82. Investing in Multiple Asset Classes for Consistent Cash Flow & Tax Benefits with Dave Zook

 

Being a successful business owner and entrepreneur can be exciting – until you realize you end up giving half of your money back to the government. Our guest today, Dave Zook, used his tax burden as motivation to find a better way and now has a proven track record of successful investments. In this episode, he shares how he turned his interest in mitigating his tax liability into a business helping other investors reduce their taxes through passive real estate syndications. Dave and Jim Pfeifer discuss many of the different asset classes Dave offers as investments through The Real Asset Investor – including the newest opportunity, car washes. Listen in to learn about new asset classes and how real estate can be a vehicle for tax protection.

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Investing in Multiple Asset Classes for Consistent Cash Flow & Tax Benefits with Dave Zook

I’m excited to have Dave Zook with us. He is The Real Asset Investor. He got started in real estate to fix his tax problem. Now, he is one of the top five ATM operators. He’s also involved in self-storage, car washes, and debt validation. He is a preferred partner of Left Field Investors, and most exciting, he is the guest on the first episode of the show. Here we are over 80 episodes later. Dave, thank you and welcome again to the show.

Thanks for having me back. That was a while back, and it’s exciting.

I can’t believe we’ve done that many episodes, and you kicked it off. We’re appreciative of that. Normally, how we start the show is you go through your journey, which I would like you to do, but we’ll do it in an abbreviated version because if readers want to get the full backstory, they can go back to episode one of the show and read that. You got involved in real estate because of a tax problem. Can you go through that story? We’ll then get into some other questions.

I’ll keep it brief. I watch my dad. My dad was a very successful businessman. I’ve watched him invest his money into real estate. He bought single-family homes, farms, and land. He self-managed some of the single-family homes. I quickly realized that’s not what I want to do when I grow up. I started investing in the business and started some businesses. Some of those businesses started doing well. More than a decade ago, I ended up having a tax bill of $500,000 a year. I was having all fun and was telling my life work, but when I had to give half my money back to the government, it wasn’t so much fun anymore.

I read Rich Dad Poor Dad. I got around the Rich Dad team. I got around the real estate guys. I got on the webinars, went to the live events, started getting around the right people, and quickly realized that real estate can be a tax protection vehicle above and beyond everything else, like cashflow, equity growth, and all of that long-term wealth-building strategies. I was most interested in it because of the tax protection piece.

I started buying multifamily. I quickly started recognizing words like cost segregation studies, bonus depreciation, and all that. In one year, it took my tax bill from $500,000 down to $0 and had been close to zero ever since while multiplying my income by several factors. Conventional wisdom will tell you that you make a lot of money and pay a lot of taxes, but you and I and many of your readers are probably not conventional. I’m comfortable sharing that message with your folks.

That’s a great story and a great way of looking at it. A lot of people that make a lot of money complain and wish they had a strategy. They don’t know there’s a way to mitigate or reduce your taxes down to zero. How did you find out that this was a possibility? You said you got around the right people. How did you find those people and even know where to go to even start this journey?

I started reading a lot. I read Rich Dad Poor Dad. There are a couple of things that drove me crazy. I remember hearing Robert Kiyosaki talk about how you can make billions of dollars a year and pay your tax legally. I decided, “I need to get around this guy.” I figured the shortest way for me to find out was to hunt him down. I remember listening to any real estate podcast, getting my hands on it, and running across The Real Estate Guys. I remember hearing them talk about their Investor Summit at Sea. I was running several businesses at the time. I was like, “There’s no way I can get away for a week and hang out with a bunch of investors.”

They came out and said, “Robert Kiyosaki is going to be on board the boat, his whole team, his tax guy, and his real estate guy.” I was like, “I don’t care. I got to do it. I’m going. We’ll survive back home. We’ll figure it out.” I made my decision and went to the Real Estate Guy Summit at Sea, talked to Tom Lou Wright, Robert CPA, and started doing business with his firm. I love working with highly qualified tax professionals and people who know what they’re doing in the space and can go somewhere and get answers to real-life problems.

Real estate can be a tax protection vehicle above and beyond everything else. Click To Tweet

That’s great because you can talk to different accountants and get different answers, but I like that you took action. That’s what we need to do. You took action to get on the boat because you thought maybe you’d get to meet Kiyosaki and some of his people. That worked, and look where you are. That shows you that you got to take steps to create your own future. I love knowing that.

I want to talk about some asset classes that you’re into. Before that, I want to go a little bit broader. Last time we talked among the show, you said you’ve often invested in 6 to 8 asset classes, but you’ll only syndicate maybe 2 or 3 at a time because you’re researching them and investing on your own dollar to see if it’s something you want to share with everybody else. How do you research and decide and find these new asset classes?

Oftentimes, they find me. I am not out looking for a new asset class, even now. I stumbled into the carwash space in the last few years because a couple of young folks wanted me to look over their shoulder and coach them up on the carwash business. I had several more conversations. When you notice a certain car on the road, all of a sudden, that’s all you see, and you see that car everywhere. It was like that with Tommy’s Express Car Wash. I got asked to look at the business model, and I liked it. I was like, “The numbers look great, and the cashflow looks awesome, and EBITDA.” It looked great, but I shelved it because I didn’t need anything else on my plate.

Long story short, I talked to several investors of mine and one of them being a carwash guy. It ended up that he’s Tommy’s guy. That’s who he is. He has Tommy’s Express Car Wash, and I didn’t know that. I knew he was a car wash guy, but I didn’t know he was Tommy’s Express Car Wash guy. He spent the next half hour telling me how Tommy’s was the best thing on planet earth. A couple of weeks later, another investor of mine asked me that same thing. He’s like, “My son-in-law and his friend there are looking to start this business. Can you look over their shoulder, coach them up a little bit, and take a look at it?”

I asked him, “Sure, what business is it?” “Tommy’s Express Car Wash.” Long story short, we had this conversation with these folks. They were all keyed up. They had their private equity partners all lined up. It’s sharp money. After having several conversations with them, we talked to them about, “How about if you let us help you structure your deals, be your funding partners, bring our investors alongside it, and build a bunch of car washes?” Oftentimes that’s what happens. I’m giving an example, self-storage. It’s the same deal.

I kept hearing this name. I know you know this. This is a good thing. This investment community is pretty small. You start running into the same people and start hearing stuff. When you hear good stuff about a certain organization for long enough, you start paying attention. That’s what happened to the self-storage space. These folks were masters at their space, and I figured out a way how to come in alongside them and partner with them. Oftentimes, it happens like that. I’m not out looking for new asset classes, but I stumble into them, and we create something.

I am going to ask some questions about car washes, and I’d like to touch on self-storage. Before we do that, are there any other new asset classes that you’re looking at that may be coming? The last time, we also talked about carbon offsets and how that might be a couple of years in the future. How is that coming in? Is there anything else new that you’re looking at?

I’ll answer your first question first. We are getting ready to launch a BTM Fund, Bitcoin Teller Machine. That’s something that our management partner has been in this space for the last few years. At this point, they have around 1,800 BTMs on the street. It’s a good track record and history with BTM. They’re one of the largest players in the space now. We are looking to launch a fund here. If you’re in our database, you’ll see that here shortly.

PILF 82 | Tax Protection Vehicle
Tax Protection Vehicle: When you can boost your subscriptions and be profitable, everything about the business model tells you that when you get more monthly paying subscribers, you’re going to make more money.

 

I saw one of those in the grocery store. I have no clue why you would need that. I invest in Bitcoin a little bit, but I go to one of the websites and buy it. What do I need a machine for?

Most people do not. It’s the same as most people don’t need an ATM machine. You and I, and probably everybody reading this, have long since converted to plastic. We don’t need cash. We don’t need an ATM machine, but there’s a whole subset of the population that’s not like us, unbanked or underbanked, lower income, EBT card carriers, or maybe they want to reduce holding Bitcoin on a public exchange. There’s a whole host of reasons.

We’re not catering to 70% of the population. We’re catering to a smaller subset of the population and finding where those people are. It’s the same thing we do with ATMs. We find where the people are that use ATMs, and we put our ATMs there. One of the things that’s exciting for us is that we already have the relationships to establish. We already have the real estate tied up. We already have everything in place with our management teams. Now we have to take up another 2×2 space and set a BTM alongside our ATMs. It creates a real, scalable, efficient model in a way to go to market that most people can’t do.

I can’t stop myself from chasing new asset classes. I’ll check that one out when it comes out. What about carbon offsets? Are there any updates on that?

We’ve been very active. We have our three core asset classes. It’s self-storage, ATMs, and car washes. There’s some stuff that we get into outside of those three core asset classes. The carbon offset is something that I’ve been invested in personally. A couple of friends of mine and I bought 11,000 acres of timber up North of Pittsburgh. There’s potential there. We’re trying to see how we can best monetize that timber, that real estate. Timber has been on terror over the last couple of years.

Does it make more sense to harvest the timber, select cut the timber, come around the backside, then sell carbon credits? We’re looking at all those things now. Over the last few years, we have been much more active on the timber side than we have on the carbon side. We have the real estate and the timber, and we’re watching that space closely. We’ve had several conversations with folks who would want to buy our carbon.

I want to dig into car washes because this fascinates me. It’s a new asset class, at least for me. I haven’t seen that as syndication around, and now there are a couple of people doing it in different ways. Why car washes? Why are you focusing on that asset class now?

It’s for several reasons. One is a well-run carwash cashflow like crazy. The other thing is that it fits our model of depreciation. One of the things that most people don’t know and you may not know is there’s something unique about car washes and gas stations. Do you have any idea what that is?

A well-run car wash will cash flow like crazy. Click To Tweet

I’m going to cheat because I listened to your podcast with M.C. Laubscher. Yes, I do know. It’s the tax benefits.

Yes, what happens is you can depreciate the building as if it were a piece of equipment and at the same schedule or rate. You can use 100% bonus depreciation on your brand-new equipment. You can also use 100% bonus depreciation on the building. It’s very tax friendly, has a huge tax impact, has aggressive cashflows, and makes a lot of sense. Banks love to loan money against real estate. They also love to loan money against well-run cashflowing businesses.

Here, you get both. You’ve got a good friendly lending environment, which allows you to scale. You’ve got aggressive cashflow in a well-run carwash and an aggressive tax impact. Here’s one of the other things too, and this has been especially important over the last years. Anybody running a business with 10, 15, 20, 50, or 100 knows how hard it is to get quality people to work for you.

You can run a high-volume carwash with 2 or 3 people. It’s taught to us. Tommy’s is known for its 2 to 3-minute carwash, and you get a good car wash in 2 to 3 minutes. You get on the belt, cruise through the belt, and come out the other end. You’re pretty much dry, and you get a good quality wash. There are 2 to 3 people on site, and you can run hundreds of cars through there on a daily basis.

Are you buying existing operations, rebranding them, and redoing them? Are you building them ground up?

Yes.

It’s both. What’s the value add to the new ones? What’s the deal with the ground up? How long does it take? How does that all work?

I’ll give you an example. When we set out, we were going to do all brand new development. We started down that path then an opportunity popped up to buy a fully operational, well-run Tommy’s Express Car Wash in San Antonio. We bought the carwash. Let’s say that in twelve weeks, we will increase the subscription model between 30 and 40%. When you understand Wall Street, private equity, the valuations, and the subscription model, not only did that increase our cashflow like crazy, but it increased the value of the business by $6 million. It’s being able to create that value through business operations, having a good team on the ground, and making that business perform better. You don’t get that opportunity in any industry.

PILF 82 | Tax Protection Vehicle
Tax Protection Vehicle: Passive losses offset passive gains. Ordinary losses offset ordinary gains.

 

What’s the subscription model? I know that you can pay a monthly fee and get unlimited car washes. I hadn’t heard of that until I started looking into this asset class. I didn’t see that at the car wash I went to. Is that a new development? The great thing is you have predictable cashflow but does it matter how many times people wash their cars? They’re not driving through there every day. Are they?

We’ve got the technology. We know what our members are doing, but typically, as somebody with a monthly membership, you’ll have people washing their cars on average, 4.2 times per month. That loss costs us, depending on the volume for that location, somewhere around $1 or $1.25 to wash a car. There you have it. It’s roughly $5 in cost, and that membership costs around $30. You do that 5,000, 6,000, or 7,000 times over, and you can start to get the feeling of what the numbers look like. You’re right. It’s being able to create a consistent cashflow and private equity.

Private equity and Wall Street loves that. Look no further than Netflix. It doesn’t matter that they lost $500,000 in Q1. What matters is that their subscriber base went from 500,000 to 650,000, and the stock price went up. It doesn’t matter that they lost all money, but their subscription-based went up, which means that they’re going to be profitable from that point. That’s how they look at it.

When you can boost your subscriptions and be profitable, everything about the business model tells you that when you get more pay monthly paying subscribers, you’re going to make more money. We can have both. That’s a win for everybody. I’ll say this. There was an article in the Wall Street Journal that talked all about the appetite for institutions and private equity firms. They’re clamoring over themselves about crazy multiples for stabilized portfolios of car washes to scale.

Is that your plan? In X many years, you sell it to larger companies, lease or something?

We’re on pace to build 60. We would expect to be bought out at some crazy multiple in a couple of years.

You mentioned that you increased the subscriptions on an existing location. How do you do that? If you’re buying an existing one or if it’s a new one, what are the steps you take to increase the subscription? That’s the value add. That’s how you increase the NOI to get more people to sign up.

There are several things but two things, primarily. One, tweak the marketing plan and get aggressive on the marketing plan without spending a whole ton of money but getting people in the door. We found that if you can get people through the tunnel, you have about a 54% chance of signing those people up for a monthly membership. The other thing is incentivizing the team on the ground when they sign up as a monthly member. Having everybody aligned when the customer signs a monthly membership, the owners win. Let’s make it so that the team on the ground wins and gets a little piece of the action too. That’s what we did. That’s worked well for us.

Banks love to loan money against real estate. They also love to loan money against very well-run, cash-flowing businesses. Click To Tweet

Talk about the structure because the structure of this deal is unique. It’s debt for the passive investor investing in your deal to a debt deal, not equity, but you also get bonus depreciation, which I haven’t seen on a debt deal. Can you talk a little bit about the structure, including the multiple, the 1.75, and how that all works together?

We started as a debt fund but switched up the model. We went back and made it retroactive. We do have it set up as an equity fund, not a debt fund. You’re right. We started as a debt fund but what we did is we put it together similar to our ATM fund, where in seven years, you exit. For comparison in an ATM deal, it’s been popular for our investors and for us. You get 179 times your money in 7 years. You also get a 100% bonus depreciation. It’s 179 times your money in 7 years. In the car wash fund, you get 1.75 times your money, and we’re calling it in 4.75 years.

We’re projecting you’ll get your 1.75 and 4.75 years. Between 4.5 and 5 years, you get your 1.75. In the eyes of the IRS, that equipment in five years is worthless. You’re taking your basis down to zero. You exit when you get to your 1.75. You’d take the bonus depreciation. You never recapture it. That model has worked very well for us on the ATM side, and we’re doing the same thing on the carwash side.

The upside of this deal is that you don’t have the depreciation recapture because it goes down to nothing. I didn’t realize that. That’s interesting.

The other upside is when we see the institutional appetite here, what happens is investors get the first 1.75X. There is no split on the fund side. We don’t get any of the revenue until the investors get paid at 1.75. When we’re looking at the institutional appetite for this asset class, we’re thinking, “We get bought out in year 3 or year 4 at 10, 15, or 20X multiple.” Read the Wall Street Journal, and you’ll see. It’s true. They’ve said it in there.

These portfolios are selling for 18X to 20X multiples. We’re thinking that if we get bought out in year 3 or year 4, you, as an investor, your IRR goes through the roof because you still get the first 1.75X. In our agreement with investors, you get paid before we get paid. You get the first 1.75X. If that goes in three-quarter years, your IRR is 22%. If that happens in years 3, 3.5, or 4, your IRR goes through the roof because you still get paid first.

It is a little bit of a different structure, and you have to dig into the details to ensure you understand it. I want to pivot a little bit here because we’re talking about ATMs and taxes. I’ve been talking to my accountant, and I didn’t realize this. I want to see what you think of what he says about the tax benefit, the bonus depreciation, and all that offsets. It offsets cashflow from passive activities, but he doesn’t think it offsets capital gains. Let’s say the only thing you have is a capital gain, and you have no cashflow. You buy a house, sell it, and there’s no cashflow of a rental house. ATMs might not offset that, but they would offset if you had a rental and the cashflow from it. Is that how you understand it? Are you hearing something different?

Passive losses offset passive gains. If you have an apartment building that you’re a passive investor in and saw that apartment building where you’ve got the passive gains, your depreciation from an ATM investment will wipe out the tax liability on your passive gains. Passive losses like depreciation from ATMs will offset passive gains. Let’s say you have a practice that you’re involved in, are 100% active, and are running that business. You sell that business. That’s an active game.

PILF 82 | Tax Protection Vehicle
Tax Protection Vehicle: If you want to be successful in this business, you have to keep your drop-off rate fairly low.

 

Remember, passive losses offset passive gains. Ordinary losses offset ordinary gains, so it depends. If you’ve got a franchise business, like a McDonald’s, and sell that thing, were passive in it, had a manager, and spent less than 500 hours there, you now can take those passive gains and wipe out the tax liability on those gains with ATM investment or with car wash investment with other passive activity.

That’s how I thought it worked. I’m not trying to confuse myself or anybody else, but talking to one accountant, his thought was that ATMs are a little bit different and operate differently. They don’t fully offset. I get different opinions based on who I talk to. Being that you are the one that’s deep in this, I assume that you’re saying that any passive loss, all the ATM loss, can be offset by any passive gain that I have, whether it’s the gain from cashflow or a sale of the asset as long as I’m passive.

That is correct, and we’ve run that. If you ask three different CPAs the same question, you’d probably get three different answers. We’ve got opinions from some of the best tax firms. I work with one of the best tax firms in the country. Passive losses will offset passive gains and passive income. It will take out the depreciation recapture as well.

That’s good. I’ll have to reconsult with the accountant that I was talking to because I misspoke. It wasn’t my accountant. In doing these shows and things, I interview a bunch of different people. One of them was not confident that was how it went, but my accountant probably is. That’s why every time I’m on one of these, I try to ask to get all the opinions.

I make sure we’re getting the right information. I appreciate you explaining that. I’d like to also get an update on self-storage because I know people say it’s recession resistant. I know we had a big exit at the end of 2021 with the fund. I wanted to check in and see how self-storage is doing now that changes in the economy in uncertain times and all of that. Can you give us an update?

One of the best-performing asset classes came out from 2008 to 2010. In fact, it was the best. There was only one better, and that was data centers. The performance came out in 2008 and 2011 with self-storage. It’s one of the best-performing commercial real estate asset classes on the planet. We saw that again in 2020 to 2022, one of the best-performing real estate asset classes in the country. We love it for that. We love it for its cashflow. We love it for its appreciation. It’s like Tommy’s Car Wash.

If you make that asset operate well, increase the rent, stabilize it, and increase that NOI, there are a lot of margins. Our business model is buying a mom-and-pop operated self-storage facility, taking it, and preparing it to exit to REIT. REITs will pay a good margin for stabilized self-storage assets. They love self-storage. Our job is to get it from a mom-and-pop operated store. There’s a lot of work to be done between mom-and-pop and institution.

Many times we’re going in there and adding square footage. We’re adding climate-controlled units. You’re taking a 50,000-square-foot facility and adding 20,000 or 30,000 square feet to it. You got to make sure you’re going into an area that’s underserved in the self-storage space. There is all stuff that you got to watch out for and know what you’re doing, but we know what the REITs want. We’ve sold 40, probably 50, some of our last exits. It was the REITs, so we know what they want. We rolled up 26 of our properties back in November for a $450 million exit. Our investor netted, on average, between 30% and 31% on that deal. We love self-storage.

If you can get people through the tunnel, you have about a 54% chance of signing those people up for a monthly membership. Click To Tweet

I do too. I was one of those investors. I appreciated that return. I want to also touch on debt validation. Can you remind us a little bit about what that is? I realized that in the current fund, there was a small setback. I’m bringing this up as an example of things that don’t always play out to perform. They don’t always go how you think, but as long as you’re with an operator who is fighting on your behalf and trying to make sure that you fix the issues, you’re still in an okay spot. Can you explain a little bit what that validation is? I know you don’t have a final resolution on the issue that came up. Give us a 40,000-foot view of what happened and how it’s going to be resolved, hopefully.

Oftentimes, in this space, it’s not in the investment world. It’s not, “If something’s going to happen.” It’s, “When it’s going to happen.” Here’s a little history and a little background on the debt validation space. First, I started investing in that validation with this team. I believe my first investment was either in late 2019 or early 2020. I invested my own money there first for a while. Eventually, I got to the point where I got comfortable with them and said, “This is an asset class that I like. It’s a short term. I’m not tying up my capital for a long time.”

I got introduced to this group through a well-known and highly respected investor who many would probably recognize the name. I looked at the business model. I looked at the different relationships involved and the history behind the team. There was some trust built up there over time with myself and my accounts. There was a shake-up in the company. There was a payment processor issue for some of our clients.

If you want to be successful in this business, you have to keep your drop-off rate fairly low. The success of the business has to do with how low you can keep the drop-off rate, how long you can keep your clients, and how well you can service your clients to where they stay with the program. There was a payment processor issue which affected thousands of our clients. Some of those clients got double and triple-billed. There was a glitch in their system, which created a huge drop-off.

We had to go back into the high percentage drop-off. We had to go back to the leadership, help them restructure the contract that we had, and redo and extend the contract. Some of our success in this business hopefully will be based on organic growth. We intend to help the company the best we can. We’re looking for ways to step in, provide support, and help with that growth because they seem committed to the contracts we lost. They seem committed to stepping in and doing whatever they need to do to make it right.

I can tell you that we’ve been on the phone with several different fund managers involved. We’ve collaborated together. We take notes together. We strategize together. We’re on the phone every day for anywhere from 30 to 60 minutes, either with our legal team or the team at debt validation, and sometimes, multiple times a day.

We’ve spent a lot of time on this. We’re working on a contract. We’re very close. We feel like we’re close to having a contract signed. Hopefully, we can get the thing pointed back in the right direction, but it’s not going to be easy. It’s not going to be in the timeframe that we projected, but hopefully, we’ll be able to get back on track and bring the whole thing back to safety and figure it out together. It has been a heavy lift, and we’re still working on it.

I appreciate you sharing that with us. I liked what you said. It’s not if but when things go wrong. One of the things that I look for is we want someone who’s going to acknowledge and let us know that something has happened, good, bad, indifferent, and make changes or fixes if it needs to be done. The reason I wanted to bring that up is to illustrate that. That’s why I like working with you, Dave. It is because you were honest about it upfront, shared it with us, and gave frequent updates. Some of the earlier sponsors that I was dealing with, you never hear from them. You don’t know if it’s going good or bad. Especially, you don’t hear about it when it’s not going to perform, so I appreciate you sharing that with us.

PILF 82 | Tax Protection Vehicle
Tax Protection Vehicle: I don’t so much care what you say about you. I put much more emphasis on what other people are saying about you.

 

If you want to talk about more stories, we could make this a long-read episode. I can tell you about a partner in the apartment building space who got stage four cancer and his team who wasn’t equipped to operate without him. They started taking off with the money, and I had to step in and take over the portfolio. We could go on and on. That’s why I say it’s not if. I had to step in and take over that portfolio and bring that thing to safety. I didn’t set out to be the operator. You’re right. I am committed, and I’m not going to run. If there’s a way to bring this thing back full circle and get us all made whole with our returns, I’m going to do whatever I can to make that happen.

That makes a huge difference. That’s all we can ask for. If you’re in the stock market now, you’ve lost 30% with no chance of getting it back unless you sit there and wait and hope. That’s why I like this industry of real estate. You don’t lose money often, but if something doesn’t go to perform, you have a team working on your behalf to make you whole. That’s why it’s so important to pick a sponsor. That’s the last topic I want to address here.

You’re a different sponsor than most. You’re finding teams of professionals, investing in them, and then presenting those teams and asset classes to pass to investors like me. How does a passive person like me vet a sponsor like you where you’re going out and finding the asset class, but I have to figure out, “How do I vet you and make sure that you’re someone I want to put my money with?”

Here’s what I do, and I would highly recommend this strategy because it worked well for me. I don’t so much care what you say about you. I put much more emphasis on what other people are saying about you. If you get out and about in the community, start asking around, and frequent your investor meetups, you get out and about that this community is fairly small. I don’t want to talk to the smooth-talking sales guy. I consider myself a pretty good sales guy. I could probably talk you into stuff.

What I would rather have you do is talk to my investors and see what they say about me. That’s what I do. Before I started doing business with our self-storage operators, I kept hearing their names over and over. I kept hearing all the good things. I kept asking questions from their investors. I don’t so much care about what the operator said about himself. I want to hear about what the investor said about that operator. That’s worked well for me. I would encourage your readers to do the same thing.

That’s well said because that is one of the main purposes of our community of Left Field Investors. It’s to be able to share information with each other. A big part of that is sharing information about sponsors to ensure that we’re investing with quality people and when we have our preferred partner program. We’re only putting quality people like you and some of the others on there in our community and protecting each other. That’s what it’s all about. That’s very well said. Here’s the last question I ask. This is not a test, but we’ll see if you answer the same this time as you did last time. What’s a great podcast that you like to listen to?

Left Field Investors.

That’s perfect. That’s what I’m waiting for.

I’ve got several. You mentioned Cashflow Ninja, which is M.C Laubscher’s podcast. The Real Estate Guy has got a great podcast. There are several but pick one that is specific. If you’re a multifamily apartment guy, listen to as many of the multifamily apartment podcasts as you possibly can. You learn stuff. You’ll pick stuff up. You’ll hear stuff, and you’re like, “That was a new twist from that same thing that I’ve heard over and over again for years.” It’s a couple of things. Pick the asset class you want to invest in, get familiar with, and listen to those podcasts. The other thing is to pick your tribe.

There are some podcasts that I thought would benefit me. The content was good, but the presenter and the podcast hosts were not. Get Rich Education is another one. He does a quality podcast. You have to connect with the host and the audience. That’s going to be different for me, you, and many of your readers. Find a quality host and find your tribe, somebody you connect with, and people who deliver quality content about the subject matter you’re interested in.

That’s great. Find your tribe. That’s what it’s all about in this type of investing. It goes for the show, the sponsors, and all of it. Dave, thank you very much. I’m pleased to have you back again. We’re grateful for your partnership with Left Field Investors and all the support you’ve given us. We’re thankful that you’re on the show again. We appreciate you.

Thanks for having me back on. Maybe I can come back for episode 160 or something.

I cross my fingers we make it that far. Thanks, Dave.

It’s always great talking to Dave Zook. I appreciated him taking the chance of being our first guest and being willing to go on a brand-new show and then revisit with him 80 episodes later. That was a thrill. A lot of things he says are interesting. He’s into so many different things. The way he talks about asset classes, he goes out hunting them. They find him, and that’s because of his network and his community.

He has so many connections out there. He keeps going to meetings, meeting new people, and looking for new things. That’s how asset classes find him because he’s putting himself out there. I found that interesting. The Bitcoin teller machines are interesting. I have no idea why people would go to a Bitcoin teller machine, but as Dave says, “I don’t go to the ATM machine for cash much anymore unless I need the cash.”

There are people out there, and the synergies of already having an ATM in place and putting a Bitcoin one right next to it. That seems to make sense to me. The car washes are big now. There are several operators that are doing carwash syndications. Private equity is certainly interested in the carwash. Here’s the thing that was most interesting to me, and I only knew this because I had listened to Dave on another show by M.C. Laubscher called Cashflow Ninja.

Since the building and the equipment are subject to bonus depreciation, that accelerates your depreciation and makes that even a more powerful benefit. Self-storage, we know this. Someone said 70% of self-storage units are still owned by mom-and-pop. When they’re bought up, a lot of people are trying to get them going and cashflowing and all that and adding value. What Zook does is he is targeting it specifically to make it attractive to a REIT. That makes an exit much better.

As I said in the show, I did that one exit with him, which was very nice. There’s been a lot of conversations in our community about debt validation, if they are responding properly, and all that. This is what I like about Dave. He was willing to have the conversation. He didn’t hide from it. I did ask him ahead of time. I said, “Is it okay to have this conversation?” He said, “Yes.”

Communication and transparency are the key. There are going to be deals that don’t go the way we thought they would go. There might be more of those coming up, but if you have an operator who is willing to communicate, who is sending out emails saying, “We’re working on it. We don’t have a solution yet, but we’re working on it,” that makes all the difference to me.

I don’t want to lose money and want everything to work out exactly or better as planned, but life does not work that way. The key is to communicate, be transparent and be honest. That’s what Dave is doing on this deal. That makes me more apt to invest with him again because I know that he is going to handle adversity in a way that works for the investors. He’s going to continue working on our behalf. Dave Zook is a great preferred partner. The Real Asset Investor is a great preferred partner of Left Field Investors. We are happy to speak with him again. We will continue to watch and see what other deals he comes out with. For now, that’s all we have. We’ll see you next episode.

 

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About Dave Zook

PILF 82 | Tax Protection VehicleWith a proven track record of successful investment ventures, Founder/CEO of The Real Asset Investor, Dave Zook, and his investors own well in excess of $100 million worth of real estate acquired since 2010. This includes a large portfolio of Multi-Family Apartments as well as several hundred thousand square feet of Self-storage across several carefully selected markets. With a proven track record of successful investment ventures, Founder/CEO of The Real Asset Investor, Dave Zook, and his investors own well in excess of $100 million worth of real estate acquired since 2010. This includes a large portfolio of Multi-Family Apartments as well as several hundred thousand square feet of Self-storage across several carefully selected markets.

Dave and his team are also one of the top 10 ATM operators in the country with well over $100 million dollars of ATMs placed in service. Furthermore, they are involved in several successful energy-related projects.

The Real Asset Investor team raises capital from accredited investors to acquire assets for cash flow, equity growth, tax benefits and diversification, giving investors options outside of conventional financial markets.
 


 
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