$200M Origin Story (Step by Step)

Early Investment Journey

I found an investor I wanted to work with, and I pitched him on hiring me, basically. I said, look, I got a deal for you. We’re gonna work for free. All I want to do is just, I’ll drive you around, file, paperwork, whatever. He’s like, “oh shoot. Yeah, no, I can’t afford you.” Like, no. You don’t understand. I’ll work for free. I just wanna learn from you. And he is like, no, you don’t understand. Free is too expensive if you don’t have anything to bring to the table at this stage. Cause he’s like, “kid, I’m in a crisis. I’m, you know, I got all these properties. I’m mid-foreclosure with someone like he was holding on for dear life. 

So that was an important lesson that free is very expensive for somebody whose time is worth a massive amount of money. So long story short, I created an email marketing campaign and put together a huge list of interested investors and interested buyers so that he could make some money on transactions and investing. I brought that to my pitch to him and he finally let me into the company. 

What I learned most about being an entrepreneur during that time and the highs and the lows and all the different things were that at the end of the day was that you had to, you couldn’t just rely on one business and you couldn’t just rely on one stream of income and the earlier that I invested it actually saved, even though that business was doing a million like, 7 figures a month, right? That it had highs and lows and my real estate investments along the way were what carried me over. 

When I analyzed my income, it was actually real estate. They carried me through the most difficult times and they allowed me to reach the high peaks of that business as well as get through the low valleys because I could, I was fed, my family was fed and my needs were met and I didn’t have to react and be reactionary, and change pricing real quick. 

Because I needed the money at that exact moment I could weather the storm and that was through real estate. So I am sold on real estate a hundred percent and we found the standard model for many funds wasn’t a good fit for us as investors at the time, from the 5 – 7 to 10-year old. So we wanted to offer something unique to the market and the income fund model we found was the best, which was very flexible. It basically doubles the returns of our Wall Street competitors because it’s backed in real estate and people can get their money back in 90 days or less. So we loved that and so we went all in on that model and we’ve been doing that ever since with great success and it scratched the itch of what we needed at the time. So it’s been great. 

Difficult  Periods are Part of Success

I read this book at that time, the perfect timing, and the book in a way saved my life and it’s the obstacles the way by Ryan Holiday and I returned to that book all the time because it just takes all the crap and all the difficult moments of your life and reframes the whole thing to be like, no, this is how it has to be to be successful and this is how it has to be and lean into that and fight through that and know that you get better. 

In the end, had four or five businesses, and they were very successful on their own, but they were very, lumpy. The highs were really high. We were killing it. The lows were really low and I was actually coming out of pocket during those lows. The business wasn’t even sustaining itself during certain months. What ended up happening was all these things culminated into a moment where I was working hundred-hour weeks. So my health slowly deteriorated over years and I was in my twenties so I was like, who cares? One day of sleep and I bounced back and I’m just back at it the next day and can work another 12 to 16-hour day. My relationship with the person closest to me had deteriorated and was completely on the rocks. All close relationships from there had completely left and basically, the only thing I had were these businesses I was pouring myself into and those were having issues. I kind of went back on my own and said, I need to analyze streams of income. What I need to know is how much time I spend and how much time I make for those efforts. 

I analyzed my income. I realized that something like in my average for that year, something like I think was about 80% of my income was coming from real estate cause I had shoveled money into real estate. I was pushing all of my savings into real estate consistently. I almost had no savings. It was all income from real estate and then I looked at the business that had historically generated all the returns and that was taking, but it was taking up 90 plus percent of my time. So I went into the team and I just said, look, we all talked this through. I’m wide open with you. I’m a hundred percent sent open and honest. We’re selling the business and we’re, and so the majority of the team went with the business to the buyers of that business and they went on to do different things.  Then a small team went to the real estate side and I just analyzed it, said, look, what can I give back? Because real estate, essentially, I looked at it like it saved my life because life as I know it today, I have two kids. I have a beautiful partner, I have an amazing family and relationships and traveling and these great things and real estate saved that life and maybe my life in general. 

So I’ll say that I wanted to give back to the community and see what I could offer and what we could do differently than everybody else in the fund space and that was, we analyzed how we were investing and what we were able to give, which was flexibility. We were able to give a competitive return and huge amounts of flexibility, which is exactly what I wanted at that phase of my entrepreneur journey. Especially to be able to say, look, I got this big opportunity. I could take the money down within 90 days or less and go buy this other thing, etc, whatever it was. So the darkest moment brought the best things in my life today. So I’m really thankful for that. I could not have imagined anything that life is like today and I credit real estate for that truthfully. 

How We Buy Properties

I did a market analysis and what I found was that I love multi-family because it has insane benefits. I think if my numbers are correct, it was like the great recession, which impacted me greatly. I still very clearly have scars from that in the way we do business because we cannot forget that memory. So we looked for something else and what we looked for and what we built a niche for were high-return projects that had problems. So what we went after were initially really two different types. One was a fully distressed model. So they either had financial distress, like some kind of foreclosure situation, or they’re missing payments or some kind of issue somewhere, or they were in some kind of other distress, whether it’s environmental and we just had to cure a water table or whatever. It was a very kind thing that brought us that direction. 

So that typically yielded a lot of retail and industrial properties, which we still specialize in industrial, a little less in retail, but we have today we manage about 85 million more than in industrial. So we’re very active in the industrial space and then the other side of our acquisition model where we found this niche at the time. I don’t even think this exists today. We haven’t seen the opportunities where there was a huge value-add play in zoning changes. Now zoning changes have been this robust process in many jurisdictions, cities, counties, whatever. But we found a niche, especially in southern California and in a handful of western states. So we would buy properties at strategic times when zoning was about to change from either retail to multi-family.  We’ve done a number of those projects or any type of lower use value to higher use value. So we did a handful of those and it was as simple and as complex as fighting through with the city, working through with the planning department, and essentially doubling or tripling the value of the property in a relatively short period of time.