Tale of Transformation: From Federal Reserve Exec, to Self-Storage Investor, with Sergio Altomare

In this episode, Sergio Altomare shares his journey from working at the Federal Reserve to becoming a successful real estate investor. He started as a file clerk and developed a passion for IT and technology. He transitioned into real estate investing with a focus on self-storage due to its recession resilience. He emphasizes the importance of cash flow and net worth in property investments and discusses the significance of strategic decision-making and building strong relationships. He also highlights the importance of stress tolerance, mindful habits, and eliminating ego to scale his business. His long-term vision includes building an elite company and launching a charitable organization focused on education.

Links mentioned:
Blinkist
LinkedIn – Sergio Altomare
hfirecapital.com
investwithsergio.com

Sergio Altomare’s Bio:
After transitioning into real estate as a side business in 2012, Sergio partnered with his wife Corinn to start Healthfire Holdings, a boutique real estate investment and property management company. In just eight short years, Hearthfire Holdings has built a portfolio of more than $50M in assets under management and syndicated over $12M in assets, returning more than $2M in profit and 25% IRR to investors. Property types have spanned in small multi-family, commercial, retail, and self-storage properties. Sergio has also flipped houses and rehabbed properties and multi-family developments. 

Tweetables:

“I give 100% to every aspect of my life. And it starts with taking care of myself and my intentionality. My meditation, my faith, that goes into making sure that I am paying attention to what is most important.” (41:33)

“Money is not most important. Most important is our purpose. Our biggest purpose in our household is to share impact, whether it be for our team, whether it be for our investors, to help people be exposed to investing, to building wealth for the entire life” (42:01)

“We don't define wealth in terms of just net worth. It's about having a fulfilling, intentional life where you're able to have that purpose, follow your passions, be where you're at, where your heart is at.” (42:29)

“but it's really about understanding your passions and what drive you.” (46:34)

The main sponsor of our podcast is Rx Real Estate Investment. They make everything we do possible, and our conversations and interviews would not be available without their support. If you want to diversify your retirement portfolio and get into commercial real estate investing, working with Rx Real Estate Investment may be a great match for you. Check out the website at www.rxrei.com. 

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Transcript

Jeff Stark (RxREI.com):

All right, everybody. Welcome to another episode of the RX investor podcast. I am your host, Jeff Stark. We also have our Claude, or our cohost I should say, Claude Condo. What's up, man? How are you doing today?

claude condo:

Good, good. How are you, man?

Jeff Stark (RxREI.com):

Doing well, yeah, excited for another episode. We've got a great one planned for today. Our guest today is the founder of Hearthfire Holdings, Sergio Altamira, how are you doing, sir?

Sergio Altomare:

I'm doing great, man. Hope you guys are doing well. Outside of Philadelphia, we finally got some nice spring weather, so excited to put away the winter gear.

Jeff Stark (RxREI.com):

Amazing, amazing. Well, glad you could join us today. If you can, maybe let's start out. I just mentioned that you're the founder of Hearthfire Holdings, but I know there, you have quite the backstory on how you got to the point in your career where you're at today. So kind of set the table for us if you can. Maybe give us a little bit about your background, where you started. Maybe you're, I would love to hear a little bit about your first career as well. but just who you are and introduce yourself to our audience.

Sergio Altomare:

Yeah, sure. So it's not the traditional and I guess everybody's got their own story. So my story goes back to my days working for the Federal Reserve. So I was born and raised in Philadelphia, with the exception of spending a couple years living in Italy with my parents, who were both Italian immigrants. I was born and raised in the city. Went through all the public schools. Landed a job at the Federal Reserve as a senior in high school as an intern. wasn't a great student at that through high school, I should say, not the greatest schools out there, but compared to some of the schools now, I, you know, it's, it's, it's definitely better than some of the education that we're seeing out there these days, but I started working at the Fed as a file clerk. I quickly got into IT and technology just as a hobby, buying a computer, breaking it down, putting it back together. Fast forward 22 years and I had established a career, went through the ranks, eventually went back to school, got a degree from Drexel University in computing and security technology. But I essentially was in every aspect of IT that you can think of with exposure to network engineering, information security, project management, you name it. enterprise architecture for the work that the Fed does for Department of Treasury. So I was in charge of strategy for Department of Treasury systems and infrastructure. Along the way, met my wife and we started like most other investors looking to just diversify our income, build some assets, and we started buying some multifamilies. It was actually my wife, while we were dating was... buying a multifamily property in Philly. She's a transplant from Los Angeles. In her previous career, she was professional musician. So she was in Philly on an opera contract. And she ended up getting a job at the Fed, kind of as a, started as an intern and then got into full-time. And then she became a project manager as well. And then we started, I started with just helping her and connecting her with some people that I knew in the city. buying a multifamily property. Our relationship was going really well. Next thing you know, we bought another multifamily property together with my background in technology and her being more on the client side of things. She handled a lot of the showings. I handled a lot of the infrastructure. And before you know it, we were property managers and then we got into syndicating. And that was a concept that was... certainly new to us, my father-in-law, my in-laws had done a lot of that in their careers back in Los Angeles. And so we were exposed to that. We had access to far more deals than we had capital to deploy at that time. And things kind of took off from there. Started with just friends and family. We're talking, this is 2013 is kind of when we started in earnest and raising capital. Started... building up the portfolio at its peak. We had about 175 units under management

Jeff Stark (RxREI.com):

Hmm.

Sergio Altomare:

in our property management business. Along the way with my background working for the Fed, I've been keenly aware and exposed to the economic cycles and 2017, 18 was when we determined that, or I believe that there was gonna be a market pullback. We had been 10 years since the Great Recession. all indications were that things were a little overheated. We couldn't make, at that time I did all my own underwriting, so we couldn't make any of the deals work in the apartment space, so we started looking at other asset classes. Well, we ended up landing on self-storage. We looked at considered mobile home parks as well. We landed on self-storage because of its recession resilience during the Great Recession. And... We made a pivot. We talked to our investors. We let them know why we were thinking that there was a great opportunity. It was, we did fantastic for our investors, returning average over 20% IRR on all the deals that we had done previously. My wife left the day job in 2016, I left in 2017, and we've been building a company ever since. And now our investment platform is built to scale. We're about to launch a debt fund just to align capital with the sheer volume of investments that we're able to do. We've got 15 properties across five states right now, about 50 million in assets under management. And now we've built a team around rock stars now. Some lessons that we'll get into, some lessons that we learned in building and executing a company which is different than doing deals. And yeah, here we are.

claude condo:

Man, that's

Jeff Stark (RxREI.com):

Amazing.

claude condo:

an impressive, you know, I want to applaud you. I know we were in the same mastermind group, you know, we have seen you on the conferences, but never have a chance to actually sit down and talk. But I'm just happy that we have a chance to come to learn your story and learn your lessons you learn and, you know, be better for our audience and ourselves as well. So if you can just take us back to your W2 job, right, at the Federal Reserve. When did you know that now it's the time to actually leave my W2 and launch my entrepreneurship journey? Because we get those questions a lot.

Sergio Altomare:

Yeah. So, so what I'm a big believer in is we know that we grow from struggle challenges and essentially putting yourself in a corner. And whether we do that intentionally or not is is a whole nother conversation. But I've always followed where where I'm being drawn to. I'm a I'm a man of faith now. And we're. were followers of God. And really, if I get an idea or I get something that inspires me and is purpose driven, then I go at it 110%. To be perfectly honest with you, when we started our real estate journey, number one is I didn't know that we were ultimately building a company and business. It was really just literally investing in real estate and acquiring properties. What happened is ultimately it got too big. Most importantly is my wife and I got married and then we were having a baby. And what happened at that time was 2016 was when we found out that we were having our incredible daughter Stella. She ever gets to watch us, she's six now. But it really got to the point where we were stretched too thin and priority became our family and our ability to have a family life together. That can't be understated because there's a lot that we can do work-wise, career-wise, investment-wise, that when you're in a stage of life where you've got the energy, the vitality to do a lot of things and work for 100 plus hours a week, you can do that when you're trying to build a family that's not sustainable. And so ultimately, We built that bridge and the building of the bridge that I say is we built a company that and the assets that we had, we worked at the level where technically we could cover our fixed expenses with the revenue we were generating from our properties. However, it was a far cry from where we were at income wise from from the W-2 job. So we had to make that decision what we were going to do. We thought initially that Corinne leaving the day job would be enough to support and carry the business. And I had actually gotten in early 2017, the biggest promotion of my life. I became an officer and an executive for the Fed. So it wasn't a part of the plan. What ended up happening was it just got to be too much and I had to make a choice, a day job, night job and family. And the family wasn't... part of the equation, obviously. But so I had to make a choice between career at the Fed and building and growing a business. And at the end of the day, it was a conversation and certainly a lot of anxiety at home for us to make that decision. But ultimately we bet on ourselves. We bet on my ability to adapt now in hindsight, what I know now versus what I knew then. It's totally different, but it's all about the journey. It's not about setting goals that are specific appointing time. And we certainly have goals that we set regularly, but it was really about, are we doing what we love? What are we truly passionate about? And for us, it was sharing that wealth journey, which is why we got in the syndication to begin with. We were exposed to the ability to grow assets and true net worth beyond... what the W2 offers directly. So we took that and then we decided to share that. But to answer your question in brief, it was building that bridge and then knowing where our passions needed to be. I love technology. I still do. I'm still very much a technologist. I serve in that role for our company right now, hopefully not for too much longer. But I knew that building a company was there was far, the ceiling was far higher and the potential was greater for us to do it on our own and just made a bet on ourselves and for my family and here we are.

claude condo:

Wow.

Jeff Stark (RxREI.com):

Cool. So I kind of have a follow-up question to Claude's question. I can tell that you're a very calculated and strategic person. So what was the run-up like to 2017 and 2016 when your wife left her W-2 and then you left yours? I'm sure that you just didn't do one or two deals

Sergio Altomare:

Yeah.

Jeff Stark (RxREI.com):

prior to that and then jump into something. So your, I guess your,

Sergio Altomare:

Sure.

Jeff Stark (RxREI.com):

uh, like your experience in the real estate world, like where did that start and what kind of struggles did you have along the way and what prepared you to make that jump in 2016, 2017,

Sergio Altomare:

Yeah, so

Jeff Stark (RxREI.com):

the following years.

Sergio Altomare:

I would say that our focus, what I learned in our real estate journey was initially that our objective was cash flow, right? Making sure that properties were cash flowing. And when it came time to make that decision to leave, it was having enough cash flow to cover our fixed expenses. Now, the first thing that I've learned in my life is Number one is we're not materialistic. So I never had a, there was a point in time where I had a lifestyle that pressed against my means to earn or my paycheck, but never to where it was, was extreme. Like if you think about what they say is your mortgage should be, or can be 30% of your income, that's insanity to me. If you, if you maintain that lifestyle, then you're really stuck in the mode of having to, that your retirement is subject to your 401k, social security. That's just crazy to me. So for me, it was making that shift from recognizing that the real secret to growth or long-term wealth is in your net worth, not cashflow. So what we were doing was focusing on buying assets that we can grow at a much higher rate, either through executing on business plans and riding the wave of the market. So we were able to do that successfully. When it came time to ultimately quit, I had a backup plan. I've always been really good at managing finances. I maintained my own you need a budget, mint, you name the platform. I was really judicious in how I managed my money. It wasn't always that way, but I learned to do that. And then it was really just a matter of managing my finances to where I can make bigger bets. And when I say bigger bets, I don't mean that I'm gambling, but I'd rather buy a $400,000 multifamily property than some... $75,000 fix or flip where the risk is greater, where you need the lower cash outlay. So I wanted to do things and that could generate exponential growth. And that's the biggest thing that I've learned is exponential growth and living, looking at our company and what we do from an exponential growth, not a linear growth perspective. So for me, What actually allowed us to quit was we had the equity in our assets. I was able to refinance. I was able to sock away eight months of expenses to know that I had eight months to figure it out. And what I ended up learning was that I don't need a paycheck at all. That if you're strategic in how you execute and manage a portfolio with knowing... you know, managing over a course of time that I could generate enough cash to survive while focusing on growth of the assets and the company. Does that make sense?

claude condo:

Yeah.

Jeff Stark (RxREI.com):

Absolutely.

claude condo:

Yeah. So if you don't mind, take us to that journey of how do you scale a business? We have business owners in our podcast that they're pharmacists, they have dental office, they have their own primary care offices. Like how do you go from zero in 2018 to 50 million today? And what

Sergio Altomare:

So

claude condo:

lesson did you learn?

Sergio Altomare:

the biggest lessons that I've learned over the time is there's no one way to do it. You can do it a lot of different ways. Along the way, we had an investment thesis. We got really good at understanding the asset class that we're in, which is obviously self-storage. I learned that inside and out, learned the underwriting, learned how to make really strong investment decisions. And then from there, it was a matter of who, not how. Have you ever read that book? So who, not how teaches us that it's about not thinking that we have to do everything, but what resources that do we need in order to grow exponentially. The biggest thing that I've learned over this period of time is if you treat your business as an investment, not just the underlying asset. as is critical. So what I mean by that is when I started to think about investing in people in our company and literally take in proceeds from a really good real estate investment and now investing in top performing individuals that can come in with experience, with the talent to help me grow. my investment thesis changed. So now I'm not just thinking about it in terms of, hey, this self-storage property here, this self-storage property here. Now I'm thinking about the pieces or people that I need that are gonna help me grow and scale this. So it's a different method of thinking about your business. If you're a pharmacist, and incidentally, my sister is a pharmacist, right? She's worked for various pharmacies for many years. But I know of some really good example is Adrian Akay. I don't know if you know him

claude condo:

Yeah.

Sergio Altomare:

from, from,

claude condo:

Yeah.

Sergio Altomare:

from go-bundance. So he's got his, his, uh, uh, pharmacy stores. And when you think about it from a business perspective and you get out, even if your genius area is being a pharmacist or whatever, you got to learn a different skillset to be a business owner and a business leader. And then it's about getting out of the technical aspects of it and then investing in the people. that can grow your business. I've read dozens of books, and I used to be that stubborn individual that think that I have to do everything, everything has to flow through me, when in reality, it's really just, I need to invest in the right talent and get out of the way. I'm a visionary. And so as a visionary, my job is kind of, my CEO coach calls me a marionette. Really just a matter of seeing the big picture and then moving the pieces where they need to be. So now my focus is, strictly on strategy and how do we deliver the best product for our team to want to work with us and for our investors delivering great investments but then also on the customer side, those customers that are going to use our storage facility. So now I'm a business, it's an enterprise that we're building not just acquiring assets and that kind of thing. So it's shifting the mentality to where is the scale? Where is your investments? And if you think about your company from that perspective, that's what allows you to grow and scale. It's very scary, very difficult to do. It's not for everyone. So the number one thing that I've had to learn is not how to deal with stress, but how to increase my stress tolerance. Because when you grow and scale, stress grows with it. And if you don't focus on the skills to expand your capacity for stress, the rest of it will break down. And that's where you end up, where you either go back to being small or non-existent at all.

claude condo:

Man, those are valuable advice for sure. Learn how to increase your stress tolerance. How do you learn that? What strategy do you need to do to learn how to increase your capacity of taking more

Sergio Altomare:

So

claude condo:

stress?

Sergio Altomare:

it's really about being mindful about good habits and bad habits. We, most people have so many bad habits in their life that reduce their capacity to tolerate stress. And it's very, very difficult because a lot of what the bad habits that I'm going to talk about are normal. from societal standards. However, and one thing is a fundamental piece is studying those that are achieving elite level with whatever you're doing. So for me, it's studying the habits of, you know, an Elon Musk, and he's probably not the greatest example because he's a real workaholic. However, he's very purpose driven and his stress levels probably, you know, a million times higher than even mine. but your Warren Buffets of the world, and even your Tom Brady's, those people that are really achieving super high levels, what are they doing that I'm not? You find pretty common certain things, getting up super early, really being a student of the game that they are in, taking care of your mental health, physical health. Like I don't drink. alcohol, I don't smoke. Now I don't even drink coffee. I'm working out, I'm at the gym this morning, I was at the gym before the guy who opens the gym was there and waiting for him to show up. So at 5am, meditate, I discovered meditation in my my mid 20s. So I've been meditating for that long. And so it's really building that mental capacity because really, the physical part follows the mental strength. So for me, it's about nurturing up here and then the rest of it follows. And quite honestly, it's about eliminating ego to grow and scale something significant. You gotta be able to listen, learn. I'm a big student. This isn't... you know, even a tiny sliver of the library that we have around our house. And not to mention a great support system. My wife and my partner, we co-founded the business together. We're growing together. So our entire being is about, our entire purpose is about growing as, as a family, as individuals, first and foremost, as a family. and then being able to align what we're doing to a greater purpose. That's beyond money. It's beyond real estate. We have just

claude condo:

Yeah.

Sergio Altomare:

a higher calling and and our faith driven.

claude condo:

Well, if you

Jeff Stark (RxREI.com):

Really

claude condo:

don't

Jeff Stark (RxREI.com):

cool.

claude condo:

mind, I appreciate what you're saying. Just for the audience, you mentioned a book, Who Not Out by Dr. Ben Hardy. So if people want to take a look at it, that'd be great. You mentioned something about, you know, you have a routine like wake up at five, you go to the gym. you do meditations and you take care of your mental health, your physical health, you have a coach. What's, if you don't mind sharing your routine on a daily basis, like what's your routine so that maybe you can serve as an example of what you're talking about.

Sergio Altomare:

Yeah. I'll caveat this by saying that I'm not one of those people that talk as if there's, number one, there's not one way to do it. But the second part of it is that you have to balance, you have to be, you have to have your really good routine most of the time. That means that you can't say that I wake up I go to the gym or I wake up, in my case, I wake up typically do a meditation or I will go to the gym and then do my meditation after the gym. I take essential amino acids. I'm not as big on supplements these days, but it's just really help with maintaining my body composure. I'm 47, so I focus my exercise routine is not about getting big and bulky, it's about you know, counteracting sitting in front of a computer. So it's a lot of stretching. It's a lot of functional working out things that I can use. It's not about what I look like in a mirror, although typically it's going to show that, you know, what I'm eating and how I'm behaving. But it's really just a matter of and I'm constantly thinking the one big habit that I've developed over time and I'm a productivity junkie is focusing on my processes and systems and I'm constantly focused on those processes. So I'm not worried about how do I do this task well? How do I figure out the process to make that task be a part of my routine? What I mean is if you do, if it's a struggle to do anything that is a good part of your habit, it's not gonna work. So you have to create a lifestyle. that allows you to do it that is going to be welcome. If it's a challenge, if it's a struggle, you could read the miracle morning and do all that. If you're not a morning person, you don't have to be a morning person. You just gotta make sure that your default process, your default mode of operating is far better than not. And if it's seven days in a week and you have that good process or that good routine for four days, You're better than app, you're better than 50%. And your goal is to continue to work that higher and higher. I fall off the wagon just as much as the next person, but it's all about continuing to compound good and great habits and study the elite. Reading, listening to audio books, that's huge. I consume a lot of content. I've been using Feedly and RSS aggregators. I consume a ton of content every day reading, but what I'm not doing is memorizing what do I need to do here or there? I have my, I maintain a strict schedule in terms of what are my priorities? How do I track what needs to be done and not where I'm, oh crap, I forgot this. You'll find that I don't forget a lot because I've established a lot of processes to help me remember. So I'm all about hacking life to be able to create more time to do what I love to do, which is for me, is creating strategies and building the company.

claude condo:

Wow.

Jeff Stark (RxREI.com):

I've got a question for you about your prior career. So you spent quite a few years working at the Fed and obviously now you're in commercial real estate. How did your time working in that industry prepare you and help you with the work that you're focused on now?

Sergio Altomare:

So the Fed is in totals about over 20,000 employees nationally. And I work for our national IT group there. So number one is I was exposed to a big enterprise where there was a lot of structure, a lot of systems, a lot of processes, a lot of division. So I got to see what things work, how things work at a high, very big scale. The fact that I was in technology and creating the systems and implementing the tools to support that gave me a unique perspective in being able to see that. So I've learned everything from how to evaluate a vendor to... taking an idea and turning that into a project to be able to execute, have so many dear friends and contacts that perform that at very high levels, obviously being the central bank of the world essentially, and knowing how to evaluate or understand the economy, currency, monetary policy, interest rates, all of that directly correlates to... commercial real estate, also in terms of how to invest. And in some cases, it's about learning what not to do. And what I mean by that is it's a very conventional, in most cases, like most large enterprises, very conventional. You stay pretty narrow focused in your own role, in your own division, in your own department, in your own job function. That's where your knowledge stays and resides. And then you adapt to the lifestyle that most people do, which is you get a paycheck, you adapt your lifestyle to your paycheck. As you get a raise, you buy a newer car, more and more payments, and you kind of get stuck in that rut. Whereas I looked at it from even going back to the great recession, seeing so many people struggle is like, how do I not fall into this? How do I look at alternative investments. And so I kind of went against the grain in a lot of respects. But overall, my experience across so many different roles, such a large enterprise, so many different people has allowed me to directly correlate everything that I did to what I'm doing now. What the biggest

Jeff Stark (RxREI.com):

Mm.

Sergio Altomare:

difference is the fact that We're not that big and we don't have the bureaucratic systems in place that we can make decisions and be super fast. But I know how to make really good decisions based on a lot of the experience on the due diligence, because there was a lot of due diligence that went on for everything. And obviously, in commercial real estate, due diligence is the name of the game.

claude condo:

Yeah.

Jeff Stark (RxREI.com):

So I think you kind

claude condo:

Yeah.

Jeff Stark (RxREI.com):

of

claude condo:

So.

Jeff Stark (RxREI.com):

mentioned it a couple of times already, but hearthfire holdings. Can you just kind of introduce the company? And I think you mentioned how many properties you have and across how many states, but

Sergio Altomare:

Yeah.

Jeff Stark (RxREI.com):

maybe give us the background of, and you know, you kind of talked to length already about being involved in multifamily and that kind of being your first venture in commercial real estate, but why? And you know, I don't know if a lot. I think some of our listeners probably know about self storage a little bit at a very topical level and that there has been kind of a run up over the past three or four years in of investors in that space. But just kind of give us the the why of self storage and what makes it so attractive to you and why it's such an incredible investment in the commercial real estate space.

Sergio Altomare:

Yeah, so and a lot of this came from research that we did in looking into what other asset classes are there that aren't nearly as crowded. So right now, our whole vision and mission of what we're building is an investment platform that offers institutional investments to all types of individuals, whether it be high net worth, accredited investors, super high net worth, family offices, even institutions. So we're building institutional quality operations to support self-storage industry. Now, what's different between us and a lot of other operators is that we're not just building it and other asset classes for that matter is the scalability of self-storage. So self-storage Number one is a business that operates on real estate. It's not the other way around. It's not real estate that is a business. What I mean by that is we have customers, right? And yes, you could say that they are renters. They're not tenant in the same sense of a multifamily where there's Landlord Tenant Act and whatever, where we operate based on lien law, which means that when... when a renter is, and most people up to now, over 10% of the US population is utilizing self storage. So you have 10% of the population utilizing self storage as a service. And self storage comes in the form of good times, is utilized in good times when people have expanding lifestyles, you're buying a new house, you need to move stuff in it. And then in contracting lifestyle. So in the contracting lifestyle or down markets, we like to say that self-storage functions in the four D's of life, downsizing, divorce, dislocation, and death. Those are all four

Jeff Stark (RxREI.com):

Hmm.

Sergio Altomare:

unfortunate parts of life, but they're parts of life regardless. Self-storage serves a purpose there. So whether it's a five by five unit in Manhattan where you wanna keep your bike safe, an extra closet for turning over summer clothes, winter clothes, or you're downsizing and you want to eventually give your kids your heirlooms, your family things, or somebody passes away in the family. Self storage serves as a service. We have monthly. contracts, so it's not a long term commitment. So there's not this huge barrier to entry for gaining customers or clients. There are really sound metrics that we are able to use to understand the supply and demand of storage facility and units and net rentable square feet in any given market. We have comps between stores to be able to see what the appropriate rates are. We have dynamic revenue or dynamic pricing. So it combines a lot of the business characteristics of a lot of other businesses from an, for example, a hotel, when you, if you were to book over the course of two weeks, you see there's different pricing per day. For us, that may be different seasons. In the spring season, we're gonna be priced a lot higher than we were in the middle of the winter in one of our properties in Indiana because of the seasonality component. Another piece of it is that there are other ancillary or upselling of services within the industry, adding like a tenant insurance or tenant protection. That's an additional, say $9 per tenant that comes in, they want to store their stuff. We offer a tenant protection program. That's an additional revenue stream. Late fees, document fees, there's lock fees. so many different functions of it. The other nice thing about it is the revenue is secured, which is really unique, meaning that if you move into a unit and get a 10 by 20 unit and you stop paying, I overlock your unit, meaning that you can't get into your unit, but I have a lien on all the goods that's in there. So I now have the ability to recover what you owe me. Try that in a multifamily apartment where you've got maybe a security deposit, which is going to cover maybe a broken door, maybe a broken window. But if somebody trashes the joint, you're SOL. So and then there are different, different aspects of it where it's climate control units versus drive up units. So it's a product, a product that is very, very unique. We have on the back end, we have economies of scale, meaning that We have a roll-up model. So we have our own brand, Harth Fire Self Storage. We have our own management infrastructure. We have a single platform that manages all of our stores. Same thing like a Home Depot or whatever. So I can evaluate the data across the entire portfolio. Every store that I add to the brand increases the value of the overall portfolio. So now in the next several years, as we're adding more and more stores, I'm getting the individual asset valuation, but now I'm getting a portfolio valuation where if there was a potential for an exit on the back end, I can now send sell to a much larger operator. I can sell to an institution. I can sell to a REIT. I can become a REIT. So it's a compounding effect that literally starts with a piece of land and then continues to build. So that is my allure to it. is

Jeff Stark (RxREI.com):

Mm.

Sergio Altomare:

the exponential and compounding growth. That's what makes it a highly desirable asset class, especially in markets like now where there's a lot of flight to safety, whether it be from multifamily retail office, they're crowding into self-storage. Now, the other unique thing is there are still 70% of self-storage facilities that are owned by mom and pop operators.

Jeff Stark (RxREI.com):

Wow.

Sergio Altomare:

We define a mom and pop operator as individuals or groups of individuals that own say less than five stores. In most cases, it's usually one or two. So there's a lot of consolidation happening in the industry.

claude condo:

Okay. Just thank you for your answer. Just as the time is kind of winning down, I want to ask you a couple of quick questions. Just tell me as an investor, we have quite a size of investors, listening to our audience, what's the tax benefit of investing in a commercial real estate? Just your personal opinion. I know you're not a CPA, but I just love people

Sergio Altomare:

Sure.

claude condo:

to see the benefit.

Sergio Altomare:

Yeah, so we still have the same incentives or the same attractiveness that other real estate asset classes have, which is we can leverage depreciation to offset passive income that's generated from the investment. Now, whether or not somebody is a real estate professional and can actually take passive losses, that's for individuals and their advisors and everything else. We do cost segregation studies on the assets there as well, which typically is about 40% losses, passive losses on a given investment depending, you know, give or take. So it's not as high as say multifamily, but it still ensures that the passive investment is going to generate the income that it should.

claude condo:

And just for me personally, my question would be like, how do you balance such a scaling your businesses to being a man of faith, family man, husband, father? How do you balance all those types so that you can be still productive and your mental state is, you know.

Sergio Altomare:

What I like to say is I give 100% to every aspect of my life. And it starts with taking care of myself and my intentionality. My meditation, my faith, that goes into making sure that I am paying attention to what is most important. Is that 100% of the time? No, it's not. We're still having a growing and scaling business. But my intentions on why I am. building the business and why I have this purpose gives me the drive and focus to pay attention to what's most important. Money is not most important. Most important is our purpose. Our biggest purpose in our household is to share impact, whether it be for our team, whether it be for our investors, to help people be exposed to investing, to building wealth. for their entire life. We don't define wealth in terms of just net worth. It's about having a fulfilling, intentional life where you're able to have that purpose, follow your passions, be where you're at, where your heart is at. That is enough for me to make sure that I focus on the right things, the health, to maximize the day, maximize the week, and maximize my life.

claude condo:

Perfect, appreciate you man.

Sergio Altomare:

Thank you.

claude condo:

Yeah,

Sergio Altomare:

Jeff, did we lose you?

claude condo:

I think we might have lost Jeff.

Sergio Altomare:

Jeff froze up on me.

claude condo:

yeah me too me too but we can we can close up we're gonna have to edit this part but

Sergio Altomare:

That's fine.

claude condo:

I think it's back.

Sergio Altomare:

He's back, Jeff, you're back.

Jeff Stark (RxREI.com):

Sorry about that. I think my internet went out for a moment. Can I ask a quick one, Claude? Or did

Sergio Altomare:

Yeah,

Jeff Stark (RxREI.com):

you wanna?

Sergio Altomare:

I'll try and be real quick. Yeah.

Jeff Stark (RxREI.com):

Yeah, so the other quick question I have for you towards the end here is about where you're taking Hearthfire Holdings. You know, if you go to the website, it looks like you've got the holdings company set up, you've got the self-storage fund, and it looks like you're also planning something in RV parks, which is really interesting. So tell us about... just the next couple of years and what your vision is

Sergio Altomare:

Yeah.

Jeff Stark (RxREI.com):

for the company and what you want to grow it into. I'm really excited to hear about that.

Sergio Altomare:

Yeah, so we have a vision to be a billion dollar company in the next five years. And the RV stuff that you saw, that was kind of a side business, RV rentals, that are kind of offloading now just to be solely focused on what we're building. We have individual investments in development assets, existing value add properties. We're also launching a debt fund, a high yield debt fund. over an income fund, however you want to look at it from an investor point of view over the next couple of weeks that we're going to be launching that as well for accredited investors, high yield, but ultimately grow and scale the company. And then from there, once it's at that size of billion dollars in assets under management, it really comes down to where can we generate the biggest return for our investors, which ultimately, obviously, will be. will be a benefactor of that, of doing a really good job. So it's really building an elite company that's going to serve our team, our family, investors, and really be impactful. We're gonna be launching our own purpose-driven impact where a charitable organization to continue on our mission of expanding education. So that's our long-term vision.

Jeff Stark (RxREI.com):

Cool. Another question

claude condo:

Thank you.

Jeff Stark (RxREI.com):

that we ask every guest that comes on is about resources that you pay attention to. So if you've got a book recommendation that you that you think everybody should read, or maybe it's a YouTube channel or a podcast, is there is there like one or two resources that you think everybody that's listening to this will find invaluable and actually should go out and pick up?

Sergio Altomare:

Yeah, I think it's really it's individual. So whatever number one, it's about identifying your passion. We use I use a disk assessment to understand where why. So number one is focus on meditation. If you've reached out to me, I can give you a paper that I wrote on meditation resources. That's about learning yourself, learning about your passions, learning about how you learn, whether it's YouTube, whether it's books. I'm not going to give you the traditional think and grow rich and rich dad, poor dad. Those are those are obviously staples, but it's really about. understanding your passions and what drive you. We're all on this journey to be able to, of self discovery and as you so discover, then it's about reading all the books on good habits. Blinkist is a really good app. If you want a single resources to be able to consume a lot of content, you could read book summaries and then from there dive in a little deeper. But otherwise it's really about mindset. It's really about growth and it's really about self understanding and reflecting and then tying it to a greater purpose. That's huge. So it's not a direct answer, but if you're a visual learner, YouTube videos, if you don't like to read books, Amazon Audible, there's so many different ways of going about it, but it's understanding how you learn and then focusing on learning.

Jeff Stark (RxREI.com):

Well, the resource you mentioned, you said it's a paper that you wrote. I'm very interested to get my

Sergio Altomare:

Yes,

Jeff Stark (RxREI.com):

hands on that.

Sergio Altomare:

yes.

Jeff Stark (RxREI.com):

So if there's a link for it, we can share it in our show notes. Otherwise, we'll make sure to direct people towards that one way or another.

Sergio Altomare:

Yeah, if you want to, I mean, you could, you could find me on LinkedIn, Sergio Altomare. There's not a whole lot of us that kind of look like this. So you could find me there. Our website is hfirecapital.com or you can just go to investwithsergio.com, sign up for a mailing list, shoot me a message. I'd be happy to share that resources, even get on a call with anybody that I can, I can help. That's, that's what we're about is just sharing impact and yeah, making a difference where we can.

Jeff Stark (RxREI.com):

Sergio, I appreciate your time today. This was awesome. Thank you so much.

Sergio Altomare:

Thank you. Thanks guys I appreciate it as well. All right, guys, we'll talk soon.

claude condo:

All right, thank you, man. Appreciate you.