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i really want to make sure that the syndicator's interests are aligned with the investor if they're trying to cash me out three years in with a refinance after most the risk is off the table not going to line with me i really want to know where their heart is and know that they truly want to take care of their investors and so i prefer to go direct to the owner operator i don't love going through other people who are raising money i want to know who i'm giving my money to though and i want them to know me keith welcome back honored to have this time with you and just to share your experience with the listeners man i mean you shared so much with us again yesterday and just investment opportunity strategies thinking through concentrated focus you know on one type of investment versus being diversified and how we educate ourselves and masterminds and getting out there exposing ourselves to different types of investing and our vision for our personal strategy and how to do that but today let's talk a little bit more about you know that deal flow pipeline and what is deal flow and how you've created good deal flow right and maybe even some best practices around managing that so real quickly i just want to just flash a visual that i've shared and it's just about looking at all the different places you can source deal flow from and once you know the places you can deal get deal flow from it's about trying to pick the assets that might fit you so if i'm looking at my portfolio and i think you know what real estate is a place i want to go i want to own a multi-family i would love to have a solid three different apartments indicators if that's a significant part of my portfolio to pull in deals from i don't want to be a hundred percent on any one guy life happens things happen and i don't want to be overly concentrated so i'm gonna have multiple deal sources that are coming to my email box or whatever it is on a regular basis and that way when i've got extra money i'm not scrambling to go find a deal i'm instead just getting the cherry pick from all the multitude of opportunities that are in front of me and decide what what's going to fit my portfolio right now so right now as i look at my portfolio i've been heavily concentrated in real estate for a long time i love it it's done well not looking to get out of real estate but as that portfolio is has really grown i'm looking to pull out segments of that and get into other assets so right now i love hard assets with cash flow what does that look like oil and gas gold and silver mine could be real estate other things that is tangible because anything that's tangible is likely to do well with inflation and i like things with cash flow because that's what pays the bills it's what allows you to get closer to work optional where you don't have to work that's awesome go ahead no i was gonna say so once you've got your deal float you've got your pipeline you've got deals coming up if i know i'm getting money back from one of your deals whitney you're giving me a hundred grand you've doubled my money i am a month or two out can start looking at what are the deals are gonna fit me i'm likely gonna be putting money back with you assuming you've got another deal but also assessing where else do i want my portfolio to grow and expanding that into something else i really only want to be expanding into one new asset class at a time i think it's important that you understand what you're investing in and for me this year the thing was crypto i know you had a speaker recently christine cranley she's fantastic and she's given one of the best explanations of how crypto works and for me that's one of the reasons why i'm growing into that into this year crypto is down this year which is great it means it's a good time to buy next year i'll probably pick something else to grow into that's awesome that's a great example as well even someone you're you know you're learning from right you're pulling things from to learn that new asset class and you know you talked about having a few operators you know in the syndication space real estate for example you got you know two or three people two or three operators that hey the these are guys that i trust these are guys i want to work with and then it's not just anybody you know everybody maybe you could speak to even vetting those operators a little bit initially before you know you want to you know move forward with them you know you are you're getting all these deal flow right you sign up on people's lists i get put on people's lists i have a clue you know i'm like wait a minute you know how did that happen but how are you vetting that operator to ensure that hey this is somebody i want to move forward with before we look at a deal or underwriting or those things that's a fantastic question so and it's something that we talk much more in depth on but i want to give your listeners all the highlights that i think of so first and foremost i want to know who i'm investing with there's some people out on other podcasts that when they do a deal they've got their one to three percent acquisition fee their financing fee their asset management fee their carried interest fee which can be 50 of the deal they've got a disposition fee and three other fees i'm not even mentioning here so when it's so fee heavy i get the sense that their primary reason for doing this is to make money not a bad thing but sometimes it can feel a little greedy versus other people that i know who are like you know what i'm going to stick with uh an asset management fee to cover my costs maybe there's something small to cover their sales person but it doesn't feel overly egregious i really want to make sure that the syndicators interests are aligned with the investor if they're trying to cash me out three years in with the refinance after most of the risk is off the table not going to align with me i really want to know where their heart is and know that they truly want to take care of their investors and so i prefer to go direct to the owner operator i don't love going through other people who are raising money i want to know who i'm giving my money to though and i want them to know me that way if they're having to tell me sorry i lost 30 of their money that's not going to be an easy conversation for them to have especially if they know and they like me so once we know that they're good people we've got good management we've got we're aligned in terms of our terms meaning that they're compensated when i'm compensated as an investor that's the best matchup then i'm looking at a little bit about their operations so i think uh multi-family is at a high right now i think cap rates i don't know that they can continue to go down they're likely to go up and i think they're starting to go up a little bit meaning apartment valuations might go down a little bit we've got interest rates going up all that says to me is not that i don't want to be in multifamily altogether but i need to be careful and so as a result there might be some compression going on in the industry so people who are more in control of their projects and their costs are more likely to survive so i like it when people own their own management company or have a good strong management company that's got some real history with them there's another some other folks i like to invest with that have their own construction company they import materials from china they've got multiple things cost where they can control and so they're likely to not only survive they might stumble a little bit they're going to thrive and be somebody who's able to buy up the other operators who are completely passive maybe out of california buying stuff up blindly it's when the tide goes out that you get to see who was swimming naked who was too thin on their margins who didn't have a solid business the last 10 years people have been able to survive or do well because of appreciation i know some people have been terrible operators but have been saved by a rising market where they've been able to break even or even give a little bit back money to their investors when maybe they should have lost money yeah there's some great points man to get any anybody started that's thinking about investing in a in this indication you know looking for that operator and you you made some great points there a couple of things you know looking for an operator you mentioned even in-house property management in-house construction and obviously it allows them to you know have control right more control than if it's the all third party no doubt about it what are some maybe just non-negotiables for you you know maybe it's not that they have maybe you like for them to have property management in-house but you know maybe that's not a non-negotiable or maybe it's a certain amount of reserves or maybe it's a certain type of amount of returns or you know what are some of those things that you think through there like absolutely the main thing i look for out of everything else is i want compensation aligned with the investors if they're incentivized differently to behave differently then i don't want to invest it's not a deal for me because the moment they get paid up front or a big payday on the refinance i want it enough to cover their cost that's also important to me i don't want them to be brash in making decisions because they're cash strapped i want to enough for them to make a little money and break even but i don't want it to be so strong that they're incentivized to do large transactions or take bigger risks simply to maybe get that bigger payday and that's that's the big non-negotiable so once i know that the team's in place and i feel good about the deal source then i'm just evaluating the projects and so in our community i've got a due diligence memo i'm happy to share that with your listeners where there's five big things i like to evaluate as part of every deal and then there's some additional questions that help people think about the asset whether it's a good fit for them and depending on the asset class and i make myself go through and fill out every single time and then i go to my wife my wife isn't always intimately involved in all the transactions before we invest either one of us has a can veto and investment decision before we do it so i have to be able to give her a deal memo she gets to review it and then we sit down and talk about it so she not only knows what we're doing but kind of why we're doing it and it's a good sounding board as part of that in addition to the community due diligence so often i've been able to assess whether it's not even something i want to bring to her simply by discussing it with a group of other people and seeing what they see or don't see as part of that it's incredible i love the you know going to your your spouse right and helping explain the investment potentially maybe all spouses are not always as well-versed in investing as maybe the other sometimes it's man because sometimes it's the woman it's it could go either way but i love that component of bringing them into that so they're familiar with it and they also have the option to write to veto it yes if there's something they see i can relate to that often when i'm speaking i say you know what my wife couldn't care less about real estate right but i think the lord she supported me you know in getting the business started in so many ways but mostly because of our mission and you know things behind what was pushing us right but i want her to be involved right i want her to know about what we've invested in and how that stuff works as much as she can so i appreciate that go ahead in order to under explain something you have to understand it and often just through me having to explain it i learn more about it and that can also help me back down on the excitement factor and really evaluate the core components of the deal love that they have some questions right make sure you think about do i really understand what i'm investing in here that's great and then yeah i love that just thinking through the operator thinking through sharing that with your spouse anything else you would share around knowing the deal or the opera i know there's so many things we could go into but maybe the operator specifically maybe there's even somebody you don't have to mention anybody specific but something comes to mind where it's like man i partnered with this person because i saw these things early on or that i've learned about them i don't know i get questions often from guests that are like well how do i attract that investor right why do they want to work with me as opposed to everybody else or you know what's going to make that person stand out to you over somebody else that has the same terms technically so one i want somebody who has some a track record what's interesting to me is people who started investing in multi-family pre-2016 are more conservative less greedy with the terms they charge investors people who got involved 17 2017 2018 or later tend to be more aggressive i think the margins are thinner for multi-family syndicators so they're trying to charge more so they can become a millionaire faster they also have less experience and less time in the game they're higher risk i want to be around with somebody who's been around for at least five years who's had multiple successful exits and ideally has been through a down cycle i want somebody to know what it's like to when times are lean to actually be able to survive that as a result i'm thinking through i also when looking at the financials we're going to discuss this on our next weekly wealth call we've got somebody who's going to discuss how to underwrite deals i want to look at the t12 do people just expect to be able to sell the same cap rate that they're buying at today i think cap rates are likely going to go up meaning the valuations are going to go down as a result and so i want to know what are their assumptions most indicators are putting out a package here's the overall number and if you ask for the t12 or something like that they have some reason why not to do it and i'm less likely to do those deals yeah it's encouraging too just that you'll take the extra steps they even ask for the t12 right can you send that to me i'd love to look over that as well hopefully there's not any hesitation there right you know to be able to send that to you as an investor and i guess you could share and before we move on to another segment you know the listeners are thinking about investing with an operator they ask for the t12 or rent roll something like that and that can be a little overwhelming right if you're not sure what to do with that is there a resource that you would recommend to even help them to know what that means to learn how to do a little bit of underwriting potentially ah i know we talk about it in our group i'm brainstorming trying to think of a free resource that would be good for everyone here's what i would just suggest look at the trailing 12 talk to other operators and before you invest compare at least three different deals and see how their terms vary also i want to know are they going to give how's the investment communication going to be in some time invest with somebody they take my money i don't hear anything back from them and or i get one confirmation i would like monthly or at least quarterly updates on how my investment is and tell me how it is don't just tell me it's all sunshine and rainbows because i know it's not i like people that tell me the good the bad the ugly i feel like i'm getting a more authentic feel of how my investment is and if it's not going right share your the operators share your wins and lessons on the other side as a passive i think it's important to be a good investor as a syndicator i've been on that other side where people like what's your pet policy going to be like you're only charging 35 you should charge them like i don't want to be so far in the nitty-gritty i'm i'm making a macro level decision is this somebody a yes or no on to whether i'm investing with them so i want to be the kind of investor that's easy to work with at the same time i want to understand what i'm getting into so at trailing 12 the financials for the last 12 months the operating memorandum really the legal document that kind of outlines the terms of everything that we're getting into and a project overview and from there i can go out and i can google the investment property i will say every apartment complex has negative google reviews because there's always going to be somebody who's going to complain no matter how good the operator is but i will still review it and see if like oh if i see consistently the maintenance guy took two weeks to replace an ac in the middle of summer i might be more hesitant about that but then i really want to speak to other investors are there any way i can connect with other investors who have had track record with that and that's why referrals are my favorite way to find syndicators love that yeah referrals we can go back again to the mastermind component and meeting other people that are investing i love what you said earlier too about going to an event where you can ask other operators who they're investing with and hearing firsthand and even asking them these questions right before you even get to talk to the operator man what's your experience been like what's their communication like maybe they can even forward you some of the communication as well right so great information keith i know the listeners are learning a lot about man that operator right how do they know who to invest with you i would imagine you're doing some similar things with it's oil and gas and the gold mining those things also is that accurate absolutely start with management team is more important than the project itself once the management team is good then i'll start looking at the project one other quick example is there there's a syndicator invested with they got an apartments indicator got into the deal and there was some stuff that the seller had hidden and ultimately it didn't make sense to do the deal so the investors were going to lose a half million dollars most indicators would say you know that's just part of the cost of doing due diligence we'll roll into the next deal it'll be okay this person instead said you know what guys i don't want this to affect us they cut that check out of their own pocket that half million dollar loss that was a big check to write but as a result all the investors were made whole they went into the next project and they went above and beyond and they've got a faithful list of investors meaning this person whenever they put out a deal it fills up extremely quickly and they're now doing 30 to 70 million dollar raises huge but it still fills up quickly because everybody tells their friends and family how well they're treated by this person they got good systems communication they do their investment parties we get regular updates on their projects we've got confidence in them and that's why we they continually attract investors that's a great example that's that's incredible keith thank you again man just a great segment so many great things about finding that operator and knowing who they are i feel like it can be applied again to different asset classes and you know as they move forward with learning to invest share with listeners again quickly i think in touch with you and i want to jump into another very important segment that and the listeners are not going to want to miss looking forward to it yeah people can connect with me at my website financial journey.life i love working with business owners and accredited investors and really helping them reach work optional in three to five years if you already have two to three million dollars net worth it's often just a repositioning of assets into the kinds of deals that can give you 12 to 20 plus cash flow on a regular basis so a million dollars at 12 percent cash flow that's 120 000 a year most my clients are earning 15 to 20 plus i don't like to really promise the big stuff but people are getting it and i love to show people how to do so reliably without taking giant risks and then once you've made reach work optional what do you want to do you've got freedom you've got time you've got energy you want to focus on impact on family there's a whole world out there of opportunities and i love empowering especially those who are faith-based you've got a big heart to give some way somehow to brainstorm on how to do that or turn their wealth into more of a giving business it's really fun to watch those people grow and change other people's lives thank you for being with us again today i hope you have liked and subscribed to the show please tell your friends about the real estate syndication show and i hope that you are learning and growing don't forget to go to lifebridgecapital.com where you can start investing today