Ep45: Invest in Real Estate For Better Returns with Ben Lakey

[00:00:00] Ben Lakey
That's one of the reasons we're very passionate about Build Vacations because the only thing you leave this life with is the legacy and the experiences that you've had. And we always say that we want to add money to your bank account and add experiences to your memory bank. 

[00:00:17] Podcast Intro
You are working professional but struggling to balance the workload of your career, family obligations, and preparing for your financial future. If so, this podcast is for you. You've spent years learning your craft, and now it's time to focus on your financial future. This podcast will teach you what you need to retire wealthy and happy. Let's dive in.

[00:00:39] Roger Jacobsen
Hello and welcome to the Retire Wealthy and Happy podcast today. I'm co-hosting with Anthony Esparza and we're glad to have Ben Lakey. On as our guest speaker, we're going to be interviewing Ben talking about everything from development to self storage to building short term rentals in the United States and on islands. Hello and welcome to the podcast, Ben.

[00:01:06] Ben Lakey
Hey, Roger. Thanks for having me, Anthony. It's great to be on with you. 

[00:01:09] Anthony Esparza
Yeah. Great to have you on Ben. Excited to jump in and learn a few different things from you guys and. See where we go down this rabbit hole today.

[00:01:17] Roger Jacobsen
Awesome. Ben, why don't you give us a little introduction and tell us about yourself and what you've done in your career.

[00:01:24] Anthony Esparza
Sure. 

[00:01:25] Ben Lakey
I started, I flipped my first house in 2002 and at the time I was studying. At the U, I was studying finance and accounting, and at the time, I think the average income for a grad of the University of Utah's program made about 34, 000 or 35, 000 a year. And I flipped the house with my brother, who was also studying there, computer science, and we made a decent chunk more than that in about a month. And I just realized that school was on the back burner. I had a great time. And I had some construction experience, so I actually supervised the crews on the job site. And I went from there, I flipped a lot of houses. I think about 150 houses I flipped. I did some wholesaling and eventually went to BYU Law School and switched that into land development.

[00:02:23] Ben Lakey
So my first land development was nine lots, just residential lots that we sold off. My second one and third one were both flips that me and a partner bought and subdivided off one lot, and I very quickly realized that it was more lucrative. Less stressful and more fun to me than was flipping and so since that time I've done one flip that was 2017 and My fourth development was 32 lots and my fifth development was about 1, 600 lots So you can scale really well in development in a way that is very difficult to do with house flipping and wholesaling. 

[00:03:05] Anthony Esparza
That's awesome. Pretty awesome I had a question regarding, so you kind of started out going to college, you transferred to grad school. I know Roger mentioned something before the podcast that you are wrapping up a 20 year career. My question was, were you always in house flipping and development solely or did you have something on the side? And this was kind of your side hustle, your side business. How did that work?

[00:03:30] Ben Lakey
I enlisted in the army in September of 2000. And so I was already enlisted at the time and just in the National Guard. And so I was just doing it part time, you know, one weekend a month, two weeks a year. And the only other job that I took throughout my career is after I graduated law school, I practiced law for myself. And I maybe did. 500, 000 worth of legal work over a couple of years and just rolled straight back into full time investing because when I was in law school, it was a very part time. Mm hmm. 

[00:04:06] Anthony Esparza
And so the law school is more of like a, like a passion or an interest that you kind of just kept rolling with and then. Still main focus was on the real estate investing and flipping and development type stuff.

[00:04:18] Ben Lakey
I I went to law school in 2010 And that was a very hard time to make money in real estate at the time And I got a full tuition scholarship with a stipend into law school And so I thought hey now's a really the best time i'm gonna have to take advantage of something like this And it's worked out really well. It's given me some really good formal education And ability to really leverage my knowledge and network to develop because development is very law heavy. There's a lot of code with every municipality and every state and it also worked out very well because my current business partner is somebody I went to law school with and so it's worked out really great.

[00:05:03] Anthony Esparza
Nice. If you had to go back or say you went through the kind of the 08, 09, 2010, when the real estate market wasn't good, eventually that may be bound to happen again. But if it does happen, is there something you learned from that era where it was hard to make money in real estate where you could pivot and do something different now and still succeed with real estate when the market's down like that?

[00:05:27] Ben Lakey
The first thing I would say is. Sell your dogs early, take the hit, take the loss because they could get worse and it also frees up your time and your headspace to do more. Another thing I learned that I didn't leverage very well is seller finance and I think that this recession there's going to be even more opportunity because you have people who are struggling to find the price they want for their house, but they have these 2%, 3 percent mortgages and you can really cash flow with that because that's what a third of the going rate, half of the going rate. I would also take advantage of more seller finance deals and the third thing it may be too late for is become more cash heavy. Make sure that you are setting aside money for all your deals for very long term bad scenarios. And just set it aside in the account and don't touch it. And you probably won't, if you execute the deal well, have to use the cash. But having it there, set aside, not taking it for another deal, can really help you stay in a good situation when those problems come up.

[00:06:38] Roger Jacobsen
I think one of the biggest takeaways that I've taken from knowing Ben all these years is when you go into development, you originally think that people come in with just huge amounts of cash, like millions and millions of dollars, and they buy this land, betting that they're going to be able to develop it and in truth. What we do is more of a close after the city actually approves it. So until the city actually approves whatever you're developing, you don't actually put any money into other than just the permitting fees and the feasibility and stuff like that. And so you're not really like splashing millions of dollars of cash into deals. You're putting money into like the permitting stuff and then waiting and see if you get approval. And if you don't, the at risk money is just like 1 or 2 percent of the total thing. And if you don't get approval, you only lose like 1 percent instead of having what could be like a 1, 000, 000 dollar like piece of grass. That's only good for like. Feeding goats, right? 

[00:07:43] Anthony Esparza
Right. And so is that just like, do you make it subject to city approval and stuff like that? Or do you just like put it on your contract for like 12 months? 

[00:07:54] Ben Lakey
Knowing your timelines is really important as well as being aware of how good the municipality Is at excited about your project how much they're going to fight against you cities have reputations for Being developer friendly developer not friendly and so you have to learn that and we've done both we've done lots of 12 month contracts with 260 day extensions baked in and we've done some that contingent upon the approval. It really just depends on how hard of a fight do you think it's going to be right? 

[00:08:28] Anthony Esparza
Always seems to be like some sort of pushback they're always going to have. Different codes, regulations, all that stuff. So it's all good stuff to know. 

[00:08:37] Ben Lakey
The first thing I do on every single project, sometimes before I get it under contract, is I'll actually go into the city offices and speak with the development guy there and get a sense of how he feels about our project. He's not the final approval authority on almost anything, but he's the staff member. That's going to go to the planning commission and go to the city council and make recommendations. And in theory, you know, they trust their employees. That's why they work for him. So we're having them on your side is tremendously important.

[00:09:11] Anthony Esparza
Yeah, that's great strategy. I like that a lot. If I can bounce back really quick, you mentioned kind of what the deal we're going to start seeing right now, like you said, you got people locked in at twos and threes interest rates, and there's going to be seller finance deals and kind of mentioned, you know, it's. Feds are trying to do like a soft landing sort of thing. You mentioned the word recession, and I was curious on your take or your forecast on what we're gonna kind of see coming into the next two, three years. And I know nobody knows the future, but it's just interesting to get everybody's take on that.

[00:09:46] Ben Lakey
I'm not an econ. Expert my wife actually studied economics in school, and I'm very plugged into some people that are really smart about it. That will text back and forth just to try to gain as much information as I can. But, like I said, I wouldn't say I'm an expert. I think that the word recession is lost. They used to say that 2 quarters of negative GDP growth. And we had that last year and now it was in a recession. I think most people on Main Street would say that we're kind of in a recession already. GDP is growing, but inflation is eating that up. Interest rates make it difficult to move, difficult to buy a home, difficult to buy a car even. And at the same time, credit card debt is skyrocketing. And so I think that when you talk to people, my experience is That they already feel a recession and so I don't know if we'll have negative GDP growth, but we are going to have difficult times for regular people and regular investors. 

[00:11:00] Anthony Esparza
Interesting to get outlook.

[00:11:03] Roger Jacobsen
I'd say there's a lot of house flippers out there right now that are already going through the things that are in a recession. So they've. Lost money on houses and they're, you know, on the sidelines waiting for the market to get better, lost a hundred grand, learned their lesson, and now they're just sitting on the sidelines for what could be another year or something and waiting to see, you know, that they're guaranteed that at least interest rates won't go up during their house flip, or if they are going up, that they're not trying to chase it, that they're baking that into their offer.

[00:11:35] Ben Lakey
I think that that's even more pronounced in the multifamily space, Roger, and I mean, you already have seen multiple major failures, people losing 50 million assets. There are actually companies, multi billion dollar companies who've walked away from 150 million assets and just lost all their equity because they're looking at what their options are right now and with cap rates going up and interest rates going up, as well as insurance has gone up tremendously recently for multifamily properties, they have less income and then it. They have a balloon because almost all multifamily and commercial loans are balloons. I don't know the exact numbers, but there are massive amounts of loans coming due in the multifamily space. Where those operators in order to meet their debt service coverage ratio are going to have to bring in a lot more cash. And so you're looking and saying, okay, if I have a 50 million asset, I may have to bring in 10 million to buy that mortgage down to be able to refinance it. What are my other opportunities that I could take that 10 million and do something better. And so there's quite a few syndicators and large hedge funds that are walking away from assets. And we have at least another year of that continuing because there's still a whole lot more maturing debt on multifamily assets. 

[00:13:06] Anthony Esparza
And I believe those are based on what seven year loans and then you got to refinance or something like that from commercial. 

[00:13:14] Ben Lakey
Yeah, it's a little worse than that right now because there were a whole lot of syndicators, new syndicators and some more experienced syndicators who were just snatching up multifamily assets in 2020, 2019, 21. And they often just have bridge loans that might last two years. And so now a lot of those loans are coming due and they're even more expensive. And they're usually higher LTV as well. So you have to bring in more cash. So it is a little extra pronounced right now. And that's supposed to die off in about a year with upcoming maturing assets. But there's still a pretty good trickle every year thereafter with those seven year balloons and things like that. 

[00:13:58] Anthony Esparza
So it could be some good deals out there in that space if you're prepared for it.

[00:14:02] Ben Lakey
If you're well positioned with multifamily, then this is maybe the best time, certainly in my career in life, to buy multifamily assets. I heard Grant Cardone say in an article the other day that this could be the best transfer of wealth. In multifamily in his entire career and life, and he said that you will have normal investors, Main Street investors who are able to take massive assets from hedge funds from multi-billion dollar companies. And that's an opportunity that, you know, maybe hasn't existed since the savings and loan bank era. So it's, I think there's just great opportunities right now in multifamily. 

[00:14:45] Anthony Esparza
So somebody like me, I've never flipped a house. I want to flip a house. That's on my to do list. I want to get into the, all the stuff you guys already do together, but still learning and need some time and stuff like that. If someone like myself or somebody like a younger person, who's trying to get a piece of the pie, what steps would they take to reap the benefits of some of this opportunity? 

[00:15:10] Ben Lakey
That's kind of unfolding in front of us. One of my mentors, Rod Khleif, he says the very first thing you should do is find your superpower. On these big projects, you don't really have one person buying a 50 million apartment project. You need different specialists, an asset manager, investor relations. acquisitions, underwriting, there's a lot of different skills that every team needs. So I would be looking very aggressively for what your superpower is and then networking to find where that superpower might fit in with an existing team so you can leverage their experience as well. And come in and get some equity and general partnership. 

[00:15:53] Anthony Esparza
That's awesome advice. 

[00:15:54] Roger Jacobsen
That's good advice. Really good advice. Why don't we switch gears a little bit right now, Ben, you're working on a couple of different short term rental developments where you're finding land and getting the proper approvals and stuff, and then building to keep in rent. Do you want to kind of tell us a little bit more about that? 

[00:16:15] Ben Lakey
Sure. As I said earlier, my partner is someone I went to law school with, and our company is called Build Vacations, and it's something that we're very, very passionate about. And we have two developments right now that are single family homes built for short term rentals in Outer Banks, North Carolina, and those are under construction right now. So we have a project in Roatan that will be about 40 or 50 hotel units as well as 40 or 50 homes. And we're currently in the process of getting our general plan approved, which is where all our lots are going to go. And as soon as we get that, which hopefully will be shortly here, we'll be able to start designing houses and finishing the design for the hotel. And we hope to be building those houses early next year and start on the hotel probably in the fall sometime. 

[00:17:05] Roger Jacobsen
There's a lot of people that will say that development is too risky. You yourself have said that land is going to eat three meals a day. How do you mitigate the risk in that space? And what's the upside?

[00:17:17] Ben Lakey
The upside is massive. It's very, very lucrative, because if you can carry a project all the way through, you're making the profit of the person entitling it and getting it approved. You're making the profit of the developer who's building the utilities for that project, and you're making the profit of the builder. And so, I think that most deals that we underwrite that we get serious about, we're going to be about 55 percent LTV on the project. So, there are good margins, and especially for a smaller developer, not a massive multi billion dollar company, that's about the target range that you want to be in. A lot of publicly held companies, Want about an 80 percent LTV, 80 to 90%. And so there's a lot of opportunity there as well to get something approved and then sell it to them and take that spread from 55 percent to 80%. And I've done deals like that where I own the land for less than 45 days and taking that spread. And so there's a lot of really good opportunity. The way that you mitigate that is, because land does eat three meals a day, unless you rent farmland, you don't really make any money off of it, and you're paying taxes and insurance and interest, and so a good way to mitigate that is to do anything you can to get around the interest, which is usually your largest cost, so you can Do that by structuring the contract so that you have things set up to either get going on building or to sell it to a big publicly traded builder before you close on the land so you can really get it so that you don't own the project for a long time and you can get a good chunk of profit on that, but really taking downland and owning that land.

[00:19:07]
That often called land banking is something for the wealthy. And if you do that, you better make sure that you have reserves for a lot longer than you anticipated, because I've had projects. We had 1 self storage that we did right before it is when we started the project. And as soon as COVID hits, Citi de staffed, they went remote, and it ended up taking us about two and a half times as long as we had planned on getting approval. And our plan was a reasonable, well thought out plan, but we couldn't have predicted COVID and how that would impact. The city's workload and so really worst case scenario is kind of what you have to plan on in development. 

[00:19:50] Roger Jacobsen
Yeah, conditional use permits are not nearly as good as permits that are already, like, allowed and in place transit corridor being much better than conditional use in my experience. 

[00:20:03] Ben Lakey
Yeah, there are multiple stages in getting a project approved. The first one, and it's important to know and understand what your rights are and what your fight is up against. The major stages are entitlement, zoning, so zoning, annexing into a city, de annexing from a city. That is almost always at the whim of the city council. Once you have that zone, so this is very risky. Once you have that zone, you're entitled to whatever the code says you can build. That doesn't mean that a project won't take a long time and have a lot of fights, because cities can slow you down a lot, and the rules and code are very complex, and so there's a whole lot of ways that they can drag that out, your engineer can miss something. And you might lose 10 percent of your units or because you need extra parking and so you're entitled it's by right, but it's only what's in the code. So you have to learn the code as best as you can. And then the next stage after that is permitting. And permitting is, once again, by right, you just have to build what is allowable.

[00:21:18]
And that's where, as Roger was saying just a minute ago, with conditional use, conditional use is an entitlement, but there are some conditions that can be very difficult to get approved. And so permitting, especially on these big, complex projects where you're building 200 units or something like that, those are difficult projects to get designed. And so that stage can also take a year or two, especially if COVID happens

[00:21:45] Anthony Esparza
That's pretty crazy to kind of feel like I, I know what you guys are talking about. I had an experience with the real estate transaction, kind of similar to this. This was some property out in like Harriman, your very Southwest corner of Harriman. It wasn't even part of Harriman, it was just part of the county, and had some clients, they wanted to build a pool, and a detached garage, and it was like a five acre lot, and so went to the county, Salt Lake County, and it was like this whole thing, kinda, it was like a conditional use permit, we had to go and get a survey of the whole lot done, and you had to be so many feet from, you had all these setbacks, so many feet from the river, so many feet from the road, And I just remember, like extended the contract another month out, earnest money went hard, and at the end of all of it, it was just like, well, it sounds like you can maybe do it. And, you know, and they ended up fighting and fighting, and they finally, I think I talked to them, and it must have been like three years now, but I think they just finally got everything approved. To start doing their pool, but it was like a long hard battle. It is what it kind of seemed like. 

[00:22:54] Ben Lakey
Conditional use permits are spongy the law in Utah and most states are fairly similar says that the city must approve it if you can find a way to mitigate all of the reasonably anticipated. Detrimental effects of the land and there's another one that's a simple legal argument that there must be something unique to that property that is not economic in nature is a rule in Utah. Not every state has that, but the spongy parts are. Where it says the reasonably anticipated detrimental effects. Well, what's a detrimental effect? What's a reasonably anticipated one? It might be parking. It might be ingress egress But it's very spongy and so cities can really push back on that And then you also have to mitigate those effects and mitigate is also very spongy Does that mean that you solve it so that effect is gone or does it mean? You make it 10 percent better or 80 percent better, so they're very difficult if the city doesn't like what you're doing, or there's just a city engineer that's difficult to work with. It's very spongy. 

[00:24:09] Roger Jacobsen
Another thing you see a lot is the, uh, use and Control of rainwater in catch basins and stuff like that, and sometimes they're like a shorter term for the storm. That might be the worst in 10 years, or they might push it up to 50 years. And then the question is, how do you control that much water? How do you put a place for a hundred year storm worth of water in the middle of your project that you're trying to build out as effectively as you possibly can. And then right there, smack dab in the middle. They want like this gigantic catch for a storm that may never happen in your lifetime. 

[00:24:51] Ben Lakey
We have a very difficult problem with that right now on our, one of our projects in North Carolina, about half of the land is wetlands, and it's an island, and we're right next to the wetlands and the intercoastal waterway. So, the rule is, is that we can't, for the big storm, we can't let the water run into the wetlands or the ocean. And we're about nine feet above the ocean in elevation, and they want us to be able to store enough water for that storm, not counting, because it's sand, right? Water goes straight through sand into the water table, or the ocean at this point. But we can't use the calculation of how much water will go through the sand, which is considerable during the storm. So we have to hold all the water that could come in that storm without factoring in how much water actually needs to be stored. And the problem is, is we're only about nine feet above sea level, so we can't build very big basins. And so it's been really difficult in getting that approval, and we've submitted multiple versions of it as we get more and more comments back from the state of North Carolina. We're almost there, but finding how to design those basins can be very tricky depending on the contours of the land. 

[00:26:18] Anthony Esparza
Right. It's almost like you got to start getting creative to find solutions as you're doing developments and different things come up like that All those things almost seem tacky, you know, like it's just like they spit volume and then it's your problem to deal with. 

[00:26:32] Ben Lakey
Yeah in a storm like that over half of the water that it rains will soak through the sand during the storm And so we could really build catch basins half the size that they are right now and store all of the reasonably anticipated water that comes down during that storm. But we have to double the size of our catch basins to get permits.

[00:26:55] Anthony Esparza
Jeez, sounds tricky. Godspeed, thank you. 

[00:27:01] Roger Jacobsen
It's often frustrating when you go into the city council or whatever, and you start the permitting process and you get put into these meetings, the developmental resource team, and you get all these stipulations for building and they take your plans that are well thought out and start redlining them and changing everything that you thought was going to happen. And then you have to go and circle back and have your engineer redraw them. And then you go back to the DRT meeting, like, with as much hope as you can possibly can, and then they redline them again, and you're just stuck in this vicious circle where you just want them to say, okay, here's your permit, and they keep changing the finish line and pulling it and changing it and wanting to do all sorts of, like, land trades and egresses and stuff like that. And May not even be possible on your project.

[00:27:57] Anthony Esparza
That's crazy. And have you, either of you guys, and I guess maybe more than specifically, but ever had a project where, kind of what we've been discussing, you're in this never ending loop of Okay, here's the new design, and then they slap your wrist, and then over and over and over again until you find out that you can't actually do what they're wanting to do. Have you ever been in that situation? And if you have, was there an outcome or was it just kind of like took the hit or had to make big changes to the project?

[00:28:26] Ben Lakey
I've never had that happen. I have had a project that was under contract. And the city of Saratoga Springs has very difficult development requirements, and we have the project under contract, and we've gone through some red lines, and we pulled the plug on the project so we didn't close on it, we would have eventually gotten approval, you maybe would have lost a few lots. But the timeline and the uncertainty just made us be more conservative. I live by Warren Buffett's first two rules. Don't lose money and see rule number one. And so we did lose some money on that for applications and we even lost some earnest money. One of my bigger hits, but we didn't go into something blind and stuck.

[00:29:18] Anthony Esparza
Right. So do your due diligence, everybody. Make sure you know, know what you're getting into. Out of curiosity, did it have to do in Saratoga with property being near the lake? 

[00:29:28] Ben Lakey
It was right on the lake, but what it actually had to do with was changing requirements of water rights, which was the biggest one, as well as The city set a rule that said you had to buy water rights from them. You couldn't buy them off the market. And the price that they had set for those water shares were, I think they were four times more expensive than the market rate at that time. And there were some developers that sued the city over that. I don't know the outcome of that case. I imagine the city probably had to drop their price or take part in the market. But they also set some rules for public open space that were very unreasonable, maybe two or three times more than I've ever seen a city require. And we unfortunately were not at the stage far enough along in that process that we were entitled to the old rules, the grandfathered rules, which comes when you submit a permit. So when you submit a permit of any kind or a zone or anything like that. You're entitled to the rules in place at the time that you submit a complete application and we haven't gotten to the permitting stage of the project that allowed us to be grandfathered into those rules. 

[00:30:45] Anthony Esparza
Yeah, I've actually heard a lot of negative things about Saratoga City. Seems like a difficult one to deal with.

[00:30:51] Roger Jacobsen
One of the cool things about your company, Ben is Build Vacations, does syndications and deals that are in places where you would want to vacation. Me personally, as a syndicator, I've done quite a lot of stuff in New Mexico in like workforce service, uh, apartment levels where we're never going to invite our equity, our LPs, the people that bring in money to come and visit, stay in these, they're nice little apartments, like 900 a month kind of thing, but we're never going to invite them out to enjoy this space and look at the project. Whereas Build Vacations, you know, you actually even have deals in there that is, you're able to go in and offer people a way to invest. And then also give them a chance to do a vacation. Why don't you tell us a little bit more about that? 

[00:31:45] Ben Lakey
Yeah, that's one of the reasons we're very passionate about Build Vacations. Because the only thing you leave this life with is the legacy and the experiences that you've had. And we like to say, we do build on the upper end of the market in quality. And so they're great experiences. And we always say that we want to add money to your bank account. And add experiences to your memory bank, and that's something I'm really passionate about. I love travel. I've had great experiences with my kids traveling. And with my wife, and it's very important to us to help extend that to our investors so that they can be increasing their quality of life as well as saving for retirement and making a good investment.

[00:32:30] Roger Jacobsen
Absolutely. The thing that we're harping on here is just, you can't take your Lambo with you, but you can definitely create memories that will last forever a lifetime. With your family and friends, we have good returns in our business.

[00:32:44] Ben Lakey
There are things you can invest in for a better return, but I've never known somebody to have a good experience with looking at their crypto account and the experience in life. Maybe they feel a little better about their financial situation and that can help them have experiences in life. But there's a lot of uncertainty there and people don't actually enjoy crypto. 

[00:33:10] Roger Jacobsen
If you do enjoy crypto, watch out because it might drop tomorrow. 

[00:33:14] Ben Lakey
Or you might have the SEC coming after you and have a criminal trial, depending on what you're doing in crypto.

[00:33:22] Roger Jacobsen
Yeah, they could come after you in the, uh, syndication space too, and might be through no fault of your own, but because the market has changed, interest rates have changed, cap rates have changed, and that's when a lot of people are going to have some real serious problems with SEC.

[00:33:38] Ben Lakey
I've actually avoided syndicating my whole 2 years ago when we found this idea of Build Vacations and I wanted to bring investors in with us. And the difference between crypto and a real estate syndication is real estate syndications are well defined rules in the SEC, whereas crypto, they're trying to find out what those rules should be, and sometimes they will apply them retroactively, whereas if you get a good attorney, if you follow the rules in real estate syndication, You will win the lawsuit at the end of the day, even if the market tanks and your investors lose money.

[00:34:22] Roger Jacobsen
That's a good point to kind of circle back to Anthony's question earlier. One of the ways that a newbie can participate in syndications or development or whatever is if somebody like a newbie brings in. The idea or the deal or the land to the deal, and then they can partner as opposed to just being a realtor, a wholesaler, find your fee or whatever you do.

[00:34:49] Ben Lakey
There are lots of syndicators out there that have tremendous amounts of money and operating experience that their business model is based on crowdsourcing and finding deals. So they want people to bring them a deal. And then their experience and their access to capital allows them to participate in that deal with you. 

[00:35:12] Anthony Esparza
It's a great way to get started. Yeah, I'm going to kind of shift my mindset into 2024. I want to get more into real estate investing. That's something I've never really chipped into, but we learned a ton from you on this podcast, which hopefully our listeners did too, cause that's really good info.

[00:35:28] Ben Lakey
Yeah. Thanks for having me again. It's, it's been great. 

[00:35:33] Anthony Esparza
Yeah, no, I appreciate it. Roger. It's a great guest you brought on. Really excited we got to do this. I'll wait for the final four. I feel like Roger has some other good topics to cover, but yeah, it's been fun.

[00:35:45] Roger Jacobsen
Yeah. Other than waiting for everything to unfold and making our predictions for the crystal ball of what the future holds, we're kind of just moving forward with things that we know and can control and hoping that things are within the realm of. Feasibility and possibility. 

[00:36:04] Ben Lakey
Absolutely. Never do real estate in slow motion, because especially in a pivoting market like this, kind of like I said earlier, sell your dogs early, but every single thing you can do, especially if you're struggling with a deal, do it fast and do it hard.

[00:36:20] Anthony Esparza
Sweet advice. Good to know. I'm going to be looking for the deals. Sounds like they're coming up. And I might be giving one of you guys a call one day when I find the perfect one, absolutely. 

[00:36:31] Roger Jacobsen
So Ben, you've done a trip to Costa Rica, a trip to Belize, couple trips to Roatan. What are the things that you like about developing in tropical areas?

[00:36:44] Ben Lakey
I love going to those areas, and I live in Utah, and so I love to get out there during the winter, which is when it's cold here in Utah, and when people aren't going on vacation as much, because their kids are in school. So that gives us some vacancy rates in those properties that we can take advantage of, but I also very much like the economics of those markets. There are a lot of people who might buy a house in Costa Rica. To do short term rentals and it's really difficult to manage that so far away and really make it economically feasible and a well oiled machine and so one of my superpowers is development and so it enables me to do larger projects that are centrally located. And far away, that's a lot easier to manage than a small project. And so it gives us an opportunity to really take advantage of our strong points in a really cool location that we'll be able to get life experiences. 

[00:37:44] Roger Jacobsen
That's awesome. You can definitely capture some of the upside of doing the development and then the economies of scale of doing more than 1 and it's great for a passive investor because they're able to partner with you and work with you and make some of the money that you make using your experience. And then they also get the backside that is when it's built, they can actually take a little time and go and check on their property and do a business trip where they see what they're doing and also enjoy tropical temperatures when it's old here in Utah. 

[00:38:22] Ben Lakey
We do a lot of economic underwriting of the markets that we look at. I think we've looked at 95 to 100 markets and we own in two and we're interested in five others. And so we've taken a lot to really underwrite the economic conditions of those markets that maybe an investor who's just buying a single house can't undertake that level of underwriting in order to buy that single house.

[00:38:50] Anthony Esparza
And as far as evaluating different countries and economies and finding where there's little, I mean, compared to like the U. S. where the scale is a lot smaller and you can. Do a lot more. What kind of approach do you take to that? Do you get a professional who that's their superpower or is there a formula you guys use?

[00:39:10] Ben Lakey
We'll hire a professional once we get a project under contract to give us a feasibility study, but we use a lot of brute force. There are things like costar and things like that, that can give you a leg up. And see what the hospitality markets look like in these other countries, but we use a lot of brute force as well, where we will pull up our competitors in the space and track for a season or 2 track their occupancy, their rates, and it allows us to have really good first hand information that may not be available to the public, and it gives us another security blanket if somebody else isn't doing their job. Especially foreign, we'll look at the stability of the economy, the stability of the politics. And see what that country looks like, what the corruption is there, what the crime is there, just a lot of things like that working in a foreign country that can really bite you hard. I mean, look at Russia and some American companies. Lost very large portions of their assets in the country because of a difficult to predict event that those events will happen throughout our lifetime and throughout our investments, so the more we can predict that the better off we're going to be nice.

[00:40:35] Anthony Esparza
I think it's a great approach. Hopefully I get to Think back on this one day when I go and build my tropical hotel in costa rica And I remember to do that I won't say I hope, I'm going to say I will. You will. I'm going to do it one day. 

[00:40:52] Ben Lakey
VAs are a wonderful thing. They can help with that underwriting a lot.

[00:40:58] Roger Jacobsen
For everybody, that's a virtual assistant, which we find a lot of those in the Philippines. Anthony, why don't you take us into the final four? 

[00:41:07] Anthony Esparza
Final four. Here we go. We got four questions we ask every guest, and today is your turn, Ben. So let's start with question number one. What is your favorite business book? 

[00:41:18] Ben Lakey
I like The Snowball. It's about Warren Buffett's life. It's a biography, but so much of Warren Buffett's life was business. But there's so many gems in there that I've never found another book that had that many gems. Nice. 

[00:41:34] Anthony Esparza
I think Warren Buffett's a good investor also. I mean, very stable, very smart, low risk, long term outlook. That's awesome. I'm going to actually download that book today because I have some Audible credits. Question number two, what brings you happiness?

[00:41:49] Ben Lakey
Making meaningful experiences with my friends and family. I'm a big believer that my wife doesn't like it when I say this, but we all leave this life naked or broken alone. And you can't take it with you. So no matter how much money I make in my life, it doesn't make a difference. I have to find peace in things that will last. And my kids and the experiences that we have with each other are enduring. 

[00:42:16] Anthony Esparza
That's awesome. Experience over materialism. Kind of the mindset. I like it. Question number three. What does your future retirement look like and or do you have one?

[00:42:26] Ben Lakey
I have found so much joy in my work over the last two years that I've changed my outlook on that and I don't I don't see a retirement other than hiring a CEO, a CFO, a COO to help run our company and slowing down a little bit.

[00:42:44] Anthony Esparza
And question number four, what do you think is the best way to give back?

[00:42:48] Ben Lakey
I think that time is the most valuable thing you can give. And the way to do that is to find something that is within your expertise and that you're passionate about and find ways that you can give in that arena. So, we have a daughter who has been suffering from cancer for about 14 months and so it's something that we've learned a lot about and we're very obviously passionate about it. And so we found ways to serve that are hard for people who don't have my life experiences to do. So really draw on your life experience and your expertise and you'll find a meaningful way and focus on that. 

[00:43:34] Anthony Esparza
That is awesome. That is the final four, Ben. Thank you for being on today. Hey, thanks for having me. Yeah, you've been an awesome guest. Actually, I'd say probably one of my favorite. I learned a lot from you. So hope everybody learned a lot and. Enjoyed the show and thanks again, Ben. It was good to meet you. You too. 

[00:43:52] Roger Jacobsen
Yeah. Thanks for being on the show. Thanks everyone for coming and listening to our Retire Wealthy and Happy podcast. Once again, we've had Ben like he who's a jag and also a developer specializes in short term rentals locally, far away and also in tropical areas. We also want to thank our sponsor, Monument Real Estate, Monument Real Estate helping you cut your retirement goals down by five to ten years. Thanks everyone for joining the show. Thank you, Ben. Thank you, Anthony. We'll see you on the next episode. 

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