You're listening to the REI marketing nerds podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.
(0:40) Hey guys, welcome back. You're listening to the second part of last week's episode. Let's jump back in. Alright, so let's let's back up a little bit. How did you get involved in this like was your background in obviously your app? Let's just say, Here's your background and blockchain technologies like blockchain, although it's been around for a while, right, I think really only broke into most people's this sort of common knowledge in the last couple of years. Right. So like, what was your sort of on ramp into this technology? Were you were you primarily involved in real estate? Like what what was your entry point here,
(1:14) I have been in still am a real estate broker since 1986. I have never ever sold a house. So there's commercial real estate broker. And we've invested in shopping centers with institutional investors, and been extensively involved in real estate. I also was hanging around some people that and I'm part of a startup country in the middle of Europe, called Libra land. And Libra lands, entire country and organization and all the moving pieces on it are on a blockchain as well. And through that, some guys that I know, had contacted me and some other people to say we're doing this what's called an Ico, which was an initial coin offering.
It was a crypto offering. And they said, We're doing this real estate Ico, can you help us on us? And so that was in, I want to say, 2018, the stuff, you know, gets murky back over there. But these guys didn't know anything about real estate. They put together this thing. And they raised, you know, I believe, between 850,000 to 1,000,002. I said, These guys don't know anything about real estate, they just raise 1,000,002. And it was like super easy.
I'm like, what if somebody actually knew what they were doing and could give like a stable credible investment instead of what they were messing around with? This is revolutionary. So that's when I went down the rabbit hole. And then I found out that what they had done, would be illegal in the United States. And so we went about learning the regulations spent hundreds of 1000s of dollars on legal fees, and accounting fees, and everything else.
And I thought there was a lot of other people out there doing it, and there was it. So when we were, you know, initially starting this 2019, and through 2020, and I know enough about technology to be dangerous. When we started our company in 1990, we shared office space with a friend of mine, who also was a startup, and their company grew astronomically. And they were actually writing the code that the internet was built on.
And so I understood a lot of the technology, I can say all kinds of buzzwords, but if you ask me anything about coding, I have no idea. But I know how everything fits together. And so I just kept asking, how does this work? How does this work? How does this work? And so it got to the point, even with some of the technology people that we're working with that built these, you know, securitization platforms and built all this stuff and knew coding backwards and forwards. You know, like, I asked one question, like, what if the blockchain stops working?
You know, they all start laughing at me like, Oh, I couldn't possibly stop working. And like, it's only been around since 2009. How could you say it couldn't possibly stop working? So it was just a lot of stuff that deeper and deeper trying to understand how all the pieces fit together. Because there's a lot of people that talk about this stuff and say it can do these things in it. And we even had discussions with some of the technology people, they're like, well, we could do this, this and this with it. I'm like, Well, you could do that with it. But that would also be money laundering, and we're probably not going to do that with it. So that's the type of stuff that you have to not only know the technology part of it, but also know the legal and also know what people will invest in, and what they'll feel comfortable with.
(4:40) Yeah, I mean, it strikes me that when you have an idea that is really new and I think blockchain was was one of the truly new ideas right over the last however many decades, I think has been really interesting. When it starts to interface with the old world systems are ready halation real estate etc, right? Things get really weird really quickly, particularly when you have these like siloed knowledge bases, like you're saying, like you know about the regulation, but they know about the tech, just because you can do something doesn't mean you can do it without going to jail. So I want to ask you, you know, you had this idea, you know, saw the the guys in Europe do this thing.
And you know, you had this idea. But then like you said, right, you realize like, well, the model that they were using wouldn't be legal here, right? So you had to put hundreds of 1000s of dollars into legal fees, accounting, all this stuff, just to figure out the way to do it legally here. I think a lot of people in that moment would have just given up. So I'm curious, like, what motivated you to push through that initial difficulty? And really try to pursue this right? I think a lot of people are just like, oh, well, if it was a good idea, a lot of people would already be doing it, you know, they would have gotten to do something easier. What attracted you to this idea, to the extent that you were willing to push through all those obstacles,
(6:03) one of the things that I like to say is I took a look at this, and like, this could be such a liberating thing for people all over the world. So if people could not only get title to prove that they've got actual title to some of their stuff, let's say you're in the middle of Nigeria, or I know that they're, I know a company that's working on title and Kenya, and Uganda. And they're putting all this stuff on maps and on title and on the blockchain.
So that now those people can actually prove that they own that. So then they have an asset in and they have capital, and so that if they have a business, they can borrow against their capital, they can actually sell their capital, they could trade their capital, we in the United States, and in Western Europe, and other countries have no idea how easy it is for us to form and create capital, because there's these legal systems, there's these just history of trial and error, versus other parts of the world. So I think, number one, there's like $280 trillion worth of real estate in the world.
So if that was all, something that could actually be accessed instead of linear or locked in, think about how free and it's going to be, because everything in society and well ordered societies always start with capital. And I always point out to people, financial freedom is upstream from political freedom, you need to have financial freedom, before you can have political freedom before you can like get printing presses before you can get out, get your thing out. And even to the point where we in the United States have the second amendment before you can buy your guns.
So everything starts with financial freedom. So I'm really big on that. And then like I said, number two, it's going to help a lot of people in the United States because we're a beacon of stability. And there's all these places out there that don't have stable money. So if again, if you can park your money someplace and get that stability, and I'm just a firm believer that the best way to create financial freedom is through real estate, but probably because I don't know anything else to do.
(8:14) Well, you know, everybody's got a unique intersection of skill sets and interests, right. And you do strike me as someone that's like really well situated to do this thing that you really deeply believe in. Right. So I mean, I don't think that's a mistake, or an accident question. So I'm curious, how do you view We'll I'm gonna give you a couple really broad questions, and then we'll just zero in on real estate investing as we come to the end of the show. But I am curious what your opinion is on the current state of regulation as regards either blockchain and blockchain and real estate specifically, it definitely feels to me like this is very much a transitional period.
You know, there's a lot of stuff going on. Now, in terms of what counts as a security, what doesn't. And I don't know enough about the regulatory regime to really have an opinion one way or another. You obviously you're someone with a deep knowledge of regulation, how it relates to real estate, where do you see us at like, where are we in the arc of understanding what these assets really are and how they need to be regulated? Sure. Well,
(9:21) the great thing is unlike crypto, and unlike the whole, we're recording this in December 2022, the whole FTX fiasco and everything else that's happened in 2022 with crypto, all the regulations that were issued new securities all come from the 1933 Securities Act, and, you know, following and so there's a lot of people out there that still come up to meet today and say, We're tokenizing this or we're tokenizing that and like well, how are you what type of you're issuing security so how do you how are you doing this legally?
And they're like, Oh, we don't need to do that this is a tokenization. No, see, this is a security. If, you know you're promising somebody in the actual words in the the act of the Howey Test, which is a legal case, it's like, if you're promising somebody in an investment scheme, that they're gonna get a return on their money, and you're going to do certain things for him. And there's four parts to it, like you are issuing a security, no matter how new it looks. And a lot of crypto is going to be regulated as securities. Bitcoin is already regulated, it's regulated as a commodity.
And there's some other things were these exchanges, some will have gotten around exchange rules, and you know, their money transmitters and things like that. But going back to FTX, what happened, there wasn't the fault of crypto, it was just plain old theft. And whether you're investing in real estate, whether you're investing your crypto, whether you're investing in stocks, you always need to like do your due diligence and make sure that you're investing in proper things, and that the people that are telling you things are actually doing what they're telling you.
But again, the great thing about blockchain real estate, it's already regulated, they're not issuing any new regulations. And they're actually improving the regulations. As we said before, accredited investors right now, get the best deals out there, because most of these things are issued under exemptions. And what's going to happen is more non accredited investors are going to be able to get into these good deals, what I would really like to see and I don't think it's going to happen is I really like to see the accredited investors thing go away, because people can go out and spend $1 to $5 on a lottery ticket, and they don't have to be any accredited.
And there's a lot more likelihood that they're going to lose 100% of their money on a lottery ticket than investing in some sort of real estate investment with some of their friends that they know. So that's the one thing that I would like to see less tightening up because I really think that people shouldn't be forced into certain things like most non accredited investors are forced in the stock market, I'd like to see people have more choice of what they can invest in. And I'd like to see more investment freedom.
So but other than that, in real estate, the regulations are real estate is one of the most heavily regulated industries in the world regulated by title regulated by per state. If you're issuing securities, not only is the SEC regulate them, but also each state has a Securities Commission. So if you're looking for something that, you know, you want to invest your money in, I believe firmly in real estate, especially cash flowing real estate, because a lot of the crypto and a lot of the tech stocks and everything else. They're all assuming that they just keep going up, up, up and up, and it never ever goes down versus real estate. You getting some nice appreciation, sometimes you might get really high appreciation. Other times you might not. But always get the cash flow because you can't spend appreciation but it can spend cash flow.
(13:10) Let's find motivated seller leads online but don't know where to start. Download our FREE motivated seller keyword report today, AdWords nerds have spent over $5 million this year researching the most profitable keywords for finding motivated seller leads. And you can grab these exact keywords when you download our report at www dot AdWords nerds.com/keywords. So I want to wrap this up, because I think there's so many threads to pull on where you could just keep talking about this forever. But I'm curious what you see as likely to happen in the next 10 years in this part of the industry, right as an external observer of not necessarily tokenized real estate but just blockchain based technologies. And obviously cryptocurrencies, like you've said many times, right?
They're the most visible sort of aspect of it, but they are one piece of what the technology does. They're not the technology itself, right. But I think because there was this kind of massive hype cycle behind crypto and that sort of died off. I think people have sort of turned their attention elsewhere for a while. But many, many, many, many people are working very hard on the technology every single day. So where do you see it as going in the next 10 years in terms of how blockchain in real estate intersect?
(14:32) Number one, I think that blockchain is going to probably impact almost every aspect of real estate. So it's going to take a long time, but eventually, most title for houses or commercial real estate will be on the blockchain. So that should reduce costs. And I was talking to this one gentleman out of Texas who has been working on blockchain title for the last three In five years, and he's got a few test counties down there in Texas, and he says that he can get a house to close in 10 days, and eventually, you'll be able to get a house to close from offer to acceptance to closing in three to two days. Wow. So and that's coming, probably, the hard part about real estate is because it is so regulated, that there's a lot of access to Gore. So you know, and it's gonna be hard. But at some point, it could disintermediate title companies, it could disintermediate, you know, disintermediate by reduced fees for real estate brokers reduce fees for title insurance companies, I also see that even in property management, and even in every aspect of operating properties, you've got this record of savings and continually updates on the record.
So that when you go to buy an investment property, if all the financials are, you know, locked in place on a blockchain, so instead of having an on a Dropbox, it's like there, and so that once you open up and like you get the key to open up all that data, you can go see and see through and get instantaneous updates and live updates on things. Versus now when you go to buy something, sometimes, you actually don't know if the tenants in there or not, are the tenants paying rent or not. And so at some point, you can have daily updates on a lot of things, who paid what paid and all the rest of it. The other thing that I see is not only you're gonna be able to pay your rent, with an ACH payment, or a check, or credit card or a debit card, but you'll also be able to pay it through crypto. So I see a lot of that stuff. And it's the same thing whenever money is being exchanged. And at some point, instead of put it parking your money in a money market account, you might park your money in a fund, that's a real estate account that invest in a bunch of different funds, and gives you a return on that. Because it's the same thing.
Most people don't understand that money market accounts aren't really guaranteed either. They're just a bunch of you know, investments. But the other thing is, is that you might see Airbnb, even renting things by the hour, because of the blockchain, you can keep track of a lot of that stuff. So there's a lot of hype around blockchain. And there's a lot of things that people say that they can do, and they can't do, or they say they can do. And like I say, technically, it's able to do but right now, they can't do it. But you know, there's just a ton of things that you won't even be able to manage it.
Like most airline miles at some point will probably be NF T's that you keep in your wallet, and your tickets to like concerts and things like that, those will probably all be issued as NF T's which are non fungible tokens. And what the what's going to happen then is the artist says, Well, if you resell the ticket that I'm going to get a cut 20% of it. But if you keep the ticket, you might get all these extra bonuses, and, you know, kind of be in our little club too. So NF T's aside from being stupid pictures with monkeys can have real value. Even if you're like running an apartment building or a hotel, you could potentially as an apartment building operator, issue, lefties, and if the tenants pay their rent on time, and things like that, they could actually be saving money towards investing in the building. There's all kinds of things that I can't imagine because I'm not that creative, but other people are going to imagine.
(18:33) Well, I mean, there's so many things that seemed like it can happen, it's a very exciting time to be interested in this kind of thing. Now, I mentioned this at the beginning of the podcast. So you can go right now to invest on main.com. And you can go download the free report that you guys have, which is all about the impact of blockchain is going to have on real estate investing, I highly recommend that you go check it out. I know it's something you've been working on for a long time. And a lot of effort went into it. So again, invest on main.com, you can go check that out. You also have a website over at Liberty fund a.io Is there anywhere else that you want people to follow you to do social media at all, like where's the best place for people to learn more about what
(19:17) you're doing? They can connect with me on LinkedIn. And that's probably the best place to connect with me, Michael flight. It's Michael J flight on LinkedIn. And if you're looking for Liberty fund that IO has a lot of articles on blockchain real estate, but also on commercial real estate and says I do retail real estate net leased properties. It has some of our things which is a podcast that nothing but net show which explains how you can go about investing in net leased properties. So we just try to be extremely educational because most of the people that I do talk to are very familiar with houses and apartments and Airbnb said those type of things but once you get in to retail or net leased properties, they say what are those things? So we try to be as educational as possible. And by all means reach out to me because we also, because blockchain real estate was so unique and original, we created the blockchain real estate Summit.
So we've had two blockchain real estate summits, which are live in person events that explain the different aspects of issuing a security as a security token, and some of the unique projects out there. And we expanded it this year, in September to two days. And really, you know, just great opportunity. For a lot of people. We've just had rave reviews about it seriously, people unsolicited say, this is just the best real estate conference I've been to just because we've learned so watch. Or the other thing is, I'm going to have to spend a week you know decompressing because, right, I just exploded. Yeah, I got to spend three hours on the plane, go go for my notes.
(20:57) So that's at blockchain real estate. summit.com. So like I said, we're all about trying to educate people because we firmly believe that, you know, this is the future this is going to help maximize human flourishing in the world. Wow, I love it. So again, this is Michael flight, you can go check him out in invest on main.com Liberty fund.io. We just talked about that nothing but net show. And of course, you can check out blockchain real estate summit.com To learn about the live events. Michael, thank you so much. Right. This is a this is a deep topic is a lot of technical stuff. You did an amazing job of making it accessible to people. I really appreciate you taking the time. Thank you, Dan. That is it. That's it for our interview this week. Man, it does seem like we are living in fascinating times or so much technological change happening around us every single day.
It is always worth it to try to listen to someone who's really been doing the work really tried to wrap your head around what they're working on. So I hope you enjoyed this week's conversation with Michael flight from again, Liberty fund.io Go check out what he's doing really amazing stuff over there. Look, as always AdWords nerds.com. You can go there and jump on a call with someone from my team. We will help you put together an online marketing strategy for your market, help you get some more deals. If that's something you're interested in AdWords nerds.com is the place to go. As always, folks, I cannot tell you how much I appreciate having you here every week. It means a lot to me your time means a lot to me. So thank you. Thank you. Thank you and I will see you back here next week. Cheers.
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