Matt Burk: Real Estate Fund Manager Shares Secrets to Decades Long Success

In this episode of The Real Estate Entrepreneur Podcast, I sit down with Matt Burk, the visionary CEO of Fairway America. Matt takes us through his transformative journey in real estate fund management, revealing how he turned innovative strategies into a thriving investment portfolio over the last several decades. From mastering diversification to optimizing fee structures and cultivating strategic partnerships, Matt's insights offer a blueprint for navigating the highs and lows of the industry. Whether you're starting out or scaling up, join us as Matt Burk unravels the complexities of real estate investment... Welcome, Matt, to The Gould Mine.

Follow Matthew:
LinkedIn: https://bit.ly/3VyV9ZI
Matt's Company: https://bit.ly/4b5SyLu

Follow me: 
Linkedin: https://bit.ly/3L2sTc7
Instagram: https://bit.ly/3soYxtW

Transcript

•  What's up Gould Miners. Today we welcome Matt Burke to the show. Matt is the CEO of Fairway America. A real estate investment firm that has a multitude of real estate funds under their management spanning across a wide variety of real estate sectors. Matt launched his first real estate Fund in 1999 and has over three decades of real estate investing experience. So needless to say this man has a plethora of knowledge and wisdom to drop from and he drops it all. In this episode. We start the episode by talking about Matt's early days as a private real estate lender and how he eventually was able to launch his first real estate debt Fund in 1999. Later on in the episode Matt shares some of the changes that he's seen in the fund space over the last three decades for both fund managers as well as LPS. He also shares some advice for emerging real estate fund managers who are getting their start. In 2024 we wrap up the episode with Matt talking about the future of real estate investing and the key opportunities he sees in the current market. Matt is truly the real deal. He has weathered the various storms that have come about over the last three decades and runs a tremendously successful real estate investment fund. So I cannot stress how much knowledge is dropped in this episode so without further Ado everyone. Let's welcome to the show Matthew Burke Matt welcome to the gold mine. Danny thanks for having out on me of course and the audience is just tuning in right. Now Matt they're at home why should they stick around what do. They stand to gain from listening to your story well if they're in the real estate. Business raising money from investors to uh fund whatever deals it is they're doing. I think I have a lot of experience and insight and uh background on how that works and funds and syndications and a pretty broad long history of doing it. So I think there's uh hopefully something that that is new to them that they can learn from. That's awesome and obviously you you have a fund. You you manage the fund that's and that's Fairway America correct so can you explain what that is for the people that are listening back at home. That might not know what that what Fairway is or what you know what you do exactly yeah well. I'd say our business is pretty broad. Danny we do quite a few things but on the investment side of the business we have managed uh private 506 regd uh real estate asset based funds for many years did the first one back. In uh 99 2000 I guess it was we launched it and um we're on our 11th or 12th. Now so yeah we've we've managed real estate private real estate funds for all on top got it and the majority uh like is it. Diversified amongst various uh real estate asset classes or do you focus on one specific sector yeah. I think each each fund has had a different kind of a structure and mandate I think in the early days the first four of them four or five of them were uh credit funds so they were real estate. Secured leans you know First Trust Deeds some seconds Etc. Okay in the day since that point. In time. Danny the last 10 years or so they have been broader so the Mandate has included um. We still do loans and there's loans in there but also Investments and other uh private 506 reg def funds and investments in both LP and G Equity positions in uh individually syndicated deals or maybe. We take the entire Equity stack if depending on the deal side so yeah. Some of the later ones are more uh. Diversified there is a couple others in there that were peer Equity that were focused on very specific strategy. One was Self Storage. One was industrial. Uh one was multif family so it kind of depends on the fund as to what the strategy uh was or is gotcha okay. So you are investing in equity positions. Also or like LP positions you're investing in GP positions as well correct. So you're you're kind of taking both both sides or taking done. Both of those yes a lot really depends on the circumstances. I'd say our our Focus. Danny is in the we'll call it the sub institutional space I mean smaller deal sizes where the large uh institutions or funds aren't as interested because this the deals aren't quite big enough. I think that has been a a theme of everything we've done right. It kind of uh is a as a more fragmented market like less efficient less of the big players that are in there so we focused on that. But we've done storage industrial retail multi um a variety of different types and we've done a lot of real estate LS gotcha okay. Now that diversification obviously there's there's benefits to that one one thing that comes to mind right away as as an like from an LP standpoint or from an LP perspective is okay great. You've. You have all of these different um asset classes or or or basically investment types that you're making how do we like because we're not specialized. How are we ensuring that like the fund itself knows how to take knows how to operate or like understands each individual uh investment. Type does that make sense so like how how how are you ensuring that like obviously you have a real estate background. I'm assuming you. Partners. They have real estate backgrounds but how do you kind of like um reassure the investor that like their their their investment is safe even though there's diversification as opposed to specialization yeah and I think the if you go back in time. I think we cut our teeth as lenders right so we underwrote have underwritten all different types of real estate in terms of you know how they are valued how they function Etc. So the early days the first 15 20 years of my career was involved and underwriting real estate deals that gave us a great deal of bre in different types of of assets right and then over time we have we have branched out into partnering with various local and Regional sponsors right so we go in we partner up with other people who have a specialty in one area or another and then the co combination of our what we bring to the party for them and what they bring um enables us to really make that we have the expertise on that particular asset type right. So it's it's combination platform Danny where where we partner up with people around the country and and it's a longer story than that that I I you know if you want to go into it. We certainly could but we've done a great deal of work over the last 12 years now helping other fund managers that were similar to me that that want went from going doing one deal at a time into a pooled investment fund helping them think through and structure those funds and it's through that work that we create the relationships that we end up doing deals with right. So we find what I would consider to be best-in-class sponsors around the country who are specialists in one area or another and then we work with them to help them create their own pooled investment funds and help them capitalize. Those funds gotcha and and is that like a vertical of the Fairway America business or is that like a separate business yeah it start well we have we have two different three different entities. Actually. We have Fairway America is kind of the mothership that's the Investments business Fairway spun out a company. A number of years ago called verest verest is a fund Administration platform and advisory so it does the advisory work for sponsors. Syndicators uh private lenders to help them set up their own fund and then it does the back office accounting and fund Administration for those funds. Once they get up and launch so that's a separate but related entity um and then our other platform is called uh funa. It's funon Doom F dsm.com and that business is a a capital raising service where we help invest help. Managers take their funds to Market and raise more capital from investors and do a lot of the backend work for them. So it's a combination platform Danny that's grown over the years and we started off as an investment manager as a lender like and we've expanded over the years into advisory. Admin and and helping other managers grow and scale their their fund business yeah that's awesome and obviously having all that experience and everything you're bringing all of those systems. Processes to the table are you uh acting in an advisory role in and and taking a per and this is just for my own education right. So like are you um are you taking a fee or are you taking like are you like participating in the deal as the GP like how how does that typically work yeah it does vary. I mean the the fund creation work if somebody if a if a fund if a manager comes to us and wants to set up a fund that's just a a flat engagement right. So that's a feed. But it's not a carry right. If they come to us. They want to do the administration that's an ongoing percentage of assets under management. But that's a back office service. If people want us to help them raise Capital. There we we run everything through a broker dealer and so there's a commission charged to that and then we'll take a back in piece of the manager. You know portion of the compensation for whatever P Capital do we raise if we're investing in another manager as an LP or a GP. It really depends on the economics of that deal. Sometimes Danny will come in as just an LP on a deal depending on the size and who the manager is and other times we might come in and put up some of the GP Capital. Uh let's say if they're going to go out and get an Institutional LP and then we'll participate in the GP economics with them. So it really depends on the manager. What stage they're at and the evolution of their business and uh you know what their needs are yeah.
•  That's awesome so coming back to your like initial fund structure and like what you guys were doing. That makes a lot of sense to me right. So you you basically spent a full cycle. It sounds like underwriting a variety of different and lending to a variety of different commercial asset classes as were you the primary lead holder like first position or or were you doing like yeah. In the in the early days. It was pretty much all First Trust Deeds that I would call it you know hard money lending toward commercial real estate. So is for whatever you know. The borrower could not get a a more traditional bank loan and we would come in in a first position. It's either maybe. It's a credit issue. It might be a you know a vacancy issue. It might be a partner issue. A tax issue right things like that and we would take senior position. I think as time has worn on we have done and will do some. Pref. Equity or Mez positions right on certain deals depending on you know how much Equity there is in the property uh. But I I would characterize this Danny as I mean. We're we're real estate people through and through from the very get-go all them I mean I do have Partners in the business. There's four of us um and then there's a few outside shareholders but mostly. It's the people that that work here as the executives. All are have a have a very deep real estate background in one way or another. So I think one of the differentiators for us when we help people set up funds is we have been a fund manager. We are fund manager. We're practitioners of it. We're not you know Ivory Tower theorists or or um. I mean you look. Lawyers are generally the ones who draft the documents I mean and you have to I mean Securities. Lawyer is table Stakes right. You have to have the council who knows what they're doing but often times y you know Council hasn't run a fund. They don't necessarily understand. All the interconnected parts of the very I mean there's origination. There's Asset Management there's Capital raising there's investor relations there's accounting right. They all have this Confluence effect that you need to understand the the interconnected parts. That's what we help managers you know through when they're setting it up to hopefully set it up properly in the first place because there's all kinds of things that they don't. They don't even know what they don't know right because you can't know until you've gone through the whole. The whole process so uh and then that that also serves as our origination platform because everybody wants and needs Capital. So when we find shes we like then. We'll we'll talk to them about right. How do we do deals together yeah no that I mean that's a really awesome some way and I I like how you've like created three verticals right. So you've got your your fund and then you've got the capital racing component and then the fund admin component and and you almost see. It's almost like sounds like you use the fun admin component to uh to almost vet the sponsors find the ones that you like and then start partnering them with on them with the with the capital. We use the advisory component to do a lot of that right because we're going we get to know them and we're asking a lot of questions so so Danny. How do you what kind of a fund. Do what's your asset strategy. How do you underwrite who is your team. What you know what kind of investors who's your investor. Target base. Like what size are they how do you match that up and then through that process you're right we get to know them we get to understand and then oh hey we really like this person right. There's some so there there. The admin is after the fact right because after you launch a lot of this is what happens to a lot of people managers you know you launch a fund. Most real estate people don't really they're not accountants. They don't really understand the the application of pools fund accounting where you're ascribing you know you're you're allocating income and expenses to investors who are coming in at different points in time when assets are coming in at different point in time that's not something. Most real estate people know how to do right so being able to do it well though is important in terms of being able to Eng gender confidence with investors when you're raising money. So fund. Administration is a business that really grown in the last 10 years I mean we started doing it. There wasn't a whole lot of people that did it. I mean it's always been sort of table stakes in the institutional world. I mean if if you're these huge you know Blackstone and black rock and Carlile and groups like that they all have a fund administrator. But when you get down into the small balance world you know under 50 or 100 million bucks. You know that used to not be a thing for for um fund. Administration companies but it's more and more a thing now because if you're a private investor you want to know that the books are being done you know properly and that income allocated appropriately so you know. We started doing the admin side that does give us a level of comfort that when we're partnering up with people H that we we know that you know everything's being alloc accounted for when you say sub institutional space. You just dropped the 50 to 100 million uh fund size so in terms of asset size. Though are you are you looking at that as like a like a volume volume like a dollar amount like under 10 million under 20 million or are we talking like uh like size of property like you know I'm assuming that you're looking more at it like from a volume perspective right like okay. It's no more than x amount of dollars. Typically. Yeah. I would say there there is no sort of magic. You know cut off number and I think it depends on what you're applying the number to when I threw out the 50 or100 million number. A moment ago I was referring to total assets under management and a fund right. Now you did a single deal for 50 million or 100 million bucks right that's plenty big for you know attracting. Let's say a JV LP partner that wants to come in and write a 20 or 30 or $40 million check right. There's a lot of groups that want to do that so on a single deal. I would say you know maybe below 15 or 20 million total cap. You know total capitalization is hard to get the attention of a of a big player. You know you get up to 50 or 100 on a single deal. There's lots of people that you know would look at any sponsor to come in for the lp portion of a deal like that on on a one on a deal by deal basis but in a pool fund like anything below frankly. Even 250 or 500 million is considered small in in the fund.
•  World yep makes sense now you got into this. You said you said like you got into real esta and finance by accident so how does that work well. I think tell me I didn't really know what I wanted to do coming out of college. I went to I was an economics major and you know I went and found a job and I ended up going to work for a a Consumer Finance company that did sales contracts personal loans and it did some real estate loans. And I'd say you know and as I just trained at that company. I found that oh the real estate piece was interesting to me. I mean how Val the property getting appraisals you know how how you determined what that value looked like so I kind of gravitated toward the real estate Finance section. I didn't I was at that company a couple years I went and I found another job with a company that did nothing but real estate started focusing heavily on the real estate side of the equation I I moved from California to Oregon in the early 90s to set up a branch office for that group and then about a year later in the early 90s smnl crisis which you're sure way too young to remember uh. They you know a lot. They shut down a lot of their offices and I was kind of without a job. So in my late 20s I sort of well I either go back to California or go find another job where I kind of start my own thing. So I hung out my shingle and you know I was 27 years old. I think and and went for it. So I'd say it was accidental in the sense that I didn't have some master plan to be a real estate person but you know once I got into it. I found I liked it and. You know the company shut down and I started my own company yeah yeah and and honestly like because when people hear the story hey I just started the fund. My you know a fund in in '99 right and and and here we go. But it's it's it's cool to hear kind of like what the background was so it sounds like you had like plenty of exposure oh yeah to real estate before you got into the fund space and I think like you know there's a lot of people who like have zero knowledge and then they want to like start a fund and it's like that doesn't necessarily work out very well bad idea and I get those people man. I mean they call up and say hey I want to set up a fund and I go well have you done a syndication. No I haven't done one well and do a syndication or two or 10. You know so you know what you're doing first and then think about setting up a fund. But yeah. I mean I started the company in 92 and we we didn't launch that first fund until 2000 so that eight years doing individual trusted. It's matching up investors in one deal at a time and then and that's that's the typical progression. I find Danny for a lot of people is that they you know matching up one deal. One investor or one deal. Multiple investors at a time gets cumbersome. I mean it's time so at some point you go well hey if I had discretionary capital and I could you know take advantage of the deal quicker you know and that's when people start thinking about a fund and that's kind of the stage at which we catch a lot of these folks and say okay does it make sense or does it make not make sense. Now a lot of them tell people. I mean I'm a very straight shooter if you're. If I don't think it makes sense I'll tell you hey. I think you're better off to just keep doing them one at a time or uh or whatever interesting okay. So seven years it sounds like almost eight years. You spent syndicating deals right doing doing them one of doing one-offs and then you you launch fun one that's correct and in our case this is you know in the we didn't even Syndicate them. We just we were doing pretty small deals. I'd say under a million bucks. So we would almost always match up one investor and one deal. I mean if I had a borrower that needed 200 Grand I'd find the single investor that had 200 Grand we matchmake and we keep points and we charge a servicing spread and we'd collect. It make it easy for the investor and they'll charge 12 and pay the investor 11 keep one and do all the work for the investor awesome okay that makes a lot of sense. Now obviously things have changed since then right because you started in the 90s and now we're yeah very so how aot how have you seen how have you seen things. Progress like how have how has the fund space evolved um over the last couple of decades uh well dramatically lots of changes in those times. I mean they fundamentally you know I think making good real estate. Investments similar to what it has always been but um you know the jobs Act passed. In 2013. You can now publicly solicit and advertise I mean back when I started you couldn't you had to have a prior business relationship um. So I think it's. The internet has obviously changed things and now you've got AI coming down the pike and it's changing things even more rapidly. Uh technology and automation. Probably the biggest change I mean people could find it on the internet. You can mean you know we started doing this. I mean you rint out documents and put them in a FedEx thing and put a little sticky note on them and people to sign there and send it off and you know and then they try exit back and then oh they forgot to you know sign in the right spot and you'd have to send it back to them and you know now. It's you do a docy sign and they sign in you know in seconds right everything's back then it was all you know analog offline. I that's probably the biggest change interesting and in terms of like investing styles do you think stylistically like meaning do you think that funds have changed atically in the way in which they size Deals. They look at deals uh or or pitch deals to investors like how are you seeing kind of like the the daytoday of of the funds and their business models. Um is there a big difference between then and now yeah. I think there's a lot more variety than there used to be um. There's a lot more funds than there used to be. I think it's a lot more prevalent that people know about it um. I think big part of that because people can you can get information at your fingertips that you know. It took me months or years to learn a lot of the stuff that we had to learn about what a fund even was. How does it work. Right had to hire lawyers and it was a cumbersome process. Today. There's there's massive amounts of information. You know online that you can find and and service providers you know every which way that'll help you so. It's just. It's a lot easier than it used to be.
•  I think stylistically you'll see a lot more a lot more funds that that do certain things that back then I don't think they did as much of I mean you'll have a retail fund. An industrial fund a storage fund right and you didn't see nearly as much of that. Back in those days. You you'd see a few but not nearly what you see today interesting. Now. I'm assuming that your fund still kind of invests in in a multitude of asset classes are are there any sectors that you're shying away from right. Now um it depends which fund I mean some funds we like our open-ended uh. Diversified funds. They have a very broad mandate so they can invest in you know a lot of different things. Some of the more asset specific funds storage fund for example a mass limited strictly because so it depends on the Mand yeah um. I think we have uh tried to stay away from well certainly haven't done much office. Uh thankfully that's a tough asset class. Although I do know a few fund managers that are done extremely well with Suburban office right so thing I find about real estate. It's a little off topic but relevant is in in the sense that um when you just use the term office right that's a pretty broad brush. If you're in a you know downtown CBD office tower that's totally different than if you're in you know walk up Suburban you know uh you know kind of Standalone office right because that stuff in many markets is doing extremely well. So I think I like the fact that there's a lot of different ways to skin the cat and and it really depends on the individual manager and over the last 10 years I mean I've met managers all over the country that have you know what they believe is their secret sauce on how they make money in real estate and you know for good operators. There's always opportunity in just about any Market fair enough and and you know what I I think that I would more or less agree with you if you look hard enough. There will be opportunity. I think that like people like to kind of broad stroke say oh like this sector is dead. Or this. Isn't a good sector to invest in but like the truth is is like the deals are out. There they might be harder to find yeah. I there's there's so much more information available. Now. That's another way I think a business has changed. You you talk about about I mean it used to be like people could you know bird dog things and you had to work really hard to get the information and find off Market stuff and there just wasn't nearly as much information readily available. But if you're a seller today like you got to kind of be crazy not to just go online and be able to get quite a bit of information about what your property's Worth right. Whereas day people could you know. I want say take advantage of but like you know if a seller's not doesn't really understand what they've got or the buyers got you know a way to to you. Know add value to that quickly that the seller is not aware of that you can have a disparity of price immediately and you make money on the bot right. It's a lot harder to do that in today's world than it was you know. In the past. I think um but there's a lot more opportunity. You know the volume is so much higher because there's so much more activity and it's so much easier to get information that they used to be where do you see this going because uh you know I I was talking to another guest where you know he basically like quited it to like uh you know like guess the tune right. It's like hey like someone you know guess the tune in six notes and then someone like says no I can guess it in three and then like someone's like oh. I can guess it in one you know and it's like no you can't right and I was like that's really interesting. You know so uh at some point that model kind of breaks and and it seems to me like we had the kind of like the perfect storm of that plus rates all at once and so I'm just I'm just curious what you what you see on the horizon right now because for the last year it's been like oh there's going to be blood. In the water. There's going to be blood in the water but like is there really any blood. In the water. I mean I know that people are are struggling right. Now. There's definitely like you know Keys being handed back to the lender but not at the scale. I think that we all expected it to you know expected there to be so like now. I'm wondering do you like is it ever going to get like that do you think or or are we waiting for something that might not ever happen. You know. I felt that way after Co right when Co happened. I thought there's going to be blood. I mean this has to be the downturn right and then you had shut down and then the FED started popping money into the system and then it took off like a rocket right so. But I think rate increase definitely had a much more negative impact on real estate than than Co did other than perhaps office right which is fundamentally changed based on you know human activity and the way people of the workforce and such short answer man. I'd say I do think there's going to be plenty of blood in the water. I think you're already seeing it. I mean we certainly have you know Assets in our portfolio that with the benefit of hindsight I wish we had the done right that you bought the peak of the market um and I think depending on what sector someone's in and what asset type they were pursuing. It's going to be more more or less pronounced depending on those factors. But you're you're saying you know a lot more. Uh pain than you saw after covid certainly in the real estate world and I think in some sectors you're seeing comparable pain to what you saw in 200. You know 91 you 8 n 10 in that uh aftermath of the Great Recession over the next five to 10 years where do you see and I feel like you're one of the like really good to ask this question because you have you obviously have exposure to a wide variety of like sectors like where do you see the biggest opportunity right. Now the most like the most amount of opportunity sector wise that's a great question man and um I think you people who have access to knowing how to take advantage of special situations and and buying into opportunistic scenarios probably have the most opportunity. Currently. I talked to this morning for example that's looking at setting up a fund that did this years ago and has been doing industrial the last seven or eight years but just their bit ass spread is so high.
•  It's like they underwrite very tightly and they just they can't find anything. So they're special situations which is nl. 's you know taking things back buying them. From Banks. You know dealing with the um you know special credit. You know groups and and special servicers and things like that. I think there's a lot of opportunity in the next two or three years in that market. Uh that you have you're just now starting to see um in terms makes of real estate. I mean I think multi probably goes on a pretty. Good run again because I think you're going to see uh. I think the demands for housing is not going to go away and I think you're going to see some. Supply constraints. The next a lot of stuff came online but it's not going to get built the next two or three years so that should present an opportunity 3 four years from now um if people can hold on long enough. I think it'll rebound nicely but um I think anybody stuck in variable rate debt right now on value. Ad stuff is getting hurt badly. I think there's opport for people to buy you know quality. You know what's pretty quality product that pretty distress pricing. And we have a bunch of fun clients that are that are looking at that stuff right. Now you know it's interesting because I I talked to someone recently who was saying like the banks are a lot more flexible right. Now the lenders are a lot more flexible right now in kind of like helping people get through. This I I wonder at what point like that is no longer like that no longer becomes the case because like for example if you've been in default now and like you're you're going on like almost a year like that you're your rate adjusted whatever now you're like at a year like at what point at what point does. The bank say like okay like enough's enough because obviously they don't want you know they don't want to have to for like no one wants that to happen but at what point is do do do. The lenders say like enough is enough because I feel like we haven't quite gotten there. Yet like I feel like there's there have been a lot of back room deals that have been happening. I think that's right I I would say if it's a insured institution that really comes down to The Regulators right because it's all based on uh on regulatory requirements on what they can or can't do. If there's another way the business has changed over the last 10 or 15 years is there's vastly more nonbank lenders than there used to be right. It's a lot of funds that that are capitalized separately and don't have the same restrictions that the banks do they're obviously a lot more expensive you know but depending on their sure they're capitalized. I see them kicking the can down the road too because they don't want to recognize impairment on these things in their funds if they possibly avoid it so any which way they can can restructure something with the borrower to avoid having to recognize you know that impairment and hope that they can you know allow the borrower to to hang on to the property and get out the other side of it and kick the can down the road. I think they'll do it as long as possible. It's just human nature why would why wouldn't the PRI those private debt F because like so an a like normal listener average listener whatever you want to say listening to this be like well why why wouldn't they just want to take the property back because the property probably isn't worth the amount of debt that is on the books and the minute. They take it back they'll have if they're being especially if they're being audited right. They'll have to recognize the loss at the moment. They take that property like really should be recognizing the loss the moment they believe that they're not going to get their money back right but most of them won't do that because then the fund performance right and then explain to their investors why the fund performance suffered and then it makes it harder to raise Capital so they will avoid you know and it look it depends on the manager right. Some will do it to the point where they go beyond the bounds of reasonableness and a lot of them will just they'll take advantage of the accounting treatment as long as they possibly can right or as long as they have you know accountants that will you know agree to it. But even then the accountants often times don't really know they're not real estate people so you know what's the underlying value of a piece of property. It's what the appraiser says it is right well. An appraiser is looking back in time too so I think it you're starting to see that now that a lot of the the as things transact. The values of the property are coming down and appraisers now have to recognize that because now they actually have something to compare it to that would support or show the lower number. So you know it everything real estate moves so slowly compared to the rest of the world right. It just things happen slowly. It's like a slow moving freight train that you can see coming from miles away. That's going to run you over but you know you can't get off the TR yeah.
•  Switching gears a little bit when we're talking to like. Let's say LPS passive investors their the those that are listening to this episode right. Now there there's two distinct models here right. There's the syndication model. There's the fun model obviously you've had experience you know running the fun model. You've had plenty of experience in in helping people who have come from syndications over to the fund model. How do you as a a passive investor kind of make the determination as to whether or not you should be investing into a syndication like deal by deal versus just like Jesus Take the Wheel. Here's my money put it in whatever asset or you know property you see fit. I think it it depends first and foremost on the needs and the situation of the lp. So if there I mean I know lots of uh LPS who are very sophisticated real estate people and most of them will want to invest deal by deal because they have the capacity to underwrite those deals themselves because they know how to do it and they want to be able to pick and choose the the deals they put their money into because they trust their own judgment right yeah and then they can kind of have more. Say in it whereas they don't want to Advocate the decision making on the investment to a manager right because they feel confident that they can do it. But I'd say for a lot of comp passive LPS that come from other Industries and don't have that real estate expertise right. Then it's much more difficult for them. To part you know underwrite an individual deal and know whether that's deal is any good or not right because they just don't personally have the capacity to do it so unless they've got an advisor that does have that capacity I would say the diversity of a fund for most LPS affords generally speaking. It's not as binary right in a syndication. If a deal goes bad right you can you can have you know significant problems lose all your money right and or some or all of your money in a fund. If you have 10 deals and one deal goes bad right and it loses all its money. The lp does might you know you get a lesser return but you don't get hit as hard by that one particular deal. So I I I'd say neither of them. Danny in my opinion is inherently good or bad or or one is better than the other. I think they just function different differently and I think different investors should be thoughtful about why they're investing in one or the other depending on what they're trying to achieve and depending on their level of sophistication on on how they would underwrite. You know a deal or a manager that makes a lot of sense and I would you know. I I I would think that the majority of LPS are not sophisticated enough to do a deal by deal underwriting uh or to underwrite each deal uh individually um or even if they are sophisticated enough if they're accredited. It likely means that they're uh quite well off and if they're quite well off then they're likely super busy people unless they're like kind of in that later phase of their career or or whatever um and so like for examp. I think of like Physicians right like like a really good uh like I always think whenever I think fund I always think Physicians because it's like you know after you've paid off your debt. There's a lot of it right uh but after you've paid that off you're likely raking in some some decent cash and so but I I was surprised to hear and and I've had a couple of other Physicians who are uh now either syndicator and or fund managers and um I was surprised to hear from from various Physicians. How uh just like financially illiterate they feel like the majority of the physician population is and I'm sure that that's not just unique to Physicians. I'm sure that's true with like most a lot of other specialized Industries where like you're making lots of money. But you don't really know what to do with it. Yep. I and yeah yeah I I think all of that is true. It's say another way that the business has morphed in the last 10 years. Especially I think this is post jobs. Act is that you see a lot of I'll call. I call them tribe leaders or or influencers. So you do you get somebody who used to be aan right who started investing into uh real. They found they really loved it and in fact they loved it more than you know being a physician and they stopped being and they went out and started doing more real estate and now they go aggregate a bunch of other Physicians and bring those people into a tribe and then you know kind of turn them onto the real estate world and a lot of managers now try to find that tribe leader because that tribe leader represents a significant point of influence to drive significant Investments to a given manager. You know that happens a great deal in all indust. I mean I've seen in you know Physicians dentists uh Engineers. I mean different all different types of professions where people you know make good money and need to find a place to put a portion of it. I like the I like the terminology tribe leader. I think that's a really good way of putting it and what's interesting is like yeah. There's like so many different silos that I've seen recently where like uh you Physicians is just like one of them but like uh I know like a ex attorney. That like was also doing you know some like that too and so. But there's a lot of value there right because they know when you get someone who's that who been been that integrated or that deep into that industry for that many for that long and then they you know get into uh real estate investing it. It is kind of like a lethal combination um especially when it comes to the capital raising component which is you know interesting um. So. I also know uh one of my buddies Justin. He he does it for like salespeople so like his whole thing is like hey. You know you're a high. You you earn a lot of commission. You're not really doing anything with it and he was a ex salesperson and I thought that was really interesting kind of like uh Niche you know carveout. So I uh I could definitely see that being salese. I mean attorneys accountants uh Engineers professional athletes right any any industry profession that makes you know good money yeah. You find someone who kind of came into the real estate world and now goes back into the world. They came from and helps you know be a a you know. A funnel into this world I mean that that does that happens way more than it used to you know now and then people try to figure out. How do they monetize that business model right because they you know you can't get paid or you're not supposed to get paid for driving. Investments to other people unless you're affiliated with a broker dealer and you have you know. Securities like licenses to do that so I thought different business models spring up where people you know charge membership fees or or educational components and so forth and then all of those become sources or leads for various managers on how they capitalize the deals they're doing yeah. It's a really interesting space um and I I definitely see it you know for all the for all the legalities right and obviously you got to make sure that you're compliant but for all the legalities that that are there I I I see a lot more upside there than I see downside. I think that like overall you're seeing America and Society in general just becoming more financially literate through um through those types of things like you talked about it earlier right like the information just didn't exist no like when you were starting out right. Like you had a. There was no play you couldn't I mean I remember man. This dates me right but in my early days I would go. The Robert. Allen was a guy who was like. He was a Pioneer in back in the day of people that would talk about how to make money. In real estate. You know go buy but go buy a house using OPM other people's money you know and OPM right and there there was there. I mean. There was a handful of those people doing it back then and now there just see it. You know it's a whole different whole different world. It's uh. It's definitely interesting and and to me what I'm I'm really curious about is what this space looks like you know in 10 203 years like I I don't know like I don't know if all of this information is going to saturate the space um or it like I'm really curious to see. What happens I I like I don't have any like hypothesis like. I'm not sure if you do but like to me. I'm just like yeah. This could go a lot of ways it could get super saturated um or or people will just get exposed for what they really are and like you're still only going to have like certain amount of players because people aren't willing to do the work. They have the information but not necessarily willing to do the work. So I'm just you know it's kind of it'll be interesting to see what happens yeah and how does artificial intelligence impact. The way things are being done in the I mean. I think you're starting to see the impact now on the space and yeah. It's um. It is a fascinating uh fascinating space and a fascinating development of what's going on in the world. Like you know I don't know. I don't pretend to have the answer yeah me neither so coming back to when you started because obviously you've you've you've been growing this now. So you said 92 so like yeah.
•  So that's a three decade uh journey and I'm wondering how many investors like have you been able to add to your database in the last couple of in like the last three decades I'm wondering what that looks like and then how did you build that investor dat. This is a very selfish question by the way you know. I'm just curious like how how did you do that over time like what were the strategies that you used to build a database yeah. I mean if I go all the way back in the early days it was very very analog old school. You know you had to try to figure out who might be interested in these private Investments and it was like literally newspapers Daily Journal of Commerce finding beneficiaries and they would publish a list of people who were the benefit this year trustee. Most of the time it was Wells Far Bank of America whatever but every now and then You' see an individual's name right and then you'd have up the name and then okay. This person was a beneficiary of a trusteed why the did they make a loan against. It did they sell the property and carry back the paper and then you'd have to go try to figure out how to get a hold of that person which required you to do even more analog work. So I mean for years that was the kind of stuff you'd have to do to try to find it. I think 2013 was the biggest change to all of that that's when you started being able to do public solicitation and advertising right the internet had grown far enough along where where you could go out now and start doing things publicly and tell the world that you had a fund before you couldn't you couldn't do that yeah um. So I mean. I'd say it's in the thousands. I don't know the exact number Danny I mean and I'd say there's and I'd striate that by the ones that you know there's a probably a thousand or several hundred that we have done a lot of stuff with and then there's a long tale people that might have done a little bit or nothing or have been in the database and acquired right that you continue to Market to but it's a fewer you know they they don't. They're not as active so yeah. It's in the thousands. I'd say it's you know. It's probably under I mean like of anything that I'd consider more than just you know a random list right. It's probably under 10 but north of five. I'd say gotcha that that's a very sizable database and it's what sounds like is that post 20133. Once you were able to publicly advertise. You you you put some focus and you put some sounds like marketing dollars and really started to uh. You know create. Some lead generation channels is that what I'm hearing yes and and yes we did and but I think you know there's some these crowdfunding sites that that went out and spent you know enormous amount of VC money. You know acquiring investors and I believe groups that and I've seen some of these and actually looked at acquiring lists over time and they've got lists in the you know. 50 100,000 name range you know but we didn't never really do that. I mean tried to keep it tight enough where uh you know I knew that the people were were genuinely interested in it and not just right you know a random list. But it's not random. But so I don't know man yeah. The short answer yes. We did it analog the old school way. We still do get a lot of rals from you know existing investors. Uh but a lot easier to go out and tell the world that you exists now and try to attract people on the internet. Even that with social media has gotten. I mean you see it on your Linked. In feed and whatever else you know what Tik Tok Instagram I mean there's just an endless parade of of stuff out there anymore. It's like I don't be honest man. I mean I get i' lose track of all of it because there's so much of it yeah going on that uh. Uh it's it's just it's hard to stay on top of but the way people attract investors to today compared to how they used to do it um very different I I feel like from an investor standpoint. There was a lot of noise and it's hard to between you know. What's you know what's worth listening to and what's not yeah that definitely makes that definitely makes sense and and and even in the last man and maybe. This is just because like you know it's almost like the I forget what the what the law is called. But like the law where like when you are look in the market for like you know a black BMW. Then all of a sudden you see a bunch of black BMWs on the road right yeah. That's the the uh what do they called that the um the reticular activating system right. It's EXA exactly yeah so yeah that's right yeah yeah. So it's like maybe that's why but like specifically in the last five years um and even like postco I want to say really is when you started to see a lot more of that and that could just be me. I don't know if you seen it too. But that's but I think too man is of course. The the algorithms of the way all this stuff works is that you know I think it people more and more myopic because it feeds you more of what you're interested in right. So you tend to see more and more of the stuff that matters to you or that and then it reinforces. I mean like the breath is less because it's all the stuff that you you know click on and like and then it becomes more and more focused right check G good. But I mean is it good. I don't know yeah it who knows it every once in a while. I'll get served up an ad that I'm like I'm really glad that that popped up right um but then for every one of those there's probably like you know 40 pieces of garbage. At least it's harder and harder to um. I mean there's just so much messaging and noise constantly. You know and you got your phone in your hand. It's 247 right. It's really difficult to to not get inundated with stuff which I think makes it harder to cut through that noise and have a message to people that you know they actually care about yeah. Now it.
•  It's uh it there's definitely there's definitely pros and cons um and and it's interesting to kind of hear your perspective on that and it's also interesting to hear how like lead generation or like the ability to lead. Generate has also like helped you grow the database because obviously you had a a huge uh base even before 2013 right so I'm assuming that like it's not like the database like exploit but like hearing that you already had that foundation and then you know put. Le generation or like kind of like put that installed that pillar into the business and that also helped grow it makes a lot of sense to me. It makes a lot of sense yeah and I think we continue to try to find new ways. I think these days especially with funsong uh which is kind of our main initiative finding ways to partner with other groups. Tribe leaders people that have a following right and bring value to those people right. That's I think trying to move the fulm over instead of you know capturing them one investor at a time. How do you you bring value to larger groups of people that that you know already have you know because it's a transfer of trust. I mean that it's a great book by uh Robert. Calini called influence right. It's social proof and the transfer of trust um. You know that's a big way to try to generate additional investors in our database on a going forward basis interesting well. Matt we're coming up on time here. So I want to be uh respectful of your time. I do have a couple of like last question questions here though sure first one is for emerging fund managers. Someone who's just getting started wants to start their first fund. What is a one piece of advice that you could give someone who is in that headp space make sure you know why you're doing it and make sure that that you're not um chasing. You know myths or things that you think are real but really aren't because there's a lot of and misconceptions about running a fund that I don't think people understand. I mean I use this analogy a lot. Uh Danny and you might even be too young. But you know. It's like having kids you know you can't until you have had children. You know you can read all the books you want about you know having kids or you can babysit your niece and nephew. But you don't really know what it's like to have until you're a parent you know and it's for the fund manager right like you can listen and hear and listen to your attorney and all that but until you actually run a fund. You don't really know what all those things are like so how do you prepare yourself as best. You can you know before you become a parent or a fund manager. Right is like that that that's the best advice I can give them and and I you know and that's not entirely self-serving right is like that's what we try to do for managers is say hey like let's let's here's the real deal right. So no the real deal. I guess is is the is the best advice I could get makes sense well. Matt you've been awesome and in traditional Gold Mine fashion want you to leave the audience with one final gold nugget yeah. Real estate is uh a great business. Just you know if you're going to be in it. You know pick your lane and know what you know why you're in it and know what you're trying to do and you know and treat. People always treat your investors and other people as forthright as you possibly can so just you know be the real deal yeah love that awesome. Matt you've been awesome thank you so much thank you for having me. Man I appreciate.