In this insightful episode of the “Raising Private Money” podcast, host Jay Conner sits down with Michael Episcope, co-CEO of Origin Investments, to delve into the nuances of real estate investments. With over $2 billion in assets under management and a wealth of experience in both derivatives trading and real estate investment, Michael provides valuable perspectives on how to effectively manage risk and create long-term wealth in the real estate market.
The Importance of Risk Management in Real Estate
Michael Episcope brings a distinctive background to real estate, having begun his career as a derivatives trader. This experience laid a strong foundation for understanding risk management, a crucial element in real estate investing. In real estate, risk management involves recognizing opportunities, spreading risk, and maintaining financial prudence—such as not cross-collateralizing assets or guaranteeing debt. This approach allows investors to weather downturns, ensuring long-term sustainability.
Lessons from the Global Financial Crisis
The 2007-2009 financial crisis was a defining period for many investors, including Michael. He emphasizes the importance of learning from past mistakes to guide current and future investment strategies. Key lessons include avoiding over-leveraging and maintaining cash flow. Michael also touches on the strategic advantage of implementing a barbell strategy—balancing risk with a mix of debt and equity investments during uncertain times.
The Crystal Ball: Predicting Market Trends
Forecasting the real estate market can be challenging, but Michael shares optimistic views about upcoming trends. He anticipates a recovery in the multifamily sector driven by reduced construction in recent years and pent-up housing demand. This is supported by the work of Multilytics, a team of data scientists who predict above-market rent growth in the second half of 2025. He stresses the importance of adjusting strategies according to market conditions, highlighting how Origin Investments tactically shifts its focus between debt and equity depending on the cycle.
Origin Investments’ Focus and Strategy
Origin Investments specializes in multifamily properties—a choice rooted in the sector’s strong, risk-adjusted returns and inherent demand. The firm exclusively targets this asset class, leveraging deep expertise to drive value. Origin invests through a combination of funds and individual deals, offering a diverse portfolio designed to maximize both tax efficiency and long-term growth. This multi-faceted approach allows the firm to navigate market cycles adeptly while capitalizing on emerging opportunities.
Common Pitfalls for New Investors
One common pitfall for new investors is focusing too heavily on potential returns without adequately considering risk or the manager’s track record. Instead, priority should be given to finding experienced managers with conservative underwriting standards who have demonstrated the ability to protect and grow capital through various market cycles.
Maximizing Tax Efficiency for Long-Term Wealth
A significant advantage of real estate investment lies in its tax efficiencies. Michael discusses how Origin Investments transitioned from a buy-fix-sell model to a buy-fix-hold strategy to leverage these benefits fully. This approach not only maximizes tax advantages but also ensures consistent cash flow and asset appreciation over time, aligning with the broader goal of sustainable wealth accumulation.
Conclusion
Navigating the dynamic landscape of real estate investment requires a nuanced understanding of risk, market cycles, and strategic alignment. Michael Episcope’s insights underscore the importance of these elements in achieving long-term success. For those looking to explore passive investment opportunities further, Origin Investments offers a comprehensive platform tailored to meet diverse investor needs.
To learn more about Origin Investments and their approach, visit Origin Investments.
10 Discussion Questions from this Episode:
- Career Transition: How did Michael Episcope’s career in derivatives trading prepare him for a successful transition into real estate investment?
- Risk Management: Michael emphasizes the importance of risk management in both trading and real estate. What specific risk management strategies did he highlight, and how can they be applied to real estate investing?
- Wealth Protection: Michael mentioned the saying, “You only have to get rich once.” How does this principle shape Origin Investments’ approach to real estate?
- Lessons from the Financial Crisis: What were some key lessons Michael learned from the global financial crisis of 2007-09, and how do these lessons continue to influence his investment strategies today?
- Market Predictions: Michael provided insights into his predictions for the real estate market over the next year. What factors did he cite as playing a crucial role in this outlook, and do you agree with his assessment?
- Multifamily Real Estate Focus: Why does Origin Investments focus exclusively on multifamily real estate, and what advantages does this asset class offer according to Michael?
- Fund Structures: Michael described the different fund structures offered by Origin Investments. How do the strategic credit fund and the income plus fund differ in terms of risk, return, and tax efficiency?
- Evaluation of Managers: How critical is the role of the manager in real estate investment, and what should investors look for when evaluating potential investment managers?
- Tax Efficiency: Michael discussed the importance of tax efficiency in real estate investing. What strategies does Origin Investments use to maximize tax benefits for their investors?
- Long-term Investment: Origin Investments has shifted from a “buy, fix, sell” strategy to a “buy, fix, hold” strategy. What are the advantages of this long-term approach, especially in terms of wealth accumulation and cash flow?
Fun facts that were revealed in the episode:
- Michael Episcope started his career in derivatives trading at 19 years old, working his way up from a runner making $325 per week.
- Origin Investments uses advanced data analytics called multiphysics to forecast rent growth and market trends.
- Michael Episcope and his partner do not guarantee loans or cross-collateralize assets, which are key strategies they credit for their risk management success.
Timestamps:
00:01 Raising Private Money Without Asking
05:28 Wealth requires protection; responsible real estate investing.
06:35 Proactive strategy produced positive returns through diversification.
09:53 Never run out of cash in real estate.
13:51 Focused on multifamily real estate for returns.
18:32 Investors often overlook risks and focus on returns.
19:58 Manager choice is crucial for investment, not returns.
23:51 Hold assets long-term for wealth multiplication.
26:45 Connect with Michael Episcope: https://www.OriginInvestments.com
Connect With Jay Conner:
Private Money Academy Conference:
Free Report:
https://www.jayconner.com/MoneyReport
Join the Private Money Academy:
https://www.JayConner.com/trial/
Have you read Jay’s new book: Where to Get The Money Now?
It is available FREE (all you pay is the shipping and handling) at https://www.JayConner.com/Book
What is Private Money? Real Estate Investing with Jay Conner
http://www.JayConner.com/MoneyPodcast
Jay Conner is a proven real estate investment leader. Without using his own money or credit, Jay maximizes creative methods to buy and sell properties with profits averaging $67,000 per deal.
#RealEstate #RealEstateInvesting #RealEstateInvestingForBeginners #Foreclosures #FlippingHouses #PrivateMoney #RaisingPrivateMoney #JayConner
YouTube Channel
https://www.youtube.com/c/RealEstateInvestingWithJayConner
Apple Podcast:
Facebook:
https://www.facebook.com/jay.conner.marketing
Twitter:
https://twitter.com/JayConner01
Pinterest:
https://www.pinterest.com/JConner_PrivateMoneyAuthority
The Best Real Estate Strategy for You: Michael Episcope on Active vs Passive Investments
Jay Conner [00:00:01]:
Welcome to another amazing episode of Raising Private Money. I’m Jay Conner, your host, also known as the Private Money Authority. And I’m so excited about today’s show and the guests that I’ve got. My guest right now, he and his company are managing over $2,000,000,000 that’s with a B, $2,000,000 inequities, and he and his company serve over 4,400 investors. So if you’re looking to raise private money for real estate deals or you’re looking to be a passive investor, you are here at the right place at the right time. So, my guest is co-CEO of Origin Investments. He also co-chairs the investment committee and oversees investment relations and capital raising. Now before Origin, he had a very prolific derivatives trading career and was named twice among the top 100 traders in the world.
Jay Conner [00:01:02]:
And along with that, he’s got over 30 years of investment risk management experience. I’m so excited for you to meet my special guest, Michael Evoscope, right after this.
Narrator [00:01:16]:
If you’re a real estate investor and are wondering how to raise and leverage private money to make more profit on every deal, then you’re in the right place. On raising private money, we’ll speak with new and seasoned investors to dissect their deals and extract the best tips and strategies to help you get the money because the money comes first. Now here’s your host, Jay Conner.
Jay Conner [00:01:44]:
Well, hello, Michael, and welcome to the show.
Michael Episcope [00:01:47]:
Hi, Jay. Thank you for having me, and I appreciate that introduction as well.
Jay Conner [00:01:52]:
Absolutely. Well, you’ve got so much experience. My audience is gonna love, hearing you talk about your experience and your background and, you know, being so involved in overseeing real estate investments, etc. But now, first of all, in my introduction, I talked about you being a derivatives trader as far as your background. You have to tell everybody what in the world is a derivatives background. You gotta tell everybody what in the world is a derivatives trader.
Michael Episcope [00:02:19]:
So that’s a fancy word for a futures trader. I went to school here in Chicago. I got a job on the floor of the Chicago Merchantale Exchange when I was about 19 years old and worked my way up. I worked from the bottom as a runner making, I think, $325 per week, and then became a pit clerk, and then became a broker, and then ultimately got an opportunity to, trade for myself, in the pits of the Chicago Eurodollar, pits, at in, at the CME. And it, it was great. It was the start of just a very prolific career. I didn’t know if I’d be good at it. I bet on myself at that time, and some people gave me an opportunity, and I made the best of it.
Michael Episcope [00:03:04]:
So I did that for about, 10 years. And a eurodollar future, it’s now called SOFR futures, but it’s essentially interest rates. So I traded the the change in the daily interest rate, every single day, and I traded what we call back monthly eurodollars. And, and it was it was fantastic. So but I got out of there in, o 6 and moved on to real estate after that.
Jay Conner [00:03:26]:
Well, that’s an amazing background and story, particularly to be starting only at 19 years of age and being, you know, introduced to that world of trading. So how do you think the experience that you had in derivatives trading for 10 years, how does plays in or to or affects or influences your approach to real estate investment and risk management?
Michael Episcope [00:03:55]:
Well, I think you said it right there. It’s risk management. And I don’t I had a, you know, maybe a mentor, but I used to be a and I’m still a student of the game and always, wanted to understand why are some people incredibly successful. Why are some people, you know, not so successful in the same industry, having the same opportunities? And so, like, I always read and I was voracious at that when it came to, trading and even real estate. And risk management was something I just intuitively understood. I knew what my edge was in the market when I was trading, and that all translated into real estate as well. And it’s about managing risk and taking advantage of opportunities and recognizing those opportunities, having an opinion but not being opinionated, spreading your risk out, not cross collateralizing assets, not guaranteeing debt, doing all those things that have, you know, like even very smart people who have, you know, taken them down. So, a lot of what, you know, I think came intuitive to me and made me a good trader is translated into, real estate investing as well.
Jay Conner [00:05:05]:
I know in reading about your background that, your beginnings of getting into real estate investing began with a desire to protect your wealth. So with that being the case, what would you say about how that initial motivation has shaped your philosophy?
Michael Episcope [00:05:28]:
Well, there’s a saying, you only have to get rich once. And that’s kinda what we live by, and we think about that from our investors as well. Real estate is really about staying rich, turning your assets into income, and doing things in the right way. And it’s kind of, you know, both ironic and sad, but real estate is one of the greatest wealth creators out there and also one of the wealth protectors, but yet more people have gone bankrupt investing in real estate or lost money investing in real estate because the market, you know, in many ways, has just been, the wild wild west for so many years. So when we think about it, it’s about protecting and growing first and managing that downside, making sure that we’re using responsible leverage, that we’re investing in the right markets, that we’re underwriting conservatively, that there’s more meat on the bone. And I’ll just tell you, like, you know, we’re kind of in the teeth of one of the worst recessions in real estate over the last, you know, certainly in my career, 15, 20 years. O eight was worse because it was a real estate-led recession. And we’ve grown through this this whole time.
Michael Episcope [00:06:35]:
We’ve been able to produce, positive returns, and that was, you know, being proactive. And candidly, it’s just using a lot of common sense. And, you know, when we were investing in 2021, it didn’t make sense to buy assets at 20, 30, 40 percent above replacement cost when you can build them. And it didn’t make sense, you know, to get to be in value add or core plus. So we embarked on a barbell strategy of lending and developing, and both of those strategies helped us navigate this market. Now, you know, we’ve got a couple, you know, issues like anybody to work out here. But when you’re investing through a fund when, you know, the majority of your deals work, you can handle, you know, a couple that that maybe aren’t doing as well as others and stuff. And that’s the advantage I think of being in a portfolio, and that’s part of risk management is that we don’t do deal by deal.
Michael Episcope [00:07:26]:
We do have sidecars available for our investors, but we generally invest through funds because they’re much more bulletproof than doing a deal-by-deal structure.
Jay Conner [00:07:36]:
Right. You alluded to the global financial crisis, 2007, 8, 9 along in there. That’s when I had my wake-up call and I learned about private money. Not because I woke up one day and said, hey, I think I’ll learn about that. It was, you know, out of need, with the bank shutting down and I lost all my lines of credit, not due to my record, but due to the global financial crisis. So we all learned some lessons. I learned some very important lessons, during the global financial crisis. What are some lessons you would say that you learned from that? And now how do you apply what you learned to your strategies or your investment strategies today?
Michael Episcope [00:08:20]:
Yeah. In many ways, we got, very lucky because going we started Origin in 2007, and and timing does matter. We did not have positions on going to 07. I often tell people if we had started Origin in o 3, or four, we probably would have had, a lot of risk on, you know, going through o 7, or 8. It’s not to say we wouldn’t have been able to manage through. Plenty of people did. When I look at the lessons, I mean, one of, I guess, 2 of the biggest things, and they’re sort of in the same, veins, don’t cross collateralize assets, especially in your funds. And I know, plenty of investors who I still talk to, you know, today who have these stories about, yeah, I was in a fund and it returned 0.
Michael Episcope [00:09:03]:
Well, that’s kind of, like, impossible if you’re adhering to just generally, you know, good risk standards. But when you start cross-collateralizing that you’re giving the bank the pledge of every single asset in your portfolio and you financially engineer returns and you’re not adding value, that’s the quickest way to go broke. You can incrementally generate higher returns when times are good, but the risk-reward just isn’t there. It’s not worth, you know, you’re gonna generate an extra 2% in great times, you know, but you’re gonna be giving up, a complete loss in bad times. So, that was a lesson I saw. And then the other one, from a personal standpoint, and my partner and I don’t do it. We don’t, we don’t guarantee loans. We do not do that at all, never have.
Michael Episcope [00:09:53]:
That’s the quickest way to go broke in this market. You can have a period where, you know, they might go fine 5, 10, 20 years. But when you do that, when things go bad and, you know, kind of like in this environment, then you, you know, you get called by the bank and it’s very difficult to recover. And I’ll say the last thing here, and this is something I learned when I went back and got my masters in real estate after trading. The best advice for me was never to run out of cash either because if you buy great real estate, you’d leverage it appropriately, you manage it correctly. All you have to do is get to the other side because real estate is cyclical, and that to me, it’s not location, location, location. It’s never run out of cash, never run out of cash, and never run out of cash. And those are the 3 most important rules in real estate.
Jay Conner [00:10:40]:
Yes. You mentioned a moment ago, you know, in this, when you mentioned real estate is cyclical, but you also mentioned, you know, the market and what we’re looking at. So I’ve I’ve got to ask you to, reveal to me in the audience your crystal ball. What do you see going on in this market in real estate? What do you see over the next year or so?
Michael Episcope [00:11:06]:
Good question, Jay. The crystal ball, that’s always tough. We get that a lot on our webinars and things like that. And I will tell you that, I’ll start where we sit today, and we are in the teeth of, one of the worst recessions. We have everything that could go against us, go against us. We had, you know, construction costs are up 40 to 50%. Interest rates are, you’ve got the 10 years now that sitting here today, I think, is around 4.7%, which is, incredibly high from where it was even 3 months ago. So we have about a 100 basis point rally on that side.
Michael Episcope [00:11:43]:
Transaction volume is low. Cap rates are up. And then we’re, and then there’s the supply that’s being delivered, into the market has never been greater than what we’re looking at today. And so that’s sort of the doom and gloom, and we’re in it exactly right now. I’m very optimistic about the next year. There’s been a saying in our industry, survive through 25, survive until 25. You know, there are maybe 2 different, frameworks for that. But everything we’re seeing, we do employ something called multilytics, which is, we have a team of data scientists who crunch a lot of numbers, and they look at every variable possible in the universe to forecast rent growth.
Michael Episcope [00:12:23]:
And what we’re seeing in the latter half of, 25 is a recovery in real estate. We’re gonna see concessions, which means free rent, disappear. You’re gonna see occupancy improve, and you are gonna see rental rates start to go up again. And that is just a matter of they they stopped putting shovels in the ground about a year and a half ago in real estate. So you have this massive supply that is really from 21 and 22, but nothing was built in 23 and 24, and we still have a housing shortage in this country. So what our data is looking at, as per multiphysics, is we’re seeing above-market rent growth, in the second half of twenty-five. And I’m excited. I mean, this is when you wanna be planting seeds in real estate, especially the common equity side of the equation.
Michael Episcope [00:13:11]:
That being said, you know, real estate, inter or I should say interest rates are sort of the x factor, and we don’t know where those are going to go, and those can definitely, derail the party.
Jay Conner [00:13:23]:
Yes. For sure. Well, thanks for sharing your crystal ball thoughts there, and I agree with you as well. So, you’re your company, Origin, Origin Investments. So there are all kinds of, you know, real estate classes, asset classes, single family, apartments, commercial, self-storage, land. What type of, real estate, asset classes does Origin focus on?
Michael Episcope [00:13:51]:
We are exclusively multifamily only, and we’re here for a reason, in this sector. It is produced, this isn’t even arguable, but the highest risk-adjusted returns across any sector within real estate, and you can take industrial office, retail, anything, and all and it’s kind of kept up with industrial on an absolute basis, but, it’s a need-based asset and it’s not going anywhere. And so, like, as a firm, you know, years ago, when we started the company, we were a little, more agnostic about where we wanted to be and what asset class. And we used to do industrial, and we used to do office, and we sort of, honed in to multifamily. And today, we build, we buy, and we lend, so we have 3 strategies. We cover 12 markets. We have 65 people kind of growing to 70 at origin. And when people wake up every single day and all they do is think about one asset class and how to maximize the value, it makes it a huge advantage for an organization like ours, especially at the size we are.
Michael Episcope [00:14:54]:
We’re at 2,000,000,000. We have a goal to grow to $5,000,000,000 in equity over the next, few years. And then the multifamily market is, is big. We’re a very tiny fraction of that. And I just believe long term that this is the best place, to have your money. You’re gonna get, you know, you’re gonna get the upside with a lot less volatility.
Jay Conner [00:15:16]:
When you have, individuals that invest, in your fund, or funds there at origin, you may have different programs, but is it more or less a straight interest rate return, or do you have equity share percentage on the backside? Or what does that look like?
Michael Episcope [00:15:35]:
Different funds. So we have a strategic credit fund that is, lending as it suggests. It’s credit, and that is for qualified purchasers only in that fund. And that’s a much more consistent return, but what you give up there is tax efficiency. So that fund right now, I think the trailing, 6 month yield is around 11% in that fund, which is amazing. And if you have after-tax or, nontaxable money, it’s a great, investment. But you don’t get the advantages of tax efficiency, which is one of the reasons why you wanna be in real estate. And our other fund, the income plus fund, is, it’s a diversified fund, so you’re in the common equity position generally in that fund, but we also have debt in that fund and ground-up development.
Michael Episcope [00:16:18]:
So you get kind of all the best of both worlds in that fund. And then as a manager, we can tactically adjust that fund depending on where we are in the cycle. So if we go back to 21, 22, we started tilting it towards debt to protect ourselves when we saw sort of what I’ll call the irrational exuberance. And then today, we’re tilting that fund back towards, common equity because we believe that, you know, in 6 months to a year to a year and a half, we’re gonna see another run-up in multifamily real estate. And then we have sidecar opportunities, which is, all common equity, but individual deals. When we have, opportunities for the fund, they might be too big. But we also know our investors, they want, they want deals, they want funds, they want a little bit of everything. And so when you think about our flywheel of products, it’s everything for the individual investor.
Michael Episcope [00:17:08]:
And we have 1031, we have QoZ, we have, you know, the individual deals as well. But one thing we always believe strongly in is internalizing our distribution capabilities and not charging those back to the investor. So in the market, what a lot of people do, who are managers of our size is they use the distribution network and they pay, expensive wholesalers and brokers, to market their products. Now ultimately, the investor pays for that. So maybe, you know, for every dollar they invest in the project, only 85 to 87¢ is being invested in real estate because of all the middlemen. So when we started this business in 07, we just rallied against that whole distribution channel. And so we’re direct to consumer, and we just believe in efficiency and fees destroy returns. And you gotta start with the distribution, channel, and, that’s what we’ve done.
Jay Conner [00:18:03]:
Right. We’ve got, we’ve got a large audience, here that’s listening to the show, and a lot of these people could very well be, you know, considering being a a passive investor. You know, wanna take a look at your company. But what would you say from your experience are some, common mistakes or common pitfalls that new investors face when they’re looking to add, you know, real estate to their portfolio?
Michael Episcope [00:18:32]:
I think I think the biggest thing that, investors a lot of time, especially individuals, and we see this, they focus on, the pro-form a, the return potential of the investment, and maybe don’t analyze the risk enough or look at the manager or the track record or things like that. And so it’s very common for managers to go out there and shop a deal, and you shop a deal by putting an IRR on the front. But what we know about the pro form a is it’s wrong, and anybody who’s been investing long enough knows that, you know, a deal that’s, forecasted to generate a 2 x in 5 years, well, that can wind up as a total loss or it can wind up as, you know, a one x, a 2 x, a 3 x, a 4 x, but it’s gonna be somewhere in that range. And it’s only after you invest and make those mistakes that you realize, you know, where the risk was, where the questions are that you weren’t asking in that particular deal. And this is not an industry where anybody can forecast with absolute accuracy. You know, we just had we did 5 deals, and I find this very interesting, but back, you know, kind of similar vintages, 22, 23. All of those deals were, had the same underwriting criteria, and the same expected return, and they’re very different as we sit here today. They’re all, you know, from a multiple perspective, multiple on equity, anywhere between, like, a 1.25 multiple and a 1.7.
Michael Episcope [00:19:58]:
So you think about that from a profitability standpoint after about 3 years, and it’s, you know, it’s vastly, vastly different even though they all look the same, on the front end. And I would say that if you’re an investor and you’re looking to get into this market, the most important variable is the manager. Who are you investing with? And you wanna, not even look at the returns, not even look at projected returns because a good manager, they’re going to, number 1, probably be conservative and, you know, they’re not gonna show you what you wanna see in terms of the returns. But what they will do is capture the upside and mitigate the downside risk. And it’s all about protecting your capital at the end of the day, and that’s what you’re trying to do. So you wanna be with a manager who’s been tested, and there’s no better time than this last couple of years because the market has never been worse, you know, probably, I mean, in the last 15 years. So I think up until now, nobody had been tested with the cycle, but now plenty of managers have been.
Jay Conner [00:20:59]:
Yeah. You sort of in a roundabout way began to answer my next question. So I’ll let you do a full answer now. So, anyway, what I was thinking about asking you was, you know, there’s there’s all kinds of funds out there. Right? There are all kinds of managers out there, and all kinds of opportunities. But what do you believe has been the most significant factor in setting your firm apart, say, from others?
Michael Episcope [00:21:31]:
Good question. I think that’s pretty easy. It starts with alignment and why we do what we do. Number 1, nobody has invested more money across our funds, and our deals than my partner and I. We started this firm to grow and protect our capital, not to build a company worth a lot of money, not to generate as many fees as we could. And you have to start asking, what’s the why? Why does this firm exist? And we exist to help high-net-worth investors maximize the benefits of owning private real estate. Because when we got into this industry, there just wasn’t a firm that was looking out after the interest of investors. And I’ve had, you know, plenty of, bad deals, and that was really what what, you know, prompted me to start Origin.
Michael Episcope [00:22:18]:
I invested with others passively in 03, 04, 05, 06, 07, and it was always, like, 2 steps forward, 1 step back, sometimes getting punched in the face. But I think the motivation of why you do what you do, and then that ultimately translates into the track record and how you, treat people, your reporting, your client experience, but your returns, comes down to alignment. And that’s what you have to make sure that you and the manager are both rowing in the same direction and after the same thing.
Jay Conner [00:22:49]:
You mentioned, just a few minutes ago, tax advantages. So what are some tax strategies, for, say, for long-term growth, you know, protecting your wealth? What are some some ways that your firm offers your clients, some ways to unlock the tax advantages?
Michael Episcope [00:23:12]:
Yeah. Jay, I’ll take it back a little bit because our firm, used to be engaged in, buy, fix, sell. Right? Buying, you know, good real estate, adding value, fixing it up, and then selling it, and generating IRR, and that was sort of the beginning of our firm. And that, a lot of managers engage on that, engage in that strategy. And I just view that as flawed, because real estate, there’s 2 things about it. Number 1, it’s it’s very tax, efficient. But if you’re selling it, then you’re not getting the advantage of those tax efficiencies. And number 2, you also want the cash flow.
Michael Episcope [00:23:51]:
And if you sell it, then you’re not getting the cash flow. So instead, you’re buying great real estate, you’re adding value, you sell it, you pay taxes, you don’t get cash flow, you don’t get tax efficiency. And what we did, about 5 or 6 years ago is we converted to open-ended funds, where we now buy, fix, and hold. Because real wealth is made, I don’t care what asset class you’re talking about, whether it’s stocks or whether it’s real estate or whether it’s a venture, but from buying great assets and holding them for very, very long periods, because that’s how your money multiplies. And that’s what you’re looking to do as an investor. You’re not looking to take a dollar and turn it into a dollar 50 or a dollar 60 and then pay taxes on it. That sounds great. It feels good because maybe that’s a great IRR over a short period.
Michael Episcope [00:24:38]:
But wouldn’t it be a lot better to take a dollar and turn it into $12 over 30 years? And that’s what you can do by buying great real estate, adding value, holding it, enjoying the cash flow, the tax efficiency, and letting, the appreciation run its course. And so that’s been a huge evolution for our firm and also a big, education portion, you know, to our investors as well. And those who understand it, they’re in. They’re they’re fully in. They get it. They’ve been down that road, and some people still, you know, like IRR, and they chase it. But we have a saying that you can’t eat IRR.
Jay Conner [00:25:15]:
Well, just to make sure everybody understands, tell everybody what IRR is.
Michael Episcope [00:25:19]:
Yeah. Sorry about that. I use industry jargon sometimes. IRR is the internal rate of return. Internal rate of return, and it’s a time-based metric. So if I, if you give me a dollar and I give you back a dollar and 1¢ next month, you’ve made, I think, you know, do my math. It’s like a 25% IRR because I’ve given you back, you know, 1% in a month, and you time weight that based on an annualized return, and that’s how it works out too. So, you know, it works out that you’ve made a very high, you know, rate of return, which sounds like annualized return, which is its cousin or annualized percentage rate, but it’s not.
Michael Episcope [00:26:00]:
It’s very different. It’s a term that’s used in, private equity and fund management, and it does have its place when you’re looking at everything, but it doesn’t build wealth. Because when you take a dollar and you turn it into a dollar 1, you know, and cents, you haven’t made any real money even if you’re IRR. So that’s the idea. A lot of times you’re gonna wanna trade a lower IRR. You know, if you can make 8 or 9% on your money for 25 years, that’s way better than chasing, you know, 20% on your money over every 2 or 3 years paying taxes and continuing to do that.
Jay Conner [00:26:34]:
Yeah. Thank you for that clarification. I know we have a lot of people who want to learn more about Origin Investments and how they possibly can get involved. So how would they go about doing that, Michael?
Michael Episcope [00:26:45]:
Go to our website. We make it very easy. Origininvestments you can download our materials. You can engage with us right there. You can set up a call with somebody in investor relations. We make it you know, the the user experience is something that we really, spend a lot of time on and just making sure that all of our information is available so you can make a decision that works for you.
Jay Conner [00:27:09]:
Well, that’s wonderful, Michael. Thank you again for joining me here on Raising Private Money. Myself, my audience, we appreciate your time, Michael. Thank you.
Michael Episcope [00:27:18]:
Thank you for having me, Jay.
Jay Conner [00:27:20]:
You got it. And there you have it. Another amazing episode of Raising Private Money. I’m Jay Conner, your host. And so that we can continue to have more amazing guests, I appreciate you liking and subscribing, rating and reviewing. And if you happen to be watching on YouTube, be sure and ring that bell so you don’t miss out on any upcoming episodes. And I look forward to seeing you right here on the next episode of Raising Private Money.
Narrator [00:27:48]:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to www.JayConner.com/MoneyGuide. That’s www.JayConner.com/MoneyGuide, and download your free guide that shares seven reasons why private money will skyrocket your real estate investing business right now. Again, that’s www.JayConner.com/MoneyGuide to get your free guide. We’ll see you next time on raising private money with Jay Conner.
