Andrew (12:52)

Jim, thanks for being such a reliable source of sound financial information. I was talking to a financial consultant about increasing my bond like holdings as I may retire in the next five years. He mentioned an insurance product, an spda, which I take to mean a single premium deferred annuity. On the Fidelity website you go to products, then fixed income bonds and CDs, then deferred fixed annuities. Define these things. They are state specific with slightly better rates than Treasuries. They're being presented as a savings vehicle that you just get your principal and interest back after the five year or whatever the length of your guaranteed interest period is. But the annuities that I know of and that you often Talk about like SPIAs are quite different products. This is a Fidelity item, so I doubt it is a pig and a poke. But I was wondering what you thought about them or what you know about them and what you thought about them as a fixed income instrument.

Jim Dahle (14:08)

Okay, great question, Andrew. First of all, not everything gets sold at Fidelity or that you can buy at Fidelity is necessarily a Good investment. That goes for Vanguard, too. It goes for Charles Schwab and certainly goes for lots of other places. So don't assume just because somehow attached to Fidelity that it's awesome. That's not necessarily the case. Let's talk about annuities. An annuity is an insurance product. It's got this insurance wrapper around it, and it can have all kinds of things inside it. And that insurance wrapper can have all kinds of special features on it. And in fact, lots of annuities are just super complicated. They're really hard to understand. That's one of the beefs I have with annuities, is not only are they a commissioned product, often designed to be sold and not bought, but they're often so frigging complicated that nobody can understand what's going on with them. That's one of the beautiful things about a pure annuity, the single premium immediate annuity, a spia. You buy one of these things and you know what you're buying? You're turning over a lump sum of cash to an insurance company. And in exchange for that, they will pay you a fixed amount every month until you die. Pretty straightforward deal. You die next month. They made out like abandoned. If you don't die for 50 years, you made out like a bandit, Right? That's just the way these things work. They basically, you know, it's a chance for you to kind of insure against longevity, if you will, and put a floor underneath your retirement income. It's a very safe sort of income product. Think of it not necessarily as an investment, but more of a way to spend your money. But the returns on it are similar to what you'd get from high quality bonds. So that's the classic annuity. And if you understand what that is, you kind of understand what an annuity is. But there's lots of variations on the theme. Now, one of the common annuities that a lot of people think is not too bad is called a multi year guaranteed annuity or a myga. And maybe that's what this thing is as you describe it. That's what it sounds like. And what this is, is it's the annuity industry's answer to CDs, certificates of deposit you'd buy at a bank. Okay, so the downside to a cd, aside from you got to go to a bank to buy them, but the downside of, well, that's not true. You can buy them at a brokerage too. But the downside of a CD is it pays you interest whether you want the Interest or not, it pays you interest and you have to pay taxes on that interest as it goes. And then when it's up, you got to buy a new one and if it pays all the interest at the end, well, you got to pay taxes on that. Well, the beautiful thing about these mygas, these multi year guaranteed annuities, is you get this guaranteed rate on them like you do with the cd, but it doesn't pay you out the income as it goes along, nor if you roll it into another annuity when the term ends one year, two years, five years, eight years, whatever, you don't pay taxes on it then either. You don't pay taxes until you want to take the money out and spend it. So you just take advantage of that feature of an annuity where it's kind of tax deferred growth. And so that's a cool feature of it and why some people look at it and go, well, that's more attractive to me right now. I want a very safe and CD like investment. But I'm in a high tax bracket now, I might not be a little bit later and I'd rather defer the taxes for a few years until this thing pays out. And so I think that's what you're describing. There's another reasonable type of annuity to buy. It's usually called a diagram, a deferred income annuity or delayed income annuity. Depends on who you ask. But this is basically longevity insurance. It pays you nothing in the year you buy it, unlike aspia. And it might not pay you for a while, might not pay you for five years, 10 years or 20 years. But when it does start paying you, it pays a lot because it had all that time to grow in a tax deferred way. And for a bunch of people who bought it to die, and because of that, that means those who are still alive after 10 or 20 years or whatever, they can pay more to them. And so the yield on this thing might be 30 or 40% a year of what you put in there originally. And so it's kind of longevity insurance. If you live a long time and inflation's gone crazy, well, it's going to pay you a whole bunch of money starting when you turn 85 or 90 or 95 or whatever. So it's longevity insurance. And that might be what you're talking about as well, but I don't think so. I think you're talking about more of a MYGA kind of product. But the key to all these annuities is you have to Understand what you're buying and you have to want what it is they're offering. If that's not the case, don't buy it. It's okay to use bonds, it's okay to use CDs if you want. You know, it makes sense as you're approaching retirement in the first few years of retirement to reduce your sequence of returns risk with a little bit more safe investments. That makes sense. But whether you want to do that with traditional investments like bonds or a bond fund or a TIPS ladder or I bonds or those sorts of things, or whether you want to do it with an insurance product like a SPIA or a MYGA or whatever is really up to you. But it's not unreasonable to look at and to do. Just make sure you understand what you're buying, understand the downsides, understand how it's taxed, understand the worst case scenario of what can happen, and you may be very happy with what you're buying. All right, I'm gonna bring one of my friends on here and one of the sponsors for this podcast and the White Coat Investor in general, Don Wenner with Dreamlive Prosper Capital, or DLP Capital. They've been sponsoring us for a long time. I've been investing with them for a long time. They often come to wcicon and sponsor there often the, the first day, well, the day before really. The day we have just an evening opening reception for the conference. They often put on an event, talk about how to build your legacy and those sorts of things. So if you're interested in that sort of thing, feel free to come early to WC Icon. They're doing it again next year in Las Vegas, but we're going to talk with Don for a few minutes about real estate environment these days as well as DLP in particular. My guest today on the White Coat Investor podcast is Don Wenner, principal CEO, founder of DLP Capital. That's Dream Live Prosper Capital. He's been sponsoring the White Coat Investor now for years and also manages some of my money. Don, welcome to the podcast.

Don Wenner (20:57)

Thank you, Jim. Pleasure.

Jim Dahle (20:59)

Let's talk a little bit about why DLP is unique. And perhaps the most significant is your commitment to, to your mission. You are not just investing money for people like me and other White coat investors. You are trying to accomplish something that I think is noteworthy and worth a great deal of time and effort. Tell us about what you're doing.

Don Wenner (21:21)

Yeah, thank you, Jim. You know, dlp, which stands for, as you say, Dream, Live, Prosper. Our purpose is to transform lives through the Building of thriving communities. And the most applicable and obvious meaning of that is the physical housing communities that we invest in. And we'll talk about that. We want to build thriving communities where people are, we call living fully, where they're having opportunities for both success in their lives and significance helping others. But we also invest heavily in building a thriving community with our, within our employee base, within our 3500 family investor base and then with the sponsor, developer, builder, operator space of those. We deploy our money with housing developers, builders, operators. And so we take a very, as you said, mission driven approach to really bringing and creating, creating as much impact as we can in the lives of those we do business with.

Jim Dahle (22:11)

Yeah, it's pretty awesome what you're creating there. And you mentioned your investor community. 3,500 plus investors, I think 800 plus of those are white coat investors. They are. You've been trusted by a great deal of our community and I think a lot of that comes down to the integrity people see in you and in your team and in the mission you're trying to accomplish. Yes, people want to do well, but they also enjoy doing good while they're doing well. So tell us what's unique about DLP as an investing firm compared to some of the other private real estate funds out there?

Don Wenner (22:49)

Yeah, thanks, Jim. I think first thing I'd say that's unique is the starting point of. Well, first is the purpose, the mission we just talked about. And second is that we chose early on in our journeys. We're on year 19 now, early on in our journey to run private investment funds and to do so in Evergreen Structures, which provide flexibility to you as investor, liquidity to you as an investor, but give us the ability to maximize each investment and not be under the timing of a traditional close ended fund, which is how most real estate fund managers operate. So the decision to be structured that way was one of the biggest decisions we made and has changed kind of the position we're in, especially through times of volatility. And then I'd say that the next really unique part about our business is that we've put a tremendous amount of focus around building what we call an extraordinary organization. And I've written a couple books on this topic. Building an Elite Career. It's actually sitting right over my shoulder. Building elite organization and building an elite career and writing the book right now called Building Extraordinary Organization and we built this disciplined system we call the elite execution system. How do you scale a high growth, high profit business? How do you set clear strategy, execute on that Strategy, solve problems and drive clear communication. When in our case we've grown by about 50% a year for 19 years in a row. And so that system we've built is built around people. It's built around developing and retaining the best leaders. And it's allowed us to execute at a really high level and generate really, really consistent, as you said in our recent conversation, almost boring performance. And how consistent span. But what's really unique is not only do we do that in our business and our company, but we help the organizations we deploy our money with do the same. Increasing their performance, increasing their growth, decreasing our risk. Which brings me to sort of the final note, which is the majority of our investments we make. Even though we are a direct developer, builder, operator of housing communities, we own 23,000 housing units today. We deploy the majority of our money as a partner and a lender to other developers, builders and operators with all of their capital in subordinate to our capital, further reducing our risk, further increasing the consistency of our returns.

Jim Dahle (25:21)

Yeah, I'd add a few things to that. You actually send your K1s out on time, for instance. I mean, your accounting team deserves some kudos for this. I've been involved in a lot of these investments and most of them do not send a K1 out in early or mid March. Most of them don't even make the April 15 deadline.

Don Wenner (25:39)

So yeah, to that point, yeah, we've never missed a deadline. We have a 35 person accounting team. So unlike a lot of real estate syndicators, small managers, it's really a small group of people and then they're hiring third parties. We have a total of 800 people executing on our strategy every day, including 35 accountants. We've never not gotten our K1s out on time. We've never gotten a distribution not out on time. We pay out our distributions every month. We pay them out before we even earn a preferred return or even before we earn our management fee. We pay out preferred returns, which is quite unique. And we distribute our reporting, our distributions, our returns, our tax forms, all on time, consistently, almost boringly so, as you have said. But that boringness is quite unique.

Jim Dahle (26:23)

Yeah. And highly desirable to this investor and hopefully many others. Give us a brief description of the four DLP capital funds that are available to invest in.

Don Wenner (26:33)

Yeah, thanks Jim. So what they all have in common is they're all evergreen, meaning they're open ended, meaning we expect to run these funds five years from now, 10 years from now, 20 years from now. But you don't have to be A part of the fund all that time, all of them are investing in housing that's affordable for working families. That's our mandate to our funds or all impact funds that that's what they, they all pay out a preferred return to investors before we earn any returns, including any management fees. With all of them you can invest qualified and non qualified monies, retirement money and otherwise. You can invest through Schwab and Fidelity and self directed IRAs. So all of them have all that in common. All of them provide liquidity. But each one invests in housing that's affordable for working families. Slightly different and then have slightly different characteristics for you. So the first is the DLP Lending Fund. That fund makes first position mortgages to professional full time developers, builders and operators of housing communities. We've made over 4,000 loans in this fund. We've never written off a dollar of interest or principal on a single loan. We've generated double digit returns, annual returns distributed monthly, two distributions a month, a preferred return of 8% paid out on the first of every month and then all the additional profits paid out the middle of every month with 90 day liquidity. So that's the DLP lending fund. Very easy. First position mortgages similar to a bank. We own actually a bank outside of this, so understand the banking space well. But this is a non bank but doing loans very similar to that of a bank but able to generate double digit returns net to you as an investor. Then we have the DLP Preferred Credit Fund which is our other lending fund. That fund has a 9% preferred return. So 1% higher has a 1% higher target return. Everything else in terms of liquidity and distributions is all the same as the lending fund. We've never even had a delinquency in this fund. And then we have two equity funds, the OP Housing Fund which owns existing housing communities. We own 13,241 rental units in that fund today at an average rent of about $1,300 a month. We've generated 17.4% net returns to investors with monthly distributions and annual liquidity and to date all of the income sheltered from tax while you're invested. And then finally we have the DLP Building Community Fund which invests equity in building brand new housing communities that are affordable for working families. That has an 11 to 13% return target. We're north of 12% net to investors and those returns actually should only get better. And I could certainly explain more why that is. With an 8% preferred return and annual liquidity, building brand new affordable Housing communities.

Jim Dahle (29:08)

Very cool. Now this year people are seeing some volatility in the publicly traded markets. You know, the last couple of years the S&P 500 has gone up 25% plus in 2025, people aren't quite seeing that sort of a situation. And there's a little bit more interest in other investments such as real estate. What would you say to somebody who is, who's disappointed with the, you know, the volatility they're seeing in the public markets? And what would you say to them about considering some private investments, considering putting some portion of their money into real estate?

Don Wenner (29:44)

Yeah, I'd say, you know, the great thing about real estate investing, generally speaking, especially private investments, is consistently, if you look at the last 40 years, 50 years, probably last hundred years, but the charts I look at are usually the last 40, 50 years. Rent has gone up almost every year the last 40, 50 years. Regardless of volatility, regardless of where, in a time of inflation or rarely a time of deflation, regardless of interest rates, regardless of all the noise in the markets, rents continue to go up. And that's fundamentally what drives up the increase of value. Housing that's affordable for working families has been in undersupply virtually at all points in our history. So better consistency. In short, less volatility, less worrying about the day to days and the value of your investments. I've had the great joy over the last few weeks of hearing from lots of our investors saying how glad they are to be invested in our funds and not worrying about some of them and for any of their investments, but at least their investments with us. What's going on in the news and in the markets, all that, you know, is, is important to everybody and when you're part of the economy, but less important and has had very little effect on our ability to generate, you know, regular consistent distributions and double digit returns net to investors. So I would just say, you know, considering taking some of that, some of the money that's in public markets and putting in a place where you're going to have more consistency, less volatility, better distribution, but still retain, in our case, good liquidity can be a great alternative to the public markets.

Jim Dahle (31:25)

All right, well Don, thank you for your time. Thank you for being willing to come on the podcast. For those looking for more information about investing with DLP, go to whitecoatinvestor.com DLP and again, appreciate your time, Don.

Don Wenner (31:39)

Thank you, Jim. Appreciate it.

Jim Dahle (31:41)

Okay. I hope you enjoyed that interview. It's always great to chat with Don and as I'VE gotten to know him better and his family over the years. Really a pretty good spectacular person. Alright, we got a question that's not terribly unrelated to that interview. This one comes in on the Speak pipe about Private Real estate funds.

Early Career Doctor (31:58)

Hello, I had a question regarding the money used for private real estate investments. I'm an early career doctor. 2.5 million in assets, mostly in index funds. I ventured into private real estate funds for the last year or so and have money in a few different funds. Regarding the money used for these investments, I have been parking the amount required in a high yield savings until the capital call. I recently thought of just continuing to invest in the market in a standard fashion and whatever funds are close to being due for the fund. Just selling whatever index funds are just over 12 months old to cover the amount due. Given that I've typically been doing about a fund or two a year, I figure that on average this seems like a better move than having that amount of money parked in a high yield savings account waiting for the capital call. Obviously there would be a small risk of needing to sell in a downturn, but I would figure that on average one would be better off with the money in the market. Does this sound reasonable to you?

Jim Dahle (32:51)

Good question. I think you understand the issues involved very well, right? Sometimes when you commit to a fund, they don't want your money for a little while. It's not unusual for you to have to wait 30 or 60 or 90 days before they call your capital. And the reason they're doing that is because they figure the money's better sitting in your account earning interest for you than sitting in their account earning interest for them. It's nice of them to do this. This is a good practice for the investor. I don't complain about this whatsoever. If you can't put my money to work right away, well, I'll just leave it working for me in my account until you're ready for it and then we'll wire it over. So this is not a bad thing, and this is pretty typical. Lots of funds do this. There's a delay in between when you commit to the fund and when you got to have the money. The downside, of course, if you leave the money fully invested is that a worldwide pandemic starts or the Fed raises interest rates 4% in a few months, or the entire global financial system melts down and you've got this commitment to invest the money and now you only have 60% of the money you thought you were going to have and you can't make up the difference from your earnings or some other investment without selling low. So I don't typically invest the money for this relatively short period. I know I need a fixed sum of money. I know I need it sometime between 30 and 90 days from now, so I leave it in cash. Now I don't use a high yield savings account these days because I've found money market funds tend to pay more right now that wasn't the case three years ago. Three years ago a high yield savings account paid more than a money market fund, but right now money market funds are paying more. So that's where my cash sits. I think at Vanguard it's paying 4.1% or 4.2% or something right now. And you also have the option to use a municipal or tax free money market fund if you like. And so that's typically where my cash sits that I know I'm going to have to use to pay a tax bill coming up next quarter or to meet a capital call for a private real estate fund. That's where I sit the money. And I console myself with, hey, you're making 4%. It's way better than a few years ago when you were making 1% on your cash. So is there some cash drag there? Yes, it's not for very long and it's not very bad these days, so I just leave it in cash. But if you really wanted to, you could invest it into some sort of real estate like fund. You could invest in it into vnq, which is Vanguard's real estate ETF or some other real estate like fund if you wanted to. But I think I'd just leave it in cash. I mean these capital calls are typically not that far away from the time when you're going to need the money, so hope that's helpful to you. As I mentioned at the top of the podcast, SoFi could help medical residents like you save thousands of dollars with exclusive rates and flexible terms for refinancing your student loans. Visit sofi.comwhitecoatinvestor to see all the promotions and offers they've got waiting for you. One more time. That's sofi.com whitecoatinvestor Sofi student loans originated by Sofi Bank NA member FDIC. Additional terms and conditions apply. NMLS 696891 don't forget about the few event Lyssa Chang's Presenting wealth and Deconstructing Social Narratives for Financial Empowerment. You can sign up@whitecoatinvestor.com Few it's totally free. Thanks for leaving us five star reviews. Thanks for telling your friends about the podcast. A recent review came in from Lake Lawyer said Life changing. I'm an attorney, not a doctor, but this podcast has been a life changer for me and my family. I've learned so much good, effective and powerful advice. I have my kids listening to this as well. 5 stars. Thanks so much. And hopefully this does, in the words of Dave Ramsey, change your family tree. Keep your head up, keep your shoulders back. You've got this. We're here to help. Thanks for being a member of the White Coat Investor community. The hosts of the White Coat Investor are not licensed accountants, attorneys or financial advisors.

Don Wenner (36:40)

This podcast is for your entertainment and information only.

Jim Dahle (36:43)

It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.