How to Vet a Deal with Jim Pfeifer

Now on this podcast, we’re going to be talking to Jim Pfeiffer a lot of folks are going through the podcast circuit, getting to baseline, right? And I think everybody needs to spend about few months, maybe six months reading books, listen to podcasts, getting the basics down on your drive, to and from work.

Now at some point, you become, you top out, right? And once you get search at the point, need to search to build a community around you. This is what we’ve done here at simple passive cashflow is why we have the retreats. This is why we had the family office, Ohana mastermind, the higher level mastermind group for our accredited passive investors.

But Jim’s going to be talking about we’re gonna have a conversation about vetting deal flow, which I think is very pertinent to a lot of you investors out there. But before we get going with that interview wanted to share a little bit of what we’re working with here. Recently, our group proposed an alliance partnership, to absorb some deal flow from a group of investors that are farming a bunch of.

Let’s call them wholesale leads, very grassroots call-in people, motivated sellers just in mass. We started to look at the arrangement and the potential deals that would come from that and we politely declined no, and here it was the reasoning why. And the reason why we can attract this type of gravity to these types of opportunities is because our group that we do pipeline club we’ve acquired over a billion dollars of assets.

And there’s probably only a few people I know that aren’t on that institutional wall streets stage that have acquired a billion dollars assets under ownership. Not some nonsense where somebody’s been in an LP and a bunch of deals and trying to cherry pick the thousand unit deals, but like a really a billion dollars.

Most people they’re just screwing around with $200 million, $400 million of assets. We have a billion dollars of assets is about 7,000 plus units at this point. But the capital has come from our group over $120- $140 million thus far. Now one of these Daisy chain things where somebody brings in a billion dollars of $40 million capital raise and not being acquired $250 million building.

No, none of that. When we go into deal, we’re taking it over. But, going back to this opportunity to absorb this deal flow, a lot of those types of deals would have been very unvetted deals that it’s the opposite way where we’re heading. What I’m trying to portray and what I want you guys to understand the way this business works is a lot of the deals are controlled by brokers.

Multi-family apartments, commercial, retail, industrial, once you start to get into this bigger scale, it’s becomes on a scale where the small guy cannot compete. You want to keep running your little single family homes, that’s great, but you’re going to be competing with every single mom and pop investor there.

So the way we’ve always seen, as you have to swim upstream, you have to get to that the next best deal. A lot of the brokers there do actually doing their job as opposed in the residential world where these commercial agents, they’re the ones sending flowers to the widowed person who owns the property or building relationships with the families to get the listing so they can sell it to make their commission, but bring it to the top sellers or buyers out there such as us.

And a lot of these deals are just done off market because a lot of these brokers, they don’t really care whether they get 36 million versus 34 million. Really doesn’t mean much again, their commission base, right? It’s just percentage their biggest concern is they want to work with people who can close the deal and is closed, say a billion dollars of deals in the past.

Go figure. These are the types of deals where when you start to bu y deals from a certain seller, you can start to get the additional deal flow from that seller, because as we’ve seen, when you crack into this a treasure trove of seller, They typically all, maybe a handful of these large apartment buildings, which isn’t a bad way of going if you have that operational experience.

But one of the lessons learned I see from these large families is eventually as the saying goes, and I guess it’s not the same, but it’s backed by data or they say 90% of wealthiest families are two to three generations. Most times we’re buying from the folks that have just had it. Their parents, their grandparents had owned these properties, build the critical mass.

And at this point may not be the decaying, but at least the knowledge share and the motivation is decaying. And I’m sure at some point, if they don’t do their estate planning properly, the family will probably come back to earth. From this point, we buy their assets at a discount because they are distressed or they don’t know what it’s worth.

It’s not as valuable to them as it was the generation or two prior to them. But so going back to, what’s the difference between working with some other, these alternative deal flow, more grassroots calling up these guys are just bombarding with yellow letters, calling up sellers, t hat approach is just you start to work with people who are unsophisticated sellers than a lot of those deals fall apart.

There’s a lot of skeletons in the closet. There’s a lot of hair on that. Those types of deals where we specifically like to work in a buy box was very clean financials. There might be some hair on the deal, but at least we know about it as opposed to it’s just more of a riskier type of situation.

Similar to like b uying a deal off of a foreclosure where you don’t even get to visit the property. There’s just a lot of unknowns. Most times these deals, they just don’t pencil for even bridge financing and we’d prefer to go to bigger scale properties. Of course, there’s some deals out there. It was like $450,000 per unit and the average rents, I’m sure we’re not more than 2000, mid 2,000per unit.

I just don’t know how that deal works, think about it. Buying a $450,000 property that rents for $2,000. Oh wait. Maybe some of you guys have an inner California property and yeah. Making fun of you because you probably should unload that the numbers just don’t make sense in that type of stuff.

Especially if your net worth is under $4 or $5 million and as I always say always caveat is catching me doing this. You can do whatever you want. Once you have that much money, you can be in capital preservation. No one should fault me for buying a big primary residence after my network gets to a certain point, right?

After a certain scale become, what do you want to use the money for? But if you’re serious about getting your net worth from a million dollars to $5 to $10 million, there’s a certain way you have to invest and especially if investing for cashflow.

If you guys have any question on this email, the team@simplepassivecashflow.com. Book, a coaching call, where we record the call for other people’s benefit. But I want to get this dialogue out to you guys. And you want you guys to ask to start to ask the good questions. So we stopped skimming the surface, like a lot of podcasts out there, and we start to dig into this type of stuff.

And the only way we’re going to be doing that is through dialogue or unless you guys joined the investor club and come out to Hawaii and hang out with us and build a relationship. With that enjoy the interview and we’ll see you guys next time.

 

 

Hey folks today, we are going to be talking with another sophisticated investor who was also more of a passive investor, right? As you guys know, we don’t have gurus on this podcast because that’s just a waste of time and you guys are tired of all that nonsense as it is so I think of a couple of p recursors here.

Jim Pfeiffer, he’s from LeftField Investors and I think what I like about them is just not another real estate rookie group, where people are trying to get started as general partners and trying to fake it till they make it. It’s just passive investors like our community of passive investors. And the other thing is, we’re going to be just going through this organic conversation of, how does Jim look through deal offerings? I’ve always, started with the numbers myself.

I’m sure you guys have heard this a million times. You look at the reversion cap rate, rent increases per year, what are the economic occupancy as some of the big ones. A lot of this is outlined in the syndication ecourse. You guys can go pick it up on the website. I think it’s in the product section.

And if you guys try it out, you don’t like it, I’ll refund it for you. I’m confident they’re ain’t nothing better for a few hundred bucks for sure. But I’m probably going to take whatever Jim says here and add it to the course too. But I also being like I think this is like a good example of a way to interact with other investors, right?

Sometimes I can get to a point where I may or may not agree with Jim. But there’s something, if I can ask as a question investor of being inquisitive, I think there’s something there that I have a viewpoint that I can see. So I’m going to really try and model how you guys should act in terms of always having an open mind, always be learning, because not everything that Jim believes.

I believe that everything, I believe that Jim believes, but I think it’s cool when you can get two smart guys together and have a conversation about this type of stuff. So you guys are lucky, you guys are being able to be a fly on the wall, but welcome Jim. I appreciate you coming on.

Yeah, no problem. Thanks for having me. I’m excited to have a chat.

Quickly, give us a little background on like when you started investing and then what are you investing in these days? Maybe a little insight and how many deals you’re in just to give people quick back.

Sure. I’m on career number four. I won’t go into all the details, but I was a stock market, investor, mutual funds, all that stuff and my my last career before this, I was a financial advisor and that taught me a lot about money. And once I figured out how money worked, I no longer wanted to invest in the paper assets from the banks and financial institutions are pushing and I realized that real estate was where I wanted to be so I totally transitioned. I did the active stuff. I think like you Lane, I was into turnkey, single family homes, and I thought I’d build up a portfolio of those and then I realized that’s too slow.

I went into multi-family and bought some small multi-family and then I got tired of managing the property managers and then I discovered passive investing.

 

For the last four years I’ve been, investing passively I’m in probably over 40 deals. Over that time, some of them I’m all in, on my own and others, I use a company called tribe vest to do some group investing and that’s how I get into some more deals.

I’m in a lot of different asset classes because one of the things I believe in is diversification, not just by deal, but by market, by operator and by asset class. So I’m in multifamily, self storage, mobile homes some industrial stuff and a little bit of commercial.

Before we move on, since you have an insight into the financial planner world industry, for those of the people that are new to the group, and still haven’t really dispelled the wizard of Oz effect behind the curtain. Any insights there you can give, like how financial planners really work?

I think most of them are well-intentioned and they know their product. But that’s all they know, and those products are marketed to them by the companies that they work for and they’re paid to sell those products. I found that at the end of my financial advising career, mostly I always believed that I wanted to recommend to my clients the same things I was doing.

And I was investing in real estate and speculating in the paper assets of the stock market. I had a hard time being true to myself because I one, a financial advisor they won’t recommend real estate because they’re not licensed for it. They also won’t recommend real estate because they don’t get paid for it.

And the third reason they won’t recommend it is because they don’t know anything about it. They’re stuck in their world, which is paper assets that financial institutions are pushing toward to them. What I learned, you need to find a good financial advisor. You need someone who is recommended by somebody else.

And who understands that you’re going to be doing real estate and that they need to support that and they need to, put their commission second and serving you first. And that’s hard to find someone like that. But when you find someone like that, then you can still have them help you with insurance or even your 401k or any of that, any of this stuff that you want to be in that world. But they’ll also support your real estate by making sure that your other assets are working together with you real estate, but that’s a hard person to find.

I personally don’t have any paper assets, but as a man who’s in, seeing both worlds, do you own any paper assets anymore or is it all alternatives?

It’s moving more alternative and I still have some paper assets because I have several different retirement accounts and so I still keep a little bit in there. But mostly when I do anything, that’s the paper assets, stock market. I want it to be something that’s paying dividends and part of the reason it’s more liquid.

So I think having some investments in the market might make sense because that stuff I can get in and out of if I need to and most of the real estate, it’s so illiquid that’s why I still have a small foot in the door. We call the alternative stuff left field because my former financial advising colleagues would say I’m way out in left field when I told them about the alternative stuff that I do. And some of our people, we call them center fielders where they have 50- 50 in left field and 50% in the market but I’m probably 90% in left field.

Yeah I’m a hundred percent left-field and this is my personality. The reason I asked is I always try and ask like smart people, what they’re doing and I get it. Like some people they want to play more right field or center field. If you want to call it, I’m cool with that. I think I’ll eventually come back to center field. Once my net worth hits a certain magic number, probably eight figures and above. I want to start to do IUL that type of stuff. At this point in time, that’s where I’m at, but it’s cool to hear your input and I think we are aligned with that.

Absolutely.

Maybe we’ll keep it in terms of like multifamily investing, because that’s just what I know the most. You grab a pitch deck or, like how are you vetting a deal? What are you start off? What is the first thing? Cause a lot of new investors, like it’s overwhelming, right? You get a pitch deck. It’s wow. It was like, 30, 40 pages, or maybe it’s only three pages. What do you start? Like, how do you break things down?

That’s a great question. And everyone does it differently, and my thing is I’m a passive investor, so I don’t want to re underwrite the deal and so we’ve already passed the part where I’ve pre-screened the operator. So I assume that the work I’ve put into getting to know the operator, that they are sending a deal that probably makes sense and probably fits within my parameters. So then what I want to do is look at some of the metrics that I like and to do that. We have, I think you have this too. We have a deal analyzer 30 or 40 metrics, if the sponsor gives them to us from the pitch deck.

Then, basically I just look at those and the Excel spreadsheet turns it red if it doesn’t fit within our parameters and green, if it does. And I use the red ones I just pick those out and I will ask the sponsor questions from that. And that helps me figure out, okay, is the sponsor going to answer me in a timely fashion?

Do they know their deal? Do they have the answer is at the, on the tip of their tongue or do they have to go ask somebody else and just gives me a second kind of opinion on the sponsor. So that’s the sponsor, not the deal. Then for the deal, aside from the red flags, what I’ll look at are a few of my kind of favorite metrics and I can go over those if you’d like.

Yeah maybe t here’s a bit of a chicken and egg thing here, right? Before you even get presented a deal, which you can go down your checklist. How did you get to know them? How did you get their name in the first place? Like maybe you’ve get there by referral. Like how you’re getting these people in the first place?

The sponsors? The best place I think is your network right? Using people that, can trust or refer you to who they are familiar with. So that’s one way use your community. So for instance, our left-field investors, again, we have a website that has a long list of sponsors, but those aren’t necessarily our favorite sponsors.

Those are just people we might’ve had conversations with, but if you’re inside a community, you can talk to other people, make sure that they have relationship. And that they, they’ve actually invested with them as we were talking offline earlier. But just make sure that and trust, at least the person that’s referring you.

I think that’s a huge first step. Then, you got to talk to them, I think and they might all say the same thing. A lot of them are salespeople, but you can get a sense of a person having a conversation. We have a list of questions that we ask our sponsors, just to make sure that they have all the information and they’re sharing it with us.

It’s hard in a half hour, an hour phone call to really get that from them, but just to see what kind of person are they and talk to them a little bit and read and hear what they say, go to their website. You’ll get some basic information, read a book that they wrote, listen to their podcast.

And they’re going to tell you who they are, right. Again, you have to filter through the selling part of it, because I think there’s a lot of operators out there and some of them are excellent marketers, and some of them are excellent operators and maybe some are both, but when you want to find is the excellent operators and not the excellent marketers.

So talk to others who have invested with them as well. I prefer a sponsor with some experience. I don’t eliminate you if you don’t have the experience, but if you have 10 or 15 years that you’ve been doing this, that gives me some confidence. I ask how many exits do you have? How many deals have you gone full cycle and let me see the numbers on them?

Another one that I like is how many current investors are in multiple deals or how many repeat investors do you have? Because that tells you something. If you have people that are investing more than once with the same operator.

So you going down this list, something that occurred to me when you were just talking about, like to have a list is a great idea because I think this is where it’s hard, once you’ve danced around on this a little bit, like you get more experienced, you understand what the questions are. And really more importantly, like what is the reason why of the question behind the actual question. This is very similar to like, when we would have new investors go talk to property managers, we would send them to an entirely different market that they didn’t want to botch the relationships they could learn.

Ride the bike with training wheels first so that they could learn the lingo, have the person talking on the other end, educate them too in the process and then go talk to the people that they want. So that can be another tip in the situation for you guys because we talk a lot about this in the syndication secrets part of the ecourse especially as a non-accredited investor or a lower net worth accredited investor under like a million.

You can get yourself discredited sometimes by asking 21 freaking question, game, question train to some of these guys, especially you’re talking to the principal of the company. Which is what’s going to happen when you’re working with more of a middle market, new market operator or a newbie when y ou’re talking to the principal. If you’re talking to some sales guys, they’ll talk to you all day long. That’s just part of their role and responsibility. I think that’s like we got to get people at the baseline first. That really helps them actually learn, have confidence over the phone cause not a lot of people talk on the phone.

That’s absolutely true. And I think the trying to figure out the sponsor is a big part of this and getting to where you have confidence in them and then it just makes everything a lot easier. You mentioned, asking questions for me, if they’re not willing to answer my questions, there’s enough sponsors that I’m going to move on to the next one, because I’m not asking the 20 questions I’m asking maybe four or five targeted questions, but I’ve had situations before where perhaps the sponsor is short with the answers or doesn’t give me full information.

And for me, that’s probably enough to move on because they’re asking me to send them a wire for 50 or a hundred thousand dollars and, they’re going to hold my money for five to 10 years. So I don’t think it’s unreasonable for them to answer all of my questions. So I’m pretty strong on, I’m going to ask you questions and you can choose to answer or not answer, but if you don’t, I’m probably moving on.

And I like how you said that it’s funny to give a mouse, a cookie, it’s going to happen. You give it an investor, a list of 21 freaking question. They’re going to ask all 21 freaking question, unless you make it explicit. Don’t ask all these questions. Pick a few that you like and just use it as a framework to starta conversation.

I’ve had people, I think people doing this all different ways, like the 21 question guy, which sometimes they don’t like to work with those kinds of people for obvious reasons. But then there’s some people that are always on the opposite expectation. They may ask one question, but they’re like, they’re more like, oh, they want to get to know you as a person.

So I think that’s great, the hard thing that you see a lot is like a lot of these guys are trained professionals. They’re salespeople, right? They’re trying to sell you on a deal. So of course they’re going to be very good at that.

We mentioned before, you’re trying to figure out, okay, is this a salesman or is this an operator or both? You want to make sure that you’re investing with someone who isn’t just good at sales, but they’re actually good at running an asset, managing an asset and that’s the most important part. For me, a lot of people say you can have a good sponsor can do it have an average deal, and that’s better than an average sponsor with a good deal.

Because even if it’s a good deal on average or bad sponsor can contain it, right? So you really want to make sure that the sponsor is someone that you want to invest with and someone that you want to have a partnership for a long time. And one of the things I check on that is, I expect a fairly, q uick response because the only way to gauge if this person is doing what they’re saying, they’re going to do is by the early communications you have with them. And there’s no other way to gauge whether they’re legit or not. So I expect that, they’re going to be thorough and professional and respond in a timely manner.

And if they don’t, I know that’s just going to frustrate me after because if they don’t respond to me when they don’t have my money yet, h ow are they going to respond when they have my money? And I know I’m the kind of person, if I have a question, I don’t have a lot of them, but if I have a question I’m going to want you to respond to me within a reasonable amount of time.

So those are some of the checks I do just to make sure that I’m compatible. Cause there’s some really great sponsors out there that I probably won’t invest with because we don’t see eye to eye on some of those things and that doesn’t mean that they’re bad. They just might not be good for me.

Just for some people to understand the world of syndications a little bit just because somebody has a logo on a website doesn’t mean, they’re a sponsor, but there are different levels of sponsors. And I’ll define that as more on the institutional side, you have people that have been around for more than five, 10 years past the last recession, 2018, like these are your more institutional operators.

You’re going to have higher splits. Maybe not as good deals where you might be able to double your money in 10 years, but there’s more of a track record there and they have higher fees were split for passive investors. And then on the other end, you have complete newbies who took a bootcamp and it’s still trying to raise money at $25,000 at a time.

Probably people you don’t want to interact with, but I guess Jim, like maybe talk us about that spectrum and your thoughts. Do you like to invest in when institutional guys are in the middle or are you willing to roll the dice at some newbie? Yeah, I’d prefer not to to have someone brand new.

I also, I sometimes avoid people that are training other syndicators because I think what happens there is you start a program where you’re going to train a bunch of other syndicators and then that’s really your boots on the ground is going to bring you a bunch of deals, right?

Whoever that syndicator is. And so then you’re partnering with five different people on all these different deals and that just makes me a little nervous. I think that experience is really important. Those are the kinds of syndicators that probably don’t even advertise, like some of my favorite syndicators, they don’t have a podcast.

They don’t have a website other than just a basic website, because they have been around long enough that they have all the investors they need. And you’re just lucky to be a new investor with them. So if you can find those, I think those are the perfect ones to be, but I also don’t want to exclude someone who’s brand new just because they’re new and they might be new to syndication, but maybe they been in real estate, their whole career.

They’re just switching from one model to another. I think you can’t just write anybody off, but for me, the things I’m looking for are experience, deal exits and, quality communication skills. If they happen to have a podcast or happen to have a real salesy website, that’s okay as long as they have the other stuff.

For the new people, I want them to have some kind of financial experience, it’d be great if they were affiliated or partnered with people who have done this before. The one biggest mistake I ever made, I think in syndications, was investing with someone who is doing something completely new. They’re turnkey company and that’s all they knew, but it was in Dallas and Dallas, the market went past them and they couldn’t get any good deals to do turnkey anymore. So they decided they were going to do a commercial office. And it was a complete disaster. And the reason is because they didn’t have any experience in that.

So what I should have done is either one, not invest with them when they’re doing a completely different asset class, or I should have asked, Hey, who on your team has experienced on office space? And that would have given me some confidence. I see some syndicators now are switching from multifamily to self storage.

And if they’re doing that and they’re hiring a self storage expert, then that’s not a new asset class for them because they’re hiring someone to manage that for them. But if they just said, Hey, I had success in multi-family. Now I’m going to syndicate self storage. Then I might have a problem with that. I don’t know if that makes sense.

In your defense there, I think in that multiple situations. At least you trusted the operator, right? Like it’s not, you’re vetting two things here. Is the operator honest and are they competent? Now, they may or may not been a competent right. Have having an experience at an asset class, but they have shown a true track record to not steal people’s money in the past with the other business, which you would think carries forward. Ultimately, you have to take some chances out there, right? Unless you have a huge network already of people you trust of organic, pure passive investors.

So I’ve invested with people in the past and got burned. You gotta take some chances, I guess what I’m saying. You got to try, you got to kiss a few frogs.

Yeah I agree. And I’ve invested with new people before and I don’t want to discourage that, but I also am a lot slower. If someone’s been around for 15 years and they have 30 exits and they’re talking to me about all these deals, they’ve exited, I might talk to them for a half hour and invest in the first deal. They show me. But if somebody, only been around for two years, does it or five years even, and has no exits and it’s only in five or six deals.

It may take three conversations and they might have to send me two or three deals that I don’t invest in before I invest in that last one. And that new person also probably I will need a pretty solid referral from someone that I know knows what they’re talking about. So that’s how I look at that. It’s a scale of how much evaluation do I do on somebody the longer your track record probably a lower amount of due diligence.

Yeah. Throw a coin in the game, see what happens. And I also do the same thing with newer operators. And it’s funny, these guys always come off cause they’re probably desperate for some money.

They’re always coming off as Hey, we got a deal now. Hey buddy. If you don’t know me Lane simple passive cashflow, like I don’t sleep with people on this first date. I want to say, I’m going to sit. I have controls on myself, right? I’m going to sit on your email list for six months.

I’m going to watch two or three deals to go by and then I’m like, Get ready to hit a pitch if I do it at that point. Or if I can find other people that have invested with you in the past, but I do the same thing and I think it’s very similar. We all have these kinds of these rules in place, but it’s hard to tease these out of each other. Talk to each other more than 20 minutes and get to know each other.

You’re right. And the other thing I like to do that is new, I didn’t use to do this but someone recommended it is once I invest with somebody, I’m going to try to wait a year before I recommend them to anybody or before I invest with them again.

And that just lets everything because these are such a illiquid investments. It helps to just see how they’re doing right. Are they sending me reports like they said they would, are they sending me distributions like they said they would? Is the deal planning out like they said it would? Because sometimes you get excited because you meet somebody and they seem like they have it all figured out and they’re really great.

And they have, four deals in the first four months. And now all of a sudden you’re four deals in and you find out that they don’t communicate well or, all of their K1s come two months late or whatever it is. Then you’re stuck on now I did four deals with them.

The other thing that I do is when I invest with a new syndicator, I’m going in at the minimum, or it fell even cut the minimum. I’ll go with the lower minimum because I just want to, I want to dip my toe in and then once I am comfortable and have seen how you operate then in the other deals, I’ll put more in, but first one I’m always at the minimum.

Yeah. And you raise a point there, and this is more speaking towards passes, connecting with other passes. Some passes come in a little aggressively talking to other passive investors and they’re like, oh, who do you use? We just spent five minutes drinking a beer together. We’re best buds now. Who you use?

So that partly has to do with it. You probably are not comfortable because maybe they don’t have that proof of concept. And I think most of it, want to hear your thoughts on this Jim, but to me, I think people spend a lot of time and energy to learn and put in testaments, which is like putting their own family’s capital on the line, taking a risk.

You still want to give that away to some random person, they just met. Like I’ve never seen passive investors get with each other, even if they have built that organic relationship over time and just say, all right, boom, here’s my spreadsheet. Where’s yours? Show me yours, I’ll show you mine a thing.

Yeah. I agree with that. I think real estate, especially in the syndication space and in the active space, people are willing to share information and not feel like I’m competing with you, even people who are syndicators can work together, but at the same token, like you said, I’m not just going to say, Hey, here’s my list of sponsors that I’ve invested with to somebody I don’t know yet, because I’m not trying to protect it and not share, but I don’t even know you yet.

So do I want to send some Yahoo to one of my favorite syndicators who’s gonna call and do something that, that may reflect poorly on me. Number one, number two, it’s also, like you said, you spend a lot of time and effort talking to these syndicators and developing these relationships so those are things to be protected.

Then once I have a relationship with someone else who’s passive, , we have some groups that are super tight and even there we share eventually, but once you really get to know each other.

You invest in the relationship.

Exactly. And then you can share but even at that point, I’m not sending you, my list of all the sponsors I’ve ever invested with because that it just doesn’t really make sense. I think part of it is the discovery you get a lot of new people and it’s just like drinking out of a fire hose.

If you say here’s 10 syndicators, go invest with all of them. You know what I say? Some of my sponsors are that I like are on this website, others, you can find on your own, but go talk to some of these guys and just get used to talking to some syndicators. And then we can talk about, who my favorites are and which ones you might want to do stuff with.

It’s all in that discovery and learning. Learning to train your BS detector is I call it.

Exactly.

Yeah. I think, and I talk a lot about like givers and takers. I think there’s a book on this. I think when you pose going guns, ablazing and talk, Hey, Jim, who do you work with? You tip yourself off to sophisticated people. You’re just some guy who is not really into the relationship and you may not be one of those people who reciprocate back. You’re just one of these guys who runs around with throwing out business cards. An inch deep, a mile wide, right? You want to be the complete opposite inch wide mile deep.

That’s the kind of person you want to find and connect with. That’s the whole purpose of these communities is to find people that you can connect with and they’re going to give something back. It doesn’t always have to be reciprocal a hundred percent, but if I’m going to tell you who my three favorite sponsors are, then, I’m hoping you have some sponsors you’ll share back with me, or if you don’t have any yet, then go out and do some research, find some. And then let’s talk about the ones that you found and compare them to the ones that I found.

And so there’s like a give and take. You don’t want to be in one of those relationships where someone’s just always doing the taking, and then you feel like you’re taken advantage of.

By coming to me and being like that guns, a blazing person you’ve demonstrated to me that you do this a lot and the person that you’re going to give me your three people is just going to be what you heard from the other guy in the first five minutes of that conversation too.

If you want to tip people off that you’re the most I don’t know, you’re just not the guy that you’re interacting with. Do that, please. Let us know early who you are.

Anything like real high level to any strange things you do that kind of go to a stent of kind of verifying or just before you invest, that may be different than anything everybody’s heard out there.

We talked about it a little bit. This always sounds shallow when I say it, but really I like to test their response time. If I’m going to send you an email and I don’t get a response within 24 hours, that says a lot to me. Or if I ask you questions about a deal and you say, Hey, I just did a webinar.

Go, listen go watch the webinar. Okay. I’ll I will go watch the webinar, I’m asking you specific questions that I want specific answers to. So those are just some, I guess they’re tests that I do because it’s so hard to determine if an operator knows what they’re doing or if they know the deal and you’re taking a huge chance with a huge amount of money.

So for me it’s about the little things, because I get super frustrated if people aren’t going to communicate with me in a normal amount of time, that’s why I got out my turnkey properties cause the property managers were unresponsive. So I don’t want to get into the same cycle here. So that’s my main thing is I send emails or I’ll give a call to somebody and it’s a test.

Are you going to respond? How quickly are you going to respond and how thorough? So again, when you’re talking about the amounts of money that we’re investing, that kind of stuff sounds like that’s really your test? That’s it, right. If you’re going to communicate with me in a way that I expect, then I know we’re gonna probably have a good business relationship. But if you don’t communicate with me how I expect, I know that I’m not going to be dissatisfied no matter what the returns you send to me.

I think that’s definitely a good point there too. Punctuality kind of shows the professionalism and how they run their shop. I will say to that for those of you guys listening. Cause there are some non-accredited investors actually listened to the show that there may be a little bit paradigm here.

Jim has probably already filled out a questionnaire. The customer service investor relations staff knows what type of investor and he’s seen he’s a serious investor. You might be a non-accredited investor or just a shy under a million half. I don’t definitely do the 21 questions, but they may not come to you immediately with a response.

They might have shit going on, so I dunno, I always see it from two sides, right? I sit on the other side of the seat too and part of it is, I don’t know, it, it is what it is. But it’s hard, right? This is what makes it so hard is because there’s not many signals, two signals.

The website is just a binary thing is they have it, they’re not, is it just looked like garbage, most of them are great. Everybody’s got a logo like it, there’s not many like true signals that you can use. It’s very difficult.

That’s why I use those, but, I don’t have those aren’t hard solid rules. If someone comes back to me in 48 hours instead of 24, Hey, sorry. It took me so long to get back to you. Something was going on, it completely fine. Or if someone comes back to me more than 24 hours and it’s someone I really want to do invest with because they come highly recommended, then I’m probably going to be like, oh, I won’t count it this time, but if I’m on the fence or if it’s somebody new or, it’s just another layer of check for me.

And so I don’t rely on any one thing, but those are just some of the indicators that say, Hey, this might not be what I’m looking for. And everybody, and I get it, everyone gets busy and all that stuff. And so you have to make sure that the parameters you’re setting aren’t too strict in one sense. But in the other sense there’s a ton of syndicators out there. So if for whatever reason, I don’t click with one of them it’s not the end of the world for them. It’s not the end of the world for me. I move on.

And here’s another way of looking at it too, folks. Like when you work with more of an institutional operator, they’re likely to have an investor relations staff and that’s their job, to follow up in a timely manner, maybe 24 to 48 hours. But when you’re working with a smaller outfit that maybe you don’t want to work with me, they’re just a complete newbie. The principal will be answering the phone calls and emails and that’s not, you want. What’s the important stuff? What is the stuff that actually like indicating of future success is not how much, how quickly they invest.

They pick up the investor’s phone call or email. I guess if you think about who’s the customers right. In the situation is it the investors or is it the tenants at the freaking property? I don’t know. I’m just putting it out there. Like I think it depends. I don’t know. What’s your thoughts on that Jim versus do you want to see systems and processes with the institution or would you rather have the organic art as a smaller operator? Cause it’s two paradigms, right?

Yeah, it is. It all depends on the relationship, I think. I don’t really care which one of those you are, but if you’re the small independent operator and the principal is picking up the phone and answering the emails, that’s great.

But at some point you’re going to grow and I need to have somebody who is willing and able to hire somebody to pick up the slack and take care of the investors. You’re shifting as you grow. So if you’re just starting out and you check all the boxes, I’m like, okay, I’m in.

And then you start growing and then your communication becomes worse and you aren’t willing to invest in your own business that tells me something right. And that’s going to be discouraging. So I’m not really as concerned with, are they a small operator or a big operator I’m concerned with, do you have the appropriate tools in place or procedures in place to make sure that you’re running your business effectively? And I would certainly rather you take care of the tenants and make sure that’s running as it should, if there’s an emergency or something, then responding to an email of mine, but you should have procedures in place so that if you’re growing like that, that any, and the principal is out in the field or something that they should have a way to communicate to you.

Like, Hey, I’m out, I’ll get back to you. I have an assistant or I’m going to hire an investor relations person. So I think that’s important too, to make sure you understand what they’re capable of and what the staff is and are they willing to, as they grow their staff so that they can take care all of their customers, whether it’s the tenants or the investors.

Because the signal is, this person is not a good business operator . So how are they in operating their business of X amount of units on the other side of the house?

Exactly.

I think this is just more personal, right? Like me personally, I like to feel like I’m digging a little bit for the diamonds in the rough. I will like to go to like more introverted operators that a good are operating, but are horrible at marketing and maybe that’s the reason why I do what I do. But I like to look for like really crappy PDF pitch decks, and really crap, no website, no presence at all. And I like to dig and I like to find those current investors that they invest with and verify tracker with that way.

Whereas I don’t like some of these operators, like when I go to the website and I look at their team, this person just does their internet marketing. This person just writes articles like who is the freaking operator of this thing that actually does anything?

And that’s just like a different point of view on like something in my head. I’m just thinking about a certain situation of an operator like this but t hat’s just how I am. That’s what I want.

I get it. I have one of my favorite operators now is someone who, he has a website and and he’s not very sophisticated, but he knows his market. He knows his asset class and he does a fantastic job at running his real estate business. He’s not so good at the other stuff. Like finding new investors, marketing, a flashy website. And, you know what, like you said, I’d prefer him to someone who’s really good at having a website or really good at podcasting. I want someone who’s really good at operating and then they can learn the rest of the stuff.

He can hire people as he grows to, make all his documents look shiny, or his website improves as he becomes more, professional. He’s a professional manager of the asset and that’s what I want. That comes in a shiny package, fine. If it comes in a dull, ugly, weird looking package, fine. If I can dig down and make sure it’s a good operator, that’s where I want to be.

Just like the turnkey provider stuff, right in that world, you and I have left that far behind, but people don’t know there’s marketers, they don’t do anything. They just set you up with the turnkey provider or the operator and in a way they’re same thing in this world.

There’s syndicators that just sponsor a deal. Which is personally I think is illegal based on what my attorney’s telling me. You cannot be a non-sponsored based compensation being a part of the GP and not doing anything, even though it happens a lot of times. But like I, as an investor and I think you’re like this too.

Like we like that personal thing, we to like that grass you’ve probably shop at the farmer’s market like I do. You want to know where your fruits and vegetables come from, but you guys, this thing, you guys may not care about that. You may want to go board, skew it more on the side of a more mature institutional operator.

But I’m just pointing that spectrum out for folks. Yeah, that absolutely makes sense. You gotta become comfortable with who you’re investing with, however that is, and it’s got to match your outlook. And that’s why there’s probably so many syndicators. There might be some people, the only people they want to deal with is, slick marketing website and an awesome podcast and they’re in.

Maybe that’ll work out for them, but it sounds like we’re aligned that we want someone who’s operator first and that seems to make the most sense to me, but it’s all got to make sense to you as the investor.

Yeah, I think you and I aren’t on the extreme, right? The extreme would be like, I know some guys that will invest in private money lending deals, which I would never do because it’s not an institutional asset.

The returns aren’t that great it’s ordinary income, but they tell me, you know what, definitely like I trust this guy and that’s all that really matters to me. And I know personally and it’s worked in the past. I think that’s the extreme. We’re more on the site left center or something like that.

I would agree with that.

But any other last parting words Jim any last tips and then we can get your contact information for people to get ahold of you.

I would say for those people that are new to this or just getting into it or trying to figure it out, it is daunting to send that first wire for 50,000 or a hundred thousand dollars. And that’s why use your network, use your community, whether it’s simple, passive cashflow or left-field investors doesn’t matter or different community altogether. I think working together in this is super helpful because it’s not like the stock market where you can just go in and buyand sell, when anything goes bad or wrong.

These are very illiquid investments. So doing some due diligence up front, it’s passive investing, but it’s not passive until you send the wire. Everything before that, analyzing the sponsor, analyzing the market, the asset class, the deal, all that is active and then you get to the passive stuff. If you want to contact me, you can go to, www.leftfield investors.com or you can send me an email at Jim@leftfieldinvestors.com. So I think take action, get in the deal, see how it goes, but be active until the passive starts.