Before we jump in:

Whenever you're ready, there are 3 ways I can help you:

1. Investing in Our Next Deal. If you are an accredited investor interested in commercial real estate opportunities, please sign up for our waiting list. We will notify you as soon as we have next value add opportunity under contract.

2. Partner on The Deal. If you're a broker, wholesaler, or investor and have a great value add, a small bay industrial deal - we want to listen to what you've got.

3. Book a 1:1 Call. Personalized advice through live video consultation.

Hey, it’s Saul.

In Think and Grow Rich, Napoleon Hill has a chapter that resonates with me. It is about the power of a "mastermind." It is a collective intelligence formed by uniting many minds.

It’s where deeper questions are raised, better answers surface, and everyone leaves elevated.

For years, I’ve been part of different masterminds, each one contributing in some way to my personal and professional growth.

These started off purely focused on business and real estate, but now they also focus on leveling up in life.

This weekend, I spent three days masterminding in Minneapolis with a group of friends.

It was our third mastermind in the past two years, and “great” would be an understatement.

We’re an intense group of real estate entrepreneurs, and our agenda runs from morning to night.

We meditate, work out, cook breakfast, and have vulnerable discussions.

Each of us has an hour to present the current snapshot of our business and personal life, sharing wins and challenges.

The feedback we receive during this time is nothing short of magic.

When you’re in a room with like-minded individuals who actively engage with your challenges, obstacles become opportunities, and ideas spark from the shared wisdom.

Here are a few nuggets I found valuable—and that you might, too.

Buckets of Cash

Cash is a fluid, rare commodity, especially for value-add investors.

One minute you sell an asset, have a bunch of cash, and before you know it, another opportunity shows up.

You plow all that precious cash into equity and, like that, there's no cash until the next deal sells. Sounds familiar?

As my friend Rafik Moor said this weekend, you’ve got to respect cash, or it won’t respect you.

Having discipline in managing cash reserves is crucial.

But leaving that cash in a checking account?

Painful, especially with inflation eating away at 5-10% a year for the last three years.

So, where should you put your cash? Here are a few buckets:

• Treasury-tied accounts: For example, Merrill Lynch offers fee-free accounts tied to treasuries that pay over 4%.

Open a low-fee brokerage account with Fidelity or Vanguard. Then, invest in blue-chip stocks for the long term. If you need cash, don’t sell—borrow against it.

• Short-term loans: Lend to single-family rehabbers for 6-12 months at around 10%. It’s not as liquid as cash, but six months is short enough to justify placing 20-30% of your cash here.

Two Buckets of Assets

If you’re involved in value-add real estate like me, you probably experience a continuous "lift" cycle.

You stabilize a property, it starts cash flowing, and then you take on another value-add project, which eats into your cash flow. And it's never ending.

Here’s a brilliant idea from my friend Alan: have two buckets for your properties.

One for value-add deals and another for low-risk, steady assets. These are Class A, single-tenant properties with national tenants that cash flow from day 1.

These may have lower returns, but they offer immediate cash flow.

Buy them with no partners. They have lower returns and may not please your investors. But if you own them 100% and don't have to spend any energy on them, it will be worthwhile.

Yes, this might slow down your net worth growth, but isn’t the whole point of real estate to generate cash flow?

Simplify Your Portfolio

I examine my portfolio on a regular basis. One of the best ways to optimize your portfolio is to consider keeping assets instead of selling them once they stabilize.

If you own a cash-flowing property with multiple partners and want to sell it, why not take a different route? Buy out your partners and own it 100%.

You give up cash to your partners, but you increase your cash flow by taking ownership of the entire asset.

Liquidity

The consensus in the group was that you need to keep 5%-10% of your net worth liquid.

My new standard is 10%.

Another great idea is to improve the liquidity line item for banks. You can do this by taking a line of credit against unencumbered assets.

You can count it toward your liquidity on a personal financial statement (PFS) while showing the liability on the same statement—it cancels out, but it shows higher liquidity.

One of our members suggested keeping $500K in an operating account for a $10M asset.

I used to keep reserves for six months of debt payments and OPex. But, a flat number makes more sense.

Personal Expenses

Re-examine your personal expenses every month.

Split them into two categories: essential living expenses and discretionary expenses.

You can't really cut your living expenses by much.

Discretionary income is what you can reduce in a hurry if it's necessary.

Most of us agreed. Frugality is important.

But, it's better to focus on increasing cash flow than to stress over cutting expenses.

Interest Rates

The group’s consensus was that the Fed will likely drop rates by 50 to 75 basis points by the end of the year.

This might not lead to a drop in mortgage rates, since some of it is already included in the pricing. But let’s face it, predicting the market is always a wild guess.

Fees Now vs. Equity Later

Many value-add investors are rich in equity but poor in cash.

Most payouts come at the end of a deal. You can charge some fees along the way by giving up more equity to partners. This can still make the deal work.

• 1% asset management fee is charged annually. It's either in equity raised on gross rents collected.

• 0.5% personal guarantee fee if you are signing on debt and putting your balance sheet on the line.

• 1% refinance fee for securing new debt.

• 1% new value fee for heavy-lift projects where significant value is created.

• 1-3% acquisition fee, depending on the size of the deal.

• $300/month accounting fee.

Other Nuggets

• You need to have one polished speech that you can deliver on the fly.

Consider joining Toastmasters for $60/month.

Also, check out The 16 Undeniable Laws of Communication by John Maxwell. It's a game-changer for communication.

• Read Healthy Wealthy and Wise by Derrick R. Sweet —a great book about balancing health and wealth.

That’s it for today.

Hope you found value in these lessons.

Be well,

Saul!