Real Estate Diversification: How to Protect Wealth & Reduce Investment Risk | Collin Plume

Collin Plume (00:00)
I think timing and location are the two biggest things in real estate. And I think that’s the thing you have to really focus on. Is it’s not it’s not as important to to other investments necessarily, but timing and location are the two most important things. And, you know, I do think there’s the timing is a little better than it was five years ago.

It may not be perfect. The timing may never be perfect. That’s the one thing I will tell people. there’s never a time where the people always think property is expensive. But at the end of the day, I think if you can watch a market, get really familiar with it, so you have that confidence, like you’ve really done your research, you can do really well in that in that kind of investing. But it’s it’s not for the faint of heart. I can tell you that.

Cody Crabb (02:22)
Welcome back to the Real Estate Pros podcast by Investor Fuel. I’m your host, Cody Crabb, and today I’m talking to Collin Plume, owner of Noble Gold Investments. We’re talking about diversification, protecting wealth.

and making smarter investments. Collin, thanks so much for joining us today. Thanks.

Collin Plume (02:38)
Cody, excited to be on.

Cody Crabb (02:39)
So for audio for our audience that doesn’t know you, kinda give us a little quick introduction of who you are, what you do and and you know what’s what are we gonna talk about today?

Collin Plume (02:50)
Yeah. I’m a serial entrepreneur. I I’ve been starting businesses since I was eighteen years old. I’ve invested in businesses. I worked in commercial real estate. I have acquired a pretty good amount of commercial real estate. I’m in the precious metals business, so that’s I I really focus on currency and money and I look at debt markets and study that every day.

And what that effect will have on me and my family and my portfolio and our investors and people that acquire precious metals from us. And I’m someone that’s had a lot of experience in a lot of different areas. So real estate’s something that I I have a true passion and love for. and yeah, I could dive into pretty much any topic from owning apartments, triple net properties, I own an Airbnb.

So I’m happy to dive into any of that. yeah.

Cody Crabb (03:47)
Yeah, and I I love that. We can we can go at that we can approach this from a lot of different ways. my first question would be like with all this experience across all of these all of these different ventures, I mean, we’re you’re talking about real estate businesses, precious metals and and mo way more, how has that how has the way that you think about diversifying changed over the years?

Collin Plume (04:08)
Mm-hmm. Yeah, I think that I my initial thought was and I actually I I think I mentioned I’m I’m starting a YouTube show lit lit launch today, and actually it exactly gets into this topic that we’re going to talk about. And that and it’s sort of talked about in the show is that the idea is is that people think they’re diversified because they’re in different stocks or they’re diff in different mutual funds, but

If a lot of it is all in the same genre of investment. So for instance, let’s say you’re heavy into a lot of the mutual funds and a lot of them have AI exposure right now, you’re not really going to be diversified if you have the majority of your net worth there. Same thing would apply for me is that I have a lot of apartments that I’ve invested in that are in Los Angeles. And I also invested in some triple net properties that are outside of Los Angeles and other states.

I tried to be diversified there, but probably owning apartments in other places could have been a little bit safer, right? Like if the market in LA is tough and obviously there’s a lot of government interference and regulation and you know they’re trying to do so much here. So being diversified there is is really important. Owning precious metals, having gold and silver, what I’ve learned over the last since 2020, 21.

investors that had some gold, 10% maybe in their portfolio or more, were better off than people that just had all their money in the stock market or had all their money in real estate because nobody can predict where the market is. So they had a non-correlated asset. and so that’s the thing that I’ve learned is diversification within the stock market by itself is not necessarily good enough. You have to have different assets that that will protect you because

We’ve seen collapses. Those collapses can be big. You’ve seen stock market collapses 20, 30, 40%. It pulls the whole market down. I I you can’t tell me that if the whole stock market comes down, that one or two of the companies you’re going to buy invests into are going to go up during that time. It doesn’t typically happen. But if you look at like 2008, 2009, when the stock market had a really massive pullback, gold pulled back initially and then started to go back up much quicker.

So if you had some gold in your portfolio, you were a little bit protected. So that’s what I think diversification actually means. and I think a lot of people get confused by that. There’s also a MIT student from the mid-1940s called Harry Markowitz, who basically came out with this theory that you need to have different non-correlated assets. And actually it’s really funny, they when he went to do his dissertation on this, they they didn’t

They didn’t give it to him. They they they said it’s not really math. You can’t really prove it. Milton Friedman and and these, you know, really smart economists couldn’t understand it at the time. And then many years later, they found out that his his formula is actually correct. The dissertation was actually correct. And he got the Nobel Prize for this same theory. and it was just a theory based on him doing his own research. And and he had a little bit of money invested and they and someone came to him and said, Well, why don’t you

Before you invest as much, why don’t you learn about the stock market? Don’t just give it to a stockbroker. Like you should actually learn how to do this. So Harry Markowitz did and realized like just investing in the stock market doesn’t really protect you. You have to have different assets, businesses, different things, different types of businesses if possible. which is, you know, partly I’m in the precious metals business. And then I have an HR and payroll business because the gold and silver business can be cyclical and

The HR payroll business is is a little less. It’s a little more recession proof because people always need to pay their employees and they always need HR. So I diversified within my businesses also. So that’s really the I think the point of true diversification.

Cody Crabb (08:38)
Yeah, I think it th it almost seems like you’re saying there’s two levels of diversification. There’s like diversification like small diversification where you’re like, don’t throw all your money into Tesla or something. And then the r and real diversification, which is like actually spread out in ways that are kind of unconventional sometimes, even. to kind of now I am super not a general investment type person. Now there is a there’s a

strategy that the name escapes me. You’re gonna this is gonna be like the most basic thing ever. So I I apologize. But it’s like when you’re kind of you you you play both sides, right? Like you you go you expect if if another side falls by the wayside, you can kind of pick up that side. That’s that’s the word hedging. Yeah. So

Collin Plume (09:21)
You can hedge. Yeah. Yeah,

that’s what hedge funds do. and actually that’s actually interesting because I my first exposure to knowing people in hedge funds was in two thousand twenty and two thousand twenty-one. And the reason I got exposed to them is I started to meet hedge fund people that were buying gold. And it was really fascinating to me because when you think of hedge funds, you typically think of companies that are trying to get

These really aggressive returns, 20, 30, 40. There’s all these famous companies out there that have like completely outpaced the stock market for years and years. And you always think it’s it’s on that side. But actually, part of a hedge fund’s job and some hedge funds are actually just there to protect against the downturns. They’re hedging in against the bad times. Because if you had all your money in the stock market in 2022 when it collapsed and you had it in stuff that

All the stuff there that went down, but maybe you had a hedge fund that was hedged, right? It didn’t go down as much. So your portfolio didn’t go down as much, if that makes sense. Or if you feel like the level of risk, like now, like the stock market’s at an all-time high, everyone’s betting on AI. Like, are you hedged against that? Like, what is there to protect you? Hedge funds actually do it the opposite way, too, is that they so that I met a guy that was in one of those hedge funds, and the years that that

the stock market pulls back, they actually break even or they make a little bit in those. They don’t make a ton, but even if they break even in the years and the other companies go down 30, 40%, that if you’re in your portfolio, that’s actually a win, right? If you take the whole pie, hedge funds do that too. So that’s another way to to look at investing is how do you protect your downside in those times. And that’s another reason why being diversified is extremely important.

Cody Crabb (11:09)
So let’s bring this back to real estate specifically. so you you know, as somebody that has multiple multiple types of investments, what is it about real estate that that attracts you? Cause you said like you were like, yeah, I’m in all kinds of things. And then you when you talk about real estate, you’re like, and definitely real estate, like of course I’m in real estate. So I’d love to hear like your perspective on that as somebody that has lots of different types of assets.

Collin Plume (11:35)
Yeah, I think Cody, the first thing is our the way our parents looked at real estate and the way that people looked at real estate over the last 20 years has been much different. In that I think when people bought real estate in the 70s and 80s, they really knew it was a long term investment and they weren’t so concerned short term about returns. In the last 20 years, because when after 911, when we dropped interest rates to zero, we really made it a

Boom and bust business in that we created an environment because the money was so cheap and so low that people were like literally able to turn a property and it would double or triple. That that kind of environment is never we’ve never seen that. That’s never happened. And real estate is not really intended to be that way. It’s supposed to be a slow growth type of investment that you work over time. But when we cut rates in 2001 after 9-11 and then

Greenspan didn’t like, you know, he even jokingly said like what bubble, which is like the craziest thing that any person in that position could ever say. They never got it under control. Now we’re sort of paying for that, right? Now we have rates that people think are expensive in the mid sixes, even though historically that’s still very low. I mean, rates in the eighties were in the you know twelve to sixteen percent range. So, you know, people are were sort of spoiled by this three, three and a half percent cheaper money.

And it’s skewed real estate way too expensive. And now we’re starting to feel it. It’s starting to level off. And you know, you start it, you see companies that own all this real estate that are giving it back to the bank. And so they’re really sort of protecting themselves. So I think now we’re getting in probably more of a normal market, which is probably what most people want. But it’s taken, I would say, five years to get to a normal market because the cheap money really screwed things up. So

I think there’s going to be opportunities again in real estate. And really at the end of the day, like buying in the right market, the right property, you know, getting the right type of tenant in there is is is extremely important. And also having a really sh good infrastructure in place to make sure that you can consistently get rent, the properties maintained well. These are all things that you really have to think about. and this is stuff that I’ve seen and been a part of for over 20 years.

but yeah, I love real estate. I think there’s opportunities again, but there’s literally I don’t think there’s been any decent opportunities in real estate, at least in like what I’ve invested in, like apartments and those types of things. I don’t think there’s been anything good probably for the past five years.

Cody Crabb (14:48)
interesting. so one of the things I like about what you just said is like it it’s it’s almost like this is the normal market. Right. Like and now we’re finally getting back to the normal market. And so people that are people that are saying that the market is crazy right now, they are right compared to what they’ve seen, but also like it may not be as bad of a a time as as people kind of think it is.

Collin Plume (15:11)
Yeah, I mean, it it’s hard for expa it’s all expectations, you know. I actually yesterday I played golf with a friend as a big real estate agent where I live and he was saying that, you know, he’s only really taking on sellers of homes, residential if they’re really actually motivated because they they can’t get out of their mind the prices from five years ago. Well, the prices of five years ago were only the prices because the money was substantially cheaper.

So it’s it’s only based on that. And now the money is is way more expensive. So those prices are gone. They’re they’re not gonna be there anymore. But then you have stuff crazy happen. Then you have I don’t know if you saw the news, but there’s there’s this unbelievable project happening in Beverly Hills in California, which is arguably one of the most desirable places to live, probably in the world. You know, you have like Central Park, Beverly Hills, like you know, the there’s certain places in the world that like

People always want to live. They’re building the first kind of over-the-top, gorgeous condo project. the Aman hotels, I don’t know if you’ve heard of them, they’re these super high-end, they’re building them, they’re gonna build gardens, and anyways. So they’ve had this $200 million condo for sale. And I was talking to my friend, I’m friends with Matt Altman, one of the big real estate agents here. And he was like, This is a crazy like who’s gonna pay this price? And sure enough, Jeff Bezos.

is under contract on this two hundred it it’s a condo. It’s a two hundred million dollar condo. A single un now it’s huge, right? I mean it

Cody Crabb (16:45)
Obviously, but yeah, but still.

Collin Plume (16:46)
It’s like fifteen thousand square feet or tw I don’t know. I don’t know how big it is. It’s huge. But at the end of the day, it’s a it’s still a condo and it’s you know, it’s still gonna have, you know, he’ll have neighbors, right? It’s it’s yeah. So you know, there’s always this that happens where there’s some pieces that are so desirable that they will like circumvent the whole rules of real estate. Price I think the price per square foot on this property is gonna be like twelve thousand or thirteen thousand a foot, where

Normally, like I think in Beverly Hills, maybe it’s a few thousand or four thousand. So it’s like astronomically more expensive than anything that’s ever happened because it’s iconic. And so there are these kind of things, these kind of iconic things that happen in real estate that stand the test of time. And it’s just like it doesn’t matter. People want to own it’s happening in Florida and all these incredible places in Florida. People are buying there and there’s tax advantages that.

But there are these things in real estate that just like blow your mind that are just they don’t make sense in the moment. but you know, obviously, you know, people want to live in desirable places and it sort of circumvents that whole that that whole rational thinking of of price per square foot and value and loans, like all that’s thrown out the window.

Cody Crabb (18:00)
Yeah,

I suppose I suppose that’s true ’cause I mean it’s I mean, the reality is like people have money at some and at some point up the chain someone’s gonna go, you know what? It is worth it and you know, that’s I I see what you mean.

Collin Plume (18:13)
Yeah, it is absolutely. But but yeah, I I own I was in commercial real estate for for five years until end of two thousand eight. So I helped investors acquire apartment buildings and shopping centers and triple net properties. and you know, they all serve a different need for a different investor. but I’m happy to dive into those and you know, sort of the pros and cons of of each of those properties.

Cody Crabb (18:40)
So for somebody who’s been sitting on the sidelines kind of waiting for things to get better, like the they think that the market’s gonna shift massively or something, what would actually tell you today that an opportunity is worth jumping on in in this market?

Collin Plume (18:56)
investors have been sitting on the sidelines. I mean, listen, it’s not easy to get financing. You know, financing’s not the way it used to be. I think it it depends on what you’re looking to do. you know, if you’re looking for appreciation, the those kind of properties, you gotta, I would say you have to get your hands dirty. Those are the kind of properties that you have to really put a lot of work in. You buy an apartment building that

you know, rents are are substantially below market. And then you got to go in there and fix it up. You got to get new tenants in there and you got to spend money. And and I’m invested in a number of those where we’ve added, you know, I have a property I invested in you know, five years ago, we’ve added maybe 50% of value in that property because the rents were substantially below market, but it took a lot of work. I mean, there are a lot of changes getting out old tenants, fixing up units. I mean, the units were big and in a in a

Cool area. So that’s why I invested in. I believed in the the future of this area. It was gentrifying. Things were getting better, but there was a lot of work. And and the the the guys that bought it and I’m involved in the syndication, they had a vision for where it’s going and they’ve proved it to be true. but it it was a hands-dirty kind of operation. Then you have properties like Triple Net. You can buy like you could buy a

Like a Taco Bell, for instance, or like a Chipotle. I own a Chipotle. So basically Chipotle is the is the tenant. They manage it and triple that means that they cover the taxes, the insurance, everything. And I get a check every month from them. And and I don’t have to do any work. There’s no work there. Now the pro of that is it’s it’s mailbox money, right? Like I don’t have to do any of the work. I have Chipotle in there. If anything’s wrong with the property, they’re gonna fix it because they’re the tenant and that’s the lease that’s in place.

But those are slower growth types of investments, right? They’re they typically Chipotle’s probably pay. If you bought one today, you’re probably gonna pay between you’re gonna get a return of four to maybe seven percent. but there’s no work, right? So there’s there’s a pro and con to that. And that’s for people that just want a return. They don’t want to think about it. They’re and they’re willing to to to get that. And it’ll go up over time and that property will eventually appreciate. And, you know, the one we bought, we bought one for like

I think like 2.3 or 2.4 million in 10 years and 15 years, it’ll be worth three million and three and a half. And the whole time I’ll be getting a check, right? So there’s a benefit of that. Whereas this apartment building that we bought in LA, we bought it for 15 million. The building today is probably worth 24, 25 million, and it could be worth 40 or 50 million. So the appreciation on that is gonna be way higher, but there’s way more work.

So I think that’s the things that you have to weigh as if you’re looking to get into it is how much work are you willing to do? Are you willing to do the work yourself, the tenants? You really have to think all those things because it’s not an easy business. It’s it’s it is a business you really have to, you know, blood, sweat, and tears, and you have to decide what you’re looking for. Now, the benefits, not only the appreciation, is the tax write-offs. You’re you’re gonna not pay as much tax on other income as you do in real estate. That’s a hundred percent.

You know, I always look at it if I’m making five percent, I’m probably making closer to eight or nine percent because of the the depreciation and everything that you can write off. So that makes it much better. but it’s it’s it’s a little slower moving of an investment than you know some of the other things that are out there.

Cody Crabb (22:19)
Yeah. Yeah, I think the I mean obviously risk is the entire point of investing. Like that’s why it’s an investment instead of just free money. But I I think th th this is a really good point because people are like, okay, what how do I get how do I get money? Like how do I get rich quick? How do I get rich quick? And people see stuff like the these courses on real estate or these people gurus saying you gotta buy real estate, or any sort of asset really. but the

the point you just made I really like, which is y it may be that you that you are completely fine with a slow return as long as it fits your lifestyle of I don’t want to manage it and be and ha hold their hand and stuff. well it’s also

Collin Plume (23:02)
Slow return, it’s also like downside risk. Yeah. Right. But like you have to weigh downside risk in every investment. It’s like you might say, like, I want a faster return, but also what if what if your investment goes to zero? Are you willing to let it go to zero? And I think that’s the thing that people until they’ve had it happen, they don’t realize that there are a lot of those things out there that can go to zero. Or there’s investments they get into and they don’t read the fine print. We were talking about

syndication and like Grant Cardone and this whole deposition thing that’s happening. And a lot of what they’re talking about as deposition is like he he sort of was talking about this internal rate of return of 15%. And they’re saying he can’t hit it. And I I won’t get into whether he’s hitting it or not, but I will tell you this I have reviewed his offerings. And from what I’ve invested in in terms of syndication, he just buys very nice apartment buildings for the most part. I’ve bought very similar types of investments.

The fees that he’s charging, I think, are a little bit higher than what the market is. Partly because he can, right? He’s got a big name and you know, he’s out there. And I’m not saying like he’s doing anything wrong. You can charge whatever you want. That’s part of it. But a lot of people don’t always read the fine print. They don’t realize what they’re getting charged. So you just have to do that. You know, the the deals that I’ve gotten into, you know, it’s just a different structure kind of coming in. Yeah, there’s maybe a small acquisition fee.

But then there’s like a barrier where the the investor gets kind of paid first. And then once it hits higher returns, then it’s split for the syndicator. I don’t know if you’ve gotten into this too much on your show, but there’s typically a threshold for for syndication deals. And it can anyone it could be like 6% or 7%. and basically below that threshold, the investor typically gets all the money. And then once you go above that threshold, there’s a split, and then there’s another split, maybe a 10%.

And there’s just different ways you can do it. Looking into those things is extremely important because at the end of the day, like they seem good. You look at the picture. I want to own a piece of that. I only have $50,000. I can buy this beautiful building. But the end of the day, yeah, you might be just some really small owner. If you can’t get your money back or you can’t get the decent return, maybe it’s not the best thing kind of for you, if that makes sense.

Cody Crabb (25:15)
Yeah, yeah. So I mean that that’s a great lesson I would say from from what you’ve said is that there are lots and lots and lots of strategies out there in real estate and elsewhere. and what you choose to do really is not it’s dependent on the person. I mean, like you said, you you can charge whatever you want, you can pay whatever you want. what what we’re we were was the Jeff Bezos thing we were talking about actually on the podcast? It was right. it was it was when we were recording.

but the the it’s a perfect example. Like it’s w at some point it’s just worth it to him and so for his for his situation. And so I think that’s a I think that’s a great way to look at investing in general, but also especially real estate. we’re we’re getting close on time here, but I’d love to hear a little bit more about you know what you you mentioned that you’re you’re just starting up podcast and kind of YouTube.

content. tell me a little bit more about that and what you’re planning on covering and stuff.

Collin Plume (26:17)
Yeah, I think I’m gonna t talk about kind of what we’re talking about today. I mean, like I there’s so many interesting things happening financially that I think my goal of my podcast is to is to take some current event stuff, try to break it down and get to kind of a simple, you know, solution or an idea and really explain it in a way that everyone can understand. I think that’s sort of my if I had a superpower, I think that’s

something I’m really good at is like explaining kind of a complicated idea into like a simple idea. So that’s that’s the first thing I wanna kinda dive into. Two is just

Cody Crabb (26:52)
If you’re in investing education, I can’t think of a better place to to use that ’cause it’s one of the most complex things out there. And so

Collin Plume (26:59)
I mean and and I’ve and because I’ve done a lot and I’ve and also like I’ve made a lot of mistakes too. I think that’s the other thing is like I want to help people avoid a lot of those mistakes. I I mentor a lot of entrepreneurs. and I just my goal is like, listen, take my advice or not, but like I’ve tried a lot of stuff. I’ve tried a lot of stuff in marketing, I’ve tried a lot of stuff in, you know, business management and success. And I can kind of tell you pretty quickly.

If it’s a good idea or a bad idea based on what I’ve experienced. And so I think part of the show will be diving into that. I want to talk about, you know, because like when I someone came to me recently and was like, tell me about like Chick-fil-A. Should I buy a Chick-fil-A franchisee? And I was like, well, before that, what I would do is like, and I’m going to do this on my show is I’m going to say, like, let’s look at Chick-fil-A, let’s look at the returns. Let’s see what people make. And let’s compare it to Popeyes. Maybe not as glamorous, but maybe more profitable.

I don’t know. You know, so it’s like, I’d like to look at that. I know Chick-fil-A requires a pretty heavy time commitment. I think they make you actually work in the store, which I think is part of the reason they have like high quality. They’d want that you can’t just like buy one and like let your, you know, cousin run it. They like they want you in there. I’m gonna weigh the pros and cons of that because that’s also work, right? That whereas maybe Popeyes, and I don’t know, maybe Popeyes, you could hire a team and maybe you don’t have to run it.

You have to factor time is money. So you have to factor your time allocation to money also. So I think it’s ideas like that that I want to break down in my show and get into that. And then, you know, if anything happens in the news, like CPI or PPI or any of these terms that get thrown around, or this Japanese yen trade. I don’t know if you’ve been watching about how the US came in. Basically, the US came in to bail out the Japanese yen and and put a bunch of our own money.

And the reason they did it was because Japan owns more of our treasury bonds than kind of any country in the world. And we were worried they were gonna start selling our treasury bonds, dumping them on the market, and then our bond market would collapse. So, like stuff like that that maybe people aren’t like fully aware of like why the government’s doing it or why it could affect them. that’s kind of what my show’s gonna be about. And yeah, my first episode literally just launched today. So

Cody Crabb (29:13)
nice. Cool. Yeah, we get the get the exclusive. No, that’s great. it sounds like you I mean, you do have a way of kind of explaining where I could I could totally see that being super useful. so where can people find like well you didn’t actually say the name of it, I don’t think.

Collin Plume (29:27)
it’s The Collin Plume Show. yeah, it’s just it’s under my name. It’s called The Collin Plume Show. I actually put it in the description, so if you want to drop it.

Cody Crabb (29:34)
Yeah, we’ll make sure we put that in there.

Collin Plume (29:36)
I also

put the there’s a story about that Jeff Bezos condo that he bought. I put that in in the chat. But yeah, check us out. yeah, so there’s my show and then you know, Noble Gold Investments. If anybody’s looking for hard assets and they felt like, you know, it’s just they’re curious about gold or they just want to learn, you know, we focus on people that just are first-time investors and are looking to get in the market. we can explain the precious metals market to you in a really simple way. and if you’re looking to get into something like physical, like

the actual gold and silver and not an ETF, that’s what Noble Gold Investments does. And you know, we can help people do that.

Cody Crabb (30:11)
that well thank you so much just to close us out here with everything you’ve learned all the mistakes you’ve made along the way in in investing in general but also i mean if it’s if it has a real estate touch I wouldn’t mind what’s one piece of advice you would give somebody who’s still early in building their their real estate portfolio or their just their investment portfolio in general I think

Collin Plume (30:34)
I think timing and location are the two biggest things in real estate. And I think that’s the thing you have to really focus on. Is it’s not it’s not as important to to other investments necessarily, but timing and location are the two most important things. And, you know, I do think there’s the timing is a little better than it was five years ago.

It may not be perfect. The timing may never be perfect. That’s the one thing I will tell people. there’s never a time where the people always think property is expensive. But at the end of the day, I think if you can watch a market, get really familiar with it, so you have that confidence, like you’ve really done your research, you can do really well in that in that kind of investing. But it’s it’s not for the faint of heart. I can tell you that.

Cody Crabb (31:24)
Yeah, love I I love the I love all of that positivity and like in and you end with the but also just wow, it’s not for the clean part. No, it’s no that’s it investing is like that. I mean it some people get wildly successful, some people lose everything and there’s a million people in between. So yeah, you gotta just do do what you can, take the risk that you can take and and just just get started. So Collin, thanks so much for joining us today. Appreciate it. We’ll be checking out your show as well.

and thank you, listeners, for joining us as well. If you liked today’s episode, make sure you don’t miss the next one. Collin, take care. Have a good day.