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Speaker 1: Welcome the Money in Wealth with John Hob Bryant, a

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Speaker 1: production of the Black Effect Podcast Network and iHeartRadio. This

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Speaker 1: is John Hope Bryant and this is Money and Wealth,

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Speaker 1: and I'm honored to be here with a new friend,

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Speaker 1: Alex Rodriguez. Men he would know him as a Rod.

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Speaker 1: Let me give you the part that's easy for all

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Speaker 1: the baseball fans. You may or may not know that

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Speaker 1: he came from the Dominican Republic. His family were immigrants.

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Speaker 1: Victor Rodriguez's father and Lord is Nellie Nevado Mellow. I

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Speaker 1: hope I said that right his mother. They came from Well,

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Speaker 1: he came. It was born in nineteen seventy five in

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Speaker 1: Washington Heights section of Manhattan and came to this country

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Speaker 1: with a dream. He was raised alongside his siblings Joe

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Speaker 1: and Susie, and achieved incredible things in his professional career

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Speaker 1: that started, as you know, playing twenty two seasons in

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Speaker 1: Major League Baseball. That's the Seattle Mariners, the Texas Rangers,

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Speaker 1: the New York Yankees, and of course later as chairman

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Speaker 1: CEO of a Rod. But we're going to get into

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Speaker 1: that because it actually wasn't later. It was actually almost

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Speaker 1: right away. But I'm getting ahead of myself. And he

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Speaker 1: has been passionate about business and sports and community. And

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Speaker 1: I will say, from my own perspective, I would say

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Speaker 1: the maximization and unleashing of untapped human potential at scale.

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Speaker 1: We'll talk about a little bit about that about with

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Speaker 1: regard to how he treats his employees. Alex and I

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Speaker 1: spent some time in the community a few months ago

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Speaker 1: here in Atlanta at Clark Atlanta University. He showed up

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Speaker 1: very simply for no compensation, because he was asked to.

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Speaker 1: And so this is an important conversation about things that

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Speaker 1: matter most at a time where everything matters. And I'm

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Speaker 1: honored to be with my new friend Alex Rodriguez John.

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Speaker 2: Great to be here, man. We've been looking forward to

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Speaker 2: doing this together.

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Speaker 1: We have. We have, And the story of your sports

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Speaker 1: success is a topic of obvious legend. And I don't

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Speaker 1: know if you get tired of talking about it or not,

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Speaker 1: but I want to talk about your sports success from

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Speaker 1: a different window, a different vantage point. I want to understand.

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Speaker 1: Was this always about you aspiring to do more? My

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Speaker 1: guess is initially you were passionate, absolutely passionate about baseball,

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Speaker 1: that was when you were in the Dominican Republic. That

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Speaker 1: was something that you obsessed on, Is that right?

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Speaker 2: Yeah? Look, ever since you know, I was born in

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Speaker 2: New York. I was born in the shadows of Yeshiba

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Speaker 2: University right around one eighty third, nineteen seventy five, very

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Speaker 2: close to Yankee Stadium. My father owned a shoe store

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Speaker 2: in our apartment. And very much like my father, ever

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Speaker 2: since I was ten years old, I've always wanted to

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Speaker 2: be a baseball player and a businessman, and I was

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Speaker 2: fairly good with numbers. My father was too, and I

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Speaker 2: had a passion for it, and ever since I was

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Speaker 2: a rookie and I got drafted in nineteen ninety three

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Speaker 2: by the Seattle Mariners with the one pick overall in

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Speaker 2: the first round, I was thinking about life after baseball

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Speaker 2: because I've seen enough examples of players that have gone

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Speaker 2: like me, from rags to riches back to rags, and

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Speaker 2: I didn't want to be an addition to that, you know,

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Speaker 2: unfortunate number or statistic. So that was my passion early on,

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Speaker 2: was to have a path to have a good life

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Speaker 2: post baseball.

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Speaker 1: You were inspired by that balance initially from your day,

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Speaker 1: Is that right? Yep? Yeah, and mom is where you

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Speaker 1: got the self esteem. She poured the love in you

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Speaker 1: and said, you can do anything.

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Speaker 2: Is that right? Yeah? You know. My father he passed

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Speaker 2: some years ago, and he left us when he was ten.

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Speaker 2: And I never saw in those ten years my father

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Speaker 2: raise his voice once. Even though he was an alcoholic.

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Speaker 2: He would drink twenty twenty four beer cans a day,

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Speaker 2: Budweiser I'll never forget, and two packs of cigarettes a day.

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Speaker 2: So my mind is a ten year old John. I

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Speaker 2: thought my father's going to be dead by the age

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Speaker 2: of thirty. There's no way that anyone can live this

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Speaker 2: type of lifestyle. But never saw him drunk, even though

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Speaker 2: I'm sure he was. But he was an acting alcoholic

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Speaker 2: and very functional. And amount of cigarettes he was smoking

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Speaker 2: my house was like intoxicating. But my mother. I got

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Speaker 2: my toughness and my grit and my work ethic from her.

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Speaker 2: She worked at General Mortars for over twenty years and

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Speaker 2: then when dad left, she had to pivot. Once we

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Speaker 2: arrived in Miami at the age of nine, and I

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Speaker 2: joined the Boys and Girls Club. She was a secretary

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Speaker 2: of the morning and surf table at night, and I

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Speaker 2: remember her coming home after twelve hours of working around midnight,

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Speaker 2: sometimes eleven o'clock at night, and I would just be

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Speaker 2: watching finishing, watching the Mets game, watching Kinner's corner, and

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Speaker 2: I would give her a big hug, and I would

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Speaker 2: take her pouch where she had her tip money, and

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Speaker 2: I would start counting that money. And you know, on

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Speaker 2: Thursdays and Mondays, Tuesdays it was thirty two twenty eight

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Speaker 2: dollars twenty nine thirty. But Friday and Saturdays with the

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Speaker 2: big ticket nights, and she would come home sometimes with

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Speaker 2: fifty eight fifty nine sixty bucks. I said, boy, we're

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Speaker 2: richer than Warren Buffet. We made it big. But then John,

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Speaker 2: she did something interesting. She would then take that pouch

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Speaker 2: and put that money out and put it in an

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Speaker 2: envelope yep. And then she would say, son, help me

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Speaker 2: pick up the mattress. And I remember, like an eleven

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Speaker 2: year old boy, like everyone's yesterday, she would take that

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Speaker 2: envelope and put it right under that mattress. And I said, Mom,

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Speaker 2: but wait a minute, there's banks all around our neighborhood.

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Speaker 2: Why don't you go put the money there? And being

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Speaker 2: an immigrant mother and not trusting banks, she goes, Son,

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Speaker 2: we don't trust banks, we trust cash, and we trust

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Speaker 2: our mattress. So that was the start for me where

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Speaker 2: I said, financial literacy is going to unlock my future

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Speaker 2: and hopefully get me out of this neighborhood.

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Speaker 1: You and I have a lot in common. The more

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Speaker 1: I hear about your story, the more we relate to mine.

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Speaker 1: My mom told me she loved me every day in

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Speaker 1: my life, just like your mother told you. She worked

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Speaker 1: as a seamstress. My dad was a business owner and

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Speaker 1: had issues. He had other problems, was an alcohol but

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Speaker 1: had other challenges that but deubled him. I could relate,

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Speaker 1: and I'm very proud of how you have how you

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Speaker 1: circumnavigated that entire situation and found always that sweet spot

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Speaker 1: of what was most important. And so now I'm going

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Speaker 1: to pivot back to something I said earlier, which is, yes,

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Speaker 1: you're passionate about baseball. Killed it for twenty two seasons,

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Speaker 1: became a legend in baseball. I'm sure lived your dream

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Speaker 1: made everybody proud, both in New York and in the

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Speaker 1: Dominican Republic, maybe even all of Latin America. But you're

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Speaker 1: dreaming also parallel about business, and I understand it your

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Speaker 1: first at the time, you're the largest contract of anybody

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Speaker 1: who signed a baseball contract. There was over two hundred

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Speaker 1: million dollars at the time. As I understand it, your

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Speaker 1: first call was to Warren Buffett.

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Speaker 2: Yeah, but you know, one hundred percent right with one edition.

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Speaker 2: Pre setting that big deal, I didn't have a lot

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Speaker 2: of capital. I was just a young kid that I

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Speaker 2: entered the big leagues at eighteen, and somewhere on twenty

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Speaker 2: one or twenty two. Before I got paid, I made

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Speaker 2: my first investment and that was a duplex and that

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Speaker 2: duplex was about two hundred and fifty thousand dollars right

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Speaker 2: around Miami Arena, right there on fis Gain and I

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Speaker 2: had a forty eight thousand dollars down payment and that

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Speaker 2: was the start of basically what is now called a

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Speaker 2: Rod Corp. And once I got my contract with the

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Speaker 2: Texas Rangers, I was naive enough to think, well, if

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Speaker 2: Warren Buffett, who ensured my contract, and that got back

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Speaker 2: to me, I said, well, now we're partners, so let

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Speaker 2: me call him and make sure that I'm going to

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Speaker 2: let him know his money is safe with me because

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Speaker 2: I don't plan on getting injured. And of course I

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Speaker 2: send an email. I thought I would never get an

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Speaker 2: email back, and he sure responded about you an hour

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Speaker 2: later and I said, if you're ever available, will love

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Speaker 2: down to come down to Omaha and have lunch with you.

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Speaker 2: And he said, how's October And I said, well, we're

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Speaker 2: not going to the playoffs, I'm totally free. And that

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Speaker 2: started a series of about five to seven years of

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Speaker 2: me going there every year postseason one to make sure

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Speaker 2: that the insurance money was good because I was looking

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Speaker 2: healthy and good. And second he became a mentor where

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Speaker 2: he would basically look at all my businesses and give

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Speaker 2: me great advice.

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Speaker 1: He ensured your contract through one of the businesses that

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Speaker 1: he has.

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Speaker 2: Is that right, yeah? Or I mean he probably did

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Speaker 2: it from his balance sheet, right. It was he was

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Speaker 2: trying to get the We were trying to share the

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Speaker 2: last third of it of a ten year contract because

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Speaker 2: it was such a new thing of a contract that long.

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Speaker 2: There wasn't any precedent, right, So we got the first

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Speaker 2: seven years insured, but the last three were having a

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Speaker 2: hard time because it was hard to forecast that far out.

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Speaker 2: But one basically said, yeah, if you sent me this check,

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Speaker 2: I'm sure the last three years and that was the

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Speaker 2: end of it. And thank goodness, we cement to the deal.

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Speaker 1: So I don't think, and I don't want to presume

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Speaker 1: or assume, Alice, that the audience understood what we just said.

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Speaker 1: They just see you playing baseball, They see their favorite

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Speaker 1: athletes just doing what they do, and they just assume

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Speaker 1: that the check, you know, is coming in the mail,

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Speaker 1: and like they get the check to their employer. Now

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Speaker 1: you just unpacked the whole other situation, as they say

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Speaker 1: in my neighborhood, where a contract is underwritten for insurance.

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Speaker 1: Can you explain that just a little bit before we

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Speaker 1: go first.

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Speaker 2: Sure. Essentially, John, let's just say that, you know, I

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Speaker 2: give you a one hundred million dollar contract and it's

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Speaker 2: ten years, and it's ten million dollars a year. Right,

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Speaker 2: it's one hundred I'm going to have to go ensure

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Speaker 2: that contract, meaning that if in year three John breaks

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Speaker 2: his knee injures himself, well he can no longer play

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Speaker 2: for the rest of his career. I'm still, as the

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Speaker 2: owner on the hook for seventy million dollars. I have

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Speaker 2: an insurance policy that, let's just say I paid two

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Speaker 2: million dollars for that premium, would essentially take care of

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Speaker 2: the seventy million dollars and now I'm off the hook.

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Speaker 2: John has paid his balance of seventy million dollars and

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Speaker 2: the insurance takes it on the chin. But in most cases,

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Speaker 2: John is going to remain healthy and that two million

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Speaker 2: dollars premium basically goes to the wayside on my end.

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Speaker 2: But you and I can sleep at night because the

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Speaker 2: contract is insured and the insurance wins in this case.

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Speaker 1: So before I ask you the question about who paid

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Speaker 1: the premium, there's an interesting take on it, whether you

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Speaker 1: as a contractor or the owner of the team. But

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Speaker 1: for the audience, what do you just describe? Think about

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Speaker 1: an insurance premium for your house. Think about an insurance

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Speaker 1: premium for a life insurance policy are your card. That

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Speaker 1: premium is a small fraction of the value of the insurer.

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Speaker 1: They hope that they you never call them with a claim.

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Speaker 1: And this is how people not all claims. Is how

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Speaker 1: the insurance company makes a profit. And you want the

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Speaker 1: insurance company to make a profit in this that's way

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Speaker 1: capitalism works. And there's too many claims. Of course, they

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Speaker 1: could go out of business. Uh So, in this particular case,

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Speaker 1: there was a premium. Alex Is, the corporation this is

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Speaker 1: this is this is separate from a rod This is

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Speaker 1: Alex Rodriguez, the professional athlete, has got a two hundred

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Speaker 1: million dollars contract, and he is the product and is

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Speaker 1: a premium for the underwriting of insurance for that contract.

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Speaker 1: Now else who paid? But I hope not getting into

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Speaker 1: your business. Now, let me put it another way. Was

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Speaker 1: this sponsored by the owners of the team?

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Speaker 2: Yeah, so it is the responsibility of the owner to

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Speaker 2: ensure the contract because obviously, as I just explained, if

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Speaker 2: you have one hundred million dollar contract and things go

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Speaker 2: the wrong way and you get injured, I, as the owner,

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Speaker 2: don't want to be on the hook for that seventy

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Speaker 2: million dollars because John's not available to play. So the

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Speaker 2: owner in this case. In this case it was Tom

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Speaker 2: Hiks who was the owner of the Texas Rangers. He

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Speaker 2: wires the money to warm buffet.

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Speaker 1: Right. The reason I asked the question is, you know

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Speaker 1: you could, as entrepreneurial as you are in your mind

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Speaker 1: if the owner said, look, I'm going to do five

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Speaker 1: years of this or three or five years of this contract,

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Speaker 1: I'm not going to ensure ten years of it. I'm

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Speaker 1: thinking the entrepreneurial Alex and I know would say, well,

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Speaker 1: let me go to Lloyd's of London. Let me go

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Speaker 1: someplace and see if I get the back end insured myself.

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Speaker 1: I'll write the premium check and there's a small price

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Speaker 1: to pay to know I've got the guarantee of all

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Speaker 1: the money. So there's a number of ways to cut this.

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Speaker 1: But in this particular case, they felt so strongly about you,

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Speaker 1: and of course you were such a wonderful negotiating position

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Speaker 1: that you got the entire contract he is guaranteed. Is

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Speaker 1: that right?

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Speaker 2: Yeah, you're spot on, John, So let me add to that.

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Speaker 2: So a lot of times and I did this exactly

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Speaker 2: what you just described, that the team is trying to

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Speaker 2: ensure that contract for protection of a downside event of

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Speaker 2: an injury the player, me or you. In this case,

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Speaker 2: you can go to Lloyd's of London and say, look,

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Speaker 2: if I'm supposed to be playing for fifteen years, but

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Speaker 2: I get hurt and I'm only allowed to play for

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Speaker 2: five years, then Lloyd's of London will give you an

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Speaker 2: additional check to John. Now, assuming that you play those

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Speaker 2: ten years injury free, the John insurance that you paid

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Speaker 2: to Lloyds to London that goes away. You lost that money,

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Speaker 2: but you made the hundred and the team is very

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Speaker 2: happy to lose two million because John played incredibly well.

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Speaker 2: So double ways of insurance and by the way, you

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Speaker 2: can also ensure your house a couple different ways than

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Speaker 2: just one.

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Speaker 1: And for those we unpack everything on this podcast. We

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Speaker 1: make things simple so you understand it. But nobody ever

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Speaker 1: talked to you financial literacy like Alex mother and my

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Speaker 1: mother taught me in the beggar of my classroom. So

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Speaker 1: we want to there's no silly questions. There's nothing that

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Speaker 1: is that is off limits. By the way, doctor King

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Speaker 1: in the middle of the civil rights movement try to

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Speaker 1: get his life insurance and try to get a million

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Speaker 1: dollars of insurance for his family. And Andrew Young pastor

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Speaker 1: Andrew Young as we know now and him went to London,

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Speaker 1: literally going to London. It ran around. No one would

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Speaker 1: insure him Alex. They thought he was just too much

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Speaker 1: of a risk, and he was only you know, he

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Speaker 1: was thirty something years old. They just figured, you know,

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Speaker 1: the chance of something happened to you is extremely high.

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Speaker 1: He's a guy about to get the Nobel Peace Price.

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Speaker 1: They finally got one of the million dollars they finally

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Speaker 1: got one hundred thousand dollars. Premium was very high because

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Speaker 1: the perception of risk was very high. Just because you're

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Speaker 1: on the front page of the newspaper doesn't mean that

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Speaker 1: you automatically get a yes to your answer. But underneath

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Speaker 1: a lot of these things are insurance policies, and older

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Speaker 1: you get the most expensive that policy gets. If you're

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Speaker 1: getting a life insurance policy, it's very cheap to get

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Speaker 1: one at twenty thirty years old. Try to get into

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Speaker 1: life insurance policy at seventy years old for your life,

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Speaker 1: the premium is going to be astronomical. And you can't

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Speaker 1: be mad at the companies. If you want to distribute

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Speaker 1: money like a socialist, you got a first collected like

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Speaker 1: a capitalist. So we want companies to find a way

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Speaker 1: reasonably to make a profit so they can afford to

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Speaker 1: get back and reinvest and take care of their employees.

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Speaker 1: And on the topic of taking care of his employees,

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Speaker 1: I want to gut into that in a minute, but

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Speaker 1: I want to commend you also, Alex. I don't know

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Speaker 1: that if anybody set this to you in this way,

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Speaker 1: but my sense is that you're the only or the

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Speaker 1: first Latino billionaire entrepreneur from professional sports in America. I

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Speaker 1: don't think there's anybody else who has that Moniker. First

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Speaker 1: of all, I don't know another Latino a billionaire in America.

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Speaker 1: I'm sure they exist, but one that came from sports

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Speaker 1: to business. There's no question in my mind that you

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Speaker 1: check that box. And I think you just got into

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Speaker 1: the billionaires club late lash year. So assuming I'm correct

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Speaker 1: of all that, on all that, congratulations.

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Speaker 2: Well thank you John. And you know what, again, I

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Speaker 2: started from literally like ground zero. I'll never forget John,

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Speaker 2: And I think I told you this when we had dinner.

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Speaker 2: You know, I was twelve years old, and you know,

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Speaker 2: Dad had left a couple of years ago, and we

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Speaker 2: were at Publics, a supermarket down in Miami, and I'm

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Speaker 2: with my mom on one of the rare nights that

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Speaker 2: she didn't work. It was probably like a Sunday night

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Speaker 2: or something. And as we're trying to pay for the bill,

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Speaker 2: the bill might have been like seventy five bucks or something.

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Speaker 2: We had like a couple of cars of food and

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Speaker 2: cereal and all of that, and as she's kind of

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Speaker 2: shuffling through her purse, some funny money comes out and

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Speaker 2: I said, Mom, that money's read, well, it looked like

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Speaker 2: monopoly money. What is that? And she was very embarrassed

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Speaker 2: and ashamed and kind of looked down, and she goes, well,

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Speaker 2: you know, the government's given us some help. And my

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Speaker 2: heart stopped. You know, even as a twelve year old,

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Speaker 2: my instincts were too, very very protective of my mother.

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Speaker 2: And to be where I am today, play for almost

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Speaker 2: twenty five years and be very fortunate to be part

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Speaker 2: of an ownership group. You also have to commend, you know,

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Speaker 2: Adam Silver in the NBA that he's opened up the

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Speaker 2: floodgates to have folks like you and I sit at

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Speaker 2: the very top of the chain as governors. It's extraordinary.

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Speaker 2: And I know that Adam and the NBA has great

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Speaker 2: ambitions to continue to promote diversity and more folks like us,

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Speaker 2: people of color to the owners group.

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Speaker 1: No doubt. And I'm an owner of part of Centennial Yards,

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Speaker 1: which is right across from State Farm Arena, as a

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Speaker 1: partner with Tony Wrestler who owns Atlanta Hawks, and Tony

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Speaker 1: is a big who accommodations definitely, the Adam Silver who's

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Speaker 1: a part of financial literacy for all, Tony is a

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Speaker 1: big booster that civil rights. Modern civil rights is in

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Speaker 1: the suites, not the streets, and the color is green.

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Speaker 1: It's about education, access the capital, low cost capital, an

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Speaker 1: opportunity for all. It's Michael mill And would say, this

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Speaker 1: is where we I think we originally where we physically

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Speaker 1: met our friend Michael. Intelligence is equally distributed, but opportunity

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Speaker 1: is not. And so we are at these tables and

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Speaker 1: we should not take it for granted. And thank you

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Speaker 1: for doing this podcast to help to spread the message

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Speaker 1: of unpacking the memo. We unpacked a little bit about

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Speaker 1: insurance and about how you underwrite a long term professional contract.

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Speaker 1: I'm sure the audience didn't know that we're going to

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Speaker 1: get into it. Well, here's another get. There is no

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Speaker 1: billionaire who came from professional sports or entertainment who's a

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Speaker 1: person of color, who didn't go over the bridge of business,

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Speaker 1: particularly corporate. I'll say that again. There is no professional

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Speaker 1: athlete that you're listening that you're thinking about right now.

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Speaker 1: Our entertainer, think jay Z, think whoever you like who

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Speaker 1: went from performing, playing whatever into the boardroom and became

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Speaker 1: a billionaire without coming into corporate. So this is a

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Speaker 1: pathway that everybody needs to understand. We've got to go

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Speaker 1: from the streets to the suites, from protesting to prosperity,

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Speaker 1: and there needs to be a business plan for that.

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Speaker 1: So your obsession, your dual obsession with being smart at

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Speaker 1: the baseball diamond, then smart as a diamond in your brain,

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Speaker 1: and then getting into real estate, which was a really

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Speaker 1: smart move, biggest business in the world. What was your

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Speaker 1: motivation there? And then treating your employees your second biggest

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Speaker 1: asset the right way is I understand it. You make

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Speaker 1: employees shareholders in your dream as well, because nobody washes

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Speaker 1: rental cars. What's your mindset there? And I'm now getting

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Speaker 1: into the most valuable thing we have, Alex. It's not

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Speaker 1: the money, it's not the assets, it's not the real estate.

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Speaker 1: It's our mindset and our relationship capital. The way we

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Speaker 1: treated each other, way you and I treated each other

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Speaker 1: when we first met set the stage for everything. I

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Speaker 1: asked you to come to Atlanta originally your office set.

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Speaker 1: You didn't have time, and you didn't and I said

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Speaker 1: this was for the people. Now, only one would know

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Speaker 1: this unless I said this is for the people. This

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Speaker 1: is no commercial there's no commercial anything in this. And

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Speaker 1: you just said, yes, I'll do it. And you came

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Speaker 1: here at your own expense and spent several days with us,

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Speaker 1: pouring into the people. And I think that's going to

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Speaker 1: pay dividends, not only in Heaven, it's gonna pay dividends

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Speaker 1: here because whatever it goes around comes around. But that's mindset,

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Speaker 1: that's character, that's integrity, that's how you treat people, treat

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Speaker 1: them how you want to be treated, and that carries

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Speaker 1: over how you treat your employees. Talk to me about

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Speaker 1: your mindset to win and why you think it's important

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Speaker 1: to bring others with you.

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Speaker 2: Yeah, great question. And we had a phenomenal time and

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Speaker 2: boy was at an impactful day when we were at

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Speaker 2: that university and talking about some of the history around

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Speaker 2: some of the Black college and the history of of

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Speaker 2: what has done for so many people. And very proud

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Speaker 2: to be there and thank you for that invite. Look, John,

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Speaker 2: the way I look at this is like financial freedom

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Speaker 2: comes from two things. It comes from knowledge and the

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Speaker 2: power of knowledge, and equity and ownership. And it's kind

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Speaker 2: of what the rich that poor dad teaches, Right. I

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Speaker 2: get excited when I get to invest into equity, and

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Speaker 2: I think most people get scared. And the truth is

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Speaker 2: if you're scared and you don't know, it's probably better

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Speaker 2: to have fear right rather than than jump in and

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Speaker 2: do something that's wrong with well, not the right leadership

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Speaker 2: group around you. I've often said that the three things

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Speaker 2: that could take a man down or people down in

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Speaker 2: the world of business are the three l's, liquor, ladies,

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Speaker 2: and leverage. So you got to watch those things. But

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Speaker 2: to me, John, it's really about simplicity and sticking to

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Speaker 2: your circle of confidence, which I learned this over two

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Speaker 2: decades ago from Warren Buffett. And the reason why I

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Speaker 2: started with multifamily apartments and a small little duplex is

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Speaker 2: because I understood it because we were never We never

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Speaker 2: had enough money to buy anything. So I remember as

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Speaker 2: a ten twelve year old boy, I went down to

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Speaker 2: my knees and I said, Dear God, if I can

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Speaker 2: ever trade places with the landlord. And about a decade

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Speaker 2: later I had an opportunity to be a landlord, even

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Speaker 2: though it was a small landlord of two apartments a

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Speaker 2: little duplex. I bought that, and all I was really

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Speaker 2: doing was I knew that at some point my ability

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Speaker 2: to make money from the Yankees was going to come down.

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Speaker 2: But if I had assets that would hedge my bet,

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Speaker 2: and as my earning power came down, my assets would appreciate.

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Speaker 2: Now I knew that I didn't need a lot of

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Speaker 2: cash flow, so I was able. My strategy was simple,

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Speaker 2: If I can play for ten more years and I

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Speaker 2: buy one asset per year, appreciate in value and in

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Speaker 2: cash flow. By the time I was done, those ten

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Speaker 2: assets would be my insurance policy for never going broke.

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Speaker 2: And that was it. It was nothing from Einstein. It

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Speaker 2: was nothing. I'm not that smart, but you try to

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Speaker 2: be clever and try to be smart and work as

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Speaker 2: hard as you can with your competitive advantage. And I

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Speaker 2: thought that was mine.

434
00:24:26,000 --> 00:24:29,040
Speaker 1: So audience, you just heard and Alice says, I I

435
00:24:29,119 --> 00:24:33,399
Speaker 1: know this about me. We exactly the same philosophy. I

436
00:24:33,440 --> 00:24:37,240
Speaker 1: had this nonprofit it was draining me dry, not really,

437
00:24:37,320 --> 00:24:40,000
Speaker 1: not literally, but I mean it was nonprofits are hungry.

438
00:24:40,040 --> 00:24:42,480
Speaker 1: And Alice, by the way, volunteers at the Boys and

439
00:24:42,520 --> 00:24:46,719
Speaker 1: Girls Club as well, and mentors. And I didn't want

440
00:24:46,760 --> 00:24:48,399
Speaker 1: to go beg in anybody. I wanted to be my

441
00:24:48,480 --> 00:24:53,200
Speaker 1: own resource. And so I went and start buying single

442
00:24:53,200 --> 00:24:58,080
Speaker 1: family residential homes and he started buying multifamily homes and

443
00:24:58,280 --> 00:25:00,720
Speaker 1: we are both together two of the artist people of

444
00:25:00,760 --> 00:25:04,360
Speaker 1: color who own both. I think as an afric American

445
00:25:05,400 --> 00:25:08,560
Speaker 1: close to seven hundred single families, and he's got an

446
00:25:08,560 --> 00:25:12,800
Speaker 1: incredible portfolio of like mostly multifamily Why because you make

447
00:25:12,840 --> 00:25:15,600
Speaker 1: money during the day, you build wealth in your sleep.

448
00:25:16,720 --> 00:25:19,639
Speaker 1: The contract that Alex got, that was the grease on

449
00:25:19,760 --> 00:25:22,520
Speaker 1: the gears. You can get rich, but you can also

450
00:25:22,560 --> 00:25:25,800
Speaker 1: go broke because the cash flow stops and you go broke,

451
00:25:25,880 --> 00:25:28,520
Speaker 1: but your expenses have not. Please listen now what he

452
00:25:28,560 --> 00:25:31,760
Speaker 1: said he said to you said it very eloquently. The

453
00:25:31,800 --> 00:25:35,840
Speaker 1: cash flows coming in, your expenses are now rising the

454
00:25:35,920 --> 00:25:39,240
Speaker 1: mediate standard of living. Your cash flow of the contract's

455
00:25:39,240 --> 00:25:42,159
Speaker 1: going to end because seventy percent of all those in

456
00:25:42,240 --> 00:25:46,720
Speaker 1: professional sports, unfortunately will file bankruptcy within five years. You've

457
00:25:46,720 --> 00:25:48,920
Speaker 1: got to have something to augment that. And he did

458
00:25:48,960 --> 00:25:53,680
Speaker 1: that through capital gains and capital asset well, capital appreciation

459
00:25:53,760 --> 00:25:57,400
Speaker 1: of capital assets asset accumulation through real estate, which gave

460
00:25:57,440 --> 00:26:03,399
Speaker 1: him both appreciating assets and income that replaced the income

461
00:26:03,400 --> 00:26:05,400
Speaker 1: he has as a player. They get that, right, Alex.

462
00:26:06,000 --> 00:26:10,000
Speaker 2: That's exactly right. And even to simplify it and just

463
00:26:10,040 --> 00:26:11,800
Speaker 2: make it even more simple, because I know this is

464
00:26:11,800 --> 00:26:14,719
Speaker 2: what the mission of this podcast is is to educate

465
00:26:14,720 --> 00:26:17,840
Speaker 2: and inspire and to teach people how to have a

466
00:26:17,880 --> 00:26:21,960
Speaker 2: better life. If he or she is listening right now

467
00:26:22,560 --> 00:26:24,680
Speaker 2: and you know that you're making one hundred thousand a year,

468
00:26:25,560 --> 00:26:28,159
Speaker 2: but that's going to stop in ten years, then you

469
00:26:28,280 --> 00:26:31,919
Speaker 2: better start hustling today for what's gonna happen in year eleven. So,

470
00:26:32,080 --> 00:26:34,560
Speaker 2: in very simple terms, if that is your life, that

471
00:26:34,640 --> 00:26:36,680
Speaker 2: is the life of an athlete, just add a couple

472
00:26:36,680 --> 00:26:40,160
Speaker 2: of zeros to it. But nevertheless, you have a partner,

473
00:26:40,480 --> 00:26:42,200
Speaker 2: and if you're in La or New York, that partner

474
00:26:42,280 --> 00:26:44,920
Speaker 2: is going to take sixty percent of it between taxes,

475
00:26:45,600 --> 00:26:49,680
Speaker 2: agents and managers and john People ask me is all

476
00:26:49,800 --> 00:26:53,560
Speaker 2: the time, how in the world does an athlete make

477
00:26:53,800 --> 00:26:57,359
Speaker 2: over one hundred million dollars and, like you mentioned so eloquently,

478
00:26:57,920 --> 00:27:00,000
Speaker 2: can go bankrupt. Well, let me give you an example.

479
00:27:01,720 --> 00:27:06,440
Speaker 2: If athlete name Chris makes one hundred million dollars a year,

480
00:27:06,600 --> 00:27:09,280
Speaker 2: one hundred million dollars in their career, and they're playing

481
00:27:09,280 --> 00:27:11,560
Speaker 2: for the Yankees, or they're playing for the Lakers, or

482
00:27:11,560 --> 00:27:15,480
Speaker 2: they're playing for the Dodgers, fifty five percent goes to

483
00:27:15,480 --> 00:27:17,480
Speaker 2: the government. So now you're down to forty five million,

484
00:27:18,200 --> 00:27:20,359
Speaker 2: ten percent goes to your manager. Now you're down to

485
00:27:20,440 --> 00:27:22,760
Speaker 2: thirty five million, five percent to your agent. Now you're

486
00:27:22,760 --> 00:27:26,840
Speaker 2: inside thirty million dollars. You haven't about a house, you

487
00:27:26,920 --> 00:27:29,520
Speaker 2: haven't bought a car yet, and you haven't even been

488
00:27:29,520 --> 00:27:30,880
Speaker 2: divorced for the first time.

489
00:27:31,440 --> 00:27:34,160
Speaker 1: Well paid alimony for all those kids.

490
00:27:33,880 --> 00:27:36,679
Speaker 2: All of that, So it goes quickly. It goes quickly.

491
00:27:37,160 --> 00:27:40,200
Speaker 1: So what we're saying to you audience is anybody can

492
00:27:40,200 --> 00:27:44,520
Speaker 1: be an Alex or John financially. Just take away a

493
00:27:44,520 --> 00:27:48,080
Speaker 1: couple of the zeros. Start simple. He made it. He

494
00:27:48,119 --> 00:27:50,359
Speaker 1: had an income that allowed him to provide for his

495
00:27:50,480 --> 00:27:53,080
Speaker 1: lifestyle and make an investment. I want you to have

496
00:27:53,119 --> 00:27:55,720
Speaker 1: a good income. Think about a house in the hood,

497
00:27:56,960 --> 00:28:00,320
Speaker 1: the worst house in the best block, by it, rebit

498
00:28:00,480 --> 00:28:05,560
Speaker 1: or a duplex, buy it, rehabit, rent it. I would

499
00:28:05,560 --> 00:28:07,480
Speaker 1: say hold it, Alex may say sell it. I don't.

500
00:28:07,520 --> 00:28:10,199
Speaker 1: But you know everybody's economics are different. Do that two

501
00:28:10,280 --> 00:28:14,200
Speaker 1: or three times and you create a generational wealth and

502
00:28:14,400 --> 00:28:16,720
Speaker 1: Alex it's just as Alex has paid it, poured into

503
00:28:16,760 --> 00:28:20,439
Speaker 1: his own community and doubling and invested back in with

504
00:28:20,520 --> 00:28:23,080
Speaker 1: his employees. Still want to hear that story? I want

505
00:28:23,080 --> 00:28:25,720
Speaker 1: you to think about hiring local talent from the community.

506
00:28:25,840 --> 00:28:30,359
Speaker 1: Is plumbers, electrician lighting, roofing, landscaping, painting. Now you're creating

507
00:28:30,400 --> 00:28:35,600
Speaker 1: local jobs, reinvesting. That's your philanthropy. Magic Johnson is one

508
00:28:35,640 --> 00:28:41,080
Speaker 1: of your mentors that helped you to navigate what you've done.

509
00:28:41,120 --> 00:28:44,600
Speaker 1: Really good guy. What was the influence on you to

510
00:28:44,920 --> 00:28:48,400
Speaker 1: double down on this and go large? And again, I

511
00:28:48,440 --> 00:28:51,000
Speaker 1: want you to touch very specifically about how you're helping

512
00:28:51,000 --> 00:28:53,000
Speaker 1: your employees that I really was touched by how you're

513
00:28:53,040 --> 00:28:55,640
Speaker 1: doing that just not what you're doing because you back them,

514
00:28:55,720 --> 00:28:58,400
Speaker 1: you backstop them. And before we finish, I really want

515
00:28:58,440 --> 00:29:01,680
Speaker 1: to get into when you hit your head against the wall,

516
00:29:01,840 --> 00:29:04,440
Speaker 1: when you stubbed your toe, it's all has not been

517
00:29:04,480 --> 00:29:07,080
Speaker 1: a bed of roses, like because you had to take

518
00:29:07,120 --> 00:29:09,640
Speaker 1: no for vitamins. Everybody's not just saying yesterday because you're

519
00:29:09,640 --> 00:29:12,360
Speaker 1: Alexe Rodriguez, Like, hey man, you're a baseball player. Go

520
00:29:12,280 --> 00:29:15,239
Speaker 1: go ad over there. You know you had to you

521
00:29:15,240 --> 00:29:16,640
Speaker 1: had to earn your CD at the table.

522
00:29:17,120 --> 00:29:19,520
Speaker 2: Yeah, yeah, great, great question. So, first of all, Magic

523
00:29:19,560 --> 00:29:23,640
Speaker 2: Johnson was my my my kind of my beacon of inspiration.

524
00:29:23,720 --> 00:29:27,320
Speaker 2: I mean, he gave me an opportunity to say he

525
00:29:27,360 --> 00:29:31,080
Speaker 2: gave me a role model. And Magic. Johnthan is such

526
00:29:31,080 --> 00:29:33,440
Speaker 2: an incredible person. You know, he's he's one of the

527
00:29:33,440 --> 00:29:36,960
Speaker 2: greatest basketball players of all time, one of the goats, right,

528
00:29:37,040 --> 00:29:41,160
Speaker 2: five time world champion, MVPs, you know, a gazillion dollar smile.

529
00:29:41,880 --> 00:29:45,160
Speaker 2: But when you meet Magic, he's even more inspirational. And

530
00:29:45,200 --> 00:29:47,800
Speaker 2: he's such a good man that he sat down with

531
00:29:47,840 --> 00:29:50,800
Speaker 2: me for three hours and basically gave me a roadmap.

532
00:29:51,720 --> 00:29:54,200
Speaker 2: And I had nine pages of notes. And I said, Magic,

533
00:29:54,240 --> 00:29:57,360
Speaker 2: we were supposed to meet years later for thirty minutes.

534
00:29:57,440 --> 00:29:59,560
Speaker 2: Why did you give me three hours and cancel dinner

535
00:29:59,600 --> 00:30:01,880
Speaker 2: with Cookie? He said, you know what, because you're one

536
00:30:01,880 --> 00:30:03,760
Speaker 2: of the first athletes, if not the only one that

537
00:30:03,840 --> 00:30:06,440
Speaker 2: came with a notebook. You came on time, you were

538
00:30:06,440 --> 00:30:09,320
Speaker 2: asking good questions, and you had like ten pages of notes.

539
00:30:10,000 --> 00:30:12,120
Speaker 2: And I thought that was interesting. But because he's a

540
00:30:12,120 --> 00:30:15,360
Speaker 2: man of color, I saw a path and an inspiration

541
00:30:15,440 --> 00:30:18,120
Speaker 2: of someone who could be a Hall of fame basketball

542
00:30:18,120 --> 00:30:21,080
Speaker 2: player and then be a hall of fame businessman in

543
00:30:21,080 --> 00:30:24,160
Speaker 2: the boardroom. So that was a pathway. When you look

544
00:30:24,160 --> 00:30:26,520
Speaker 2: at a Rod Corp. We have over five hundred employees.

545
00:30:27,000 --> 00:30:29,920
Speaker 2: We call them team members. Eighty five percent of those

546
00:30:29,920 --> 00:30:33,880
Speaker 2: are minorities, men of color, black skin, brown skin, women.

547
00:30:34,840 --> 00:30:38,600
Speaker 2: And I was inspired by my mother because my mother

548
00:30:38,680 --> 00:30:41,280
Speaker 2: never had an opportunity to invest with Warren Buffett or

549
00:30:41,360 --> 00:30:46,520
Speaker 2: Blackstone or KKR Goldman Sachs and JP Moorean wouldn't even

550
00:30:46,560 --> 00:30:49,560
Speaker 2: take her calls. So as I think about our investment,

551
00:30:49,600 --> 00:30:51,840
Speaker 2: if we make an investment of ten million dollars into

552
00:30:51,840 --> 00:30:56,080
Speaker 2: a company, every person on my team has an opportunity

553
00:30:56,200 --> 00:30:59,200
Speaker 2: even if it's two thousand dollars to invest with me

554
00:31:00,120 --> 00:31:03,880
Speaker 2: pro rata, with me side by side, right and my value,

555
00:31:03,960 --> 00:31:07,200
Speaker 2: no promote, no fees, because I want everybody on my

556
00:31:07,280 --> 00:31:10,160
Speaker 2: team to have a path to have in a better life.

557
00:31:10,160 --> 00:31:11,360
Speaker 2: And the way you have a better life, as we

558
00:31:11,440 --> 00:31:15,200
Speaker 2: talked about, is by having more assets and less liabilities.

559
00:31:15,560 --> 00:31:18,560
Speaker 2: A liability is a car, an asset is a house

560
00:31:18,960 --> 00:31:22,280
Speaker 2: is a multifamily is part of a business that generates

561
00:31:22,280 --> 00:31:25,080
Speaker 2: cash flow. Another way of saying it, john for your audience,

562
00:31:25,680 --> 00:31:29,040
Speaker 2: is what is the difference between a liability and an asset.

563
00:31:29,320 --> 00:31:32,880
Speaker 2: Liability takes money out of your pocket every month like

564
00:31:32,920 --> 00:31:36,760
Speaker 2: your home, and an asset puts money in your pocket

565
00:31:36,760 --> 00:31:41,240
Speaker 2: every month like a multifamily. Apartment. Okay, So it always

566
00:31:41,280 --> 00:31:44,760
Speaker 2: bothered me that only the rich people, at least it

567
00:31:44,800 --> 00:31:47,680
Speaker 2: felt from my prism when I was really young, had

568
00:31:47,840 --> 00:31:51,360
Speaker 2: the opportunity to invest with the Warren Buffetts like. And

569
00:31:51,680 --> 00:31:54,920
Speaker 2: today my mission is to work on financial literacy for

570
00:31:54,960 --> 00:31:58,360
Speaker 2: my community and secondly to give people an olive branch

571
00:31:58,440 --> 00:32:00,520
Speaker 2: and an opportunity to invest. Side side.

572
00:32:00,880 --> 00:32:02,000
Speaker 1: That's right, even.

573
00:32:01,800 --> 00:32:04,000
Speaker 2: If it's two thousand dollars. That never made any sense

574
00:32:04,040 --> 00:32:06,920
Speaker 2: to me that only rich people get to invest in assets.

575
00:32:07,040 --> 00:32:09,280
Speaker 2: How about the poor people? Okay? That was me. That's

576
00:32:09,320 --> 00:32:12,760
Speaker 2: my mom, right, So that's one. And if you don't

577
00:32:12,800 --> 00:32:15,360
Speaker 2: have the money, John, what I'll do is as an example,

578
00:32:15,720 --> 00:32:17,280
Speaker 2: and I did this with one of our team members.

579
00:32:17,280 --> 00:32:20,200
Speaker 2: They didn't have the money. It took fifty thousand dollars.

580
00:32:20,840 --> 00:32:24,880
Speaker 2: I fronted the fifty for them. Yeah, became five hundred thousand.

581
00:32:25,560 --> 00:32:28,560
Speaker 2: They paid back my fifty with an eight percent coupon,

582
00:32:28,960 --> 00:32:31,120
Speaker 2: and then they kept about four hundred thousand dollars profit

583
00:32:31,280 --> 00:32:34,640
Speaker 2: and they put down zero. So now the next investment,

584
00:32:34,640 --> 00:32:37,160
Speaker 2: they're putting down two hundred thousand and have two hundred

585
00:32:37,200 --> 00:32:39,920
Speaker 2: in the bank. And that brings a lot of joy

586
00:32:39,920 --> 00:32:48,840
Speaker 2: to me as a leader of my company.

587
00:32:51,840 --> 00:32:55,360
Speaker 1: My friends have told me, Alex, to slow yourself down,

588
00:32:55,440 --> 00:32:59,240
Speaker 1: stop talking so loud, long and fast, and explain this

589
00:32:59,280 --> 00:33:03,480
Speaker 1: to me. You mentioned word coupon. You mentioned the word promote.

590
00:33:04,000 --> 00:33:06,880
Speaker 1: Can you get so promote is something that Alex and

591
00:33:06,920 --> 00:33:12,720
Speaker 1: I love. Think about a license anyway, explain to them

592
00:33:12,720 --> 00:33:16,000
Speaker 1: in your words promote and coupon all we love both

593
00:33:16,040 --> 00:33:18,400
Speaker 1: of those phrases. But watch explain that, Alix in your word.

594
00:33:18,720 --> 00:33:21,960
Speaker 2: So if I lend John, my friend here, one hundred

595
00:33:21,960 --> 00:33:25,480
Speaker 2: thousand dollars and he pays me eight percent, I'm so

596
00:33:25,560 --> 00:33:27,880
Speaker 2: glad you said that, John, because all these fancy terms

597
00:33:27,880 --> 00:33:30,719
Speaker 2: and accurate, they're just there to confuse people, right, our

598
00:33:30,800 --> 00:33:33,200
Speaker 2: people in our community. So that's a great question. We

599
00:33:33,240 --> 00:33:34,880
Speaker 2: take it for granted sometimes because that's the way you

600
00:33:34,920 --> 00:33:37,160
Speaker 2: and I talk when we're in your office or my office.

601
00:33:37,360 --> 00:33:40,040
Speaker 2: So I lend John one hundred thousand dollars, he pays

602
00:33:40,080 --> 00:33:43,440
Speaker 2: me eight percent. So essentially he's paying me eight thousand

603
00:33:43,480 --> 00:33:46,520
Speaker 2: dollars a year on that hundred right, And that's called

604
00:33:46,520 --> 00:33:50,080
Speaker 2: the coupon. Right, And if that coupon is out for

605
00:33:50,240 --> 00:33:53,360
Speaker 2: three years, eight thousand times three, he owes me twenty

606
00:33:53,360 --> 00:33:59,320
Speaker 2: four thousand dollars. Essentially, right now, if John and I

607
00:33:59,520 --> 00:34:04,200
Speaker 2: are partners and we buy a business for one hundred

608
00:34:04,200 --> 00:34:08,120
Speaker 2: thousand dollars and five years later we sell that business

609
00:34:08,160 --> 00:34:13,360
Speaker 2: for a million one, essentially there's a million dollars of profit.

610
00:34:14,360 --> 00:34:17,600
Speaker 2: And because John and I are the code GPS on

611
00:34:17,680 --> 00:34:20,920
Speaker 2: that million dollars of profit, once they get their money

612
00:34:20,960 --> 00:34:24,760
Speaker 2: back our investors plus an eight percent coupon or return,

613
00:34:25,640 --> 00:34:28,640
Speaker 2: then there's about plus or minus a million dollars of profit,

614
00:34:29,280 --> 00:34:32,239
Speaker 2: which twenty percent of that goes to John and I.

615
00:34:32,719 --> 00:34:35,560
Speaker 2: And that's two hundred thousand dollars that John and I

616
00:34:35,600 --> 00:34:39,160
Speaker 2: get for putting the deal together, underwriting it, managing it,

617
00:34:39,360 --> 00:34:42,879
Speaker 2: sourcing it, and essentially bringing value to it. So John

618
00:34:42,920 --> 00:34:45,759
Speaker 2: and I walk away with two hundred thousand dollars. So

619
00:34:45,840 --> 00:34:48,239
Speaker 2: our partners are super happy because they got them a

620
00:34:48,360 --> 00:34:50,680
Speaker 2: ten X, and John and I are happy because we

621
00:34:50,680 --> 00:34:52,640
Speaker 2: were able to promote a great deal and then we're

622
00:34:52,640 --> 00:34:53,560
Speaker 2: off to the next one.

623
00:34:53,880 --> 00:34:55,799
Speaker 1: So you might have been thinking about it. People might

624
00:34:55,840 --> 00:34:59,719
Speaker 1: be hearing like a concert promoter, right, I guess you

625
00:34:59,719 --> 00:35:03,160
Speaker 1: know can generally get your hands around it. But it's

626
00:35:03,200 --> 00:35:07,560
Speaker 1: a deal promoters, it's an investment promoter. So the promote

627
00:35:07,800 --> 00:35:13,680
Speaker 1: is the percentage of the profit that the developer gets

628
00:35:14,040 --> 00:35:17,960
Speaker 1: by bringing the deal to market successfully, and they value

629
00:35:18,040 --> 00:35:23,520
Speaker 1: added on top of the cost and agreed coupon. He

630
00:35:23,640 --> 00:35:25,839
Speaker 1: said it much better than I I did.

631
00:35:26,560 --> 00:35:29,239
Speaker 2: Te let me add one, thanks for our listeners and

632
00:35:29,280 --> 00:35:34,040
Speaker 2: our viewers listening in. John and I only make that

633
00:35:34,160 --> 00:35:39,800
Speaker 2: promote if we make money for investors. He very very important.

634
00:35:39,960 --> 00:35:43,840
Speaker 2: We have complete alignment. If that's a donut and we

635
00:35:43,840 --> 00:35:45,840
Speaker 2: don't make any money, John and I are out. We

636
00:35:45,880 --> 00:35:48,920
Speaker 2: don't make any money. We only make money once the

637
00:35:49,040 --> 00:35:53,360
Speaker 2: investor gets their money back plus an eight percent coupon

638
00:35:54,000 --> 00:35:58,000
Speaker 2: right return on their investment. Then after that waterfall, which

639
00:35:58,040 --> 00:36:00,040
Speaker 2: is called the waterfall, once we do all of that

640
00:36:00,080 --> 00:36:03,359
Speaker 2: at and we have a million dollars left in profits,

641
00:36:04,000 --> 00:36:07,359
Speaker 2: then John and I split that eighty twenty eighty goes

642
00:36:07,400 --> 00:36:10,560
Speaker 2: to the investor and that twenty percent goes to John

643
00:36:10,600 --> 00:36:12,239
Speaker 2: and I as code general partners.

644
00:36:12,480 --> 00:36:14,600
Speaker 1: The first time I might mention the word waterfall to me,

645
00:36:14,680 --> 00:36:18,759
Speaker 1: I was actually looking for where we're going on vacation, like,

646
00:36:19,000 --> 00:36:22,239
Speaker 1: what's the waterfall? So for the listeners, the waterfall is

647
00:36:22,239 --> 00:36:25,520
Speaker 1: the way in which the transaction breaks out. How's that

648
00:36:25,560 --> 00:36:28,839
Speaker 1: dollar split up? What's the waterfall, who gets the well,

649
00:36:28,840 --> 00:36:33,719
Speaker 1: who gets what first right? And what's the priority of

650
00:36:33,800 --> 00:36:37,120
Speaker 1: the distribution I'm playing, I'm saying this in plain English.

651
00:36:37,200 --> 00:36:40,600
Speaker 1: That's what we call a financial waterfall. I want you

652
00:36:40,680 --> 00:36:42,480
Speaker 1: guys to become an experts and all this stuff so

653
00:36:42,520 --> 00:36:45,000
Speaker 1: no one can uh. As Malcolm Mick said, we've been

654
00:36:45,040 --> 00:36:47,360
Speaker 1: bamboozo We've been tricked, We've been fooled. I don't wantybody

655
00:36:47,360 --> 00:36:50,360
Speaker 1: to fool you anymore. I want you to be financially literate,

656
00:36:50,480 --> 00:36:52,760
Speaker 1: because it's not what you're not dumb and you're not stupid.

657
00:36:52,800 --> 00:36:54,360
Speaker 1: It's what you don't know that you don't know that

658
00:36:54,400 --> 00:36:56,239
Speaker 1: is killing you. But you think you know because no

659
00:36:56,239 --> 00:36:57,040
Speaker 1: one ever taught you.

660
00:36:57,360 --> 00:36:59,640
Speaker 2: I agree with that, and I think sometimes he's acronym.

661
00:36:59,719 --> 00:37:03,120
Speaker 2: Sometimes are made to keep our people out of the

662
00:37:03,200 --> 00:37:06,880
Speaker 2: room and keep them not smart, and really our listeners

663
00:37:06,920 --> 00:37:09,480
Speaker 2: are very, very smart. We just have to have better

664
00:37:09,520 --> 00:37:11,720
Speaker 2: teachers that are willing to teach and bring people along

665
00:37:11,840 --> 00:37:13,840
Speaker 2: like you and I are trying to do. But we

666
00:37:13,920 --> 00:37:16,399
Speaker 2: do have a lot of resistance because I do feel

667
00:37:16,400 --> 00:37:18,200
Speaker 2: there's a lot of people that are trying to keep

668
00:37:18,880 --> 00:37:22,240
Speaker 2: the people down, and I think you're really doing God's

669
00:37:22,280 --> 00:37:25,160
Speaker 2: work and helping educate people and teach people. And there's

670
00:37:25,200 --> 00:37:30,280
Speaker 2: no greater gift than teaching someone how to fish versus

671
00:37:30,280 --> 00:37:32,080
Speaker 2: just giving them a fish.

672
00:37:32,440 --> 00:37:35,240
Speaker 1: Financial literacy is the civil rights issue of this generation

673
00:37:35,600 --> 00:37:38,479
Speaker 1: in my opinion. When you know better, you do better.

674
00:37:38,520 --> 00:37:42,640
Speaker 1: We don't have much time left in this incredible podcast

675
00:37:42,640 --> 00:37:44,719
Speaker 1: we've had together. This has been rich. I do want

676
00:37:44,760 --> 00:37:48,120
Speaker 1: to cover a couple more things before we exit here.

677
00:37:49,040 --> 00:37:51,480
Speaker 1: As you were talking about the waterfall and the coupon

678
00:37:51,520 --> 00:37:55,440
Speaker 1: and all that, don't get a chance off enough to

679
00:37:55,560 --> 00:37:58,560
Speaker 1: thank people who got helped to get us here. Magic

680
00:37:58,640 --> 00:38:01,439
Speaker 1: Johnson would talk about all the people he'd leave a game,

681
00:38:01,960 --> 00:38:04,279
Speaker 1: a basketball game and ask for the people would send

682
00:38:04,280 --> 00:38:06,479
Speaker 1: those front benches for their cards, and he goes visit

683
00:38:06,560 --> 00:38:08,719
Speaker 1: with them and use his credibility to get in their

684
00:38:08,719 --> 00:38:11,120
Speaker 1: offices and just listen, right, And a lot of those

685
00:38:11,120 --> 00:38:13,200
Speaker 1: guys end up doing deals with And basically you've just

686
00:38:13,239 --> 00:38:16,560
Speaker 1: said the same thing. You're giving Warren Buffett some credit.

687
00:38:16,560 --> 00:38:19,200
Speaker 1: Thanks for saying that. I woult to give Tony Wrestler

688
00:38:20,560 --> 00:38:23,400
Speaker 1: two hundreds, which is man in the world, credit for

689
00:38:23,640 --> 00:38:26,600
Speaker 1: doing a deal with me, and I own you know,

690
00:38:26,840 --> 00:38:28,560
Speaker 1: at the end of that deal, all of the company.

691
00:38:28,600 --> 00:38:30,520
Speaker 1: He just wanted a coupon. He just wanted a seven

692
00:38:30,560 --> 00:38:34,480
Speaker 1: percent return on his money. Him and Michael Arraghetty. Everything

693
00:38:34,520 --> 00:38:37,920
Speaker 1: else paying other than paying my debt, debt and preferred equity,

694
00:38:39,280 --> 00:38:43,440
Speaker 1: I owned the rest, and we shouldn't. We should all

695
00:38:43,480 --> 00:38:48,520
Speaker 1: be grateful and gracious about spreading the credit when we

696
00:38:48,560 --> 00:38:53,040
Speaker 1: actually succeed. Is there somebody that you want to mention

697
00:38:53,560 --> 00:38:57,400
Speaker 1: that helps you get here? Alex? And also, I didn't

698
00:38:57,400 --> 00:39:00,359
Speaker 1: want to end with this, you know, rainbows after ms.

699
00:39:00,719 --> 00:39:04,400
Speaker 1: The mistakes you made is something you kicked yourself about.

700
00:39:04,640 --> 00:39:07,000
Speaker 1: Why did I do this stupid thing? Something you're not

701
00:39:07,040 --> 00:39:10,000
Speaker 1: you know, that's a lesson now for the audience.

702
00:39:10,719 --> 00:39:14,680
Speaker 2: Yeah, So I'll keep it to finances and mistakes that

703
00:39:14,680 --> 00:39:19,960
Speaker 2: I've made there because we don't have enough documentary all

704
00:39:20,000 --> 00:39:23,439
Speaker 2: my mistakes. So I'm gonna try to keep this tight.

705
00:39:23,640 --> 00:39:26,720
Speaker 2: My good friend Grant Harrell once gave me great advice.

706
00:39:27,400 --> 00:39:29,520
Speaker 2: He always talk about the five bes and he said,

707
00:39:30,000 --> 00:39:32,359
Speaker 2: be brief, brother, be brief. So I'm going to take

708
00:39:32,400 --> 00:39:35,080
Speaker 2: Grant's advice on that. So, first of all, I shout

709
00:39:35,080 --> 00:39:37,560
Speaker 2: out to Tony Wrestler, who's my partner at the NBA.

710
00:39:38,239 --> 00:39:41,640
Speaker 2: He's one of the coolest people that I've met, but

711
00:39:41,719 --> 00:39:46,000
Speaker 2: also very generous, and he is someone that really believes

712
00:39:46,560 --> 00:39:50,399
Speaker 2: in bringing people, all people in the room with him

713
00:39:50,480 --> 00:39:54,000
Speaker 2: and give him an opportunity, as you will eloquently just

714
00:39:54,040 --> 00:39:57,040
Speaker 2: described in your partnership with Tony and his partner and

715
00:39:57,080 --> 00:40:00,200
Speaker 2: your other partner. As far as mistakes, I'll I go

716
00:40:00,200 --> 00:40:02,640
Speaker 2: to two thousand and eight, because it was a really,

717
00:40:02,680 --> 00:40:07,239
Speaker 2: really tough time with the financial meltdown. I bought a

718
00:40:07,280 --> 00:40:11,920
Speaker 2: piece of property, five hundred units right around George Steinbern

719
00:40:11,960 --> 00:40:14,200
Speaker 2: a field in Tampa where we held sprint training. And

720
00:40:14,239 --> 00:40:16,880
Speaker 2: my thesis was it it's good enough for George Steinburn

721
00:40:16,920 --> 00:40:19,280
Speaker 2: and the Yankees, it's got to be good for my apartments.

722
00:40:19,640 --> 00:40:22,920
Speaker 2: So I basically bought five hundred units for about sixty

723
00:40:22,960 --> 00:40:27,320
Speaker 2: thousand per door. Okay, I had twenty thousand of equity

724
00:40:27,480 --> 00:40:30,200
Speaker 2: per door, and I had the loan for forty thousand.

725
00:40:31,200 --> 00:40:34,319
Speaker 2: What happened was from a Monday to a Thursday when

726
00:40:34,360 --> 00:40:37,120
Speaker 2: everything went upside down and we had the financial crisis

727
00:40:37,120 --> 00:40:40,919
Speaker 2: in eight oh nine, my properties, my units were now

728
00:40:40,960 --> 00:40:44,920
Speaker 2: worth thirty eight thousand, but I owed forty thousand. So

729
00:40:45,000 --> 00:40:49,399
Speaker 2: basically that's what they call you're underwater, right, And unfortunately

730
00:40:49,440 --> 00:40:52,719
Speaker 2: I was young and not experienced, and I had what

731
00:40:52,840 --> 00:40:56,560
Speaker 2: is called the PG, which PG stands for personal guarantee.

732
00:40:56,719 --> 00:41:00,000
Speaker 2: Oh yes, which if you're listening and you don't really

733
00:41:00,040 --> 00:41:03,959
Speaker 2: remember anything else, John and I said, please remember this part.

734
00:41:04,640 --> 00:41:09,840
Speaker 2: Never sign personal guarantees it unless it's your home. Now.

735
00:41:12,160 --> 00:41:16,240
Speaker 2: I was fortunate enough to have some liquidity, and I negotiated.

736
00:41:16,760 --> 00:41:19,279
Speaker 1: Everybody means cash cash.

737
00:41:19,920 --> 00:41:22,200
Speaker 2: I was fortunate to have to have cash, and I

738
00:41:22,239 --> 00:41:25,280
Speaker 2: was able to negotiate with the banks a very clever

739
00:41:25,400 --> 00:41:28,200
Speaker 2: deal in which they had like a fifty million dollar

740
00:41:28,280 --> 00:41:32,239
Speaker 2: write down in exchange for a four million dollar check.

741
00:41:33,280 --> 00:41:35,840
Speaker 2: And then we said to the bank, look, you're not

742
00:41:35,920 --> 00:41:40,680
Speaker 2: in the business of managing these assets, meaning multifamily apartments,

743
00:41:40,760 --> 00:41:42,960
Speaker 2: we are, so why don't we give you a four

744
00:41:43,000 --> 00:41:47,279
Speaker 2: million dollar check. You write down fifty million dollars. Immediately

745
00:41:47,360 --> 00:41:50,879
Speaker 2: from losing two hundred thousand dollars a year in that portfolio,

746
00:41:51,320 --> 00:41:54,080
Speaker 2: we started making two hundred thousand dollars a year because

747
00:41:54,080 --> 00:41:56,960
Speaker 2: we owed less and we put more equity in. And

748
00:41:57,000 --> 00:41:59,840
Speaker 2: then we said to the bank, when we sell and

749
00:42:00,000 --> 00:42:02,840
Speaker 2: the next five years will give you another fifteen percent

750
00:42:02,880 --> 00:42:06,879
Speaker 2: of the ups Wow. Eventually, right, thinking outside the box.

751
00:42:06,920 --> 00:42:07,160
Speaker 1: John.

752
00:42:07,280 --> 00:42:11,359
Speaker 2: Wow, the bank became a promoter on our deal. Yeah,

753
00:42:11,480 --> 00:42:16,400
Speaker 2: that was what we call a win win win alignment structure,

754
00:42:17,160 --> 00:42:20,479
Speaker 2: and we sold it for a big number. We gave

755
00:42:20,520 --> 00:42:24,160
Speaker 2: the bank another few million dollars on the ups and

756
00:42:24,280 --> 00:42:28,120
Speaker 2: to this day that's still my bank. And we did

757
00:42:28,160 --> 00:42:31,520
Speaker 2: the right thing at the toughest time, and people and

758
00:42:31,560 --> 00:42:34,319
Speaker 2: partners will never ever forget that because that builds your

759
00:42:34,360 --> 00:42:35,800
Speaker 2: reputation in the business community.

760
00:42:36,040 --> 00:42:39,560
Speaker 1: I'm so glad that you added that, Alex, because that

761
00:42:39,719 --> 00:42:42,799
Speaker 1: is probably one of the best lessons anybody's going to

762
00:42:42,800 --> 00:42:45,840
Speaker 1: get from this. There's something called non recourse debt. We

763
00:42:45,840 --> 00:42:48,000
Speaker 1: don't have time to get into it now. It's the

764
00:42:48,040 --> 00:42:50,719
Speaker 1: best kind of it's the most appropriate type of debt

765
00:42:50,760 --> 00:42:53,400
Speaker 1: for the type of large scale transactions that Alex and

766
00:42:53,440 --> 00:42:56,239
Speaker 1: I did. Either personal residence. It's nothing wrong with a

767
00:42:56,280 --> 00:42:58,560
Speaker 1: personal guarantee. You know, I have a personal guarantee in

768
00:42:58,560 --> 00:43:00,920
Speaker 1: our home, right, that's right. But you when you're doing

769
00:43:00,960 --> 00:43:04,000
Speaker 1: business deals, should try to let the assets speak for themselves.

770
00:43:04,360 --> 00:43:08,040
Speaker 1: But what he did structurally was brilliant. And when you're

771
00:43:08,080 --> 00:43:10,279
Speaker 1: being run out of town, get in front of the

772
00:43:10,280 --> 00:43:15,200
Speaker 1: crowd and make like a parade and I had followed him.

773
00:43:15,280 --> 00:43:16,920
Speaker 1: I sort of knew. I thought I knew where he

774
00:43:17,000 --> 00:43:19,440
Speaker 1: was going. But that last piece was very creative. He

775
00:43:19,520 --> 00:43:22,680
Speaker 1: turned his banker into a venture capitalist, into a joint

776
00:43:22,760 --> 00:43:26,640
Speaker 1: venture partner. It was really quite quite clever. And you

777
00:43:26,760 --> 00:43:29,400
Speaker 1: turn a negative cash flow into a positive cash flow

778
00:43:30,000 --> 00:43:34,080
Speaker 1: overnight through structure. Listen, everybody, there's a crisis coming in

779
00:43:34,120 --> 00:43:37,279
Speaker 1: some parts of the economy. Commercial real estate. It's got

780
00:43:37,280 --> 00:43:41,040
Speaker 1: a trillion dollars of refinancing they gotta do. In the

781
00:43:41,080 --> 00:43:44,640
Speaker 1: next year or two. There may be properties that become available.

782
00:43:45,360 --> 00:43:47,480
Speaker 1: Real estate has never gone down the history of the world,

783
00:43:47,680 --> 00:43:51,600
Speaker 1: I mean in America rather over time. Think about some

784
00:43:51,640 --> 00:43:54,040
Speaker 1: of this. It's not a problem, but as Alis just said,

785
00:43:54,480 --> 00:43:58,040
Speaker 1: in your neighborhood, maybe some of this is an opportunity

786
00:43:58,400 --> 00:44:02,840
Speaker 1: for you to reposit that asset, help the bank, the lender,

787
00:44:03,239 --> 00:44:08,680
Speaker 1: help yourself, help your community, and create a little generational wealth. Alex,

788
00:44:08,800 --> 00:44:12,720
Speaker 1: you are walking generational wealth. You're a walking in tech gritty.

789
00:44:13,280 --> 00:44:17,880
Speaker 1: You're a good guy. And you know, we're all angels

790
00:44:17,920 --> 00:44:19,960
Speaker 1: with dirty faces. You know, a saint is a centerlar

791
00:44:19,960 --> 00:44:21,680
Speaker 1: got up. So none of us are perfect. But I

792
00:44:22,440 --> 00:44:25,120
Speaker 1: like your imperfection. I like the way you roll and

793
00:44:25,160 --> 00:44:30,759
Speaker 1: I appreciate you coming on this podcast and being so transparent. Charlemagne, myself,

794
00:44:31,280 --> 00:44:33,560
Speaker 1: all of the friends of this podcast, thank you for

795
00:44:34,360 --> 00:44:34,840
Speaker 1: just being you.

796
00:44:35,520 --> 00:44:37,400
Speaker 2: John, thank you very much for having me. I consider

797
00:44:37,480 --> 00:44:39,120
Speaker 2: your dear friend, and we're going to do a lot

798
00:44:39,120 --> 00:44:41,239
Speaker 2: of great things together for the community and maybe even

799
00:44:41,239 --> 00:44:44,360
Speaker 2: in business. But just one last message for your great audience,

800
00:44:44,400 --> 00:44:47,359
Speaker 2: and again I want to just say how important it

801
00:44:47,400 --> 00:44:50,920
Speaker 2: is that they know that they are smart, they are capable,

802
00:44:51,120 --> 00:44:53,359
Speaker 2: they are enough. We just got to do a better

803
00:44:53,480 --> 00:44:56,360
Speaker 2: job us as leaders to educate them and bring them along.

804
00:44:57,239 --> 00:45:03,640
Speaker 2: And don't forget that. Remember this, remember this. A champion

805
00:45:04,800 --> 00:45:08,719
Speaker 2: is a loser that tried one more time. Hmm. Don't

806
00:45:08,760 --> 00:45:11,440
Speaker 2: give up and just keep on trying. You can do this.

807
00:45:12,440 --> 00:45:13,520
Speaker 2: And John and I believe in you.

808
00:45:14,120 --> 00:45:17,680
Speaker 1: Yeah, Alex believes in you. That's why he's pouring into

809
00:45:17,719 --> 00:45:21,680
Speaker 1: you because he sees you in himself. He sees you

810
00:45:22,400 --> 00:45:26,400
Speaker 1: as the little boy, the young person who is trying struggling.

811
00:45:26,480 --> 00:45:29,360
Speaker 1: He sees his mother in the single parent households. He

812
00:45:29,520 --> 00:45:32,800
Speaker 1: sees the young black men trying to make it as

813
00:45:32,880 --> 00:45:35,760
Speaker 1: a parent, he sees his father there. He can relate

814
00:45:35,800 --> 00:45:38,040
Speaker 1: to you because he was you, So go out there

815
00:45:38,040 --> 00:45:40,640
Speaker 1: and kill it and then help somebody come up behind you.

816
00:45:41,080 --> 00:45:43,759
Speaker 1: This is John O'Brien. This is Money and Wealth, and

817
00:45:43,800 --> 00:45:46,040
Speaker 1: this is my man, Hey Rod.

818
00:45:46,239 --> 00:45:48,359
Speaker 2: John, my man, Thank you so much for having me.

819
00:46:02,719 --> 00:46:05,200
Speaker 1: Money and Wealth with John O'Brien is a production of

820
00:46:05,239 --> 00:46:08,560
Speaker 1: the Black Effect Podcast Network. For more podcasts from the

821
00:46:08,560 --> 00:46:12,920
Speaker 1: Black Effect Podcast Network, visit the iHeartRadio app, Apple Podcasts,

822
00:46:13,360 --> 00:47:43,680
Speaker 1: or wherever you listen to your favorite shows.