Choosing The Right Investment Team: Know, Like, and Trust – Steven Pesavento Transcription:
Steven Pesavento 00:01
Investors. Welcome back to the Investor Mindset podcast. I'm your host, Stephen Pesavento. And each week, we share mindset tips, and real estate investing strategies to help you take your business and your investment portfolio to the next level. And today, we're gonna be talking about a topic that all of you leaders and business owners know, through and through is the critical piece of creating success. And that comes down to the team that you build and the team that you choose to invest with. So we're gonna get into that and more in today's episode.
Steven Pesavento 00:37
This is the Investor Mindset podcast and I'm Steven Pesavento. For as long as I can remember, I've been obsessed with understanding how we can think better, how we can be better, and how we can do better. And each episode we explore lessons on motivation and mindset for the most successful real estate investors and entrepreneurs in the nation.
Steven Pesavento 01:04
Passive investing is a critical strategy that can help build wealth for you and your family. And if you're interested in investing alongside me personally in the same investment opportunities that I invest in, and investing directly with VonFinch, in this phenomenal team that we've built, I encourage you to head over to vonfinch.com/invest. So that you can register to get access to our investor network, and have an opportunity to talk with me or a member of our team, where we can dive in and be able to help you better understand what opportunities are available that match your specific investment criteria, and really be able to be a resource about pointing out how you can save money on taxes, learn more about the types of investments that best fit your strategy, and just generally build a better relationship with you. So you can head over to vonfinch.com/invest, to get involved.
Steven Pesavento 01:59
So let's dive into it. Let's talk a little bit about one of the most important pieces of investing success. And that comes down to the team that you build. As many of you who are business owners and have our founders, you may have started business based around you based around your skill based around your drive, your ability to go out and make things happen. There's many small business owners that are making piles and piles of money. And many of those businesses, they started primarily with an individual founder entrepreneur, who's in that business running an operating, really driving success, you pull that business owner out of that business, the business does not continue to succeed. And as a result, many of those business owners who really take it to the next level, are able to understand this concept of building a team. Maybe many of you have been like me where you've built teams that have succeeded, you build teams that have not, and you've learned some lessons along the way. So I want to share some of those lessons about building a team with in the realm and within the conversation of why it's critical to have a really powerful team, when you're investing into real estate because real estate, especially commercial real estate is simply just buying a business and running that business more efficiently effectively than the next guy.
Steven Pesavento 03:20
So when it comes down to building a team, of course, it really comes down to who is the leader, the manager, the visionary, the person who's actually pulling those different pieces together on that team that in the real estate investing world is often called the lead sponsor, you might call that person a managing principle, you might call that person, a founder, a CEO, whatever that role is, in that business on that team, that person who is responsible for setting the vision for going out and understanding what opportunities are available in the marketplace. And being able to pull a group of people around them to be able to execute. Second core piece is who's going to actually come down to executing that vision and making it happen in small teams, often that's a founder, owner or founder manager who's playing part of that key role of of being able to take that expertise, those relationships, those skill sets, and be able to go and execute and bring those to that team on the ground to be able to actually deliver and create a phenomenal product and phenomenal experience. So in the investment world, you'll often see this role is an asset manager. It's a Chief Investment Officer. It's a acquisitions manager. It is a investor sales associate or investor relationship, or investor relations manager. These are some different roles that you often see that are coming down to actually focus on the execution of what's happening on a daily basis. And so the benefit of investing with a large team is typically that those responsibilities are distributed. They're distributed across multiple different people who have expertise and disciplines in those different areas. As, and they're able to bring that experience that expertise to the table for that team.
Steven Pesavento 05:07
When investing in passive real estate syndications and funds, the most important piece of the investment decision comes down to who you're investing with. Many people will gripe over the individual investment, they may want to only invest in single deals, because they want to look at and make those individual decisions. And I'll talk about the pros and cons of that in a second. And others may think, hey, well, I only want to be investing in this market or only believe in this opportunity. And that is all good. But at the end of the day, what you're really investing in is you're investing in a sponsor, you're investing in a team, you're investing in a group of individuals who is going to go out and buy, operate and manage that real estate in partnership with you. And truly, on your behalf. The wealthiest individuals have been leveraging syndication and GP LP relationships, for decades, centuries, even to have other people go and work on their behalf, bringing their expertise and executing them, in order to help create and preserve that wealth that everyone is looking to grow, or to be able to create some great income and cash flow off. And what it comes down to, is the team when when you're looking at it comes down to ensuring that you trust them, right that know like and trust factor is number one, in my book, because everything that I'm about to share is really simply enforcing that know like and trust factor. So I always encourage people to spend some time diving into content, reading articles, or media pieces, or examples of past opportunities to understand that thought process, that investment thesis, that belief system, and even to understand the evolution of that belief system, and to see that they are changing the way that they think, depending on the market that's at hand, so that they're not locked in a set of beliefs that worked 10 years ago, but no longer work today. So it's critical to have that know, like and trust factor as the number one thing I always recommend, if you don't like somebody, you probably should invest with them. Because at the end of the day, they're going to be making decisions on your behalf with every single investment dollar that you invest with them. So the second piece is, of course, comes down to that experience, this is only furthering that trust factor is what is their experience directly in the individual markets that you're looking or that they will be buying in, what is the experience factor when it comes to operating and managing those individual assets, selecting those individual assets going and finding opportunities to get access to assets that other people just would not have access to? And what is their track record of being able to deliver the type of returns that they've been able to project for you as an investor. So you have to know like and trust them. You want to know what their track record is. And you want to know who else is key at making decisions on those individual assets or in the funds that you're going to be investing in? So who are those individual team members? Or what are those skill sets that they have identified as being key to success when it comes to investing? That doesn't mean you need to know every single person on the team? I would I would bet that 99% of the time you're not going to but who are some of those key leaders, those thought leaders, those people that are within the company that bring their experience to the table in order to in help ensure that the investment goes as planned and help reduce risk on an individual basis. So
Steven Pesavento 09:00
are they building up a stable of great people that around them, those people could include employees could include employees as executives could include employees as as administrative staff to help support and ensure that communication is effective, it could include the experts or professionals such as accountants, and lawyers that are going to be helping supporting on a regular basis. Some of those professionals might include the property managers that are going to actually execute and manage that property on a regular basis. Or in some cases, it might be the individual operations teams that that sponsor or fund manager is selecting and hiring in order to execute that job on behalf of the investors. Right so the team and those professionals that are underneath that key leader is a critical piece of the equation. Now the number two People are those managing principals who is the managing principal who is in that decision making bucket where they can replace those professionals with other professionals? And what is their experience? managing teams, hiring teams bringing on great people? And are they somebody who has the right belief system to go out and recruit people who are truly smarter and have a better experience in that specific niche area that individual employee or team member or professional is responsible for managing one issue that I've seen from time to time when working with different individuals partners, while working for different employers, or bosses. Prior to moving into this space, while I was working in management consulting, one of the big issues that I often saw was that some of these leaders had an ego. And they didn't want people who are smarter than them around them, they wanted to be the smartest person in the room. Now, personally, I think that's silly. I want to be the dumbest person in every room that I'm in, because that means that I'm hiring and bringing on great people around me who I believe in and trust their ability. And by having many of those different people advisors alongside those employees, they bring in those years of experience going through different experiences, which really leads into the next key pieces. What is that experience level in going through different economic cycles when it comes to real estate, in particular, when it comes to finance, it's critical that the team has experienced changes in the economy. Now, many of us experienced the changes in the economy that happened during the COVID pandemic during the early days and of the late times, and there's some great opportunities to further understand the belief system, how were they operating? Were they foot on the gas in March of 2020? Or do they pull off the gas and assess what's happening within the current market and within the system, and do those beliefs on how they handle that situation matchup alongside yours personally, I took my foot off the gas. And I looked at what was happening in the market. And because of previous experience going through market cycles, and seeing interest rates change, and understanding from great advisors who have lost 10s of millions of dollars, making poor choices, I listen to their advisement and their focus was cash in the business's hands to be able to make those key decisions in order to support all the other investments that you have is key. So we chose to sell off a couple assets, to be able to have a little bit larger reserve from a management perspective. And that allowed us to really be able to be nimble, and frankly, to be able to sleep at night knowing that we had enough reserves on each individual property. So that's the fifth and final thing that I want to really talk about here is that there is an alignment of values with you as an individual investor with that team. Now some of these values might be aspirational for you, because perhaps you tend to be somebody who
Steven Pesavento 13:13
is looking to go and partner with great sponsors to invest as an LP with great sponsors. And you might have some fear around that. And they happen to have a lot of experience. And so from an aspirational standpoint, you're stepping out of your comfort zone in order to go and do that that may be okay. But it's important to understand is somebody that you're investing with, do they have the same look and view of the economy in the world, are they going to make those decisions with your dollars that are invested, the way that you would make them or more importantly, are the way that they're going to make those decisions going to leave you feeling comfortable with your decision to invest or uncomfortable. Because at the end of the day, what I find is that, you know, you want to have that know, like and trust factor, you want to have that experience and that track record of success, going through many different types of market cycles, while also having a phenomenal team. And that team is made up of different individuals with different experiences that collectively allow the team to really execute well, alongside some great advisors who have been through that and have a vested interest, either personally or professionally, in that team success, therefore, binding them and their advisement being knowing that those advisors are going to be there. And then of course, finally coming down to those values. Are these people that believe what I believe? Do they care about the things I care about? Are they interested in making an impact from a charity perspective and the type of charities that I care about? And are they going to be a great shepherd of my money and doing good in the world while being able to create the outcome that I'm actually looking for? So because of all those things, I think It's critical that you sit down and really understand who it is that you're choosing to invest with, and then build that know, like and trust factor. So how can you do that? How can you actually go about understanding who people are and what they're about? Well, one key way is, of course, dive into lots of content that those individuals have put out in today's day and age sponsors or operators who are not putting out content, and do not have any type of thought leadership, maybe individuals that you might question, well, where's their experience, really, now? Sure, there's people who are fully focused on executing and they're great at that piece, and they, they don't really share their views outwardly. So in those cases, then it's really important that you have an opportunity to hear from them, you might hear from them on a platform with a partner of theirs, you might hear from them in a one on one conversation, where you're getting that opportunity to connect with key leadership, maybe you're connecting with an investor relations manager or somebody on the team who is out there to carry the message to be a shepherd of the beliefs and values of that team and to go out and really vet the individual investors to make sure they're a good fit. Because when you're partnering with someone for three 510 years, it's important that there's an alignment there. So oftentimes, great teams will have either a Managing Principal there as a gatekeeper, or they'll have an investor relations manager, who's there to make sure that there's an alignment, and that you can get that information that you need. And they can really be a great resource to help you continue to build that trust with them. Now you can look at their individual deals that they're doing, and you can understand how they think about these things, right. Depending on the timing in the market, different sponsors will look at things differently, right. And if you're a passive investor, like most passive investors, you're probably not someone who's diving into the underwriting or going and looking at the costar report. And really having that knowledge to understand is this deal more conservative than this deal over here, it's pretty hard for you as a passive investor to know that because really one of the benefits that you're hiring that sponsor and and partnering with that operator is to come with that experience and knowledge to be able to look at something and say, I see an opportunity here that is not seen everywhere. Because one of the big advantages of real estate, of course, is that it's an inefficient market. What that means is that not all the information is publicly available. And you have the opportunity as a sponsor, or an investor to really have insider knowledge. Unlike the public markets, you can't inside trade when you're investing in apple. But most real estate operators are inside trading their knowing about what's happening on a local level that
Steven Pesavento 17:49
many others won't know about. So they may know information that you don't. So it really does come down to looking at the offerings, understanding the numbers, asking questions about how they think of the world, looking more so at how they answer the question and what their reasoning is, what their belief what their thought process what their investment thesis is necessarily, then agreeing with the believe growth is going to be 1% or 3%, in three years, right. So some of those things definitely depend on the market. And they definitely depend on the individual details. But by being able to talk with them, or listen to a webinar, or ask follow up questions, you then get to continue. Number one thing, which comes down to that know, like, and trust factor. So some of the things that VonFinch really believes in, to illustrate this is, you know, we are putting out great content, building relationships with many, many investors, it allows us to then when we have those conversations, one on one, to really be able to get to know our investors and spend time asking them questions, understanding who they are. And we're really working on really growing that connection, right? I think sometimes you get so busy in it, that you really have got to build a great team of other people who can help support diving into all those personal details. And as a result, then we get to be in a position as advisors have some sort of pointing out different areas or opportunities, even within our investments or outside of them where we can connect them with other professionals that can help support as well. And we've got a phenomenal track record. We've purchased 10 multifamily as we exited two, we've purchased over 200 individual single family properties, we've renovated over 100 of those, we've exited all of those properties with a very healthy, successful return for investors and for partners. And we've been through multiple different market cycles, changes to interest rates, changes to what's happening on a local level versus on a national level. As a result of that I know personally that I'm much more concerned than I was when I started in the industry, back in 2014, or when we started full time in 2016 been around people who've been through it. And I'm fortunate to have some great advisors who are here. And so I encourage you to find people that you know, like and trust you can personally connect with, you can connect with them logically that you both agree with their belief systems and their thesis that's phenomenal. If you can also align with some of their values, or some of that core belief that they're carrying like ours is we really believe in helping investors live a better life. And I'm personally on a mission to inspire others to enjoy more of life because, frankly, life's short and tragedies happen every day, we want to make sure we can build that nest egg to have that freedom, flexibility, so we can all have more fun and do the things we care about. And I really do believe that it's not a stick, it's the thing that I've really built my whole life around. And so for the people who are really on board with that they love what we do. For people who aren't on board or, you know, it's purely about dollars and cents, and they don't care at all about values, we can absolutely serve on the dollars and cents side. But they might not be as attracted to us as those who really care about the heart and know that the money is a key piece of creating that security that we're all looking for. So with that, I love the opportunity to connect with each and every one of you. So if you're interested in getting involved in investment, real estate, and you're somebody who has been listening and diving in and learning, but you want to go to another level and you want to see if this is the right fit for you, then I definitely encourage you to however Yvonne finch.com/invest register, share some more information with you with us and then schedule some time with me are a member of our team. So we can really dive in and be an adviser to you about what opportunities are available in the market and, and how you can really get to that end goal that we're all searching for. So it's a pleasure to serve. It's a pleasure to share. And I look forward to connecting with each and every one of you. And as a reminder, for those of you who have been listening for any amount of time or those of you are just joining us, make sure you hit subscribe so that you never miss another episode or lesson or nugget from the investor mindset or the team at VonFinch. And if you love what we do, I I highly appreciate and encourage you to go drop a review on your favorite podcasting app over on Spotify or Apple. We appreciate every single one of you who have dove in to help create a better life for you and your family. And we look forward to sporting thanks again.
Steven Pesavento 22:50
Thank you for listening to the investor mindset podcast. If you like what you heard, make sure to rate review, subscribe and share with a friend. Head over to the investor mindset.com to join the insider club where we share tools and strategies from the top investors and entrepreneurs and how to take it to the next level.