7 Minute Deals: Fee-Free, Fund-Free Real Estate Investing with Brian Dally

Speaker 1 (00:00:02) - Good day, everybody. Welcome to the deal. Scout. Got seven minutes on the clock. I'm here with Brian from ground floor. Brian, welcome to the show.

Speaker 2 (00:00:09) - Thank you.

Speaker 1 (00:00:10) - Yeah. So we're going to talk about your deal. Tell us about what your deal. Because you guys just had a huge press release and a, uh, an accomplishment that happened through Forbes that you wanted to share here. And we want to hear about it, because this is a trend that we think is going to really do well in the future for what you guys do.

Speaker 2 (00:00:30) - We are in an 11 year old platform that started off allowing with the idea that everybody should be allowed to invest in the same types of deals on the same terms, on a level playing field, with the 1% and the top 5%. That's always had access to those deals. It turns out we went to real estate. The reason that we're proud to be a Forbes 50 fintech, uh, is we think that's emblematic of something that's happening in the market.

Speaker 2 (00:00:57) - There are now multiple ways for people to get access to private deals that didn't exist before in real estate and beyond. That's a very good thing for people's portfolios and financial futures, and it's fun to talk about it now on a bigger scale. Uh, you know, 11 years in. Yeah.

Speaker 1 (00:01:15) - 11 years ago, you had a, you know, this idea in vision that everyone should be able to have access to the same level of deals that everyone else or that maybe the wealthy had access to. So you started this journey to do this, and you started in real estate, kind of like, what was that impetus moment that you said, I think I should be able to invest in this. Josh should be able to invest to this and Sally should. What started that with you?

Speaker 2 (00:01:40) - Well, in 2012, Congress passed the Jobs Act. The Jobs act liberalized capital formation in a lot of ways. I think regulation has always been one of the barriers to those of us who are non-accredited investors. That's about 95% of Americans, but also, importantly, the 5% of accredited investors having access to better deal flow that meets company public standards.

Speaker 2 (00:02:05) - And these rules that were passed in 2012 by Congress opened that up. Now, the SEC had to do a lot of work to put these rules into play. But there were other problems. For example, it's no good to invest in private deals. If I'm forced to write a $25,000, $50,000 check for each deal. That's a large quantum of capital for most people. If what you want to be is diversified within one category. Secondly, it's no good if it only if it requires you to invest in a fund. Even most funds are pretty tough to get out of, even if you can get into them. And while you're in them, they're very expensive. And research says that fund managers frequently take one third to two thirds of the upside for the risk you're taking. So we had to solve all those problems today. You can show up to ground floor with as little as 100 bucks, and you can quickly have a diversified portfolio of high yield loans that happens automatically, keeps you reinvested automatically, but is not a fund.

Speaker 2 (00:03:08) - You actually get the benefit of these fractionalized investments. And, you know, we have a lot of other things you can do on the platform too. And that's the deal. Uh, that's opened up for people.

Speaker 1 (00:03:18) - Yeah. So we could talk about the spread between being an accredited non-accredited REIT, different access to different levels of deals. But one of the things you mentioned for accredited investors as well, you go into a fund, your money might be locked up for a long period of time. Correct? Right. Yeah. You guys, uh, you guys face this issue. How?

Speaker 2 (00:03:38) - Well, we think funds are outmoded. The public and the public markets actively managed. Funds have lost to indexing and have lost, frankly, in a lot of cases, to individual investors who are hyper concentrated and good stock pickers. So actively manage, investors lose in public markets, we think they're going to lose in private markets as well. And they're heavily, heavily compensated in private markets. So we've disrupted that.

Speaker 2 (00:04:05) - When you invest with us, you are your own fund manager. The technology makes that possible. The regulatory disclosure, the regulatory oversight makes that possible. And you get all the benefits. We take nothing out of the investors return. It's fee free. Just like you can trade stocks on Robinhood free, fee free. You've been able to invest on Schwab and Fidelity, uh, fee free and a lot of their funds today. The future is fee free, the future is fund free. And technology is making that possible now.

Speaker 1 (00:04:36) - Interesting. So how do you make your money then?

Speaker 2 (00:04:40) - We make our money by providing capital to people who are looking for financing to fix the aging housing stock and and solve the housing affordability and housing supply shortage problems in America. We have housing stock that's older than ever. We have less inventory in many markets than ever. Prices are out of reach. More than ever, the people we finance are solving those problems. And you as an investor, get to finance that with us and benefit from it.

Speaker 2 (00:05:12) - Profit from it.

Speaker 1 (00:05:13) - Yeah. Now I have money with ground floor, and I would not consider myself the smartest fund manager or whatever. Right. I'm really good at putting deals together and stuff like that. Uh, now, if I, if I don't think that the fund managers out there are going to do a great job, how could I really trust myself that I'm going to do a good job bringing money to ground floor?

Speaker 2 (00:05:32) - Well, the thing with the ground floor is we've we have we've been at this a long time. And when we first started, we allowed people to pick and choose their own and custom build their own portfolio. And a lot of people want to do that. Some people have that as a hobby. They want to allocate that way, and you still cannot. Ground floor. The newest part of Ground Floor is a mobile app that will index you into everything we do, the same way that an index will give you exposure to the entire global stock market, or a corner of the stock market that you want.

Speaker 2 (00:06:03) - It all happens in an app. It's all automatic, and you don't have to pick and choose or have any expertise at all. And you benefit from the diversification $1 at a deal at a time, which is pretty amazing. Yeah.

Speaker 1 (00:06:15) - Super cool. So for our deal makers out there, if they want to learn more about you and Ground Floor and maybe a way to get involved in real estate investing, here's a good place for people. Could start that journey.

Speaker 2 (00:06:25) - Come to ground floor. Com uh, everything you should need to know is there. We also have, uh, audited financials and other regulatory filings that are available on file with the SEC. So we always encourage people to check out the offering circular. Uh, that's the full detail. And more than most people probably want to know.

Speaker 1 (00:06:46) - Yeah. Good. Well, fellow dealmakers, as always, reach out to our guests, say thanks for being on the show. Thank you for sharing your deal. And connect with them and maybe put a deal together yourself.

Speaker 1 (00:06:55) - We did that all in seven minutes or less. We'll see you all on the next episode. Bye everyone.