How to Make $300K/Year as a Limited Partner (No Toilets!)

The Real Estate Investing Club

Join an active community of RE investors here: https://linktr.ee/gabepetersen   BECOME A SUCCESSFUL LIMITED PARTNER IN REAL ESTATE 🏢💰   Discover how Pascal Wagner built a $300,000 per year passive income portfolio by investing as a limited partner in real estate deals without ever fixing a toilet or dealing with tenants! 🚀 In this episode of The Real Estate Investing Club, we dive deep into the strategies used by institutional investors to deploy capital into real estate syndications and private equity deals.   INSIDER SECRETS FROM A $150M FUND MANAGER 📊   Pascal shares his unique journey from founding a venture-backed VR startup to becoming a fund manager at Techstars, where he deployed over $150 million into 300+ companies. After his father passed away suddenly, Pascal took responsibility for managing his mother's $3.5 million portfolio and discovered the power of passive real estate investing. Today, his family generates $300K annually from rental properties and LP investments across 23 different private deals.   THE THREE PILLARS OF SUCCESSFUL LP INVESTING 🎯   Learn the framework that separates successful limited partners from those who lose money. Pascal breaks down the critical importance of having a clear investment strategy, building robust deal flow pipelines, and properly vetting operators and opportunities. Whether you're looking for cash flow, equity growth, or tax reduction strategies, this episode reveals how to align your LP investments with your financial goals.   AVOIDING COSTLY MISTAKES IN REAL ESTATE SYNDICATIONS ⚠️   Hear the raw truth about losing $40,000 in what turned out to be a Ponzi scheme, even after conducting extensive due diligence with audited financials and institutional backing. Pascal shares invaluable lessons about diversification, red flags to watch for, and why even sophisticated investors can't bat 1,000. This honest conversation about investment losses is essential viewing for anyone considering passive real estate opportunities.   BUILDING DEAL FLOW LIKE THE PROS 💼   Discover Pascal's proven system for generating hundreds of real estate investment opportunities monthly. Learn how to leverage crowdfunding platforms like Fundrise, RealtyMogul, and Yieldstreet, use Google ads strategically to build your pipeline, and connect with top-tier operators in multifamily, industrial, storage, and alternative asset classes. This episode reveals the exact process institutional investors use to source and evaluate deals.  Want to learn more about our guest? Connect here: https://passiveinvestingstarterkit.com Want to learn more about the REI Club Podcast, how to invest with Gabe at Kaizen, or join our community of active real estate investors on Skool? Visit the podcast website at https://www.therealestateinvestingclub.com or click here: https://linktr.ee/gabepetersen #PassiveInvesting #LimitedPartner #RealEstateSyndication #PassiveIncome #RealEstateInvesting

Transcript

00:00All right. Welcome back to another episode of the Real Estate Investing Club. I hope

00:13you guys are having a great week. We're actually coming at you from an off day. Usually it's

00:18Friday. Today is, I don't even know. Today is Thursday. We've decided to pick up one

00:23more day so we can kind of spread them out a little bit more. So if you guys are listening

00:27to this on Thursday, I hope you're having a great Thursday. Otherwise, I hope you're

00:30having a great day, whatever day it is for you. This is going to be an interesting episode.

00:35We got Colt Mulderig with us from DCA Family Offices. I'm sure you guys have heard about

00:41high net worth families investing in real estate as one of their strategies to deploy their

00:46capital. And so this is going to be specifically focused on the high net worth families and

00:51family offices and about maximizing the after tax return. And I apologize in advance. My

00:58daughter got me sick. And so I have a little bit of a cough going on. And so I hope I don't

01:04do it on the podcast. But if I do, I just have to apologize in advance. But other than that,

01:08let's get right into it. Colt, thanks for hopping on the show.

01:11Yeah, appreciate it, Gabe. Great being here.

01:13Absolutely. I told you before we get on here, we always like to start with stories. We like

01:18to hear how people got to where they are. So why don't you take us back to the beginning

01:21of your story in real estate and tell us how you got here?

01:25Yeah, absolutely. It's probably not the typical path. So economics undergrad after that one did

01:33actually a couple different venture-backed startups. And during that time, I always had the question of

01:39who's on the other side of the veil? Who are the VCs that are behind the curtain that are really

01:44driving the operational direction of the company? And so that really piqued my interest in private

01:50equity and VC, led me to go get my MBA, and then ultimately into investment banking.

01:59And during that time, I was really focused on energy, transportation, and infrastructure

02:05deals. And with that comes a lot of real estate. And so on behalf of our clients, doing a lot of buy

02:13side were, you know, one, making acquisitions of other companies, but along with that, you know,

02:19a significant amount of kind of real estate assets and, you know, partly, you know, redevelopment or

02:24kind of core assets and really running the gamut across different kind of asset classes there.

02:29And so that really opened up the world of real estate for me. Since then, I've moved over to our

02:38family office platform, and now lead all kind of real asset strategies. So that would include

02:43infrastructure, as well as all kind of real estate strategies on behalf of family offices and high

02:49network individuals. Nice. Yeah, so I mentioned right before we get on here, we want to start with

02:55basics. So we want to really lay the foundation of your role and what you try to do. So why don't you go

03:01into what a family office is and, and how they how you are kind of supporting them in the in deploying

03:08their own capital? Yeah, you know, if you zoom out at a, at a macro level, you know, a family office is

03:16really just a ultra high net worth individual or and their greater family. And put numbers on that at

03:24point do they qualify as a ultra high net worth? I think if you're if you're a qualified purchaser,

03:31I would put you in the, you know, that rank of kind of family office level of wealth, right? So we're

03:37talking, you know, ability to write, you know, a couple million dollar equity checks per individual

03:43deal, you know, got 20 plus million of, you know, total investable capital, then you can really start to

03:53build that foundation, you know, DCA, we manage around 600 million of equity, on behalf of our

03:59clients. And obviously, the larger you get, the more more scale you have, you can start to build

04:06out a fulsome team to go and execute on these more kind of niche strategies.

04:12Nice. So yeah, at its core, it's just it's just rich people, I mean, rich families that usually have

04:17their money from some kind of, you know, business sale or some other business that's operating,

04:21and they're putting it into real estate as an alternative investment to the stock market to

04:26other investment strategies that they would pursue, correct? Yeah, that's right. And I think,

04:30you know, you can look at a lot of different flavors of it, right? It could be, you know,

04:35a founder that goes through a large liquidity event, they sell their business, they have this

04:38new wealth, and there's a diversification strategy around, you know, public equities and alternatives.

04:45It could be that, you know, this is a, you know, family owned and operated business.

04:49And the business is just generating significant cash flow. And, you know, you can, you can buy

04:55houses and you can buy cars. But, you know, if you really want to start thinking about the next

04:59generation, it's about diversifying the overall asset pool. And then I think when, when we think

05:05about kind of family offices, we really think about it as kind of stewardship for, for the next

05:11generation. This is really not, you know, this is not about your money anymore. This is about,

05:16kind of, hey, what legacy can I build for the next generation? So that this, this wealth that

05:23I've accumulated can continue in perpetuity. Yeah, makes sense. So let's go into the type of,

05:30of assets that they actually like. And when I'm, when I say asset, I mean, I know, you know, gold and

05:36real estate, they're qualified as assets, but I'm really just talking about real estate, you know,

05:42mobile home parks, um, self storage facilities. Uh, so in terms of the, the asset type, the type

05:49of real estate that they like to invest in, what do you see as the, um, the one that's most sought

05:55after from family offices? Uh, you know, it's, I think that depends on, on the family and kind of

06:03what their ultimate goals are, you know, in some cases, they care, I guess they care, right? In

06:08some cases, this, it's purely a diversification play. Like, does it look good in Excel, right?

06:12What's the IRR? What's my return on investment and more of a diversification play to make sure that we

06:18have kind of balance in the portfolio and have some core assets that are just stable versus taking some

06:23development risk or some value add risk. Um, so I think that's, that's one flavor.

06:27The other flavor is folks that really want to be involved operationally, right? And so that's

06:33where you start to see people leaning more towards hospitality. You know, it's really nice to go,

06:38you know, sit in your own hotel in the lobby, in the bar and say, you know, wow, like I own this.

06:43Um, and so that does involve a lot more operational intensity when you start getting into hospitality.

06:48Uh, but it is more tangible than just, Oh, Hey, here's my, my self storage facility. That's

06:54on the side of the road there. Don't knock self storage. It's a great asset.

07:00No, yeah. Don't get me wrong. You know, the, the ones that are, that are unsexy are generally the

07:06best. Yeah. So yeah, we're, we're a large investor into manufactured housing. Like we,

07:12we love the space. It's not necessarily sexy and it's not, you know, generally on the top of

07:18people's list when they think about kind of real estate asset classes, but I think it's

07:21probably one of the more compelling and recession resilient and a real estate asset classes out

07:27there. Yeah. Yeah, absolutely. Um, so taking the perspective of somebody listening, you know,

07:33they, they've gotten to the point where they've deployed all the capital, their own personal

07:36capital that they possibly can. They need to start raising money and they need to start doing

07:40syndications, um, come up with a fund, something to, to get the ball rolling, to start to scale.

07:45If they want to start reaching out to high net worth individuals, what is the, um, strategy? What is the,

07:51uh, what's the way that these individuals like to be reached out to? How do you generally go about

07:56that? Yeah. So it's a, it's a great question. We, we go through a kind of a multi-stage

08:03underwriting process. And number one is underwriting kind of the GP or general partner

08:07and really looking at them on, on a personal level and kind of their strategy and their track

08:14record before we even started looking at deals with them. Um, so for folks that are really starting to,

08:19you know, think about, Hey, I want to become a true operator and, and raise a fund around a

08:24particular strategy. I think number one is what is the strategy and how, how is it different than

08:31what everybody else is doing or how are you approaching it in a different way? Um, so that

08:36you can really stand out, you know, amongst the other GPs that are constantly pushing deals towards

08:42ultra high net worth individuals, you know, on, on the family office side, we see a huge amount of

08:48deal flow and it's hard. It's hard to stand out. And if you're, if you're pushing a, you know,

08:52a multifamily deal, I see 10 multifamily deals a day, right? So how are, how are you going to be

08:59different to make sure that, you know, that investor says, Oh, you know what? That's interesting.

09:04Um, so I think number one is, you know, really having your strategy defined and then staying in your

09:09lane, right? But like, you want to, you want to make sure that you're not kind of dabbling in,

09:14in a lot of different asset classes, a lot of different strategies. You know, people like to

09:18bet on subject matter experts, right? They don't want to, they don't want to bet on someone who's

09:23never done it before. Um, the, you know, the next piece is having your, your track record dialed in,

09:29uh, you know, in this day and age, everyone is data driven, right? And so when you're going to pitch a

09:35deal, uh, you know, you should be prepared to have your track record

09:39available to potential investors to say, Hey, this is every single deal I've done.

09:44This is how they've performed. And yeah, you might, you know, if you have some losers,

09:48that may still be okay. Like you shouldn't be scared of the fact that you have a loser,

09:52as long as you know, you're able to convey what happened, right? I think everyone is forgiving

09:58and they can look and say, yeah, there was things that were outside your control and something went

10:02wrong. Uh, but well, and I, yeah, I would say, um, because I had a, I had a storage facility

10:07that a while ago that, um, caught fire from there was, there was a break in, there was a fire.

10:13And it was like literally the weekend before, uh, we were closing. I already, you know, I'd done the,

10:18the repositioning and I was, it was under contract, ready to sell the weekend before

10:22it was a break in fire, totally a whole thing went to shit. And so we had to do this insurance

10:27thing. And then we did end up making money, but it wasn't what I had expected because of that

10:31incident. And I, after doing that, I was always like almost ashamed about it. Like I somehow,

10:36you know, nobody would invest in me with me in the future. But, um, like you said, I think it's,

10:41it's important. Everybody gets hit in the face at one point, just because life happens, you know,

10:45you can't predict everything that's going to be happening with your, with, with your deals.

10:50Um, earthquakes happen, hurricanes happen, whatever. You're not going to be able to predict it. And you

10:54just need to kind of own, um, whatever it is that happened, own it, uh, and explain it. And so long

11:01as you don't, you are not the negligent party, you're not the one that is, that made me, you know,

11:07made the gross mistake. Um, if it was, you know, legitimately out of your control, or at least

11:12mostly out of your control, then, uh, people will, you know, they will understand that and they're not

11:17going to hold it against you. But, uh, the importance is just being honest and, um, and owning

11:22your story. And, um, so, yeah, I just wanted to hop in there cause I have my own story about that.

11:26And, uh, I did kind of go through a period of, of feeling like I had failed, even though it was

11:31predominantly out of my control there. Yeah. You know, it's like, it's a, your deal, right? You,

11:37you feel personal ownership of it because it is yours, right? So I think, but that's, that's spot on.

11:43Yeah. Um, so before this, before we got on here, you said that you specifically like mobile home

11:48parks. That's something that I buy, I, uh, I'm into. And so let's talk about that. Why do, uh,

11:54high net worth individuals like to invest in a mobile home parks? I, uh, a lot of reasons. I,

12:00number one, uh, I think if you look at the historical performance of that kind of sub strategy,

12:06uh, over multiple decades, it's been very, very low volatility, right? You know, we have a lot of

12:14ebbs and flows and end of the day manufactured housing, uh, there's a need, uh, they're, they're

12:22always full and they just kind of,

12:24keep going up with inflation over time. You know, you can think of the direct comparison

12:28is just as traditional multifamily. And so I think when, when we're looking at, you know,

12:33our multifamily portfolio relative to our manufactured housing portfolio on the traditional

12:38multi side, you know, we have more tenant terms. So every, every year or two, you got to refresh the

12:45interior, uh, something breaks in the unit, you're going in there and you have to fix that.

12:50So there's just more capex there. Um, and there's a lot of new supply, regardless of,

12:55you know, if you're in a good market, there's going to be new supply. And then if you, you know,

12:59you look at the, like the last couple of years within kind of the multi-space and real estate

13:04in general, it's been pretty beat up and we don't really see a lot of rental growth.

13:09Um, and you're, you're kind of fighting to keep occupancy when a new kind of property comes

13:14online. And then you contrast that to manufactured housing where it's effectively, you know,

13:20ground lease, you know, your average resident is living there for seven years. If something breaks

13:25in it, it's their house. So it's their responsibility. Um, and you know, your capex is

13:31really limited to, Hey, how do I make sure that the, the landscaping and the driveways

13:37and the kind of the infrastructure are okay. Yeah. Utilities. Uh, and so when you compare

13:42that, it's like the risk return kind of profile there, it's, you know, you can get to a similar

13:48return profile in manufactured housing as you can in traditional multifamily, but with less

13:55operational intensity, uh, and kind of less risk from, from our perspective. So I think

14:00that's, that's actually just one, one of the reasons that are the left there, but I think

14:04that's one of the reasons we like it. Um, the other is, you know, just from a tax efficient

14:09perspective, right. As a, as a family office, right. These are us based investors, taxable

14:16investors. And so, you know, being efficient with capital is of paramount importance. And when

14:22you have a portfolio that is kind of cash yielding, right, you have taxes due. And so the ability

14:29to do a cost segregation on a manufactured housing project and the amount of depreciation

14:35that you can actually take as bonus is significant in comparison to traditional multifamily and

14:42compared to really the vast majority of, of other kind of real estate asset classes and

14:48maybe carwash. Um, and so for that reason, we really look at it on, Hey, what's our,

14:52what's our after tax return? If I can, you know, if I can take a hundred percent bonus

14:58depreciation on, you know, a portion of that property and I can use that, those losses to

15:06offset or delay an attack slide billy from elsewhere in the portfolio. Uh, it just, it just

15:12makes that, that compounding effect more powerful.

15:15Why do you know why that is? Why, why is mobile home park? Why are they treated differently

15:21in terms of, um, tax depreciation?

15:24Well, the, the big piece of it is because you don't own one, you don't, you generally don't

15:30own the homes, right? And so what you really own is, is the land, right? Which you can't

15:36depreciate and then the land improvements. And, you know, if you're an investor in Volos, you,

15:41you know, you know, there's septic systems, you know, there's gas lines. This is all considered

15:46by the IRS as kind of short lived property, right? And so it's less than kind of 20 year life and

15:52therefore it qualifies as bonus depreciation. And so when you compare that to say, you know,

15:57to say an office building, right, which is pretty much just as, you know, concrete shell most of the

16:02time depreciated over 39 years, you don't get the bonus. Right. And so, uh, it really kind of comes

16:10down to just the underlying makeup of the park. Right. Yeah. That, no, that is obvious now that

16:16I think about it because of the life of the actual, yeah, from the IRS's perspective, the life of what

16:22makes up the, the property is much shorter for mobile home parks versus something built out of

16:27concrete, like you said. So, um, yeah, that makes sense. Do you guys, uh, so we're also into RV parks.

16:32We love RV parks, especially now we're really into a long-term stay RV parks. We're trying to,

16:38uh, get as many people, uh, that are in our RV parks to stay there a month over a month. And

16:42we're finding it to be a pretty good strategy. They almost act like mobile home parks. They're

16:47not as sticky, you know, people can leave a little bit easier, but they, yeah, the, the return tends

16:53to be better. And so is that something you guys also look at or have, have long-term, I know it's

16:58kind of a newer, newer ish concept, but have long-term stay RV parks. Um, I don't know. Is that

17:04something you guys look at? Uh, so we haven't in a, we haven't had a concerted effort to go after

17:10that as a particular strategy, um, within our existing kind of portfolio, we do have RV parks.

17:17And I think what we've noticed over, especially over the last several years is that people just

17:22continue to stay. And so while it's not, you know, we haven't designed it to be a, a long-term

17:28stay, um, in some cases it, you know, just kind of has the natural progress and, and, and

17:34that happens. Um, and so I think it's definitely an interesting strategy to start kind of pushing

17:39that as, as more of a true thesis. Yeah, that's, uh, I mean, that's one of our main marketing

17:44strategies for our RV parks is, you know, we look for extended stay, we market like long-term

17:50stay, extended stay, um, and you fill them up. And first of all, RV pads, I don't mean to

17:55make this about mobile home parks, RV packs for parks, but RV pads rent generally higher

18:00than a mobile home pad would rent for. And, um, and it's just a lot easier to bring them

18:06in. And so you can do infill a lot quicker for mobile home parks. You gotta, for us, what

18:10we found, I mean, actually bringing the unit in is the fastest way to fill a mobile home

18:14park versus getting somebody to bring it in. Cause it costs five, sometimes $10,000 to get

18:19those things in there. They got to pick them up, drive them across the highway, pay for

18:23permits. Um, and it's just, you know, it's a ridiculous process. So, uh, the other piece

18:28is density, right? You know, that's part of the reason why they're not really building

18:33any new mobile home parks, right? Because what's the highest and best use of that amount

18:37of land? It's, it's definitely not to go to build horizontal, right? It's to, it's to

18:41build vertical, right? Because in that same spot, you can put, you know, 400 multifamily

18:47units, right? And so, but you know, in an RV park, you know, it's, it's even more dense

18:52than a traditional manufactured housing and a park, right? Because you don't necessarily

18:56have kind of the yards or at least not as much yard, right? And you're kind of, you're

19:01able to kind of get more units into that acre.

19:04Yeah. Yeah. And municipalities just do not like mobile home parks. We have one out here

19:10in Western or Eastern Washington. Um, and it's a, you know, it's got 30 some sites on it

19:17and, but there is tons of land that we could expand into and the city just won't let us

19:22expand. They will not let us put additional mobile home parks or mobile home units there,

19:26even though it's perfect for it. They just do not like them. And I've, I've seen this

19:30across multiple municipalities is they don't like mobile home parks, um, and they won't

19:34allow you to expand. And so, uh, what is out there is, um, I mean, it's, it's what's out

19:39there. And so you can't really, can't really add additional units, which is pretty

19:43disappointing. I mean, it goes back to what is highest and best use for the land, which

19:47makes sense. But I think there's, you know, there's, there's a flip side to that. And I

19:50think it's one of the reasons we, you know, we like the space and you could say this for,

19:54for other kind of investment sectors as well as it comes back down to supply and demand,

19:59right? To your point, they, but they will not let you build another park. So what, you

20:05know, the, the supply that's out there, that is what it is. And as it, it, it keeps demand

20:10high as a result, as opposed to, you know, being able to bring on new multifamily properties

20:15or whatever the particular asset class is, you know, if you have this kind of supply

20:20and demand and balance, there's, there's going to be winners and losers. Yeah. And so then

20:25we take that on, on all, all investments, right? It's like, Hey, what's the supply and demand

20:29here? How, how likely is there going to be another property or another operator who's going to be

20:33able to come in and kind of dislocate the equilibrium of the market? Yeah. Yeah. And which

20:39is another reason why, um, all the home parks, they stay full. If you, if you got the homes

20:43in there, um, they'll stay full, which is, uh, you know, another reason why it's such

20:48a great asset. Um, we, we turned this into a mobile home park, RV park podcast, but, uh,

20:53originally we were talking about family offices. Um, so is there any other, we have run down

21:00the clock and so we, you know, it's 20 minutes, we got to jump into the quick question around,

21:03but before we move on, I did want to ask, is there anything else that you can tell listeners

21:07who want to start reaching out to family offices, who want to, um, start raising capital

21:12specifically from high net worth individuals, any type of, of advice that you could give

21:16them? I'd say, have your, have your story down and have your materials ready. Um, you

21:24know, in the, in the family office space in particular, right, we, we see so much that

21:30we're, you know, we don't have time to reply to emails all the time. It's really hard to pick

21:35up the phone when someone calls. Um, and we're just always strapped for time. And so I'd

21:40say, you know, be ready, uh, because when you, when you get the opportunity, you got

21:45to be prepared to, to answer the questions and, and have something that they ask where

21:50if they say, Hey, let me see your deck, you should make sure you have a deck. Uh, you

21:55know, they want to see your track record or make sure you have it ready to go. So I think

21:57you just, you know, being prepared to, and really pounce on the opportunity when you actually

22:02get face time with folks.

22:05All right. With that, I'm pushing us over to the quick question round. Are you ready?

22:10Yep. All right. Starts with education. It could be any form. It could be a book you've

22:16read, a conference you've gone to a mentorship program you've been a part of, but I need

22:20a two, uh, recommendations, one recommendation for general life wisdom, and then one for real

22:25estate.

22:27Uh, you know, general, general life wisdom. I always say the economist, it takes a, you

22:32know, I don't know. It's not necessarily a, a real estate book, but, um, I think it's a,

22:37it's a good macro view. It's a, and it's a good kind of centrist view of global economy

22:43in general. And for, uh, for real estate, unfortunately, I don't, I don't know if I've

22:48ever actually read any real estate books other than like a textbook. Um, no worries. You

22:52ever read rich dad, poor dad, you're the first one.

22:55I've not, I'd say, you know, we're, we're data driven. So it's, you know, we look at

22:58costar, we look at green street reports, you know, stuff that's really, you know, what is,

23:03you know, what is moving markets today, you know, and really looking at what is, what

23:08is the fed doing? What are interest rates doing? Uh, because that's, what's really

23:12going to, you know, shift the trajectory of your investment as opposed to necessarily

23:18a book from, you know, a few decades ago. I might, I might get blasted for that point.

23:24No, no, no. I like it. I'm going to say, uh, your recommendation is costar. So that's,

23:28uh, that's fair. All right. Next question is for your younger self. Let's go back to the

23:33Colt, who was, uh, just getting started out so many years ago, go back to him, look

23:36him in the eye, give him one piece of advice moving forward.

23:40Oh, one piece of advice. Um, I would say, you know, follow what you like earlier.

23:48I give you, I think that's, that's my advice. So I, you know, I went and did other jobs,

23:53you know, went in a roundabout manner to, to get to where I am. Um, but obviously always

23:58had a, had an interest and I think, you know, I feel like I've, I've probably lost 10 years

24:03on trying to find the path as opposed to just going direct. Yeah. Well, it's never lost. It's,

24:08it's just your journey, but, um, but a lot of people say that same kind of sentiment. And whenever

24:13you, uh, people say it, we always like to point it back to you, the listener, this falls into the

24:17bucket of, I wish I got started sooner. 90% plus of the guests who come on here, of the 600 guests

24:23who come on here, say that same thing. So if, uh, if you haven't gotten started, if you haven't

24:28gotten your first deal done yet, this is your kick in the pants, go out there, get it done.

24:32Don't be a guy who says, I wish I got started sooner. Uh, it could be anything, get anything

24:35done, uh, invest into somebody else's deal, buy yourself a single family, whatever it is,

24:41just go get it done. Yeah. There's the, there's the old saying, right? What's the best time to plant

24:45a tree was 20 years ago. And what's the next best time to plant a tree is today.

24:48There you go. That is a, that is a good saying. It's funny. Cause I actually just planted trees

24:54at my house to block out of view. And I'm every, every morning I look out there and I'm

24:58like, come on guys grow. And I know it's going to take five, 10 years, but all right. Next

25:03question is about the U S it's a big place. There is a lot of opportunity out there. Give

25:08me the single Metro you're most excited about investing in today.

25:12Single Metro. Uh, you know, we actually like, I think probably the, you know, the greater

25:18kind of Bay area actually. Oh, interesting. Okay. So I think that's it. It's probably a

25:23contrarian view, but you know, the Bay, the Bay area is not going away. It's still the,

25:29you know, the epicenter of, of tech and innovation, especially when we start thinking about the

25:34long-term kind of AI boom. Um, and it's been, and it's been beat up, right? You see a lot

25:40of capital going into the Southeast. You see a lot of new supply going into the Southeast.

25:43You also see flat rents. Uh, and so I think we're, you know, an office space there. Don't

25:49you guys have like 30 or 40% vacancy or something like that? Something crazy high.

25:54Yeah. I don't, I don't know if I do office, but I don't know if I do office anywhere. So

25:57yeah, fair enough. Uh, but residential in particular. Um, and you know, there's no,

26:03there's no news like bad news. And so I think it's, you know, there's some of that gets kind

26:08of overhyped in my mind. And so I think we see it as a generally good value play.

26:13Yeah. Makes sense. Um, yeah, you are actually the first person to say San Francisco. That is,

26:18uh, generally, you know, people, you always hear about people, people moving away from San

26:23Francisco, investing into Texas or something like that. But, but you're right. I like, I like your

26:28area of North too, you know, Vancouver, uh, kind of Washington and kind of the greater kind

26:34of Seattle suburbs, I think are also good markets. You know, it's like, it's, it's a stable and a

26:39business environment, you know, generally good tax area. Yeah. We got Amazon. Yeah. Amazon.

26:48Yeah. Both, uh, both really good markets, but San Francisco, I mean, I, yeah, it's never going to,

26:52it's such a beautiful city too. It's, it's not going anywhere. Um, all right. Next question is

26:58about finding deals. It all starts getting in contact with the seller and pen in that purchase

27:02agreement. You can take this any way you want. You can take it a finding new, um, family offices

27:06to invest with you, however you want to answer this question, but what is your favorite way to

27:10generate leads and, uh, find new deals? Uh, so we, we take a, you know, a very interesting

27:17approach because we're, we're generally in co-investing with other, other operators. So I

27:21think what we do is define what the, what the thesis is and then go try to find data to

27:29support the thesis in that market. And then we go try to find who are the best people

27:34doing that in that particular market. And then we talk to everybody. And so that by the time you've,

27:40you've spoken with everybody, you, you can get a good lay of the land. Um, and through those

27:45conversations, you're going to, you're going to start to generate kind of a deal flow, right?

27:49You'll, you'll be in the market, you'll understand it and you'll be connected with the right people

27:54that kind of have access to the right deals. Yeah. Yeah. I like it. So we're going to say,

27:59uh, your favorite way is networking. Um, I, uh, I've said this a few times on the show, but I,

28:06back in the day I used to do single family and I would always do off market and I kind of took that

28:10into commercial and I was always like, you're never going to find a deal, a good deal unless

28:14you find it off market. But I have been, um, this past like year or two, I've been leaning heavily

28:20on brokers cause I just didn't realize how good of deals in, especially for commercial are, uh,

28:24are out there through brokers. And it's a great way to find good deals. Um, networking, it's a lot

28:29more fun to you because you're just having conversations with people, uh, versus, you know,

28:33talking to sellers all day long. So yeah. The other point I'd make on that is, you know,

28:38through kind of broker networking is broker, you know, that's an industry as well. They're talking

28:44to property owners and trying to get a listing. And so in some cases, if they can go to an,

28:49an owner or a seller, kind of knowing that you're in the background wanting to buy that property or

28:55property like that, it makes them more competitive if it's, you know, JLL versus CBRE and they're,

29:01they're both trying to get the listing. The guy who shows up and says, Hey, you know what? I,

29:05I have a guy that will buy this tomorrow and we don't have to go through, you know, a three to six

29:10month process. We can just get it, get it done, right? The broker can get their fee, they get the deal

29:16and you don't have to go through a competitive process.

29:19Yeah. Yeah, absolutely. That's a, that's a good point. Um, all right. Next question is about

29:25lessons learned. Not every deal we get into goes the way we expect it. In fact, many times,

29:30if not every time something will go wrong and, uh, that's when we get to learn a lesson. So what was

29:35a deal that you've been a part of that went a little bit sideways and then what was the lesson

29:39you pulled from it? Uh, yeah. So yeah, the, the lesson on, on all of these is whatever can go wrong,

29:46will go wrong. You know, we underwrite, you know, 10, 20 different scenarios on,

29:51Hey, what if friends do this? What if occupancy does that? What if, you know, the tenant does this

29:56and it all, it always, you know, something always happens, right? It's never going to be exactly

30:03kind of the base case you, you underwrote to, um, you know, trying to pull out a specific example,

30:09you know, like in the manufactured housing space, you know, uh, I don't know, couldn't tell you the

30:14number of times where kind of we go in and there's always a septic issue and you gotta,

30:21you gotta dig up the ground. You gotta get new septic tanks in. Um, and you know, the, the lesson

30:27on all of this is, you know, do your diligence, right. Understand what all the things that could go

30:33wrong and, and have a contingency, right? Have some capital that's available to, to address the

30:40unknown. Yeah. Like don't, don't go in there, you know, skinny, no cash on the balance sheet and,

30:45you know, expecting everything to just go as you underwrote. Yep. Yeah. Having a cash reserves is

30:51so important. Something I've learned more than once. Um, you know, things are definitely going to break

30:57even if, even if it's like was recently put in, you're talking about septic tanks. We had an issue

31:02where it was a new septic tank and the, uh, somebody, the hoses, or, uh, they didn't put

31:06the, um, the drain line down far enough. And so it was breaking. And so, yeah, things go wrong

31:11all the time. Um, you just gotta be ready for it. Yeah. We had a property in, uh, out in Montana

31:17and a winter storm came through and it wasn't even the rain, but the, just the wind chill

31:23beating on the side of the building froze the water lines. Oh, wow. And so then you had water

31:30lines that snaps in inside the walls. And it's just like, you don't even expect something like

31:35that to happen. All right. But it'll happen. That's for sure. All right. And this is kind

31:39of a new question. Um, because you've already mentioned AI is so big, I'm a huge proponent

31:44of adding AI as many places as you can within your business efficiently. Um, so what is a way

31:49that you guys are implementing AI in your business? It could be in underwriting, in lead generation,

31:54whatever. Um, give us some use cases that you found are pretty useful for AI.

31:59Okay. Yeah. The biggest one is market research, right? Um, because I think for us, we're not

32:05going to put any proprietary information in there, um, and have it, you know, help the

32:09machine learn or, or do anything like that. But it's been a great tool for us to, to augment

32:15kind of really the market research. So something that would take you a really long time to do,

32:19you know, it can synthesize that down and now obviously you've got to read it and you've got

32:24to test it and make sure that it's, it is truly accurate, but just the mass aggregation

32:29of data to really get you up to speed on a particular market. Um, I think it's been.

32:34I will 100% second that it used to take me like a full day to get to, to do what I felt

32:40was good enough research on a new market. Um, and I, I'm going to say, uh, put perplexity

32:46out there as the, uh, the AI that I like to use. It's a specific type of LOM, but, um, perplexity

32:52is great for that stuff. And you can do what used to take a day of work in, you know, it'll,

32:57well, you'll start it and then it'll work for a half hour and then you'll come back and

33:01you'll be able to read the report. And it's just amazing how it works that way.

33:04Yeah. Um, all right. And this brings us to the last question. This is for the listeners.

33:09You've given us a lot to think about. I'm sure people want to reach out, get in contact

33:12with you. This is a two parter. Where can they find you? And then what can they expect when

33:16they reach out?

33:16Uh, so I'm definitely available on LinkedIn. Uh, so you can send me a note and, um, I am,

33:23I am horrible at, at checking it. So what you can expect is that I will get back to you,

33:28but it may not be, you know, within an hour.

33:32Fair enough. And I will put that link in the show notes. So if y'all want to reach out to

33:36Colt, all you got to do is click a little more in the description. It's going to pull down that

33:40full description and in there you can find his link. All right, man, that wraps it up. Thank you

33:45very much for hopping on the show. Appreciate the time. Thank you.

33:49Absolutely. For everybody who's with us today, thank you guys for showing up. You are the reason

33:53we do this. So if you guys have any questions, reach out to me, Gabe at the real estate investing

33:57club.com. If you guys want to support the show, just leave us a review or a comment or whatever

34:01you want to do. Other than that, I hope you guys have a great week. Keep rocking real estate.

34:06And I look forward to seeing you on the next episode.

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