Profit with A Purpose with Neal Bawa

Josh (00:00:02) - Good day, everybody. Welcome to the deal, Scout. On today's show, we're going to have a conversation with a guy who you've probably seen on LinkedIn. You probably seen his content on YouTube because they're cranking out content and he's one of the most requested podcast guest. So Neil, welcome to the Deal Scout.

Neal (00:00:23) - Well, thanks for having me on the show. I love the name Deal Scout. That's just a marvelous name to have for a podcast.

Josh (00:00:28) - Yeah. Thank you, man. I appreciate it. Trademarked. So we're going down the right route. I love hunting for deals. I love I'm a deal guy and it brings me a lot of joy to, you know, to do these kind of things. So to to meet and connect with other deal makers like yourself, to learn to grow. But also, you know, it's our mission and purpose with the show is to put people in deals together. So why don't you tell us, Mr. Neil, you know who you are and what kind of deals do you do?

Neal (00:00:57) - Sure.

Neal (00:00:58) - So I'm a technologist, you know, a geek. I'm deeply steeped in Silicon Valley style of operating, um, computer science graduate. And my, my specialty is data science. And I've been a technologist, had a successful career, had a successful exit after 15 years of, you know, running my technology company that was a partner in and last ten years I've been in real estate on a full time basis and using data science to make money for my investors currently have nearly a thousand investors, nerdy, geeky investors that live in Silicon Valley. They're doctors, our technologists, and they like what we do and how we operate, you know, in a very left brain way. Um, portfolio is about $1 billion. We've done 32 projects in, in 17 markets and we're about to go through a very major expansion that I'm really excited about. All of it driven by the use of data science. We currently have about 50,000 people that have used our data science. We publish it for free. There's no subscription, there's no upsell, there's no education program that you have to buy.

Neal (00:02:04) - We've never done one. It's just data science that's published for the use, you know, for the public's use essentially in the Wikipedia model. And people like using it and people come back to us and share their insights and we incorporate them into our data science and send it out.

Josh (00:02:20) - So man, it's so interesting. So the business model behind a Wikipedia, you know, push like kind of explain like what made you think to do that? And, you know, like for me, if something's not making money or driving a mission forward, so that's how I measure things, margin and mission. If it's not doing that, like I really have to look at why am I doing it? So like, what is your motives for creating something like that? Because it's interesting.

Neal (00:02:45) - So, you know, it it all goes back to when it started, right? So I started working on creating high quality data science for real estate in the 2008 timeframe when I was buying a property every month and my family banned me from going to parties because they said I was infecting all of the other children in the family with my stupid, my completely insane ideas about this being the best time to buy real estate ever.

Neal (00:03:16) - So would go around saying stuff like that and say, but have the data science to prove it. And I would bring my laptop to parties and start showing, you know, very complicated Excel spreadsheets to people with charts and graphs. And so they banned me from parties and I love my family, and I felt really slighted by that. So I said, Well, perhaps I will find other people that understand the data science that I'm showing. And and so I open a meetup group inside of my technology company. So basically, unlike other people that fight through traffic in the evening, I was basically walking 150ft from my corner office to my conference room where the meetup groups would be. And and, you know, I learned a lot of real estate there. And I opened a real estate meetup that where I would present my use of data science. And the first time I did it, Josh, there were four people in the room. Three were from Apple, one was from Google. They were basically data scientists like me because the headline that I'd used was a terrible headline.

Neal (00:04:06) - It was something like The Data science of real estate, right? You know, bi data scientists for data scientists. So for data scientists showed up and, you know, spent an hour explaining to them. And at the end they were really, really excited. And because they were making a lot of money, they started immediately using it and buying single families. And we ended up buying the same single families and the same same, you know, city well, not the same single family, but in the same location. And everyone was making money hand over fist. And we're like, how come nobody else knows about it? And they're like, You should do this again, but with a better tagline for your for your for your class. And so we changed it to location magic, the art and Science of figuring out the best cities in America to invest in. And this time, two dozen people showed up again, very geeky and nerdy because my description was very geeky and nerdy, and I kept improving it.

Neal (00:04:51) - And before I knew it, there were hundreds of people showing up. And, you know, my location was perfect because I'm in Silicon Valley, right? So there's so many math people, so many computer engineers. They all think like me. They're like a bunch of nerds. And they would just geek out all of over all this stuff. So we built this community of people and they would come and ask me, Can I invest with you? And it's like, No, no, no. I am running this technology company that you're standing and I've got 400 employees. This stuff is here for you, to you to get. If you can use it, that's fine. But don't come to me and expect me to invest your money because don't do that. And so this went on for years. Josh Where would basically just give this stuff away? And before I knew it, people were calling me like randomly I would receive phone calls saying, Are you Neil Bower? Yes. Are you the guy that gives all this data science away? You know? And I'm like, Yes, well, can you present at our conference? And I'm like, Well, I'm not gonna pay to, you know, travel to your conference.

Neal (00:05:39) - Oh, no, no, no. We'll get send you a business class ticket and the conference will be free for you. Your food, your hotel will be free. I'm like, that's a pretty good deal because this is a real estate conference. I'm going to learn from all these people. And I'm like, As long as you don't say anything wrong about me being a real estate guy, I'm a technologist. You have to introduce me as a tech guy. You can't say I'm a real estate guy because I don't have a real estate portfolio except for my own single family home. And they're like, Yeah, yeah, yeah, we like that. You're like the token nerd at our conferences. So we love that. And I'm like, okay, that's fine. And so I'm going to these conferences all over the US and people are paying for everything. I'm traveling business classes. I'd never travel business class before that. So it was it was great. And so I'm doing this and I'm building this audience.

Neal (00:06:20) - But every time the audience comes to me and says, Hey, you know, I want to buy something from you, it's like, no, I'm a technologist, you know? And so not until 2013. This stuff is like 2008, nine, ten, 11, 12, 13. Not until late 13 when my company was sold and had a huge tax bill. I live in tax reform. So you can imagine when you sell a company, you know, 53.6% is your tax rate. And I'm like, what do I do now? And I'm like, Well, I should buy a bunch of, you know, buildings and get depreciation. But the problem is my tax bill was very high. So somebody says, if you were a general partner in this building, you would get more than your share of depreciation because you would get your share for the money that you're investing. But as a general partner, you would also get your the general partner share of the depreciation. I'm like, Ah, that can save my taxes, right? So I'm like, okay, well, I'm going to go buy a big building and, and hopefully some of the people that I've whose email addresses I've gathered in these last six years are going to find this useful.

Neal (00:07:12) - And they did mean it's sold out in seconds. So I had six years of brand building that I finally monetized, right? And so it did end up being useful. And a bunch of those people eventually are investors with us and they've invested five, ten, 15 times. They've invested about $293 million of their money with us and we use that for $1 billion portfolio. So there was monetization, but it didn't start that way. Josh Because it was all based on my frustration that my family would not allow me to come to parties.

Josh (00:07:43) - I wanted to show.

Neal (00:07:43) - Them that other people thought that what I was doing was valuable.

Josh (00:07:48) - So parents out there, if you want your kids to be successful, don't let them go to parties. It's the it's the.

Neal (00:07:54) - That's the moral of this particular story. Yes. It's probably not going to work for you, but that's the moral.

Josh (00:08:01) - So, Neil, this is so we're going to talk about deals, but man, are you naturally extroverted or introverted?

Neal (00:08:08) - I'm naturally introverted.

Neal (00:08:09) - When I was nine, I was diagnosed as an autistic child. And, you know, in India and mild autism, it wasn't very aggressive. But I would basically, you know, spout numbers just randomly. And I would people thought that there was something wrong with me, but I was actually doing math in my head. I do math in my head all the time. Every time I look at the world in front of me, everything is converted into a bunch of math, and a portion of my brain is doing it. It doesn't bother me anymore. So I can function as a normal person. But there's a portion of my brain that's just doing math all the time. And luckily in India we found a good psychiatrist who realized that this is a skill. It's not a, you know, it's not a problem to fix and I don't need pills or things like that. So she, he he just taught me how to ignore it. So I've never been able to turn it off. It's going on right now as I'm looking at you, I'm doing math, but I've been able to get to the point where I can actually function and partition that piece off.

Neal (00:09:06) - And so I was I was an introvert because of that. Because, you know, when when some you feel like something is wrong with you, you don't want to be friendly with people. But thanks to that psychiatrist, over time I was able to get around this. So I trained myself on things that I'd like to do. For example, I realized that I was a bad trainer because I would present these concepts and people would go to sleep in my meetups. So I went to a class that I took at Udemy of how to make my presentations more entertaining. So. So it was a wonderful class. And then I, you know, I took more classes and I basically learned how to be a better presenter because I'm an introvert by nature.

Josh (00:09:43) - You're fascinating, man. You're really funny. So when you look at me, there's numbers going in the back of your head. What number do you what number do you equate to me? Like, do you do you see a number? So a few.

Neal (00:09:54) - Seconds ago I was actually there was math going on in my head to try and figure out if the laptop in front of you is 15.6in or is it 17in. So that kind of math, it's random. It usually doesn't make any sense, but it goes on 24 hours a day. As long as my eyes are open, it goes on, man.

Josh (00:10:12) - So, man, that's so cool. You've taken nerds, geeks, you know, the token nerd. Like you've taken this and you've owned it, right?

Neal (00:10:23) - It is who I am. I mean, you have to own what what, what you are. And. And there's a benefit to being a nerd, right? Or a geek. I'll tell you one of my favorite quotes, and this is one that I invented, Josh, is the Bible got it wrong by one letter. One letter, because it is not the meek that shall inherit the earth. It's the.

Josh (00:10:43) - Geek.

Neal (00:10:45) - It's the geek. Richest man in the world. Geek second richest geek.

Neal (00:10:50) - Third richest geek. Josh, do you see a pattern? Do you see a pattern?

Josh (00:10:54) - How do I become a geek?

Neal (00:10:56) - I think you have to fall in love with numbers. I say to people, God must be the greatest mathematician ever. And that's why he's God, because the universe, everything that that we do in the universe is a set of rules. And the more we learn about the rules, the more we learn about the world. My most popular course is on Udemy. There's 12,500 students taking it right now. You can take it. It's free. All of my stuff is free. There's no upsell. You'll never like have a click here to get this in any of my courses. It's just here's a course and use it so it's Udemy. Com slash real focus. Udemy is a website that has, you know, hundreds of millions of people taking courses. This is the most popular real estate course on Udemy. It's also the one that has the most reviews. We have 1005 star reviews.

Neal (00:11:41) - It's called Location Magic. How to how to figure out the best cities to invest in in the US. And this course is loved by people. If you read the reviews right, there's a thousand written reviews of people that have, you know, watched this course and then people go on to describe how they've used it to buy real estate in the last three, four, five, six years. So you can see their results in the reviews, right? So you can just read the reviews and see how how many millions of dollars people have made. And what's nice is what I'm excited about it is that those people, not all of them, went out and made millions of dollars. Some of them never did anything with it. But you know what? They loved the math in the course. They loved the fact that the course was only 90 minutes long and it allowed them to take an area which is very difficult to understand and simplify it. Right. And that excited them. So it excites me.

Neal (00:12:29) - So every year I go and update that course and then teach half a dozen other courses, but don't teach them on Udemy. I teach it on my website, Multifamily University. So that's multifamily and we get about 25. Thousand people that sign up for those kinds of courses. I teach one on how I use virtual assistants. I have 20 full time virtual assistants and the course uses 30 examples. So 30 different systems and processes which we throw up on the screen of how we optimize them, right? There's no such thing as a good virtual assistant or a bad virtual assistant. There's only such a thing as a organized virtual assistant or a disorganized virtual assistant. And so those 30 examples are organization examples, and that's a very popular course. I've taught it now for ten years. So my goal in life is to bring order to chaos through math.

Josh (00:13:18) - Mm. So I you know, I just read Dan Martel's book, Buy Back Your Time. And now I have multiple virtual assistants working with me and I have, you know, teams of people that I'm building.

Josh (00:13:33) - I am the disorganized guy. Right. And I'm learning to create order through chaos. But I have to I have a CEO who's doing that for me because for the life of me, I could sit there all day long and try to figure it out. He does it in five minutes. Right. So you've got this group of 20 full time and you know Vas and you've got your team. And at one point you managed. You had 400 employees.

Neal (00:13:57) - Like, Yeah, that that was the technology company here in the US. You know, right now I have about 15 employees and 20in the Philippines and then have about 300 employees at the properties. I don't count them as my employees because when I sell the property, they go with the property. Yeah, but, but right now they're obviously under our direct management.

Josh (00:14:15) - So is it an Excel spreadsheet that happens in your head? Like how do you manage all these details of this stuff? Do you have like anytime? Yeah. Oh, who does it for you or.

Neal (00:14:26) - Well, firstly, I have a CEO just like yours. Her name is Anna. She's much more structured than I am. She used to be a software engineer, so she's very structured. And so for me to get stuff out of my head, I don't have the time to build systems and processes. So I use a single tool called loom. So anytime I want to build a system and process, I open a Google sheet or a Google doc, and then I share my screen and I simply talk. My typical loom is 2 to 8 minutes long. Eight minutes, you know, is a very complex process. And I basically simply regurgitate what I think this process should be. And I do it in a completely stream of consciousness way where I'll say something like, well, in column A, you should do this in column B, you should do this when the report comes in these it should be a bar graph or it should be a chart. I want this report coming out every two weeks in so-and-so slack channel and this person should be in charge of that or that person.

Neal (00:15:21) - So in my stream of consciousness, I say this. When I started I wasn't so specific, but you get better at it because you're doing 2 to 3 looms a day. And then what you do is you don't assign that loom to the person, like to a low level person, you just assign it to your Co and that then will basically send that for transcription. These days loom transcribe since the release of ChatGPT loom transcribe. So that part doesn't have to be done. But basically the Co sends it through a transcription software and then cleans it up and then sends it to a lower level person or, you know, a manager of operations like an ops manager, and then they basically break that into something and show it to the Co. And in my weekly meeting with the Co, she comes back and shows it to me. If I have something to add, I add it and then it becomes a process and the process is put into Asana, our project management software. And we never put something into a project management software that is not recurring.

Neal (00:16:15) - If you create a one time task, you will never create a process. So only recurring tasks can be put into a sauna and then tasks are then or projects and tasks are connected to others. Why? Because sometimes you have to do a before you can do B and B before you can do C, Yeah. So we're also looking not to create tasks that are unconnected. So tasks have to be connected unless it's one of those rare tasks that has no connections to anything else, which almost never happens. By the way, if you really think through it, everything's connected to something else, right? And so, so sequence is really key. So early on I built a loom and that loom said you cannot ever create a task in Asana that's not connected to another task. And you cannot ever, ever create a task that doesn't have a sequence of tasks in it that don't repeat after a certain amount of time. The only thing we change is from time to time a task that's monthly might become quarterly or a task that's weekly might become monthly.

Neal (00:17:08) - Those changes happen all the time in weekly organization meetings, but we don't allow people to ever finish a task. They can only finish this instance of the task. This one instance they can check box, but we don't allow our staff or our virtual assistants or staff in the US to ever check the task and have it be gone. Because once a task is gone, the knowledge of the company is lost. They can only remove this instance. A future instance will come back.

Josh (00:17:32) - Yeah, and that's how you had the exit. You had systems, processes, reoccurring things so you could sell your wisdom, your knowledge, your the machine. And that's what you do through your stream.

Neal (00:17:47) - Every company I create is a machine, and every company that I create actually only has one goal to put me out of a job. That is the only goal that every company has, right? Apart from whatever the company actually does. So whether it's a technology company that builds a software or it's a real estate company that builds apartments, its primary goal is we will build apartments.

Neal (00:18:10) - It's secondary goal is we will get to the point where we are automated enough not to need any CEO, especially not this one.

Josh (00:18:18) - There comes. To level, man. All right. We're going to take it to a higher level, you and me. All right. I really love this conversation. A lot of times I talk about cap rates and I talk about how to find a deal and such like that. But I'm fascinated by you and I need to dig a little bit with your permission. Are you okay with that? Oh, yeah.

Neal (00:18:36) - As deep as you want.

Josh (00:18:38) - All right. So this is so good. You grew up a geek, a nerd diagnosed with autism. Here, take these pills, do this stuff. You're broken or you're an outcast. A nerd, a geek. Right. You've owned this and you've taken this for yourself. And now you're working in positions where you're giving away a lot of your knowledge. A lot of people will hold on to that knowledge, right.

Josh (00:19:00) - And not share it for fear of scarcity. So you have had to own things that might have been negative and you're giving away your gift. Here's the here's kind of like the setup for this is what in you is like, how could you do that? Like what? How did your mind wrap around this where you could be secure enough to own the thing that the world would perceive as weakness and to give away some of your greatest value? And I see the I see the reward. It's massive. Like you've had exits, you're very successful. But like, to get there, there has to be like a bigger vision for life. How did you get there?

Neal (00:19:49) - Um.

Neal (00:19:50) - My through my mom. My mom always said that anytime you give something away, it'll come back ten x And she said it so many times that a portion of my wired brain is wired to believe it. Now, sometimes I've had skepticism with that whenever course on Udemy. Right now at this point there's 12,500 people taking that course.

Neal (00:20:11) - Thousands of reviews, but Udemy doesn't give me their email addresses, right? So what that means is I can't market anything. I can't build a database, I can't sell anything to them. So my portion of my brain says, you know, what can I possibly get out of this doing this? And, and but but since I've had since since I was 5 or 6 years with my mom says it'll come back ten x it's now actually wired into my head. Think of it as propaganda that my mom has put into my into my head that is is permanently there. So think the credit goes completely to her. Now, in every case where I haven't figured out what the benefit is, it's been there. So for example the Udemy course no email addresses, right? Um, so we have two full time investor relations manager. Their job is to pick up the phone and talk with people that come in. As you can imagine, the second question we asked them is how did you hear about us? Right? So now we know exactly how many of our investors have come in through Udemy.

Neal (00:21:11) - So I can tell you that of the $293 million that we've raised, roughly $30 million has come from people who took the Udemy course. So the answer is if you track, you'll find that many of the things that you do as quote unquote branding actually have specific outcomes, right? The only thing is that when you do some of these things, you don't you don't have the ability to measure the outcome then. So you have to basically go on faith that there will be an outcome and then you have to build tracking systems to see what you know, what the actual impact was. The second thing that happened from Udemy is people started forwarding my Udemy course to other people and we we you know, basically because of that, I got started. I started getting invited to more conferences because there was more online is such a huge way of kind of, you know making something viral. Most of my fellow, you know, you know, investors and general partners don't have a way to to make something go viral like the Udemy course, right? So by by doing that, we created a brand where like I'm teaching, you know, I'm presenting at three conferences on the 19th, 20th and 21st of this month in Scottsdale, Los Angeles and west L.A.

Neal (00:22:31) - Well, and the organizers of the second conference were having trouble selling out all of their tickets. So I sent out an email right from my side saying, Hey, I'm going to be there, I have this content. It's pretty amazing. And immediately the conference was sold out, so there's a value and you might think, yeah, but the value went to him. Not really. A lot of people don't invest with me until they see me in person. There's something about the human psyche. So now at someone else's conference that someone else is paying for, people I know will come to see me, watch my presentation, spend two hours with me in the in the corridor of the of the ballroom, right talking with me. And the next day we'll go and invest in my projects. So there's a result from everything, right? There's an outcome and all of it is connected back to that Udemy course that I gave away for free. So now I'm building more Udemy courses. What I learned was even if you cannot predict the outcome, the benefit is there and it may be a little more or a little less than you think.

Josh (00:23:30) - Yeah. Your ability to track these things in attribution builds your faith that there's a universal law which your mother enforced with you when you were five and six. If you give, it will come back tenfold.

Neal (00:23:46) - Yes. And from my perspective, because I'm relentlessly logical and mathematical, what I found is that while this law may have some spiritual basis, which I don't understand, being, you know, left brain, it actually has a practical basis. The people who give more people talk about them, and that creates a virtuous cycle that leads to them getting more. That is, I can prove that with data, whether there is a spiritual backdrop to this or not, I don't know. I mean, I'm not talking about the secret. I'm simply talking about our your ability to expand your ecosystem by giving and then that ecosystem giving back to you. That seems to certainly be the case. And I've measured it.

Josh (00:24:29) - That is so cool. That is. It removes doubt. Right, Because the reason we don't give is fear or scarcity mindset, which you could call fear, but you have proven.

Josh (00:24:47) - The investment of given the ROI of given you have proven it out. It's brilliant.

Neal (00:24:53) - I've also learned over time. So, for example, we published lists of cities that people should invest in, and we share the data science of how did we get to this point? For example, today in late 2023, we believe that the best city to invest in America unquestionably by a very long shot happens to be the Rogers and Bentonville Metro in northwest Arkansas, also called Knwa, northwest Arkansas. So when you when you go to Dallas Airport, you see a flight that's going somewhere. You see NWA, that's northwest Arkansas, and it's Bentonville and Rogers to two cities, half a million people. And so we have seminars and webinars that we do each year where we basically pick a bunch of cities, usually smaller ones, larger cities. Everyone knows the story. I mean, what can I share with you about the story of Dallas or the story of Miami? Right. So I share the stories of cities that are less than a million people, and I don't share a story of I went there and something great was happening.

Neal (00:25:54) - I never say things like, Amazon is opening a warehouse because my data science shows that Amazon actually has no impact whatsoever on a city because Amazon opens a warehouse everywhere. Everywhere. Amazon has a warehouse in every city in America because that's necessary for their distribution. Therefore, the net effect across a thousand cities is zero. Right? I never say, you know Starbucks for the same reason. So when I do the math, though, I don't try and figure out why something good is happening in a particular city. I'm curious and sometimes I'll fly there. I was in Rogers last week to to kind of learn some of these things, but I try and figure out if the effect is actually happening. Rogers has five times the population growth of superstar cities and ten times the population growth of the United States today. Right. And in Rogers case, the answer is simple. Walmart decided that to compete better against Amazon, it must build talent in its home. Right? Walmart. Bentonville is the the home of Walmart.

Neal (00:26:57) - So what they've done is they are bringing 18,000 of their mid-level and high level managers in by giving them massive incentives, including cheap mortgages, to move from wherever they are in the United States to Bentonville. And that has because these people have a lot of money. These are not low level workers. These are mid-level 80,000 to $200,000 managers that they're moving in. The amount of brainpower that they're bringing in to Rogers is extraordinary, changing the landscape of the area. The second reason is the Waltons are by far the richest family in America, by far the richest family. They're extraordinarily philanthropic and they are extraordinarily down to earth. I actually met one of the Waltons accidentally when I was in Rogers because that person was just shopping at the grocery store. I went in to get an ice pack because I fell the previous day and I injured my forehead. And so I went in to get an ice pack and somebody at the counter told me, This is one of the Waltons. Apparently they don't even have bodyguards and they don't live in homes with walls.

Neal (00:27:59) - They just live in regular homes and they spend their money on this area. Those things I figure out later. But the data science tells me first that something's happening. So for the last ten years, I've tracked all 323 metros In the United States, there's 323 metros. And in each metro there's let's call it ten cities. So Kansas City, for example, you know, you have Liberty, Overland Park, you know, Shawnee, Oleta So a typical metro will have seven, eight, nine cities. If it's a big metro like San Francisco Bay Area might have 30. So there's 2000 smaller cities in 323 metros that I track. And each month I rank those metros based on 100 parameters. My current champion is Rogers, Arkansas. At the beginning of each year, I'll publish my list of champions and why I think that these cities will go on to become, you know, ultra powerful. Um, I've had many wins, but my two biggest wins have been that In 2016 I published Provo as a champion city, followed by again by 2017.

Neal (00:29:03) - So twice. It's the only city that I've published as my champion two years in a row in 2020 and 2021, back to back Provo, one city of the year from Milken Institute. Milken provides the most well known ranking of cities in the US. And so it was the only back to back winner ever. It was also back to back winner for us, but four years before Milken, because Milken is now basically looking at the done deal, where we are looking at momentum numbers. And then in 2019, we published Idaho Falls and Idaho Falls is the 2021 and 2022 winner of the Milken small City title. Wow. Right. So we we typically will come up. So so I will I will say this within the next three years, Rogers or Bentonville, whichever one you pick, Northwest Arkansas will win Milken best city of the year within the next 2 or 3 years.

Josh (00:29:57) - Nice. How far can you take? Pi?

Neal (00:30:01) - Oh, I'm not very good with those kinds of things. So the answer is not the kind of math that I do.

Josh (00:30:07) - 3.14. That's my.

Neal (00:30:10) - 22 But I use it all the time, right? So I'm using it all the time. So here's an example of how I use it. This morning I installed a new Wi-Fi mesh system in my home. Right. And so most people are just maybe want to place it here or maybe want to place it there. So it's mesh. My mind says, well, a circle is two pi, you know, pi r square, so I'm going to basically place it here and then I'm going to use Pi R Square to see what the area of the circle is and what the radius is based on that does it meet? Meet the smart plug that is outside of my house on the tree. Right. That's the way my brain works.

Josh (00:30:46) - Oh, that's so cool, man. So in in your work, you had a big exit tax of fornia. I love that man. That is so cool. Not that you're paying a bunch of taxes. You should come to Florida.

Josh (00:30:58) - Maybe, but the.

Neal (00:31:00) - I don't pay taxes anymore. Remember, I'm a general partner, so pay zero.

Josh (00:31:03) - Oh, perfect. So you've had a big exit. You've done a bunch of deals. How old are you, Neil?

Neal (00:31:11) - I'm 50, so when I sold my company, I was 40. So I was well, 41 when I sold my company. And I've now had seven large exits. Very successful, all of them very successful in real estate over the last ten years. Um, I haven't exited my own real estate, so I, you know, I own dozens of homes that I bought in 2008, 2009, basically buying them from the, you know, from the banks, you know, at $0.30 on the dollar, Those didn't sell because my taxes would be too high. I still live in California. So have to be careful.

Josh (00:31:44) - Yeah. Why do you keep going? Why not just get on a sailboat or spaceship with Elon or like, you know, why Why do you keep on pushing?

Neal (00:31:54) - Um.

Neal (00:31:55) - What I find is that my two attempts to retire or kick back have been very problematic. So when I sold my company, I retired for two months, and the first month, you know, I was very happy. The second month was a little grumpy. By the third month, my wife was trying to kill me. I was trying to kill her. So I just my my brain needs a very large amount of input and I can't get that input from simply reading books or watching television. So I almost will, you know, almost all the time when I'm watching Netflix, I have to do something else along with Netflix. I can't just watch Netflix. I like Netflix, I watch it, but I have to continuously do something else. So I'll walk around my house doing a task and carry a phone with me to to watch Netflix or an iPad to watch Netflix. So my need for input means that I have to keep moving forward.

Josh (00:32:46) - So building business is a survival mechanism for you. Like you have to do it.

Neal (00:32:51) - If I don't do it, my brain will basically slow down and if it slows down, it'll start to fall apart.

Josh (00:32:58) - Wow. Interesting. So like you, you've got to build stuff. You have to be in this. Like this is joy for you.

Neal (00:33:06) - Actually, it's a joy. But but it's also a necessity. So it's wonderful that my joy and my necessity are the same thing.

Josh (00:33:15) - It's a it's great that your joy and your necessity are the same thing. Many people will go through their whole life and not find their joy, right? They'll do things because they have to. I got to pay the bills. I got to put diapers on my baby's butts. I got to feed them right. Like in there, they get stuck. Men, You know, specifically, I can only speak on behalf of men. That's all I know, right? I got three. You know, I got a wife and two daughters. I got a son. But I don't know anything about women still.

Josh (00:33:40) - But men, we get stuck in a rut of this necessity thing and we lose track of the joy. Like, what if I.

Neal (00:33:48) - Fight to to do that, right? So first I figured out what my joy is. Anything related to math and logic is my joy. And then I had to figure out how to get into a position where I could do that for a living. So think it's not something that happens automatically. It's something that's a struggle. You have to fight for it. You have to you have to write down the things that really matter to you in life. Then after you write that down, write down the things that you want to be doing to make those things that matter happen, right? So it's like, you know, these are the things that matter to me, but okay, how do they happen? Right? Mattering doesn't matter. You have to connect that to real physical things that you do on a daily, weekly basis. And once you write that down, write down occupations that would connect back to that.

Neal (00:34:32) - And maybe it isn't real estate, maybe it's something else. And I think you have to figure your way out to do that. I think that I could be in I could be in technology making a lot more money right now. So, you know, I could open a tech company and work on it. But what I do right now solves a very major problem. The United States is 4.7 million homes short. Very few people are making homes. A lot of people in real estate flip homes. They improve them, they buy homes and they upgrade them. That is a noble and worthy initiative, but not to my brain. In my brain, the total volume, the total stock of the United States has to increase, because if it doesn't, things will get worse and worse. Right? Because the stock is an increasing at the speed that it needs to increase at. So my best use is to to work on improving the stock. And that's my mission. I call it Mission 10-K. So if anyone's interested, it's Mission 10-K.

Neal (00:35:31) - That's mission one 0.com. Go there and you'd be astonished at what we're doing with data science. We basically profiled every city, small or big, in the United States and figure out which cities is it easiest, cheapest and fastest to build and to build townhomes because you know, when you say build, you could be building a thousand different things and the cities would never be the same. So we said, how about we pick just one thing, make only one kind of it and figure out how to make it in the most efficient way in certain parts of the United States. So people say, but yes, but you're not solving the problem in Austin. You're not solving the problem in in Orlando or the San Francisco Bay area. Where's the worst? And my I'm like, so what? Mission ten is a mission to build 10,000 town homes. By the time I'm done, 10,000 families will live in brand new townhomes, rental townhomes, and that not be rent burden. That's the most important part because if you build them in San Francisco, they have to give 50% of their salary to the rent, which is useless.

Neal (00:36:29) - I mean haven't achieved anything. But if build them in Rogers, they'll use 27% of their salaries and they're still living in a brand new townhome that's the same size as the one in San Francisco. But now it's 28% of their salary, not 50%. So I've achieved something. When I'm done, 10,000 families will be happy and won't worry about, you know, their rent numbers. So why do I have to do it in Austin? I can't do it in Austin. There's no math that that I'm aware of that works. So I'm just going to smaller cities. It's the same number of American families that I'm going to help so I don't have to go into the big ones.

Josh (00:37:01) - So you're looking at it at a macro level, like the US is 4.7 million short or I think I got that number right. I'm going to build 4.7 million, you know, fill in the blank. I don't care where it is. There has to be supply and demand though. Don't you take that into account? Like you don't want to build something that sits vacant.

Neal (00:37:20) - So I only build in cities that are not fast growth. They're incredibly fast growth. Rogers, for example, is six x US growth. New Braunfels is 5.5% growth. Shawnee is about 3.5% growth. And parts of Indianapolis like Fisher are 3%, three times US growth. So I'm I'm, I'm going into cities that are ridiculously, unbelievably outstripping the local infrastructure and supply.

Josh (00:37:51) - So the demands there, the numbers work. It's just not in these areas that most people are looking at building LA build in Miami, build in Orlando, you're finding things that are not many people are paying attention to, but there's a massive demand for it.

Neal (00:38:08) - It's an incredible demand. Right. And again, why are people not looking at it? We're fundamentally big fund managers who have hundreds or thousands of times more money than I do. Right. I'm dealing with tens of millions of dollars. They're dealing with, you know, billions of dollars. They they are not like me because they're not math brain. They focus on a set of cities and say, I'm going to work in Los Angeles, San Francisco, Miami, Boston.

Neal (00:38:32) - These are my cities. So that's why. And they're comfortable because they learn enough about those cities to consider themselves to be subject matter experts. I move my list of cities every year based on demographic data, so the city that I loved last year is no longer a city that I care about. I shouldn't say maybe that's not the word. It's not no longer city can execute in because something changed in that city and my math stopped working. So I have to move on. So the downside of my model is every year we need to pick a bunch of new cities, and every year we have to walk away from cities that we have built, infrastructure, friends and connections in. That's the hardest part of the job. But we have to walk away. For example, I can tell you in the last 12 months I've walked away from my favorites favorite state, Texas, simply because my math shows that even though Texas is easily the best state in the US for growth and Dallas is easily the best city in the US for growth overall at its size, you know, it's a big city.

Neal (00:39:26) - Um, the mathematics of real estate tied to that don't work because Texas has extremely high property taxes and ridiculously high insurance. And so I have to look for the next best small city that resembles Dallas and the next best small state that resembles Texas, because that's where my math will work and my tenants will not be rent burdened. I'm very obsessed with the idea of not rent burdening my tenants right. And basic math is if people if a family is making 60,000, I want to give them new townhomes for under $20,000. Well, that means that only about 3% of the United States, you know, qualifies because only in 3% of the United States can build townhomes so cheap that my annual rent is under 20,000. Wow.

Josh (00:40:14) - Man.

Neal (00:40:15) - Sorry, I this happens. People sort of their brain explodes when they're talking to me.

Josh (00:40:19) - No, no. Well, what I love about it is so if I was a hedge fund manager of a $2 billion fund and our our job, you know, like, fill in the blank, whoever, I'm not going to name any big names, but our job is to gobble up properties and to build and invest and such like that.

Josh (00:40:36) - I'd want to hire you. You'd probably say no because you have this. This desire to make the numbers work and for to the benefit of others, Right? Not just the numbers.

Neal (00:40:50) - I can't work for other people because what happens is very quickly my ideals get perverted. So they come and ask me questions like, So you're building in CDA. If you build in CDB, wouldn't you have a higher profit? My answer is yes. Like I would just give them a straightforward answer. Yes. Yes. So why don't you build there? Because I'm rent burdening my tenants and that is not part of my mission. My mission is to have 10,000 families in the United States that are not rent burdened. Yes, but that means that you're taking a hit potentially on the profit that you make for for us. Yes. Well, in that case, we're not going to let you do so. Well, here's my resignation. I know this will happen, so don't even try.

Josh (00:41:28) - Yeah. So you play out the story before you even say yes with someone and you go down this path of like, if you're if it's just profit, there's not going to be an alignment.

Josh (00:41:37) - It's profit.

Neal (00:41:38) - And this the four first for words on the Mission ten website are profit with a purpose. Profit without purpose is ultimately hollow and doesn't create happiness for you. It simply creates convenience of having money.

Josh (00:41:57) - Yeah.

Neal (00:41:59) - Money by itself can create convenience. And I know I'm not bullshitting. It's a wonderful thing to have and I'm very happy to have money. And I and I. And I enjoy it. But it doesn't create happiness. It creates the convenience of having money. Happiness can only come with purpose. That's why the first four words and the largest four words on my site are profit with a purpose.

Neal (00:42:21) - Yeah.

Josh (00:42:23) - Super interesting we're going to do if you're open to more more conversations around this in the future. Profit with the purpose. Oh, I got to ask you 1 or 2 more. Uh, what if. You just wake up one day without a purpose. How do you find it again?

Neal (00:42:44) - Um, you just keep questioning yourself. What is my purpose? Why am I here? What? What about me makes me unique? And how can I use that to serve people? Right.

Neal (00:42:54) - The 12,500 people that are on Udemy. They're never going to give me any money. Some of them, maybe 50 or 100, might become investors in me. But the rest of them, they're simply going to thank me, right? And so my purpose is dual serve. The 50 guys that join me give me monies to so that I can make money and so that I can serve my 10,000 non rent burdened tenants. But the remaining 12,500, I helped them buy a better home in a better place because I helped them compare cities in with just a 90 minute course. Now they can compare any city in the United States. I'm literally telling you this it's completely true. If you randomly pick two cities from the United States of any size, from the the map of the United States, take my course in 90 minutes, you will know more about those cities from a comparison perspective than a broker that's worked in those cities for 30 years.

Josh (00:43:53) - That's awesome, man. Where could they find. So the people listening in, they're going, That sounds amazing.

Josh (00:43:59) - You know, we're looking to do some investments. We can't find cap rates that make sense. We can't find investments that make sense anywhere. We're sitting on this money and it's because of inflation and because of what's going on in the world. Like we got to put it to use. We want to be good stewards of this money. So they go, where can we find out the research? Where can we find the tools? You created a course that can put a tool in their tool belt. Where could they find that? Udemy course.

Neal (00:44:25) - So there's actually an updated version of the course. The Udemy course is only updated in January each year because you know Udemy requires you to jump through a lot of hoops to update a course. So we actually updated three times a year on multifamily. So go to multifamily EW.com, the course is there. There's you'll notice there's a bunch of courses and you'll recognize this one because it'll say how to compare the best cities, you know, in America to other cities to take the course.

Neal (00:44:52) - It's about 90 minutes long. Think updated it in June. There's also a bunch of other courses that think you like, including one about the impact of artificial intelligence. There's another one on the impact of climate change on real estate. You like the real estate trends course because in the trends course I actually have 50 plus cities that we've ranked and that sort of go through them and tell you the good and bad of each of those cities. So come take them. The courses are all, you know, they're set up to be just run whenever you want them to run so you don't have to wait for any particular date. And then if you join our database, then in January you will get an invite to each course as it's updated. And hopefully one day, you know, we work together. You know, I find that that's not necessary for me to meet my mission, but hopefully we get to work together.

Josh (00:45:36) - What is the weirdest thing that you track in your life?

Neal (00:45:41) - How often have sex? It's necessary.

Neal (00:45:47) - It is part of happiness.

Josh (00:45:49) - Man, you're fantastic. You just said it without even thinking about it.

Neal (00:45:54) - Think about what I just said. Think about what I just said. Why don't you try? How often do you have sex? Don't you think that sex is a a is a wholesome part of your life? Wouldn't you want to track everything in your life that's important to you?

Josh (00:46:08) - Yeah. Whatever. Whatever you measure, whatever you measure improves.

Neal (00:46:14) - Improves.

Neal (00:46:14) - And you have control over it. Right. So. So basically, you cannot manage what you cannot measure.

Josh (00:46:24) - Hi. I'm opening up your Excel spreadsheets and I'm working with you. And then there's a tab six. Perfect.

Neal (00:46:36) - It's actually a it's got a chart, it's a bar graph.

Josh (00:46:39) - And so this was a great month for you, Neil. Yes.

Neal (00:46:44) - Keep it up, Neil.

Josh (00:46:45) - Keep it. Go, Neil, Go. All right. Where could people go not to get that chart? Where could our dealmakers go to connect with you, Learn more about you, and maybe get you to come to their conference.

Josh (00:46:59) - What's a good place for that?

Neal (00:47:01) - Um, well, I'm the only Neil Bawa on the World Wide Web, so as long as you can spell my first name and last name, if you enter it into Google, you'll see thousands of podcasts. You'll see. Um, we have, we have, I think we have 8000 people following us on YouTube and we publish new data articles, interesting ones, fun ones, not about sex, but other things. Um, every, every two days. So we, we publish them one every other day. So if you like YouTube, Google, Neil Bao on YouTube if you like, you know, or just Google me on Google and you'll see YouTube and other links to me if you would like to join our ecosystem and get notified of our courses. Always free, we don't charge subscriptions. You can go to multifamily and take any course and then you'll be part of our our ecosystem.

Josh (00:47:46) - What question I've asked you all sorts of crazy ass questions. What question do you wish I would have asked you?

Neal (00:47:53) - How can people help me in my mission to build 10,000 homes for American families that are not rent burdened? Right.

Neal (00:48:02) - It's a big mission. So this is a huge mission. It you know, I have currently my portfolios of, you know, 2 or 3000 units, 10,000 brand new units, though, is a huge, huge number. It's $850 million of equity, $2.4 billion total construction cost. Right. It's a massive task. And I took this on because I wanted something so unbelievably big that I wouldn't know how to get there because think figuring out how to get there is the most interesting part of the task. If I knew how to get there, then it wouldn't be big enough. So I started with 1000. I'm like, Think I can figure out how to get to 1000? So I don't know how to get to those 10,000. I think right now I figured out how to get to maybe a couple thousand of those. So I'm looking for people that can work with me. There are people obviously, who can come in and be equity partners. This these mission projects are the most profitable projects I've ever done, and I've had many blockbuster exits.

Neal (00:48:58) - But I think more than that is if you have access to communities of doctors or of of technologists, if you have access to high, you know, high wealth communities, if you know, a high net worth person or a family office, definitely connect them with me. These people are very savvy. They're going to invest when they think it's the right investment. But think when you connect them to me, that would be an incredible way for me to get through my mission. And if you'd like to learn more, go to Mission ten k.com.

Josh (00:49:29) - Super cool. You heard this. Ladies and gentlemen, as always, reach out to our guests and say thank you for being on the show, for sharing your your knowledge, your brilliance, the way you do deals, the way you look at deals and connect with them. Their contact information is in the show notes below. That's the mission and purpose of what we're doing here is to put deals and deal makers together. If you have a deal that you'd like to talk about here on the deal, Scout, head over to the deal Scout com, fill out a quick form and let's have a chat and then let's do a deal.

Josh (00:49:58) - I love you guys and we'll talk to you all in the next episode. See everybody.