[00:00:00] Speaker A: You're listening to the Preferred Way, a retirement podcast brought to you by Preferred Trust Company, the preferred custodian for all alternative investments.
[00:00:09] Speaker B: Hi everyone and welcome to another edition of the Preferred Way. Today we are talking with Gannon Kaufman from Streamline Capital Group. And welcome. Gannon, we're so glad you're here today.
[00:00:21] Speaker C: Thank you, Chris. I appreciate your time and great to be here on National Donut Day.
[00:00:26] Speaker B: As you talking about offline here, I've got my shirt. We already gave out donuts this morning. We're good to go.
[00:00:33] Speaker C: Love it, love it. My kids will love it. We won't miss the opportunity to grab one, maybe even for lunch. So we'll see.
[00:00:40] Speaker B: Hey, you know, a donut, breakfast, lunch and dinner. That's my go to never a bad day for adults. All right, let's get started. Why don't you tell me first off, tell me the story behind Streamline Capital. Tell me a little bit about you guys.
[00:00:51] Speaker C: Thank you so much. Streamline Capital Group is a real estate investment and development company based in Mesa, Arizona. Our co founder and CEO David Rezak has been doing this for 29 years. We own assets in Chicago and in the Phoenix metro and we are focused on investing in value add, medical, office and healthcare assets. And David has been doing this for a long time. And for years and years he did these deals with friends and family, syndicated deals one by one, and eventually got to a point after a brief retirement period which was more like a year long sabbatical, he decided that he wanted to come back into the industry and make an impact. Not only financially motivated, but true impact investing. Making a positive impact in the communities in which we invest and helping people to become financially literate and helping high income earners preserve and grow their wealth. So we work a lot with professional athletes, retired athletes, high income earners, entrepreneurs, physicians, and through our fund reg D506C fund, we help people invest in tax advantaged real estate assets.
[00:02:07] Speaker B: That's awesome. So I know that you focus on medical and class B office suites. So tell us why, why that particular niche?
[00:02:15] Speaker C: Yeah, I appreciate it. Great question.
What we have found is that medical office real estate is different than a lot of the negative headlines that you see in the news about office vacancy in these big major metropolitan downtown areas that are suffering from 30% or 40% vacancy percentages.
That is not our product class. We are investing in the foundation of the communities in which we invest. These are recession resilient operators. These are businesses that do not get outsourced or they are AI resilient We, we believe in telehealth and all of the new technology that is coming to the industry. But it at the end of the day the majority of our tenants are anywhere from a thousand to five thousand square feet. They sign long term leases, they invest heavily in their own tenant improvements and this is recession resistant real estate that helps to just create the communities in the bedrock in, in which we live and work as a community.
[00:03:28] Speaker B: And with that, that kind of goes along with my next question. So Mesa, Arizona obviously being in that surrounding Phoenix area, tell us why that particular.
Why Phoenix?
[00:03:40] Speaker C: Yeah, absolutely. So obviously we live here, we're based here. We're very bullish on Arizona and Phoenix in general. David relocated from another state, I relocated from another state.
The business climate here is very favorable for real estate development, for business development, entrepreneurship, vc. In Mesa we have a huge tech corridor with Google, Amazon, all of the big semiconductor chip manufacturers that are coming into town like TSMC who's investing close to $100 billion I believe in their project.
Intel's investing another 20 billion in their campus here locally in Chandler, about 10 minutes away from where we live. And then aerospace in defense. There's about 1200 companies around the state focused in that arena. Healthcare is booming with all of the banner expansions. I mean I could go on and on but net migration into the state is very positive. Job growth is great. We've got a great school system here, public education and our universities policies are very developer friendly and we are excited about what's, what's here and what's coming. It's a lot of activity. New retail development, new single family homes which kind of leads the way in the real estate world as you probably know and appreciate. So we're very bullish on Mesa in the Phoenix metro in general.
[00:05:15] Speaker B: Yeah, it's awesome. Phoenix is the place to be and a lot of people are migrating there. We know that it's very similar to Vegas where we are.
So yeah, it's a great area. So how do you approach acquisitions and underwriting?
[00:05:32] Speaker C: Yeah, great question. So what we're looking for through our fund which is for accredited, accredited investors, we have a $50,000 minimum and when, when we're buying an asset we're looking at generally about a 60 month hold. Now if we can hit our return metrics before that, we can certainly cash out. And when we're looking at a capital event on the back end, we can either refinance out and bring our investors original basis back to them or at least a big percentage of that they will Remain in the deal infinitely and move on with us and continue to reap the rewards of that investment.
And we, we generally are underwriting where we can get an 8% preferred return on our investment to our investors that will accrue if it's not paid in year one, because we're working through a value add improvement strategy and then an overall 15% IRR. Some of the properties that we're looking at are on market, some are off market. We have one targeted property in mind as our first acquisition in the fund. And this is a very unique deal in the sense there is some distress on the part of the seller.
You know, if anybody's familiar with single family residential investing, the best deals are where there's distress. Nothing changes in the commercial real estate world. And this particular asset, the family, the kids who inherited the asset don't want to be landlords. So there's an opportunity for some seller financing which also sweetens the pot, as we like to say. But we're looking at a five year hold, an equity multiple of 1.8 to 1.9%. Meaning if you were to invest $100,000 with us in five years, you're going to be getting approximately $190,000 back.
[00:07:17] Speaker B: That's awesome. You know, it's interesting because you mentioned that 15%, the return on investment.
So you know, where are you going to get that today? Alternatives are really where it is because you don't see that in the stock market. You just don't.
And so that kind of brings me to my next question.
So those, you know, obviously cash investors, very common, but a lot of people don't know you can make these same investments through your retirement account. It has to be a self directed ira. So talk to us a little bit about that and how you, how you integrate self directed IRAs and how you allow them in your investment.
[00:07:54] Speaker C: Yeah, absolutely. Self directed IRAs are a huge investment vehicle for us. And we have investors that use them for all of the reasons that you know and love and appreciate them. A lot of people don't realize that if they have a 4,401K or an IRA that they can self direct those funds. Now more and more you'll see these larger institutions and custodians and there's a lot of, there's a lot of proposals going on in Washington right now about people being able to self direct into these alternative type assets. And I do agree that alternatives are the place to be. 15% IRR is significantly better than what is projected to be returned in the Stock market over the next four or five years, which I've heard is you know, maybe 4%.
Unless you're looking at some of these AI or tech companies or I know Circle just IPO'd and they're a big crypto and blockchain based company. But if you're just looking at typical the stock retirement funds, it's going to be lower than what we can do in real estate. And the magic sauce for us is really forced appreciation. If you're going to look at anything is like why, why commercial real estate? That is the magic sauce. We can buy an asset, we can improve it, we can increase rents, put in streamline property management and realize some efficiencies and economies of scale. So simultaneously we are increasing rents, we're decreasing our expenses, we're increasing our net operating income and we're forcing appreciation. And at that point you're getting cash flow, depreciation appreciation and tax advantages as they're applicable to you. Which, which can be very, very what's.
[00:09:42] Speaker B: Very attractive for a self directed ira, that's for sure.
[00:09:44] Speaker C: Yeah, exactly. And then through your self directed ira, as you know and appreciate, these grow tax tax free. Right, the tax advantaged investments. So making a net $90,000 over five years, that's straight to the bottom line.
[00:09:59] Speaker B: Absolutely. Yeah, it's fantastic. We don't, you know, obviously there's not a whole lot of education out there. I think now more and more today we hear about alternatives, we are talking about alternatives, but there's still a need for education out there about self directed IRAs and how you can, you know, make the, the choices of the investments you want to make for your retirement account. You don't have to stick with a financial advisor who's picking them for you and limiting you to what you can invest in.
So there is there, gosh, there is such a large amount of purchasing power out there still that's underutilized through self.
[00:10:35] Speaker C: Directed IR and trillions of dollars right now.
[00:10:38] Speaker B: Trillions of dollars. Yeah. If you're out there and you know, you keep, and this is what we see. We see people, they get their statement from their, you know, big box custodian and they don't even look at it anymore. They shove it in a drawer because they know, like to your point, 2, 3, 4%, I mean they're not doing very well and they don't want to think about it. They, you know, they shut the drawer and leave it alone. And really, gosh, you know, you have an opportunity to, to change your whole retirement trajectory if you just think a little bit outside the box.
[00:11:12] Speaker C: Yeah, absolutely. I mean, 100%. And maybe that would be a good dovetail into to you explaining to, you know, our listeners a little bit more about what exactly a self directed IRA is and how it differs from, you know, a traditional ira, a brokerage firm like Schwab or Fidelity.
[00:11:29] Speaker B: Yeah, a lot of times people think self directed ira. Oh, no, I don't want to, I don't want to get into that because it's a taxable event and I don't have to. No, no, no, no, no. The first thing that I think everybody needs, a self directed IRA is still a qualified retirement account.
The only difference between us and a big box, such as, let's say Edward Jones or Charles Schwab, is that we specialize in alternatives. So everything that is not publicly traded while they specialize in things, you know, stocks, bonds, mutual funds, we are regulated exactly the same way. We follow the same IRS rules and regulations. There is no taxable event to take your money from a Charles Schwab and put it over with a preferred trust.
You know, it's one qualified retirement account to another. You're just selecting different investments. And over here on the big box side, the, you know, the, the Schwabs of the world, they, they really don't get paid to give you investment of investment advice about alternatives because that's not what they specialize in, that's not what their suite of products is. And over here on our side, we're not licensed for the stock market. We are focused truly on those alternatives. You know, the real estate, the precious metals, digital currency, startup companies, all of that type of, of investment.
So those are the only differences on what you invest in. So if someone out there is thinking, oh, I don't want to do this, I don't want to make it a taxable, it's not going to be, it's not a taxable event. You can have these great investments and you can actually have both types of accounts. And we encourage people to diversify and to make sure that they don't put all of their eggs in one basket. So keeping some, some things in the stock market, that's great, but also give yourself the opportunity to test the waters with some alternatives and get, get a, have an opportunity to start raising that roi.
[00:13:25] Speaker C: And that's, that's really informative and great insight and maybe something that you could share for people listening. I know when I got started, what do the logistics look like as far as onboarding or know, as far as the process of transferring or rolling over retirement funds into a self directed ira.
[00:13:45] Speaker B: We try and make it as seamless as possible.
And so similar to when you started the process with your, your big box company, you know, you have to fill out an application. We've got to get certain information from you because, well, the IRS requires that of us.
But it's a couple pages. We make it very easy for you. We have it all online so it's very efficient. You can, you can go onto our website, you fill out the applic application, it gets sent to us and then we're contacting you within a couple hours of receiving your application. We're going to ask you, you know, where is your current retirement account? Do you have a 401k? What are, what are we working with? Just to figure out what our next step is. And then based on that, we'll initiate the transfer of funds from wherever you're currently holding your retirement account. We'll ask you to work with them to liquidate.
You know, and it can be just a portion. People always want to know, well, do I have to take the whole with me? No, you do not.
Yeah, you can take a portion of the account and then we just follow up with, with the other custodian for a timeline on the transfer of funds. And when they get to us, when the funds reach us, then we're ready to make the investment. So if they're working with a streamline and they're, you know, we're working with a company like you all, then we prepare the investment documents based on what your offering is and we send them out to them to approve everything.
And then once we get that back, we're sending the funds over streamlined to make the investment. And then why don't you tell us a little bit about too. Once the investment happens, how often are they receiving payments into the back into their retirement account?
[00:15:23] Speaker C: Yeah, great question. So we, we provide quarterly payments and distributions is what they're referred to. And if, if for example we acquire an asset and the, the strategy is to move it from a gross lease or modified lease structure to a triple net and we are re tenanting the building, making some improvements and going after pot different type of investment or leasing tenant. There may be some time where those distributions aren't paid initially but they will accrue but you'll be caught up to to speed at some point. But really these things start to hum at the end of year two, beginning of year three. And then we will continue to ride that improvement plan up until the point where we can either cash out and refinance or sell the property. And that's potentially market dependent. We like to hold on to them. We're buying hold investors. And one thing that streamline does that I'd like to highlight that not a lot of other syndications companies do is when we have a capital event and we refinance out and let's say you invested a hundred thousand dollars and we refinance and you get that hundred thousand dollars back, you will stay in the deal for the lifetime and at that point your returns can become infinite because you've already received your basis back. And so everything's just icing on the cake. Whereas a lot of times other syndication or investment companies will cash you out on that refi. They'll keep the asset, you'll be made whole the back, your projections will be hit. They won't have done anything wrong.
However, we really incentivize our investors to play the long game with us because why kill the golden goose? Otherwise you're just going to have to go find something else to roll into.
[00:17:12] Speaker B: Yeah, absolutely.
So I think, is there anything you want to talk about from a standpoint? What the investor should know once they have a self directed IRA and they're.
[00:17:23] Speaker C: Investing with you, I would say, you know, so there's hand holding obviously, because yeah, they're.
What I like to say is we just move at the speed of instruction. Right. If you're taking a road trip, you don't know exactly how to get all the way to where you're going. You drive to the end of the horizon and then you reevaluate. Right. So you guys are there, we are there. There's coaching and helping along the way. So they're not, you know, investors are not doing this alone.
But can you just speak maybe to some of the misconceptions that investors should be aware of, you know, before opening an IRA and. Yeah. And share it. Shed some light on that.
[00:17:59] Speaker B: Yeah, absolutely. I think one of the biggest things, like I mentioned before, is that this, this is, you know, going to be a taxable event for them. There's a lot of fear in that. And I think some of that too comes from, and I hate to say this, but it's kind of true. From their current financial advisors or the company that they're working with. You know, let's remember, nobody likes to lose business. Nobody likes to be sending money out of their, you know, out of their, their business. So I think one of the things that we're always trying to fight and one of the Things that we realize people don't completely understand.
Is that it? It is legal? Yeah. I've heard financial advisors tell, tell clients, no, you can't invest in real estate through your ira. That's not legal. Okay. They really should be more careful at those kind of things because it very much is legal. It very much is an IRS approved investment.
They're just not getting paid for it. So they, they don't want to talk about it. They, they want to keep your money right where it is. So I think that's a huge misconception.
So what people need to absolutely know is, yes, it's all approved by the irs.
Our licensing is through as a financial institution. We are regulated by the IRS just like they are.
So it absolutely is doable.
And then another one, I think is the, the misconception that I have to move all of my money over all at one time.
[00:19:22] Speaker C: Yeah, that's a big one. Yeah.
[00:19:24] Speaker B: Yeah, that's a big one. I think, you know, one of the things to really think about is what, what are you thinking about investing in? Do you have a specific company like Streamline in mind? And do they have a minimum investment amount? What is that? Minimum investment amount?
And so we encourage people, start, start with the minimum if you haven't done this before and then see how it goes. And then if you want to add more, we can always help you transfer additional funds over.
There's no limit to IRA to IRA transfers.
So get your feet wet in the alternative space and see how it's going. So I think that's another huge thing.
[00:20:01] Speaker C: Absolutely great recommendations.
[00:20:03] Speaker B: Yeah. And then I also think, you know, a lot of times they'll talk to us. We're very, very transparent about our fees and, and how much it costs to open a self directed ira. It's different than what you're seeing on the big box side. They get paid differently. They make their money different. But I think we hear a lot of times from clients, they'll say, oh, well, I have a free IRA at Schwab. I, I don't pay anything to have. Okay, well, nobody works for free, so. Right. But they make money off of the investments as you're earning. So are they.
And that's different. We don't, we don't take any money from your investment. Whatever you make, whatever your income generated from that investment is, that's yours to keep in your ira. We have fees for administering your IRA and keeping custody of your assets. So we, we do both have these structures, you know, and so I think sometimes people are miss they can't have that misconception that somehow what, what they're getting right now is absolutely, completely free.
[00:21:04] Speaker C: Gotcha, Gotcha. And so is there a minimum or a maximum on your side as far as how much somebody could potentially invest with streamline?
[00:21:13] Speaker B: No. So whatever, whatever they, whatever the investment sponsor is offering, whatever their minimum is, that's, you know, you just need a couple hundred dollars to open the account up and then, you know, you can, like I said, you can use however much you want or, you know, some investments have a lower barrier to entry.
It depends on the investment class. Right. Precious metals, for instance. I mean, you know, it depends on the precious metals, it depends on the quantity, it depends on how many, all these different things. Right. So it just depends on what you're looking to invest in.
And then you can, you can select the amount. Like I said, you always have that option to transfer additional over.
And the other good thing is too, you can pay the fees via a credit card or personal funds and leave all of the money intact in your IRA to actually invest and make the investment, investment. So.
[00:22:07] Speaker C: Love it. Love it.
[00:22:08] Speaker B: Yeah.
[00:22:09] Speaker C: So one thing I guess kind of in, in conclusion here as we're wrapping up, if, if there's anything that you'd like to touch on, I mean, obviously we know that's why we partnered with Preferred. But what makes Preferred Trust different from any other self directed IRA custodian in the industry? Anything that you'd like to touch on?
[00:22:26] Speaker B: Sure, I love that question.
Obviously we don't have a product to sell. We don't sell anything but our service. That's what we're here for.
And a lot of people for a long time, you know, just assumed, you know, it can be stressful. You know, we, we're the necessary evil for them to get from earning in their retirement account to getting to that investment. Right.
And so we try and make it as efficient and, and painless as we can for, for the client. One of the big things that makes us different is that the, the principals who started the company, their background is real estate and investing and, and every angle of real estate. And so they understood that time is money. And that's one of the things that we've kept with us throughout the years of our expansion is that we know people are, you know, if you cannot fund an investment quickly, those people are, are missing out on their opportunity to earn additional funds for their retirement. So that's a huge thing. So fast, efficient service where we are not as big as Charles Schwab. We don't ever want to be. We want to be able to provide that personalized service to our clients. We want our clients to know that when they need to talk to us and they call, we're going to pick up the phone. If they send us an email, you're going to get a response.
And I'm also a super big micromanager. So I make sure everything is taken care.
[00:23:54] Speaker C: Love it. Everyone needs a good micromanager on the team.
[00:23:57] Speaker B: Yes. So I make sure every call and every email is answered. I don't want anybody to ever get dropped or feel like, you know, we hear horror stories about that all the time from people that have said, I, you know, I sat on hold for an hour and nobody picked up the phone. Or, you know, I've left a voice message every day for the last five days and nobody ever called me back. You know, that's the last thing we want to do.
[00:24:19] Speaker C: You actually get to talk to a human.
[00:24:21] Speaker B: You do get to talk to a human. Yes, Yes, a hundred percent.
[00:24:25] Speaker C: Well, this is, this has been great. You know, I think this has been very informative in and very informational.
[00:24:34] Speaker B: Yeah, we appreciate you guys being on today.
I think it's important for everybody who's listening out there. You know, if you're, if you're interested in Streamline, if you're interested in, in getting started with a self directed ira, give us a call.
You can visit our website, we can link you with Gannon and his team over at Streamline. If you're thinking this is what I want to do, let's get you started. You know, give us a call, reach out to us, email us and I'm sure they can reach out to you as well, Gannon.
[00:25:02] Speaker C: Yeah, absolutely. People are invited to call or email. I'm on LinkedIn. I'm very easily accessible and we have got booking links for no pressure, easy informational intro call. If you'd like to learn more about what we're doing, I would welcome the invite.
[00:25:19] Speaker B: Yeah, and we do as well. If you want to do a consult with one of our IRA experts, you can set up a time directly from our website and we will give you a call and answer any questions that you might have.
So thanks Gannon. We appreciate your time today. We appreciate having you on the preferred way. It's always nice to see successful up and coming companies are just doing an awesome job for their clients.
[00:25:41] Speaker C: Thank you, Chris. Looking forward to working with you guys more and more as we move forward here. And I hope you have a great day.
[00:25:46] Speaker B: Same, you too. Enjoy your donut headed that way. Now, y' all have a good day, and thank you for joining us on another edition of the Preferred Way.
[00:25:56] Speaker A: Thanks for joining us for another episode where retirement savers meet alternative investors.
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