Transcription
Get ready. We were just at the Warren Buffett annual event this weekend, the Berkshire Hathaway event in Omaha. And we are going to discuss what he is seeing and doing right now. And well, as well as what he thinks about real estate and what it means for you. And today we've got Travis Hass on with me. Trav, that was a fun little trip we had, huh?
>> Yeah, it was a good time.
>> Welcome. Welcome.
>> Yeah, especially to get finally to the Midwest. You know, I'm a Midwest boy based in Madison, so it was kind of nice to get you into into my neck of the woods a little bit versus me being in Phoenix all the time. So,
>> yeah, it was really interesting. There was 40,000 people there. The conference was amazing. Uh first come uh you know, first serve. You basically sit down wherever you want in this huge arena. Um the reason we wanted to go this year is because um Buffett was there of course and he stood up and talked. um uh was it Greg Ael I think did most
>> Greg yeah did most of the talks and uh it was really really interesting and they had all their execs there um and and so the question is you you know everybody loves Warren Buffett and the question was how is this going to transition over he's been such a great stock investor for all these years um and my question what I the reason I wanted to go is because a lot of times he omits real estate in a lot of his discussions, he he has said some things here and there, but we're going to get into that in a minute. But Tra, before we start, let's talk about what he said about inflation because I think, you know, with the war and everything going on, obviously he's very, very, very consumed. Uh he was very direct that uh runaway inflation is something that he's concerned with. He's saying it's a nightmare that you cannot manage. He referenced back in some of these ne Nebraska farmers saying that you know they were borrowing at 12% um u and and uh they just got crushed during this period of time and and um you know so you have any questions or any uh thoughts around the inflation piece?
>> Yeah, you know first of all it's kind of you know you mentioned Greg Ael you know and and him taking over. I do got to say kind of go back to somebody who wasn't there just to kind of paint that picture. It was pretty impressive how he sat up in front of that conference. He had no script. He had no teleprompter and he was able to all day actually talk about all their investments and not say that he was prepared because you can tell that obviously he had the knowledge of it. And I just thought it was pretty impressive how he actually rounded that whole stadium together. you know, for somebody that wasn't sitting there. If you can imagine sitting in a basketball stadium and he was just sitting at a black chair, black tablebody by himself.
>> Yeah.
>> And um you know, with the crowd and it's looked almost like a graduation setup if that's if that's a good way to set it. You know, people sitting on the floor and looking at it. But yeah, it was definitely cool. And, you know, with Warren Buffett there in the front row, um, and his family, uh, definitely something really cool for you and I to see. I mean, I'm glad, you know, wow, Mr. Buffett's still alive. He's a legend. That we were able to as investors and real estate people that it was an honor to actually be in that room and to see their setup. Definitely. Uh, and we can get into that later, too. But, yeah, it, you know, and, uh, Warren spoke there for a little bit. You know, they gave him the mic. Um, they gave him the floor, you know, they honored uh his 60 years of service with the with the pendant, you know, that they actually hung from the ceiling. You know, they got Charlie Munger was hanging there as well. Obviously, you know, rest his soul. Uh, you know, he was a big part. But it's interesting on the inflation portion like you mentioned because he talks about, you know, farmers being in Nebraska that they got crushed by borrowing and inflation's killing them. Um, just kind of moving backwards. And he really he really does shy away from real estate if if you know anything you know that actually pops up into there. You know you can tell that he is a Wall Street guy and um, you know, you and I are pointing you know, kind of putting our own investments in our own hands and actually outdoing inflation with real estate, you know, and trying to keep up with it. So it was just kind of kind of interesting, you know, just, you know, truly you can see obviously, you know, he's, you know, Berkshire. It's actually not Berkshire. That's another thing that I learned. You know, they all pronounce it Berkshire.
>> Um, but you can actually see that there definitely are, you know, they're they're tied into the Wall Street with insurance and everything else. And, you know, kind of definitely shy away from real estate just because you got to be active instead of just being a passive investor. And if I had to take away the investor crowd was there, you know, some of the people that we spoke to, um, I definitely would call them passive investors versus active into real estate like we are.
>> Yeah, I think it's important to uh really good points. Thank you. I I Yeah, I talked to a lot of people that were there and I think the, you know, obviously what he's done for them is incredible, right? Like if you if you invested uh in their company and their stocks, you know, years ago, you've done extremely well. Um, and so you have this, you know, they call him the oracle, right? Uh, you know, he's invested just so well for people. And I think the the real question is is who's next? Like who's the guy that because he's in his 90s now, is it going to be the person that he's is succeeding him? uh and certainly there aren't any others that I can think of that even hold a candle to what he's done and and so if you invested there you've done really really really well it is a story for me as I kind of was reflecting um of, you know, Wall Street versus Main Street right? Because the Wall Street model is give us your money through, you know, how whatever means it might be through a pension through insurance through through even the banking system and we know best and we will invest it for you. And in this case that would have worked right in the Warren Buffett case it worked. Um, and you know, but and I think a lot of the people that were there were kind of oblivious with how did this all work? Like how, you know, how did we get these phenomenal returns? And they sit there and they listen and they ask great questions and it's all because of the Oracle and his team of course and investing in these right companies. So, what's really interesting is he he invests in businesses, not necessarily direct ownership of real estate, right? And I'm going to get into that kind of nuance. And and so we all talk about passive income, you know, in real estate, but he invests in stocks, which is really even more passive. Like, it's it's basically you don't even have to think about it. You just got to invest with him and let him do his thing. So, uh, to me, it's less control. Uh, if you really want to know what's going on with your money, it's way less control than understanding on, you know, call it Main Street investing.
>> Yeah. And I think too when you look at I just want to kind of answer your direct question about what are they doing about inflation, right? If if we look at it on that standpoint and I think one of the ways that they're doing that they spoke a lot about insurance and that can just relay into us as real estate investors and when you even look at the demographic that you know the big push was into Japan, you know, with their insurance portfolio if you remember that they, you know, they they brought the gentleman that's ahead of the insurance company. If you look at how to outdo inflation and if you look at the cost, one of the biggest costs for us because you We had great conversations with Mike and Phil, you know, during this whole time about even our portfolios with insurance and the costs are going up and obviously they're right in the heart of, you know, selling policies. You know, Greg Ael actually even talked about it with individual policies that they were selling and how do they keep their current consumer and how many people are actually out there bidding out their insurance. And you know, I think that obviously they're addressing their insurance inflation, how they can run with it is just in that Wall Street system as you're talking about, you know, based through there and getting the worldly, you know, push um that demographic play actually going to Japan um and getting into the insurance market there. And there's nobody, you know, better ahead of the US with debasing of their currency is Japan. So when you kind of just look at the future, Kenny, of kind of where the currency is going and keeping up with real estate, um, you know, kind of holding those real assets, definitely, you know, listening to a company like that, you know, definitely kind of assures my position where I'm actively investing and controlling my own real estate on my own deals and, you know, alongside Danny, you know, and some syndication stuff, but you're still controlling the deals.
>> Yeah. And and I think that people might know that they own GEICO. They uh, you know, and and Omaha is where Mutual of Omaha, you know, you know, there's there's all this insurance uh all these insurance companies in that market. They just bought the largest insurance company in Japan. Um, and they have all kinds of of plans to obviously expand that. Um, and and and so um, you they to your point Trav, I I think Jerry if you could put up that inflation chart, I think that might be really really interesting. So this is obviously historical inflation and and one of the reasons why I wanted to start with this one is um, you know, he again, he Warren Buffett said this is was a direct runaway inflation is something that you cannot manage and you you can only avoid being in its path. And now obviously we don't know that we're going to hit these obviously, but these are some of the worst case um and the consensus of you know, where we think things might be. It's interesting as you can see um potentially it's going down to the 2% range. Um, which I think is a really really interesting point. Uh, both of these show that they go down. So uh, what that would mean is that could mean lower interest rates. Thanks Jerry. I appreciate it. Um, because as you guys know in in June of 2022 uh when the inflation went up to 9.1 that's when the Fed reacted and started increasing their rates to try to combat inflation. Um, but but he's very very very concerned about the you know, the uh potential inflation. He kept talking about it through his uh, you know, through the day. Right.
>> Yeah. Yeah, but you know when you go into your core ethos about I think one of the good things of the takeaway that I took from there is listening to them with big cash holdings right? I know you've been talking to your by listening to you, you've been talking to people about holding some cash, being disciplined, you know, underwriting a lot of deals and looking through them, but obviously that, you know, discipline over hype and your patience is going to win.
>> Yeah. Right. He talked a lot about patience.
>> Yes. And I And even too of looking at it on the real estate deal, you know, if they're holding a record cash hold, right? And I know that you and I talked a little bit that you're, you know, you're holding some good cash positions too to be disciplined to take advantage of some of these deals that you've been talking to everybody for the last three to four years. And obviously inflation's doing its thing. you know, we're watching it in real life where, you know, that dollar is being debased and, you know, using that good debt to, you know, that purchasing power, you know, and as you know, debt induced inflation, you know, what Hartman always says, right? And uh, it's it's it's interesting to watch.
>> Well, he's got this is another point that I had is he's sitting on 400 billion with a B in cash right now. Obviously, they're invested, I think, in treasuries, uh, making, uh, what is it, like 5 percent or four or five percent right now. Um, and and so, but the the point is is he's what I got the sense of is that he's he's got these cash positions getting ready for, you know, this disruptive period of time, right? Is that what you had?
>> Yeah. And when you look at it too, he's definitely concentrated into energy, insurance, and obviously transportation with the rail systems.
>> Right.
>> Right. And which which I think is a big key. And, you know, it's it's interesting too. They they touched on it real briefly. Right. When you look at Apple, okay, so Tim Cook was in, you know, present obviously CEO of Apple. So, you know, you know, when Berkshire Hathaway has a big position in Apple and you have Tim Cook that's sitting second row right behind, you know, Warren Buffett. But the interesting thing, right? I mean, that's a major core consumer, you know, ecosystem, right? Um, that they're still involved into it. But if you look at the history of it, you know, in 2024 and 2025, they reduced 75% of their position in Apple stock.
>> Yeah. And they're still and they're still holding 62 billion. And at one time they started at $35 billion investment which at that time was 10% of their cash holding that grew to 180 billion remember um of the brand. But then obviously too if if it's telling you that a major, you know, consumer product like that and they're reducing it um to 75% but still a strong holding and you know Tim Cook is there for a reason cuz he probably doesn't want them to pull out that that investment that they have. But obviously they got to sell their stock slowly. They just can't dump it all. But it's interesting too to even look at the consumer of inflation going out of control and does that consumer not have enough disposable income to keep buying the next greatest iPhone, right? So when you look at the crunch of the expenses,
>> well, I think I like um, you know, if I was to look at this as I was kind of, you know, reflecting on, you know, real estate versus stock, you know,
>> um stocks win in a lot of areas. So, so certainly they're fast, they're very very very efficient. Um, and and of course, uh, you know, you you know, they're passive, extremely passive, right? Whereas real estate, this is this is Buffett's position. Real estate is there's negotiation, there's time, there's multiple parties involved. Um, you know, there's the management piece and and there's actually a quote, he didn't say it at the at the conference, but there's a quote that said, "If I could buy hundreds of thousands of homes, I would, except for the management, right?" Like, so he he's not opposed to being a landlord, but he always pokes at the costs of owning a home, which is legit. But what's very very interesting to me is that he completely omits everything that has to do with depreciation, everything that has to do with the tax benefits that you get from real estate completely. And of course, you don't get those with stock. Uh, you know, as as you know, stocks distribute, you pay tax on those. As real estate distributes in the early years, for sure, u it's offset by depreciation. So, so the real estate cash flow in the beginning of course is tax deferred and the stock distributions are not. Um, and and he doesn't really talk too much about inflation as it relates to the hard assets as well, which I found very very interesting. But if you go because I did a lot of prep for this today. I I was actually trying to see why does Warren Buffett not talk about real estate depreciation? Why does he not talk about the the the tax benefits? Um, and it's it's very interesting because it's completely omitted. I mean, I went on Claude, I went on Chad, I went on Gemini, I was trying to figure out like I went everywhere to try to figure this out. I couldn't find it. Um, he basically doesn't address it. And I think uh so so all of his talks are, you know, they're they're pre-tax arguments. All of them. Every single one. So when you just look at real estate, oh there was one thing that he did say which is very interesting and it was cool or you and I drove by his home his uh when he bought that home in 1958. He bought it for 315 and he said it was the third best purchase he ever made, which I thought was really interesting. And the first two were his two wedding rings, which uh Jerry told me he said those are probably made of gold, which is very very interesting to me. But um, you know, so he does talk about real estate, but the really cool thing was is that when you and I have during the break, we went down the four of us and what is the biggest thing in the conference center?
>> Clayton homes. Clayton homes.
>> Modular homes. And he made that investment I think it was 1.8 million in 2008 2009. It's a modular home business, right? So he's in affordable housing.
>> but he's in the manufacturing of them. He's into the financing of them. He, you know, he's into the retail selling of them. He's not actually into the direct ownership of them. So, he is bouncing around, right? Wasn't that interesting?
>> Yeah. And Greg actually touched on this. Greg Ael did when he was doing his talk. He he stepped back and actually was one of his highlights of talking. He was very proud because his he directly talked about affordability. And if you can remember the this is the exact numbers that he used. I just remember it because we were sitting there cuz he was comparing to a $40,000 land purchase. Okay? So, not including land or in this case, his example he used was a $40,000 land purchase and their 1,000 sq ft home, right? And it was a one-car garage was would sell for 240,000 all in said and done on land. Well, obviously he was he was very descriptive of if you're in Nebraska, let's just call it 40,000. Or if you're going to be in Phoenix or Scottsdale, you're paying a lot more money to put a, you know, $200,000 home on. So you're looking at $200 a square foot, right, for a 1,000 sq ft. And let's relay that to both of us, right? For a two-bedroom, one bath apartment unit,
>> you know, from that from that standpoint, right? And we really look at that affordability gap is truly going to be driving that renting. And even looking at a modular setup, not even, you know, knowing what your lot is going to be. You still got hookups. You still got a lot of utilities to put into there and that cost. I would believe, you know, he's just looking at the true cost of the home, everything putting in on a modular setup, but you still have site work, etc. Maybe he's figuring that into his land cost. But that just tells me if they're truly really grinding on the affordability and looking at the modular home cuz you and I have talked about this. I mean, we had Mike that was with us, one of our buddies, and he's in construction. And I directly asked Mike of just a question. When do you do you see wood or 3D printing or what can take out like these homes to drive this cost down? and and you both said, you know, wood and timber, you know, you can grow pine pretty fast and there's still today that there's not a technology that can replace that, you know, and technology is one of the things that can hopefully drive that cost down, but still a home's a home and the labor is going to be the labor and the affordability is what I take from it. People are still going to be pushed into renting.
>> Yeah. And by the way, they've owned Clayton Homes for 15 16 years. And and um, you know, they had a two-bedroom and a three-bedroom option, remember? So they had a big sign right on the house. Uh, that is super super cool. And we're with Mike Lofton, who is a production home builder, right? So he's like, "These are extremely well priced. They're modular." Um, and and so it's interesting to me that uh, you know, that was like uh one of the main pieces in that conference center that we that we were walking around. Uh, but he uh and I was I was I was excited that Greg was talking about it. I I was actually in their main talk. um, you know, but they everyone's talking about this affordability issue and and I personally think it's it's really really going to be something that we need to embrace as real estate investors is exactly the the same. What we have an opportunity to do that they don't do is they're they're manufacturing something brand new and selling it for 200. Let's say we can actually if you can buy that home for 50 60 70 80 $90,000 you're in a way better position and and so that's actually what's happening right now as we're starting to see this real estate dip. But one thing too we got to take a break in a minute for our um our sponsor Monetary Mentals, but I want to tell you you guys may not know because I really dug into this. Buffett has other fingers into the home ownership, the financing, the credit, and all that stuff. We're going to talk about that after the break because they are the largest the largest number one in the country. Fanny and Freddy Mac lender um commercial lender. So, right right after this break, Trav, we're just going to take about a minute.
>> Perfect.
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So, Trav. Okay. So, just to summarize, um, you know, Buffett is not a landlord. He owns the businesses, right? And so, what I wanted to talk about was on this on the residential uh side of the the equation. Um, he acquired uh a couple different Vanderbilt Mortgage, 21st Mortgage Corp. Um, and he's got the Berkshire Hathaway uh financial corp and credit corp. That's on the residential side. And then on the commercial side, which is the area that you and I are in, of course, on the multi, I already knew cuz I had a friend that sold his business to him u about 10 years ago. Um, you know, he's now uh crept into the the financing side um and when he bought um Capmark and Jeff Financial. So these are two other companies where he's actually financing and he actually he was the number one lender in the country for Fanny and Freddy and the third largest HUD lender. Can you imagine that? So but he doesn't really talk about the, you know, the back end. So he doesn't actually own the real estate itself, but he certainly owns the financing, the manufacturing, the retail piece. So he and he but but of course as you know uh with that he doesn't necessarily get the depreciation and the tax benefits and all that.
>> and too and he's owning the uh one of the largest brokerage firms too.
>> You know, oh, there's that.
>> We forget about the simple things of just the transactions. You know, and and I do agree with you, Kenny. It's like so we kind of named it out. We hit on the insurance piece at the very beginning, right? That's I think that that's a that's a big one to look at. It's a major cost that all of us have and They're tied right into the middle of it. They're tied into the middle, you know, transaction middle, you know, piece between financing, government, Wall Street, you know, that he's playing the middle part of that, right? And then he's tied into utilities. It's like Greg Ael, who's actually running the company, who's the successor CEO, he ran their utilities portion is what his main >> what his main item was, right? And and the two executives that you saw up there for most of the time during this entire convention addressing the shareholders was Greg and then the gentleman I can't is you know, we could probably find his name um, but the gentleman that runs the insurance division. He sat up there for a long time and they actually had him up there a couple times and Warren when Warren even spoke there when they brought the microphone to him, you know, cuz he was sitting in the crowd in the front seat, he said that they're going to spend a lot of time of what they're seeing in the insurance arena. All those are directly tied into real estate. And I agree with you, too. But I think what we come back to is kind of like why doesn't Warren talk about this? My simplicity is is most of his investors don't want to actively be involved into anything like we are actively involved into real estate. Of course, there's going to be some management into it, but you know, when we're using the banking debt, right? You know, then we're using depreciation, we're using taxes to our advantage. um most of your investors that are sitting back, he needs their equity or their money to be able to invest into these businesses, right? So, you know, he's I also think too, you know, Warren is obviously a sales guy. You look at, you know, we we were talking about personal branding and and businesses, etc. Like you can walk around that convention center, there's great hats with his picture on it. You know, we all discuss too about Elon. you know, everybody knows Elon and his, you know, brands that he's involved with. You know, Tim Cook is there. You know, obviously he's the successor CEO from the founders. Um, but they're tied, you know, he's tied into a lot of things that affect affordability, building, you know, utilities, operating, and insurance and funding and selling. So, he's definitely tied into the real estate play, but obviously, you know, is holding back and not saying that he's going to invest into real estate because he's a Wall Street guy.
>> Yeah, I know. And that's actually what was my epiphany is is, you know, I completely get it. Like I I mean, it is it is fast. It's it's it's efficient. Um, and certainly it's extremely passive, but but if and if so, if you're him,
>> it's awesome, right? Because you get now a chance to and he's made obviously arguably one of the one of the best investors in our lifetime. Um, he's made some incredible purchases and and done extremely well for people. I and I I love to see that um for sure. The question is is who's going to replace him? And you know, are we going to see somebody with that kind of discipline that can do that again? and and uh, you know, and so in a lot of ways I'll bet you uh, you know, a little bit lucky, right? And and you you know, getting on with the right platform, the right philosophy, but sometimes you don't always know when you're investing um, and and so that's, you know, kind of the whole point of this channel is so so if if that is your that's, you know, what I call the single point of failure, right? Um, you know, and so the the right thing to do is
>> look at the bigger picture, right? What you know, inflation-adjusted assets, right? Like whatever those are using other people's money, OPM. Um, and by the way, over the years, I've borrowed borrowed from retirement plans. I've borrowed from insurance companies. You know, these are companies that invest money. So, as as Main Street gives the money to Wall Street, what they really do is look for ways to reinvest it. Um, and and I think that um I just kept kind of bouncing back and forth to, you know, um how much trust do you have in your wealth manager, your financial planner, um that stock, you know, the bundle of goods that they're investing in, the fees, and all that kind of stuff. And obviously, uh, I was incredibly impressed with impressed with with the who he is, what he's done. The real question is, you know, who's going to be next? Um, and and should you completely put all your chips with that or should you be taking a different position on your with your own money? Um, and and learn because most of those people don't really know where their money's invested. They they they come to the shareholder meetings and they talk about all the different companies, but they for sure don't know the allocations.
>> Well, you got to remember too when Greg was sitting up there and having a conversation, he says decentralization operators win. That was something when and where that's going to go where they, you know, it was actually really cool. So like Greg Ael sat up there and he addressed, you know, everybody talked about their positions, but then they had a Q&A section right where they had a microphone set up and and shareholders could come up and actually ask a question and, you know, of course, you know, the hot topic or the buzzword that's out there is AI comes up into the conversation, right? And when he, he actually said that decentralized operators win and when you look at that, when you look, you know, if you're if you're disinvesting into the stock market, like you're in a centralized system, right? But if you can pull out and get on your own a little bit, you're you're removing yourself from that. But, you know, even on the AI, he truly wouldn't directly answer AI and where he sees that it's going to go because he, if you remember, he called it narrow AI.
>> He did. Yeah, that was really I do. He also said that it was for sure going to reduce labor costs.
>> Yeah.
>> Yep. He didn't say how much. She didn't make a prediction on the percentages, but he did say that is actually going to be a savings obviously for some of these companies that they've invested in.
>> Yeah. And you know, and he talked about it as being a threat, you know, what I mean? And how do they sec, you know, how do they secure that and what they, you know, he didn't go into specifics, but they are definitely re, you know, allocating a lot of resources to protect their shell from that standpoint, but that decentralized operator wins. You know, what I mean? I I actually, you know, kind of chuckled at that just a little bit when you look at inflation, our currency, you know, when you learn from a guy like like George Gam, who's definitely, you know, talking about macroeconomics. Um, but just myself as an individual investor and obviously invest in other people's money where you're looking at it, it's like how how can we control our own deals and how can we control our own destiny versus just the set or forget mentality and being actively involved in in where your wealth is being allocated.
>> And one one thing I wanted to mention that he said, he says, "I understand fewer businesses today as a percentage of the whole than I did 10 years ago." I thought that was really interesting because what remember he was saying that
>> uh well he's I mean, what I loved is they pulled their financials up, right? So their financials come up, they look at the individual sector.
>> A lot of zeros. A lot of zeros.
>> Oh my gosh. It was it was it was really cool to be able to see the from a transparency standpoint, which businesses were doing extremely well, uh, which ones were kind of flat year to year, which ones have really really really grown um, but but I thought that was a really interesting point is, you know, back call it 10 years ago. I mean, like like when he bought uh Burlington Northern and BNSF uh railway, which was also in this convention center, he he specifically did it for the distribution of good and services. And I can't remember how many trains they have on the tracks every day, but they were talking about that. So so the stuff that he's investing in is stuff that it will not go away. It's not cyclical. it's not they're, you know, they're very very easy things to understand um, and and so I really appreciated that simplicity about it and for a lot of people they should they should invest in these kinds of things along with him because
>> the bread and butter is not going to go away um once you unplug from that um
>> well first of all you should understand that he certainly does, but once you unplug from that um I think there's tremendous opportunity um you you know, on a, you know, I call it like a a speedboat versus a cruise ship, right? He's like a cruise ship,
>> but he's also reinvesting back in those businesses that he understands. So, he's not really doing these
>> um, you know, these the like the stuff we were talking about, these these tech the stuff that you read about a lot, the stuff that the media talks about a lot. I really appreciated his simplicity in his investing.
>> Yeah. And remember, even Warren had the mic. He he mentioned this too where he was just kind of talking about, you know, succession, you know, the history of what they've done and, you know, Greg Ael obviously too, you know, he said these, you know, he said that the simple thing of thinking decades, not quarters, you know, if you go back to their ethos, and that's always been the e ethos of obviously Berkshire Hathaway is they are thinking decades and, you know, everything that they're talking about, the long-term hold of all these companies that they're they're operating in. And when you actually do walk through that convention center and you you heard me say it all the time. It's like they own that brand. They own that brand. I know.
>> You know what I mean? It's just like it it was amazing. Like there's Duracell, right? There's Yeti coolers, you know, I didn't know that.
>> I bought the Meta Glass. I bought those Meta. Well, you bought those metal glasses for me.
>> Yeah.
>> Yeah. You know,
>> like a Ray-Ban. like all these businesses that that you know you guys would would not really NetJets, I think was another one, obviously Geico, See's Candy, as we walked around, you know, imagine having a convention like we've all been to conferences. This was a conference of businesses that that Berkshire owned. Like I was like it was it was
>> get this and they have their own shareholders in there and they were on a drive to sell $2 million. They were they were
>> hey invest with us, make us this money, but come back and support your brands. But does that also drive consumerism? And it's just good marketing, too, right? You know, I mean, all those brands, when you think about it, too, when you actually relay it into what we're doing, all those brands too, what are they? They're steady cash flow machines that are just generating cash back into their portfolio, right? And, you know, just like your ethos that you taught me and how many other people that are out there is you're buying for cash flow, and they're buying businesses for cash flow. And if you can learn anything about being an investor, you know, it's it's those basic simple principles and they're just, you know, they're allocating it and holding 385 million of cash waiting to deploy it.
>> Yeah. And and just I'm just going to quote here. He said, "It's not ideal for deploying cash." The 380 to 397 billion sitting of treasures is essentially a statement of opinion about valuations. Um, and uh, he called the market a church with a casino attached. I thought that was really really that was a great quote, right? He's known for those. That that I thought was a really really interesting one. But um, you know, so again, kind of like with real estate, guys, like I keep telling you guys, this is the time to build your team, get your cash together, start putting your war chest together and start paying attention to these valuations because you guys all know and I've been talking about this forever. Cap rates went from four to six. Uh, interest rates are certainly uh significantly higher than they were. Expenses are up. Occupancies are down. Valuations are down. So, so what does that mean? Um, you know, it doesn't necessarily mean that you deploy cash today, but it also doesn't mean that you should maybe bounce along the bottom, but um, it's a fantastic time to have cash, to deploy cash, to put aggregate money together, and to start looking for opportunities and and that's precisely what we're doing, right, Travis? And you're you're in the same boat, right?
>> It's and I'm going to just come back and say the simple investing is always going to beat the complex. Does that make sense when I say that?
>> Of course.
>> Yeah. And it's the, you know, simple base hits. I'm not looking for the home run, you know? I mean, I exited a company that was cool. I didn't know any better, right? But I'm just taking that cash and I'm just doing simple investing. You know, we're still delivering packages. Uh, which is kind of ironic. I had dinner with Skyler that, you know, he's a fellow DSP, you know, Amazon DSP operator in Phoenix. And he actually worked for the rail system, BNSF. How do you say BN? Yeah. So he used to build bridges for him, which was really interesting just to see how that operated and to say, you know, how did that company operate where he would ride up and down a rail station and, you know, they would he was on the road all the time just building bridges across that obviously railroads can go over. So, it was real interesting to see for years how he did that because he was a firefighter in the Navy, you know, got out of the Navy, then that was his first job and then he got in obviously into the Amazon delivery service partner, you know, business that he operates now. Um, but he still has the exact same mentality. You know, he's doing simple investing. You know, he owns a body shop. He owns a maintenance shop. Uh, he's buying, you know, he owns his own shop that he's working on his own vans. He understands it. He's not Peter Pan, as I call it, spreading himself out all over the place and he's just doing those simple investing and he's buying real estate with the cash flow from those companies to take advantage of, you know, taxes like you know, every like you talked to everybody and just really simplifying it and obviously coming from what we learned from traveling to Berkshire Hathaway, they are still doing their simple concepts, they're staying in their lane, they're not getting into everything else, they're holding cash and waiting for the right buy deal and they're buying on cash flow just like you teach all your, you know, everybody that's uh all your viewers. There was just a big acquisition this week of an HVAC company like um by one of the big boys, you know, and it's interesting. So why would that be like because those you can't AI that, right? Like you know what I mean? Like in Phoenix, man, when it it goes to cracks 100 110 um, you know, you want an AC unit now, you'll pay whatever. Uh, and, you know, it takes it takes people to put it put it in. So, so you it's interesting how the trades and the blue collar um, you know, kind of back to you know, the rail system and some of these real basic blocking and tackling businesses. Uh, Buffett's been there the whole time and meanwhile everybody's, you know, trying to make money up and down. It's it's uh it was really really uh amazing to go. Uh, it's great to look under the hood to see how they invest, what they invest in. Uh, but I did see a big difference between like the people who are shareholders, uh, you know, they're all in in the in in the stock market, in the stock market, right? Like they do they do not understand
>> how and why like, you know, I found that to be very interesting. The people I was talking about, I talk to them about what what I did and they just look at me like like I was speaking a different language, you know, right?
>> Yeah. And we got out and, you know, it's the whole thing came up. I don't actually know if you actually shared with your viewers about how this came up, but, you know, you met a gentleman by the name of Ben actually at Limitless, which is great and not, you know, not to tie in Limitless into this conversation, but obviously it's a great place. I mean, I met my my business partner Dan Breie at Limitless, you know, through you four years ago and, you know, now I own, you know, almost, you know, going on a thousand units with him, which is kind of cool, right? Um, but you met Ben and you did uh they had the cowboy exchange and I know that you did something with them that you got us four passes in two nights. But it was fun because Ben came out to dinner with us and actually showed us around. He's the one who drove us by, you know, Warren Buffett's house. He kind of gave us a lay of the land, but he also drove you around as a real estate investor and showed you new projects that were coming out, but he really wanted to educate you on a different market, you know, cuz you're basically in the Southwest and he wanted to show you what the Midwest was like because I know that you invest in Ohio. You know, you and Denil talk about this a lot, but it was really fun to go to dinner with him and he was so proud of the area. Um, and he's still and he's a real estate guy, you know what I mean? We're going to this big convention, which is a major thing for Omaha, right? I mean, a lot of people put a lot of money back in there. They're putting that new rail car through the downtown that people can, you know, really come to there. It's nice and clean. But it was interesting where he was talking to you about, you know, prices, showing you brand new office space that was being built and there's nobody in it,
>> you know, and it's just those simplistic models that you're talking about always on your channel. And it was interesting to see a whole new market and it's right in front of you and
>> that's yeah, that's one of the benefits of go dropping into a city, you know, as you know, like we I want to know what's happening, right? So, uh, we all know some some cities are shrinking, some cities are growing. They don't grow equally, they grow in areas, you know, around something could be employment, could be uh freeways, could be, you know, who knows what. Um, and and so he brought us to some of these really really uh interesting areas of Omaha. First thing I'm asking is, you know, how like uh I I, you know, I was asking how much is Warren Buffett's house and how much is that new new development, you know, that we went to? You know, I mean, it's a very interesting, right?
>> Yeah. And Yeah. And Buffett's he said Buffett's house is worth a lot less than some of those new development just side by, you know, those those skinny tall homes, let's just call them, right?
>> Yeah. And I would rather be in Buffett's neighborhood. Like I I would rather be there all day long. It's absolutely spectacular. That that neighborhood's gorgeous.
>> Yeah. And it's kind of fun, too, because you
And I have had a cool area to see, like I, you were in Milwaukee with Kiyosaki, you know. We flew up obviously from Phoenix and with the Latino Creativos. They had their their real estate convention, and you and Robert both spoke there. And, you know, it was kind of fun after dinner when we had dinner at Carnivore, you know, downtown Milwaukee.
You know, we hopped in my, you know, fancy F-150 pickup that has my name on it because I can't, you know, peg it out of anywhere else that you made fun of me on. But, you know, but we put Kiyosaki in the front seat and he wanted to see what downtown Milwaukee was like. And he's like, "Wow, look at all the blue power that built this. Look at all the hard labor that built this." And and Omaha had a lot of that, but you can tell definitely there was a little bit more, you know, financial investing with with Warren in there. He made a lot of millionaires obviously in in the town in in Omaha, but there was still just a lot going on in Omaha and in the Midwest. And, you know, seeing some different markets and looking at a house like Warren's that he said was maybe a little over a million dollars, maybe two max.
"Um, and what would that house be in Scottsdale?"
"Oh, a lot."
"Yeah, I know. Yeah." And I think that, you know, the the message there is, you know, don't overlook this, you know, made in America is where it's at. You know, these hardworking folks. Uh, some of these some of these markets are are booming. Like that area of Omaha, that area of Milwaukee that we went to was booming. Like there's no. Now, there certainly are areas that aren't. So, if you look at Milwaukee or you look at Omaha overall, it's going to equal out, but you know, you got to pay attention to the path. You know, what what what what's the path? Where do where do people want to go? There's still money to be made in all these markets.
"Yep. Yep. And and like I said, it's um you know, it it's interesting too. I'm down in Naples currently, right? In Naples, Florida. And you you mentioned a little bit before the trades and you know, everybody looking at the trades and you know, my friend Hector down here actually, what he does is he puts in um sprinkler systems and all the landscaping in these big huge home areas. Let's call it like GL Homes is a big home builder that's down in Naples and all across Southern Florida. And you're looking at what Wall Street is actually looking to put their money is he gets contacted all the time to sell his company because they're looking for the cash flow residual. Okay? So, think about this. You go into a thousand home area and you're putting in the landscape, the lawn service. And then what he tries to do then is he tries to get with the homeowners association to keep the landscaping going on where everybody's paying their HOA fees cuz he wants that residual cash flow and he's expanding that. When you mentioned the heating and air company. Now he owns a heating and air company. So when they're going in so he can actually sign a contract to do the service in all these homes. So, he's thinking as a business just like us and looking for the long-term cash flow play, you know, going in and building a relationship with all these homebuilders and all these homeowners associations. And he's getting contacted by Wall Street all the time because they're looking for a place to put Main Street people's money, you know, into Wall Street."
"Back into Main Street, right? And he's, you know, he's a great guy. I mean, he's got over 2,000 employees. I mean, he's doing, you know, he's and he's he's a street guy. Never went to college, you know, never went to college. Kind of like Mike, you know what I mean? Mike never went to college, you know, that we were talking about Mike Lofton doing home building. And, you know, he just saw a different approach where he's looking for that long-term cash flow as you're always talking about with real estate. And it's uh the model works well. It's it's interesting, but but Wall Street is always chasing Main Street, it seems like."
"Always has, always will. And uh any final last thoughts? Uh Trav, first of all, thanks for jumping on. I know"
"Uh we bumped to Neil because I was like, 'Hey, we just got back from the from the conference.' So, uh"
"This is kind of cool. You know, this is what the passes looked like."
"You know, I remember I ate up one with you and Mike Lofton on there, which is kind of fun, you know, which is kind of cool to see this. But, you know, the thing too, it's another thing I didn't know that that that Berkshire Hathaway owned was that Bookworm Company, you know, selling books. And you bought me this book."
"Yep."
"You know, the author was there and signed it, right?"
"Yes."
"And uh"
"Yep. He lives in Tempe, Arizona, too, by the way. I got one as well."
"And uh that's my next read. And and uh yeah, I I tell you, you one of the things I learned is you get you got to get out, right? Like I was in like I'm in my own lane. We all I go to real estate conferences. I go to lender stuff. I go to private equity stuff. I all the stuff that we all do. Uh this was completely different for me. Um but man, my learning was like this. It was steep. I was curious. I walked in there, I was excited. Um and uh unlike a lot of times where you're like, 'Okay, this is kind of a rinse and repeat conference.' Um, you know, that's why we put together Limitless is, you know, it's so different. Uh obviously it's a financial education conference, but it's really not a real estate conference at all. Uh we try to bring in all these different folks that are, you know, talking about different things. Uh, so I know Trav, you're coming again this year. Uh, what are you what are you going to talk about?"
"Whatever Taro lets me talk about."
"Taro always says I'm I'm Kenny's little minion, so I got to put him on stage."
"No, I'm just kidding. No, I'll talk about I'll talk about operations a lot. I I, you know, operators like a key operators was a big thing last year that that that I, you know, I always talked about. But I do believe that my new term this year and Josh that obviously does social media I, you know, I met with him and talked to him and quality QC quality control I think is the next area where everybody's got to mix into it. Even when you look at Greg Able to even look at what Berkshire Hathaway is talking about on retaining their customers in a policy that they don't go out and shop them. You got to look at the quality control and AI coming into everything. How do you control the AI? um, you know, where is that quality control going to come in? That's that's a weakness that actually I think a lot of people think that that's a strength, but I think a lot of humans are going to just rely on the AI and they're not going to look at the QC or the quality control of what information they're getting and are you making the right decision and to even kind of go on and thank you for taking me on the trip. It was fantastic. But the major benefit a we got to see you know behind the scenes what a major company like Berkshire Hathaway got to see Warren Buffett, you know, Warren Buffett, Tim Cook, Greg Able, you know, met a lot of great people like Ben, you know, that we met there. But I'll go back and say the most I learned about the entire thing were the people and the relationships that actually met while we were all together. You know, yourself, Phil, Mike and I, just four of us. And collectively, you know, I was kind when we were flying home, you know, I was just thinking to myself, between all four of us, we have more than 2,000 employees. Yeah."
"And when you look at the not to say the jet and all this other stuff, right? When you look at kind of like not an ultimate flex where you actually look at you can put together something and it just for even like myself of delivering packages or like Mike building homes and you know, Phil involved into oil and gas, like that is where I learned the most right? And and we're sitting there just asking simple questions to each other and all of us had that good specialty, especially like Phil with AI. You know, I really hope that Phil is going to get an opportunity to talk to people at Limitless. Listen, they could come listen to him. Just sitting there. Him and I are both the same age. We're 49 years old. And it's really cool as like, you know, to be able to have a great relationship like that and sit and just have a coffee. What are you seeing out there? I mean, you're even asking him questions about how does a patent work?"
"Yeah."
"Oh, yeah. Yeah, for sure. Yeah, cuz I'm I'm going down a road on that right now. And of course, he has so many patents. So, so to your point, um, that is kind of the idea is to you, you know, your network is your net worth. You we hear that a lot. It's absolutely true. You know, there are different things that you need from different people at different times. And"
"You got to be in the right rooms. That's for sure. And otherwise, you can't just do it through Claude and chat and and on online. That's for sure."
"Yeah, for sure. So,"
"Trav, hey man, thanks for stepping in. Uh, you know, pitch hitting for Denal today. Um, and"
"Oh, that's great. She'll be back. You know, if anybody wants to see great great, you know, wall art, I got a piece of wood on our uh on our wall. That's an inside joke. But, you know, we were I was showing Kenny, there was this, you know, we were in a cool bar. There was a cool picture up there and we were laughing about it. I go, in my house, we got a piece of walnut with lights lit up behind it. So, that is hard these days."
"And all I love my wife."
"Did you pay for that?"
"I love my wife."
"I know. Yeah. All right, Trav. Thanks, man. Awesome seeing you. Thanks everybody for listening. Uh we'll see you next week."
"Thanks."