SPARK Your Wealth with Passive Income

What if you could invest alongside a mastermind — with just $5,000? 

Scott Meyers welcomes Brian Davis, co-founder of Spark Rental, to dive deep into the world of passive investing. 

Brian shares his winding journey from subprime mortgages to building an investment club that democratizes real estate deals, giving everyday investors access to big-league opportunities. 

Together, they explore risk, reward, due diligence, international living, geo-arbitrage, and the lessons hard-earned from surviving 2008. 

This conversation will challenge how you think about wealth building — and maybe even make you want to book that one-way ticket abroad.

WHAT TO LISTEN FOR

1:02 – From Psychology Major to Hard Money Lender

3:13 – How 2008 Wiped Out My Job and Portfolio

6:59 – Inside the Spark Rental Investment Club

15:22 – Expat Life: Abu Dhabi, Brazil, and Beyond

24:20 – Why Sponsor Risk Trumps Market Risk

35:24 – How 50 Investors Spot What One Might Miss

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CONNECT WITH BRIAN DAVIS

Spark Rental | LinkedIn | Instagram

Attend the Self Storage Academy in Seattle, WA August 21-23

https://selfstorageacademy.com/ 

Chapters

• 1:02 From Psychology Major to Hard Money Lender
• 3:12 How 2008 Wiped Out My Job and Portfolio
• 6:59 Inside the Spark Rental Investment Club
• 16:32 Expat Life: Abu Dhabi, Brazil, and Beyond
• 25:30 Why Sponsor Risk Trumps Market Risk

Transcript

Announcer (00:28):

This is the Self Storage Podcast with the original Self storage expert, Scott Meyers.

Scott Meyers (00:38):

Hello everyone, and welcome back to the Self Storage Up Podcast. I'm your host at Scott Meyers. And on today's episode, we have met Mr. Brian Davis with Spark Reynolds. Now Brian, he works in the world of passive investing. Active investing has a club that teaches people how to do this and invest alongside of them as well. And so we're going to take a stroll down the passive investing path today with Brian Davis. Brian, welcome to the show.

Brian Davis (01:02):

Scott, thank you so much for having

Scott Meyers (01:03):

Me. This will be a lot of fun. I've been excited. This is going to be a lot of fun. We got a lot of similarities. I think probably the biggest similarity that we just discussed is the fact that you and I are, we love to explore other opportunities. You see a pile of money in the corner, we'd like to go pick it up, or at least to explore ways to be able to make money in it. And you've done that. You've been able to scratch that itch in multiple ways, in multiple fashions on the passive side. So I can't wait to share your story and your journey with Storage Nation. So with that, Brian, tell us a little bit about yourself and how you got to the place where you are right

Brian Davis (01:35):

Now. Yeah, so I'll try to condense 20 plus years of real estate into 90 seconds, but I graduated college in 2003, which sounds like a long time ago, and I guess it was, but I fell into real estate. I didn't know what I wanted to do with my life. Graduating college, I was a psych major and a criminal justice major. So my stepdad was friends with a guy who owned a subprime mortgage lending company, which in 2003 was all the rage, as you probably remember. So I went and I interned for them for a summer. And at the end of the summer, the owner said, look, we don't need another loan officer. We have a bunch of loan officers. What we need is someone to handle my partners and my hard money loans. Are you interested? And I said, well, I don't really know what hard money loans are, but sure, why not?

(02:23):

I don't have anything else going on. So I started working with them as an account executive and loan officer doing their hard money loans, which they were doing on the side of their main conventional loan mortgage loan business. And it was a lot of fun. I was mostly working with house slippers and some guys doing burr investments, and I am watching all these guys make money hand over fist in real estate investing back in the mid aughts when it was one big party before 2008. And I'm sitting there thinking, well, I'm smarter than these guys. I can do that. So I plowed every spare penny that I had into buying rental properties and fixing them up and refining them to keep as a rental, doing the burr strategy. And then 2008 hit and I was way over leveraged, and I had negative cashflow on these and the economy collapse and my vacancy rates went through the roof.

(03:13):

And what was hard about that is that not only did my investments all collapse, but my day job also disappeared because no one's borrowing hard money loans anymore, right? No one's flipping houses anymore all of a sudden. So that was hard. But I went and I took a job working for an e-commerce company that specialized in working with mom and pop landlords. And the only reason I got that job is because I myself was a mom and pop landlord. So that's how the universe works, right? A door closes, a window opens, et cetera, and that was all remote. So I learned the online business sort of side of the industry, online marketing and that sort of thing. In 2015, I moved across the world with my wife. We moved to Abu Dhabi, and in 2016 I started Spark Rental with a former colleague of mine.

(04:00):

And that was one of those entrepreneurship lessons that people talk about. But I don't think most new entrepreneurs believe, and that's that the business that you think you're in is not necessarily the business that the market wants you or wants and needs you to be in. So we thought we were going to be a software company for selling services to mom and pop landlords basically. And neither my partner nor I had any software development experience. We were non-technical founders. So from the very beginning, we had all kinds of problems. I mean, a web developer ran off with half of our seed capital, I mean, all that kind of stuff.

Scott Meyers (04:41):

I've never heard that happen before from a development entrepreneur.

Brian Davis (04:47):

So all of that kind of stuff. And so our business evolved quite a bit over the years, but one of the things areas we went to, we started teaching a course on real estate investing, and then our students kept asking, Hey, can I just invest with you guys in one of your deals that you're working on because I'm not quite ready to invest by myself. And we kept saying, no, we must have said no 50 times to people who asked us that. And finally we were like, well, maybe the universe is trying to tell us something here. Maybe we should actually listen to what the market is saying. So we started brainstorming ideas of how we could do that with our core students. So we did a couple pilot deals just experimenting with single family homes, going in on them with some of our students. And it was successful, but it was way too much work. And it was around that time that I had really gotten into passive real estate investing, and I thought, well, maybe it doesn't work with active real estate investments like rental properties, but maybe it could work with passive real estate investments.

(05:45):

So we did a pilot deal there and it was great. It was fun. Our members liked it or the people, our core students liked it. So we started to open it up to the public as just a flat fee investment club where we meet every month and we go in on these investments together.

Scott Meyers (06:04):

So who's the chief underwriter and presenting and the person ultimately responsible for presenting these opportunities to the group? Is that by a committee by board? Is it yourself, you and your partner? Tell me what that looked like.

Brian Davis (06:19):

Yeah, so there's two answers to that question. The formal answer is that we vet all these deals as a club, and every member is responsible for their own money. I mean, they're making their own decisions. And of course we have to say that for legal reasons, some CYA stuff. The informal answer is that my partner and I, part of what we do, part of the value that we are offering with this investment club is networking with operators.

(06:47):

So

(06:48):

We spend a lot of time going out and meeting with operators like you. It's how you and I got connected and just learning about what they're doing and the kind of investments that they make and what their track record is and how long their experience is.

(06:59):

And then we get on their investor email lists. So all day, every day we're getting emails from operators about their latest deal. And when one comes across our plate that we think might be a good fit for the co-investing club, we will sit down, we'll talk about it, we'll hop on the phone with that operator and dig in a little bit deeper and ask 'em some questions. And if we still think it's a good fit, then we will invite them to come in front of our investment club and present their deal. And then our entire investment club gets to grill them together and all sling questions at them from 50 different angles, and then they hop off. And we as a club sit there and we discuss the deal, the pros, the risks that we see, what we like about the deal, and then any members who want to invest in that deal can do so with 5,000 or more. And collectively we'll invest half a million, 750,000, whatever it is that month, whatever, just the interest level is from our club members. But it's a way for each person to invest a relatively small amount, even as we have a pretty large bargaining power as a community, we can often qualify for those higher preferred returns or better profit splits or whatever it may be.

Scott Meyers (08:11):

So you're investing in a fund to fund model, I'm assuming, right? I shouldn't

Brian Davis (08:14):

Assume. No, no. It is not a fund to funds. So it is a flat fee membership business that we have, so we don't get a cut of any of the money that's invested. So in a fund to funds, often there will be some kind of slice of the pie set aside for the fund manager for legal reasons, we can't do that. So yeah, whatever the club earns that gets distributed out proportionate to each person's investment in that

Scott Meyers (08:43):

Deal. So not a fund of a fund, but are you investing as one entity as an LLC coming in to buy the shares? Okay.

Brian Davis (08:49):

Yeah. So for each deal, every month when we do a new deal, we will open a new joint venture LLC, and then any members who want to participate in that deal will get listed as a member, as a partial member, a partial owner of that LLC proportionate to whatever they invest. Sure.

Scott Meyers (09:06):

What is the interest in terms of a depreciation? Do you have funds that are set up for folks that are all looking for depreciation and then you're seeking to come into or buy those shares of perhaps of a fund that gets depreciation or that there's always a number of, your investors are obviously looking for depreciation, and so do you pool those folks together and then invest in certain shares of certain funds? Because we set aside shares in our funds for folks that can take the depreciation versus those that are investing in a retirement vehicle that the K one with depreciation would go for N. So tell me, what does that look like? Do you bifurcate some of the shares on the investments of your partners that are in the group?

Brian Davis (09:41):

We do not bifurcate shares, no. So our members can choose to invest through a self-directed IRA if they want to or through

Scott Meyers (09:48):

Legal. They self select,

Brian Davis (09:49):

Yeah, ortho legal entity or through their personal name, whatever they want to do. But if it's an equity investment, like a syndication, the joint LLC will get its K one, and then our CPA team will go in and yeah, that'll divvy that up so that each member gets their own K one again, whether they're individuals or entities or whatever. So each person gets their own individualized K one and their share of the depreciation. If there is depreciation for that investment, there may not be, we invest in more than just syndications. Sometimes it's private notes or other stuff where it's like a 10 99 INT that we get at the end of the year.

Scott Meyers (10:31):

Yep, understood. Well, let's talk about that then. Tell me what you're looking at here we are, this podcast is dropping in July of 2025. What are you and your partner looking at? What is the club looking at? I'm assuming they're, they're sending you out and having you due diligence on certain investments that they come across. What are you interested in right now? What trips your trigger?

Brian Davis (10:54):

Yeah, so one of our core values as a club is diversification. So we want to do a lot of different types of deals, so different asset types, different types of properties, geographical diversification, different markets around the country. We are not interested in picking the next hot market. My crystal ball is no clearer than yours, but also timeline diversification. We want to invest in deals at different timelines. So the deal we just wrapped up in our investment club was a secured note at a flat 15% interest, and it was a shorter term note, it was about a year and a half. So that was to a land flipper, and not only are we secured by a corporate guarantee from his company that owns all of these parcels of land, he also gave us a first position lien against his primary residence at something like 70% LTV. So we felt pretty good about that, but that's one example. Every month we try to do something a little bit different. So this year we've invested in an industrial syndication that was a seller lease back. We have done some affordable housing deals. We've property tax abatements. I mean, we've invested in, let's see, what else have we done this year? We did a, it's a guy who does installment contracts to people who would otherwise not be able to buy homes.

(12:28):

So land contracts, however you want to put it. So yeah, it's a mix of stuff ranging from as little as a year, year and a half interim up to five years or beyond. In investment term,

Scott Meyers (12:44):

How many opportunities are you putting in front of the group on say a monthly basis? And do you do this? I look at the way that we raise equity within our own group and our own database, if you will. And that is we have an opportunity that comes up and we present and promote that and webinars until that one's done. And once that's done, then we move on to the next. Do you operate in that linear fashion as well, or as opportunities come up? Are you constantly having webinars and introducing joint venture partners and opportunities for folks?

Brian Davis (13:13):

So we do one a month is what we promise as an investment club. In some months we do bonus deals. So for example, in this month, we are going to do a bonus deal because that note, that secured note that I just told you about that was capped at $250,000 and we typically invest a lot more than that, and we had around half a million dollars of interest in that, people who wanted to invest. So we actually had to cap people's participation in that one. So to justify that to our members, that was just set aside as a bonus deal. We will do an official July deal later this month. But yeah, we will probably do around 15 deals total this year. So 12 monthly deals and then a handful of bonus deals as well.

Scott Meyers (14:01):

What's the average capital raise for the projects that you're putting folks into?

Brian Davis (14:06):

Yeah, average is probably in the 500 to $600,000 range. I think the largest we've ever done was 860 some thousand dollars. So as the club grows, we invest more and more. It's, it's been growing pretty steadily over the last two years.

(14:22):

So

(14:23):

Yeah, I really don't see any downside to our scaling as far as our members go. The more members that we have, the greater our negotiating power for better returns. So for example, that land investor, we negotiated that 15% interest rate with him. He normally pays a lot less than that. And again, like we talked about, syndications often pay higher preferred returns or better profit splits the more you invest. So yeah, it's all upside as far as I see, as far as the club scales.

Scott Meyers (14:58):

So you've moved around a little bit. You spent some time in Abu Dhabi. I've spent a little bit of time in the Middle East as well, and you're looking at AI and some of the other nuances of what they're focusing on in the Middle East. Was that a strategy to go to these different parts of the world to be able to understand the investing climate within those areas? Or was this a byproduct of wanting to be able to live in other climates and other cultures?

Brian Davis (15:22):

So my wife is a school counselor and we originally moved abroad because she took a job at an American school in Abu Dhabi, and we just fell in love with expat life. When we moved abroad, we owned a house and obviously had furniture for that house. So we rented out our home as a furnished house planning to just step right back into our former lives after two years after her contract was up. But we loved the lifestyle, so we ended up selling the house, selling all of our furniture and staying abroad for a decade. So yeah, we spent four years in Abu Dhabi and then we moved to Brazil to the capital city of Brasilia. Spent four years there where we had a child. Our daughter was born there, and she's actually a Brazilian citizen, which is kind of fun. And my wife has taken jobs at schools around the world. Most recently we lived in Lima, so that was what originally drove our move overseas, and I wanted to find ways of earning money from overseas, find ways of investing in real estate from overseas. And it all kind of evolved on its own from there.

Scott Meyers (16:34):

Yeah, yeah, I love it. I love it. Many of the folks that we've ran into that become expats longer than they thought, they started out almost exactly the way that you and your wife did, and that somebody typically in education coming from, most likely from London, uk, they take a two year contract to teach somewhere, and they said that was 20 years ago and they stayed. And so no matter where that is or you than they recognize that, hey, this isn't so bad. And I think the more, depending on what kind of ties you have back home, when you travel like that, you recognize, I think you quickly forget the things that you missed back home because you begin to, this becomes home where you're, and you build community and you recognize that, okay, outside of maybe some really close relationships back home, I can do this. And it's kind of exciting.

Brian Davis (17:22):

Yeah, I mean that really became, the only thing that we missed about the states was our family and friends. I mean, we had fantastic lives overseas, and the reason we moved back to the states a week or two back was because we wanted to be closer to our family and friends. Our parents are getting older and we wanted to just spend more time with them while they're healthy. But yeah, living overseas, it's a great life and it comes with a lot of advantages. International educators in a lot of places get free furnished

(17:52):

Housing. So

(17:54):

For 10 years we didn't have a housing expense, so we were able to save and invest a lot more money than we would have here in the states

Scott Meyers (18:01):

We

Brian Davis (18:01):

Share.

Scott Meyers (18:02):

And if you're living in the UAE and it's a tax free income, you just gave yourself also a 30 or 40% bump in income as well.

Brian Davis (18:09):

Well, that's right. And in the US you can take advantage of the foreign earned income exclusion. So you still have to file a tax return in the us and you still technically owe taxes your first, I think now it's 115 grand per person per year. It's around it think that's about right. So roughly your first 115,000 per person per year is tax free for regular income taxes. That does not apply to self-employment taxes, double FICA taxes that I

Brian Davis (18:40):

Pay,

Brian Davis (18:41):

But as far as regular income taxes go, so between my wife and me, that's $260,000 a year in regular income taxes. That's tax

Brian Davis (18:48):

Free.

Brian Davis (18:49):

And then above that, you do have to pay regular income taxes, but that's another perk of living overseas. It is. We didn't own a car for six years in America. It is just this assumption that every adult must have a car.

Brian Davis (19:03):

Of course,

Brian Davis (19:04):

When we moved to Abu Dhabi, we were like, oh, well, do we really need two cars? Maybe we could share a car. And then it turned out we could, so sharing one car was fine, and then we moved to Brasilia, which is a very walkable city, and we're going to be living 15 minute walk for my wife's

Brian Davis (19:18):

School. She

Brian Davis (19:19):

Said, well, what if we don't get a car at all? What if we just walk and bike and Uber everywhere? And it was fine. And same thing in Lima. We did buy a car again, we moved back to the states. Gotcha.

Brian Davis (19:30):

Sure.

Brian Davis (19:32):

But yeah, there are so many advantages to living overseas, and that doesn't even scratch the surface of geo arbitrage, the lower cost of living overseas. So I've been earning money in US dollars with a US-based business, but we've been spending money in places with a different currency where cost of living is lower. So that's really been helpful as well.

Scott Meyers (19:52):

Yeah, that geo arbitrage was introduced to that back in 2006 when Tim Ferris came out with the four hour, I was going to say the four hour mega bonding, and I forget the actual page in the quote, but that stuck with me. When you're earning money in dollars and living somewhere where your business runs on rupees and you live on pesos. I think he was in Argentina at the time or somewhere. He said that's, and then he mapped it all out, and I was just like, that makes a lot of sense. We've had a taste of that. We've had some fits and spurts at different places, and it's a real thing when you spend a little more time somewhere else and you recognize that and it's just like, oh my gosh, if I can continue to make money in US dollars, yet I'm living over here on this. We've done at Mexico for a little while and some other places, and it's just like, oh my gosh, we're living like kings.

Brian Davis (20:39):

Yeah, there are some things in particular that are just way less expensive overseas. In South America, beef is basically no more expensive than chicken, whereas in the US beef is quite expensive. So yeah, something like the last time I ran the numbers beef was something like five times more expensive in the US than it was in Peru where we were last living.

Scott Meyers (21:03):

Well, I mean, I noticed, and you just mentioned it as a transportation, you didn't speak specifically to the cost, but you look at taking an Uber and a taxi and most other countries, it's just like, wow, this really doesn't pay to have a car when we can for the few times that we do need to take this, we can take public transportation or a taxi and it's super cheap.

Brian Davis (21:24):

I mean, there was basically nowhere in Lima that I couldn't take an Uber to for more than $10. I mean, we uber around town for 2, 3, 4 or $5 tops wife in the States. That is not the case.

Scott Meyers (21:40):

No, it's not. My wife and I literally just got back last week from Istanbul, Turkey, and we could go anywhere across that city, 10, 30, 40 minutes, and it's no more than 10, 12 bucks a ride. And it's just like, is this subsidized by the country? Or why is this so cheap? But yeah, amazing. Well, let's get back to the investing side, Brian, my list and myself, when I say my list, our database and a group of investors are LPs that invest with us. I mean, this is pretty cut and dry, it's cookie cutter. We know this industry the back of our hand. It's a simple predictable business model. We know the risks. We can predict and project the returns and come, gosh, pretty darn close every time. Five years out, you're looking at lots of different asset classes in different parts of the world and new technologies and things. So let's talk about risk and reward and how you not only assess an investment, but then how do you communicate that to the folks that are in the club?

Brian Davis (22:39):

So the first risk that we look at, the most important risk is sponsor risk or operator risk. Of course. Yeah. I mean, there's that cliche in the industry bet on the jockey not the horse. Correct. And we have definitely found that to be true. We have seen good operators salvage deals that have gone very far sideways, and we've also seen bad operators mess up perfectly good deals. So the first and foremost thing is just vetting the operator. And that goes beyond reputation because two of the worst deals that we've invested in were from operators who at the time when we invested with them, and this is back in 2022, this is before the meltdown in commercial real estate, but they had just sterling reputations in the industry. These were some of the biggest names in the industry. They had really good reputations and they just completely collapsed. So it has to go beyond reputation. Reputation helps though, right? I mean, that's one piece of the puzzle, but it isn't everything. Track record also one piece of the puzzle, but not everything. Some of those operators had great looking track records, but I really like to see operators who have lived through a different real estate market cycles. And in particular, 2008, so I lived through 2008 directly. We already talked about that. But that fundamentally changed how I look at investments, both real estate and other types of investments like stocks

(24:20):

And people who got into real estate after the recovery. They just don't, I don't know if they have the proper respect for how things can go awry. So we like to invest with operators who have been in real estate since 2008, at least now that not everybody can do that. Of course, we're almost 20 years out from that now. But we do want to see operators who have been through some different types of real estate markets, been through some cycles that this isn't their first rodeo, right? So that's part of it. We go and we try to speak with LPs who have invested with them on a couple of deals. We'll go on platforms like Invest Clearly or Passive Pockets or

Brian Davis (25:13):

BiggerPockets.

Brian Davis (25:13):

We'll ask, has anyone invested with these guys? What are your opinions on them? We will search through the forums to see anyone who has written posts about those people, stuff like that. And we'll hop on several phone calls with operators and ask us about deals that have gone awry and what happened and what did you learn from it? And just keep probing and digging just to try to get a sense for the person and their reliability, their trustworthiness,

(25:42):

Their personal values. Not everything is easy to measure qualitatively, but that doesn't make it any less important. And I have found that if you talk to someone long enough, you'll start getting a clearer picture of their trustworthiness, their character, whether they put their investors first. But that has to kind of emerge over the course of conversations, and you have to kind of probe around the edges of that. You can't ask those questions directly because anyone can follow a script and say all the right things of course. So yeah, you have to probe around the edges of that. But anyway, so operator risk, that's the main thing. But when we look at specific deals, some of the big risks that we look at are debt risk, is it how long is the debt term? How much runway is there to wait out a bad market for selling? Right?

(26:37):

And we've seen a lot of that over the last few years of deals that maybe were perfectly okay deals, but the debt ran out, the term ended on the loan. So then the operator is forced to either sell a refinance in a bad market for selling or refinancing. The longer term the debt, the more comfortable we feel that it doesn't have to be fixed interest as long as there's some kind of protection against interest rates just shooting through the roof like they did in 2022. As you know, a lot of operators got badly burned by that where they didn't have protection in

Brian Davis (27:09):

Place.

Brian Davis (27:11):

So debt risk is one of the things we look at. Property management risk is a big one. When we look at deals that have gone bad, both deals we've invested in and just other deals that we have seen operators bungle or drop the ball on, what we see is that there's what they call a cascade of problems. So that's a term from aviation where what sends an airplane down is not one thing going wrong. It's a cascade of problems. And I think the number is on average in a plane crash, there are seven different things that went wrong. And we find this the same thing with real estate deals. One thing going wrong is not necessarily, there's probably not going to sink a real estate deal, but when you have a lot of things all go wrong at once, that is what sinks deals. And we have found that outstanding property management can, we've never seen a deal go completely off the rails if it had outstanding property management. So that is something that we take a really close look at that I don't think enough LPs really scrutinized. Correct, and it's not about whether the property management is in-house or outsourced. It's about how deep is the relationship between the operator and the property manager.

(28:28):

So that's one of the first questions that we ask is how many ties have you worked with this property management team in this market? And if they say, well, this was our first time dealing with them, or maybe we've worked with them in one deal, that is a red flag for us. What we want to hear them say is, oh, this team manages all 15 of our properties in this market. That's what we like to hear. Going back like 10 years, 15 years, 20 years,

Scott Meyers (28:58):

Bringing endorsements is what you're after.

Brian Davis (29:01):

So we want to see a really deep history of the operator and the property management team working together in that market. And the same thing goes for construction risk. Who's going to be swinging the hammers? And how many deals have you worked on with that team before? And it could be in-house or it could be outsourced, and either one is okay if they've worked together on a lot of deals before. So same thing there. We also look at regulatory risk. If it's a residential investment. Now that doesn't apply to some of the other stuff, but it's a residential investment, like a multifamily investment. We want to look at how tenant friendly is the city and state because that's relevant

Brian Davis (29:40):

It.

Brian Davis (29:41):

Yeah. It doesn't necessarily mean we won't invest in that deal, but it adds to the risk, right? I mean, it adds to the risk profile. So I'll give you an example. We invested in a multifamily property outside of Portland, Oregon. Very, very tenant friendly place as you know. And the reason that we felt comfortable doing that is because the operator, they had a very deep track record in that exact market, and the company actually started as a property management company 20 years ago in that market. So property management actually was their expertise in that specific market. So that's a case where the fact that it is such a tenant friendly market in some ways played in our favor because that's keeping some of the other riffraff out of that market. Other operators are going to be avoiding that

Brian Davis (30:32):

Market,

Brian Davis (30:33):

Whereas this team is very comfortable working there in a more challenging market. So that's a case where we made an exception for that. But again, regulatory risk, it's one more spoke in that wheel of risks that we're looking at. And then we also want to look at concentration risk. Have we invested in a lot of properties in this area before? Are we sure that we want to invest in so many deals in Dallas, for example, or so many deals in Austin or Houston or Phoenix or whatever, because a lot of operators love Texas because it's a pretty investor-friendly exactly place. So we've actually turned down some deals that we thought looked like pretty good deals in Texas because we didn't want to have too much concentration there. Again, we're not trying to pick the next hot market. We're trying to spread our money pretty far and wide. And then you have the typical market risk that you're going to have. But that being said, some investments are more recession resilient than others. And that's something that my partner and I have paid a lot more attention to over the last nine months or so.

(31:45):

We have tried to look for investments that are more recession resilient as there have been some warning signs that we might be headed for a recession. It hasn't materialized yet, but that doesn't mean that it's not coming. So for example, we have invested in some multifamily deals where the properties got designated affordable housing, or at least a percentage of the units got set aside for affordable housing in exchange for a property tax abatement. So where there were some caps on rents and that sort of thing, but those units, there's a wait list for a lot of those units. And in a recession, guess what? That wait list is going to get even longer because those units are going to become even more coveted in a recession. And meanwhile, those deals, those property tax abatement deals, those deals, they were able to bump up the NOI with the stroke of a pen with that property tax abatement deal

Brian Davis (32:43):

Because

Brian Davis (32:44):

The savings on property taxes far outweighed any restrictions on rents. So it's a way to add value to these deals without swinging hammers. So you can avoid that construction risk altogether if the way that you're boosting the NOI is with a property tax abatement. So that's is one quick example of some recession resilient deals that we've been looking at. But yeah, it was a long answer to a short question.

Scott Meyers (33:13):

Well, no, I mean those are the keys of the kingdom though. I mean, it's all about risk and reward. I mean, that's why we do this. And if we look at investments, those with higher returns usually have a little higher risk in it. And so where's that balance and finding what that looks like. That all plays into looking at the jockey, as you mentioned. And I guess one of the benefits that we have, I shouldn't say, I guess we know one of the benefits that we have working for us is there's a whole lot of self storage syndicators out there, but very few of 'em have been investing since prior to 2008, and we've been at this for 30 years. And so we've seen a couple of cycles. We know what it looks like, and I call it the scar tissue that we built up.

(33:52):

And the fact that if you've gone through a recession and you've had those challenges, you see a little further down the road when you begin to look at the deals that are in front of you right now, you can spot potential pitfalls just from the experiences you've had from going through a tough economic cycle where a newer investor may see two or three perceived risk opportunities within a project. And as you mentioned, seven, we will take a plane down or a deal down. Well, those that have been through a little bit more, we can usually identify seven or eight because we've been stretched and seen, oh, here's the domino effect of what happens over here and see what this looks like and how to mitigate those types of things. And so I'm not saying that to point to ourselves for any other reason other than I'm pointing to ourselves because we have that history behind us. And there is some benefits of getting older and wiser is that you do become a better investor, not just hustle doesn't beat experience no matter what anybody says. It just doesn't.

Brian Davis (34:50):

No question. And we've also found a lot of benefit in vetting these as a club. So

Brian Davis (34:59):

Having

Brian Davis (35:00):

50 sets of eyeballs on these deals. Oh my god, yeah. So my partner and I always say that people come to our investment club for the small minimum investment, five grand instead of 50 or a hundred grand they you normally need, but they stay for the group vetting of these deals because every time I've been in real estate for 20 some years, every time we meet and vet a deal together, someone in our club is asking a really good question that hadn't occurred to

Brian Davis (35:24):

Me.

Brian Davis (35:27):

And sometimes there's niche knowledge that people will bring. Oh, sure. So for example, we've had people when we're discussing deal, we'll have a member raise their hand and say, I live five minutes down the street from this apartment complex. I go, look, yeah, they'll say, I drive past this place every day on my way to work. I know this well. Or we have a woman in our club who's an insurance adjuster. She'll tell us about what's going on with insurance premiums and where she's seeing the greatest risk and premiums jumping over the next year or two. So yeah, just having 50 sets of eyeballs on these deals, people are going to notice risks that other people missed or just ask really probing questions of the operator that can bring to light things that maybe would've been overlooked otherwise, either pros or cons. So that has really been helpful, just having so many sets of eyeballs, all vetting investments together, there's a huge benefit to that.

Scott Meyers (36:30):

Agreed. Well, Brian, thanks so much for taking time with us. I'm glad that we were able to get you back on after the conversation that we had to be able to share you and your knowledge and what you're doing in building at the club there with Storage Nation. So as we depart today, you're well-educated, have a discussion about the book that you've read recently that has had the most impact on you as a person. It doesn't have to be on the investing side, and doesn't have to be on the personal side, although it could be either or both. What is one of the most memorable, impactful books that you've read recently?

Brian Davis (37:03):

So as far as recent books go, I'm going to say Buy Back Your Time by Dan Martel. That is a great book, especially for entrepreneurs where people start a business looking for freedom and flexibility and instead they end up with 20 different jobs that they have to do themselves. And it's just endless stress. And I've been there myself, and in some ways I'm still there. But that notion of building a system that can run without you building a machine that can operate while you go off and have your adventures. So for example, I took what I call a Red Month in Argentina a little while back where my family and I went and hiked around Patagonia in Argentina for a month, and I just said, I'm not available this month. Schedule a call with me for when I get

Brian Davis (37:58):

Back.

Brian Davis (37:59):

But you can't do that if you are a W2 employee, if you are an entrepreneur who's trying to wear every single hat in your business. So yeah, check out, buy Back Your Time by Dan Martel.

Scott Meyers (38:10):

Yeah, a good one, very good recommendation. Another group that I'm a part of had him come in and speak, and then I was able to spend just a little bit of time with him. Been an incredible individual and he's built quite a process. Well, Brian, once again, thanks so much for your Time Storage Nation. You've been spending time with Brian Davis, and I know that you picked up a few nuggets out of this and a ways to be able to look at the world and your investments a little bit differently. So with that, Brian, thank you so much and for the rest of you will see you on the next podcast episode. Everyone take care, and we'll see you soon.

Brian Davis (38:40):

Scott, thank you so much for having me.

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