Interview with Matt Lefebvre of Elm Grove Companies

Meet Matt Lefebvre –  a rising star in the Manchester / Southern NH real estate world, and at one point the youngest agent in the entire state.

Matt helped me find my first multifamily property – a 6 unit building in Manchester. As an agent for Elm Grove Realty, Matt specializes in representing buyers of investment properties as well as tenants seeking retail, office, or industrial space for their business. He’s in charge of all commercial leasing for Elm Grove Companies and is the Vice President of the New Hampshire Real Estate Investors Association.  Elm Grove continues to be a great partner for us, managing our 6 unit building and providing strategic advice and deal flow.

Below, Matt discusses a variety of topics with us – from foregoing college and pursuing a career in real estate, to his opinion on what makes Manchester a strong market for multifamily investment properties.

On becoming an agent at an early age and foregoing college to pursue a career in real estate

I became interested in real estate at an early age from the books I was reading. First I was just reading general business books, and then I started reading business books that talked about real estate, which then turned into reading real estate specific books.

My parents had always been very supportive of me and put a big focus on my education. They always wanted to make sure that I was in a good school and was learning, and they felt that it was important to be flexible with how exactly that worked. So, in my sophomore year of high school I made the decision to get out of a traditional brick and mortar school and instead started doing online curriculum to finish up the few remaining credits that I needed to graduate. Then the plan was to get involved with internships to do some hands-on learning and try out different professions before applying to college.

So I got an internship with Keller Williams Realty, where I shadowed a few agents and went through their training programs. I learned a lot throughout that process, and my plan was to keep interning at different real estate companies for a while. Eventually, I wanted to apply to the University of Pennsylvania because they had a phenomenal international business program with a real estate concentration – which is what interested me the most at the time.

But after sticking around for a few months at KW, I decided to get a real estate license and try out brokering real estate for real. So I decided to take what I thought would be a gap year from college – which isn’t too uncommon. My parents were supportive of me being able to do that, because it would allow for me to make some money and gain more professional experience before starting school. Three days after graduating from high school, when I turned 18, l officially got my real estate license.

Eventually it just worked out so well for me and I was so passionate about it that I decided college was not the right choice for me. I’d learned so much with on the job training and decided that I didn’t need to spend all this time in the classroom where I’m going to be bored out of my skull for 90% of the material and only maybe find 10% that’s going to be really relevant / interesting to me.

So I decided to stick with making a living in the real estate industry before I really had any other thoughts about getting back into the higher education world. It was “well I’m going to go to college” and then it was “well maybe I’m not going to go to college immediately, I’m going to try to things first and then go to college” and then it was, “nope I cannot go to college at this point, after working for full time for a year it’s just going to happen.”

If you actually look back at my post ~ 4 years ago on, I asked the forums about going to college versus going to work full time, and if a degree was worth four years and hundreds of thousands of dollars. The advice that people gave me on that post helped solidify my decision, because it was predominantly people saying – “you should go out and try something and if you like it, you like it.”

On why he gravitated towards real estate instead of other types of businesses

When I started learning about business and entrepreneurship, nothing really jumped out at me in terms of a product that I could create a business around or a service that I could offer that was unique. When I started learning about this concept of building wealth through real estate investments, that seemed like the perfect way to get involved in business.

At the time I was a 15 year old kid who had maybe 100 bucks to his name, so I couldn’t exactly go buy a building. I figured if I can’t buy them myself, then I’m going to sell them to people who can buy them and build up cash until I can do it myself.

On what new multifamily investors should look for in an agent / broker

The first thing you should look for when evaluating a real estate broker is if their experience and knowledge matches your investment goals. My guess is that 90% of the real estate brokers in the country are are strictly focused on residential sales and leasing to owner occupants. They might sell a duplex every couple of years, but they aren’t going to be an expert on multi-family investments. If buying single families or small multi-families (4 units and under) is your strategy, then these retail agents can be a great asset. However, if you’re looking for larger multifamily properties you want to engage the services of a more commercial based agent that understands how commercial real estate sales work.

home for sale sign

Especially if you’re looking for a larger multifamily property, a broker should be good with running numbers. I’m using spreadsheets in my business every day. As you deal with larger properties — it becomes less about the total dollars that go into your pocket every month and more about the percentage of those dollars that go into your pocket based on how much money came out of your pocket in the beginning. So as a new investor, you want to make sure that you are working with someone that can help you effectively analyze the financials of a deal.

They should also have experience with evaluating property condition, be able to give a rough baseline of repair estimates and speak to the property condition with respect to the neighborhood.

Some good questions to ask a prospective broker could be asking about what kind of analyses they run on properties, asking about what kind of sales they’ve done in a particular area etc. Those are all important factors that should be considered when looking into what kind of broker you want to work with.

On how brokers allocate their time and energy to clients

It might be a bit of a general generalization, but if a real estate broker is prospecting, he’s talking with people that are selling their buildings. If this particular broker comes across a property that is going to be coming up for sale, if it’s a sizable deal then it’s going to weed out a lot of the smaller investors out there. Your first goal as a broker is going to be to make the sale as smooth as possible. That means the broker wants to bring in a buyer that has a track record of performing on these types of transactions. They know what their numbers are, they know the area, and they know in the beginning if it’s going to work or if it’s not going to work out. The broker wants to look good in front of their seller and as such they’re going to make sure that the first person that they call when they have a property for sale is going to be somebody that they know can perform.

real estate plan

So if you are looking to work with a real estate broker for the first time I would say the most important thing to come to the table with is a plan and knowing what you’re looking for. Having the capital to close is an important factor as well – either your own or with identified and committed partners.

When you have an initial meeting with your broker, you should be able to communicate what type of return you’re looking for, how much capital you have / have access to, what your risk tolerance is etc.. Do you want to buy a property this turnkey or do you want to buy something that has a little bit of hair on it? The more you have your criteria nailed down the more the broker can help you pinpoint properties that meet that criteria.

On how a new agent should decide what brokerage to work with

When I was at KW, I worked on a team that did a lot of business in the residential, owner occupant space. I learned very quickly that it wasn’t for me. While it’s fulfilling to help people find a home, I really didn’t like the endless discussions where people would walk away because they didn’t like the flooring or the bedroom paint color. Working with investors who understand that they might have invest some money upfront to get a better return on their investment down the road was more appealing to me. That’s a more difficult conversation with someone shopping for a home that they’re going to live in. You can explain to them that it would only take a small investment to remedy a lot of the things they have issues with, but ultimately that could kill a lot more deals than I could help them out with.

So dealing with people who were much more dollars and cents minded, people who were very analytical in the way that they looked at properties, really suited itself better to me and what kind of business I wanted to get into. You can only sell the same home so many times before it gets boring, whereas in the commercial real estate world the sky’s the limit. And there are never two deals that are going to be the exact same.

elm grove

So that was the primary motivation for me landing at a company like Elm Grove. It was just it was just a fantastic opportunity. They’re a local, tight knit brokerage, and they have a huge impact in the multifamily market here in Manchester, New Hampshire and around the state in general. They do property management, they work on their own acquisitions, they have a construction company, and they have a very strong maintenance team etc. It’s just lends itself very well to somebody who deals with real estate investors a lot and wants to focus more on that type of clientele. Working for a company or an umbrella of companies that does all those things already, it was just a match made in heaven for someone like me.

For a new agent, especially if you’re on the commercial side, I think the biggest factor to consider is what you can get in terms of training and education. In the long run that’s going to set you up for success. A lot of new agents make their decision based on their commission split, but I think you really need to prioritize your training and education first and foremost. You’ll do more business over the long run. Each person has their preference if they want to deal with a small local firm or a giant like Cushman and Wakefield or CBRE, but that’s going to boil down to personal preference. Again, the most important thing that you can look for right out of the gate is the training and the education that the brokerage can provide.

On developing a personal brand

The core of my approach to developing a personal brand is knowing what my target market is and then being where those people are at. If you’re involved with multifamily, joining a local Real Estate Investors Association is a great opportunity to network with those people. If you’re interested in large scale commercial property management then looking into an organization like IREM which is the Institution of Real Estate Management will allow you to network with other owners other managers that deal specifically with those types of things. So I would say priority #1 is to go where your clients are and go where you can hopefully learn something as well and further your industry education. I think face to face networking is going to beat cold calling every single time.

Second to that is building a consistent brand and persona around your business. My online presence is very consistent across the board with what I’m looking to do. I have the same professional profile picture for every single account that I work off of, which might seem like a small thing but if you have one that was taken four years ago one picture taken six months ago, for someone who has a young face like me in general, I look like a completely different person.

But having a consistent brand online is another important thing too. If you’re focused on making investors a return on their money then make sure that that’s cited in every professional profile that you have. If your focus is helping businesses find retail locations for their business or if your focus is working with office users who are expanding / moving around their business, then make sure that your tagline supports that specific function.

On why Manchester NH is a strong market for multifamily investments

When you’re dealing with an area like Manchester New Hampshire or southern New Hampshire in general, you have a very unique situation compared to a lot of other states and a lot of other municipalities. You’re dealing with an area that has a very low rental vacancy rate comparatively across the national average. In New Hampshire it’s much lower than say somewhere like Oklahoma or Washington state. I believe we carry a ~2% residential vacancy rate across the state in New Hampshire based on an article I recently read.

Other nearby states – Massachusetts, Connecticut, Rhode Island, southern New York – prices are just incredibly high in comparison to what you’re getting in Manchester. I was at a course a couple of weeks ago and talking to other brokers in New York City, New Jersey, Long Island areas and they were talking about what kind of cap rates they were seeing out there for multi-family buildings. And when I told them we’re seeing 6-8% cap rates for a lot of these properties, they’re saying “oh my God what? In New York City, if you get a 3 percent cap rate you’re lucky.”

So, with Manchester you’re dealing with a market that’s very affordable for investors, the properties produce strong cash flow with consistent rent growth and low vacancy rates. And you’re in a pretty good state that you is favorable to businesses and balanced in terms on tenant / landlord regulations. In general, Manchester is a very balanced place to be and I think it’s a really good market for multifamily investment.

Connect with Matt:

Matthew Lefebvre – Elm Grove Realty

M:  603-554-2309  –  O:  603-505-4900



Bigger Pockets

Best Ever Recap of the Best Ever Conference (day 2)

Here’s day one if you missed it

Saturday (Day 2)

Champion’s Mindset

Terrell Fletcher  ex NFL running back for the Chargers, CEO of Wake Up Ur Dream

terell fletcher

  • Terell got us FIRED UP bright and early on day two, most of us still feeling a little hazy after a great after party in downtown Denver
  • I asked Terell what he though separated guys like Rodney Harrison and Junior Seau from someone like Ryan Leaf (the former being NFL legends, the latter being the biggest draft bust of all time). Terell thought it came down to battling through adversity, and how you behaved when things went wrong. Guys like Rodney and Junior used it as fuel to get better, whereas Ryan tended to melt down and clam up, exacerbating the situation.
  • For a former NFL star, he was super gracious with his time and hung around for the rest of the conference, chatting to everyone and taking pictures. Yes, I got one too.

Mobile Home Investing

Jorge Newbery  Founder and CEO of American Homeowner Preservation (moderator)

Kevin Bupp  Owner, Mobile Home Park Academy

Frank Rolfe  Co – Owner, CREUniversity

  • Back to my shiny object syndrome… I think it may have spread to the audience, because I don’t think anyone in the building finished this panel without at least *thinking* that they wanted to start exploring mobile home park investing.
  • Frank is a true legend of the mobile home park game, and is the SIXTH LARGEST owner of mobile home parks in the country.
  • Kevin shared how winning deal sometimes comes down to the relationships you can build with the sellers. Most park owners are from the greatest generation, and place a big value on character. For many, who they choose to sell to is about more than just money. While true in most asset classes, this tends to be the case even more so with mobile home parks.
  • Lot rents in parks have room to double in a short time horizon without having a significant impact on occupancy, Frank believes. Since so many parks are mom and pop owned, a lot of them haven’t kept up with inflation over the past 40-50 years. There is also no new supply of new parks coming online to re-set market rates, unlike multifamily or commercial developments where new construction can push rents higher across all classes.

Landlord Automation

Divyesh Panchal – CEO of Keybot:

  • Cool product demo for Divyesh’s startup, Keybot, which helps automate keyless entry with a stronger value proposition than existing players
  • Check out his project website for more details

Above the Line

Trevor McGregor – McGregor Consulting

  • Trevor was a Master Coach with the great Tony Robbins before venturing out to start his own coaching business
  • He is also an active real estate investor, meaning he brings both the Tony Robbins coaching foundation, and also understands the unique challenges and perspectives of a real estate investor from first hand experience
  • I mean, this guy coached Joe Fairless and helped him grow from 4 SFRs to over $250,000,000 worth of real estate…
  • He’s Canadian, so he’s obviously a super nice guy and very down to earth (unlike some coaches I’ve spoken with in the past)

Next Leap

Joe Fairless – Host of the Best Real Estate Investing Advice Ever Show (moderator)

Jason Yarusi – Managing Member of Yarusi Holdings

Danny Randazzo – Residential and Commercial Real Estate investor

Andrew Campbell – Windhorn Capital

Pancham Gupta – Mesos

  • This panel was comprised of investors who had recent breakout success and recently completed their first one or two large deals
  • Some key themes that the panelists pointed to in helping them breakthrough to the next level included hustle, persistence, and having someone hold you accountable to your plan (they were all coachees of Joe, and a few were also coachees of Trevor)

10 Tips for Better Negotiation

Jason Scott – Lish Properties

book on negotiating real estate

  • Seriously.. the book is jammed pack with amazing tips and habbits you can start implementing immediately. Buy it!
  • Jay gave us a great mix of overarching negotiating strategies, mixed in with some golden nuggets of wisdom from his experience that could make or break deal negotiations
  • Of the 10 major points Jay went through, my favorites was also maybe the most obvious (but least applied) — ask for what you want, and don’t be afraid to hear no! Doing a bit of reflection.. there are definitely areas within real estate and life where I need to apply this principal.
  • One simple to conceptualize (but difficult to implement) negotiating tip is to “let the silence do your work.” People HATE silence in conversations. It’s so uncomfortable. If you can let people continue to talk while you remain silent, even if for 30 seconds, a minute, two minutes… often times they will start negotiating against themselves. Jay has seen people negotiate with themselves and knock tens of thousands of dollars off of an asking price without having to say a word!

To Fund or Not to Fund

Kevin Bupp – Owner, Mobile Home Park Academy (moderator)

Amy Wan – Founder & CEO of Bootstrap Legal

Jeremy Roll – President, Roll Investment Group

Matthew Owens – Owner of OCG properties

  • The discussion here was around the benefits and trade-offs of raising a blind / semi-blind fund vs. raising capital on a deal-by-deal basis
  • The main considerations the panel suggested investors consider are:
  1. Legal fees as a percentage of capital raise can significantly diminish returns and add complexity for smaller funds
  2. Ability to execute and access to deal flow adds timing risk with a blind pool, where investors could theoretically commit their funds to escrow but not have them deployed or earn any return for 6-12 months. This is less of a risk for investors that participate in a syndication, as their capital is typically not committed until a deal is nearly at the closing table. Without adequate deal flow, investors could become irritated over their idle capital.
  3. Track record –> more difficult to raise a fund with limited track record. Easier to start off raising capital on a deal by deal basis.

Debate – is residential real estate at it’s peak?

Dave Van Horn – CEO of PPR Note Co. (team Room to Run)

Kathy Fettke – co-CEO of the Real Wealth Network (team Room to Run)

Jorge Newbery – Founder and CEO of American Homeowner Preservation (team At the Peak)

Steve Baldus – Managing Partner of Elevation Realty Partners (team At the Peak)

  • What better way to end then with a fiery debate over residential housing prices? Are they at the peak of the cycle or is there still room to run?
  • Attendees voted on their initial opinion (I think it was like 60/40 thought we still had room to run… we were an optimistic crowd), and then the winners were measured based on who could swing the most percentage points when we voted again after the debate. The optimistic debaters won, and we finished with around 65/35 saying we are not yet at the peak.
  • Kathy has done this on national TV quite a few times, so a bit of an unfair advantage to team “room to run”
  • The main arguments of team At the Peak centered around the impact of raising interest while wage growth remains stagnant, and the general length of the current economic expansion
  • Team Room to Run’s arguments were mainly around the supply and demand realities of the housing market, as well as the the role that tightened lending practices (as compared with 2006) have played in keeping affordability in check.
  • I was hoping someone on the hot seat would have done some research and gone even further back in time than the last cycle, or the 1980s which I think was mentioned once. The housing market goes back a longggg time, and as Ray Dalio pointed out in Principals, we have extreme recency bias when trying to predict economic cycles. Everyone seems to want to compare right now with 2006ish as a baseline, when in reality there is probably another point in history with more applicable lessons.

Overall, this conference was a rousing success. It was a great mix of education, networking, and fun. The panelists were entertaining and engaging, the breakouts were a great change of pace, and I can’t remember feeling bored or eager for a break. I loved the in-house breakfasts and lunches where we met new people and recapped discussions. Compared to similar events I’ve been to, the crowd here was very impressive. It seemed like everyone I talked to was knowledgeable, experienced, and genuinely interested in helping others and learning more. Every other person I talked to could have been up on stage themselves. Another huge thank you to Joe, Ben Sam and all of the sponsors and panelists for putting on such an amazing conference!

Best Ever Recap of the Best Ever Conference (day 1)

Wow – what a great weekend we had at the Best Ever Conference out in Denver! If you’re feeling some FOMO or wondering what the conference was like, here’s a recap with my key takeaways of each session.

Friday (day 1)

Keynote: Lessons Learned From 1k Investor Interviews and $265m in Apartment Acquisitions

Joe Fairless  Conference host, Ashcroft Capital, Best Real Estate Investing Advice Ever podcast

Let’s get this party started with Joe’s keynote. For those keeping score at home, he controls $265,000,000 worth of real estate – more than double from this time last year. Joe walked us through a brief background, and then dove into the key three things everyone wants to do in the multifamily investment world – finding, funding, and keeping great deals.

My favorites approaches to each of these objectives were:

  • Finding great deal by hosting a local meetup in your area for other multifamily owners. This may cost you some money to get the ball rolling (pick up a dinner or a round of drinks), but you will position yourself as an expert in the space. Consistency, like most things in real estate, will help compound the success of this approach over time.
  • Funding great deals by being a GREAT listener while speaking with investors. Anticipate and listen to their concerns if hesitant to invest with you, and be prepared to speak to the things you do to help mitigate risks.
  • Keep your great deal by raising more money than you think you will need. The #1 reason why multifamily investments fail is lack of adequate capital reserves to provide a cushion during economic turbulence or unanticipated capex. Investing in deals for cash flow (vs. appreciation) and holding conservative, long-term debt can also help during tough times.

Exploring Niche Asset Classes

John Roy – JNL Parking

Kimberly Smith  AvenueWest Corporate Housing

Divyesh Panchal – Numerous branded hotel investments

As someone with a ruthless case of shiny object syndrome – this session was both awesome and enlightening. An expert panel talked us through the ins and outs of hotels, parking, and corporate housing… none of which I have done but am now obviously fascinated with. The highlights were:

  • Surface lots are an appreciation play. They will have a small or break even cash flow, but over time will become more and more enticing for developers to build on.
  • Garages are a cash flow play, and can produce great returns with comparably predictable maintenance and without the hassle of tenants.
  • John got started while in his MBA program and Notre Dame, and scraped a few single family houses to create a surface lot for football games.
  • Courthouses and hospitals are great locations for parking lot investments
  • Kimberly walked us through how her companies can help investors find, manage, and optimize their assets suitable for corporate housing.
  • Divyesh found his hotel niche with mid-level branded hotels (Hilton, Marriott etc.). He found that these offered the best risk – adjusted returns when compared with boutique, low-end, or luxury brands.
  • Hotels are not for the faint of heart, and Divyesh partnered with an experienced hotel investor in his ventures to help him get a foot in the door with these big brands and understand the ins and outs of hotel ownership

Stories of Scale

Kathy Fettke  Real Wealth Network (moderator)

Matt Rodak  Fund that Flip

Dave Van Horn  PPR Note Co.

  • It’s hard to start a business in the real estate world… but it may be even harder to grow and scale one
  • One suggestion from the panel (which I did immediately when I got home) was to create an organized list / chart of ALL of the job functions that exist within your business (even if you are doing all of them).
  • For example, acquisitions, due dilligence, funding, investor relations / reporting, asset management etc…
  • Then break out all of the sub-tasks that need to happen under each of these functions.
  • Eventually, you will get to the size and scale where you can start hiring out some of the tasks you don’t enjoy and that don’t require your vision or strategic thinking to execute (bookkeeping is a common example).
  • One visual the panel mentioned as a way of thinking about this is to take a pie chart, and each section of the pie represents time spent on a particular job function. Initially if you’re a one person band, you’re going to be filling up that whole pie. Eventually, you want to start making your way in closer and closer to the bullseye on some areas, but may choose to remain more engaged in others.

In pictures, this looks like starting here, where you’re doing everything…

and moving towards here, where you focus on the things that you enjoy and add significant value to

Benefits of Development

Scott Lewis  CEO of Spartan Investment Group

  • Scott was one of the most impressive people at the conference, and has a unique energy and intensity about him. He crushes.
  • Scott shared his “Developer’s Ethos” – five statements that developers should keep top of mind while building their business. My favorite was “prepare to be punched in the face”, because it’s going to happen in real estate. It’s a matter of when, not if. If you’re prepared for it and expecting it, you will react more rationally than emotionally and come to a better solution in less time.
  • The other ethoses were great too:

Don’t Just Make It, Keep It

Ryan Gibson  co-founder of Spartan Investment Group

Mathew Owens CEO of OCG properties

  • It took about 5 minutes of listening to Matt discuss his tax strategies for my brain to start hurting.
  • I guess the bottom line is… you are very likely paying too much in taxes and not taking enough advantage of the perfectly legal and managable strategies that could boost your post-tax income.
  • From a compounding perspective, this can make a massive impact on wealth accumulation over a long time horizon.
  • Matt discussed a lot of things I will take back to my CPA, but I think my biggest takeaway is that I am going to hire a real estate specific tax advisor to help me think proactively about my business from a tax lens, and separate out the roles of my tax preparer / filer and tax strategist who can help me think through things more strategically and stay out of the weeds of filling out my returns.

Creative Value Add Flipping

Matt Rodak – Fund that Flip (moderator)

Jason Scott  Lish Properties, 123 Flip

Scott Lewis- Spartan Investment Group

Tim Emery – Co-owner of Invest Success

  • This was a true all-star crew of panelists. I’ve been reading J. Scott’s books for years and was great to finally see him in person.
  • While each panelist had a different approach to their business, they all had a blend of flexibility and focus that allowed them to stay ahead of the curve while still remaining disciplined to their core competencies.
  • An example of this came from Jay, who went into a flip with a partner. His “bread and butter” had been mid-grade rehabs, but the partner wanted to do a pop top and add more square footage to the house. The expected return on this approach was significantly higher, so they went with it… and Jay added a new tool to his arsenal, creatively adding more value to capture more profits.

Scaling BRRR

Trevor McGregor  McGregor Consulting (moderator)

Tarl Yarber  Fixated Real Estate

  • Tarl and his team at Fixated are making big moves out in the Pacific Northwest BRRRing and flipping, and are even putting together what looks to be an epic expo in late April.
  • One big takeaway and new process I am implementing is to take a bunch of pictures (Tarl takes 100) of each rehab project, each week. This becomes even more helpful if you’re managing a lot of projects out-of-state. The pictures will facilitate contractor accountability, give you a great arsenal for social media, and give greater connectivity / feel to the projects if you aren’t there physically.
  • Personally, I wouldn’t hire a random off of craigslist to do this. I would tap into my existing network of brokers / property managers in the area and see if anyone of them would do it for some extra cash. Pictures don’ t need to be listing quality, but should be taken with a good, wide-angled point and shoot camera if possible (phone cameras are getting crazy-good now too)

Raising Capital

Jeremy Roll  President, Roll Investment Group

Ryan Gibson – Spartan Investment Group

Nikolai Ray  CEO of MREX

Amy Wan  Founder & CEO of Bootstrap Legal

Matthew Owens – Owner of OCG properties

  • According to Joe, this was one of the most requested topic for discussion, and the panel delivered.
  • I loved having Jeremy up there to help us understand the “voice of the investor.”
  • Jeremy focuses on investing in other’s deals, and does a LOT of due diligence around what sponsors and deals he and his investment group get involved with.
  • He picks apart PPM’s and will question and negotiate terms he finds disadvantageous to his group.
  • Pro tip: if you raise money from Jeremy, make sure you know your documents and deal inside and out!
  • One other nugget from Jeremy I found interesting – he looks to make sure that the sponsors are in a compensation “sweet spot.”
  • As an investor, you obviously don’t want a sponsor to eat up too much of potential profits or have misaligned incentives…
  • But you also want to make sure that they are being compensated fairly and at market rates for acquisition fees, equity splits etc. so that they are highly motivated to maximize returns on the deal.
  • Significant discussions around the different types of regulatory hurdles a sponsor must navigate, and the benefits / risks associated with raising capital through different avenues… 506(b) vs. 506(c), blind pools, semi-blind pools, crowdfunding etc.
  • Amy started a company called Bootstrap Legal to help investors navigate this complexity. Bootstrap’s mission is to blend the high – touch strategic advice of an attorney with the efficiency of technology to significantly reduce the cost of executing a capital raise.
  • Every sponsor and deal will have different deal terms and fee structures. One way to determine what’s appropriate for your deal is to go onto a crowdfunding website and look through the investment offerings. What are their waterfall structures, acquisition fees, asset management fees etc..? This can be super helpful both in establishing your terms for a deal, and to help educate “newbie” investors as to how your terms compare to the market terms for syndicated deals.

Ready to hear what happened in day 2? Here you go!

3 lessons learned from Boston Beer Co. founder Jim Koch

I was fortunate enough to listen to Jim Koch, founder and CEO of Boston Beer Co. (parent company of the Samuel Adams brand) present at a “drink and learn” session last week.

Over the course of an hour, and a few Boston Lagers, Jim imparted some priceless wisdom on us. Here are my favorites, and how I am applying them to my real estate investing.

Know the difference between what is scary vs. dangerous

Not all things that are scary are actually dangerous, and not all things that are dangerous are scary.

What does that even mean, you might be asking?

Well, Jim spent a period of time as an instructor with Outward Bound, a wilderness / leadership program where one quickly learns the difference between fear and danger. For example, repelling down a 100 ft cliff may be scary, but you’re held by a rope that could carry a car, so all things considered it’s not so dangerous. Walking across a 35 degree snowfield on a bright and sunny day in late spring is not scary at all, however this is prime conditions for an avelanch, so it’s actually a very dangerous situation to find yourself in.

For Jim, staying at his job in management consulting was not scary, but it was very dangerous. It was a cushy job where he flew first class out to meet clients and was paid a hefty salary, but the danger would be doing something he didn’t love and waking up at 80 years old realizing he wasted his life.

Starting a company on the other hand, was scary, but not all that dangerous. He realized he could always go back to working a “real” job or find another way to replenish any financial losses if his company failed.

To me, this lesson applies beautifully to real estate. So many of us are afraid to pull the trigger on our first deal, or take the necessary steps to remove the barriers in the way. We have to constantly ask ourselves, am I holding myself back because of fear or because of danger. Often times, the downside isn’t as bad as we make it out to be in our head, and things that are really scary aren’t all that dangerous.

Tim Ferriss has written extensively about baselining a worst case scenario – certainly worth a read if interested.

Appreciate the jagged resume

While pursuing his JD / MBA at Harvard Business School, Jim decided to drop out and take an internship with Outward Bound. When he came back to school 4 years later, his resume was anything but “clean.”

Employer after employer “flushed” him, including his old classmate, Willard (you may know him better as Mitt Romney).

Finally Jim found his fit with the Boston Consulting Group, which was filled with other quirky but intelligent minds. After 5 years working as a management consultant, Jim was committed to starting a small brewery in Boston using his family’s 100 year old recipe.

When looking for a partner to start his company with, Jim looked around to all of the other brilliant minds with advanced Ivy League degrees him at BCG… and naturally, took his secretary Rhonda. Jim found that all of the other consultants had the same skills and experience that he had. Rhonda was great with people, helped Jim stay organized, and as Jim said, “Rhonda knew bars.”

I was lucky enough to get a good job right out of college. I was doing all of the right things, getting promoted, and following the career path that I know many would kill to have. Realizing I would never be happy grinding my way to the “top,” I started learning more and more about shifting to an entrepreneurial life. I significantly cooled the jets on my career progression and negotiated my way down to a 60% working capacity schedule. While real estate investing continues to be my main focus, I also own an e-commerce website and food truck that sells pretzels shaped like mustaches. My resume is becoming more and more “jagged” every day, and I’ve never been happier.

Know the difference between sales and marketing

Back in the 1990s when Jim was at Harvard, they didn’t teach a single course on sales. Jim’s appreciation for sales grew when, after being unable to find a distributer for his beer, had to go door to door at the local Boston bars trying to sell them Sam Adams. He would leave BCG with a 6 pack of beer in a cold sleeve, tucked away in his fancy consultant’s briefcase, and walk down Congress street in Boston until he could get a bar owner to try his beer. Jim had to visit 20 bars to get 1 sale, and quickly learned to deal with rejection.

Make no mistake about it, if you are a Real Estate investor, you are in sales. Beyond selling a property, we are constantly selling ourselves and our abilities to lenders, brokers, investors, partners etc. It’s worth investing time in sales training early and often, as it will continue to pay dividends for years to come. It’s easy to think we are being productive by burying ourselves in marketing activities like basting off hundreds of yellow letters, run Facebook / Google ads, and even putting up a great looking website. None of that will matter if you cannot sell yourself in human to human interactions.

As Jim eloquently put it – comparing marketing to sales is like comparing masturbation to sex. One you can do alone in a dark room and with a lot of activity, feel like you are accomplishing something. The other is noisy, messy, and you need to be able to do it with at least one other person.

… yes, he did say this as his closing remarks after the buzz from his third or fourth Boston Lager had clearly kicked in.

As one of the people in business I look up to the most, Jim was amazing to meet in person. He was gracious with his time, drank beer his entire talk, and wore the most outrageous Sam Adams branded blazer I’ve ever seen.