If you have been following our podcast, you have undoubtedly heard plenty about a Solomon Investor. In today’s episode we are speaking with Scott Cain, a true Solomon Investor. I have known Scott for many years, and have had the pleasure of working alongside him as he has invested with Boron Capital. I asked Scott to come on the show and share with me anything he believes would be valuable information to our investors. We talk about Scott’s experience with the private market, the public market, Boron Capital, and a few more topics that he believes are important for any investor to know.
If you have been following our podcast, you have undoubtedly heard plenty about a Solomon Investor. You know that a Solomon Investor wants to take control of their financial future by creating a return that they can count on. You also understand that a Solomon Investor knows the value in seeking God’s wisdom to make decisions that will impact their future and the future of their family.
In today’s episode we are speaking with Scott Cain, a true Solomon Investor.
Scott Cain operates in the private market for his career in the commercial real estate field. I have known Scott for many years, and have had the pleasure of working alongside him as he has been an investor with Boron Capital for many years as well. I asked Scott to come on the show and share with me anything he believes would be valuable information to our listeners.
We talk about Scott’s experience with the private market, the public market, Boron Capital, and a few more topics that he believes are important for every investor to know.
Below are some major takeaways from our discussion that will open your mind to the world of a Solomon Investor.
Key Takeaways:
The emotional difference between the public and private market (3:12)
What does cash flow actually mean? (6:52)
A realization about Scott’s self-directed IRA brought on by Covid-19 (10:41)
Why does the #1 public market investor have his money on the sidelines instead of invested into the public market? (14:27)
Scott’s take on the public market returns vs the returns in the private market (17:18)
Scott explains his responsibilities while investing with Boron Capital (20:21)
How Boron believes the wisdom of God directs their investment decisions, just as it did for King Solomon (22:43)
Becoming a Solomon Investor is all about taking ownership of your money and making it work for you. The key to doing that is to always be learning and seeking the Lord’s direction. Scott was able to share his experience in working in the private market and we sincerely hope that his insight on the matter was beneficial to you as an investor.
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- All right. This is the Solomon Investor Podcast. I am your host, Blake Templeton and I have with me Scott Cain. Scott Cain's one of our investors. He actually is in commercial real estate and man, Scott, I'm so glad to have this time with you to spend and just process through what's happening in the market right now. So welcome to the show, man.
- I appreciate the invite Blake. Proud to be here.
- Yeah. Man, let's just, let's start with, you know, we've known each other, what? Five years?
- At least.
- Yeah, in that ballpark.
- It may be a little bit longer than that, brother. It's probably been closer to eight.
- And, it probably has been closer to eight, yeah. And you, you had money. There's an IRA that you had first invested with us, right, in the beginning.
- That's right. That's correct.
- And you had that IRA where? Where'd you have that in the beginning.
- I mean, I was at Fidelity and then moved it into in trust where we could do something with it. You know, self directed.
- Okay, perfect, perfect. And so, you know, most of our listeners find themself in that same place where, whether it's a 401, it's an IRA, could be a pension and they have that money that's been, you know, it's been put into the centralized system, whether they started when they were in their 20s and they, you know, just started putting money away and maybe a company match or something. They find themselves with a chunk of money and at this point, most of our listeners don't really have any other noticeable thing that they're doing with the money but putting it into the public market and it's been sitting there for so long and it's rode the waves and the roller coasters and you know as a Solomon investor, we have three essential dimensions of our investments and we had the public market investments. That's like the centralized market, the stock market, and then we have the private market and, you know, for you, I mean, that's your world you live in. You live in the private market. You see the tangible, you see the difference but most people ironically, they just don't even know that it even exists that they could even invest into it. For you living in that world, being in, you know, commercial real estate, and then, you know, investing with us, you know, in our properties, what goes through you knowing, like, for instance, let's just talk about the pandemic for a minute. We're going to be in this season of the consequences from quantitative easy and printing money for quite some time, what's the difference of what you see people feeling in the public market versus an investment in the private market? Like, the emotion differences.
- Well, man, even as a family, we still have some money in the stock market and you can watch that go up and down on a daily basis. It'll move 500 or 1,500 points and that is very emotional. You think you're, you know, making or losing money on a daily basis when in fact, you know, maybe you are, maybe you're not but you're not really in control of any of that. What we've seen in real estate is that the company that I work with does primarily multi-family and, you know, big hoopla about people not paying their rents. Well, that's not what we see. People are paying their rents. We're getting the same kind of returns that we've always gotten on our properties. So that shows that asset to be very stable. That real estate asset continues to grow in value. It continues to return good cash flow. So there's just, like you said, emotional calming effect. One, that you, you know, working with you guys, a god-centered company. Two, you've got a tangible asset. Real estate that year over year, decade over decade, continues to appreciate, show additional value and it throws off good cash flow. So, it's, to me, it's what I call the full meal deal. So it's what we're looking for in a good investment as a family so that we can build something.
- Yeah, I appreciate that. You know, and one thing you mentioned was control, that you didn't have control in the public market and I was just talking with another one of our investors a few days ago and they were saying that some of their friends had just retired and the husband locked himself in, you know, against the TV on the regular each morning and just wanted to know what his investment was doing, and the reason, you know, it's funny, the reason though is because he knows internally he has no control so now he hurts more 'cause he has more focus on what he has no control over and so I appreciate you saying that 'cause that's one of the biggest shifts is, you know, as a Solomon investor, you're actually in general, God's calling us to be a king and take ownership of our investments and how we take control is by putting it into the private market and for most people, they just don't even know that that's even possible. Like, I could do that? I'm not touching my money right now. Doesn't someone else have to go do that? And yes, what we call a Solomon general, a Solomon general, like Boron Capital, we actually, yes, we take your money and we put it in there but you are now in the private market and one of the big differences we talk about, like in the public market, is that the fees are actually what eat away at the actual earnings. You know, for instance, like a simple mutual fund, as you know, a mutual fund that average percent on that mutual fund and fees is 3.17% and the average mutual fund might only produce, you know seven or eight percent but the fees come out of that.
- Right.
- And so, you know, that's 39% of the actual profit, the fees in that public market investment get eated up and so then in the private market, you know, especially for as a Solomon investor, we don't have fees. Boron Capital doesn't charge fees and so that gives you control over that asset. Share with me more about cash flow. I mean, some people, most people, Scott actually, don't even know what cash flow is. I mean, it's really, it's ironic but for most people 45 to 75, they've never seen cash flow. A divot, more than 50% of stocks don't even pay dividends and if they do, they're teeny weeny. So, help us understand like the tangible-ness. Like, what's cash flow mean to you? What does that really feel like, look like? You know, kind of--
- Well, it's just where you get either a monthly or a quarterly distribution based on the cash flow of the asset. So if you've got, say, an apartment complex, for instance, and it's throwing off, just to pick a number $100,000 a month in free cash flow, and they're going to take the investors and after they pay all the bills and come down with what the profit is, the free cash flow, they'll take that, usually on a quarterly basis and they'll split that amongst the investors and return it to 'em as a dividend or a cash payment out on their investment. So, that's the cash flow aspect of it and you still hold your investment in the asset and at some point, like we did with Ashbury, the asset gets sold and that's what, there's another payday there. So, I mean, there's different ways to look at it. If you're a long term player in real estate, you can have the appreciation of the asset over a long period of time and then at some point, a big payday when you sell it but in the meantime, you can enjoy cash flow. So that's the beautiful thing about the two dimensional approach or three dimensional approach that you guys operate under.
- Yeah, I love that. Two points you just made are really, really powerful. I want to highlight those is one is you get to enjoy the cash flow and most people, you know, they're like, can I actually touch it? Can I feel it? 'Cause in my IRA or in my 401 or, it's just set it and forget it and the ironic thing is, is the rule of set it and forget, like, leave it in for the long haul, that rule only works in the private market. That rule doesn't work in the public market because in the public market, every economist would say there's always going to be a correction at least every 10 years, if not every five. So if you leave it in for the long haul, I mean, if you go back and do the analysis of a big picture of someone leaving their money in, we've done that with so may clients and yeah, they made a big return at one point but they left it in and then it corrected. So they lost a big portion of their return and then they lost a big portion of their return and then it corrected and it had an appreciation and when they shook it all out, the majority of them made less than four percent in the market over the span while the product wasn't even tangibly correlated to the actual earnings of the company. So, that long term investment, that's a beautiful thing in real estate. You just mentioned, you know, appreciation. The longer you're in, you're actually making tangible cash flow, the property's appreciating, it's backed by collateral and then you can actually enjoy it. So you can compound it. As a Solomon investor, you can compound that where it's making money on money on money or you can actually take that cash flow now. And so, some of our, you know, retirees that are listening to the show, I mean, that's beautiful. A lot of people don't even realize the amount they have in that 401 and that IRA, in that pension making a set, fixed rate return. As a Solomon investor, you could actually live on that monthly return.
- Right. You know, one thing Blake, that I want to share with everybody is, and didn't really realize this till it happened this pandemic deal that I have a self directed IRA. Got a quite a bit of cash sitting there. It's not directing anything right at this moment, which kind of, you can look at it two different ways. One is you got cash, you know, there but also it's like I've got a substantial sum of money that's not making me anything right at this minute. Well, ala Coronavirus and you saw what happened to the market, if I had been invested in the market during that time, I would have lost 20% in a matter of weeks. Now, I might not be making a lot of money but I sure didn't lose anything and I'm sitting on the sidelines with a pile of cash and so when the market did back up, all kinds of opportunities, you know, I mean, everything has a time to buy and if you've got cash ready to go, then you can get at the optimal time and things just get that much better but yeah, it's, being self directed is in my opinion the way to go if you're interested in that kind of investment.
- Yeah and the beautiful part about what you said is being self directed. So, you know, he's talking, just in layman terms for those who have an IRA, you can self direct that IRA and actually take control of that and put that in the private market and you putting it in the private market allows you to have actually have collateral to put tangible collateral as the property Ashbury he was referencing, his IRA is actually was in Ashbury and the property itself was more valuable than all the investors together, the amount they had in it. So that actually stands there and is the protector, the fortress, if you will, around their money and so his IRA was able to then have money poured back into the IRA to actually fund the IRA whereas in the public market, unfortunately, it doesn't have a collateral. So it's not even backed by the companies that it's invested into 'cause it's not actually invested in the companies, it's invested into a stock and the reality is is, as Scott had mentioned, that number can go up and down and up and down and what's it based on? And Scott I just, I'm so amazed at how if the stock value was based on company earnings, as you and I know, it would be based on a quarterly update, not a daily update.
- Right.
- So the balance sheets and the, and the actual analysis of the books would be quarterly and then we might have a shift every three months in the stock market if it was backed by the earnings of the actual companies but as you and I know, and everyone listening, you literally have a minute by minute, you know, update and so then it's not based on the earnings of the company. It's truly based on the emotions that are in the market. And that's when we have the, you know, the halts in the markets where in the stock exchange they actually freeze the market. Well, why would you ever have to freeze it if it was backed by the earnings? You wouldn't know what the earnings shifted and nothing's going to shift enough until three months later. And so, that just really helps us understand in a season like this I was looking at, you know, for instance, on Warren Buffet. He's got, Berkshire Hathaway has 137 billion on the sidelines not invested in cash and just like you mentioned, the number one public market investor, if he's got his money on the sidelines then you've got to understand that he's saying it's too volatile. The market's not a good market. It's not a value market and we look at the Buffet indicator even and he has this picture of what the stock value divided by the GDP of a country and it needs to be in the 70s, 80s and it's in the 150s and it's almost as high as it's ever been and so, you know, if he's on the sidelines and his statement would be, you know, be greedy when others are fearful and be fearful when others are greedy and everyone clearly has been quite greedy to jump in, you know, this is that time of reckoning to realize, man, most people listening to this show, you don't have 20 more years and if you did take a massive dip, you don't have 20 more years to gain it back and then the point is not just to gain it back. Like, that just puts you back at square one. The point was actually to thrive in the years that you worked so hard to make this money in.
- Correct, correct. And I've ridden that roller coaster up and down a couple of times already in my lifetime and that's why I'm doing what I'm doing now. I got tired of that, of starting over.
- Yeah. Well and you know the consistency, you know, so as a Solomon investor, King Solomon, the book The Solomon Way is about King Solomon 3,000 years ago in the bible and he actually was the first trillionaire and he actually put everything in the bible and shows us how he does it and he starts out with the first dimension of the three dimensions is wisdom. It's God's wisdom that he builds the investments and, you know, someone asked me, you know, well, I mean, Solomon with all his money, he would've, you know, he would've kind of controlled the market and he would have put his money money in the stock market and the idea is no, he wouldn't have put it in the market and the reason he wouldn't have put it in the market is because he would have no control because the market's controlled by emotions and his wisdom would have said, no, I would control the physical, tangible assets and that's what, you know, a Solomon investor has the ability to do. Share with me some more on, share with me more on what are your goals in your investments intangibles? How do you see, you know, maybe, how do you see hitting your goals with investments in the private market versus the public market?
- I mean, I gave it a pretty good go in buying stocks and things like that. I've traded commodities. I've done about everything there is to do in the stock market, mutual funds, you name it and I just didn't see the kind of progress as far as actually making the kind of returns that you could see in real estate. That's why I'm in real estate now. I'm on my second, third career now but I was drawn to it because quite frankly, that's where I could get the best return and build some real wealth. Not just on paper but--
- Yeah.
- But land is the one thing there's never going to be any more of and I was just drawn to it and I've seen other people be very successful buying real estate, holding it for long periods of time and then, you know, sell it when the time's right. Buying more real estate. And real estate has the ability to produce income. So what I was looking for in our family was to build a large asset base and then also build a substantial retirement income. To think that you could retire on social security, I don't want to do that. I know people have to. I just don't want to be one of those people and I really want to build something for my family. I want to teach my children that there's other ways to acquire, build, and maintain a good, healthy base for your family and I think being in control of it, one, is the start. You need to be focused on, you know, we pray on everything before we do it. I'm not going to put my money anywhere before I pray about it and I pray a lot. So I'm slow to move sometimes. Maybe too slow but definitely going to do that and then to have something tangible to put your money into like real estate, be it land or apartments or hospitality. It doesn't matter what it is if it's an income producing property. It could be commercial real estate. It could be residential. It could be a lot of different things. But, I think you just find what works for you. Build a nice portfolio with stuff that you're comfortable with and that returns a decent return that you can build something with and that's really our focus over the next, I've kind of got a 10, 15 year plan that I'd like to work through and hopefully carry that on down through my children.
- That's great. Share with me a little bit, you know, as a Solomon investor, when you invested with Boron Capital, some people, you know, who are in the public market, again, they've done the 50 hours a week for 50 weeks for 50 years and they've just never touched the money and they just kind of in a bubble in abstract land in the market, when they activate their net worth and they, you know, rise up as a king or a queen in the king's court and they say, you know what, I want to take control. I didn't even know how and what to do but I want to take control and they actually put the money in the private market and they invest as a Solomon investor, fast forward. Paint a picture for 'em. Like, what were your responsibilities on Ashbury? Like, what did you have to go do and what did you have to watch and manage and analyze and, you know, did you have to do anything in that investment?
- No, I probably tried to do more than I should have. I was in Blake's business all the time. Asking him lots of questions but he was very open and honest with me about what was going on and how it was going on. I knew just enough about real estate in the multi family world to be dangerous. But no, I really didn't have to do anything except trust in the lord and trust in Boron and sit back and watch it happen. But that was, and honestly, you know, we have a story that goes back a ways. We had talked over a period of years before I came on as an investor with Boron because I wanted to see who Blake Templeton was and what your company was all about and my thought was if he's still here in five years then I'll see about doing something with this young man. And it turned out well so I have no complaints and I'm sure we'll do business again so, but yeah, as far as getting involved and honestly that's a big reason of why I did go with you guys because I certainly didn't have the time or the knowledge, either one, to go out and do what you guys do with Ashbury. But it was fun to watch it happen and be involved and ese the process that you went through to turn that property around and then sell it for a nice profit.
- Yeah, I appreciate that. And, you know, one thing you had mentioned was that your heart, to actually go before the lord and pray and that's the first dimension of how we run Boron Capital as a Solomon investor. You know, a Solomon investor leans not on his own understanding but he would then lean on the king of king's understanding and, you know, one thing that surprises people when they ask, you know, how Blake? How in 14 years and 300 plus transactions, how has not one single person lost money? Like, that's unheard of. And, you know, we have a massive due diligence that we go through. A massive vetting property, especially if we're going into a new industry. We may spend eight months in due diligence crunching numbers and algorithms and we have 13 proprietary optics and metrics that we, that have to blend and match for year over year and percentages but those might all line up and those will all have a green check mark but if I don't have peace, if we don't have peace as a company on that investment or that portfolio that we're acquiring, man, we just can't do it because if his wisdom sees something that I don't see then he would not give me peace. But then in the same position, doing the optics and metrics and it would, there's been properties that have lined up on a majority of the points but I didn't get check marks on everything. And so, my leaning on my own understanding would actually say, eh, don't do it and then I had massive flood of peace. Like an absolute transcending peace from the lord of like, no, this is good. Then we purchased it and then some things got opened up and we realized, oh my gosh, there's another income stream. There's another income stream. Oh my gosh, this is better than we actually thought it was going to be. And so, that wisdom, you know, and most people don't understand that it's easy to make the money. It's hard to actually keep the money.
- Right .
- And, it's the wisdom of god that actually has to run our investments and I have, you know, agnostic individuals come to me and say, man, I don't even believe how you believe and I'm not into all that but, man, I have you invest all my money because if you are right, like, I trust your conviction for like your truth, if you are right, I want the wisdom of god to protect my investments.
- Right.
- And so, yeah, I appreciate that thought.
- They need to get with the program.
- Do what?
- They need to get with the program.
- They need to get with the program. That's right. You know, so this three dimensional asset, that's what stood the test of time. That's what stood the test of time for King Solomon and, you know, for 40 years he reigned as king. He owned more territory and more land than any other king before him. He was more wealthy than any other king before him and we go back and we look at these principles and we look at the ingredients of what did he do? How did he do it? And, he actually had mental frameworks in the private market that stood the test of time and the basics were the wisdom of God, walking in the wisdom of God. Number two, the tangible asset. Having an actual, your money tied to a tangible. It collateralized the actual investment and then the cash flow. And, you know, you mentioned cash flow on Ashbury or the thought of getting cash flow is something for your future, the 10 to 15 year plan. I love that thought line because most people don't understand the value. If you're not getting cash flow, if you're not getting the, if you don't have that tangible return in the public market, literally it's just based on the emotional gains and right now everything's already overvalued.
- Right.
- So if someone wants to stay in right now and like, and not activate their wealth and pull out, you'd have to think, you know, I mean, you mentioned before we got on the idea of how that world kind of traps you in the feeling that you can't get out 'cause you might have FOMO, you might have a fear of missing out on something.
- Yeah, a lot of financial advisors, especially if you go into mutual funds, if you're a young person or even if you're an older person that hasn't really dug into and looked at how it works and paid attention to some of the ups and downs of the market and how they valuate things and how the way to get 'em is just bring money right now. It throws everything out of whack. So there's no true valuation when you're like Warren Buffet sitting on the sideline with the enormous resources he has. You know, you could follow a guy like that. You can pay attention to what the good lord says and, you know, just get with some people with some wise council but they do want you to feel trapped in that mutual fund or in that IRA or whatever you're in and it's absolutely your money and you can take it and take control of it and then place it where you feel good about it and things that you feel like will follow what your investment strategies are for your life and in your retirement and where you want to go rather than just getting in line with the masses and watching a small gain come in or a big loss. It can go either way and it can go very quickly. So, yeah, it was a little unnerving at first but once I did some, I did a lot of study on it and I took a couple of courses and I learned about self directed IRAs. I've studied quite a few different books where you could read about that stuff and learn that you can control it and you can return a much a better return and be in more control of your finances. So, that's when we made the move.
- Yeah and that's so good. And, you know, for those who are interested, you've got an IRA, you wanted to know what those next steps are and you want to know how to do a self directed, you want to know what those next steps are of what Scott's talking about, now is the time to actually take action. That first action, just make the decision, I want more information. And for those who are, oh man, you're fed up with the drama, the drama and the roller coaster. You understand like man, I can't trust my 50 years of everything I put into, you know, working so hard for that nest egg, I can't, if I can't control it, I sure know that they're not going to control it well. And so, I want to be able to activate that and put that with someone who actually can roll their sleeves up and get into the trenches and who actually go work for me in my investments and that's what a Solomon investor does. A Solomon investor begins to think for themself. A Solomon investor decides, you know what? I don't want to pay the excessive fees for someone who's making money whether I make money or not. A Solomon investor says, you know what? I want to actually take control and I want to go liberate my financial future and create a actual return that I can count on and, before I forget, we have live trainings. We have my book, Net Worthless. Lots of different tools that I want to give ya. What I want you to do is pull out your cellphone, for all the listeners, pull out your cellphone and text the word, Solomon to the phone number 31996. Text the word Solomon like you're going to send me a text message, text the word Solomon to 31996 and then that'll begin a communication with us and we'll communicate back with you. We'll send ya a link to get those goodies and we want to actually help you make this process, the shift. You know, as Scott said, it's less of this big scary, you know, bridge, this gap then, you know, we're making it too big of deal. It's literally just a decision. Take control. And so, right now you have that opportunity. You see what's happening in the market. You see the unemployment rate's crazy. You see businesses shutting down but the market literally is at the all-time high. It's clearly not correlated and so we want to actually be wise as Solomon investors. We want to actually look at the future. You know, Scott made a good point. He's creating something for his future. He's creating something for his kids. He actually wants to teach 'em principles of wealth and those principles of wealth come from wisdom of God. And so, again, pull out your phone. Text Solomon to 31996 and I would love to send you those goodies and continue this relationship with you. Scott, I've enjoyed this time with you, man, just getting to shoot the breeze and just talk back and forth about the wisdom and the nuggets of how you've enjoyed being a Solomon investor and look forward to doing this again with you soon.
- Same here Blake. Enjoyed it very much.
- Hey, very good. Guys, again, this is the Solomon Investor Podcast.