Ep. 4 | Alternative Investing For Engineers

On this episode of The Engineering Passive Income Show, Joseph discusses the four best investments for passive income that are mature and dependable, Index funds, Dividend stock, Peer to peer lending and Commercial real estate. Joseph explains what each one of the four are and how you can invest in them alongside the pros and cons of each. Don’t forget to subscribe and leave a five star review if you found this episode helpful.



0:00 – Intro
0:36 – Joseph states that this episode will discuss the four best investments for passive income
0:48 – Joseph speaks about index funds and why they’re ideal core portfolio holdings
1:34 – Joseph states that there is an index fund for almost every type of financial market in existence
3:18 – Joseph talks about how index funds have lower management costs associated with them due to their passive income style
4:22 – Joseph explains how high dividend stocks are one of the simplest and lowest costs ways for investors to create passive income
6:21 – Joseph describes peer to peer lending
7:32 – Joseph informs us about the number one investment option for passive income; commercial real estate
9:15 – Joseph explains the down side to REITS
9:26 – Joseph describes how syndications work and the pros and cons of these types of investments
12:27 – Joseph speaks about how you can invest in real estate with a self-directed IRA which is a non-tax able entity
13:07 – Joseph titled the top four types of passive income investments are index funds, dividend stock, peer to peer lending and commercial real estate
13:32 – If you liked what you heard don’t forget to subscribe and leave a five start review



Welcome to the engineering passive income show, where engineers and other professionals come to learn how to generate passive income, grow their wealth and get their time back. Your host is Joseph Bramante, an accomplished civil engineer, oil and gas professional, multifamily investor, an industry speaker. Learn about investment alternatives, the same types of investments that he used to achieve Financial freedom himself broken down like only an engineer can. Now here’s your host, Joseph Bramante.


Welcome back engineers. On this episode, we’re going to discuss the four best investments for passive income. There are many options out there, but these four are the most mature and dependable for you to invest in.


Starting things off, we have index funds. Which are basically like mutual funds that are linked to a particular market index. They’re considered ideal core portfolio holdings for retirement like 401ks and IRAs. They have been promoted by the legendary investor, Mr. Warren Buffet himself as a Haven for savings for later years in life. Now the objective of an index fund is to closely match the performance of the particular index they’re tracking. So like there’s one called the Russell 2000, which is made up of a bunch of small cap companies. And then there’s also the Willshire 5,000 total market index, which is the largest US equity index out there, plus many, many more. There’s an index fund for nearly every type of financial market in existence. And these funds are then passively managed as opposed to actively managed, which is when a fund manager tries to beat the market. It’s called the EMH or the efficient market hypothesis states that at all times, markets incorporate and reflect all information known, making it impossible for a fund manager to beat the market through stock selection alone for any period of time. As our success is only a matter of chance.


Now, a friend of mine who runs a very successful wealth management company once told me this story about fund managers and just kind of helped me understand how some can rise in the right to notoriety and others do not. And the analogy he gave was basically imagine you’ve got 300 people flipping a coin and you know, a percentage of those would get heads. So like 50% would get heads and 50% would get tails. Well, if all the guys who get heads again, get to keep flipping that will continue on and on for several rounds. And you would have some people, a smaller and smaller sub of those fund managers who continue to hit heads. And then eventually over time, all of them would’ve eventually struck out.


The difference is that the guys who got heads for say 10 times in a row would think that they’re just geniuses, instead of just realizing that, Hey, they just got really lucky cause the odds of them hitting heads that many times is very, very low. Well there you go. That’s basically fund managers. That’s kind of how he described them. How I always think of them.


Now as a result of this passive management style they have lower management costs associated with index funds and the passive management fees are about actually 20% of those on active managed funds. And you have lower annual turnover rates of your stocks, which means you’re going to have more long term capital gains for short term capital gains, which makes index funds more tax efficient. Though you do pay tax on the dividends they kick off. So in a way you’re double taxed, cause you get the capital gains. Plus there’s the ordinary income tax you’re paying on those dividends. And lastly, just want to point out at the returns would mimic whatever index they’re tracking, but the stock market has historically returned about 6% to 8%. So that fund would generally track it around 6% to 8%. Although this obviously depends on the history of that fund. And of course, as we all know, past performance does not predict future results.


Coming at number three, third place are high dividend stocks or just dividend stocks. This is one of the simplest and lowest cost ways for investors to create passive income. As public companies on a stock exchange generate profits, a portion are allocated back to their shareholders in the form of dividends. The dividend amount per share can vary a lot from one company to the next and can also change from year to year. One year they may offer a like a 5% share and the next year maybe a 2% share. Though, they’re also very liquid. So you’re able to reallocate your stocks in any given year as they’re adjust their dividends. And also if you’re unsure about which dividend paying stock to choose, you should choose or sorry, you should look for ones that have at least a 25 year track record of increasing their dividend regularly. And these are termed a dividend aristocrat stock.


So once you get your, you know, you get your dividend, you can either keep the proceeds or reinvest them to grow your equity position of that company, however, whichever option you choose, whether you reinvest it or you keep it, those dividends are going to get taxed by IRS because it considers all those dividends income and you get taxed based on your ordinary income rate.


So if you look at companies, I think there’s this one company called Econ enterprises, which has the highest dividend yield as of June 2021 at about 14.18%, which seems pretty amazing. It is really good actually. But if you apply just a 24% tax bracket, which many people are at you get an effective after tax return about 10.78 each year, not including any share value growth or decline. So very strong returns on some of these dividends. But obviously each will come with its own performance metrics.


Next runner up is peer-to-peer lending. This has been around for just over a decade now and it’s basically just lending money directly either to another person or to their business through online platforms like prosper and lending club. They’ve got a few others. Your returns can range from 7% to 12% and once the loan is made, that’s it there’s very little work for you to do as the investor.

The investors can fund loans with investments as little as $25. So basically just kind of equivalent, little bit more than what you would pay on a stock market and it’s available to both accredited and non-accredited investors as defined by the SCC.


As a reminder, accredited investors have a net worth of over a million, not including their house or annual income of 200K for single person or 300K for those filing jointly plus for their criteria. But each platform will also have its own set of investment criteria as well for you to participate. From a taxation perspective, All of the interests you earn on your loan investment is fully taxable as ordinary income, which brings me to the number one investment option for passive income.


The top pass to investment for you to invest in is real estate, big surprise, right? There are many different types of real estate. So from a market maturity and access perspective, we’re going to focus on commercial real estate. Single family has another option out there, but it tends to be much more active versus passive form of investing. And it’s a lot more volatile. You know, if you’re looking for a residual income, passive form of income single family would have the greatest volatility, meaning that if the resident moves out, you’re going to be sitting a hundred percent vacant in that unit for a couple of months until, or a couple weeks, at least best case until it’s full again.


Commercial real estate though consists of office buildings and retail centers, industrial facilities, storage units, warehousing, and apartments just to name a few, the most accessible option to all investors is what’s called a REIT or a real estate investment trust, which are publicly listed on the stock exchange. Anybody can go out right now, just buy a stock in REIT. So REITS, this is a little fun fact, REITS pay out 90% of their income as dividends. That means they keep a 10% manager fee which allows them, cause that’s a relatively lower managed fee compared to other forms of real estate investment, but allows them to pay so much more for their assets. And they tend to also buy much larger assets because they have so much capital they got to deploy. So they can’t go out and buy small properties cause they just, it just wouldn’t work. They’d have to buy it a million small properties versus just a couple of very large ones.


The downside to REITS though is that their dividends are taxed at ordinary income, which may be an issue for those of you in the higher tax bracket. Another option though is what’s called a syndication which is when a private company will pull a bunch of investors capital together to purchase a single as set or even a portfolio of assets in a fund. When publicly marketed these investments are only open to accredited investors through what’s called a 506C offering. Though with a bit of research, Investors can find sponsors who syndicate what are called 506B offerings. That’s B as in boy, which are open to non-accredited and accredited investors alike.


Unlike the options above both of these offerings tend to have much higher minimum investment amounts, which can range from $25,000 to $250,000 minimum investments, depending on the term of the deal. Now, each deal is unique and may have special terms depending on the amount you invest, potentially rewarding investors for investing more, but regardless the returns do tend to range from 6% to 8% annually with a significant capital event every five years or so, that returns all the original investment plus an additional 40% to 60% of profit again, depending on the deal. Plus since investors are actually members who are partners in the particular entity that owns or holds the real estate, they get all the tax benefits that come with it. So all the benefits that come with just buying the property yourself, like you would your house, you get buy an also being a part of this syndication.

So all that passive income or dividends are offset by those passive losses, which typically results in them not paying any tax on those dividends for several years. And then once the investment does eventually end, they can roll their original investment into the next and defer a hundred percent of the capital gains into the future and continue to do so in definitely via a 1031 exchange. There’s a running joke about real estate investing and that you’ve got to continually invest in deals. You know, every time you start to get like that third or fourth year into an investment, your amount of depreciation, your passive losses starts to decrease or really your passive income is starting to outpace those passive losses. And so like just like a junkie, you know, you’ve got to look for your next fix, you know, get your next real estate investment deal. So you can continually to have larger and larger passive losses and geez, it’d be just the absolute worst if you ever actually had to pay tax on your passive income. So it’s just, you know, just kind of running joke within real estate investors, as you’re constantly buying, cause you just don’t ever want to be in a position where you’re getting those passive losses not strong enough to write off and have to pay tax on all those passive incomes.


So to really spice things up, you can actually invest in real estate with a self-directed IRA, which is a taxable entity, meaning none of the investments dividends or sale proceeds are taxed. So regardless if they do a 1031 or if they invest as an IRA, none of the income, passive income gets taxed. The only downside to that is that it can take a while to accumulate the wealth within an IRA because you’ve got limit on how much capital you can contribute to the IRA each year. Either way, you’ve got two really great options for deferring or avoiding tax on your passive income.


So in summary, the top four types of passive income investments  and are index funds, dividend stocks, peer to peer lending and my personal favorite commercial real estate of the four real estate has the greatest tax advantages and the highest total returns, talk about a win-win.


Well, that’s it for this episode engineers, I hope you learned something. And if you liked what you heard, please go ahead, and hit that subscribe button and give it a five star review, I’ll see on the next episode of engineering passive income. Bye for now.

This was another episode of Engineering Passive Income with Joseph Bramante, download resources and join our private investor group at Then be sure to leave us a review on apple podcast. Thank you for listening. And we’ll see you on the next episode.




Ep. 3 | Bad Math For Financial Freedom

On this episode of The Engineering Passive Income Show, Joseph discusses our relationship with time and money. Joseph also shares some tips and advice from his ‘tax toolbox’,  speaks about why you should reinvest your capital as it grows and describes how trading minutes for money will cost you memories. Don’t forget to subscribe and leave a five start review if you like what you’re learning and hearing from The Engineering Passive Income Show!



0:00 – Intro
0:38 – Joseph mentions how this episode will cover the topic of time and our relationship with time and money
0:54 – Joseph gives the example of, you’re on your deathbed, how much money would you pay for an extra hour with your loved ones
1:16 – Joseph states that trading minutes for money will cost you memories
1:50 – Joseph talks about how the secret to understanding how passive income works is to view it like leverage
2:47 – Joseph shares the formula for financial freedom as being when your passive income is greater than your expenses
3:38 – Joseph mentions how there is a game called cash flow game by Robert Kiyosaki that teaches your tricks about how to achieve financial freedom
4:13 – Joseph speaks about how passive income streams such as rental houses and storage units all have major capital events like sales and refinances attached to them that build on investment over time
4:50 – Joseph talks about taxes and expenses that offset your passive income
6:04 – Joseph explains cost segregation and how it is beneficial
6:37 – Joseph speaks about another tool from the tax tool box called the 1031 exchange
7:30 – Joseph shares a final tip on how to spin the money and encourages you to reinvest the capital as it grows
8:11 –  If you liked what you heard and learned on this episode, make sure you subscribe and leave a five start review!



Welcome to the engineering passive income show, where engineers and other professionals come to learn how to generate passive income, grow their wealth and get their time back. Your host is Joseph Bramante, an accomplished civil engineer, oil and gas professional, multifamily investor, an industry speaker. Learn about investment alternatives, the same types of investments that he used to achieve Financial freedom himself broken down like only an engineer can. Now here’s your host, Joseph Bramante.


Welcome back engineers. I’m your host, Joseph Bramante. On today’s episode of engineering passive income, We’re going to talk about time and its relationship with money, particularly our relationship with time and money.


Now let me give you a couple of examples. This first one’s going to be a little bit grim. So please bear with me. And the next two are a little bit brighter. But first example, we’re on our death bed. How much for the hour with our loved ones, your daughter or son is graduating. How much for the hour with them. And last you’re getting married. How much for the hour with your bride or husband on that special day, $50, $100, $150. I think it’s worth much more than that. Yet, we give it away for so cheap, trading minutes for money will cost you memories. Trading minutes for money will cost you memories.


How much of the memories of your child’s first steps or that first date with your wife or husband or the memories of graduating that also difficult engineering school, memories are priceless and thus time is priceless. So again, why are you trading minutes for money? That’s just bad math engineers and you of all people should know better than that. Math is our jam, but that’s okay. I’ve got a formula for you and it’s called passive income. And the secret to understanding how passive income works is to view it like leverage or a [01:56 inaudible] that is being applied to your finances.


As you recall, moment is force times distance. And in this case, the force represents you, it remains constant. You don’t work any harder than you normally do. While the distance from the fulcrum represents your active income or your W2 plus your passive income. So initially your W2 is going to account for the majority of the leverage, but as you’re gaining passive income is going to grow linearly. Your leverage is going to grow linearly as you’re gaining that passive income. And thus your active income is going to allow you to generate more passive income, which is going to allow you to generate additional leverage, which allows you to generate additional passive income.


But unlike your active income, your passive income is working 24/7. So while you’re asleep, it’s working except with no overtime, of course, generating income and increasing in value. And here’s other formula for you. The formula for financial freedom, it’s actually more of a conditional statement, but financial freedom is whenever your passive income is greater than your expenses. Again, when your passive income is greater than your expenses. That’s if you have a lower active income, then by default, you should have a lower expense burden than somebody who would have a higher active income. So lower active income should mean lower expenses, which means you can achieve financial freedom faster and quicker than somebody with a much higher active income. So it’s really like a catch 22. You would think that somebody with a huge salary could achieve financial freedom much faster and easier than somebody with a lower salary. And reality is just not the case.

And if you really want to see this played out in pseudo kind of reality, there was a game called cashflow game by Robert Kiyosaki, rich dad, poor dad. I encourage you to go check it out. We love playing it. And it’s great to play around with the table with your family. It really teaches your kids and yourself all these different tips and tricks about achieving financial freedom.

Now, I know what you’re thinking, but what if I don’t have that much active income to invest, right? We just talked about this. If my W2 is lower, how can I more quickly achieve financial freedom than somebody who has a higher W2? Because I’m going to be investing smaller amounts.


Well, engineers, many passive incomes like rental houses or flip houses or apartment complexes and, you know, storage units, all those typical passive income streams that you may have heard about. They all have major capital events tied to them, such as sales or refinances that acts like static electricity that builds on an investment over time, only to shock the crap out of your finances with a surge of capital every couple of years, whenever you do trigger such event, allowing you to reinvest at 50% to a 100% more than your previous investment amount and get this, usually it’s tax-free.


Now this leads me to my favorite passive income topic, taxes, death, and taxes, as they say are the two things we all have in common.


I used to believe this until about 10 years ago, when I started investing in multifamily, then I quickly learned about something called passive losses, that is right passive losses. And these are basically expenses that will offset your passive income. And the biggest one is a very special one called depreciation that applies to commercial and residential real estate. But isn’t actually a real expense. It’s more like a theoretical expense. It’s like gravity or dark matter. Like we know they exist, but you can’t really see it or touch it.


The formula is really quite simple. It’s total investment value, Plus all closing costs divided by the useful life of the property, which is either 27 and a half or 39 years for residential or commercial buildings. That’s it. That’s the amount that gets applied to your tax statement each year that is used to wipe out a lot of your income. It is the largest expense each year and causes significant losses for at least the first couple of years, offsetting that passive income as I mentioned, i.e., you’re not going to pay tax on your passive income in the first couple of years.


You can further amplify this by doing what’s called a cost segregation, which segregates the components of a property into 5, 7 and 15 year property. And thus allowing you to accelerate the depreciation on those items, into the present and bring those future depreciations to the first couple of years, allowing you to go even further into the future. Allowing you to have a couple more years of passive distribution, passive income without having to pay the taxes on those paths of gains.


But wait, there’s more, as they say, one of your last tools in the tax toolbox is called a 1031 light kind exchange, or just 1031 exchange. Or we all obviously just say 1031 and we all know what that means. And it’s basically used to defer all of your gains when you do eventually exit a deal and allows you to continue to defer those gains indefinitely so long as you meet the requirements.


So let’s say you sell a deal and you’ve got a hundred thousand dollar gain that you would normally have paid taxes on. Well, in this scenario, you’re allowed to defer that gain into your next investment. The main requirement is that you’re reinvesting into a larger like kind property and that you do it within 180 days of the sale. There’s additional complications as well, but that’s in a nutshell, it’s basically what a 1031 is. It’s like the, one of the greatest gifts to real estate investors from the IRS.


The last tip I’ll give you for this podcast is how to spend the money. The Cardinal rule for financial freedom is to live on the cashflow. You should never ever spend the money you get from these capital events. They are the fuel to your nuclear reactor. And if you take out the fuel cells, the reaction stops producing the financial energy you need to power your life. Plus you trigger a tax event every time that you pull the money out. Which is like flooding your reactor with water, no Bueno. Instead reinvest the capital as it grows, thus increasing the power of your reactor and amplifying your passive income.


And that engineers is the power of passive income. I hope you learned something today, and if you liked what you heard, please subscribe, and give it a five-star review. I’ll see you in the next episode of engineering passive income, bye for now.


This was another episode of Engineering Passive Income with Joseph Bramante, download resources and join our private investor group at Then be sure to leave us a review on apple podcast. Thank you for listening. And we’ll see you on the next episode.


Ep. 2 | Rat Race For Engineers

On this episode of The Engineering Passive Income Show, Joseph discusses the importance of freedom and how creating passive income for yourself is so much better than selling your time for money. Joseph speaks about how American people have the completely wrong concept of money due to the education systems. Joseph also shares with us how he was able to change his way of thinking and how he created passive income so that he didn’t end up selling his time for money for the rest of his life.



0:00 – Intro
0:37 – Joseph states that for this episode, were going to go deep
0:47 – Joseph asks you to take a moment and think about where you’re going and what is your big masterplan for your life
1:01 – Joseph speaks about his masterplan at 24
2:56 – Joseph explains why that is completely the wrong path to go down
3:30 – Joseph talks about how he learned about multi-family homes and how if it weren’t for his boss, he would’ve never learned about real estate
4:59 – Joseph states that the biggest con that has ever happened to American people was the concept of money
5:44 – Joseph speaks about how people are trading their time for money when they don’t need to
6:28 – Joseph encourages you to think about the freedom. What would you do if you didn’t have to go to work tomorrow and you had passive income coming in?
7:11 – Joseph states that travelling is one of the greatest gifts of life that you can give to yourself
7:29 – Joseph speaks how if you take anything from this episode, he wants it to be that you take a vacation or that you’re able to go for an extended vacation because you have passive income coming in that’s supporting you
7:44 – Joseph talks about a vacation around Europe he took with a friend from college and how that vacation was when Joseph realized how important it is to not sell your time for money and create some passive income for yourself
10:49 – Joseph states that you are getting your time back with passive income
11:08 – Joseph urges you to not let other people steal your time from you
11:16 – Joseph mentions how the following episodes will host conversations with other entrepreneurs and investors about different strategies you can use to get your time back



Welcome to the engineering passive income show, where engineers and other professionals come to learn how to generate passive income, grow their wealth and get their time back. Your host is Joseph Bramante, an accomplished civil engineer, oil and gas professional, multifamily investor, an industry speaker. Learn about investment alternatives, the same types of investments that he used to achieve Financial freedom himself broken down like only an engineer can. Now here’s your host, Joseph Bramante.


All right, guys. Welcome back to the show. On today’s episode, we’re going to go deep. We’re going to start peeling back that down onion, and I’m really excited about it.


So right out of the gate, just got to know where you’re going. What is your plan? What is your big master plan for your life? Take a moment and think about it. I don’t know who you are, where you are, but this is a very important question. If you’re me, now, I remember what my master plan was. I remember I was 24 years old. I had the job. You know, I did the schooling. I had the job. I was all lined up. All I had to do was keep my head down, keep plugging away, keep working, keep putting the money into the 401k. Got a great company match. Got to get the extra money on the outside. Get your little Edward Jones or fidelity, whatever you got your outside investments and you just keep working away. And then if you’re lucky, maybe if you know, if you do well, maybe if you do well, you get some promotions. They give you some stock options, which, you know, at Exxon, we had another term for that. We call them the golden handcuffs. We’ll talk about that later why.


But you keep doing well then maybe, you know, or not maybe, but for sure, you’re going to reach the age of 65. And hopefully, you know, all things work out for you. You don’t get hurt or injured. You reach age 65, you can retire. And then what they give you is, you know, your retirement and you get this big, beautiful check and get these payouts. You know, they say, look, if you put this much money away, when you’re 65, you’ll be able to get this much per month for the rest of your life or, you know, however long you plan on living.


But there was always that question mark in the back of my head, right? I was like, well, but what if I live to a hundred, right? Like what if I, you know, people do that. It’s more and more are living to a hundred and you know, 90 plus years old these days, could you imagine being 90 years old and running out of retirement, you worked your butt off your whole life, saved money. And you just because you had great genes, you took care of yourself. You outlived the retirement that the company had gave you. And now you’re, I mean, what do you do in that situation? That’s terrible.


But anyway, that’s the vision I had in my head, that’s the path I was going down, right? But it’s the completely wrong path. Because what happens is you get down the retirement and what you finally get is a thing you’ve wanted your entire life more than anything, is a thing that you have. When you’re a kid, they take it away from you when you join corporate America and they give it back to you whenever you’re an adult, when you’re retired. That’s your time, it’s your freedom. It’s your freedom to do whatever you want. And I tell you what, the reason they’re able, they meaning corporations, The some, etc. and was able to get away with it is just because of a lack of education. People don’t know any better.


I didn’t take a single finance course My entire career. I had to learn about multifamily on my own, which is just cut dumb luck. One of my colleagues, my boss was buying houses. And so I wanted to buy more houses. And then it led me to buying apartments. But if not for that, I would’ve never discovered real estate. And I think, and it wasn’t through my own, just doing research, educating myself, joining groups, etc. None of my education about what I’m doing now came from the system, came from my high school, came from my college. I was an engineer. I knew math. They taught me how to calculate the area under a square or sorry, calculate the area under a graph. I can do differential calculus, all this crap. Couldn’t balance a checkbook. Couldn’t do you know, profitability analysis. I didn’t learn profitability analysis until I went to Exxon. I kind of got my pseudo MBA from Exxon, right?


But those are those skills that, just imagine if I knew this stuff, or if you knew this stuff as a teenager, you know, if they’re teaching you stuff in high school, but they don’t, why? Because the system is designed to create good employee. They want you to be, yes sir, no sir. Employees to work for the man, who work for somebody else so that you can make them rich and they can have all the freedom that you wish you had. That’s what they’re doing. And you know, the biggest con that’s ever been done on the American people is the concept of money. Like I love money. Money’s great. We all want to make tons of money. So don’t get me wrong. I love plenty of lavish things, but it’s not everything. I’ve learned that early on, It’s not everything now. Sure, I can, you know, go down this route and I can be, you know, I could, you can do the bill gates thing if you wanted, and you could be very successful. But at the end of the day, you know, when people are on their deathbed, nobody has ever said, man, I wish I made more money. Man, I wish I’d worked those extra couple hours and had the extra, you know, a hundred thousand dollars or something. What they wish is they had more time.


And so that’s the a con that’s happening. People are trading their time for money and they just don’t need to do it, but there’s no other option, right? The system says you work 40, 50 hours a week. And you know, we’ll give you two weeks’ vacation. So you know, that’s your two weeks, right. You can do whatever you want with it. Most other countries, by the way, it’s six weeks. It’s an embarrassment that we only get two weeks here, but that’s beside the point. And not to mention that. Yeah, you’re working 40 hours a week, How much time are you spending commuting to work? How much time are you spending supporting your work activities? Going to the dry cleaning, getting cloth for work, going to lunches, dinners, etc. That’s all in support of work. So what I really want you to focus on is not so much the money side guys, but just think about the freedom.


Like what would you do if you didn’t have to go to work tomorrow, right? If you had passive income coming in and it was equivalent to maybe if it was slightly less, think about this, what if, how much income would you need in passive income that’s consistent, reliable, dependable that you would say, you know what I don’t need this shop. I know a lot of people that could real quick, either find ways to downsize or they would, you know what? I don’t need that extra thousand dollars a month. I’m happy. I would much rather have my freedom. And as a guy who’s traveled for three months at a time to different countries, I can tell you that traveling is one of the greatest gifts to yourself and in life in general that you can ever do. Just seeing the world. It’s just for me, it’s one of my, I got the bug early on with Exxon when they send me overseas and I never stopped traveling ever since. And I just, you know, if anything comes out of this,  you listening to this, I hope that you book a vacation and you go somewhere. I hope even more that you’re able to go for an extended vacation because you’ve got passive income coming in, that’s supporting you.


I remember I went on a vacation with my friend, good friend of mine from college. We went on a Europe vacation. We had the whole thing planned out. We were starting off in Zurich, Switzerland. And then we kind of traveled all over Europe and came back to Zurich. And it was a great vacation. He had used up, he had saved up all his vacation days for the entire year. Actually I think he had, he had some rollover vacation from the prior year. Again, just talking about the system and how crappy it is that they get you to juggle and stress to manage your vacation day. You can have what really should have been, He should have done that vacation anytime he wanted to, it was a great vacation.


But anyway, so we’re on this ship 30 days, we’re having a great time and the vacation, he’s got to go home. I decided I didn’t want to go home. I extended my vacation extra two months. It was end of the year. So I went to Austria. I did Christmas in Austria, Vienna Austria got to see all the Christmas festivals and everything there, ended up going to Paris France for new year’s. And then just kind of hung around and traveled, went to Check, went to all kinds of other little, small towns, and just enjoyed, you know, there was no itinerary for me. I was just free to do whatever I wanted. And I’ll tell you what, it was the greatest experience.

I felt like just such a nomad, just, you know, just like a fly on the wall, just exploring and really living life.


And I tell you what, that vacation for me really separated the difference, you know, cause this was a good friend of mine and we’re, you know, he’s, he’s a, you know, we, he stayed the traditional engineering route. He’s still an engineer today. Really great engineer. But it was on that vacation that I realized the difference, you know, after all he had to go through to have that amazing, a month in Europe, for most people is an amazing vacation. To think of all the sacrifice he had to do. Carrying over vacation. Didn’t take any vacation or very little vacation from the year prior, just so that he can have a really nice vacation the following year and then all the saving up and all the crap you had to go through to get the time off, etc. Cause it’s, you don’t just get to take a month off. I mean, you got to plan that, you got to get permission to take that much time off in, you know, corporate America.

So it was at that point though, right? We’re like we were both having such a great time and he wished he could have stayed, but he couldn’t, you know, and it was unfortunate that he had to go home and I just stayed. And that’s the difference. That’s when you were a 100% free with your time to do what you want, when you want with it. I could have stayed there. I could have never come back If I wanted to, I could have stayed in Europe this entire time. But that that’s the entire point of the story guys is you’re getting your time back with passive income, time that you don’t get back. It is the one thing in life that is even from everybody, we’ve all got the same 24 hours in a day. No more, no less. How you spend it, That’s up to you. So choose wisely and don’t let somebody else steal your time from you.

Passive income gives you opportunity to get your time back. The rest of these episodes, We’re going to be talking to other entrepreneurs, other owners, investors, etc., different strategies that you can do to get your time back too. God Bless guys. See you in the next episode.


This was another episode of Engineering Passive Income with Joseph Bramante, download resources and join our private investor group at Then be sure to leave us a review on apple podcast. Thank you for listening. And we’ll see you on the next episode.




Ep. 1 | My Story

On this episode of Engineering Passive Income, Joseph talks about his story and explains how he went from top of his classes, to a high paying engineering role with Exxon, to unemployed with a negative cash flowing apartment complex with asbestos, to now having 13 acquisitions and being able to have the freedom to do whatever he wants with his life. Joseph gives you what he did wrong and what he did right to get back to the top



0:00 – Intro to the podcast
2:05 – Joseph explains what the podcast will be about and talks about his early days just out of college and his first internships of his career
3:12 – Joseph applied to 2 oil and gas companies and ended up getting a job at Exxon, which brought him to a pivotal point
4:18 – Joseph noticed his opportunity for upward mobility at the places he interned wasn’t very good so he went the oil and gas route
5:03 – Almost immediately they send him overseas
6:19 – When he moved to Papa New Guinea was when he really started making a lot of money, with almost no expenses
6:57 – Joseph talks about his manager who was a rotator, and always seemed to buy houses and rent them out which peaked Joseph’s interest
8:09 – Joseph and a friend came up with the plan to buy 40 foreclosed houses and they needed a loan of $3,000,000,
9:12 – After being rejected a lot, a bank suggested joseph to buy an apartment complex rather than individual houses, so he bang to read up on it and fell in love with the math
10:39 – After 6 months, Joseph closes on his first property and becomes and apartment owner, but within the first 6 months, he instantly regretted the decision
11:29 – They lost 15% of their occupancy pretty much immediately
12:07 – Their renovation attempts seem to be working, but the insurance they had purchased turned out to be fraudulent
13:06 – They were installing central AC, which requires permits, meaning you have to do an environmental which showed up asbestos
15:18 – The final nail in the coffin is he lost his job at Exxon, leaving him with no income and an apartment complex which was negative cash flowing
16:25 – The next day, Joseph spent over $10,000 on a real estate group so as he could get his property on track
17:26 – Joseph spent the next 6 months focusing on real estate, and managed to turn the whole property around, with a $30,000 per door renovation and doubling rent as a plan
19:03 – Joseph goes through the steps of the renovations
19:38 – After a slow start, Joseph leased the whole property up
20:11 – They made a 200% return on the refinance, and it was then he realized multifamily was for him as he talks about what they have today
21:22 – Looking back, Joseph feels so grateful
21:56 – Multifamily has given Joseph the freedom to do whatever he wants
22:46 – Getting passive income to the point where it matches your job takes a long time



Welcome to the engineering passive income show, where engineers and other professionals come to learn how to generate passive income, grow their wealth and get their time back. Your host is Joseph Bramante, an accomplished civil engineer, oil and gas professional, multifamily investor, an industry speaker. Learn about investment alternatives, the same types of investments that he used to achieve Financial freedom himself broken down like only an engineer can. Now here’s your host, Joseph Bramante.


Welcome to the engineering passive income show. I’m your host, Joseph Bramante and I’m just so glad you guys are here. I really just want to take a moment to thank you for tuning in. How you find your way onto the show, just want to say a special thank you for coming here. This is our very first episode, and I just want to give you an overview of what you can expect on the next several episodes.


So, as a reminder, I’m your host Joseph Bramante. I’m a civil engineer by trade. I started off interning at consulting firms and then spent five years in the oil and gas industry working for Exxon overseas. I then jumped headfirst into multi-family back in 2011 and just have tons and tons of stories and experiences to share with you guys about what I’ve learned over the last 10 years and not just my experiences, but we’re going to have all types of guests on the show from various backgrounds, like self-storage and mobile home parks and warehousing, just to name a few. And if there’s somebody who wants to talk to let us know in the comments below, and we’ll be sure to reach out to them and get them on the show. Not only that, but we’ll have a very interactive process in how we actually do our interviews. And we’ll let you guys know ahead of time that, Hey, we’re going to have so-and-so coming on the show. If you have any questions for them, send them our way. We’ll be sure to ask them on the show. So please go ahead and hit that subscribe button for us. And if you’d be so kind, just go ahead and give us a five-star review as well. Now let’s get to the show.


Hey investors. Welcome back to the show. Today We’re going to talk about my story. How I went from kind of middle-class to upper-class to unemployed, to the CEO of a multi-million dollar multifamily investment company here in Houston.


So I started off as an engineer, as you know, went to school, made great grades, and had some really awesome internships that really kind of enlightened me as I was going through and getting ready to make an ultimate career choice.


My first internship was for a small consulting firm out of Baton Rouge. The company was namesake by the main owner. He was a PE a professional engineer, and he was the only one at the firm. And everything kind of reported up to him. Your typical kind of engineering consulting firms structure. And my second consulting firm, consulting internship job was at a consulting firm in New Orleans, much larger firm called WS Nelson, had a great time there, spent the entire summer doing a lot of AutoCAD, detailed design etc., working on some really large projects for some very large clients.


And then ultimately, you know, when it came down to the end, you know, so we have finished these internships, career days coming. It was our last career day, and two oil and gas companies came to town. And I remember thinking, you know, what the heck, let me just go ahead and apply. And we’ll see what happens. I don’t know anything about oil and gas, but, you know, I was top of my class had really good grades, so I figured let’s see what that can do. So do the interviews end up getting a job at Exxon. And so I was at this really, you know, kind of pivotal point in my life. I was like, you know, do I take this offer at Exxon, which was substantially higher? Or do I go with, you know, WS Nelson and continue down my traditional consulting route? So that was the first kind of pivotal point I had in my career. And I bring this up because the decision I made is probably a decision that a lot of you are in right now.


And so what I noticed in the consulting firm, just during those two years that I was interning, it was two summers was that my opportunity for upward mobility wasn’t really that great. Unfortunately, the only way I would kind of move up was if somebody retired and, you know how that goes, people don’t typically retire every day. It’s a pretty rare thing. And so I didn’t want to get stuck in the same position for, you know, decades doing the same stuff and not really getting much exposure. I wanted to grow, wanting to do different things. So that’s when I decided to go ahead and do the oil and gas route, because I didn’t know anything about it and they’re offering me a lot more money. But what I liked about it was I was actually had, I was with a much larger company. I was able to go to various job routes with it.

So I took this job and almost immediately, they send me overseas. I’m here in Houston for nine months and opportunity comes up for me to go overseas. And I take it, which was another reason why I wanted to go at Exxon because as an engineer, you know we do all these designs, right? You’re back at the office doing designs for projects all over the world. And I remember, I was specifically, I was designing this I designed an I-beam for this, it was an overhead crane for this facility out in Freeport, Indonesia. And I designed this I-beam and a few weeks later I get a photo back of that I-Beam installed. And I was just like, man, I would’ve really loved to have been there to actually see it. And so that was one of the things I was really excited about working for Exxon.


So anyway, I’m overseas now in Australia, I was working on this very large LNG facility that we’re building out in the middle of the jungle in Papua New Guinea. It was our highest paying kind of hardest ship, our most hardship assignment they had. So I took it because it just seems like really adventurous. So I spent the first year in Australia, we moved in country to Papua New Guinea and then Papua New Guinea is when I really started making significant money. Also because my expenses were basically none. I had like a thousand dollars a month in expenses because Exxon was paying for everything. I had a driver, and my rent was paid for, everything. And one of the unique things about being an ex-pat, especially in those hardship locations is there’s really two types of ex-pats. You’ve got one that is a rotator. So they’re on the job site for like four or six weeks and they go home and then they come back four weeks later. And then there is a resident. I was the latter, the resident. I was full-time in Papua New Guinea. But my manager was a rotator. And this is around 2010. And I remember every time he would come back to the job site, it just seemed like he had some new crappy little house that he had just purchased for like $60,000 and was renting it out for a couple of hundred dollars. I mean, these things looked terrible, but he was renting them out and had accumulated quite a few. And so it kind of piqued my interest.


And remember, we’re overseas, we’ve got kind of really slow internet limited news. You know, the funny thing about when you’re overseas is, you know, they don’t really talk about America that much. You’d be surprised. We kind of live in a bubble here in America and you overseas, they could care less about us. So I really didn’t have much insight to the housing crash that was going on other than, you know, I kind of knew vaguely it was happening. But anyway, so he’s buying all these foreclosed houses. So I started looking into it and a friend of mine, one of my colleagues he’d already had like five through his family. And so I worked with him, I said, Hey, man, let’s go out and let’s buy some houses. Our boss is doing that. We should do it too. So we sat down, and we came up with this idea. We were going to buy 80 foreclosed houses. I had this beautiful spreadsheet, do it over a two year period. And all we needed was $3 million. We needed a loan for $3 million.

So I had this spreadsheet, it’s all, you know, dialed in looking good. And so I’m picking up the phone, I’m calling all these local banks here in Houston, and I’m sending them this spreadsheet, you know so proud of what I’ve done. And as you might imagine now, first of all, I’m calling these guys from a Papua New Guinea phone number. So they’re probably, you know, answering the phone already very suspicious. And then they hear me this 25 year old kid talking about, you know, trying to get a loan for $3 million and want to buy 80 houses over a two year period. I mean, it was just absolutely bonkers. And so as you can imagine, they all, you know, politely kind of hang up on me to say, no, thanks, not interested. And finally, one of them just says, look, Joseph, go buy an 80 unit apartment complex. Don’t buy 80 houses, just buy an apartment complex. There’ll be one roof much better than 80 roofs. And that’s when the light bulb kind of went off in my head. I had no idea I can buy an apartment complex. So fast forward a few months later, I’m on I’m finding all these brokers getting in touch with people. And I start my hunt. Also I started I bought like half a dozen books or so on Amazon and had or on Kindle and was just reading these books. I went through a book a day almost in the very beginning. I was just so pumped and excited about it.


And what I really loved about I was at the formulas, I fell in love with the math, you know, again, a big geek engineer over here. I loved the math side of it. So I just memorized all the formulas and really went to town in breaking down this industry. So just with reading a couple of books, I kind of felt so emboldened, plus, you know, I was 26 at the time, 26 years of age, you know, felt a bit embolden just to go out there and take the world by storm. So I’m calling these brokers, I’m getting in touch with them and getting shown these properties, all remote what have you. And this is before COVID, this was before zoom, you know, I was remote working to the extreme back in 2011 on my first deal.


So finally, after about six months, find my first property. And well, not my first, but I go under contract and win and closing my first property after about six months of effort, and then, so there you have it. So now I’m an apartment owner. I’m 26 years old, got this 26 unit apartment complex. And it’s, you know, 2011 within the first six months, I instantly regret that decision. And, you know, honestly had I bought that property or had I not bought that property and lost that bid and been forced to maybe go a little bit longer without going under contract for a property. I may have never even gotten into industry.


And here’s why. Within my first six months of owning that property first we lost 15% vacancy almost immediately because it was two neighboring properties that the seller owned. He sold us one and all the residents went next door, once they got news that we owned it. So that was the first bad thing, which wasn’t, you know, I kind of brush it off as I, no problem, I want to do a renovation anyway. So I just started renovating those units that people had moved out of. Then we are, so we’re doing this renovation and we’re paying everything cash because, you know, that’s how we do things at Exxon, as far as we know. You know, we’re trying to Exxon the crap out of this project and it is, you know, initially it seems like it’s working, I’ll say that. So we’re doing our Exxon thing on this property and we are, you know identifying subcontractors and whatnot. And then the next bit of bad news comes in that the insurance that we had purchased we find out, You know, I get a phone call one day from the broker who had sold us the insurance that the guy that he bought it from was a fraud. We didn’t actually have insurance. So it’s, you know June, no it’s like, April, May, we’re going, you know, June is hurricane season. It’s kind of a big deal. And so we find out crap, we don’t have insurance.


So, you know, now we’re starting to panic. We’re reaching out, we’re trying to get other insurance, which if you don’t have insurance and you own a property, it’s very hard to get insurance. So, we’ve got that problem. That’s kind of a problem right there. And then we get the next issue comes up, which is one, honestly kind of knocks me down a little bit, but still somehow, I managed to rebound is that we get a phone call from our, so back up a little bit, we’re doing this renovation, we’re installing a central AC. Our property had all window units. So we’re installing central AC on the property. And part of that process is to apply for permits. And part of the permitting process is, you’ve got to submit an environmental. Now, normally not a big deal. Today Most lenders it’s mandatory you do an environmental. Lenders typically on your side. I know it can be a bit challenging sometimes, especially when you’re first starting out. You’re like, why am I doing all of this crap? Trust me, it’s worth it. They’re in your court at the end of the day. Well, this was back in, you know, I think multi-family, wasn’t as mature as it is now back in 2011, wasn’t required. Our lender let us close on a deal no problem. Probably because they were not multi-family lenders to begin with. They were just kind of a general lender.

So we didn’t have an environmental. No problem. We pay for one comes back like a week later, and then probably one of the worst things you can imagine is on there. We have asbestos and I remember, you know, after a few choice words between me and my partner. We immediately get on the phone. We’ve got guys working in those units. We have units with sheet rock down. We send them home, like guys, stop work, go home, no more questions. We kept it very just point blank, just kind of real quiet because, you know, we work in oil and gas industry. We know about asbestos, we know all the dangers and risks. So as soon as we found out we stopped work sending everybody home. But now we’ve got this huge mess because now we’ve got a property. There’s four units that we’re renovating that we can’t touch because it’s got asbestos. So now we’re getting bids to get asbestos abated. And we’re trying to figure out how to do this.


And then like a few weeks later, just the final nail in the coffin hits me find out that I’m getting let go from Exxon. So it was just back one after the other, after the other. And finally just the knockout punch lost my job. So mind you the property is already negative cash flowing. Me and my partner we are keeping this thing afloat with our own money. And once I lost my income, now it was dependent on him. And so I was obviously, you know, a bit upset, you could say that and upset, aggravated, angry, embarrassed, all those things. If you’ve been let go, if you’ve been fired, you know what I’m talking about. It is, you know, for me personally, it was the biggest upset, it is the first time in my life I’d ever been, I ever failed at something, you know, the kid used to kind of winning and winning and you make the grades, and you know, you get the jobs, and you do all this and had all this academic scholarships, etc. And then just to get that termination paper, I’ll tell you what, that was a pretty big blow to the ego and really kind of kept me in check after that.


But so nonetheless, the next day, I’m rebounding, I’m spending over $10,000 to join a local real estate group to kind of, you know, get myself in a position to succeed on this property. Cause I obviously didn’t know what I was doing. I read some books, thought that I knew what I was doing. I was wrong. I had this 30,000 foot level education of how to operate properties and how to do multi-family.

And I guess today it would be similar to just listening to podcasts about how, you know, people like me have gone and done multi-family, but when you actually get down to, you know, the boots on the ground and actually doing a deal, you quickly realize there’s a lot of the nuances and a lot of the, just going through the motions that you need to have to get comfortable doing deals. So anyway, I joined this group and immediately started taking action. I spend the next six months focusing on real estate, reading additional books, taking courses professional courses at CCIM, continuing getting very involved with the mentoring program and then managed to turn the whole property around and within like a six month period, it Sounds a bit crazy, but we can put this plan, another plan, right. To do a 30,000 per door renovation on a property, mind you, that we spent 25,000 purchasing 25,000 per door purchasing. So we spent more, we were going to spend more on the rehab than we did on the purchase. And we were going to double rents. It was a crazy story, and I pitched this idea to all the mentors at that group, that real estate group that I joined, all but one told me it was a crazy idea. Even the CEO was like don’t do it, it’s a crazy idea, but I was in a position where I just made all this money overseas. And I was, you know, their advice was to sell the property. And I was going to lose the majority of what I made for the last five years. And I just, you know, I couldn’t afford that. So I was like, you know what? I’d rather go out with a bang and let’s just go all in versus just backing out now, cutting my losses and still losing. I’m going to lose either way. So if I’m going to lose, I am going to lose on my terms.

So we went out and we went all in on this property. I had some money left in my 401k, cashed it out and use that to collateralize a new loan, a bridge loan that was full recourse. Me and my partner did it. And we proceeded down this route of doing his massive renovation. Step one was we vacate the property. Step two, we did a moderate asbestos abatement on just the key areas. Step three, we came back, and we did the full renovation and step four, released it back up at double the rents. And then I’ll tell you what it was, that was probably the most nerve wracking nine months of my life. Cause it was, you know, we’re spending money like crazy. We’re doing this renovation. We’re spending money, no money is coming in the door. We have no idea if it’s going to work. No leasing, nada. And when we started leasing it was a slow start because we were releasing in the wintertime. But around March, April, May, and we leased that whole thing up. And for me, that was the moment that I knew that multi-family was for me. Because we’ve read books. You’ve heard the podcast, we’ve seen all the presentations, but until you actually go through it yourself and you realize, and you see, you know, the NOI increase and you see the cap rate and you see, you know, for us when we got that refinance that term sheet, and I was like, wow, you’re going to give me all this money Tax-Free, we made over a 200% return on the refinance, got all my money I made that I put into the deal times two, still own it today.


And that was, I was sold at that point I’m in, hundred percent, let’s do this. So at that time though, I did have a job on the side. I’m working in the oil and gas sales, but also working, you know, the majority of my evenings and after work still multi-family. But I use the success of that first deal to go forward and raise capital for more deals and, you know, fast forward to today, you know, I continue working with the same people on that first deal that or for the most part that I am today, we formed a company back in 2016, we are now on our 13th acquisition. We’ve got new development that we’re working on. We’ve done several other large value adds. We’ve got one, right now that we’re doing that’s even larger than the first. We’re doing a 37,000 per door value add on a property. And yeah, so it’s just been a crazy, crazy experience. And, you know, looking back on everything, I’m just so grateful because now I’m in a position where, you know, a lot of my friends who never, who were still with Exxon, majority of my friends at Exxon are no longer at Exxon. They’ve been let go, or they’ve jumped ship, they’ve gone elsewhere. And you know, my original partner as well, he’s gone to several other companies. And I tell you why, it’s just one of the most humbling conversations I have is when I am meeting with other, my former colleagues from Exxon and other places. And just seeing, you know, how much of a difference that multifamily has made in my life. And given me that additional freedom to do what I want. I can take three months off and travel like I’ve done numerous times. I don’t have to work, you know, come in super early or I can basically do what I want. I live life on my terms. And that is the freedom that, you know, that really you can’t put a price on.


And for a while, you know, it was an ego thing for me, and I just kept pushing forward and pushing forward. And it was, I came from a very high income earning bracket. And it took me several years to replace that, to replace that income. And that’s definitely one of the big challenges as an engineer is the big hurdle. Cause you’re making very good six figures in your engineering roles and your other analytical roles. And to get that passive income to the position where it’s replacing your salary takes a long time. However what doesn’t take a long time, it’s just getting that additional revenue. It’s where you got that extra couple hundred bucks a month, a couple of thousand dollars a month. It really, you know, it takes, you know, over time, it really kind of loosens up your mood.


I’ve got, you know, my original partner, whose got, you know, a lot, I can’t say how much, but he’s got a lot invested. He could retire if he wants to right now, but now his mindset is completely different. You know, he goes into work and he works because he wants to work. He doesn’t work because he has to work and it’s a completely different mindset. And you know what, I hope that all of you listening to this can get to that position where yeah, you know what, you might be at a W2 right now, but, you know, with disciplined investment and choosing great opportunities to invest in overtime and by time, I mean, time, I don’t mean one, two, three, four, five years. I mean like 10, 15 years over a period of time, you’re going to be able to basically replace that W2 income, but just be patient with yourself. And I think, you know, once you get there, you’ll look back and you’ll see it was all worth it. But anyway, that’s my story, guys. I’ll catch you guys on the next episode. If you have any questions or want more detail please send in the comments, send me an email and we’ll be sure to get that, get a response to you, but we’ll be going over this in more depth at a future podcast. So have a great one guys and see you in the next episode.

This was another episode of Engineering Passive Income with Joseph Bramante, download resources and join our private investor group at Then be sure to leave us a review on apple podcast. Thank you for listening. And we’ll see you on the next episode.



Ep. 7 | Interview With Reed Goossens

On this episode of The Engineering Passive income Show, Joseph is joined by Reed Goossens. Joseph and Reed discuss a wide variety of topics throughout this episode such as challenges you face when investing in real estate, adapting your skill set to aid you with investments,  entrepreneurship in Australia vs entrepreneur ship in America and so much more. Don’t forget to subscribe and leave a five star review if you enjoyed this episode!



0:00 – Intro
0:43 – Joseph gives us an insight into Reed’s background
1:14 – Joseph encourages you to listen to Reed’s podcast ‘Investing in the US’
2:16 – Reed speaks about his background and why he moved to the US
5:31 – Reed takes us through the reasoning as to why he got involved in real estate and investing
9:16 – Reed states that he has lost count of the amount of former engineers that are now real estate investors
11:45 – Reed mentions how he believes engineering is a great degree to study as it is a problem solving degree
13:00 – Reed speaks about how his life looked whilst he was investing and working as a full time investor
15:01 – Reed states that it took him eight years to leave his full time job
18:08 – Reed talks about how his mindset changed as he was building his wealth by sharing some personal stories about challenges he faced with some of his first investments
20:13 – Joseph states that within this industry the challenges never go away and that every deal bring some new challenges
22:19 – Reed speaks about how he was needing real estate to be his day job whilst being able to use the skill set he had from studying engineering so he became a project manager and describes how it was the best decision he made for his career
26:51 – Joseph encourages anyone listening to this to take inventory of their skills and think about how they can use them to get into the real estate industry
27:45 – Joseph asks Reed if he has any stories he can share about experiences with other engineers that were passive investing with him
31:44 – Reed speaks about how the uncertainty of real estate can be hard for engineers to wrap their heads around or accept and take the leap of faith required for investing in real estate
34:49 – Reed mentions how the beauty of passive income is that you can do it alongside reliable investors who have experience
35:47 – Joseph asks Reed if he thinks he could’ve gone into real estate without his engineering degree
38:04 – Reed speaks about Australian culture and entrepreneurship in Australia vs. entrepreneurship in America
39:27 – Reed mentions how he used to have Australian investors but the majority of his investors now are American
40:31 – Reed explains why there is no multi-family housing in Australia
46:30 – Joseph and Reed playing a funny game where Reed tests Joseph’s knowledge of Australian slang
47:37 – Reed has a book called ‘Investing in the US; the ultimate guide to US real estate’
48:41 – Joseph speaks about when he lived in Australia



Welcome to the engineering passive income show, where engineers and other professionals come to learn how to generate passive income, grow their wealth and get their time back. Your host is Joseph Bramante, an accomplished civil engineer, oil and gas professional, multifamily investor, an industry speaker. Learn about investment alternatives, the same types of investments that he used to achieve Financial freedom himself broken down like only an engineer can. Now here’s your host, Joseph Bramante.

Joseph Bramante: Aright engineers. Welcome back to the show. Today’s guest is Reed Goossens, all the way from Brisbane, Australia. Brizzi, he originally moved here in 2012 here being New York city for work. Engineer by trade and then got into the real estate game started with small duplexes and he launched his own real estate investing firm, Wildhorn capital. He’s now a very successful multifamily, syndicator of very large multifamily investment deals. He’s got several, I think we’re at like over 150 million AUM and growing, but we’ll get into that. And also has a very successful podcast, which I encourage you to check out, call investing in the US if you haven’t heard of it, definitely go check it out. So Reed, welcome to the show.


Reed Goossens: Good day, mate. Thanks for having me on the show.


Joseph Bramante: Yeah, Man. It’s good to have you here.


Reed Goossens: It’s good to Be here.


Joseph Bramante: You know, we’re going to practice, do a session on Azzie slang and see how many Azzie words I remember.


Reed Goossens: Yeah, let’s do it at the end of the show. I bet you forget a lot.

Joseph Bramante: No, man. So I watched this thing on Facebook called Ozzy man reviews. I’m sure you are aware. So that’s how I stay fresh. Like my Aussie slang it’s by watching, it’s just a funny thing on Facebook, but that guy is hilarious. So anyway, so tell me about your story. Obviously, you’re from Brizzi and then you came here in 2012 if memory serves that’s around the time that JayZ song came out, you know, New York, I’m sure that had nothing to do with why you came here.


Reed Goossens: No, it didn’t. Actually rewind a few years earlier than that in 2009, so engineering background, I graduated the university of Queensland in 2007 with a Bachelor of Civil Engineering, majoring in structural engineering. And in 2008, I went straight to London to work on the 2012 Olympic games. Preparing all the infrastructure actually the Paddington station, if you remember Paddington bear I was doing the upgrades for the Paddington station because that was the first station, you know, tourists and athletes would see as they’re coming from Heathrow airport. And so that was a really incredible experience. But in 2009, I went to the south of France and was a deckhand on the super yachts for a year. If you ever seen the show below deck on Bravo, it was exactly the same thing as that. And in that time I fell in love with an American girl and in 2009, we met kept in contact. I actually crossed the Atlantic ocean on this super yacht to the Caribbean because it’s winter in Europe.


Joseph Bramante: You sailed across the ocean to be with her. Is that what you said?


Reed Goossens: No, no, let’s not get that far. It was more for the experience. But in 2009, like I finished, did a year on these boats, had a great time, but you know, wanted to go back and no offense use my brain. So I actually ended up backpacking through New York city and that’s when I fell in love with New York city for the first time. So I fell in love with this girl, fell in love with New York city, moved back to Australia in 2010 and was just pining to come back to the US. And, you know, two years later in 2012, I was able to make the jump back here and you know, and chase a girl and live as an expat in New York city.


Joseph Bramante: Wow. That’s, so we have a lot of similarities, you, and I, so both civil engineers. I also had an emphasis on structural. I never actually got to, sorry, I had two summers at WS Nelson in new Orleans where I did get to practice and use my trade as an intern. But then I went straight to work for Exxon after. So after that, I never actually did engineering work anymore. But I also worked as a deck hand, not as lavish, I didn’t work on these big mega yachts. I worked on a towboat going up and down to Mississippi river, like Tom Sawyer. So, but that’s how I paid for university. So we got some similarities there, so I know how to work the lines and all that and do all the knots and stuff. But that’s very cool. And so you, obviously, you fell in love with the American girls and you can stay the same for the Australian girls, If never been to Australia. It’s just something about the accents. And I imagine for you, it might be the same, you know, for you, we’ve got an accent.


Reed Goossens: That’s exactly right.


Joseph Bramante: Look at these weird American accents, that’s so hot, you know, or whatever, you know, I think it is. Very cool. So a little bit jealous, cause you actually got to design and build something in New York, which is man that’s incredible. And you were actually just before the show, you were showing me a photo, that’s a photo of it right there behind you, right?


Reed Goossens: In the background. Yeah. Yeah. But I know this show’s all for engineers and sort of the premise that I get asked a lot on these shows is, you know, why’d you get involved and in around that story of that moving back to Australia in 2010, I got a civil engineering job again for a mining company in Brisbane in south end, I think you might even know where south end is. Cause I know he spent a bit of time in Brissy, and I was sitting in a cubicle and I was like, I’ve just spent two years abroad, you know, gallivanting around the south of France, met this incredible girl in the states. And I was like, I feel like a small cog in a big machine. I was in a cubicle. I was probably what? 24, 25. And I just had, I knew I had more to give and I didn’t know what that give was. I just knew that I’d been, I wanted someone to pay me to live my life to go traveling and go surfing and you know, chase girls around the world. That’s essentially what it was. And then I stumbled upon the book, rich dad Poor dad. And that was the sort of the aha moment for me. That was really when the penny dropped and that whole working for someone else and feeling like that small cog in a big machine really started to hit home. And that book just you, it opened my eyes in terms of, okay, there’s a thing called being an entrepreneur, right. There’s a thing called investing and I’d started to turn some, you know, decent money being in the mines, you working for Exxon mobile, I’m sure you work, you were in remote areas of Papua New guinea, all that sort of stuff. Cause I know you are in my show explaining the story. But I’m sure a lot of your listeners resonate with the fact that you just feel you’re in front of a computer, you’re doing CAD, you’re doing these, you know, on these flights to the middle of bloody nowhere and you’re stuck there for a month. And it just, I was like, this can’t be what I’m doing for the next 40 years of my life. I need to take control, but I didn’t know what entrepreneurship was or is at the time. But I knew I had to get my money working for me. And so was really the start of it. And it was a combination of just being a little bit self-aware and thinking, well, hang on, I’m an engineer. Like, you know, I’m building stuff with land and real estate. Why don’t I start investing in real estate? And that was the start of the journey to learn about, okay, let’s start buying a house and flipping house and this was all in Australia by the way. So I was learning about real estate prior to moving to the us. But it was that start of that coming home from traveling, the stuck realization that I was sitting in a cubicle and that I wasn’t in control of my life and then reading rich dad poor dad, that was the sort of the belt, the fire in the belly to get started.


Joseph Bramante: So I actually never read rich dad poor dad until recently. I’ve been doing real estate for 10 years. Never read it until recently. And I just kind of jumped in, but I’ll tell you, if you haven’t read it, go read it. And you’ll be from that very first chapter when they say a house is a liability versus an asset, I think that’ll completely rock people’s minds and get them into really understanding what real estate and entrepreneurship’s about. But so me and you were actually in Australia, obviously you were in Australia your whole life, but I was in Australia the same time as you were in 2010. So I was there from, I lived in Brisbane from 10 until I, sorry, from nine until 10. And I remember real estate was really expensive there. I was like my, my big takeaway, I was like, holy cow, this stuff is expensive. I was living in a little tiny condo that I was renting a condo in this high rise and it was just, the prices were astronomical. And so did you start your real estate game in Australia or no?


Reed Goossens: No, I didn’t, but I did start the education journey. And for, you know, all these people listening about, you know, I’m an engineer and as you mentioned before, I’ve got a podcast as well. And I’ve lost count about how many engineers, former engineers now, real estate investors, because it’s all about breaking it apart and putting it back together. Like we’re all geared that way. Even today in my business, I look at another business and I’m like, I can take that apart and put it back together and maybe I should have a at it, but yeah, for me, in the beginning, it was like learning, like just trying to absorb as much information. And luckily in Brisbane at the Bronco leagues club was the only, at least the only meetup I could find. And it was a small meetup for real estate enthusiasts, you know, who want to get in the investing enthusiast that is not a brokerage or, you know, whatever. And I started attending those things and just starting learning about the different ways. Like I learned about lease options in Australia, which are now you can’t do anymore. Fixing and flipping, There was back in the day, which, you know, like you would involve in mining. There was a lot of these young kids, who’d go out to these mining towns and be buying, you know, really cheap houses. And then within like a year, they’d be worth a couple of million bucks because the boom of the mining. And I’m sure now looking back, they’re not worth as much because what we all know that the boom and bus towns, of secondary markets, including very similar to America here. So I didn’t actually learn, so I didn’t do anything in Australia, but I was ready to pull the trigger. And at that time I was ready to pull the trigger. I was, you know, self-educating for about a year, year, and a half. That’s when I was like, I’m going to move back. I’m going to move to New York city and I’m going to chase this girl. And so I spent some of my savings moving halfway across the world. And ultimately needed to get a job in the US. And I landed. I remember, like I had A4 piece of paper, which is a 11 by 17. And I had filled out the entire front and back with all the engineering firms in New York city. And I literally started door knocking. I went from door to door, do you have a job? Do you have a job? Do you have a job? Some security would be like, get the hell out. You know, I remember walking door, you know, the bigger firms and was just that I just needed the job to stay in the country because I needed the visa. And so I continued as much as a realization was I needed to get out of engineering, and I knew it wasn’t going to be for me. It was also a realization that it’s a skillset and I’ll get into another story in a minute that I could use as a steppingstone to get me to where I want be in my career as a real estate investor, as the founder of a company that invests in real estate. So for all those people listening out there, I, 100% believe engineering is a great degree to study because it’s a problem solving degree. Practicing it, not so much. So, you know, being, you know, determining how many bolts you need in a connection, I’m like, oh, I really don’t care. I wanted to know how much you’re going to rent the space.


Joseph Bramante: How long was it from, So you’ve made the realization, which is a very key point here that you’re not going to go a hundred percent passive investor, a hundred percent real estate overnight. This is a process. Especially when you’re an engineer, cause engineers typically make they’re on the higher end of the bracket on salary. To replace that it’s tough, you know, and from personal experience, when I owned my first apartment complex. I owned 50% of a 20 unit apartment complex. I still had to work on this, a fulltime job in sales to maintain my lifestyle. It took me a couple more properties before I was finally able to replace that income. But you’ve made this realization, you’re getting an engineering job at what point, So how much longer did you work in engineering and what was that life like for you? What were kind of hours were you spending, you know, 40 hour week job, plus you’re working on the side. What is that like?


Reed Goossens: So, hit New York city, literally within the first two weeks. And this is the benefits of the American culture. I was at my first reias event. People who don’t know what the rear is. It’s a real estate investment association. And honestly like, you know, Joseph, I was so blown away with the amount of information readily available to me, this tapestry of reias around the country that I could go to, that I could pay 20, 30 bucks at the door. There’s probably a REIA in Houston. There’s a REIA in Austin. There’s a rear in every single MSA. And I was surrounded by people who wanted to be real estate investors, again, coming from Brisbane, which had a very small meetup group to now being in New York city, the big apple with 200, 300 people filling rooms who wanted to learn about cash flow and, you know, tax benefits of real estate investing. I was just like, my jaw was on the ground. And for me, part of my superpower a little bit is realizing where I come from. I was like, wow, this is at my fingertips. Holy crap. Like, this is awesome. And I just started going to those events religiously, religiously. And I challenge everyone who’s listening to this, do exactly the same thing, going to those things religiously two to three a month, and just starting to absorb all the information, because that’s what I was doing in Australia. Just not on a grander scale. And I was going to do something in Australia cause I was absorbing, okay, Yeah, I can fix and flip. I can do this, Blah, blah. Yeah. And through that, I was able to realize two things. One how bloody cheap secondary tertiary markets are here in America compared to Australia. And two, I couldn’t get, no one would borrow to me. So I had to use the cash I had saved. It wasn’t a lot of money, but I bought my first property for $38,000. It was a tripex in Syracuse, New York. And then your question was how much time, between picking up and I’m jumping forward a little bit between picking up the book, rich dad poor dad and leaving my W2 job. Now, remember I had visa issues. So I had to keep, to stay in this country before I got married. It took me eight years, took me eight years to leave my full-time job. And I’m jumping ahead of the story here. But at that time I’d already owned four major, you know, apartment syndications as a lead syndicator.


Joseph Bramante: So absent of visa issue, What do you think it would’ve taken you?


Reed Goossens: I think it probably would’ve taken maybe a year quicker, maybe a year quicker, but in my mind it was like, it was like, I needed a bunch of money in my bank account to say, this can survive me for next two years. It wasn’t my, it wasn’t exactly, you know, dollar for dollar my income, but it was enough to say, you know, and I can tell you the number, it was $175,000. And I was like, that could last me for two years if I didn’t earn a dime doing anything else. I was good at penny pinching and it was just me and my girlfriend slash wife at the, yeah, this is in 2016, 17. So that was what I needed to get in terms of a quote unquote, nest egg, to feel comfortable to leave the day job. And that was really what it is. And obviously since then I’ve grown my wealth tremendously, but I’m trying to put numbers to it. So people who can listen to this show and again, I’m still living in Los Angeles and the story, you know, goes on from there. But coming back around to your original question was, yeah, landed in New York city started, you know, educating, doing the same thing I was doing in Australia, just learning, learning, and then within six months. And at that point I’d been self-educating for about two and a half years at that point. Cause remember, I read rich dad poor dad in 2010 and I had self-educated all the way through. And then I was like, I remember nose stuck in a book on the subway, analysis paralysis. And I’m like, I’m never going to get to deal number 10 without doing deal number one. And I was, you know, we get into this mindset of risk and fear, you know, being fearful and, oh God, what happens if this, this, and that. But for me, it was like, I’d already moved halfway across the world. That was the hardest thing, I already got a job. I just moved in with this new girlfriend, you know, didn’t even know this girl I’d done all the hard things, like buying a bloody property was probably the easy thing. So it was all just about the mindset, pushing those boundaries to say, I’m comfortable with the outcomes, even the worst outcomes. If I lose my job and I have to move back to Australia, well, that’s the worst thing that can happen to me, right? If I lose this deal, it’s my bloody money. And it’s $38,000. I’m, you know, not that you go into investing to lose money, but these are all the thing, the thoughts that go through your head to process the push you need to go and make that first take, do that first deal.


Joseph Bramante: So a couple of things there, just want to really hit on that. This is really about the journey, not the destination. So this is going to take, obviously, this was, you said you did an eight, you maybe could have done in seven or six. But tell me about how did your mindset change as you’re building that wealth, as you go into years, one, two, and three, you’re continuing to increase your net worth, your portfolio of real estate’s increasing. How does that affect your mindset while you’re at work? Are you more relaxed? Are you more, did you notice any changes?


Reed Goossens: I was so hungry. Cause once I started to see just a little bit, I remember that first property, it was making me about seven, 800 bucks a month, clear cash, right? It wasn’t nothing to poke a stick at, but it wasn’t going to, I needed probably a lot more of them to replace the income. But what it also did was show me, you know, the other side of real estate and being fresh face bushy eyed tailed Aussie, I had no idea what section eight housing was. I ended up having a drive by shooting at my property, you know, like it was, it wasn’t the, it wasn’t the clean start that we all dream of. And I could have stopped. I could have said, this is ridiculous. I can’t believe I’m just going to get rid of this $38,000 property and move on down the road. I remember the two tenants moved out and there was only one tenant and that tenant wasn’t, you know, wasn’t giving much cash, you know? So these are all the, I’m telling all these little stories to show that if, you don’t just smacking it out of the park the first deal, it was about getting to that first deal to get across line. But I proved to myself that I could do it. And that was the biggest thing. Hey, I can do this and now I can go and do a deal Number two, and I can do deal number three. And that slowly got me going into what I now, you know, have built today. There’s a few more stories along the way, because I finally got a mentor after all these years, and got into large multi-family, but it got me going and again, I had lending issues. I couldn’t be lent to because I had no credit score. I didn’t got no credit score. Didn’t even know what a credit score was when I first moved here. So yeah, the question was how did it make me feel, it made me feel hungry for more. Because I knew it was like, Hey, I can do this.


Joseph Bramante: So once you started getting that first little, that $700 check every then you’re like, wow, how can I grow this? So the first deal, right? So the challenges, every deal has its challenges. And on that first deal, the challenge is doing a deal. And I think you hit on that. And then the second deal, you no longer have the challenge of doing a deal, but you’ve probably had a new challenge. And so every deal is going to have some other challenge that you’re having to overcome. And so as you get into this industry, and at least this is what I’ve found, that the challenges never go away, every deal is some new challenge, but you know, I’m not deterred by those challenges anymore. I know that first deal for me and for you and a lot of people, it’s scary, right? Cause you go from reading all this stuff in books and theory and hypothesis and ideas to like, okay, it’s like concrete, you’re going to do it. It’s like flying by the instruments, you know, like you can’t see, you’ve never done it before. You’re just having to trust what’s in that book. And I feel like as engineers, we’re probably more inclined to do that, because we have four years in college doing just that we were reading all these formulas and theories and whatnot about gravity and everything. And we, you know, we do entire designs based on formulas that we’ve read in a book. And in a lot of ways, real estate investing is exactly the same. You’re doing a lot of calculations based on formulas that you’ve read in a book and you just, it just takes, you know, five years for it to really come to fruition, as far as the exit. I mean, you’ll see it more immediate as far as cash flow goes, but the real big money as you probably know when you do exit those deals. So tell me about your first apartment complex. And then if you could tell me about, so you’re a lead investor, sorry, an active sponsor, syndicator many, many terms for it. Tell me some stories about passive investors, particularly if you have any that are engineers with you, and if you can share any insights because not everybody is going to do what we do and everybody’s going to go out and is going to be the sponsor on a deal, cause that’s another level of real estate investing. This is, you know, we’re professionals at this, this is our livelihood. There’s a lot more people who will go out and just be passive investors. And so if you could share some stories from that viewpoint and what your experience has been, particularly around the engineering side.


Reed Goossens: Yeah. So for me it was and I love what you hit on about the challenges. You are completely correct, challenges even today I have challenges, but they’re just bigger. There’ve got to be a few extra zeros on them. But for me and the story, and I can only talk about stories and I remember making the transition to LA because my wife was from LA and 2014, I’m here. And I get to the point where I’ve just had enough of engineering. I can’t do engineering anymore. I was have to go back and study, I think it was CP Eng. And I remember studying for it and going, I’m going back and doing stuff that I did in year 10, year 12 calculus. And I was like, I’ve been out of university for, you know, four or five years at this point. So I was just like, I was like, screw this. And I actually and this goes back to my skill set. I used my engineering firm to, not this picture, but another deal, was building a multifamily deal down long beach. And I reached out to the developer on that deal and I said, Hey, are you looking for a project manager or owner’s rep, because I’m a structural engineer. I can be a project manager. I’m wanting to transition. And for me it was the, I needed to be surrounded by real estate, 24/7. I was doing real estate on the side, but I needed a day job to be real estate as well. And so I actually made the transition and the guy was like, yeah, I’d love to have you on board. You probably have a big skillset that I just don’t, We don’t have internally. And I didn’t do engineering for them. I just came in. But having that knowhow building and designing and construction really, really was valuable for them. And that, that was, looking back on it, That was probably the biggest, in hindsight to anyway, that was the biggest positive that I’ve ever taken, every step I’ve ever done in my real estate career was making that transition. Cause I needed that visa, but I looked at myself and said, what skillset do I have that I can go and apply in a field that I want to be in, I so desperately wanted to be in.

Joseph Bramante: That’s great. So at this point, you already know you want to go into real estate. You know, you’ve got this degree in civil engineering or structural engineering, and you’re trying to figure out how you can marry the two together. So you can force yourself into that industry and get some industry experience learning, you know, at least one side of the industry on the development side, while you continue to hone your skills with the intention of eventually kind of breaking off and being your own sponsor on your deals. That’s amazing.


Reed Goossens: And I say that because there’s probably some people who are listening to this show who want to be active or are getting, you know, tired of the engineering and then in this passive side as well. But was just a personal story because I just knew that I had, we are all standing on a mountain of value, right? Regardless if you’re an engineer or not. And it’s about looking at that value and seeing how that could be applied and this goes for any industry, if you want to get into fashion, if you want to get into art, if you want to get into jewelry design, I don’t know what, you know, you always have a skill set that you can be applicable that can help you bridge the gap and learn on the job. So that for me was really, and I was at with that company for four and a half years, I built over 350 luxury ground up apartments in long beach. And I got to a point where I was like, look guys, I’m out. And I went and started my company. So, and at that point back to the earlier story, I done four major syndications as a lead sponsor at that point over about four and a half years, between 2000.


Joseph Bramante: You were doing about one a year. That’s incredible.


Reed Goossens: Well, it became quicker towards to the end. Like the first couple of years was helped co-sponsoring and investing passively and, you know, just learning this syndication business. And then I started doing it myself.


Joseph Bramante: So that’s great. So you started off, you were investing passively into other syndicates deals co-sponsoring as well, and then graduated into now you are full-time, you’re syndicating your own deals with your own investors.


Reed Goossens: That’s correct. Yep.


Joseph Bramante: That’s great. So another comment I wanted to make was so all engineers, every engineer’s going to have a unique, they’re going to be in unique situations. And you can go different routes with it. So the route you chose was, I’m going to take my skill expertise, and I’m going to force myself into this industry with the skills in the real estate industry, another route. So the route that I took cause I was with oil and gas is I said, well, none of my oil and gas friends are, you know, I can’t learn real estate in the oil and gas industry, but I am surrounded by a bunch of other engineers who happen to be making a whole lot of money for expatting overseas. So I was able to leverage my capital resources at that end. And so I think any engineer listening to this, any professional, etc., needs to just take kind of an inventory of what they have available to them, whether it be, you know, skills, how they can get into the industry from that perspective, or maybe the capital and or maybe operations or property management side, there’s multiple ways to get into the industry. You’ve also went in via kind of into this syndication route as a passive, which is a very common way. And honestly, I went straight to syndication, cause I just didn’t know any better. I wish, you know, in hindsight 2020 that I would’ve gone in passively, cause I made a ton of mistakes on my first deal that I probably wouldn’t have made, If I would’ve done it through past investing, but that’s another story. So anyway, I had a follow up question for you was, so now you’re syndicating deals, you’ve got, you know, hundreds of investors, if not thousands on your deals, have you had any experiences with other engineers that are passively investing with you and any stories you can share about that?


Reed Goossens: Yeah. I have a handful of engineers. So with my own podcast, I’ve spoken to a lot of engineers who have transitioned into real estate full time. I’ve also, you know, the handful of engineers that having invested with me you know, just love their job. They love what they’re doing. They love going to work and problem solving and designing and seeing something come to fruition, you know, many years later. And that’s the same thing what I do. I just do it in real estate, right. I am just building our portfolio. And so, but they know the benefits of investing in real estate, but sometimes some engineers, like you mentioned earlier, and I was one of them analysis paralysis and they just don’t want to, they’re good engineers, but they don’t want to be business owners. So a lot of the engineers who invest passively with me are actually just exactly that they just don’t want to be business owners, but they know the power of investing in real estate. So thus they, you know, they find good sponsors like myself, like yourself, Joseph, and they invest with them, right. Because they trust them. And when the stories of like, I’ve been asked many hard questions, you know, about certain investments, but because I think like an engineer, I know kind of what the questions are going to be, right? Because we’ve like to go down that rabbit hole of like, well, if you’ve answered this, then that means that, so very pragmatic. And again, just really wanting to learn. And they’re very, very numbered. We’re all numbers orientated. But my specific passive investors who are engineers particularly those who are in the civil and software engineering space tend to really, really look more at the numbers, which I highly, you know, applaud they need to. Cause if they don’t understand it, they may not necessarily want to invest if they don’t understand. So just, it really comes down to conversations and making sure that you’re transparent. But knowing that on the other end, you have someone who’s extremely knowledgeable with numbers and can crunch them pretty quickly. So yeah, sort of vibe on that level.


Joseph Bramante: Yeah. You know, I’ve got a lot of engineers as well and particularly you know, a lot of Exxon engineers and they don’t cut me any slack when it comes to reporting and whatnot. Just because I am former Exxon, they feel that they’ve, it’s their obligation to really just give me a hard time sometimes. But you brought up a good point in that, you know, being a syndicator on a deal from the engineering perspective, definitely isn’t for everybody because I do think engineers might be more likely to get into that analysis paralysis because you’re having to make decisions with imperfect data. You don’t know a hundred percent what’s going to happen. It’s not like in class or when we’re designing something when the data is perfect, you know, the exact output. Here we’re making investments based on market data based on, I mean, there is some perfect data, but there’s also a lot of imperfect data that goes into it. And we do our best to put contingencies around those risk. But nonetheless, there is some risk and I remember every deal you do, you’re going to get those butterflies in your stomach. And there’s that you’re always like second guessing yourself. And like, I think of this, that I consider that. And that’s the challenge for a lot of people is being comfortable with knowing that they’re making this, you know, concrete, you know, this permanent investment based on this, you know, fluctuating, imperfect data and comfortable with the risk, both the upside and the downside. But fortunately for real estate though, downside has been very, very minimal over the last, you know, decade.


Reed Goossens: I love what you say though. Cause I remember when I like, my engineering brain is very black and white, right? There’s no gray and there’s no gray matter. And so I think a lot of engineers when they get involved with real estate, that uncertainty, that I don’t, how can you, can you guarantee me that’s going to be like this in five years’ time? No, we don’t have crystal ball. And that’s the leap of faith that investing is, investing in Anything. Whether it be real estate or stocks or in a business or in commodities, there is risk involved, yourself. There’s risk with all that sort of stuff. And it’s about those calculated risks. You’re never going to have the answers to all the questions, right? And it comes a point like I was on that train going, okay, I’ve got to that point. I’ve read enough. I’ve understood enough. I’ve calculated enough. I need to go out and now take action. And that’s the leap of faith we all have to take, when it comes to investing, but sometimes engineers and I’ll put my hand up and say, I am one of them, it took me two and a half years before I pulled the trigger. But that was just because I needed the two and a half years to learn and do the reps and shots on goal and just like practice, practice, practice before I felt confident in myself to go out and buy that first deal. And so some of your listeners here today will be also thinking the same thing they want to get involved. They’ve been looking at deals, they’ve been going to meetups, they’ve been doing stuff, but they just never take that. They’ve never pulled the trigger and that’s because you don’t, you are uncertain of the unknown and it’s been comfortable in the uncomfortable to take that leap of faith and push your boundaries and say, I’m going to make an investment in this particular deal.

Joseph Bramante: Yeah. And that’s why I think particularly for engineers, at least doing one deal as a passive, a small minor investment that you’re not going to of lose sleep over. I think a lot of deals will let you get in for a minimum of 25,000. And you put them with a truly, you know, a seasoned syndicator allows you to kind of at least get over that initial challenge of doing that first deal, because now you’ve done a deal, you’ve kind of, you’re going through the motions of a deal. And that way eventually, if you do decide to go out on your own, you won’t have as many, you know, concerns cause you’ll, you’ve been through it and you’ll be like, oh, well, you know, I did this deal and there were these unknowns and it’s normal to not know this and it’s normal to, you know, make these assumptions. And I think that’s also part of it is just the unknown unknowns of the industry. Cause you don’t know a lot of this stuff. And you almost have to, I mean, strongly recommend it. You just have to do one as a passive, just kind of going through the motions cause sure you can listen to these podcasts. You can read all the books you want, but until you’ve actually done one and gone, you know, full a circle and a deal, you really don’t know. Cause there’s a lot of stuff that happens. And you know this, at the closing table, etc., that there’s no book that can prepare you for what, some of the stuff that happens, you know, at, you know, at the 11th hour, when you’re coming to the table, you’re making split decisions that, you know, high stakes decisions sometimes on deals and it can, you know, it is just, it can really send you for a loop if you don’t know what you’re doing.


Reed Goossens: And that’s the beauty of passive investing, right? That you can invest alongside like people like yourself, Joseph who have had that experience, you’ve gone out and you know, bruised your knees a few times on the earlier deals. Now you’ve set up your systems and you’d understand the different markets where the growth patterns are, where rents are going because you have active deals in the market that you can pull for data and that data can help them make a better investment decision. So the risk for a passive investor, listening to this show, wanting to invest with you is minimize because you have the reps on the board, right? You’ve gone out and got that experience. You’ve gone out and got that track record. So that’s the benefit of it. You know, the benefit and passively investing. You don’t have to go and do all that hard work. You can still do your day job that you love and, you know, use some of your accumulated money to invest passively in a deal and let Joseph do the hard work.


Joseph Bramante: So it sounds like having that engine degree though definitely helped you a lot. Do you think you could have done it without the engineering degree? Do you think that if you were, so you were sailing gall sitting around the ocean on these yachts, if you would’ve stayed doing that. How do you think things would’ve turned out? If not for that girl in America?


Reed Goossens: I always knew and it’s funny you say that, even before picking up the book Rich dad poor dad, I knew I wanted to be my own boss at some point in my life. And on the boats, I left the boats because I just was a henchman. I was just, you know, scrubbing deck. And I knew I just, I had more to give and again, I hadn’t even read the book, rich dad poor dad at that stage, but I just knew there was something inside of me that I wanted to be my own boss at some stage to live life on my terms. And that’s my biggest why. And that’s why I got involved of in real estate and entrepreneurship, because I could be my own boss. And that’s what drove me. Some people love having a boss, I didn’t. I’m a bad employee. So, you know, that’s what I always was striving to and I’ll continue to strive for. I don’t pay myself a wage right now. I’m an entrepreneur, they’re lumpy and I’ll continue to be that for the next 40, 50, 60 years of my life. And that is in itself and probably back to the engineer mindset that I’m just very, as a human being, I can handle uncertainty. Some people can’t handle uncertainty and they need that constant paycheck. I was willing, I’m sure like yourself, like when you wean off that to become, I’m an entrepreneur, it’s scary. And it’s uncertain and goes back to the points of, we were talking earlier about when you’re analyzing a deal, there’s uncertainty in everything you do. For us as entrepreneurs, we just geared a little differently. Even if I had stayed on those boats, I always knew that I was going to go off and do something, whether it be in real estate or not, you know, I couldn’t tell you because I’m now down this path.


Joseph Bramante: That’s true. That’s true. So let’s change topics a little bit as we wrap the show up. So obviously [37:46 inaudible] from Australia. So how similar would you say your mindset is to those of other an Australians? So you think there a pretty strong entrepreneurial spirit in Australia or you’re an anomaly?


Reed Goossens: I will say out of my friends, I probably am a little bit more of anomaly. I will say the American culture as much as the Americans love to, we are America. You know, it also is very more sympathetic to entrepreneurs and there’s more people wanting support entrepreneurs. I don’t know if that’s just a population, but, you know, thing like coming to the New York city, going to that meet up event all those years ago, I was like, wow, there’s 300 people here that all want to be real estate investors. Like everyone gets it. In Australia it was like, what are you doing? It’s like, yes, I understand real Estate’s good, but you don’t need to quit your job, bro. Like just have one or two houses, just be fine. Like I was like, no, I need to be the full-time real estate investor. So it just maybe was not, it was about the people who surround yourself with. Now I’m sure if I go back, when I go back, cause I will eventually move back to Australia. I would’ve had the NBA here in America, right. Building an American business is sort of like a lot of Australians who have businesses aspire to crack the American market. And so cutting my teeth here, building a business over the last 10 years will only put me in better stead to go back and be a big fish in a smaller pond.


Joseph Bramante: I am Curious. Do you have investors or a portion of your investor comes from Australia?


Reed Goossens: Yeah. In the beginning, yes. When the Australian dollar was a lot stronger. Yes. But now most of my investors are Americans.


Joseph Bramante: What is the exchange rate now? I haven’t checked.


Reed Goossens: Look, off the top of my head. It’s typically run at about a dollar, 70 cents. So yeah, So one Australian dollar will buy you 70 cents American, historically it’s fluctuated between 70 to 80, 80, you know, 85 cents. It’s very similar to Canadian dollar probably Canadian, slightly stronger.


Joseph Bramante: Very cool. So where about in Australia you thinking about moving back to?


Reed Goossens: I’m 35. I’m sure I like to have some kids in the next couple of years, I don’t need to move back immediately, but probably the next 10 years, I’d like to have my children grow up in Australia at some point. So there’s real estate in Australia, I can replicate what I’m doing here. I will say that there’s no multifamily in Australia. I can’t go and buy 250 garden style units in Australia. And we, you know, I can get into that.


Joseph Bramante: Why is that?


Reed Goossens: It is purely because two things, right? Sorry, first thing’s population, Australia has 25 million people in the same land mass, exclude Alaska. The mainland Australia, mainland America is roughly the same size. Maybe mainland America is maybe 50% bigger. We have less than one 10th of your population. And the second thing is you can inhabit pretty much north to so east to west. We cannot inhabit the interior of Australia. It’s a desert. So it’s all around the borders. And really predominantly on the Eastern seaboard. So we don’t have, so with the lack of population drives, lack of secondary tertiary markets like you have your Kansas cities and the Denver’s and the Charlotte, North Carolinas and all that sort of stuff. Co coupled with that is because of our population, We don’t, and I don’t want to say, use the word unsophisticated, isn’t the right word, but it’s just, we only have a certain amount of lending capacity in Australia for our population. So there’s only really five major, big banks. We don’t have a Freddy or Fanny you know, government backed securities. We don’t have that. So the lending in Australia is different. The lending in Australia is all built for to sale. So when I have, if I wanted to build a hundred units and I had a piece of dirt, the banks wouldn’t be able to say, okay, your future NOY is going to be this. So I’m going to value it on that future NOY. And here’s the loan. They’re going to say, no, you need to pre-sell 30% of the units off the plan, before we are going to get involved. So it’s all condominium, it’s a condominium market and that, and the rent to value. So your rent versus how much you can get in a house or a condo like you experienced, you know, is extremely low. So you’re never cash flowing in Australia. It’s all negatively geared. So think of LA, San Francisco, New York, think of those markets in, around the entire country. There’s very little, if any, if any cash flow, it’s all negatively geared in the real estate market, in the resi real estate market. Now, if you get hotels and self-storage and other stuff, there are other things out there, but by and large, it stems from [42:43 inaudible].


Joseph Bramante: It’s all based on appreciation of the assets.


Reed Goossens: It’s all based on appreciation. And it’s all based on lending practices as well. Certain lending practices drive us down a path. So coming out of uni, most people in Australia wouldn’t buy a house. They’d buy that condo that you rented a two bedroom, two bath condo for $400,000, $500,000 in, you know, somewhere that’s probably five kilometers or five miles from downtown Brisbane. That’s it.


Joseph Bramante: That’s absolutely crazy.


Reed Goossens: And I’ll say Canada, Britain, Europe, America is the only country that has what it has. And it’s still to this day, I think in my opinion, my humble opinion when it comes to commercial real estate, the number one country for yielding commercial real estate, not just multi, but also other things because of its lending practices, because of its business friendly. So part of the reason we’re seeing a lot of compression in cap rates in the multifamily space is because of international dollars, flooding this market, knowing that it’s, you can get a decent yield. You go by an office tower in London, 1%, 2% cap rate. You could buy an office tower in downtown New York, probably for 3% or 4% cap rate. So there’s just a difference there of yield. And, you know, got people from Asia, from Hong Kong, who just, I couldn’t even imagine what crappy yields are getting over there. It just doesn’t exist. But we also seeing a trend of American real estate trend towards that of other Western countries where you have very low cap rates, because there’s a lot of liquidity in the market because people, real estate isn’t an alternative asset. It’s a major asset, a big funds and pension funds and retirement funds are all investing heavily in real estate today. But back in 2008, it was, you know, still considered an alternative asset.


Joseph Bramante: The market’s definitely matured, matured a bit over the last decade. That’s funny you say all that. I really hadn’t really considered it. I knew that we had a surge of international equity coming into the market international capital, but I thought it was just because we were so, such a great economy, which is true, but it’s also because their economy when it comes to commercial real estate is just not there.


Reed Goossens: It’s there, but it’s just not as yielding. And it’s the yield that everyone’s chasing, right?


Joseph Bramante: Yeah. Very fascinating. Yeah. Cause otherwise it would just be like, ah, you just rinse and repeat, just take, you know, the model here and you go and you replicate it there. And Australia on the surface, Australia seems very similar to the US.


Reed Goossens: It is, trust me, from culture and the way we live it is, but just from lending practices and the cost of construction and the cost of dirt means that you can only, it only pencils at a condo. It never pencils at a four rent market. And they’re trying to push that in Australia, but it just, if you can’t get your cost of construction down, it won’t pencil. It just doesn’t make any sense.


Joseph Bramante: Australians are too damn expensive.


Reed Goossens: You want to build a casino? Build a casino? That’s all, you know, it’s completely different of that stage.


Joseph Bramante: Well, let’s wrap up with some kind more funny stuff. Slang. So obviously just personal thing. I love the Ausie slang. I just say it’s cool. You know, Australia is its own language. I know we’re both talking English, but when I moved to Australia, I had to learn English again because it comes at you so fast and they’re using words you’ve never heard of in ways that you’ve never thought to use them. And you really just took a little, I acclimated, everybody does. But you definitely, when you’re immersed in that environment, I just remember, wow, this was, I was taking notes. Like what does that word mean? So let’s play a game. Why don’t you test my knowledge? You say a sentence. I will try to interpret what it is that you said. I know I’m putting you on the spot here. So if you need a minute to think.


Reed Goossens: I’ll give you some, lay ups early. So I’m going to head to the bottle low.


Joseph Bramante: So the bottle low would be the bar, right? Want to head to the bar?

Reed Goossens: Kind of, the bottle o is a liquor store. So you take it to go. You take it to go. I’ll give you another one. I’m going to hit the frog and toad.


Joseph Bramante: Oh man. I thought you said you were giving lay ups. Say it again.


Reed Goossens: I’m going to hit the frog and toad.


Joseph Bramante: I’m going to hit. I have no idea.


Reed Goossens: I’m going to hit the road.


Joseph Bramante: The frog and toad.


Reed Goossens: The frog and toad, sorry, toad, meaning I’m going to hit the road.


Joseph Bramante: I never heard that one before.


Reed Goossens: Yeah, there you go. There’s the first one.


Joseph Bramante: I lived there for a year, man.


Reed Goossens: Let’s think of another one and actually funny, The book that I wrote investing every chapter has some, I should probably I’ll open it up.


Joseph Bramante: Let’s do a plug for the book. So what is your book?


Reed Goossens: Investing in the US. The ultimate guide to US real estate and yeah, here we go. Aussiesms, okay. Got one here. I’m going to put my togs on.


Joseph Bramante: Okay. It’s not thongs, thongs are sandals. Is it crap, I don’t know.


Reed Goossens: Speedos.


Joseph Bramante: Speedos. I was thinking that, but anyway.


Reed Goossens: We’re going to meet up tomorrow avo?


Joseph Bramante: Yeah, tomorrow afternoon.


Reed Goossens: Tomorrow afternoon. So Arvo for everyone out there. Afternoon arvo. That’s probably, That’s too easy.


Joseph Bramante: I knew you’re giving me the hard ones. I feel like I knew more, a lot more Australian than this.


Reed Goossens: You’re a bloody bludger


Joseph Bramante: Bludger. No, I don’t know, Bludger.


Reed Goossens: Is like a lazy person. Oh, you’re a bludger, get off the couch you bludger.


Joseph Bramante: Well obviously need to go back to Australia. It’s been too long. It’s been 10 years. That was still one of the coolest experiences of my life though. Cause I lived in CBD in Aurora tower. If you know where that is. And I would go downstairs. I was on the 44th floor, which is the highest I’d ever lived in my life. 44 stories up. I would go downstairs, walk across the street, then go up this other building. I think it was like capital one tower or something. And that was my office. I didn’t have a car for a year. It was the first time I’d ever lived without a car, which as an American is a bit, as an American who’s had a car most of you know, until, since I was 16, you know, that was a weird thing to like, not have a car it’s kind of rite of passage and it’s just a different way of life. You’re getting groceries every day. Like you just, I had a tiny little apartment and I paid a whole lot of money for it and everything was, I remember everything was really expensive there. It was good.


Reed Goossens: Hopefully you got paid in like the equivalent of…


Joseph Bramante: Oh yeah, I got a cost of living adjustment from Exxon. It was great. So I was making good money there. I was spending all of it, but I was making it. But I remember the food was really good in particular, the stakes, you know, I live in Texas and we are known for steaks here. But I remember the quality of the meat in Australia was really top notch. Like almost like, like I don’t remember seeing like organic and not, like everything was basically organic. It was just like super healthy food. Maybe it’s just the area I was living in.


Reed Goossens: The average Australian steak will be probably if you go to like a Vons or, you know, what’s a HEB in Texas, your average steak won’t be as good as the average steak you get at like a Kohls or a [50:27 inaudible]. What I still really love today is Australian lamb. Lamb is, I’ve had Colorado lamb here and it’s just not as, it’s a little fatty. But yeah, if you can ever have New Zealand or Australian lamb. Oh, so good.


Joseph Bramante: And yes, unfortunately for those of you who may like kangaroos, yes, they do eat kangaroo there. And it is delicious and it’s not, you know, it just comes like a little medallions and a little package already marinated and you put it on the Barbie and it was good, but all right Reed, Hey man, Thanks for thanks for coming on this show.


Reed Goossens: My pleasure.


Joseph Bramante: It was great catching up with you and I see what you’re doing and you just keep kicking ass man. You’re doing a really good job up there. And if you ever come to Houston, man, Let me know. Love to go out and get a beer with you.


Reed Goossens: Let’s do it. If I ever start looking at deals down there, I remember one time I went down there, I got food poisoning and never went back.


Joseph Bramante: So sorry.


Reed Goossens: Thanks man for having me on the show. It’s been awesome.


Joseph Bramante: All right, see you Reed, take care.


This was another episode of Engineering Passive Income with Joseph Bramante, download resources and join our private investor group at Then be sure to leave us a review on apple podcast. Thank you for listening. And we’ll see you on the next episode.




Ep. 6 | Should I Partner or Do It Myself?

On this episode of the Engineering Passive Income Show, Joseph discusses whether you should invest solo or invest with a partner or as a team. Joseph talks through the pros and cons of both and provides some questions he recommends you ask your sponsor to ensure you make the best decisions. Don’t forget to subscribe and leave a five star review if you enjoyed this episode!



0:00 – Intro
0:36 – Joseph states that this episode will cover the topic of if you should invest solo or with a partner or a team
0:43 – Joseph mentions how he started investing solo
1:40 – Joseph speaks about how he was trying to manage from abroad and was failing but thought he was doing great
2:53 – Joseph explains some hurdles you may run into if you try to invest solo
5:31 – Joseph recaps on the three hurdles and states that if you answered no to any of them then you should consider investing with a partner
5:40 – Joseph shares some ways in which you can invest with a partner
7:12 – Joseph provides some questions you should ask your sponsor to help you with your decision making
7:51 – Joseph explains why you want your sponsor to have five years’ experience
8:51 – Joseph advises you to at least ask to view your sponsors projections from a prior deal they have done if they don’t have five years’ experience
9:31 – Joseph states that you want to ask what market your sponsors properties are located in
11:06 – Joseph talks about how you can learn so much just by being a passive investor and just by going through the motions with another syndicator throughout the process
11:19 – If you liked what you heard don’t forget to go ahead and subscribe and leave a five start review



Welcome to the engineering passive income show, where engineers and other professionals come to learn how to generate passive income, grow their wealth and get their time back. Your host is Joseph Bramante, an accomplished civil engineer, oil and gas professional, multifamily investor, an industry speaker. Learn about investment alternatives, the same types of investments that he used to achieve Financial freedom himself broken down like only an engineer can. Now here’s your host, Joseph Bramante.


Welcome back engineers. On this episode, we’re going to discuss whether you should invest on your own, or if you should invest with a partner or a team. I actually started my career in investing solo and intimately familiar with this topic.


As an engineer, we are naturally DIYers. We like to do things ourselves to learn something and then do it. We don’t need anybody’s help. And I took that same exact approach. When I started, I read, you know, half a dozen books or so multifamily. This was before podcasts and then jumped in and purchased my first property.


Now, let me tell you how that went. It started off great as things usually do. It takes a few months for problems to show themselves. Now, mind you, I was still working about 50 to 60 hours a week overseas and 13 hours ahead in Papa new Guinea.


So when I would wake up in the mornings, it was already 5:00 PM in Houston, and I didn’t get an update for what had transpired for that entire day and respond after hours. So I was, you know, they’re already gone for the day and I’m responding. I was trying to manage from afar and failing miserably. But I thought it was actually doing a pretty good job. And the reason I thought I was doing a pretty good job, was because I was so busy at my day job that I didn’t have time to notice the terrible mistakes I was making and all the issues I was having. Managing the property was an afterthought, because the amount of passive income I receive from it was so small compared to my W2 income that I failed to give it the attention it needed.


After six months, all my errors came ahead and that property was negative cashflow. On top of that, I got laid off from my job. So obviously this was the extreme worst case scenario. And more typically what I see in today’s market is that when an investor makes some mistakes like this, maybe they try to buy apartment complex by themselves, maybe 10 to 12 units or so. And you know, when things don’t go quite right, typically the deal is just don’t cash flow or they don’t pan out like they had hoped and they just end up exiting, making little to no money, rarely do people find themselves in that extreme scenario. But what can I say? I’m extravagant like that.


So, how do you decide if you should, you know, try to take on a deal by yourself or partner with the team? Well, the obvious first hurdle is capital. You need to have enough capital to take down the investment and the investment needs to be large enough to support professional third party management. This last part is something that I missed and many others miss on their first deals. They find the first deal they can afford regardless of how small it is and they go in and take it down.


Well, the problem with that is, below about 75 units Multi-Family is too small to afford professional third-party management and you ended up having to manage the deal yourself. Well guess what? Property management is a full-time job. So congratulations engineers, you just added another 10 hours a week to your work schedule. Plus you have to deal with residents and trust me, engineers are the last people you want dealing with residents. So that handles that first scenario.


The second hurdle is experience. Now, do you know how to handle the intricacies of the particular investments you’re considering making? For a multi-family, Do you know how to underwrite the deal and negotiate the purchase agreement contract and negotiate the loan terms, execute on a renovation, manage operations, maybe deal with emergencies, maybe a building burns down and then the exiting the deal as well. Would you know how to handle all that successfully?


A common mistake is to oversimplify the industry. Imagine if somebody decided to invest in building a road, because they spent their entire life driving on roads. On the surface, it might seem simple enough. You just clear the ground, pour some concrete, paint a few stripes, but in practice we all know it’s much more complicated than that. And while doing those steps may result in a road, it probably won’t be the one that lasts that long. Well, the same is true for investments.


And last, do you even have the time to actively manage a property? Like I mentioned the example about investing in the small property, the ones that are generally below 75 units, you’ll need to commit about 10 hours a week to managing those investments, depending on their size, complexity, and location. Larger investments are generally easier to manage than smaller ones. Stabilize investments don’t require as much sophistication as value add and local investments don’t require as much travel and meetings as non-local, but regardless, they’re all going to require some portion of your time to actively manage.


Now, just to recap on those three hurdles, capital experience and time, if you answered no to any of those, and you should strongly consider investing with a partner. There are two main ways to do this. One is through crowdfunding platforms like real crowd and crowd street, which market deals from a list of sponsors, who they have vetted extensively and put them up on their public websites. Essentially, these platforms are middlemen to the deal and exchange for their vetting of the sponsor. They charge a small fee either to the investor or to the sponsor, which if to the sponsor ultimately gets passed on to the investor. So really it’s paid for by the investor.


The other option is to invest in a syndication, which is a direct investment into the deal. It has the least amount of fees, but does require investors do their own vetting of the individual investment and more importantly, the sponsor, or shall I say equally as important, the sponsor. You can also join groups like the 506C group, which is a platform only for passive investors, where they provide reviews and referrals for syndicators that they’ve invested with themselves. When starting out it’s best to leverage referrals as much as possible to get started as fast as possible while educating yourself along the way.


Now, investing directly with the sponsor through syndication is like betting on the jockey versus the horse. If you focus on picking the best sponsors, you won’t need to worry so much about underwriting the deal, since the sponsor will have a track record of choosing good deals. And to help you in your decision-making, here’s some questions you probably should consider asking them.


So regarding experience, you should ask the sponsor or at least one to know, when did they buy their first apartment complex. You were looking to see that they have at least five years of experience, which starts from the day they close on that first deal. The reason it’s important you’ve got to ask when they buy that first deal is because, you know, some people will try to count the time leading up to that first acquisition and maybe use some other kind of funny math. So it’s important that you always ask, when did they bought it and you can do the math from there. And the reason for five years is threefold. You want five years’ experience because number one, it takes 10,000 hours to master anything, right? That’s been tried and true. It has been stated in numerous places, five years working full-time is roughly 10,000 hours.


You also want to see the returns for the deals they’ve sold. And a typical deal has a whole period of about five years. So coincidentally, if they’ve got five years’ experience, more than likely they’ve exited a deal. So you can see what the returns were like on that deal. And then the third reason is because 45% or close to 50% of businesses go under within the first five years. And so you want to know if that syndicator has been around for the last five years. So you know that they’re going to be around, at least for the next five years. You want to know they have some staying power.


Next, you want to see their track record. You want to see the returns for the deals they’ve exited and the projections versus actual for their recent acquisitions. So this is particularly true. Maybe if they don’t have the five years, because maybe you’re not listening to this advice. And you’re saying, you know what? He’s only got two years, but I’m going to roll the dice. In that scenario, at least look at their projections for a prior deal they’ve done. You want to see that that projection pretty closely, you know, within say 20% to 30% matches what the actuals are.


If they’re much more than that, then they’re really just guessing and they don’t really know. And this comparison just to build on that, you want it to be on a month, over month as compared to the Performa. You don’t want to look at year over year. You want to see month over month, how they’re doing.


Next, you want to ask what market their properties are located in. Some will have a concentration in certain markets while others may be spread out nationally. Those with the concentration will tend to be less risky simply because they’re investing in their own backyards and accumulating a portfolio in a single market would indicate that the market is rather stable. You know, to do that same thing, you know, in general, you’re not going to be able to do that in a market that’s not stable. So it speaks well for both of them and the market.


A national syndicator, someone who’s spread out nationally will tend to be a little bit more risky simply because they’re not investing in their backyards and tend to be chasing trends for hot cities. It is like buying stocks at the top of the market, you pay a premium on the way up in the hopes that it continues to climb, but could also get dinged pretty bad once the hype is over and if that market were to go back down.


These are the three main questions, experience, track record and market that you should be asking the sponsor. Now there are some deal vetting that you could choose to do, but if you get these first three right, the chances are, the deal is probably just fine. When you invest outside of these three, then you have to get more hands on with the underwriting to make sure that everything checks out.

So engineers, which are you? An active or a passive investor? Both are perfectly fine options so long as you know what you’re getting into. And you can certainly start off in one and transition into the other. Me personally, I wish I’d have started off as a passive and then transitioned into active after a few deals. You learn so much just by being a passive and simply going through the motions with another syndicator throughout the process.

Well, that’s it for this episode engineers, I hope you learned something. And if you liked what you heard, please go ahead, and hit that subscribe button and give it a five star review. See you on the next episode of engineering passive income. Bye for now.

This was another episode of Engineering Passive Income with Joseph Bramante, download resources and join our private investor group at Then be sure to leave us a review on apple podcast. Thank you for listening. And we’ll see you on the next episode.




Ep. 5 | Interview With Houston Tiger 21 Chair Steven Kaufman on Allocations

On this episode of The Engineering Passive Income Show, Joseph is joined by Dr. Steven Kaufman. Throughout this episode Joseph and Dr. Steven take us through Tiger 21, what it is, who it’s for and why you want to be a member of this group. Joseph and Dr. Steven also discuss investments and tax rumors as well as sharing some very intelligent and helpful advice.



0:00 – Intro
0:46 – Joseph gives us an insight into Dr. Steven’s background
2:09 – Joseph explains how he and Dr. Steven met through The Fanatical Change Foundation
3:45 – Joseph states that in 2015 Dr. Steven was the world record holder for power lifting and was a four time world champion power lifter
5:46 – Dr. Steven explains what Tiger 21 is and what it does
6:38 – Dr. Steven talks about why you would want to be involved in Tiger 21
7:05 – Dr. Steven  states that whether we recognize it or not, Men and Women end up synchronized with the people around us
7:58 – Dr. Steven shares a quote from Tony Robins, ‘the quality of your life is a direct reflection of the expectations of your peer group’
9:03 – Dr. Steven speaks about realizing he needed to update his peer group because he found himself as the smartest and richest person in the room when in reality you always want to be the dumbest and poorest person in the room as that it where the most value is created
11:03 – Dr. Steven speaks about the portfolio defense concept within Tiger 21
14:10 – Dr. Steven states that the PD is the biggest value offering that Tiger 21 offers as it is the most unique offering from Tiger 21
15:43 – Dr. Steven states that the average net worth for Tiger 21 members is $110m
18:20 – Dr. Steven talks about how the only thing that is allowed to be recorded in the meeting is the percentage of asset allocation
19:09 – Joseph shares information about Tiger 21’s 2020 asset allocation
19:45 – Dr. Steven explains what private equity investments are
21:42 – Dr. Steven speaks about when he bought his first rental property and how long he has been investing in real estate for
22:32 – Dr. Steven talks about what he is currently investing in and mentions how he is not an asset class investor he is a deal/opportunity investor
24:50 – Dr. Steven explains why he was and is investing in boutique offices right now
29:26 – Dr. Steven speaks about how investing real estate early on in his career has helped him to get out of that W2 mentality
31:50 – Dr. Steven shares a personal story about someone he worked with who was able to make amazing life changes and retire early from working together on investments
38:03 – Dr. Steven talks about tax rumors about 1031’s and passive losses and also talks about tax strategy and savings
44:09 – Joseph encourages you to reach out to the sponsors if you’re an investor on a deal because it’s a personal business
44:59 – Dr. Steven states that the cash allocation on Tiger 21 is really interesting as it fluctuates and shares some more information about this with us
46:57 – Dr. Steven states that Sam Zell is worth $5B and keeps $3B in cash
50:32 – Dr. Steven talks about how it’s very difficult to lose money in real estate and that is why there are so many wealthy people in real estate
52:06 – Dr. Steven mentions how Tiger 21 say that you make your money through concentration and you keep your money through diversification



Welcome to the engineering passive income show, where engineers and other professionals come to learn how to generate passive income, grow their wealth and get their time back. Your host is Joseph Bramante, an accomplished civil engineer, oil and gas professional, multifamily investor, an industry speaker. Learn about investment alternatives, the same types of investments that he used to achieve Financial freedom himself broken down like only an engineer can. Now here’s your host, Joseph Bramante.


Joseph Bramante: On the show today Episode number five, we have Steven Kaufman , and Dr. Steven Kaufman sorry about that. And Steven, well, you’ve been in the industry, geez, for the last 20 years. So some claims to fame about Steven. He was ranked according to ink magazine, Zeus his company, one of the 37 fastest growing private financial service firms in the United States. Zeus as a hard money lending company does many other things as well. But there, I mean, if you’re in Houston, you know about Zeus, I see their sign every day on I10 for they’ve adopted one of the roads. So you can’t miss it. You’ve been on international and local news Fox, ABC, CBS, CNN, Bloomberg, I mean just, and also contributing author to You are listed by the national mortgage professional magazine as one of the top 40 most influential mortgage professionals in the United States. Man, That is really cool. And also in Houston by Houston business [01:35 inaudible] top CEOs in Houston, you’re from Brooklyn, New York. I didn’t know that about you. I didn’t realize you’re from New York. I did know you grew up in Baytown, and you have a really great story of a real kind of a rags to riches story that is really inspiring. Went to Houston, got your BS in accounting, CPA. And then from there, I mean, you are just, obviously you love to learn, right? You got master’s degree in economic development. You went to Harvard for strategic marketing program. You got a PhD in psychology with the focus on performance psychology and group leadership and organizational leadership and group trust. And then from the philanthropic side, I mean, and this is how we met right? Back in fanatical change. So fanatical change was a foundation that you and some others launched that was based in Houston. And it was a really novel concept where based to have a giant party every year and correct, if I’m wrong here, you have a giant party every year. And then all the proceeds from that party, which in the party was, these were some of the best parties I’ve ever been to. All the proceeds from those parties would go to select individuals like people, like during the party you had interviews, you had scripts of people that were in a hardship situation that were in, I’m not sure if it was voted on or at least you got to see where your dollars are going. It was like, so, and so…


Dr. Steven Kaufman: The Families in the news, the week of the event. So if you were a family that suffered a life altering tragedy, the week of our event, we hosted the party in your honor. So those writeups that you were seeing, summaries of families that were in the news that week. That’s how we selected them. We used the local news stations.


Joseph Bramante:  It was a very intimate form of Philanthropy. And it was incredible. And I really enjoyed also seeing the record afterwards. Cause that was, you know, a lot of times you do, you donate, you get to charities, whatever. And that’s where it ends. You write the check, you have no idea what happens to it. But with this afterwards, you actually got to see like a video of, so and so receiving that check and all the emotions and expressions, and it was, it really made you want to continue doing it. And then just obviously if that wasn’t enough, right? I mean, in 2015, you were the world record holder for power lifting. You were a four time world champion power lifter, you’ve summited, Mount Kilimanjaro, Mount Fuji, you’ve tracked Everest base camp, done Houston to marathons. You’ve done running with the bulls, which I’m personally jealous of. And you’ve also, you are a, you finish second in the Southwest regional amateur arm wrestling championship. You’re just like an all-around cool dude. You’ve got like, just like the Mr. Cool PhD. I mean, wow! You’re like the most interesting dude of Houston.

Dr. Steven Kaufman: Joseph, no one’s ever refer to me as the coolest dude. So that’s definitely a compliment. So thank you. I don’t know if it’s a cool, it’s about coolness as much it’s about trying to prove something about self-worth or self-esteem or something like that Obviously, a guy who’s checking off that many boxes is trying to prove something.


Joseph Bramante: True. But what I notice about it is all those boxes are in such like complete opposite spectrums, arm wrestling, power lifting, PhDs. I mean, usually those don’t, but I was a little bit similar, right. I mean, in high school, I was the football jock and the chess champion. So like I had those opposite ends. I would stand, I’d be in the chess tournaments with my Letterman jacket on. Really, I was trying to intimidate the guys, but you know, that’s another story. So I get that, but it was, you know, it’s a very well rounded, you know, a lot of times you see people that are pretty narrow and I just, you’re all over the place doing everything and doing everything extremely well. Which is very unusual. And I mean, just amazing for you, but so today, what we’re here to talk about though, is tiger 21. So you are one of the Houston chairs for tiger 21. Think you became a chair, What last year?


Dr. Steven Kaufman: About a year and a half ago, about 6 months before COVID give or take.


Joseph Bramante: So for those who don’t know what tiger 21 is, what is it?


Dr. Steven Kaufman: It’s a high net worth peer group. So similar to other networking and peer groups like Vistage, YPO, EO, tech, all those similar type groups where you get together on a regular cadence or regular basis with other similar like-minded people tiger 21’s a little bit different because it’s a much smaller group, much more higher hurdle to become a member, much more expensive. And so the membership will just call it more exclusive because the net worth requirement and this sophistication of the people in the room is a lot higher. It is high net worth peer groups is a summary of what it is.


Joseph Bramante: And so why is it important, I guess, for the everyday investor who doesn’t qualify, Like, why should me, for example, like, I don’t quite qualify to be in tiger 21. One day I hope to be there, but why should I care about what you guys are doing up in tiger 21?


Dr. Steven Kaufman: Well, one reason is, and probably the reason why I mean I joined is because over time you realize that the most influential aspect of your success is what I call the power of the peer group or the law of synergy, or synchronicity. Sometimes I call it that you end up this, I didn’t know you were going to go on this direction of the conversation, but this is one of my most fun things to talk about that whether we recognize it or not as men and women, we end up in synchronicity or synchronize with the people around us. So you mentioned football earlier, you know, when you’re playing football, you play with players that are really, you get better. If you play with players who are really bad, you actually play down to their level, you may be a little bit better than them, but you’ll play down. Or in chess, you’ll play up to a master and you’ll play down to an eight year old who may not be a master. And so we’re always in sync with people and there’s a lot of, of this in life where, you know, kids join gangs to become in sync with their, not just because they want the love and affection of maybe the group, but human beings will change their behavior to earn the love and respect of their friends. And a very, a great quote that I love by Tony Robbins’s the quality of your life is a direct reflection of the expectations of your peer group. So I’ll say that one more time, the quality of your life is a direct reflection of the expectations of your peer group. If your peer group expects this, you’ll deliver this. If they expect this, you’ll deliver this. And we notice in young children who they, if you’re a parent, I’m a parent. If you send your kids for a play date with another parent, you realize when your kids come back, their behavior changed, why? Because they want to earn the love and respect of their friends, So they change their behavior to mirror their friends as much as possible, or vice versa. So in business, this happens the same way. If you’re around people doing much larger transactions all the time, or thinking big picture business wise, you end up thinking big picture business wise. If you’re around people who, you know, I grew up really poor in a trailer park. If you’re around those people, they’re always down talking, getting out of the trailer park. It’s like being in the hood or the ghetto. People very rarely leave that environment. And a big part of it is because of the way that they speak about being there. So, for me, I recognized several years ago, not a long time ago, but several years ago that I needed to upgrade my peer group and drastically to make sure that the level of success I was having was in the direction that I wanted to go. Because I ended up finding myself as the smartest, richest person in the room. And the truth is as we both know, you want to be the poorest dumbest person in the room, because that’s where the most values created. And joining an organization like tiger 21 enabled me to do that. In fact, they made me the dumbest poorest person in the room right away. And I’ve remained there ever since six years later.


Joseph Bramante: Absolutely. And you’re spot on, you know, I’ve heard that before. I think many people have, if you’re the smartest person in the room, you’re in the wrong room and, you know, I’ve kind of adopted that same philosophy, you know, forming our company, Triarch. I’m the least experienced person at our company. Didn’t know anything. Everybody around me is, you know, I just surrounded myself with super smart people. And yeah, chess, spot on about that analogy as well. When we’re training, So a little bit about me, I was a state champion in chess, and we wouldn’t play anybody who was below our rating level. You get rated. So you know your number and you’re always trying to compete with other people. And if you’re playing with people below your level, you’re going to play to that level. You’re going to play to the level of the challenge. So well, great, man, that is spot on. And so I’m listening now. So now I know why, so we’ve talked about what tiger is and why obviously we need to be listening. So tiger 21, and so from what I know about it, and how many unique things about it is that unlike the other groups, you know, there’s a lot of business groups. One of the things they do that I always found interesting was this portfolio defense concept, you know, which is really like why don’t you talk a little about it? And my analogy of it is just like, it’s constantly keeping that knife sharp, you know, and just keeping you on your toes and making sure that you don’t kind of get complacent, I would say.


Dr. Steven Kaufman: Yeah. So it is the most unique thing, like you said. In fact, I’ve never heard of any other organization doing what tiger does and if they want to get away with it and when I say get away with it, it means make people comfortable with it. Including people like me, I find myself though, I’m all over social media, that’s all fake presentation stuff. It’s not my real life as you know, I mean, I talked about having children here, but rarely do I even talk about my children anywhere or my real life anywhere. And the wealthier you get, I have found that most people prefer, unless you’re in the business of marketing, like Grant Cardone or Tony Robbins, where you’re making your business, all social media, most wealthy people that I know and especially those in tiger, who are some of the wealthiest people in United States they want more privacy. And part of that is keeping financial privacy because you become more of a target in essence, the more you have. And so the bullseye becomes bigger, I should say. But tiger does this really unique thing called the PD or portfolio defense where once a month, one member, a typical group has 15 members. And once a month, one of those members is going to do a portfolio defense where they get an hour and a half dedicated to them where they’re spend 45 minutes doing a qualitative presentation, meaning presenting about their life, getting everyone to know them, pictures, story, background, and then 15 minutes of financial presentation, the quantitative piece. And this is unique because most people never do this in front of anyone other than a banker or their spouse. And I can tell you, there’s a lot of anxiety around it. However, once you do it, you realize how beneficial it is. And well, once people do it, they typically want to do it more frequently. Because like you said, you realize you’re all of the fears with you, No one really cares on the audience. It’s your life, not theirs. So all the other members do care about you, but they don’t care about your number or, you know whether you are the richest or poorest guy in the room. They don’t care about that. You care about that more than they do. What they’re interested in is what they can learn from you presenting. The irony is the person presenting the PD  has so much anxiety about their financial information. But the irony is everyone in the audience watching is trying to figure out what can I learn from him or her doing this presentation right now. And when I say financial presentation, it’s fairly detailed. It’s not an audit from the IRS and it’s not a colonoscopy type presentation, if you will. It’s a presentation. I didn’t know what you were going with that. So thanks for adding in the CPA. It’s basically, you’re providing a financial statement On screen to everyone to look at. And one of the main conversations is asset allocation, concentration of risk. And you disclose as much as you want, or not as much as you want, it’s up to you as little as you want, I should say. And you direct the question. So as a chair, I work with a member. I was a member for four years and became a chair, right? So I know from the member side, and I know from the chair side.  On the chair side, my members who are in my groups, I’m coaching them on how to get the most value out of the presentation. And the PD is the biggest value offering that tiger offers, cause it’s the most unique thing that it offers, other than being around high net worth individuals. The next best thing it offers is this ability to do a financial presentation and ask any question you want. And once you get over the fear of, oh, I’m going to show my financial information. Imagine if you just let go of the fear, I don’t have to worry about my financial information. And you can ask all of these people who are your peers, who have nothing to gain from their advice. They’re not a financial advisor. They’re not a lawyer selling the state planning. They’re not a CPA selling tax strategy. They’re just other high net worth people. You get to ask them for advice. And they know exactly where you’re coming from. That type of advice is priceless because they get to see where you’re at and where you want to go. And they tell you how to close the gap between those two things. So very, very, very, very valuable exercise. And then again, it’s why people typical actually do their first one and they realize it’s not a big deal. They want to do it more frequently. I did a, there was a PD this month, a guy’s done it 10 times since portfolio defense, 10 different times. I did mine as a member five times in four years. So once you do it, It’s a value add for you.


Joseph Bramante: And I just want to hit on something. So we’re saying high net worth, high net worth is a very loose word in our industry. And just to give some context, we’re saying high net worth here, we’re talking, I think just to be a member, the minimum threshold is a 10 or 20 million net worth. But in practice, I mean, you got guys in there at the hundreds of millions of net worth if not billions, I mean, these are some really big fish in that room.


Dr. Steven Kaufman: The average net worth for a tiger out of 900 members is about 110 million. That’s the average. It’s not the mean, but it’s the average. The minimum, like you said, is 10 million. But every time you’re in a meeting, they break down other than Manhattan and LA. So Manhattan and LA are the exclusions. But if you’re in a meeting, 40% of the people in the room have a net worth of 10 to 25 million, 25 to 75 million is the next 40%. And the following 20 percent’s made up of 75 million plus into the billions. And the founder of tiger is a billionaire. [16:16 inaudible]  you know, every week.  And he’s still a member participates as a member in the organization. And he’s a person who started the organization, at this point with 900 members is a pretty decent sized organization. The irony is, the entire budget’s not even a rounding error on his balance sheet, but he still participates because he sees the value in being totally transparent, even has a billionaire. So you have a billionaires showing their net worth and the breakdown.


Joseph Bramante: Imagine that, imagine doing a PD and you’re the richest guy in the room you’re getting critiqued by, I mean, that must be one, that’s very humbling, right? He’s got a, it speaks very well for the character of the group and whatnot. But I was just, man, it shows you that the level of respect that everybody has within that group for each other, regardless, as you said in the beginning, it’s not a number thing. Nobody really cares what your number is. Everybody’s equals in that room, you know, as far what you’ve told me and it’s yeah and if you’re telling me that the top guy in room is still continue to do it every year, cause he’s getting so much value for it, man, I don’t know. I’m kind of speechless cause now I’m like, I’m just seeing myself like man, how close am I becoming a member? Like what do I got to do to get into membership.


Dr. Steven Kaufman: It’s expert advice from practitioners, not theorist, no one in the room is theorizing. They’re there. They’ve done it themselves. So their advice is very…


Joseph Bramante: It’s experience based sharing versus what something you’ve learned in a book or whatever.

Dr. Steven Kaufman: Right, Exactly. Well, very well-articulated. You said it better than me.


Joseph Bramante: Alright. So the other thing in tiger is you guys have something called your allocations and this is a public document I was looking at last year’s. And so basically they come with these allocations and it shows like how, I believe it shows how all the members are investing. So because you’re doing all these PDs, right. Everybody knows where everybody’s money is. And so I guess, are they somehow figuring out that, okay, the average for the group is this percent.


Dr. Steven Kaufman: The only thing from a PD, I think I know where you were going, sorry to interrupt you, but this will frame your question probably. I don’t know exactly where you’re going, but this is important. The only part of the PD that’s allowed to be recorded in the meeting is the percentage of asset allocation. That’s it. And that’s an actually reported to corporate in Manhattan who then produces this chart that you’re referencing. So every month all these members are doing their PDs throughout the globe. And that information is conveyed, not the dollar amount, but the percentage of how people allocate their money. What do they invest in? That’s given a corporate and they maintain this by chart.


Joseph Bramante: Absolutely. So there’s a pie chart out there and you can Google it tiger 21 allocations. I’ve got the one from 2020 and basically gives you a percentage of how everybody’s money is allocated, which they’re getting from these people’s confidential PDs. So this is real live data here. And so it reads 27% real estate, 26% private equity, 22% public equity, 13% cash, 7% fixed income. 3% hedge funds, which I thought was interesting, right? Cause I’ve watched, you know, you see shows like billions and all this and you would think, oh, all these rich guys are all part of hedge funds. Like that’s how they make their money. Only 3% of these guys are putting their money in hedge funds. So that was some learning for me. And then the rest is commodities. Like 1% commodity, 1% miscellaneous. So I think we all know what real estate is generally, but what is like the difference between like a real estate and private equity? What would be private equity?


Dr. Steven Kaufman: Okay. Private equity would be investments in, it could be oil and gas. It can be some operating companies if you’re investing in a chain of restaurants, if you’re investing in medical, anything that is not real estate or not public is the easiest way to understand it. So if I’m not investing in real estate and I’m not investing in public stocks like public equities, then the remaining category by default, pretty much, if you think of anywhere, you could put your money, it’s going to be in private equity where you’re investing in something that’s not publicly traded, but it’s not real estate. So typically it’s going to be a, it doesn’t have to be a startup, but it could be a startup company, but it could be an existing company raising more capital or anything of a sort, everything in between there. Everything from whoop, if you sing the whoop bracelet to that biohacking bracelet, it’s kind of like the aura ring that tells people about their sleeping habits. Both of those were funded seed a capital in tiger 21. So it could be something like that or it could be, some investors will even classify a hotel chain investment as private equity because they’re not valuing that investment from the real estate perspective. They’re valuing it from the operations perspective. So even some investors will say that’s for me, that’s private equity. I don’t consider that real estate. I only consider real estate where it’s the hard asset and I’m valuing the asset, not the operator. So that’s the difference between the two.


Joseph Bramante: Gotcha. So my big takeaway or one of the other big takeaways is real estate is the largest percentage. I mean, 27% private equities are 26, not much larger, but still compared to the whole pie, It’s a substantial piece. So we both have backgrounds in real estate. I’m on the multifamily side, you’re also a multifamily, but you’re doing all kinds of stuff, right. You’ve been in real estate for like how long?


Dr. Steven Kaufman: 25 years now actually, sorry, I’m 44. So, I bought my first rental property when I was 20 years old. So 24 years, I bought my first rental apartment when I was 20, I own three single family homes before I was 21 years old. That was a goal. And so I’m 44. Sorry, It keeps moving up every year.


Joseph Bramante: So you’ve been through like two or three cycles now, and which is, I mean, first of all, it’s, you know, to survive a cycle. I mean, those are cleansing effects of the economy. And so to get through that really speaks well for you. But so you’ve been in real estate for the last 20, 24 years. And it’s been, you know, you got an entire company around it, right? You’re on the lending side for real estate, but also your own private investments. What are you investing in as an investor?


Dr. Steven Kaufman: I referenced Sam Zell, who by the way I met through tiger 21. I’ve met him four different times. I’ve spent hours with him. I’ll reference the billionaire real estate investor, Sam Zell, and say this, I’m not an asset class investor, I’m a deal investor or an opportunity investor. Anything that I can invest in that I can wrap my mind around, I can cover the downside risk and I can partner with someone very, if I’m going to partner and if I’m not going to manage it myself, if I can partner with someone very credible, like you, you mentioned a multi-family, I mean you and I have done $50 million of multi-family and a big part of my ability to do that is because I really trust you and your ability. The stuff that we do in house and managing in house, it’s got to be simple enough that a simple guy like me from a trailer park in Baytown can understand the economics and can I cover my downside risk? My biggest, I’ll do any investment where I have collateral, so real estate, I have downside risk protection. So I can’t lose all my money. I will probably make money, even if I don’t make as much as I want. And based on what I know I’m probably going to make in the mid to upper teens, I don’t need to hit it out of the park on every transaction. I don’t want to do that. I don’t mind getting rich slowly. I want to be doing this for the next 40 years, not the next four. And as you know, if you lose money on a transaction, what it takes to make up for that transaction is significant time. So I’d rather make a little bit less, but know I’m going to make that or be in the ballpark of that, then, you know, try to hit it out of the park. I’d rather, again, I rather earn 8% IR with a pretty good assurance, I’m going to make it very high accuracy than 28% knowing that I couldn’t miss that target. So I’m looking for investments like that. And that’s for me, boutique office, multifamily with a proven operator like you, retail, and healthcare assets.


Joseph Bramante: So what is boutique office? Because obviously everybody’s heard the horror stories about office just getting absolutely destroyed last year. You’ve done well, not only well, but you’ve doubled down. You’ve been buying more office throughout this entire pandemic. And man, I was, you had me really scratching my head there this whole time and I’ve passed by your facilities and they look gorgeous.


Dr. Steven Kaufman: Thank you. Well, I mean, here’s the thing about office. You have to remember, it’s a Warren buffet quote. When people are, you know greedy be afraid. And when people are afraid be greedy, and if you want that type of asset, this is the time to buy it. Because like you said, everybody thinks because of COVID that people are staying home and that’s true. And there’s more sublease space available in Eastern Texas than there is actual office space available in Houston, Texas. And the absorption’s very slow. In fact, there’s negative absorption right now going on. But that’s the entire office market. But if you look at what we call infill locations, and I’m not sure everyone in your audience would know what that is, but in Houston, we’ll say inside the loop, we’re very close to the CBD or close to downtown quality locations, irreplaceable. What we call recession resistant if at best or at worse, but we maybe could even say recession proof locations. But we don’t say that. We’ll just say recession resistant locations. People want to in those areas want to work near where they live and they don’t want to go to a tower. And they don’t want to park in a parking garage three blocks away, and they don’t want to go through security that takes them 10 minutes just to get up to their floor. They want be at a park, get out of their car and get in their office and they want to be to control their own thermostat as you would know. They want to be able to control their own air condition and HVAC and their temperature in their office. These little things make a boutique office space really valuable because if you’re an architect, engineer, CPA, lawyer, housewife, who wants to go back into the market after your kids have left the nest, and you want to go back into the workforce and you want your own office space to be an away from the home now. All of those things make boutique office and to us boutique office is 50,000 square feet or less. We focus on about 30,000 square feet. That’s our sweet spot. And the last asset we bought was 28,000, so we’re shoot for that. And we’re about to build something ground up in Dallas. That will be about 25,000 square feet. So we’re shooting for office space in that size, because still there are lawyers, architects, CPAs, who want to work around where they live and they still want an office. They don’t want to office in their home. I don’t all about you, but I think you’re better at this than me for sure. And it could be generational. I don’t work well at home unless I absolutely have to. I mean, for this zoom or this podcast,  I left home to be on this specifically, cause I keep my home as like a sanctuary of no work, as much as possible. And I keep work where work is. So it may be generational. I can tell you, there’s a lot of misinformation going on about whether companies are going to ever have their people come back to work or not. You can see very traditional companies are saying, stay home indefinitely, but then you have other companies like Deloitte, who’s expanding their office space in Houston because they’re no longer going to cubes. They’re take all their cubicles. And so they’re going to private offices or much larger open space with partitions. They’re adding two full floors downtown right now because they can’t get everyone back to work in the space they have. They’re actually adding real estate. IBM adding real estate, Google of all companies said they want people back to work and they are adding office space, Amazon added office space. So it’s kind of weird. You don’t know which company’s doing what right now. And there’s definitely a decline in occupancy. No question overall. But again, if you look at the market overall, that can be dangerous, because on a micro level, I think boutique office still has a lot of upside potential. And it also has other uses. You can condo the office. It’s just like you can condo apartments if you’re in trouble, you can always convert it to condos and there’s always the land value. So the last part I would say is we’re trying to always buy assets that have very,  in essence, almost a covered land play long term, because we know the land value is very strong, very high.


Joseph Bramante: So you’re doing all this amazing stuff in real estate now. But as you mentioned earlier, maybe been doing this for a very long time. And so at some point though, and let’s go back to the beginning. So you start off, you were at W2 for somebody I imagine, right? You were working as an accountant and you had these three houses by the time you were 21, which was a goal of yours. And then, so how has real estate kind of early on in your career helped you and pivot to become this very successful investor and get out of that W2 mentality?


Dr. Steven Kaufman: Easy answer is long term time horizon. If the longer the runway, the more room you have for mistakes, by the way, well, you know, this better than me, the longer the runway, the more time you have for mistakes, that because they’re not mistakes, if I’m going, you know, 12 inches, if I get it wrong, it shows up. But if I’m going, you know, two miles, I have a long way to get there, to be on track. And I’ve made plenty of mistakes and I’ve learned from those, but I’ve always thought I’m going to be in this for the long haul. So everything I’m choosing, it needs to be for my reputation, the type of credit that I get, my banking relationships, my investor relationships, 94% of our investors who’ve ever invested with us, still invest with us. In 24 years, that’s probably my biggest compliment is that 94% of the people who have ever given me a dollar to invest with me beside me, even though I’m usually the largest investor, those people still want to partner with me, which is a really a major compliment. I know part, I know part of that is that I’m thinking very long term. I want to be doing this for a long time. And so early on, I thought I want to be doing this for a long time. I don’t want to just go in and buy a house and flip it and make, you know, which everyone starts with or has you know, you didn’t, you’re the only guy I know who started buying apartment complexes outside the country, or when you were outside of the country. You’re an anomaly for that. You’re a unicorn, but most people are going to start investing the single family homes, cause they’re comfortable with that. And they’re going to see there’s profit in flipping it. I thought there often holding it, let me hold it and see what happens. I think that was the difference.

Joseph Bramante: So you were on the appreciation side of real estate, not so much on the passive income side and we all know what happened to at least early on. We all know what happened to values over time, right? I mean, things have just gone crazy. And that’s one of the beauties about investing in real estate is that it blows [31:21 inaudible]. Like if it has great cash flow, that’s awesome. But it’s also going to appreciate, and you know, one might be an appreciating asset. One might be strictly a passive cashflow asset. From your 94% investors who’ve continued to reinvest with you, How have you seen their lives change just from doing these deals over this law long period of time with you? Has it allowed any of them to kind of make life changes that you’re aware of?


Dr. Steven Kaufman: Great question. I’ll talk about just one guy to start his name’s Mike and he’s been investing with us for a very long time. He’s retired and all of the transactions that we’ve done, they fund his retirement. He’s invested in our commercial assets, our equity, but also in our debt. And he makes, you know, his monthly distribution that he gets on our debt 8%. He lives off of that. And he let me know which I don’t want to get emotional about one time about six months, maybe a year ago, he called me just to let me know how important I was in his life, actually in the latter, you know, the final, he’s in the fourth quarter. And that’s what he says. He said I’m in the fourth quarter and how important my relationship. We met each other randomly and he just wanted me to know how important it’s been that he met me. And it was extremely touching because he’s retired, he retired earlier because of some of the deals we did early on together and his monthly cash flow comes from work that I do every day to help my investors and myself.


Joseph Bramante: So this was a guy who probably had no aspiration to do, like what we do, like as an active investor, go hunt, all that. And he say, you know what? I got this guy, Steven, he knows what he’s doing. And so like can you say like over what period of time has he been investing or when he make his first investment?


Dr. Steven Kaufman: About 12 years ago is when he started. And he started very small about probably 50 to a 100K, which was small for him and us. And you know, over time, you know, when you were making, in one of our deals where we accidentally made 41% IR over three years, that was an accident. We were not targeting that we were targeting about 17% on that transaction, but it did very well over three and a half years. He had a good amount of money in that asset. And it’s just, I won’t say every dollar he has is with us, I don’t know, but I know that significant portion of his net worth is with us, which also puts a lot of pressure on me to do a good job and to be responsible. And, you know, I care about that a lot. I care, I’ve always cared about my, I don’t care about my reputation in general. I can’t control that. What I can control is my character and how I deal with the people who are closest to me and I take it so serious. And it’s an honor, really. It’s truly an honor that he trusts me like that. And yeah, thanks for asking that question. I don’t get to reflect that very often.


Joseph Bramante: You know, I love that that timeline was kind of right in 12 years and I tell people all the time like, look, this is not a get rich quick kind of thing. Like this is like, Hey, you’re going to be putting in money to this, but this is a realistic opportunity for you to be done, you know, in 10 years, 10 to 15 years, if you’re doing this one deal a year as a passive investor onto these deals, and you don’t know, as you mentioned, you might put into a deal that’s supposed to be a 17% IRR and it becomes a 40, I mean, I’d say there’s probably a greater chance of that than there is of a deal investing that’s supposed to be a 17 and it becomes like a zero. Like, I think there’s a greater chance for the upside of these deals than there is for the downside. But absolutely I think when you’re investing for when you have a real estate expectation back to your example of, you know, 12 inches versus 12 miles, you have a realistic expectation of, okay, I’m going to be investing in real estate. I think the initial, what kind of turns people off maybe is in the beginning, you know, they had this really high W2 income and that first year of paths of income checks is very small, you know and they’re like, what the hell am I doing?


Dr. Steven Kaufman: They may not get a check for the first year or two as well.


Joseph Bramante: Yeah. They may not get anything and they’re, you know, so there’s this kind of mental resistance, if anything, because, you know, on paper that it’s going to pan out or supposed to, and you’ve seen the history of it, but in practice, you know, that experience investor mentality initially isn’t there. And so you just got to have that discipline to be like, no, I’m just going to keep investing. Because it does snowball very quickly. I’ve been doing this for 10 years and now our deals are starting to snowball as well. And it ramps up very, very quickly. And you end up with, you know, now you’re like hunting for deals, cause you’ll have a couple deals. You know, if you’re a passive investor and you’ve done a deal a year, there’s going to be a couple years towards a last half of that 10 where you got multiple exits at a time and you’ve 2X on returns or whatever. And now you’re like, crap, I put in a hundred now I’ve got 200 from this deal. And 200 from that deal. And now you’re putting in half million dollars or so into deals. And then it just really snowballs. And I think people, you know, kind what Warren buffet talks about with compound interest, but with real estate, it’s even greater cause you’ve got that, Not only that cash flow on the money, but just that appreciation that really takes it up. Now let’s kind of shift gears and talk about the tax side. Cause that’s another component that people, I mean they know a little bit of the tax, but there’s a distinction that I really want to hit on, which is passive income and passive losses. A lot of times I know when I started off, I was like, oh man, I’m going to write off all my income. I’m going to have these losses. And I didn’t know the difference between a passive income and active income. I just thought, oh, this depreciation applies to everything and it doesn’t. But it’s still you know, what I’ve been teaching people is that what it does do is that it basically ensures that the money you’re making is for the most part tax free. I mean, you make enough losses to wipe out those returns.


Dr. Steven Kaufman: Just for clarity, you mean like Phantom loss to like depreciation paper losses, right?


Joseph Bramante: Exactly. So Phantom losses like depreciation, which is the big one. And then on the exit, when you do have those big capital gains, we got luxuries like 1031 where we can just carry all those profits forward. And so you obviously had the expert here, talk more about that and get your thoughts on the tax side.


Dr. Steven Kaufman: Yeah, I’m not sure, I’m not an expert in this topic and I’m actually a little bit worried about 1031s with the current Biden tax strategy. There’s a lot of rumors that, that could go away. There’s even a rumor that the pass of loss could go away, that limit of 25,000 is actually on the people are predicting that will actually go away, that you will not be to take that against other losses or other gains, excuse me. So really crazy time. You know, I think depreciation’s a beautiful thing. I think if you’re investing in real estate and you’re making money and you’re able to write that off with Phantom losses through, and when I say Phantom, I just mean like depreciation. I don’t mean anything in the gray, I just mean through depreciation and amortization. So that you’re deducting something that didn’t cost you money just for anyone who’s listening, who thinks when I say Phantom, I mean truly made up. I’m not meaning that at all. I think that’s a beautiful aspect of real estate. I think tax savings and tax strategy is significant. I read, you know, depending on what your opinion is of Donald Trump, President Trump, I’m not talking politically, but I read one of his books early on how he talked about when I was in my early twenties about how you have to manage for taxes, because if you’re paying, you know, 30 to 40% of your income in taxes, you are only, you’re going to hope to make in the mid-teens on an investment. And to think that you’d be paying more of  than that percentage in tax access is absolutely asinine. And I remember that. And so I’ve always been thinking, and I’m not a CPA because of that. But as a CPA, I was always thinking, how do I mitigate taxes and things like cost irrigation studies and other tools and techniques that operators use to reduce taxes for investors, I think is super. And I think we should deploy as many of them as possible, as soon as possible. The problem with cost segment, as you know, is that if you wait to do it until you’re done, if you do it too early, you don’t get the benefit fully because you’re still doing renovations after. And if you wait till the end, people are, you know, in that three to four years until you actually do get it, or two to three years, when you actually do get it done, you’ve gone two to three years where they don’t get the benefit. So it’s a catch 22. I’m a fan of them and I love them. For the cost, It is so obvious that it should be done.


Joseph Bramante: So a cost seg for those who don’t know is basically where you got these companies, which is like a CPA, an engineering firm combined that will go in and you’ll have a breakdown of all of the different components of your building. And then they’ll determine, okay, well, these carpets, they depreciate at, I think, five or seven years, but these walls, they will depreciate at, you know, 27 and a half years. And so they’ll break down the building into all those different components, and understand that some components would depreciate faster than others and typically we’ll do this during a renovation because it’s a lot easier because we just spent a $1 million, $2 million renovating a property. We have a contract, we can tell you exactly what we spent and you know, what was done and makes it easier for those firms to go in there and say, okay, all these items are going to depreciate at, you know, five years. And the rest of this stuff will be 25. And so what happens is you just get a big chunk of depreciation right up front which is great for lot of investors.


Dr. Steven Kaufman: Yeah. Perfect. Absolutely perfect. I mean that offset and you get to write that off potentially if you have a tax strategy that allows you to being able to write that depreciation off is really a major advantage to you. It’s figuring out if you can write it off, it’s a challenge these days.


Joseph Bramante: Exactly. If you can write off and that’s other thing is, you know, and really this comes into play big for people who have multiple investments already. So say you’re invested in deal number 10, but you know, deals number one through nine, they don’t have any more depreciation. Maybe you’ve been holding them for a long time. So you’ve burned off, you know, now your passive income’s higher than that depreciation. So now you’re starting to pay tax on that passive income. But if you were to do deal number 10, for example, up, maybe just get a big windfall of depreciation that was cost seg upfront, accelerate upfront. You can only wipe out some of that, but then I believe it also carries forward. So whatever you don’t get to use in that year, it just rolls to next year.


Dr. Steven Kaufman: Yeah. It does. It rolls indefinitely, but again, the hope is you’re able to take the depreciation that you’re getting from one investment and write it off against other income elsewhere. And as of now that’s the case, but that could change.


Joseph Bramante: It could change, you know, I’m optimistic that it won’t, I think there’s too many people in politics who have real estate as, I mean, it’s used by so many, including tiger 21, and it would really be shooting yourself in the foot. And so I just don’t, you know, I don’t see it happening. I see a lot of roadblocks, but, you know, like I said, we’ll see. And just because it changes doesn’t mean it can’t get changed back in the future.


Dr. Steven Kaufman: Sounds good.


Joseph Bramante: Well, great, Steven. Well, Hey man, thanks for coming on. Thanks for kind of breaking down tiger 21, the allocations and what is tiger 21 and of why people should care. I mean, obviously I’ve learned so much just from our conversation today and, you know, I knew about the allocations, but I didn’t realize it stemmed from those portfolio defenses that are, I mean, so it really makes those allocations a lot more accurate.  And just kind of that background of, you know, the importance, which wasn’t really the intent. I’m really glad we went down that route of, you know, those PDs from not only the bottom guy or the smaller member, but the guys all at the top, they’re all getting value from it. And then we touched on that, the story, that very emotional story with your passive investor for the last 12 years, who’s been able to retire early because of the investments he’s made with you over the years over that 12 year period, and was so nice to reach out to you. And, you know, I’ve had investors reach out to me and if you’re an investor on a deal, please reach out to the sponsors. You know, [44:08 inaudible] it does mean a lot. You know, really estate is a very personal investment. That’s why I like it as well. Cause it is personal. It’s like a marriage, every deal you do, you’ve got your group of investors and it’s your job as the active to take care of them. And it’s, you know, it’s always nice. You don’t really expect anything, but when they do tell you, Hey, thanks for, you know, the great returns it’s you know, it does mean a lot. So I’m glad that, that’s probably just one of many stories you’ve got with people like Mike. But no, Steven, thank you for your time. I know you’re a super busy guy. Is there anything else you wanted to close out with?


Dr. Steven Kaufman: No. Think you’ve hit all the important topics. I think we didn’t talk about the cash allocation.

Joseph Bramante: Well we got time.


Dr. Steven Kaufman: I’ll tell you. It’s really interesting because it fluctuates. What’s interesting about that chart. If you have a minute, I’ll just tell you one cool thing about it.


Joseph Bramante: Plenty of time.


Dr. Steven Kaufman: Okay. One cool thing about it is that you read it off that, you know, you said about the hedge funds, only 3% are in hedge funds or have 3% of their allocation in hedge funds. That’s because people realize pretty quickly. In my opinion, that hedge funds are only good for one person and that’s the hedge fund manager. And the reason why  some of these go defunct or belly up or lose is because the person making a lot of the money and allocating [45:31 inaudible] the management team. That’s my opinion, from what I’ve heard, I could be wrong about that. I’m not an expert, but I think the kind of the curtain’s been pulled back, if you will, on hedge funds and that I won’t call it a gimmick because it wasn’t, a lot of people have made a lot of money, but definitely hedge fund  managers have really done well. And I think most people who are in the know pretty much, that’s not the way, but what you’ll find interesting is that cash and cash equivalents, meaning just cash money or something that’s liquid, it fluctuates. And so during 2020, you have to realize that it was during COVID, that chart came out and we haven’t seen the updated one for 2021 yet, but it will come out soon with just, you know, through the first quarter. And I can assure you that the cash number has gone down a little bit. And it’s a conversation that comes up very often, which is how much should you keep in cash? And you have people in the room, the problem with this chart is that you have people who are a billionaire, and then you have a person who is worth 10 million in the same room. And so does the person who’s worth 10 million keep, you know, one point, you know, you know, a million dollars in cash because that’d be 10%, and does the billionaire keep a hundred million dollars in cash? It’s a fascinating conversation. Actually it’s a little nerdy, I know.  It’s a little nerdy, but I’m fascinated by it. And I’m fascinated by the different opinions of what people say, but you’ll be surprised Sam Zell is worth $5 billion and keeps $3 billion in cash.  And so you’re thinking like, well, he wants to do deals. He’s a real estate guy and he’s like me or I’m like him, I should say respectfully to him. I’m not an asset class investor. I’m an opportunity investor. So I’ve got to be ready. I got to stay ready. And so he’s just looking for deals that fit his box, like a thesis like me. And so but with you, you need cash at some level. But you have guys like him who are, you know, worth billions who keep a very high percentage and then you have a guy worth $10 million as I joke who has to borrow money from you, walking out to pay the valet, you know? And so it’s like, which one do you, which one of these guys do or gals do you want to be? But it’s a really interesting conversation. The chart does show that it’s about 10% and it’s a little bit down in 2021, just so you know.


Joseph Bramante: Gotcha. So another thing on that topic though, is when you’re dealing with the amount of equity that they have the amount of cash. And so the advantage that the smaller investor has over the larger, the guy who has less cash, where the guys have more cash does, it’s hard to find deal. Sam Zell $5 billion, He couldn’t find a dealer to put $5 billion into [48:14 inaudible], like he’s going to be, you know, there’s a cap to in generally, if, you know, maybe, you know, you could pretty easily find deals for $10 to $20 million to put into, which is a lot, right. But for a guy who’s got 5 billion in cash, I mean, how many deals is these you want to put into? I mean, he’s got, he’s got to have a whole army of people to deploy all that money. And that becomes a challenge as you, I mean, you know, first world problems, right? As we get richer and richer, you’d be like, damn it, I’m too rich to find deals. I got all this cash standing by. But that is interesting. So your prediction is that it’s going to go down even more.


Dr. Steven Kaufman: I just surveyed my members last month and asked them, Now, this is a sample of 15 to 30, not 900 members throughout the group. But most people are trending the number down. I’m interested. I’m always fascinated. I’m the kind of person in which is thinking you should have a very strong nest egg if cash, a lot of members, a lot of investors. And I relate to this, but I just it’s troubles my mind. They will invest absolutely every dollar possibly to make a yield. And so it’s just really interesting. In our business we’re pretty lucky because like you and I have some, if a limited ever came to me and said, I need my money back. If I have the cash, I give it to them. In fact, Mike, that guy actually, I meant referenced about eight years ago. He wanted some money for some purchase [49:40 inaudible], I bought them out of the deal. But why [49:46 inaudible] buy him out? Cause I keep cash. He deployed all this cash and said, I don’t want any cash. I want it all working. So it was just interesting philosophies. I mean, it’s just, I’m fascinated by the people who can invest every dollar and not worry. And then there’s guys like Sam Zell who hoard it, are hoping for, to find an option, like you said, where could you invest? It’s one thing I learned about tiger about being around some of these guys who make their money in different ways. Cause It’s fascinating, a billionaire member in Houston tiger told me the problem with real estate, he said the benefit with real estate with what you do is that you have so much downside protection, that you’re probably the reason why there are so many wealthy people in real estate, because it’s very difficult to lose money. You would have to, someone have to commit fraud for you to lose money or you, you’re the operators. He said, you’re the sponsor. So you probably will never lose money. You’re going to make money for the rest of your life doing this. But the problem is, you’re limited as you keep making more and more money, you’re limited on what you said this earlier, I’m saying it a different way. He said you’re limited on what you can invest in because there are only so many deals that are going to keep meeting your standards. And so if you received a ton of money, how do you go? He said, if I wrote you a check for a hundred million dollars today, and [51:00 inaudible] I like you, I respect you, what would you go invest in? And I was honest, I said, I don’t have a way to deploy a hundred million dollars. He said, that’s the challenge with real estate.

Joseph Bramante: And you know, I want to point out something that if it’s not clear to people, so we’re talking about investing, you guys are investing it, they’re investing as passive investors in deals, and these are all passive investments are making. And so they’re not active investors. They’re not hunting the deal, whatever. The deal is being brought to them by somebody like you or me. And then there is investing passively alongside that. And that’s how they’re making their money. I mean, they’ve may have got other means to make these sums, large sums, but that’s how they’re continuing to maintain their wealth and grow their wealth with through in a secure manner. A relatively secure manner unless volatile manner is through real estate.


Dr. Steven Kaufman: Yeah, for sure. I mean, the phrase that is thrown out a lot for financial advisors, but also it’s almost cliche in tiger 21, which is you make your money through concentration and you keep your money through diversification. And part of that diversification strategy is working with other people to pass [52:11 inaudible] work with other people passively to help you maintain your wealth because you’re spreading out a little bit, either in different real estate transactions or even different operators. I mean, I invest with other investors. I invest with you and other operators because I can’t be in all places and I want to deploy the money and I want to cover my downside risk by diversifying. So fascinating conversation. I know it’s a little nerdy for people who are tuning in, but I really am fascinated by it.


Joseph Bramante: No, absolutely. And we can go on and on this and I appreciate that you [52:40 inaudible] cause that’s, you know, it’s one thing to have a passive investor invest with you because they don’t do this for a living, right. Maybe they’re an engineer somewhere and they are working and they don’t have the time or the means to go out and not only, you know, find the deal, but then maybe they don’t have the $20 million or $10 million that takes to take down that deal. But they also have an active investor come in and invest who now you could do this on your own. Like your specialty, you know, is in that office. You’re also doing some ER. I don’t even know what your specialty is, to be honest. Cause you’re doing so much. But it’s, you know, it’s an honor though, for me to have you investing in our deals. Cause it’s like, man, like this guy, actually you do own some multi-family out by yourself that you’re a sole, active on. And so it’s, you know, but it just kind of goes to show you that, you know, a deal is a deal. And even me, like if I see a great deal, I’m going to invest in it. And they were all, at the end of the day, we’re all investors. Some of us do this for a living, others, we have a living that allows us to invest. Yeah. Well I just thought of it on the fly now. I’ll coin that one. So Hey man, I really appreciate the conversation. It’s been amazing. I’d love to get you back on the show sometime in the future. We can continue this conversation later about some other topic maybe.

Cool, I am in, I loved it. Thank you.


Alright brother, well, Hey, it was great chatting with you. Take care. Have a good evening.

This was another episode of Engineering Passive Income with Joseph Bramante, download resources and join our private investor group at Then be sure to leave us a review on apple podcast. Thank you for listening. And we’ll see you on the next episode.