Paul Moore – The Perfect Investment

Intro: [00:00:00] Who wants coffee? Who wants a pot of coffee? I just make coffee. You want a cup of coffee? Sure, here you go! Who wants coffee? Anybody else want coffee? And now it’s time for the man with the caffeine, the new tropics for the brain. It’s @CoffeeWithMike, hang in, hang tight, grab your cup and let’s get this thing started.

[00:00:23] Mike: [00:00:23] Hey, welcome back to Java Chat, everybody. This is Coffee With Mike here and I’m sitting here with, after reading his background, a seriously interesting man by the name of Paul Moore. Paul, thanks for joining us here on Java Chat. Real pleasure having you. 

[00:00:41] Paul Moore: [00:00:41] Absolutely. It’s great to be here. Thanks, Mike. It’s an honor.

[00:00:44] Mike: [00:00:44] Awesome. Awesome. Guys. Yeah, actually I should just let you talk, dude, because Paul has such an interesting background. I mean, he’s been there, done that a couple of times and I’d like him to share some of his history—where he’s been, what he’s done. I hate to do this to you within a small condensed time, unfortunately, cause I know you got lots to share, but can you give us a little bit about who Paul Moore is?

[00:01:10] Paul Moore: [00:01:10] Yeah, absolutely. So I grew up wanting to be a parapsychologist. I saw the movie Ghostbusters as we all did at that time. And, I didn’t know, there was no parapsychology degree, Mike, why didn’t they tell me that? So like I was a junior in high school and my football coach was someone who finally cared. He said, Hey, so where are you going to get that parapsychology degree? And I said, Oh, I don’t know. I’ll figure it out. Probably Duke University, you know, they’re kind of weird. And he said, well, why don’t you call the Duke University, parapsychology department and find out what, you know, what’s involved.

[00:01:52] And so I called the psychology department and I got laughed off the phone. They hung up. And I decided with good grades in math and science, I ought to get an engineering degree. So that was my second mistake. Anyway, I ended up getting an MBA after that went to Ford Motor Company, which I loved Ford, but I actually had an entrepreneurial itch. I spent the five years at Ford, always noodling and thanking and spending evenings and weekends trying to start a, not a side hustle, but a replacement hustle. And I did and a partner and I just got the timing right. And everything worked out perfectly. We started this HR and staffing firm that Wall Street kind of had its eye on that industry for a couple of years. 

[00:02:46] Mike: [00:02:46] I don’t think people realize how big that industry is. 

[00:02:49] Paul Moore: [00:02:49] I know, right. It’s incredible. Well, in 1997, we were five years into this and a friend of ours went public and he wanted to acquire a Michigan office with all the tens of millions of dollars he had suddenly had in his bank account. And so they acquired our company for too much money. And, I decided after that, I wanted to move to the Blue Ridge mountains. Raised two kids out, you know, an hour from, the closest large town. We did that and the two kids somehow turned into four kids and we started raising the kids out there.

[00:03:31] Mike: [00:03:31] Something about those Blue Ridge Mountains. I tell you.

[00:03:33] Paul Moore: [00:03:33] I know, I know.

[00:03:35] Mike: [00:03:35] And so they had to go there somewhere.

[00:03:38] Paul Moore: [00:03:38] We started a nonprofit organization to reach out to international students studying in the US and gave them a wonderful Blue Ridge Mountain retreat weekend. And we did that for a couple years. 

[00:03:50] Mike: [00:03:50] I would have been one of the ones coming out for sure. 

[00:03:54] Paul Moore: [00:03:54] Oh really?

[00:03:54] Mike: [00:03:54] Oh yeah. Oh yeah.

[00:03:57]Paul Moore: [00:03:57] Yeah. It was great. So we, you know, the kids could come out and they could milk a goat and ride a cow or maybe it was right. 

[00:04:03]Mike: [00:04:03] Yeah, I would have told her I would have. Totally. Yeah. 

[00:04:09] Paul Moore: [00:04:09] So we started a big, you know, we built a big pond and stocked it and kids had hiking trails and all that. You know, I was 34 by then, 35 year old, type-A entrepreneur with lots of energy. And I found I wasn’t happy.  I found the nonprofit was great, but we were only doing retreats like maybe one or two a quarter. And I wanted to be doing something every week and it was actually pretty easy.

[00:04:40] And so I found myself looking for something to do. And I tried a few things that I won’t go into, but I heard that you could actually buy houses for cheap on the courthouse steps that were foreclosed upon. And, I didn’t know anything house flipping wasn’t even a thing yet. It was called buying a fixer upper back then. And so my buddy and I went to the courthouse steps and we bought a house for about 55% of its retail value. We swept it. Painted the main floor and then stuck up a “for sale by owner” sign in the yard. And even though the unemployment rate in that town was 22% at the time the textiles had crushed Martin. Well, Virginia. Yeah. We sold it in four hours for full price. Jeez. 

[00:05:31] And I told my friend, Jack, I said, this is easy. We can do one a week for at least one or two or three a month. Well, number two and three and four were really hard. We lost money on a couple of them and I realized residential real estate flipping was fun and profitable, but wasn’t quite as easy as I first thought. And Mike, we did dozens and dozens of houses. Then we flipped a couple dozen waterfront, lots at a resort area. That’s much like Tahoe. And, but it’s called Smith Mountain Lake. And that’s where, What About Bob was filmed.

[00:06:09]Mike: [00:06:09] Yeah, it’s cool. 

[00:06:10] Paul Moore: [00:06:10] It’s not Lake Winnipesaukee. Wasn’t true. And, yeah, we have 500 miles of shore.

[00:06:16] Mike: [00:06:16] Okay. Thank you, Hollywood for making us believe lies. 

[00:06:19] Paul Moore: [00:06:19] Yeah. Right, right. So we’ll have the credits, just leave the credits at the end of the movie, but at any rate, we did that and I started a small subdivision and sold that out . 

[00:06:33]Mike: [00:06:33] It sounds like you went from flipper to developer. Is that fair? 

[00:06:37] Paul Moore: [00:06:37] We did one small subdivision. In fact, that was part of the great pain I’ll tell you about, at some point, if you want to know the great pain of my life. 

[00:06:45] Mike: [00:06:45] Yeah. We’re going to need to hear that. I’m sure that was a pivot point of some sort. 

[00:06:49] Paul Moore: [00:06:49] Yeah. But during that whole time, I was always trying to figure out what’s the on-ramp to commercial real estate. Well, how do I get involved in the big time and do I even want to, and how much money would it take and who would I need to know and how would I need to do it? And so I finally got involved. In commercial real estate in 2011, we invested foolishly in an oil and gas deal. And, no, seriously, we threw about a million dollars.

[00:07:20] It was the vast majority of friends, other friends and family of mine, but I threw my own money and two into the bottom of a hole in the ground in North Dakota. They’re promised to produce 10 or a hundred times as much in oil revenue. And it produced exactly zero, but while we were dry flying in and out of North Dakota and my friends, little jet, we really, Hey, you know, there’s no housing here.

[00:07:47] There were trucks, pickups, cars, semis parked along the side of the road and people living in a Walmart parking lot. They didn’t have housing and there were 18,000 job openings and wow. And housing was the number one problem. There was a Holiday Inn in a small town in North Dakota. Dickinson, North Dakota.

[00:08:11] And I guess it went for $99 a night usually, but it went for $129 a night and it was booked. So we said, Hey, we’re both involved in real estate investing. And while we’re waiting for this oil to come out of the ground, we thought it would be a smart idea to build multifamily. So we built a multifamily community designed specifically for transient oil workers, so they can come and go. It was basically like, it was short-term rentals and they could rent for a week, a month, a year. And we were able to rent these rooms, these beautiful cabins for $129 a night.

[00:08:58] Which sounds low compared to the hotels, but at the same time that it was very high as a multifamily. In fact, I mean, if you look at multifamily across the US apartments, they rent for about a dollar, a square foot on average, and that means an 800 square foot apartment might rent on average in the heartland of America for $800 a month. Yeah, well, we were renting 300 square foot apartments. They were fully furnished and everything, and they had all the utilities and internet. But we were renting 300 square foot apartments for $4,000. 

[00:09:33]Mike: [00:09:33] And probably getting it considering $129 a night.

[00:09:35] Paul Moore: [00:09:35] Yeah. As an apartment, it seemed outrageously expensive as a hotel room. It seemed really cheap. And so we were across between the two, we crushed it. It went really well. We took a lot of the profits from that when we sold it and my business partner sunk that into a Hyatt Hotel that sunk him. We built a ground up Hyatt Hotel and it was just a disaster. So that’s when I got into BA. That’s when I joined a mentoring group. I got involved in commercial real estate. And I’ll tell you more about that later in the show. 

[00:10:14] Mike: [00:10:14] Cool. So today you’re still developing? You’re still investing?Oh, there’s the carrot juice. You’re still investing in things in real estate, correct? 

[00:10:25] Paul Moore: [00:10:25] Yes. We have a company that pulls together people who want to invest in commercial real estate, but they don’t have the millions of dollars to get in.

[00:10:34] Mike: [00:10:34] Syndication.

[00:10:35] Paul Moore: [00:10:35] Oh yeah. We do a syndication model where we allow them to invest, you know, $50,000 and be part of a, let’s say, a $5 million deal. 

[00:10:44] Mike: [00:10:44] Sure. Sure. That’s awesome. I think the name of that is Wellings Capital, is that correct? 

[00:10:48] Paul Moore: [00:10:48] Yeah. Wellings Capital is my company. 

[00:10:50] Mike: [00:10:50] Awesome. So, you’ve been through all of that. Wow. And I’m sure there’s a lot more to discuss. You’ve been through all of that. And in the midst of it, obviously there are different points where you have taken lessons, things that have gotten you to go, Okay, that doesn’t work. We can’t do that again. How did you address that? I mean, what did you when you hit that wall and realized this is an “Oh shit” moment. How did you recover? I mean, I think you mentioned that you actually went into debt like two and a half mil and yet like 13 months later, you were out. And that’s like, unheard of. 

[00:11:27] Paul Moore: [00:11:27] It’s even worse than that, or better than that. However, you look at it. I had a million and a half in the bank more or less when I sold my company in 1997, not a huge amount. Now that I look back, but at the time at 33 years old, it was unthinkably large amounts. And I blew through a lot of that because I didn’t know the difference between investing and speculating. So talk about lessons. That’s one. Okay. You know, as an entrepreneur, you know, Mike, we love the cutting edge stuff.

[00:11:59] We loved learning about Google Ad Words in 2005, when it came out 2004, we loved Facebook ads when they came out and we could get in front of all the competition and all the local dentists, who could use your program. I’m sure we’re very excited to be in front of, you know, being using the cutting edge type stuff. Investing is entirely different. The richest guy in the world now, Jeff Bezos asked Warren buffet. He said, Hey, you know, you’re. Your investing style, your program is not very complicated. It’s actually quite simple. Why doesn’t everybody just do what you do and buffet, apparently this is not recorded.

[00:12:44] I mean, it wasn’t on audio or video, but apparently he chuckled and said, no, no, nobody wants to get rich that slow. Yeah. And the point is investing is not, it can be entrepreneurial. Jeff Bezos was very entrepreneurial. a lot of people are very entrepreneurial, but the vast majority of people who get wealthy, do it really slow and steady. Paul Samuelson was the first Nobel peace prize winner in economics from the U S and he said, as compared to speculating, he said, True investing should be more like watching paint dry or watching grass grow. If you want 800, if you want excitement, take $800 and go to Las Vegas. 

[00:13:29] Mike: [00:13:29] Yeah, no, it’s kind of funny. We actually had that conversation in some of the real estate investing classes that we’ve been in. I have a friend here, we call him Coach. A great guy and he says exactly that. He says, if you’re in here to make quick cash, why don’t you take that cash? Hand it to me, we’ll go down to Bellagio or something and I’ll go throw it down on the crafts table.

[00:13:52] Let’s see what we can do. Cause we got just as much chance of doing it that way as the way you’re thinking right now. If you’re thinking about long-term, then you’re in the right class. And, this is the way he says it. Shit don’t happen like that in the market. It just doesn’t.

[00:14:10] Paul Moore: [00:14:10] Yeah. So to answer your question, I didn’t know that, and I didn’t have any idea, you know, investing is when your principal is generally safe and you’ve got a chance to develop cash flow and make a return. Investing’s that way. But speculating is when your principal is not at all safe and you’ve got a chance to make a return. And you’ve also got a huge chance of losing it all. And so I was a speculator called myself an investor and 10 years to the month after having $1.5 million, almost $2 million originally in the bank. I had $2.5 million in debt and all that debt was against real estate properties because I was seven or eight years into my real estate career by then. 

[00:14:59] And so I was thankful that at least I had assets. I mean, I had a lot of debt. I had a lot of expensive debt interest payments, but the real estate was there. And of course, I didn’t know that we were about to plunge down the deepest hole since the great depression. I assumed that the jitters in the market in 2006 and seven were the worst of it. Of course, we all wanted to believe that, but that wasn’t true. In fact, the next year would be the worst. A year for the stock market and the worst year for the real estate market on record in a very, very long time. And so I found myself, in November of 2007 journaling, I like to journal in the morning.

[00:15:49] I found myself, asking what would one of my heroes, what would he do? His name is George Mueller, technically pronounced Mueller. And he’s a German born guy who went to England. He was a hellion as a youth and he turned into a Saint as an older man. And he opened orphanages for kids. It’s in Bristol, England and George Mueller began to house orphans first.

[00:16:16] It was five and then it was 25 and then it was 2,500. I don’t know that he ever got much beyond that, but he housed 10,000 orphans total in his lifetime. And, he did it all without doing any marketing. You didn’t do any capital raises fundraising, possibly hated marketing, but he was still my hero, even though I loved marketing because he actually did a lot of amazing things in his lifetime to help the poor.

[00:16:45] And I thought, well, I like that guy, what would he do? And I literally thought, as I was sitting journaling, I thought he would start giving money away. And he would believe that he would find his way out of the hole. He was in that way. And though he didn’t believe in debt either. So I was already in big trouble. I said to my family, Hey, we’re going to give our way out of debt. 

[00:17:14] Mike: [00:17:14] Whoa, who brought the first straight jacket after that comment? 

[00:17:20] Paul Moore: [00:17:20] Well, my wife tried, but then, somehow or another, her best friend was an account. My accountant and I got a call from her husband. A few days later, he and another good friend met with me at a fast food restaurant. And they said, what’s your plan to avoid bankruptcy, Paul? And I said, give my way out of debt. And then the other straight jacket came out and I’m sure. And, that was in December of 2017 or 2007. Anyway, January 1st, 2008, we started giving what seemed to be a lot of money every week. We made a donation to a nonprofit, a charity, a church, something that was important to us, to kind of land this plane four weeks. I had an idea drop out of heaven, and I had no idea where this idea came from. And I actually went down to the county courthouse. And I told the county planning and zoning commission that I had this large tract of land along the Lakefront at Smith Mountain Lake.

[00:18:32] It was not sub dividable. That was very clear. And I walked in with a survey that I had hand drawn on and I told them I was going to subdivide it. And here is the loophole. I said it real nice. It’s your law that allows me to do this. And they said, and that lady was completely dumbfounded. And she said, I’ve worked in this job for decades. Nobody has ever come up with such an outlandish plan. So, she said, and you did congratulations. And so I turned that piece of land into a little subdivision. And then the very height, or I should say the depth of the worst weeks of this downturn, which was September, October of 2008. I sold four of those five lots for hundreds of thousands of dollars when nobody was buying land or lots at the time. And miraculously, we were completely debt free in 13 months. 

[00:19:28] Mike: [00:19:28] That’s that? Isn’t that amazing? You gave your way out perfectly. That is awesome. It’s kind of interesting. When you talk about the recession that we had in ‘08. It was funny. I have a background in finance because I was in mortgage lending, both private and conventional. And when they started doing the interest only loans in ‘06, the first commercial. I looked and they’re using interest only loans for owner occupied homes. 

[00:20:01] I immediately got on the phone with my old broker back in Hawaii, who I hadn’t talked to in like six years and I literally called him up and I said, Did you see the latest commercial? He goes, what commercial? I explained it to him. He goes, Oh no. I said, Oh yeah, they just started doing that. And he goes, how many are doing it? I said, well, I can only gather that everybody’s going to jump on the bandwagon. Cause you know, how money is it? Money finds money. It’s going to go make more. And he goes, this is bad. I said, yes. I said, we got about two years. He goes, you think we got that long? I said, the way things are going, we got about two years, 2008 and we’re not over it yet. And I was like, I hate being right about stuff like this. 

[00:20:39] Paul Moore: [00:20:39] It’s too bad. You couldn’t have shortened the whole thing. 

[00:20:42] Mike: [00:20:42] Oh my gosh. That would have been a killer short. Are you kidding me? That would have been awesome. So since you’ve taken well, let me look at the time here. I want to make sure that we’re—Oh, we’re, we’re doing great. I want to talk a little bit about, cause you wrote a book about the perfect investment since we’re on the subject of investing, and like, pre-show you kind of talked about how that’s not entirely true, but can you describe first what that is? And then why would you say that? I mean, you just wrote a book on “here’s the perfect investment but it’s not really perfect.” How does that work? 

[00:21:14] Paul Moore: [00:21:14] Well, I didn’t plan to be a fool. 

[00:21:24] Mike: [00:21:24] Should we be having whiskey over this instead of coffee?

[00:21:29] Paul Moore: [00:21:29] I mean, Hey, look, I started a podcast and we’ve got 230 shows, about how to lose money. So I guess I don’t mind being foolish, but, anyway, no, seriously. I looked at the long-term demographics, which include millennials, baby boomers, immigrants, and now gen Z. Right? And I looked at the trends around the world, toward, away from home home ownership and toward renting. Those trends include the US. 

[00:21:59] Mike: [00:21:59] I still don’t understand that, but please keep going.

[00:22:01] Paul Moore: [00:22:01] Yeah. Yeah. And, I looked at the, you know, the increase in population and I didn’t do this in a vacuum. I was part of a mentoring program who saw the world the same way. And I learned all this and I thought this is like the perfect investment. And so, I wrote a book called the definitive guide to multifamily investing and a friend of mine.

[00:22:30] The title and a friend of mine finally got honest with me and he said, look, he goes, if you really want this book to be popular, he goes, think about great titles out there. Think and Grow Rich and Rich Dad, Poor Dad. You need something a little more catchy, like the perfect investment. So I named it that. The book is about why multifamily investing is a great investment. And then I got several paths to get involved, either as a passive investor in a syndication or as the syndicator yourself, or as just somebody with a group of friends who pulled together their money and bought large apartment buildings. And so there’s a, that’s what the book’s about. It’s been out since 2016, 

[00:23:20] Mike: [00:23:20] I’ll be grabbing a copy. 

[00:23:22] Paul Moore: [00:23:22] Okay, well, I’ll be glad to send you a PDF if you like, or you can get it on Amazon. So at any rate, the problem, Mike, I wrote this book and I found that multifamily apartments, commercial real estate in general, but especially multifamily, it was becoming more and more popular and there was more, difficulty in finding deals that made sense, in our world we say the cap rate capitalization rate is compressed. And so at least from what I’ve been seeing. And so I was, you know, I know I look 40, but I was actually in my mid fifties at the time. 

[00:24:16]Mike: [00:24:16] You hold it very well. 

[00:24:18] Paul Moore: [00:24:18] Thank you. Thank you very much. So I should be like my friend Charles Dobbins, who says I’m 72. I know I look 56 and he’s 56, of course, but anyway, but seriously multi family has gotten very, very overheated and we as business partners, we’re all in our mid fifties. We’ve all lost lots of money on other deals. Like I told you already, we all had lots of pain in our lives. Like every entrepreneur I know. And we said, you know, we’re just not going to play this game. We’re not going to overpay and hope for the best. And so for years I watched the guys in my mastermind, buying deals that I shook my head out and privately thought you’re gonna pay.

[00:25:01] And then coming back on the mastermind 2.5 years later saying, Hey, remember that deal I bought in Greenville, I tripled my investors’ money on it. And we sold it last week and I’m like, Oh gosh. And so it made me think. You know, either I was really stupid for not jumping on the bandwagon or there’s gonna come a day when the musical chairs and when the music stops and somebody is going to be left, holding the bag for an overpay, apartment building that they way overpaid for.

[00:25:38] And they’re going to pay a dear price. And I read Warren buffet. I read Howard marks. I read all these different things. Smart people, ambassador, you know, investor comments. And they said, you know, they’re going to tell you this time, it’s different. They’re going to tell you it’s okay to overpay. There’s a really famous multifamily guy who got charged by the sec. I think it was last week, who was telling the world very publicly, very loudly. It’s okay to overpay for multi-family because it’s always going to go up. 

[00:26:14] Mike: [00:26:14] I think I know who that is. We won’t say his name, but I think, yeah, yeah.

[00:26:18] Paul Moore: [00:26:18] I bet you do. Yeah. And so at any rate, it’s not okay to overpay. The fundamentals are the same as they were last year and last decade and last century. And so I just chose to not overpay. I ended up bidding on lots and lots and lots of deals that we got outbid on. I ended up just walking away from hundreds of deals we didn’t even bother to bid on. And we basically decided, you know, maybe we should find something that’s less popular and we did. So, in 2018, early 2018, we started researching self storage and mobile home parks. And we jumped into that firemen class. Yeah, well, unfortunately it has been on fire, but nevertheless it’s way different than apartments. And I can explain why, if you want to know. 

[00:27:11]Mike: [00:27:11] So yes, but let’s save that for a second. I think the big point that’s being made here is recognizing when something is no longer a good investment. I mean, I think that’s the premise of the book was you learned the lesson of, yeah. We’re not going there anymore. We’re gonna find something else. That’s got better because once the CA like when 2008 hit cap rates out here on single families were down below 8%. And I’m at 12% or if you don’t show me 12 I’m out.

[00:27:45] I mean, I completely stopped looking in the Valley because there was just nothing there. The max I saw was nine and it was the max I saw was nine. And the amount of work that was going to have to go into it to make it a nine wasn’t worth it. I’m not going to go into debt for something that I’m going to have to fight for the money. I don’t think that’s the point of investing. I mean, correct me if I’m wrong. 

[00:28:04] Paul Moore: [00:28:04] What was the same house worth percentage wise? 

[00:28:12] Mike: [00:28:12] So the actual rate was probably about seven, eight, five. The extra addition of, you know, bring it up to par and getting it rehabbed and all that good stuff. You needed rehab to get it to a 9% and 11. It might’ve just barely broke 8.25, maybe. Okay. 

[00:28:31] Paul Moore: [00:28:31] So you and I came to the same conclusion. It sounds like, and that is the perfect investment. Even with all the right fundamental,s it is no longer perfect. If you have to pay too much. 

[00:28:43] Mike: [00:28:43] And I think that’s the lesson here. I really do. I mean, I, and I hope everybody’s listening. This doesn’t go just for real estate. You guys, this goes for anything. This is, there’s a, there’s a basic economic behind this. If you have to dump cash into something in order to make it profitable and the numbers make sense. Okay. But if you’re dumping cash into something to make it profitable and they’re not quite sure. Or you’re not quite sure they are. There’s variables that you’re not in control of. That’s another big thing with me. You know, I live in a town that lives on gambling. What are the odds? Listen, if I can’t hedge my bets and I can’t control the odds, I’m out. I do not want to play that game. I mean, I might as well go to my toilet. Just throw money inside. 

[00:29:25] Paul Moore: [00:29:25] Well, that’s what speculating is, right? 

[00:29:27] Mike: [00:29:27] Yeah. Yeah. And we had a ton of them out here when we had the building boom between, Oh three Oh four. Everybody was coming out here on, on prebuilt. They were buying land. They were buying a spec house, you know, as soon as they were built by the developers and they were immediately turning them into rentals. I mean, this city had. Probably a really unusual amount of invested investor owned home. They outnumbered owner owned homes for awhile. It was that bad. And to me, that’s a complete recipe for disaster. 

[00:30:03] Paul Moore: [00:30:03] Really bad time. Think about, think about it when you’re getting foreclosed on. Are you more likely to fight, to make it work, to save your home? If you live in that home and it was your family, if it’s childhood home, or if you’re in New York City with a hundred of them about, you know, you could care less.

[00:30:22] Mike: [00:30:22] I mean, and I know, and even then the stories get even more wilder than that. We’ll talk more about that some other time, but I know guys that stayed in their house for a year, a year and months, They never paid because they were in that hole. They were in that whole process of trying to get the, whatever it was called, the adjustment or something.

[00:30:41] And they were told don’t get caught up. You get caught up, you’re gonna mess this thing up legally. And I was like, you’re asking me to where’s that restraints that I’m already out of my house. So I could possibly be with my house anyway. So, being that it’s no longer the perfect investment. What kind of criteria can people think of to be able to see something that is a good investment, not being that there’s anything perfect?

[00:31:10] Paul Moore: [00:31:10] Of course. Yeah. I think the point is that it is. You know, it’s still got great demographics and all that, but, look, there’s a great book called Mastering the Market Cycle by Howard Marks. Howard Marks is one of the most successful investors that I know of in history and a master in the market.

[00:31:32] It just came out recently 2017 or 2018, I think. And he says, you know, the time that you need to be the most conservative is the time that most investors take the most risks. And that’s near the top of the cycle that that’s in Las Vegas in, let’s say 2007, when everything, when the margins were thinnest.

[00:31:56] Yeah, the margin of safety was the smallest. The margin of error had to be the smallest that’s when people were overpaying the most. And he said, that’s exactly how booms and bust cycles work. If you’re a smart investor, you know what I’m going to say? 

[00:32:15] Mike: [00:32:15] Everybody said it, even Warren. Blood in the streets, go invest one, stay out of it. What gets me is how many people get Punchdrunk? I know, and literally this is what it’s called, because you’ve seen it. You’ve seen it. I’ve seen it where they just start throwing money at everything. Oh, this is a great deal. A quick example.

[00:32:36] When I was in private lending full time, I had a young guy come to me going, yeah, I’ve got this property. I want to get some financing for it so I can rehab it and turn it and say, great, no problem. So let’s go through your numbers. And we went through his numbers and I said, well, where’s your profit.

[00:32:54] He goes, Oh, I said, yeah, first off, I’m not going to get a lender to lend on this. Not, not in a chance. And you know where, even if it frees us over, I said, the second time, how much money you got in on this deal? He goes, I got a thousand earnestly. I said, you made a mistake putting a thousand down. Cut it loose. Let it go. Let it go. He did, thankfully, because I was, yeah, he did. I was really worried that he was going to take a hit cause that was like a, it was a Chicago property. So it wasn’t a real big thing. But for him, 20 grand was a lot, that’s about what he was gonna do. 

[00:33:32] Paul Moore: [00:33:32] Very smart. 

[00:33:33] Mike: [00:33:33] He was very smart. We’re going to take a short pause, guys. And, we’re gonna come back in about 30 seconds. And when we do, we’re going to talk about what motivates Paul. You all know, we love to talk about what the inspirations are. So 30 seconds and we’ll be right back.


[00:33:46] And we’re back here at Java Cha. I’m Coffee With Mike sitting here with Paul Moore, talking about investments. And, we’ve been having a good time, but, you know, behind all of this and this particular second section, we always talk about what inspires and it’s a big deal because people don’t get anywhere without a “why.” And I don’t know that everybody talks enough about it, but I know it’s a serious subject for you. So tell us, 1. what is your why and 2. why do you think that’s so important? 

[00:34:16] Paul Moore: [00:34:16] You know, a couple years ago I had a very surprising wake up call, really. And that wake up call was, I found out that there was something called human trafficking in the US and I knew that there was human trafficking in the Philippines or in Thailand or somewhere.

[00:34:35] You know what I found out, Mike? I found out that if you take the record profits of Apple, Starbucks and Nike, and at least as of 2017 or 2016, when I heard this, if you take the record profits, add them together, double that number. That’s the approximate revenues generated by human pro human trafficking worldwide. And I thought to myself, Hey, if I was alive in the mid 1800s, I’d want to believe I was an abolitionist. I’d be an abolitionist. I’d be fighting to free slaves. I’d be fighting for the abolition of slavery. And I want to believe if I was an adult in the 1960s, that I’d be fighting for civil rights and I will be doing the right thing.

[00:35:30] And you know, this is a civil right, and this is slavery and there are tens of millions of victims. And since we started this podcast, there are been probably 400 to 600 new victims of human trafficking. When I found all this out, I realized, well, why have I never heard of this? Why didn’t I know anything about this? Why isn’t the whole world complete or at least America, why aren’t we in complete, upset? Why aren’t we treating this like a national emergency? Why isn’t this? I mean, look unlike the civil war. Everybody I’ve ever spoken to was against human trafficking. 

[00:36:16] Like Civil War, you know, like maybe for example, half and half, or maybe it was 60/40, but everybody I’ve talked to and know is against human trafficking. Democrats are against it. Republicans are against it. Of course, we know that there’s a deeper thing going on behind the scenes. And there are people that claim to be against it who are for it and benefiting from it. But that’s not the point. The point is there should be a massive outrage about this. And so I decided I wanted to try to tell the world and tell everybody I could about this outrage.

[00:36:52] And I want to try to promote the ending of human trafficking and the rescue of its victims. And so that’s really, really important to me backing up 23 years to when I sold my company. I can tell you, Mike, when I woke up the next morning with a couple million dollars in my bank account at 33 years old, I didn’t feel any better. I didn’t feel any different. In fact, I ended up feeling a little worse about myself over the next couple of years, as I’ve tried to find my way and figure out what to do and lost money and scams and things. 

[00:37:27] But I never felt for a moment bad about having a big “why.” And I think it’s really, really important that we all have that lock in on it because if you make a billion dollars or if you declare bankruptcy and either way, if you have a big “why,” you won’t have to struggle with all the pain. You’ll have the pain of losing money and you’ll have the pain of relational problems if you’re a billionaire, but you will have something bigger driving you ahead. 

[00:38:01] Mike: [00:38:01] It’s something bigger than yourself, for sure. You just happened to hit a passion. Part of mine, when it comes to human trafficking, I’ll be the underground railroad and all that stuff. We follow them. Thankfully, there’ve been a lot of rescues lately, at least for the children, the adults, not so much. And I know that that’s just as bad. So I’ve been down that road, been deep when you figured out that, why, what did you say?

[00:38:29] Paul Moore: [00:38:29] Well, I, you know, I already had other things like when I was in 2007 and 2008, I already told you the story that I donated to things I really, really cared about. But when I was able to be laser focused, it’s a lot easier to have one big thing. You know, Gary Keller, the great real estate broker wrote one thing, one thing.

[00:38:57] It’s a lot easier to have all your efforts and all your mindset and everything focused on one thing, than have 10 things you really care about, but can’t do a whole lot about. And so I think even if you have 10 things and I do, by the way, I have other things I care very deeply about very deeply, but I think once you have one thing that you’re really focused on, it really helps generate ideas, relationships. Discussions, creativity, all kinds of things that you couldn’t get if you were casually interested. And so that’s why I think this one thing, this one big obsession is so important. 

[00:39:38] Mike: [00:39:38] I would agree, quite deeply that’s without wanting to belabor the point, that’s probably the clearest ticket possible. And, with that, guys, I’m going to call for another 30 seconds now, because I want to get into some other things in the last section, with what’s next and stuff. Talk a little bit about certain codes that people should learn about. So guys, we’re going to take another 30 second break and when we come back, we’re gonna start letting some real nuggets out. So hang in there 30 seconds. And we’ll talk to you in a second 


[00:40:09] And we’re back here at Java Chat, talking with Paul Moore. We’re in our last section here, and this is basically, you know, we talk about where’s Paul now, what’s Paul doing, and where’s he planning on going? You touched on a couple of things, one which is, a passion of ours that has to do with fighting human trafficking. We’re going to leave that for another time. Cause I actually want to dig into that in another podcast if you don’t mind, but you’re, you’re still working. Wellings Capital is a fairly young business, right? It’s like two years old or something like that?

[00:40:40] Paul Moore: [00:40:40] We’ve been around about six years and Wellings Capital has re-imagined itself in the last two years. 

[00:40:48] Mike: [00:40:48] And what does Wellings focus on is that back to the multi-family investments and things of that nature? 

[00:40:54] Paul Moore: [00:40:54] So we found that in, and this is my experience to a lot of people. There’s, I mean, literally like 1.6 million people in Bigger Pockets, for example, is the largest forum for real estate investors.

[00:41:10] Mike: [00:41:10] Yes, it is. Yes it is. 

[00:41:11] Paul Moore: [00:41:11] And yeah, so we found that a whole lot of those people and I was one of them. Didn’t know how to get into commercial real estate, but they wanted to, or they at least were interested. Some of them found out that the, you know, in, I found out that the Forbes 400, the wealthiest people in the world almost all invest in commercial real estate.

[00:41:32] That doesn’t mean they made their money that way. But a lot of them did and a lot of them just shelter taxes that way. And so, Wellings Capital was invented because real estate commercial, real estate investing shouldn’t be as hard as people think it is. And it’s not. If you know the right people. And so what we’re doing is we’ve opened up funds to allow accredited investors to invest as little as $50,000 into our fund.

[00:42:04] And then we’re spreading that across a diversified portfolio of very carefully diligence operators and assets with recession. Proof or not, that’s not right. Like self storage, mobile home parks and to a lesser degree, a few others. And so by doing this, we’re giving these, in $50,000 ish investors, access to world-class investments and world-class tax stress.

[00:42:37] Mike: [00:42:37] Awesome. I’d like you to define it because it’s been kind of thrown around in circles and I’m sure there’s a bunch of business professionals that are wondering what is accredited when it comes to being an accredited investor. 

[00:42:53] Paul Moore: [00:42:53] Yeah. So we sometimes say, you know, you’ll know if you’re accredited, but that’s just not true. Some people have thought that over the years, but an accredited investor is an SEC regulation that, I say it slowly because people think I say SCC, but it’s a regulation that says you can only invest in certain types of private placement deals. In other words, they’re not publicly traded, right? If you have experience investing and they, since they don’t know how to test everybody to see if they have experience, they just said, well, if you have a million dollars net worth.

[00:43:31] Not including your private residence. Or if you make $200,000 a year for the last couple years and likely the forthcoming the next year, or if you make $300,000 a year with a spouse, then you are accredited. There’s some every other minute details in there, but those are the main qualifiers. 

[00:43:53] Mike: [00:43:53] And so, anybody that’s looking to invest, that’s not accredited, what would you suggest they start looking at as far as an investment like we’ve been talking about?

[00:44:06] Paul Moore: [00:44:06] Well, I’m not a fan of the casinos on Wall Street. 

[00:44:09] Mike: [00:44:09] And so you probably are not a fan of casinos over here either then. 

[00:44:14] Paul Moore: [00:44:14] Well, I just, it’s not that. It’s just that I know what Warren Buffet said. If he died, you know, or if somebody was starting out, they should just stick their money in a diversified portfolio of stocks and let it ride until they retire. And I get it. I really, really do. I think that’s a legitimate option. I really do. However, I personally like real estate.

[00:44:39] I like hard assets and things I can touch. And, I like the fact that I can talk to the operator, the syndicator, the manager, whatever you talk, whatever you want to call it, I can meet them face to face. I can’t imagine meeting the CEO of general life rate before I invest with them. I can’t imagine that my voice would have any impact, but, I mean, I invest with a company. Wellings Capital invests heavily with a company in your very town.

[00:45:05] My friend, we can call him or text him on a Saturday and I’ll hear back from him within minutes. He’ll jump on the phone and what I say actually matters. And I try very carefully not to ever tell him, I think you should do this, but I, I shoot out ideas and he does too. And. We actually partnered together recently on a new fund.

[00:45:26] We just launched and it was nice. The point is, I mean, I really think that people can do better than just Wall Street, you know? I don’t know what the current number is Mike, but the 93%, at one point of people who play stop keyword, being the verb, playing, 93% lose money. And, I think people can do better than that.

[00:45:51] Mike: [00:45:51] You know, it’s funny. I was just on the earnings call for all companies Pinterest yesterday. I find those calls very interesting because you hear a lot of general statements about, yeah, we did this percentage of year over year or quarter over quarter and it’s wonderful. And then, they open up for questions.

[00:46:07] And the only thing I heard or the only people, yeah. I heard jumping on there were all fund managers or people that were managing inside funds. Like I heard Barclay’s on there yesterday and I’m sitting here going, I don’t hear any normal Joel coming in there and saying, Hey, what about this? Hey, what about that?

[00:46:22] And I thought, gee, this is where obviously I invest in them. This is where some of my money is. I really don’t have any, I really don’t have any power here. But like you said, in real estate, Would it be, would it be fair to say, look, okay, cool. Go do your 401k or go do yourself. Directed IRAs, do whatever, but maybe diversify even more. Get yourself learning about real estate, do something that you have a little more control over. Yeah, I would consider that kind of shoring up or hedging to make sure that you’re covered. Is that a fair assessment? 

[00:46:57] Paul Moore: [00:46:57] No, I think that’s a great assessment and I believe in diversification now there’s an argument that diversification can be a really negative thing. And if we have time, we can dive back into why that could happen. But I think it’s really smart. As long as you know what you’re doing, you don’t have to know how to run a self storage facility to do a good job vetting. A self storage operator in investing with them. Now it’s arguable that everything that can be known about a publicly traded firm is known and that’s, you know, that’s the, I can’t remember efficient market hypothesis.

[00:47:36] And that says that, you know, really. You’re never going to get a good deal unless you have illegal insider information anyway. So since you can’t get a good deal, just put your money in a diversified portfolio like buffet says and let it ride for decades and don’t you dare touch it. Well, that’s that’s again, that’s a good idea. I think real estate is sort of similar because commercial real estate is highly illiquid. I mean, if people invest with us, I tell them, I warn them. I said, don’t invest, don’t invest here and call me in three years and say, you need your money out because you’re probably not going to get it.

[00:48:16] We’re investing in 10 year projects. Again, Buffett’s not a real estate investor, but he would agree that you shouldn’t even look at the stock price of equities for 10 years. Well, you can’t with a lot of commercial real estate for 5 or 10 years or even longer. And so that’s one of the reasons we like it because the disciplined approach says. Buy and hold and don’t look at it and don’t trade it and don’t try to figure out some special, like, you know, way to short or long met thing. 

[00:48:51]Mike: [00:48:51] I think that’s absolutely valid. Cause I mean, I know I’ve got a lot of guys that are day traders options, traders, and they’re, they’re out there banking and that’s cool. But if you miss, that’s profit for the day, you know, I had friends that have worked on Wall Street that were trading, you know, doing M and A’s and all that kind of stuff. Well, my one buddy was like, if I missed two in a row, I didn’t make it to number three. I hung up my phone, logged out and I went out and golfed.

[00:49:17] I’m just going to stay away from it. I’m not going to, I’m on a trend and I’m not going to keep that trend going. Whereas with what you’re talking about, it’s not it’s the trend is over 10 years. And if it’s managed properly, like you said, by the operator or the syndicator, whoever you’re not going to have much to worry about at all.

[00:49:32] I mean, that’s one of those things you can leave alone and not touch it. There’s a thing with multi-families and I wanted to dig into this too. We all love the IRS. I know you said no more jokes, but I had to. Multi-families, they have a tendency to have this thing about partnering with the IRS?.How does that work? Because to my understanding, that’s not always the greatest idea, but in this case, it is. 

[00:49:55] Paul Moore: [00:49:55] Yeah. You know, I don’t know when you, as a listener, are going to be listening to this, but, around the end of September, early October 2020, the New York Times broke a story with some apparent information that said the president of the United States paid $750 in taxes last year.

[00:50:21] And he didn’t pay any taxes for something like seven of the last 20 years. It might’ve been even more than that. And of course there was outrage. Of course there were things there were fingers pointing. There were demands that he’d be audited. I know I said I wouldn’t be political, but I’m just going to say whether it’s Barack Obama, Bill Clinton, Donald Trump, or George W. Bush. They all get audited every year. In fact, there’s a very specific procedure. They’re already being audited. That’s another story. 

[00:50:57] Mike: [00:50:57] Most of them know that though. It’s good that you bring that up. Cause most, most people think, Oh, they never get audited. No, that’s bullshit. They got these guys’ money. They’re going to get audited. It just happens 

[00:51:06] Paul Moore: [00:51:06] They have to leave all their records in a specific drawer where they have to the IRS and anybody can go. I mean, the right people can go audit at any time. Yep. But that’s not the point. The point I want to make your mic is that commercial real estate investors. Weren’t a bit surprised. We’re like, yeah. Now there is a famous quote. I think I might miss it, but a Congressman in 1980 said something like this. He said, you’d have to be a genius to be a commercial real estate investor and pay taxes. 

[00:51:39] And that’s confusing. But when you think through it, he’d say you’d have to work really hard to pay taxes because commercial real estate is set up to avoid taxes and it’s even this week, as long as I’ve been doing this, I was surprised yet again at how little commercial real estate investors. Pay in taxes and there’s so much we can do a whole show or two shows. 

[00:52:04] Mike: [00:52:04] Well, we’ll have to have you back to talk more about that. That would be awesome. I think the whole point that you’re making here is commercial real estate is a safe investment at the same time. It helps you do exactly what? I can’t remember. 

[00:52:23] Paul Moore: [00:52:23] Judge learned hand. 

[00:52:25] Mike: [00:52:25] He was the gentleman that said he should be praised for avoiding taxes, not evading. And I think I swear a lot of the public does not know the difference they think just because you haven’t paid taxes, you’re evading it. And that’s what, that’s the narrative that’s thrown around about anybody that doesn’t pay a lot of taxes. It’s not just, it’s not political. This is just straight up. Oh, he makes too much money. No, he’s trying to protect what he’s got, and I think more people need to learn that better, but you mentioned that there’s like, Oh, go ahead.

[00:52:54] Paul Moore: [00:52:54] This is where I’m a little confused. Okay. Why do the same people who set up the system to save on taxes, criticize other people for not paying taxes. Number one. And number two, I didn’t mention this earlier, but I’m writing a book on Warren Buffet’s rules for real estate investors. In other words, if you took his principles for equity trading or company trading, if you will, and apply that to real estate, what would it look like yet?

[00:53:25] Warren Buffett actually criticizes the tax system and says, I don’t talk about himself. I don’t pay enough taxes. My secretary pays more than me. But at any rate, yeah. I don’t know why, because by saving on taxes, Buffett has been able to donate to do a lot of what he believes is very good in the world. I don’t think that the IRS would probably do as well as he did in helping poor children in Uganda. 

[00:53:59] Mike: [00:53:59] Yeah. Yep. Absolutely. I think a lot of it is misplaced information or disinformation as it has gone out. People listening to their friends about what’s good and what’s not good. And not really knowing themselves, there needs to be a little more education on that.

[00:54:15] And it’s funny because you have all these guys that are out there, the gurus of real estate investing, flip a house, you know, buy subject to and all this kind of stuff. That’s like, okay. Yeah. That’s part of it. Having been in private lending, it was kind of, I got all their students coming to me going, Hey, we can do a no money down deal with your lender.

[00:54:32] And I’m like, Yeah. I don’t know who you think you’re talking to. That doesn’t work. There’s gotta be some skin in the game brother. but I think if. I think if there was better information out there, that was easier to find. Cause it still doesn’t seem like it’s that easy to find. what is this book coming out or, you know, you just mentioned you’re working on it. Any, any target date for that release? 

[00:54:52] Paul Moore: [00:54:52] I virtually had it finished probably six months ago and then I got really, really busy with other projects and always anything like that’s going to have to take a back burner to Wellings capital. I’ve got two writing partners on it. We’ve already had it approved.

[00:55:07] And actually the publisher is contacting me about once every two months saying why haven’t we set a release date? And so we’ve got about two or three chapters left too, so, okay. And so I’m guessing a lease the end of 2021 will be the best we can do because there’s a nine month window. Once you’ve got a book almost done.

[00:55:32] Mike: [00:55:32] I will be wanting a copy. I’m serious, dude. If you could figure out how Buffett’s stuff applies to the commercial I’m in. And he’s very insightful that you can even pull that. Because you could create a whole new class of investor by putting that book out. You realize that.

[00:55:58] Think about it. Who are you talking to? You’re talking to all of Warren’s followers that don’t do commercial real estate and all of a sudden, now you’re giving them the blueprint on how to do it, using his rules. Tell me you’re not going to create a whole new class of investor.

[00:56:10] Paul Moore: [00:56:10] That’s a brilliant thought. Do you do marketing? 

[00:56:13] Mike: [00:56:13] I dabble. I’d be happy to, we can totally have that conversation. but yeah, there’s, there’s, there’s so there’s so much, yeah, we’re going to need to have you back. Goodness gracious. The time has run. I always hate doing this, but please, can we have you back because there’s a lot more to talk about. I mean, we’ve got the whole IRS thing to talk about. We’ve got the whole setup thing to talk about as far as syndication, how to set up a syndication. And then of course the human trafficking passion that you and I both share. Can we have you back? 

[00:56:46] Paul Moore: [00:56:46] I feel like I’ve made a new friend today and I can’t wait to be back. 

[00:56:50] Mike: [00:56:50] Okay. I’ll make sure that we get you on whatever’s convenient for you, obviously. But the sooner, the better. Guys, where can people find you besides Wellings Capital, which is I’m going to assume that’s a dot com. 

[00:57:03] Paul Moore: [00:57:03] Yeah. That’s And I’m all over Bigger Pockets as well. 

[00:57:13] Mike: [00:57:13] Yeah, that’s good. You know what? We’re going to have to dig into some of that next time too. Cause I mean, you’ve been writing. What is with the boldness near boneless ham? What is that? Did you, what is your, what is the, what is the deal? 

[00:57:28] Paul Moore: [00:57:28] Okay, so I have a question for you, Mike, and your audience. Okay. Semi boneless ham. You know about that, right? 

[00:57:40] Mike: [00:57:40] Yeah, I do, but that’s, that’s my question. The hell is this?

[00:57:44] Paul Moore: [00:57:44] Exactly, just to go to a store at the IGA, which was a store, I don’t know if that’s out where you are, but there was an IGA store near us as a kid and this guy with a big marker, you know, like he would write and paste these big posters to the window going in. And it said semi boneless ham $1.59. And I’d ask dad semi boneless ham. Does it have a bone or not? Never answer. Nobody knows. 

[00:58:14] Mike: [00:58:14] I got a butcher friend. I’m going to go ask him though, after this.

[00:58:17] Paul Moore: [00:58:17] Would you please get back with me? 

[00:58:18] Mike: [00:58:18] I’m going to have to because that just makes no sense.

[00:58:21] Paul Moore: [00:58:21] So for all your listeners who have no idea what we’re talking about, I’ve written quite a few articles and somewhere in the article, I try to work in the question semi boneless ham. Does it have a bone or not? 

[00:58:36] Mike: [00:58:36] Okay. I see about a million different ways that can be applied to commercial real estate. We’ll talk about that. Listen guys. 

[00:58:43] Paul Moore: [00:58:43] Third show. 

[00:58:43] Mike: [00:58:43] That’s an absolute third show. Totally. Just about semi boneless ham. So listen guys, all of the links that things that we’ve been talking about, the links will be posted below in the comments of course. If you have a question, go ahead and put the question in the comments.

[00:58:59] Paul, you’re more than welcome to come. I can answer them or we can forward them to you. However, you’d like, follow-up Make sure you find them on social media. He is, he’s on Twitter and he is on LinkedIn. I follow his Twitter. I’m sure he puts out some cool stuff. And of course, if you’re watching on YouTube and not yet a subscriber, make sure you subscribe buttons right over there. Right next to that button. It’s a little bit extreme. 

[00:59:21] Paul Moore: [00:59:21] Subscribe to this YouTube, Mike’s YouTube channel. I’m going to give you a free gift. 

[00:59:28] Mike: [00:59:28] Okay. That was unplanned guys, if you didn’t catch that. So thank you very much, Paul. That is absolutely awesome. We’re going to promote the heck out of that. 

[00:59:35] Paul Moore: [00:59:35] I’m going to give you an ebook on how to invest in self storage and another ebook on how to invest in money. 

[00:59:44] Mike: [00:59:44] I got three people that would love that. Now I’m going to reach out to them just for the hell of it. And by the way, I’d like a copy, please. I can’t wait to have you back, dude. My mind is just buzzing right now. Sorry. If you’re listening to us on podcasts platforms, make sure you download or subscribe there.

[01:00:02] If you’re on, listening to us there, feel free to support us every little bit helps with this little, this little podcast as we grow. And we bring you more people like this amazing gentleman here, and we’ll have him back. It means a lot that you guys listen and watch. It really does. I don’t think you guys understand how much it means to me and how much it means to my team. You really love you. And we thank you for doing what you do. 

[01:00:25] Keep going. Yeah, don’t stop. by all means, stay up, stay safe, stay healthy and live. That’s the big one. Make sure you do that. So from Paul Moore, myself coffee, with Mike to all of you. Ciao for now

[01:00:50] Outro: [01:00:50] For more information on Java Chat, visit You’ve been listening to @CoffeeWithMike on Java Chat. Tune in weekly to this podcast. For the next episode, you can also download or subscribe today on your favorite podcast platform. A production of Oasis media group, LLC. Located in Las Vegas, Nevada. Copyright 2019, all rights reserved.

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