Sarah Sullivan knows what busy professionals looking for time freedom need - because she has been one of those active pros herself for many years.
She knows that you need the basics of real estate investing broken down simply, and in plain language.
She breaks down the jargon, helping us understand critical concepts like ROI, cash flow, annualized return, and liquidity of each type of investment.
This episode is an absolute must-listen if you're a professional seeking to make a foray into this lucrative market.
Switching gears, we delve deeper into real estate investing strategies.
Sarah talks about the importance of the often overlooked wealth preservation, the legacy investments of the rich and famous, and the delicate art of balancing wealth preservation with cash-flowing investments.
Plus, Sarah shares some invaluable tips on vetting professionals and finding suitable investments.
So, tune in and let us help you build a diverse portfolio, stay ahead of market trends and achieve your financial goals.
Live free. Get Educated. Master Your Money.
Subscribe to our Podcast here!
https://investingstuffyoushouldknow.buzzsprout.com
Youtube Videos now up as well! Subscribe here:
https://www.youtube.com/channel/UC1kV60Yxx4ntgLqAwOCR1Pg
Sarah Sullivan knows what busy professionals looking for time freedom need - because she has been one of those active pros herself for many years.
She knows that you need the basics of real estate investing broken down simply, and in plain language.
She breaks down the jargon, helping us understand critical concepts like ROI, cash flow, annualized return, and liquidity of each type of investment.
This episode is an absolute must-listen if you're a professional seeking to make a foray into this lucrative market.
Switching gears, we delve deeper into real estate investing strategies.
Sarah talks about the importance of the often overlooked wealth preservation, the legacy investments of the rich and famous, and the delicate art of balancing wealth preservation with cash-flowing investments.
Plus, Sarah shares some invaluable tips on vetting professionals and finding suitable investments.
So, tune in and let us help you build a diverse portfolio, stay ahead of market trends and achieve your financial goals.
Live free. Get Educated. Master Your Money.
Subscribe to our Podcast here!
https://investingstuffyoushouldknow.buzzsprout.com
Youtube Videos now up as well! Subscribe here:
https://www.youtube.com/channel/UC1kV60Yxx4ntgLqAwOCR1Pg
Hey everyone here at the Investing Stuff You Should Know podcast. This is where we bring you live insights, active insights from the world of investing. We have a great guest with us today Sarah Sullivan. She has a fantastic capital group. She's the founder CEO president. I think she's all those things. Sarah, thank you for being with us today and for participating in least in my Investing Stuff You Should Know. First live podcast slash webinar. Slash guest invite. This is exciting.
Sarah Sullivan :Hello everyone in live land. Thanks for having me here, johnny. It's really special Things you should know. In investing like near and dear to my heart, i love educating investors with everything I've learned over the last 10 years so that they can take the shortcut and not make the mistakes or go through the long path that I had to take. So happy to be here and add value. And hello to all the listeners.
Johnny Nelson:Wonderful, wonderful. So we'll just hit right into the questions here. So a lot of my audience are professionals. I was a mechanical engineer myself. I spent about 10 years in that space. I had another career before that and basically as a builder. So I know a lot of folks in that space And they are interested in and knowing about how can they get into real estate investing. Yes, they probably have heard about you could just sell your home or maybe you could do a flip. But also there's this other piece that's a little more rarefied and that's in the commercial space here. So we'll talk about all the different things you've seen, and you've seen a lot in more of the residential and the larger side. But we'll just hit off with the first question here. So give us your own journey into the world of real estate investing, if you could.
Sarah Sullivan :Yeah, definitely. So I started working after college. I did economics And I thought, oh, i've got this great degree from a great college. You see, great job, life's going to be really great. But it was really tight financially. So I said, oh, it's the best way to make more money. Ok, i'm going to go back, i'm going to get an MBA and finance and marketing And then I'm going to make the big bucks.
Sarah Sullivan :I went back to work and worked in corporate kind of going up from manager, senior manager, director in tech companies And I still found that money was tight. I was not yet like I needed to figure out, once the money comes in, how do I keep more of it and how do I grow more of it. And I think that's really true for so many successful people in the world who are really smart and focus on education is that then they focus on their career, their job, how to bring money in the door, but they don't focus enough on how to keep more of it, like tax strategy, and how to grow more of it investing. And so it was right about when I had my first baby 10 years ago that I was like I got a shift in order to be in this long term planning mindset And so I started looking at people around me who were home during the day And we're living, going to more vacations than me. I'm like I want to do what they're doing, yes, and living in Silicon Valley. A lot of people had made their money in tech and then invested in real estate with that money And they were living off of the passive income from real estate. So I started asking, because it's like where is your real estate? Oh, it's in Texas. Oh, it's in Florida. Oh, we don't manage anything. I'm like, how do you do that? And they said, oh, this thing called syndications And they explained it to me. And then I was like that's fascinating. It truly is hands off And you get to participate at a really big lower risk level. So I started investing in it. Then I started telling my friends and family about it, and then I started telling more people and more people. And then I was like, wow, i can build a company around this And I built Sugo Capital And it's all around educating investors on different types of investing to see what's right for you And then, if our types of investments are right for your investment goals, then we connect people. But I love what you said about.
Sarah Sullivan :Most people probably know about two or three different types of real estate investing And if it's fine, if you guys go to Sugo Capital dot com somewhere, one of the tabs is to a three day challenge. In the very first day, in the first five minutes, i have a slide And it's 15 ways to make money in real estate And it goes through. Ok, you probably know about Fix and Flip and Airbnb and buy and hold a single fit. I'm not a real estate that are very scalable. It's not exactly scalable to have your job, your career that you're really passionate about and really good at, and also have 10 Airbnb's. So how do you invest in real estate in a scalable way?
Sarah Sullivan :So this chart is really cool because it's like everything I learned over the last 10 years, johnny, and about different types of investments What are their ROI, what is their cash flow, what is their annualized return, what is the full period, What is their liquidity, because these are all things you want to be able to see, to see how it fits into your investment plan as a busy working professional.
Johnny Nelson:And all the questions, of course, sarah, that the professionals want to know upfront. Maybe a lot of people are half off our own K, maybe a Roth IRA and these other investments, So we're savvy with their money, but maybe they haven't heard about it. Or I'm also like, well, this makes sense. My friends and family or people that are seem to be doing well, are doing this. So you want to walk through. So what are the basics? And that, like you said, that tool, that template you have, is an awesome tool, just to give people just a little bit of confidence. We're not going to all hyped up, we're not running around saying a bunch of promising incredible things. She's like hey, these are the basics, Just walk through slowly and carefully and just to give you a sense of where this could go and if it's right for you and your family.
Sarah Sullivan :Yeah, exactly, and especially working professionals who want to be hands-off. It's not always feasible in the place you live in. So I always like to say buy real estate where you want to live. That's not always the best place to buy real estate to make income off of or as an investment property. It might be in another state, certainly in San Francisco you don't want to own investment property. Certainly in Texas. It's a great place. But as a working professional, how are you going to manage property in Texas?
Sarah Sullivan :Well, there's something called syndications, private placements, and it's where other people like me and my partners manage your investments and you just put your money in and watch it build And all these kinds of private investments. You can choose them based on time You want your money to be held. You can prefer income like monthly checks or quarterly checks Or you're like, hey, this is in my IRA or this is in my 401k and it's for later. Appreciation is most important to me. Wealth preservation, wealth building, is most important to me. For those kind of folks with those goals, then we have these offerings that have really strong annualized returns at the exit And especially if you're holding them in a tax-advantaged account like qualified funds, then that's very beneficial for wealth growth.
Johnny Nelson:For sure. Have you offered over time, sarah and this is kind of speaking more to the syndication community have you offered various higher cash though properties or higher equity build properties? Have you been able to offer that over time? That way, i think what I'm getting after there is like at times people can tailor it So like, oh, this is not right for me because I need cash flow now or I want to see equity build. Like, hang on, hang on. Oftentimes sponsors like yourself are able to offer or will be offering. It's kind of like you know those, these offerings will come up and you just keep your eye open. Is that true? Have you been able to offer that?
Sarah Sullivan :Yes, 100%. So we've acquired 24 apartment complexes And so each one of those has a different structure. Some of them are within a fund, some of them are individual And I'll give an example. So we buy a property in a location and it's 400 units, 400 doors within one complex And it's already in great shape, it's got great tenants in there, it's cash flowing. So we say to investors hey, there's not a huge value add here, it's already doing great Cash flow is going to be 8%, 9%, and then we exit. You'll get some capital gains, but it might be like 5% per year. So that could be an offering.
Sarah Sullivan :Another offering might be hey, we're building a new 300 unit apartment complex. It's not going to cash flow for three years because it's dirt right now in bulldozers. But when we lease it up and we get it you know, primo tenants in there, primo net operating income and we sell it in five years you'll get a lump sum check that's equal to 100, 125% of your initial investment. So it's a really big chunk on the back end and not any cash flow in between. So they're still both apartment complexes, they're still both passive income or passive investments for investors who want to be in real estate and be hands off, but totally different financial structure as far as when you receive the money as an investor. So thanks for bringing that up, because we do have those examples. I gave our real offerings we had.
Johnny Nelson:Yeah, i'd like to pivot backwards in this little bit about a sequence, i think, from the kind of direction we've been going, but it's stuck in my mind. It's so interesting to me that successful folks you know very entrepreneurial, smart people, like you said, in Silicon Valley, in the San Francisco area make their money in apps and software and societal changing things, but then they still go back to real estate. I think you kind of address that, but the point is so important because it's like even the smartest people doing the most cutting edge things, they still are compelled to put their money into some type of real estate, some type of tangible asset. So can you talk to us a little bit about that? Why, that is almost seemed like a discordant thought. They're like well, shouldn't you want to put that into some other next startup or the next cutting edge thing, ai or something? Why did they go back to something as basic, as fundamental as a house or residence for a human being?
Sarah Sullivan :For both preservation and for more secure growth. So if you look at the number of apartment buildings that have been offered out to investors and have been successful in where investors have made money, the percent is much higher than people who've invested in tech companies and who have made money in tech companies. So it is around wealth preservation and legacy, however, a lot of people do. There's a stack, there's a formula that family offices follow for the Uber wealthy, and it's a little different for each one, but what I've looked to mirror, and what I share with people to mirror, is about 60% of your portfolio in something that is a wealth preservation investment. So for me that's apartment complexes. It's very recession resistant, resilient when it comes to inflation, all these other things. People always need homes. It's tax advantage. So that's my 60%, and so a lot of people, when they make their money in tech, they do the same. They put a chunk in a wealth preservation asset, a hard asset that's not going to disappear overnight. It's not likely to go to zero. There's still risk in all investments. But then what's the other 40%? So then maybe some cash flowing investments that don't appreciate some VC type investments. So they still do bring their money back. But it's not 100%. It's not like oh, i made $7 million in this exit, i'm going to put $7 million back in some tech. No, they might be like OK, i'm going to put $5 million in real estate, save a million to disperse among some startups and do some angel investing with 10 different angel startups. So it is a both. It's just a percentage stack And people want to have that safety and security that real estate brings.
Sarah Sullivan :And then also, when you're at that volume, you know you can easily become a full-time real estate Operator. If you're not careful. Homes in the air B&B's like yeah, i mean, you have a couple million, you can buy a lot of properties, but then that's gonna take a lot of your time. So you do have to pay attention to What do you want? some people want to do that.
Johnny Nelson:Yeah don't.
Johnny Nelson:So no, we'll assume your life, it'll like absorb it, you know. So, like to your point is so important, because I have coaching, some coaching clients And like, well, what do you want to do? and it's like, so we do it like buy a duplex, whatever. And like how important is your time to you? and let's map out where you want to go, what's the vision for you and your family, and know that you're basically treating this for for time And that's the thing you kind of mentioned at the beginning of our conversation was like Oh, like I don't have to manage it in these other things where you can stay Not so much in your lane, but stay maybe what you're passionate about or what you're good at right now, and then kind of build up this investing side of your family arsenal and have that growing and coming in as well.
Sarah Sullivan :Mm-hmm. Yep, exactly. So I did start out in the single family homes and air B&B's and then I switched over to the Syndications and then I switched over even more. I quit my job and now I have a syndication company. So now it is active again, but you know it's super fun.
Johnny Nelson:It's not always a path for everyone, but it's a fun path for sure, talk to us and you I'm circling back a little bit too, but also it's kind of just on our order of questions here, sarah, and that is The why wouldn't you invest in California? And we you and I that are like maybe live in the space or in the space of the time, like, of course, you know Why would you invest in California And you want to, you know, invest in a emerging or, you know, secondary, you know the secondary markets here. What are some things, just as a you know, as an expert operator, that you would share with perhaps new investor, like, why don't you invest in California And you like to invest in, you know, maybe Texas or Florida or the current line is a different place where you have your own investments?
Sarah Sullivan :Yeah, basically for the numbers, for the economics we invest to make money right. And so I'll give an example our single family home. We, during COVID, we moved to France and we rented out our home. We rented out our home for about 60% of the mortgage, so 40% was coming out of pocket, while we were renting our home at maximum rent for our market. Now you might think, well, that doesn't make sense. Correct, it doesn't make sense. And yet people, from people, are buying homes and renting them for less than the mortgage.
Sarah Sullivan :Yeah they say to me You know, it's not that bad, i'm only paying 2000 a month out of pocket in hopes for appreciation. And I'm like or You could make 8% per year and bank on appreciation if you're in a different market. So there is just the numbers is one thing like the numbers don't work As far as single family homes. I'll give another example, my, my friends. He was like I see what you're doing and I'm gonna do it too. I was like there's a lot to learn, don't just go out and do it. He's like no, i'm really smart, i'm an engineer, i got this. I got a buddy, we're gonna go.
Sarah Sullivan :They bought a 10 10 unit apartment complex in in Sacramento and he was like it's pretty good between the two of us were only down $5,000 a month. And I was like Understand what people say these things. So is the economics in California are that the rental prices are lower than the mortgage. Now if you go to a place like Indianapolis where The rental prices are higher than the mortgage That's where you want to be a landlord. You know, can I rent it for $3,000 a month, but my mortgage is $1,200 a month. That makes sense. You get to keep the extra. So it's really purely economics is the the biggest factor for me. The second Is to take a look at the political climate and the landlord friendliness of a state, even down to the The city and the county, so particularly in California. I'll give an example. This is also while we were in the middle of a lease on a property.
Sarah Sullivan :Yeah, you know, two rules changed Around and it didn't matter if you already had a certain type of lease in place. The rules changed, it negated parts of that lease, and so when came time and the lease we couldn't get the tenant out for about six months. We got an attorney. They said, yeah, nothing you can do Now. Collectively this couple made a million dollars a year.
Sarah Sullivan :So and we verified with their employers that they were not in any sort of hardship. You know they were getting their paychecks every month but they were not paying us rent. But we couldn't get them the rental property. And the attorney said why don't you try paying them $40,000 to move out? Who wants a rental property here? No, so Texas is very landlord friendly. You know We work with our tenants. If they don't pay their rent, we ask why do you need an installment plan? Do you need some more time? Can you pay half now, half on the 15th? But if they're really unable to pay, we are able to say, okay, it's time for you to move out and we're able to get a paying tenant in and move on, because our first responsibility is to our investors, right? So you gotta look for places that are landlord friendly.
Johnny Nelson:The rules, that's the second thing Absolutely So that's really good. So let's look at let's move on here.
Johnny Nelson:Let's see here Oh, i see here's a good question for us What are some common misconceptions or mistakes you've observed among those starting out in real estate investing? Again, our audience is successful professionals that wanna step into this here. So I know you've seen many of those kinds of folks coming to your world, people that you know, friends, family, colleagues and whatnot And you've seen a lot of things. So give us maybe they thought one thing and it was something else Give us some insight in there.
Sarah Sullivan :Yeah, perfect. So the number one thing I see, and the context is I had 750 investor strategy calls last year 750.
Johnny Nelson:Wow.
Sarah Sullivan :I'd say about 60% of those were people who were successful. W turn to folks So Intelligent, smart, and they had one to three single family home rentals And they had thought that the easiest way to get into real estate was to buy some single family home rentals. They had thought that the best way for cash flow was to buy one, two or three, like, oh you know, we can just stack single family home rentals, and they were like we're exhausted, this is totally not what we thought it would be. So the thought that, oh, i'm just gonna get started, so probably the best place to start is the smallest, most accessible thing, and so that's the most common mistake I see.
Sarah Sullivan :Instead of hmm, i'm about to get, i wanna get started in this, there's probably someone who's very experienced and professional that I can just give my money to. And it doesn't mean give your money to me, i mean find an operator who you really resonate with, who does what you wanna invest in, and let them be the professionals. You don't try to do your own taxes, probably because there's someone who lives and breathes that all day long, right, and they're the expert and it's the headache you don't wanna deal with. I think that's the number one I see.
Johnny Nelson:Yeah, and then the potential loss that you might encounter by doing it yourself is really not. I mean, there's a great deal of uncertainty, fear and then also like, just like with anything, of a high reward in life. There's a reason my professionals exist in the space because they're quite good at it. So don't be afraid to have those training wheels parallel with professional, and then maybe it's your thing And you can also just see if it's like, if you resonate with that activity. Maybe you do, maybe you love it and you go all the way and start becoming a real estate professional yourself, or if you don't let people like yourself, just keep handling that part of your life and just developing a better and better relationship.
Sarah Sullivan :I'd like to add that the number two mistake I see is that people think that they can use the depreciation and loss from real estate to offset their W-2 income, if without them being a real estate professional or their spouse being a real estate professional. And that breaks my heart because sometimes they don't realize it until tax time And they're like wait, i thought I was gonna get this huge right off on my W-2 income. It's like no, it's separate passive income and active income and they don't blend unless you're a real estate professional or your spouse's. So not fully understanding the tax benefits because there is a way that it can benefit you, and so I guess that's the number two mistake is not fully understanding how the tax works around this in order to maximize the benefit.
Johnny Nelson:And then we know we've both seen it, i'm sure, out there on social media and maybe just even in events. We hear about tax benefits and we hear about real estate investing and successful professionals, And then somehow we mingle that together and like to exactly to that point and it's like, oh, i thought we're gonna get this And it's actually no. It's like you do get it and you can get it and there's ways of getting it, but it's very specific and you gotta follow the rules and the laws and you just wanna make sure you're comprehending and understanding what that actually means for your situation.
Sarah Sullivan :Yeah, and I'll give some more examples in case people are not familiar with it. So, investing in an apartment complex, we do a certain study and analysis and a tax strategy that allows investors to get maybe 60, 70% tax write off in the first year. So like, if you invest $100,000, you could get a loss of 60 or $70,000. Now a lot of people think, oh, i can take that against my W2 income. No, you can't. However, there are I know we're talking about real estate here, but there are oil and gas investments where you can get 75 to 100% write off on your EGI or W2 income.
Sarah Sullivan :So, understanding and we have a breadth in our personal portfolio. So understanding the stack I was talking about earlier where it might be like 60% in a hard asset that brings you peace, comfort for the longterm, there'll be a layer in there of oil and gas for the tax benefit against your W2 income. However, it's a little more risky. However, it knocks down your W2 income tax. So really understanding the breadth of what's out there to play with in the categories And that's what I love helping people with. It's super fun to put together that puzzle right.
Johnny Nelson:That's amazing, Sarah. I love that You have this kind of brand that I love and that's, you know, creating confident investors, and that kind of resonates with me as well. Where I see families, I think my family is what I like helping the most, but you know, obviously there's a professional mom and or dad or something like that, And then you know they're successful, but then also maybe they're not confident and like, oh, I'm not smart enough to be to invest my 401K or put some money down in a private real estate investment. Where did that confident investor moniker come from and grow from, And how do you make people become confident investors today?
Sarah Sullivan :Yeah, i appreciate that. So I started doing online education and I did like a webinar here, webinar there, and I was doing tons of webinars And then you know, you can see in webinars what people are saying in the chat. And so there was so much content that people were like, wow, i didn't know that, thank you, thank you. And so from all those webinars, i took that content and I put it into a three day series And, again, if you go to sugoatcapitalcom, you can access it because there's a recording of it. I've done it so many times And so it's really condensed and fine tuned until the basics, and so it's somewhere on my website. Sorry, i don't know exactly where, but it's the three day series. And so why do I want people to feel confident? Because I felt confident once I learned the basics, like my anxiety around money, my anxiety around my future went way down once I learned, like peaceful energy around money.
Johnny Nelson:Doesn't that sound nice, that sounds super nice.
Sarah Sullivan :Super nice And so growing up, my mom did not have peaceful energy around money. There is this anxiety around money, anxiety around are we gonna have enough for the future? And so now she invests with me. She's like I'm very confident, I'm gonna be just fine, And so that is. I'm getting chills all over my body, but it is so.
Sarah Sullivan :It makes everything so so worth it when people tell me that, Like that, they feel really peaceful about their financial future because they know how to invest in what's right for them, And so it's very rewarding to me to go from a place of anxiety around money to helping others get to a peaceful place around money and their financial future. And then also the question of how do we do that? Well, if you're looking at investments and you're trying to learn about them at the same time, there's something called lizard brain. I don't know if you've heard about this I'm probably gonna get it wrong, but it means that when you're trying to make a decision, especially around money, the logic side of your brain does not work as effectively as it normally does.
Sarah Sullivan :And so that's usually when people get anxious and they don't make a decision and they feel unconfident. And so what we do with the confident investor series is we educate. We have this three day series and we're not offering anything, we're not offering coaching, we're not offering investments, we're just educating so that people can absorb the information they need. And it's the basics. It's like, probably what you take your coaching students through is okay, what do you want? When do you want it? Cash flow, wealth building, legacy building Okay, next step, next step, next step, next step. Here's the terms you need to know. Here's how to do due diligence on properties. Here's how to do due diligence on teams like myself. Find out if I'm legit or not. Another thing, to go out in the internet land, or legit or not. And then, finally, financial and modeling. You know how to understand when you're gonna get what amount of money at what time. And so we do that.
Sarah Sullivan :When people are not trying to make a decision about money, then you can absorb it, then you can figure out your questions. Watch it again, ask me whatever it is, now you're like I get it. So then when you go and look at an investment, it's not foreign. You're like I understand. I can do my due diligence, i have a checklist from Sarah and you can make a decision right Not right for you, but you've already done the learning. So that's the process I take people through And I think it works really well, as people come to the table with knowledge and they can make the decision themselves. Basically, That's.
Johnny Nelson:I can just feel the sense of confidence that you can inspire Sarah, and even the piece like, oh, i'm gonna go to, i'm just gonna. I'm getting relaxed here listening to you just talk so calmly and confidently about this and like how that could work with a newer investor, like, yeah, this is like a really really resonating with that, so really good, and it's all on your website, like you said, is that is that the? is that three day conference or that three day seminar? Is that free or is it just a one?
Sarah Sullivan :It's all free. all of our content is free, Yep.
Johnny Nelson:Amazing And I'll drop that in the. This is recorded live, as we know, but I'll put that in the podcast notes and drop it in the live link and on LinkedIn and Facebook as well, so people will have that and go there for an excellent, excellent resource that you've provided for our audience.
Sarah Sullivan :Yes, it's under the events tab. I just found it So go to capitalcom backlash events.
Johnny Nelson:You're gonna be a while jumping in and check that out where that is. What advice would you give Sarah to for a beginning? I think we probably already touched it, but again, just to kind of like some might make nice precise bullet points for a beginning professional, let's say they hear this, they see it on LinkedIn or Facebook or somewhere online And like, oh, i wanna get in and that we talked about a lot of things interesting, interesting stories and processes and how to do things. What are some things that they should do today or tomorrow if they were to see or listen to this, if you just had to get that nice little crisp list.
Sarah Sullivan :Yeah, I'll say the first two things. The first one is decide what you want and when you want it. So a lot of times people are thinking about oh, I wanna quit my job in 10 years, so I need to focus on cashflow.
Sarah Sullivan :No you don't, not today. Today you need to focus on wealth building And then in 10 years you're gonna switch your strategy to cashflow. But really getting clear on when you need the thing and what's appropriate for you right now is what I think is the first step that people often get wrong. So, if you want cash flow in the future, focus on wealth building now. If you're about to quit your job next year, then find the passive, cash flowing investments, but be really clear with yourself. Then step two is I call it.
Sarah Sullivan :Who do you need to tell? That's either making a plan with your spouse, your family, your business partner if you own a company, and being really clear about your goals and your timelines. You can make a plan with the people who are in your ecosystem. Then being also really clear who you need to add to your ecosystem. Is it someone like Johnny who's going to help you come up with that plan and execute it? Is it someone like me who has the investments that are going to get you to your goal? Is it a CPA who's going to help you with that complicated tax strategy? so you don't have to. I think it's deciding what you want and getting the right people on your team in your ecosystem, aligned with the plan. You won't get anywhere if you have a fuzzy plan. If you have a clear plan and you tell the right people, that's how you're going to get there.
Johnny Nelson:Amazing. How do you vet those professionals? Obviously you know your spouse, but they see you or I out there doing this or that. Like you said, the due diligence on the people in internet land. What have you found to be successful for people to get that confidence? I mean, we think we're so intellectual but also the crock brain does kick in and it's like who knows someone that knows the space here? What are some shortcuts or some heuristics as you use Sarah, or you've seen other people use?
Sarah Sullivan :Yeah, so definitely asking people who are in your same situation. So a lot of times you ask me who's your CPA, sarah? I'm like my CPA is not the right CPA for you. Yes, 24-partment complexes, these, all these random offshore account things, whatever I've got going on, that's not everyone else. So go find someone who's in your position, be in a community of people who are in your position or a little bit more along the path, and ask them who's in their ecosystem and who they recommend. You'll get some pretty strong recommendations. You'll get some pretty strong. Once you're in those communities and you start asking, you might even have five people who recommend the same CPA and say for W2 earners who want to mitigate tax and have the connections to the oil and gas type investments. Like being that community, ask, ask, ask. Get those recommendations. I think that's the best thing for the professionals. And then when you're looking for who to invest with, definitely ask.
Sarah Sullivan :Sometimes it's harder to tell because those might be a longer time until you see the results. Like someone who invested with me last year might not know they haven't exited anything, so they don't know what are Sarah's results. But you can review track records And if someone doesn't have a track record on hand. That is everything the good, bad and the ugly. I wouldn't go with that person. There's a website called VeraVestcom, and so it has sponsors on there like myself who are offering things out to people, and it has a stamp that's called VeraVest Verified For what it's called. But it basically says, hey, we've done a full background check on Sarah, everyone in her company, and actually two days ago I just renewed it and I got the full, nice 80 page background check on me. They go through all my commercial loans back to when I was 20, when I got a parking ticket Like it's all in there. They don't show it to the investors, but they basically say Sarah and her folks in her company are clean.
Johnny Nelson:Yes, yes.
Sarah Sullivan :They don't check everyone, but the principal is in the company, so that's a great resource. You can also do your own background checks, but there's some that are already done for you.
Johnny Nelson:Those are great starts And again, when you're stepping into the space for the first time, you don't even know where to start, who to ask and even a way to navigate that.
Johnny Nelson:And if someone, perhaps some framework, like, oh, that makes sense, i could do that, i could ask that question and just give them a starting point. This is the whole point of this is just to get set yourself a course and take a step in that direction. We're not talking like running a marathon or finishing this the next 10 days. You're like, hey, just take a step in that direction, start thinking about this, get the confidence, like you said, about the confident investor, and thinking about your family and what that your financial future might and should look like. So that's that's very exciting. Final, final chapter here, as we wrap up the show here Sarah, what, what trends or shift do you see on the horizon in the real estate space market or that the audience should be aware of that? you, obviously there's lots of talk about shifting interest rates and some things like that. Is there anything that's kind of that you've had some deep insights on as you, as you live in the space or closely.
Sarah Sullivan :So a lot of people see the shift in interest rates but they don't see or realize is the shift in loan to value. So it used to be. We could get like an 80 percent loan to value. Now we're getting like 55 percent loan to value. What that means is we have to raise more equity. What that means is money is more expensive, not just for the debt but in order to make the purchase in general, And so that creates a situation where cash flow is much lower for investors.
Sarah Sullivan :And you know most people out there syndicators they're not going to purchase something if it doesn't make 18 to 20 percent annualized for their investors. But it's not going to be in the form of cash flow the way it used to be. So a lot of investors are still like I don't want that one and waiting for one that has high cash flow. They're going to be waiting years. It's. I mean they tell me for your next one. I'm like the next one might have lower cash flow. I mean, hopefully not.
Sarah Sullivan :But having cash flow as a priority in real estate today is very difficult to find. It is out there. There is a way to to kind of give investors cash flow. That's part of the money raised. It's not really cash flow from the property, But that's the biggest shift I see, And then, as far as so, that's the shift that we've been experiencing over the last nine to 12 months. Right, Yeah, it's been slowly, slowly, skinnier and skinnier cash flow. The annualized returns are still strong, though, And so the biggest trend that I've done with my personal portfolio and shared with my investors is keep investment, keep real estate investments for your wealth preservation, for your growth, and then find something else for your cash flow.
Sarah Sullivan :So maybe you find oil and gas for cash flow, Maybe you have an Airbnb for cash flow, or maybe you have something that's totally you've never even thought of. There's so many cool things out there that are really really alternative. They can provide cash flow. They're not wealth preservation, They're not gonna grow in appreciation or value, but they're strictly cash flow. So it used to be that real estate could do both for you, and now I'm saying, hey, you're gonna have to have two investments for these two different purposes. Now It'll shift back. There's always cycles. It'll shift back.
Johnny Nelson:Totally, totally, And I think that just the benefit of being in this space. We call real estate private equity, but it could just be private equity. And then these kind of things that sponsors like yourself are into and are chasing down and are keeping abreast of, how can you provide that value to your investors? And you see like, for example, you have the foresight and the knowledge to see that other family, for example, the returns of the cash and cash is shrinking. So then you're automatically going out there ahead of everybody saying, hey, what else can I provide so I can still keep my investors happy and create this business sustained? And that's what you do. So that's really, really amazing.
Sarah Sullivan :Yeah, thanks, Alex.
Johnny Nelson:I think that's probably a good place to wrap it up, sarah. So thank you so much for being with us, and I love doing this live, doing a live episode of the Investing Stuff Functional Podcast. The final thing I'll leave the word. I'll leave the good word with you is how should people I think you've mentioned a couple of times that how should? what's the best way for people to get in contact with you? LinkedIn, facebook, instagram, website? What do you like?
Sarah Sullivan :Oh, linkedin is good. We have a lot of strong content on LinkedIn. However, if you go to sugocapitalcom, there's on the front page there's a ROI calculator And if you download that then you're on my email list And we provide education and you know all of our events that are coming up are marketed to that email list. So, if you want to be on the email list, sugocapitalcom, download that ROI calculator that's on the front page and you'll be added to our list and you'll get tons of education. And it's all free because I want everyone to make the best decision for themselves and their family.
Johnny Nelson:I love it. Until next time, everyone here at the Investing Stuff Functional Podcast, we'll see you, And if you give us a like and spread the word, we can bring more great guests like Sarah back on here. So until next time, thank you.
Sarah Sullivan :Thank you for having me here, Johnny. Thank you so much. Bye-bye.