In this course you will learn how companies decide on how much debt to take, and whether to raise capital from markets or from banks. You will also learn how to measure and manage credit risk and how to deal with financial distress. You will discuss the mechanics of dividends and share repurchases, and how to choose the best way to return cash to investors. You will also learn how to use derivatives and liquidity management to offset specific sources of financial risk, including currency risks. Finally, You will learn how companies finance merger and acquisition decisions, including leveraged buyouts, and how to incorporate large changes in leverage in standard valuation models. Upon successful completion of this course, you will be able to: • Understand how companies make financing, payout and risk management decisions that create value • Measure the effects of leverage on profitability, risk, and valuation • Manage credit risk and financial distress using appropriate financial tools • Understand the links between payout policies and company performance • Use derivatives and liquidity management to offset financial risks • Pick an appropriate financing package for an M&A or leveraged buyout deal This course is part of the iMBA offered by the University of Illinois, a flexible, fully-accredited online MBA at an incredibly competitive price. For more information, please see the Resource page in this course and onlinemba.illinois.edu.
Nona Inc.
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From the course by University of Illinois at Urbana-Champaign
Corporate Finance II: Financing Investments and Managing Risk
194 ratings
University of Illinois at Urbana-Champaign
194 ratings
Course 6 of 7 in the Specialization Financial Management
From the lesson
Module 4: Financial Management of Acquisitions and R&D
In Module 4, we will apply the financial management tools that we developed in this course to M&A decisions and R&D programs. We will learn how to finance an M&A deal, and how companies choose between cash and stock payments to acquire target companies. We will also discuss the financing of LBOs (leveraged buyouts), and learn how to model a leveraged buyout using Excel. We will then discuss the financial management of R&D programs, with an emphasis on risk management. Specifically, we will learn how to think about the financing of R&D in a dynamic framework that considers the need to make uncertain follow up investments.
Meet the Instructors
Heitor AlmeidaProfessor of Finance, Stanley C. and Joan J. Golder Chair in Corporate Finance
Department of Finance, College of Business
[SOUND] I
want to talk a little bit about the Nona Incorporated interview
that you're going to watch.
Nona Incorporated is a small business, of course.
It is, though, much more financially sophisticated than Analog Outfitters,
which is the first interview that we had in the course,
that I hope you watch it as well.
So what you'll see in this video is that many of the ideas that we discussed in
this course, and also in Corporate Finance 1, are going to appear in the words of
Parham, who is the owner of Nona Incorporated, the person we interview.
Okay, but Parham, of course, is going to bring the invaluable perspective of
a real-world business person who's going to give his perspective on these issues
and the perspective of a small business, right?
Which is, as I said before, it's very different from some of the examples for
large companies that we used in the course.
As you watch through this video, I want you to think about a few issues that are,
to me, they are the most important ones.
Of course, the whole video is great,
but these are the specific issues I want you to think about.
In terms of the acquisition strategy, so think about the following.
Why is non-incorporated a bit like a private equity company?
There is actually some similarities between what Parham does and
what the private equity company do.
Second, why did Nona change its
acquisition strategy as the business developed?
This is something Parham talks about in the video.
So why has the acquisition strategy changed?
Can you think of ways of reasons why?
In terms of financing, one thing that Parham talks about is that
they use long-term leases to finance acquisitions, and
I want to make sure you understand that.
In addition, I ask him about bank financing, right?
So what does he do when he has to raise money from a bank?
And he gave very interesting answer.
I wanted you to watch it and think about it.
And there is a very interesting point where he talks about
this financing strategy of giving equity in the building to the seller.
And as, I think I mentioned this in the video,
this is actually similar to a stock financing in large mergers.
It's a very similar idea, and I want you to really understand that.
Okay? Think about it,
make sure you understand this.
It's a very interesting idea.
Finally, Parham talks about what conditions does he think
are feasible or situations in which Nona Incorporated would
consider bringing in new equity capital to finance investments.
That's something we talked about in the course, debt versus equity.
When would you issue equity?
Parham talks about that.
Finally, risk management, all right?
He talks about the nature of the interest rate
risk that his real estate business faces.
So I want you to think about, what is the nature of this risk?
It's a very interesting argument, I think.
And what can the company do to mitigate this risk?
He also talks about payout, so I ask about him about payout.
So what are the key considerations that he sees when he determines payout policy for
Nona Incorporated?
And he has an answer that I think really goes back to what we discussed in
the course.
And also he talks about which strategies does
his company use to minimize tax bills.
So there are some interesting ideas there that I want you to think about as well.
And what you can do is, maybe, discuss these ideas in the discussion board,
add some thoughts, and I think that would be interesting.
I'm sure Parham would appreciate it as well, to see some discussion generated by
our interview, which I really thought was great.
[SOUND].
Hi, Parham, how are you?
>> Good, how are you?
Nice to be with you.
>> Thanks for talking to us.
Can you start by telling us a little about your business,
what lines of business you have, a little bit of history maybe?
>> Sure, really, it's two different businesses.
One is I own a chain of tire and auto stores in Illinois and Iowa.
There's four different brands, Car-X you may have heard of.
There's another brand called Fast Tire.
There's a Davis Tire, there's a Shutes Tire, and
these are just independent stores that I bought and accumulated over the years.
And my other core business is real estate.
And, basically, I own, I don't know, roughly 100,000 square foot of retail
space, and really just in Central Illinois and a little bit in Chicago.
But, for the most part, it's a commercial real estate business, and
then a retail business of tire and auto repair.
>> So, why did you think it was a good idea to put these two businesses together?
>> Well, they kind of went together a little bit.
So, really, the operating business, which is selling tires and
selling repairs, sort of produced the operating cash flow over the years.
Not at first, obviously, I used to lose a lot of money.
But, eventually, it produced a little bit of cash.
And, ultimately, one of the ways that I
instantly got into real estate was I owned some of the stores.
So I would have a retail store that's selling tire and autos, and
that's really the main source of the income.
And the other way to generate long-term assets, really, these days is real estate.
And so the stores were paying rent anyway, so might as well bring rent to myself.
So it started with one store I had.
Then I would buy the store.
And then that was my first real estate business, was getting rent and
the income stream from rent.
And then over time, it'd be a couple stores.
And, eventually, I would own most of my stores.
And then the natural sort of progression was to own shopping centers,
where now, in one space there might be three tenants or four tenants,
and generating and building long-term assets through real estate.
So they went together perfectly.
>> What have been some of the major investments that your company has done
the last few years?
>> Well, the last few years, really, the major investments are on the retail side,
which is Nona Inc., is acquiring stores.
>> Yeah.
>> And some of them aren't major from a dollar standpoint, because once we got to
a certain place from a balance sheet standpoint and from generating cash flow,
we really started focusing on buying operations that were struggling.
Because there's no value in buying something that was really successful and
all ready, and charging a premium for it.
When I was building the business, and I was small, I would buy opportunity.
I would buy stores that were, really, already successful.
I would pay a premium for it, but I had to do that to be able to build on.
Over time we learned how to manage those.
And, in a way, we'll take more risk and say, you know what?
Once a year or twice, couple times a year, we can acquire an operation,
a store, and it not be that successful, and
then not immediately add value to the balance sheet.
So we would take a risk, ultimately, but we would buy in for nothing.
So they were not real dollar value investments.
But they were structurally good investments, because it took away
resources from our personal resources, from the people operating the businesses
that we had to put in, and try to manage stores that are not doing well.
Because we had to basically, take struggling stores and
try to get them to a certain place where they can cash flow.
So that's really been the predominant investments that we've made on that side.
On the real estate side, I buy commercial real estate as much as I
can when the deal is right in a shopping center.
So, recently, we had bought a shopping center in Bloomington.
It was like a $6 million shopping center, but
that's probably been our biggest one in the last year, year and a half.
When you buy a new store, how do you know that you can improve the operation?
So the store could be struggling because it's in a bad location, for example.
Or it could be struggling because it has bad management.
How you do figure out, how do you separate one from the other?
>> Well, you nailed it.
I mean, basically those are really the two biggest things that I look at.
Look at. So first and foremost is I just walk into
a store, or me and a couple guys, we walk into a store and we just observe.
And doing it long enough,
I can probably tell in about 15 minutes that it's a poorly run store.
>> [LAUGH] [INAUDIBLE] >> So right then,
that at least gets me to where I'm going to take a look at it and
then dive deeper, okay?
If I walk in and I just see, wow, this is a really good manager.
They have a couple of nice technicians.
They look their processes are well thought-out and it's struggling,
then you go to that next step.
And it's like, well, what's going on in this town?
Maybe it's the location.
Maybe it's just a function of the competition
that happens to be around it and the density of the competition around it.
So that would be the next layer that I would look at.
But really, the first and foremost to me is management.
Because we believe that management can bail you out of even a bad location.
You can have a bad location, you can even have maybe a struggling economy.
And you can even have a struggling town within that economy within a certain town.
But if they're really poorly managed and there's somewhat of a demand for it,
then it's fixable.
Because you really just got to check those boxes off of what constitutes a good
process and good managers.
>> I see, yeah, that's interesting.
What about the real estate side, how do you locate a good investment?
>> That one is an evolution.
So, when you are starting out, you don't have a choice, you buy C property.
If I were to grade properties A, B, the really good pieces of property, B, C,
down the right, right?
Well, when you're starting out,
you're not going to get an opportunity to buy As and Bs.
Couple of reasons, one, you don't have the money for it.
Okay, you haven't built up enough cash to be able to go to the bank and
borrow enough money to overpay, basically.
The other one is, you don't get access.
If you're small and you're just starting out in commercial real estate,
you don't hear about the A and B deals.
You only get the C deals.
Then as you start having a little more, and you know the realtors, and
you know the people in the town.
And they know that hey, you're a buyer and you can maybe go and be able to buy and
have a $6 million or a $10 million deal.
Then all of a sudden, those things open up.
Once you get to that point, really it's an evolution of where you are in time.
If you're in your entrepreneurial stage where you're building and
trying to acquire and build.
Well, then you tend to buy things
differently than you were if you were like, for example, my stage right now.
I prefer to overpay.
I prefer to overpay, but I have properties that are A plus.
So I don't get an upside.
But what I really do have is guaranteed strong rent.
So, for example, I have tenants like Starbucks,
AT&T, all the big national triple rated tenants, right?
But when you're really trying to build,
you want to buy the B properties because they have the most upside.
Because someone that's selling it isn't charging a premium.
So, I think depending on where you're at in your evolution of your business career
or where you're at as the evolution of the company.
If it's the company is trying to grow, you're going to be buying differently.
If the company is in a mature state and
really wants to not disable or change that balance sheet and
really keep having a strong balance sheet, they'll tend to take less risk.
At least I do take less risk.
Pay a little bit more but much more guaranteed streams of cash flow.
Does that make sense?
>> Yeah, no, it makes total sense.
You talked a bit about financing, which is very interesting to me.
When you buy a new business, let's say a store.
Let's talk first about a new car shop, then we'll talk about real estate.
But when you buy a new car shop, how do you finance that investment?
I mean, is it a big investment up front, or not really, right?
>> No, it can be, it depends.
I've had, five years ago I bought a store that was $750,000.
Six months ago I bought a store that was zero.
[LAUGH] >> [LAUGH] You spent no money.
[LAUGH] >> Spent no money.
Basically what I did on that one is I took over the lease.
The company or the business was struggling enough and
they were in a long-term lease with the landlord.
They needed to get out.
They just needed to get under the lease.
So basically we'd go in there and maybe make an asset purchase,
maybe spend $25,000 on their equipment.
And really ultimately what I'm buying is,
I'm taking over their liability of this lease that they've signed.
So, the mixture for me has been all over the place.
So it's been very traditional financing.
Go to a bank and to make it simple, it's a $100,000 investment.
You put $20,000 down, no differently than a house.
You borrow $80,000, amortize it over five years, typically, for the business.
>> Will banks happily lend you money to buy a new shop?
>> It depends when you're- >> Or it's kind of a risky-
>> It depends where you're at.
Again, so when I first started out the banks would not
loan me that type of money.
So what I did was, let's say Heathrow was selling me the business.
I would go to him, and you say I want $100,000 for it.
I said, well, I'll give you your full asking price, okay?
But I'm going to only give you $70,000 in cash.
So now what I'm borrowing from the bank is 80% of $70,000.
$56,000 if my math is correct, right?
So now the bank is willing to loan $56,000 on $100,000 because that's
technically 44% equity, right?
So but then I make the owner carry that $30,000.
The bank doesn't count what the owner carries as debt.
The bank treats it because they're second in line.
The bank doesn't care, right?
So as far as the bank is concerned,
they're only loaning you $56,000 on a $100,000 transaction.
They feel pretty safe about that.
So in many instances, I worked with the seller.
And said, if you really want to sell it at your full asking price, instead of me
negotiating and going back and forth I'll give you the full asking price.
But in return you're going to carry a portion of that.
And by carrying, that means over the next three years, let's say it was $30,000.
I'm going to give you $10,000 a year for the next three years.
>> I see. >> No interest, okay?
>> Nice.
>> That helps me finance from the bank's perspective early on and
it gets the deal done for the seller.
Now they have risk because they don't know me.
So they might potentially lose $30,000, but at least they're going to get 70.
>> So it's fair to say that there is a little bit of risk sharing,
right between you and the seller in that sense.
>> And it always depends on where that seller is in from a necessity
standpoint or where they're at from the.
If they're selling a prime, prime piece of asset, whether it's a business or
a real estate, they're in a position that says I will never take that.
If you are buying from somebody that is struggling a little bit or
really wants to get out.
Some people want to get out because they're old and
they're just ready to retire.
Some people want to get out for various different reasons,
not always because they're struggling.
You just never know.
But I always, every single deal I've done,
I make the seller, at some level, take on some of the risk.
>> Yeah, though it's very interesting because when public companies merge,
the way that they do this is by using equity.
So the target firm will keep some equity in the merging firm, right?
So you're kind of doing that- >> Exceedingly, that's true, yeah.
>> Even though you can't [INAUDIBLE] the equity.
>> That's right, yeah, that's right, yeah.
That's very interesting.
I didn't know that, it's something that I'm learning now.
[LAUGH] >> Yeah, and the banks love it, and
the banks love it.
So when you go to the bank and say it's a $100,000 transaction.
But I only need to borrow $56,000,
to them, it looks like you are in a very great cash equity position.
because they don't treat that money that they're giving you,
they treat it as equity.
>> Yeah, and what kind of collateral does the bank look for?
If it's, of course if it's real estate, right, they're going to-
>> They have the real estate, yeah.
>> But what if it's a store?
>> The stores is inventory, the lifts, the hard assets.
But really all they have is inventory and lifts.
>> I see.
>> And those depreciate, well, inventory really doesn't,
but But the equipment depreciates at an incredibly fast rate.
So as far as banks are really, really concerned,
your real collateral is the person that they're borrowing from on the first one.
>> It's the first one, right?
>> And at the end of the day they, as you move on through your evolution of where
you're at from a balance sheet standpoint, then they don't even ask.
Now, but earlier on they want to tie it.
I know people that have tied it to their house.
They go buy it.
>> Go buy it.
>> Yeah, so their buying their first store, for example.
Or they're buying a Subway or a Jimmy John's, or
whatever and they're going to borrow $150,000, it's tied to their home.
And eventually they let those things go, as you prove to yourself.
And it's no different, banks you establish your relationship,
no different whether it's IBM borrowing from banks or
whether it's a little guy owns Jimmy John's or me or something like that.
You develop a relationship with that bank, and they get to know what you do, and
how you do it, and why you do it.
And sometimes you struggle but they're with you the whole way.
But if you can really be transparent with them.
>> Yeah.
>> Eventually it doesn't just become a collateral thing.
>> And do you have a relationship with a specific bank, or do you shop around?
How do you handle the banking relation?
>> I don't shop around.
I have been with the same couple of bankers almost my entire
what I would call almost my entire meaningful business.
>> Yeah.
>> Early on it was whoever, but last 15 years,
it's been the same, and usually the same person.
That person's moved on to different banks but
I followed that person to the different banks.
>> I see.
So when you get a loan these days,
they don't even ask for collateral like inventory.
It will be just loan, and it's your promise to pay.
>> No, typically, now it might go like this.
Hey, I'm going to acquire a couple stores in Iowa.
It's one of the problem stores.
I need $150,000, and they just give it to you.
It's not even directly tied to a store.
It's just tied to Nona, Inc and our operation.
>> [CROSSTALK] >> Yeah.
In terms of financing again, have you ever considered raising money from other
investors, raising the equity from other investors or no?
>> I have on real estate.
>> On real estate.
>> I have on real estate, but that comes at a cost as well, right?
So the only time I think you would, the only time so far that it's made
sense to me was if I wanted to acquire a bigger piece of strip mall,
maybe a $10 million strip mall, where I need a couple million dollars in cash.
I can get financed 80% almost on anything.
>> Yeah. >> Even if it's a $20 million deal,
I'm pretty sure I could get the financing for it.
>> Yeah, yeah.
>> But they're still going to want you to have 20, 25% cash, right?
>> Yeah. >> So whether I get it from somebody else
and raise it privately, I've still got to pay them.
And what's happened with the interest rates as low as they've been,
there's really never been a need for that, right?
There's no reason to have a private investor give you money and
then they're going to want 6% or 7% when banks are lower.
Now the only time you really need to do that is if you just don't have the cash
but you believe that you want to buy this property.
But it won't make sense unless it's an appreciating value.
For example, the shopping center that I was just telling you that I bought
in Bloomington, I bought it at the highest price you can buy.
[LAUGH] I overpaid, okay?
I overpaid.
There's no upside.
So if I bring in private investors on that, there's really no upside for
them on something like that.
If it's one where there's upside, it makes a lot of sense.
>> You can share the rental income with them, right?
It can give you equity.
[CROSSTALK] >> Really,real estate is all about paying
down debt.
>> Yes. >> It's the principal payment.
So every single month,
even if your loan payment to the bank is thirty grand a month,
with 21,000 of it goes toward principle, in my mind, I made 21,000 dollars.
In the mind of any investors, they made 21,000.
It's because as some point it's just deferred, right, so
at the end of the year it's 240,000 in equity.
And later on if you talk about how owners get money out by refinancing.
Well that money is there because it's actual equity.
You just didn't get it today.
[CROSSTALK] You just didn't get it up front.
>> Yeah.
No. Very interesting.
Let's talk a little bit about risk.
What are the major risks that you see in the near future for
your business and what are you doing to try to mitigate those risks?
>> Well, the auto side is probably the.
Right, well actually both sides.
We'll say they both have risk.
The auto side risk is not as clear so there are some guesses, technology.
Technology is probably the biggest risk, right?
Electric cars, the way cars are lasting longer.
For example, brakes are a big part of our business and
now we have regenerative brakes where they don't wear down as much.
>> But I have to remind myself,
25 years ago when I started this, we only did mufflers and brakes.
And we thought, my god, what happens if they start having ABS,
which is anti-lock brake systems, and they have these.
They don't happen really fast.
So we just evolved through them and figured it out as time went on.
But technology is always a risk, but outside of that, it's people.
We happen to be in a business that cannot be automated.
So if I don't have a guy that can fix the car physically with his hands and
mind diagnosing it, it's not going to work in the automotive business, right?
There's no way to automate.
And if people aren't going into that industry, which they're not.
There's not a big pool of technicians, and there's a shrinking pool of
qualified people that are even entering this business.
Then now all of us are competing for a very, very small pool.
And that is a serious risk, and it's something to really think about.
On the real estate side, it's always interest rates.
Always interest rates to me first.
But even interest rates depend on when you buy in that cycle you'll be okay.
But the other part is frankly the economy.
If it's not growing and
retail is not thriving, then as you notice in Champaign over the last seven or
eight years, you've seen a cycle of a bunch of buildings with for lease signs.
>> [LAUGH] >> And
then they'll go through a period where those are leased.
And then they'll come back again.
And that's really predicated on what type of economy we have.
So that's always the risk is just oversupply.
>> Yeah.
>> Oversupply on the real estate side.
And then, ultimately.
It's very hard to manage interest rate risk,
because right here's a higher cost of capital.
>> Even if the interest rate on your loan is fixed,
you still face the interest rate risk.
>> Because the buyer that's eventually going to sell it to me now has to spend
more to finance that project, so you just lowered the price of your asset.
>> Yeah, that's a good point.
So do you feel like this risk is pretty much outside of your control then?
>> [CROSSTALK] >> Yeah, my
only thing is that it's going to apply to everybody.
I mean that's really the best way to think about it,
well that's the way I think about it.
Is that it's going to apply to everybody and
as long as you're cognizant of it, like I learned in.
>> [LAUGH] >> The phrase I learned in MBA school was
scanning your environment.
>> [LAUGH] >> And as long as you are scanning your
environment and really paying attention to the subtle changes that are happening, and
adapting to them, you should have a competitive advantage,
at least to be able to stay in it.
>> You talked a little bit about paying cash to owners.
So how do you pay dividends to the owners of the equity?
For example, to yourself.
And let's say if you have a coinvestor in the real estate business.
How do you manage this payout?
What do you do there?
>> Well, couple ways.
One of them is you have to think about taxes.
Taxes are a huge, huge, huge,
huge consideration because they change everything.
They really change the equation from a tax standpoint.
So whether something is ordinary income or something falls into,
when you sell a property and it becomes- >> Capital gains.
>> Capital gains.
So all these things go into the pot, right?
But one of the ways.
So in my business, I have two businesses.
The operating business, I don't have much choice.
It's an operating business.
So we're an S1 company, so whatever money you make just flows.
Down to your personal income.
Now what I can do is because I own some of the buildings
that the operating business is renting from.
I can make those rents be higher, for example.
I can make those rents higher and take more of your money through real estate.
Real estate you depreciate.
You have depreciate real estate.
So it's not a cash event, right?
So it might show on paper that you made $50,000 on this real estate a year.
But really, you might have made 85,000 in actual cash.
Because you have depreciation in real estate.
So one way is to shift it.
The other way that we take, and I do it.
Which I just did a year ago, I periodically sell property.
Okay, or re-finance property.
So there's a couple of ways you can do that.
One is you were almost telling the example.
If you built $250,000 of equity this year.
Then at the end of the year, you can do this every year if you want.
As long as the bank is holding the loan to value of 80%.
At the end of the year- >> You can get some.
>> Go and refinance- >> Yeah.
>> You pull out the equity, and it's non-taxed.
>> It's not taxed?
>> It's not a taxable event, zero tax.
>> Interesting. >> Because you refinanced.
So a lot of people in real estate that love real estate.
Which is why people watch like Donald Trump and stuff and
be like, well, he doesn't pay very much taxes.
Well because he owns a lot of real estate.
>> That's because of the real estate, yeah.
>> It's not because of him, or Heidi.
It's just the way the function of real estate.
So every single year I could pay myself zero, okay?
And every single year go back and refinance my property.
Pull out whatever excess equity I've made
outside of the loan to value that the bank would like keep.
And that becomes a tax free event.
>> And you can even get some profits out of your operating business, right?
And so you can put the two businesses >> You can them together, right.
>> Together in a way that minimizes tax revenue.
That's very clever.
>> The other way to do it is to randomly, every once in a while sell certain assets.
You pull out that money, and
then you put them in a 1031 exchange which is what I just recently did.
So basically you just take your equity that you made in these other properties.
Sell it, make a little bit of money.
And then put it immediately back into upgraded property.
And that becomes a non-taxed event.
You can then go refinance that and then pull it out.
So, those are really.
Then the last part is at some point you have to decide to cash out and just sell.
And that's a major tax benefit and you really have to plan for that.
I haven't got to that point yet.
>> Yeah, yeah, well, thank you.
This is all very interesting.
Just to finalize,
there are business students from all over the world watching this.
What kind of advice do you have for people who are starting out?
>> In business?
>> Yeah, in business.
>> Well, I mean, there's a couple of ones that I always say to young kids is that.
This is more of a philosophical thing.
That you don't have to love what you do.
>> [LAUGH] >> Everybody wants to say I'm not happy,
or I don't love this, right?
Well, it's the means to the end, right?
>> Yeah. >> So along the process of
whatever it is that you want, define what you want.
If it's quality of life, if it's money, it it's whatever.
Define that, okay?
But the steps along the way,
you're not going to be happy all the steps along the way.
So obviously that's the main thing.
And the other part of it is, everybody knows this.
Is that unless home runs are wonderful, they're wonderful.
To be honest, I've never had a home run.
>> [LAUGH] >> I've never had a home run.
I've had a lot of singles and- >> I'm not sure I believe that, but.
>> Pardon? >> I'm not sure I believe that.
>> I really haven't.
>> Okay. >> I really haven't had a home run.
I have friends that have home runs.
>> All right. >> And I know and
I can tell you the difference between what home runs are.
Home runs are when something goes from nothing to just exploding.
Mine has never exploded.
It's been sort of a steady process that I started a long time ago.
But it started with, you asked about the real estate.
It actually started with an apartment that I bought for $63,000.
That was the first real estate transaction I made.
And that's when I learned, whoa, I can make more rent than thing.
So I think it's just a matter of defining what you want.
And, having the patience.
Because most of the time, you will have to have a methodical patience.
And if you get lucky, you have a home run.
But most of the time it's pretty methodical.
>> Yeah, yeah.
Thanks a lot for talking to us, it was great.
>> Absolutely enjoyed it, yeah.
>> Thank you.
>> Thanks.
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