an ATM deal?
I actually have a book coming out soon that will talk about this.
I also have a course coming out as well so keep your eyes peeled!
There’s a lot of similarities between how you vet a real estate deal and how you vet alternative assets.
How do you get into these alternative assets?
There are three main parts:
The market, the sponsor, and the deal.
You can think of it like a funnel with the market at the top.
In multifamily, we buy a lot of properties in Jacksonville, Florida.
It’s a growing market in both population and income.
When looking at alternative asset markets, or any market, ask yourself:
What is it?
What’s happening in the oil and gas space?
Is it growing?
After looking at the market itself, you go down to the sponsor.
What group is operating this?
Have they done deals like this before?
What is their track record?
Those questions allow you to learn about the specific group and how they fit within that market.
The last thing is the deal.
What is the specific deal?
How will you make money?
Do you understand how you could lose money?
Usually, there’s one or two primary risks in any deal.
In our ATM deal, the primary risk is: Will people stop using physical cash?
Throughout the investment, we found out that around 5% of the population uses cash often there hasn’t been reduction over the last 10 years.
In general, be open to new deals.
We’re constantly looking at unique opportunities like timber, energy, and roll up strategies.
If you have a unique deal, send me an email!
I would love to see deals particularly outside of real estate.
Now I want to hear from you!
Are you going to look into alternative investments?
Let us know in the comments.
Before you leave, make sure to check out our special report about inflation investing. It shares the best choices to invest during an inflationary environment.
If you are interested in investing with us, we are happy to answer any questions that you may have. Join our investment club today and we will be in touch.
Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.
