Grow Your Cashflow Podcast | Evaluating Passive Income Investments: A Guide To Financial Freedom with Dave Zook

Do you think analyzing deals is difficult and confusing? Do you struggle with determining what a “good” deal even is?

One of the first steps I take when evaluating a deal is understanding the incentives of who is behind it and what is in it for them.

In our latest episode of the Grow Your Cashflow Podcast, I interviewed Dave Zook, Founder & CEO at The Real Asset Investors who has raised over $800M for his projects to ask:

What is a syndicator and why you need one as part of your investing roster
How to use syndicators to achieve financial freedom at least 2x faster than on your own
How syndicators pick the funds that they present to investors

🔗 Listen to the episode here: https://youtu.be/uhmHhyMtA_0

#Investing #FinancialFreedom #RealEstate #Syndications #PassiveIncome #WealthBuilding #AlternativeInvestments"

// About The Guests:

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Dave Zook, founder of The Real Asset Investor, transitioned from successful entrepreneurship to mastering tax strategy and investments. With over $800 million placed across diverse asset classes, including cryptocurrency, Dave is a financial expert. His proactive, strategic approach and valuable insights make him a sought-after speaker. Join us on the show to learn from Dave's journey, exploring tax strategies, investments, and the road to financial success.

Pascal Wagner is the founder of Grow Your Cashflow which was formed to help accredited investors learn how to earn consistent passive income from private placements. Previously, he was a Fund & Portfolio Manager at Techstars, making over 300 follow-on investments for the Techstars Ventures ‘17 and ‘21 Funds, he founded Walkthrough, which was acquired by PlanOmatic in 2019, he founded Online Ad Labs which was acquired by PosterBrain in 2016, and he has owned a growing portfolio of real estate properties across the United States since 2013.

// About The Show:

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Welcome to Grow Your Cashflow Podcast where we help accredited investors learn how to earn consistent monthly passive income from private placements.

If you're uncertain about where to invest for dependable returns, have limited access to exclusive opportunities like private placements, or are looking for expert insights and guidance on generating consistent income across various asset classes, then this show is tailored just for you.

By listening to this show, you'll achieve your passive income goals faster by learning:

🚀 Proven strategies to secure monthly passive income.

💡 Expert insights from successful fund managers and investors.

🌐 How to access exclusive opportunities in private placements.

📈 Techniques to diversify across multiple asset classes for a robust portfolio.

💰 The well-guarded secrets of wealth accumulation used by the world's elite.

Try listening to our most popular episodes on your favorite podcasting platform or on youtube. We look forward to you joining our community of investors. You’ll be one step closer to growing your cashflow!

// Links Related To This Episode:

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- Learn how to earn monthly passive income from private placements at: https://hubs.ly/Q023z8mg0

- Get passive income opportunities delivered to your inbox every week by joining our subscriber list at: https://hubs.ly/Q023z93L0

- Follow Pascal Wagner on your favorite social media channel: https://www.investwithpascal.com

- Watch the show on YouTube: https://www.youtube.com/channel/UCRidNcuN5ZH71Ztm5r514nQ

- Subscribe to the Grow Your Cashflow Podcast on your favorite platform: https://growyourcashflow.transistor.fm/

- Reach out to Dave Zook on Linkedin: https://www.linkedin.com/in/dave-zook-63765a15

//Timestamps and Highlights:

00:00 - Intro

01:14 - The podcast's aim to help accredited investors grow their cashflow.

01:32 - Introduction of Dave Zook

01:58 - Overview of Dave Zook's strategy and focus in real estate investments.

02:25 - Dave Zook's involvement in multifamily and community development in real estate.

03:45 - Pascal's personal experience and connection with Dave Zook.

05:05 - Dave's background and journey into real estate.

05:06 - Dave gives a brief overview of his early experiences and family background.

06:00 - Dave talks about his shift from avoiding real estate to embracing it for tax efficiency.

06:30 Dave explains his shift towards investing in multifamily apartments and tax efficiency.

07:32 - Dave describes the focus of his fund management company and the variety of asset classes.

10:08 - Pascal asks about the problems investors face before approaching Dave.

11:30 - Dave emphasizes understanding each investor's unique situation and needs.

12:00 - Dave shares an example of using depreciation to counter tax liabilities.

12:16 - Pascal asks about the problems people face before working with Dave Zook.

12:30 - Dave talks about the conventional routes people try before seeking alternatives.

13:00 - Investors looking to diversify from traditional assets and business owners seeking passive income.

13:45 - Dave discusses business owners transitioning from active to passive income.

14:15 - Pascal discusses the limitations of stock market investing for passive income.

15:07 - Dave shares a quote emphasizing unconventional approaches to success and wealth.

16:31 - Pascal transitions the conversation to the benefits of working with syndicators

17:45 - Dave emphasizes the importance of the deal structure for investors.

20:06 - Dave discusses concerns about fund managers using fees to sustain operations.

21:18 - Pascal highlights the benefit of gaining access to deals that require high minimum investments.

22:15 - Pascal discusses the benefits of accessing institutional-style deals and the importance of track record in syndicated investments.

23:08 - Dave emphasizes the advantage of teaming up with institutional operators for better deals and more scalability.

24:39 - Dave talks about structuring deals to ensure that the sponsor makes money after the investors make money, promoting a win-win approach.

26:04 - Dave stresses the importance of investing in oneself and shares various ways to gather information and educate oneself in real estate investing.

29:30 - Dave emphasizes the importance of trustworthiness and reputation when considering syndicators

30:45 - The value of learning from others' experiences and opinions within investment communities

31:15 - Pascal discusses the value of being part of investor groups, gaining insights, and understanding risks before diving into investments.

31:49 - Dave discusses his approach to matching offerings to target customers, focusing on specific asset classes that align with portfolio objectives.

32:56 - Dave mentions the role of asset classes in achieving long-term equity growth and tax efficiency

33:36 - Pascal Wagner asks Dave about attracting investors who share similar interests and goals.

34:02 - Dave Zook highlights the diverse range of investors in his syndications, including mom and pop operators, contractors, doctors, lawyers, and more.

36:02 - Dave Zook emphasizes the importance of due diligence and getting to know operators and their investors.

38:45 - Pascal Wagner inquires about Dave's transition from multifamily to self-storage and what attracted him to the self-storage asset class.

40:00 - Dave Zook explains why he was drawn to self-storage, emphasizing its resilience during economic downturns.

41:16 - Dave Zook shares his website, "therealassetinvestor.com," and encourages listeners to reach out to his team for more information.

41:45 - Outro

Creators & Guests

Host

Pascal Wagner

I help accredited entrepreneurs & executives in the US replace their primary income through private investments.

Guest

Dave Zook

What is Grow Your Cashflow Podcast?

Welcome to Grow Your Cashflow Podcast where we help accredited investors learn how to earn consistent monthly passive income from private placements.

By listening to this show, you'll achieve your passive income goals faster by learning:
🚀 Proven strategies to secure monthly passive income.
💡 Expert insights from successful fund managers and investors.
🌐 How to access exclusive opportunities in private placements.
📈 Techniques to diversify across multiple asset classes for a robust portfolio.
💰 The well-guarded secrets of wealth accumulation used by the world's elite.

Try listening to our most popular episodes on your favorite podcasting platform or on YouTube. We look forward to you joining our community of investors. You’ll be one step closer to growing your cashflow!

[00:00:00] Pascal Wagner: How would you recommend? Someone go out and find kind of different deals or different partners or syndicators.
[00:00:08] Dave Zook: One of the most important things is track record. Primarily for me, I want to know I can trust [00:00:15] these guys. I want to know their track record. I want to know that they're fun to work with. This life is too short to deal with people who aren't fun to work with.
[00:00:24] Dave Zook: This is a business. This is a wealth building strategy. But we can also have a lot of [00:00:30] fun doing it, build strong relationships and enjoy what we're doing at the same time. And that's what I'm about. Like it just makes life more fun when you deal with good people.[00:00:45]
[00:00:48] Pascal Wagner: Hey there, welcome to another episode. My name is Pascal Wagner, the host of the grow your cashflow podcast. If you're new here, we help accredited investors grow and [00:01:00] diversify their monthly cashflow through low risk private placements. To be clear. We're not financial advisors providing you on advice on your specific situation, but our email list, our social content, and this podcast.
[00:01:14] Pascal Wagner: are all [00:01:15] designed to help you learn how to find and vet passive income opportunities. So that someday when you're looking to grow your cashflow that you'll consider working with us. And even if you never invest with us here, at the very least, we want to help you accelerate [00:01:30] your ability to gain financial freedom.
[00:01:32] Pascal Wagner: So with that, Let's dive in today on the show. I have Dave Zook from Pennsylvania. Dave is the founder and CEO at the Real Asset Investor, which is [00:01:45] a wealth management firm headquartered in Atklin, Pennsylvania, specializing in diverse income generating assets, including car washes, ATMs, self storage, and natural gas investments.
[00:01:58] Pascal Wagner: His strategy is to provide investors with [00:02:00] income Investment opportunities that stand out in a world of financial noise. Since founding in March of 2015, the real asset investor has managed over 750 million across 25 different [00:02:15] funds with a minimum check size of 50, 000. They're known for their syndications and funds that go full cycle, providing their investors with reliable returns.
[00:02:25] Pascal Wagner: He's been actively involved in the multifamily space, uh, and resort [00:02:30] community development with real estate holdings in multiple states and even overseas. He's, uh, syndicated 25 million worth of real estate personally in his career. And notably, Dave and his development partners are pioneering early stage planning and [00:02:45] development of the largest real estate development on the island of Ambergris Cayo Belize, which was rated the number one island in the world by TripAdvisor.
[00:02:56] Pascal Wagner: Dave is also a published author and has been a guest speaker [00:03:00] at the International Business Conference and on the Real Estate Radio Guys. He along with his wife, Susan, and four children call Lancaster County, Pennsylvania. With that, let's hop into the show. Hey, [00:03:15] Dave, welcome to the show. I'm, uh, I'm incredibly excited to have you here and, um, you know, whether Dave knows it or not.
[00:03:22] Pascal Wagner: Uh, he's actually been a big influence on helping me in my career path, and I originally invested with him, uh, [00:03:30] with the ATM investment. I invested 104, 000 with him in a syndication deal that he was doing, and that's been going along well. And, uh, overall, you know, I, I flew out. To go spend time with him and a bunch of other investors where we [00:03:45] toured, uh, some self storage properties and some car wash facilities together.
[00:03:49] Pascal Wagner: And so, uh, I've met and known David for, uh, maybe a year or 2 now. And I've met him a couple of times and, um, has absolutely been an [00:04:00] inspiration to me. So I am excited to have him here on the show. So to get us into what we're going to talk about today, I think it's important to understand. The different types of roles and people that you [00:04:15] interact with in the world of investing.
[00:04:17] Pascal Wagner: When you get into this world, there's a whole new lingo to learn and concepts to understand. There's CPAs, financial advisors, fund managers, sponsors, and syndicators, and the list [00:04:30] goes on. And if you're new, it's kind of overwhelming. So in this episode, I'd love to cover what is a syndicator and why do you need one as part of your investing roster?
[00:04:39] Pascal Wagner: Uh, how do you use syndicators to achieve. Financial freedom at least two times as fast than [00:04:45] you can on your own. And then kind of an inside look into how syndicators pick the funds that they present to investors. So Dave, uh, for our listeners out there who don't know about you, your business, your [00:05:00] background, can you tell us who you are and what you do?
[00:05:05] Dave Zook: Well, thanks for having me on your show, Pascal. This is going to be fun. I, I was looking forward to it, but. So I was born in, [00:05:15] I was very fortunate to be born into an entrepreneurial business, friendly family. And I, I was, I was raised in the modular building space. And I sort of grew up in that business and really went through all different facets of the [00:05:30] business.
[00:05:30] Dave Zook: So I got into the office and, um, during the time, during my late teens, early twenties, I, I saw my dad actually. From the time I was a kid, I saw my dad take the money that he was earning from his business. He [00:05:45] did very well. He would take the money that he earned from his business and he would invest it he would buy farms and land and single family homes.
[00:05:52] Dave Zook: And I watched him self manage some of those single family homes. I just quickly decided that wasn't going to be me. So [00:06:00] I. I made the intentional decision. I wasn't going to be a real estate investor at all. And I went down the business path and I started a couple of businesses, got the business up to the point where they were running very well and it's making a lot of [00:06:15] money.
[00:06:15] Dave Zook: Uh, got myself in a position where I was paying a half a million dollars a year in tax and I just, you know, got tired of that and, and started doing some research and going down the rabbit hole and trying to figure out, okay, how do I keep the [00:06:30] money that I earned? And then I, when I, you know, the further I got down that rabbit hole, the further, the more I started to realize that people were using real estate.
[00:06:39] Dave Zook: To offset their tax liabilities, uh, legally and keep themselves tax efficient. So I, [00:06:45] that, that really intrigued me. And so I got into the multifamily apartment space and started learning keywords like cost segregation study, the bonus depreciation, and it really started wrapping my mind around it. It went from paying a half a million dollars a year in [00:07:00] tax one year to zero the next, and I've been living tax efficient.
[00:07:04] Dave Zook: Every year since going back more than a decade, and so it changed my life. So that's how I became a real estate investor. It wasn't like I started out, I'm a kid [00:07:15] thinking I was going to be one of the opposite, but here we are today. You know, when I figured out that. You know, real estate can keep you tax efficient.
[00:07:22] Dave Zook: I went from not wanting any to wanting, you know, all of it.
[00:07:26] Pascal Wagner: Yeah. Yeah. So how would you define what [00:07:30] you do today?
[00:07:32] Dave Zook: Today we run a, uh, fund management company and we, uh, have several core asset classes and, and really, um, This is going to sound quite [00:07:45] selfish, but it starts with me and my portfolio. Like the, the, the asset classes, we have four different ones for core asset classes that we really invest in.
[00:07:56] Dave Zook: And those, you know, that's just [00:08:00] simply a reflection of my portfolio. So I like to invest with teams and operations teams and people who. Um, have sort of their one thing, um, you know, I, I, I consider myself a [00:08:15] sort of a, um, uh, serial investor, a serial business owner, own several companies and invest in a lot of different stuff.
[00:08:24] Dave Zook: Um, but my operations team, I want them to have their 1 thing, you know, [00:08:30] when I, I'll give you an example when I. Um, sort of investing in self storage, I found one of the best operators. I could have found the best operator, one of the best operators in that asset class. And, you know, just really [00:08:45] started, sat down with the principals and really started asking a lot of questions.
[00:08:49] Dave Zook: And one of the things that I asked the principal was, you know, and he's, you know, he just. Late sixties, early seventies. And I asked him, I said, what else do you invest in? [00:09:00] And he looked at me like, what are you talking about? Like I've only ever invested in self storage for the last, whatever, 50 years. So that was the only business he'd ever had.
[00:09:11] Dave Zook: That was the only thing he's ever invested in was self storage. He is all [00:09:15] in. He's got one thing that he's really good at. That's kind of thing that I like as a serial entrepreneur and a serial investor. I like to have those guys who really know they're the masters of that asset class. Right now we've got storage, self [00:09:30] storage, car wash, ATMs, natural gas.
[00:09:33] Dave Zook: And, you know, I feel like we have that in each one of the asset classes. So it's really just a reflection of my own portfolio. When I find an operator that I can scale with, um, I'll give you another example. ATM, [00:09:45] ATM investor for almost four years. Until I became a partner in the business and took it out to my investor or to my investor base.
[00:09:53] Dave Zook: And so oftentimes that's sort of what I do. I invest with my own money first, and then I find an [00:10:00] operations team, really kind of nail it down and find an operations team that I believe in. Then I take it out to my investor base. So we're fun management.
[00:10:08] Pascal Wagner: I love that. What are the problems that your target avatar has?
[00:10:13] Pascal Wagner: Like your LPs, your [00:10:15] investors, people who invest with you, what problems do they have before they come to you?
[00:10:20] Dave Zook: Well, oftentimes, so there's, there's no real, there's no real one answer. And you know, [00:10:30] that's, that's many times, that's what we do when we sit down and talk to an investor, we try to find out, okay, what, what is your story?
[00:10:37] Dave Zook: You know, because if you have an investor who has a serious tax problem, or let's say you have a, had a liquidity event [00:10:45] or. You know, he's got a tax problem and he's not, you know, he's okay on the cashflow side. He just wants to build wealth and build wealth and he wants to stay tax efficient. And so when you have somebody like that, you may not [00:11:00] take him down the self storage route because we run a value add shop on the self storage side, which, you know, it's a pretty modest cashflow play.
[00:11:10] Dave Zook: We're spending money. We're fixing these things up. We're adding square footage. You know, we're really getting to the [00:11:15] point where we can. You know, package them and sell them to a REIT. So not a ton of cash flow during the hold, not a ton of tax impact during the hold. But you're, you're really investing for some huge equity [00:11:30] appreciation potential.
[00:11:30] Dave Zook: And, and we've had some of that, you know, we, we rolled up a 26 property portfolio almost two years ago, which was a very lucrative deal. But we make, you know, we make most of our money on that deal. We make most of our money on the backend. [00:11:45] That's totally different when you're looking at an ATM investment.
[00:11:49] Dave Zook: You know, let's say somebody had a liquidity event and they made, you know, a couple hundred thousand dollars and they're going to get taxed. Well, what can you do about that? Well, you can invest in an other asset class. It gives you huge [00:12:00] amounts of depreciation. You can take that depreciation and wipe out the tax liability on your liquidity event.
[00:12:06] Dave Zook: Every investor has a different story. You just got to find out what that story is and figure out how you can add the max amount of value to that specific
[00:12:14] Pascal Wagner: investor. Understood. So [00:12:15] you
[00:12:21] Pascal Wagner: work with solve these problems today without you? Like what are the things that they've tried and just come up short [00:12:30] or maybe they just want to diversify into other things and they come to you.
[00:12:35] Dave Zook: Well, the, the, the conventional route is, you know, obviously mutual funds and wall street and, you know, there's kind of profit, those kind of [00:12:45] assets.
[00:12:45] Dave Zook: Well, there's going to be on paper assets. You can call them assets, um, but, uh, you know, oftentimes you've got somebody that comes and they, they've tried that for the last, you know, 5, 8, 10 years. And [00:13:00] they want to diversify outside of that. Um, there's also oftentimes a lot of investors I work with are business owners.
[00:13:09] Dave Zook: Their whole career or life has been around, you know, it's been [00:13:15] around building their own business. Now they got to the point where they got cash. Uh, they've been running this business for 20 years. They're plateauing on their business. They really don't have the energy or desire to take that thing to the next level.
[00:13:28] Dave Zook: They're really in a comfortable position and [00:13:30] business could be churning cash, you know, really giving them a lot of cash flow and building a lot of. Well, for them now, they're looking, okay, how can I maximize that? How can I, how can I continue to build wealth, but do a little bit more on a passive side, make money while I [00:13:45] sleep and not have to worry about it.
[00:13:46] Dave Zook: And, you know, if you can wrap that tax impact around it and really get them to the point where you can say, okay, I don't want to make, I don't only want to make cashflow on this asset, but I want to keep myself, get myself in a position [00:14:00] where I'm more tax efficient. That's oftentimes the investor I'm working with.
[00:14:04] Pascal Wagner: That totally makes sense. I feel like as though, you know, there, there are a lot of different ways that you can try this, especially if you're looking for passive income. I, I think, you know, [00:14:15] I, and my, I've learned from my dad, you know, dividend investing in the stock market and you can collect dividends, but.
[00:14:22] Pascal Wagner: Uh, you know, some of the lessons learned there is that if the stock goes down by, you know, 20 percent and it's only generating 8%, it's not [00:14:30] like a huge, uh, huge return. Uh, you know, you're losing money in a lot of those instances. So, uh, I feel like that, that story resonates a lot. And I also think it's probably because when you.
[00:14:43] Pascal Wagner: As you grow up, [00:14:45] as you get put into society and you might work at a job and they offer a 401k or an IRA, typically like the default place where you invest those things are the stock market. So that's. That's where you get used to those and [00:15:00] you don't know that all these other kind of investment opportunities that that we're talking about here exist.
[00:15:07] Dave Zook: Yeah, and I have a, um, quote that I trademarked it is you can [00:15:15] be conventional or you can be wealthy. Pick one. You could draw, you could swap out the word wealthy with whatever successful or, or, you know, a couple of the words, but really, when you look at society and you, and you think [00:15:30] about conventional wisdom, whether it's, you know, conventional wealth building or conventional health or conventional education, you personally.
[00:15:41] Dave Zook: I don't want me or any of my kids to be on the [00:15:45] conventional side. I just think, you know, you're either going to be conventional or you're going to be successful or wealthy, but you got to pick one. And so that's also how I look at, you know, the conventional wealth building standard that's in our country.
[00:15:59] Dave Zook: You know, it's [00:16:00] all about Wall Street. It's, you know, we're trained to think that. You know, if we worked really hard for 40 years in some cubicle, then at some point, you know, we might be able to afford to live the life that we really want when we're 65. I guess that could work [00:16:15] for some people. It's just not for me.
[00:16:17] Dave Zook: And, you know, that's sort of the, that's been sort of that conventional thought is work really hard, save your money, invest in stock bonds, mutual funds. And at some point you can live the life that you want to live. And it just [00:16:30] doesn't work for me.
[00:16:31] Pascal Wagner: Now that we've kind of covered all of those pieces, I love that point.
[00:16:35] Pascal Wagner: I'm on the same, same, same wavelength of like, well, if you want to see high returns or, or just be successful, you have to do things that other people are not doing. Be, [00:16:45] be contrarian and, and stock market investing is the public market. That's where everyone goes. And, and so, uh, you know, not to say wealth can't be built there, but it's, uh, you know, everyone's playing in that sandbox.
[00:16:58] Pascal Wagner: So I definitely agree with that [00:17:00] one. Changing gears to the kind of next section here, you know, first we talked a little bit about, you know, what is a syndicator and, and why does someone add them? Like what problems are [00:17:15] they experiencing before they talk to someone like yourself? Now let's talk about what are, how, how do you use syndicators to, to like jump ahead?
[00:17:29] Pascal Wagner: In your [00:17:30] financial journey. So what are benefits of working with someone like you?
[00:17:38] Dave Zook: So I will give you some benefits and and and you gotta understand i'm on both sides of the table [00:17:45] here Like I invest as an lp in other people's deals as well Because you know, I I also like the idea that I can invest In somebody else's expertise where they're out there, you know, putting in the sweat [00:18:00] equity and they're making this deal happen and they're, you know, laying awake at night having to worry about, you know, labor and supply chain issues and, you know, whatever.
[00:18:08] Dave Zook: I mean, it's, you know, it's, it's an active business. So I'm very much intrigued with being an LP in somebody else's [00:18:15] field, because I know, I know when you're the syndicator, you're the GP, you know, it's not just, you know, somebody's got to make this stuff happen. Somebody's got to be boots on the ground.
[00:18:26] Dave Zook: Somebody's going to be, you know, uh, over and over this thing, making [00:18:30] sure, you know, taking care of problems, fixing things and all that. So for that, the syndicator or the GP. Um, you know, many times both, but the syndicator is, is working. And oftentimes it's, [00:18:45] you know, somewhat fee based, you know, it could be a profit split, you know, there's all kinds of, you know, there's all kinds of ways to structure a deal.
[00:18:53] Dave Zook: Um, what I like to see when I'm investing in somebody else's deal, I like to see a deal that's not [00:19:00] fee laden on the front end. I like to see a deal where the sponsor makes money after I make money. You know, after I get my principal back for return and there's a split on the back end, whatever, but I like, I'm very, I'm very into [00:19:15] the details when it comes to, okay, I want to see how the deal is structured because this structured where it's all front end loaded where the guy makes his money and then, you know, it's pretty easy to see.
[00:19:27] Dave Zook: Um, what the manager has in mind when you can [00:19:30] kind of look at how the deal is structured and if he's got, if it's backend loaded and he makes money when you make money, that's how I like the deal. And that's really how we structure our deals for, for our investors. Like, look, we either, we either all win or nobody wins.
[00:19:44] Pascal Wagner: [00:19:45] Yeah. I mean, a common theme that I've been hearing, uh, over and over and I've even had on this podcast is this concept of, of fund managers doing deals. So that they can collect the fees to [00:20:00] keep the lights on, uh, and I, you know, it's what what's your take on that?
[00:20:06] Dave Zook: Well, you know, and some industries are are known for that.
[00:20:12] Dave Zook: You know, when, you know, they go out and do a capital raise, you know, a couple [00:20:15] of million dollar capital raising. You really. Uh, you know, one of the big questions for me is, okay, how are you, how are you going to spend my money if this is to keep the lights on and pay the manager salaries and make sure the bonuses get paid out, whatever, and not so [00:20:30] much.
[00:20:30] Dave Zook: But if we're going to go out and create something, and we're going to go out and buy equipment, we're going to really make something happen. Okay. That's a different story. So, yeah, no, they're, they're, that is all things you should be looking at as an LP investor, as a limited [00:20:45] partner coming into a syndicated deals, like, how's this deal structured, you know, it's a manager making all this money on the front end, or is he making the money behind you after you make the money, then there's a splitter.
[00:20:57] Dave Zook: Is there a preferred return? That's all kind. That's the kind of [00:21:00] stuff I'm looking for when I, when I'm coming into somebody else's deal as an lp. So
[00:21:04] Pascal Wagner: one of the benefits, I, I guess at least in the, your case or the things that you look for is that you're always looking for something that is, uh, You know, when the investor wins, that's when [00:21:15] the, the person putting together the deal wins.
[00:21:18] Pascal Wagner: I also imagine other benefits include just getting access to deals that they wouldn't otherwise have access to. Can you think of, can you think of other benefits?
[00:21:28] Dave Zook: Yeah. So we did a, [00:21:30] we put a fund together for a group who, um, their minimum investment is a million dollars. Well, indeed. You know, in our network where we've got several thousand investors in our database, that cuts a lot of [00:21:45] people out of play, you know, when you've got to come up with a minimum of a million dollars.
[00:21:50] Dave Zook: Um, so, you know, there's instances like that where, you know, where it's mainly geared around family offices and, you know, bigger institutional size investors where [00:22:00] we can come in and say, okay, we will do that deal and we will bring you a million dollars, but we'll do it in a syndicated effort on our side.
[00:22:08] Dave Zook: So those are some deals sometimes where you can't even get access to them unless you want to play with a million dollars. [00:22:15]
[00:22:15] Pascal Wagner: Yeah, we're doing something similar for, for the first fund here at grow your cashflow. It's, uh, and I definitely see it, you know, there's just having access to institutional style deals that might be safer or, [00:22:30] uh, you know, that there's just like a certain quality of operator behind it.
[00:22:34] Pascal Wagner: You know, I'm finding that in this space. There's a lot of indie fundraisers. I guess you would call them like people that are [00:22:45] doing, you know, their first or second deal. And and by all means, everyone has to do their first deal at some point in order to move forward. I just think as an investor, I want to be putting my money and into these types of opportunities where.[00:23:00]
[00:23:00] Pascal Wagner: You know, things have been proven. There's more of a track record. And, and I honestly think that those are kind of deals that are better to get into. If you're new to this landscape thoughts,
[00:23:11] Dave Zook: yeah, you know, and it does when [00:23:15] you've got an institutional operator on the other side. And now you're coming in. I mean, obviously you still got to do your delegates, just because the institutional operator doesn't mean the deal is good.
[00:23:27] Dave Zook: So, you know, but, but it does give you, when you, [00:23:30] when you come in with scale and you can team up with them, it's no different than, than our operations team on let's say the self storage side, or, you know, we, we get a better deal because we come in with volume and we're able to buy [00:23:45] bigger, more lucrative deals.
[00:23:47] Dave Zook: You know, when we can, you know, especially with our business model, where our whole business model is set up to where we add value to a, let's say we buy from a mom and pop [00:24:00] operator, then we add square footage, climate controlled square footage. And then we roll up a bunch of these properties into a deal and get some crazy low cap rate from an institutional, uh, buyer.
[00:24:14] Dave Zook: You can't [00:24:15] do that. You know, most individuals can't play at that, at that, uh, kind of scale and that they can't play that game. But when you group it together, you can do it together. You know, you might be able to pull 50 or 100 [00:24:30] investors together and make that deal happen. So those, that's the advantage to be able to come in with a syndicated effort and, and do those kinds of deals.
[00:24:39] Dave Zook: And, and look, this isn't the only way, you know, that's the only way you can [00:24:45] play. And obviously you can go out and do it yourself if that's what you choose to do. And, and, and again. It has to do, it has to do with how active you want to be in the space. Like if you want to, if you want to go out and [00:25:00] buy a self storage facility and run that business yourself, there may be more margin there most likely will be more margin in there for you.
[00:25:08] Dave Zook: But you know, there's also a lot more work, a lot more effort. And, you know, for myself [00:25:15] personally, I believe I could assemble a team and done my own self storage facilities. And went out and really made it happen. I chose to take a shortcut and really team up with an operations team that had been doing it for the last 50 years.
[00:25:29] Dave Zook: Um, so [00:25:30] more than one way to do it, this is the way I chose to do it. And it's worked out very well for us.
[00:25:35] Pascal Wagner: So let's say someone's new, new to this game. They've maybe done, uh, an LP investment or two, and they're listening to this show and they now know [00:25:45] about the real asset investor, how would you recommend?
[00:25:49] Pascal Wagner: Someone go out and find kind of different deals or different partners or syndicators to, to get on their lists, to, to start seeing their [00:26:00] opportunities. And, and what are you looking for? Well,
[00:26:04] Dave Zook: so a couple of things, one of the most important things is track record. I want to know, number one, I want to know that they're [00:26:15] reputable, trustworthy guys.
[00:26:16] Dave Zook: I want to know what they've been up to in the last. 10 years, for sure, um, longer is better, uh, 20 years is better. Um, but, you know, this, our community is [00:26:30] a pretty small community. And so when you ask around, if you're plugged into the investment community, and you start asking around, it doesn't take long to figure out who the.
[00:26:41] Dave Zook: Key players are in any given asset class who the star players are, [00:26:45] you know, and, and, and oftentimes it's better to talk to the investor than it is, than it is to talk to the operator. I'm not as much interested in the slick salesperson didn't tell them that they can tell me all the good things about himself and [00:27:00] his company and what they do and what they can deliver and all that.
[00:27:04] Dave Zook: Much more interested in talking to an investor that's been investing with them for the last 5, 10, 20 years. So, you know, there's a lot of things, but, you know, primarily for me, I want to know [00:27:15] I can trust these guys. I want to know their track record. I want to know that they're fun to work with. Um, you know, look, this, this life is too short to, uh, deal with, um, people who aren't fun to [00:27:30] work with.
[00:27:31] Dave Zook: Um, you know, this, this, this is, this is a business. This is a wealth building strategy, but we can also have a lot of fun doing it, build strong relationships and enjoy what we're doing at the same time. And that's what I'm about. Like, [00:27:45] I, I have the luxury now to figure out a pick. People who I liked on business with and do business with them.
[00:27:53] Dave Zook: And, you know, it just makes life more fun when you deal with good people.
[00:27:57] Pascal Wagner: Totally, totally. You, uh, you don't get [00:28:00] caught up in, in all the bullshit to be honest, but, uh, cool. No, I dig that. So, so what kind of groups are you talking about? Right. So I'm picture, picture the first time investor here and they're new to the scene and they're trying to figure out like.
[00:28:13] Pascal Wagner: Where do I go? What [00:28:15] websites do I visit? I'm, I'm thinking there's groups like the five or six investors group. I've heard of left field investors. I've heard of, you know, white code investor. If you're a physician or, or anything like that. And, and those are kind of small communities. We're now building a community [00:28:30] here.
[00:28:30] Pascal Wagner: Uh, I grow your cashflow to kind of help people start looking at deals and seeing everything. Are there other places that you recommend checking out?
[00:28:39] Dave Zook: Well, the very first one should be. Um, the real asset investor. com. [00:28:45] No, no, listen, I know, I know about most of those groups that you've mentioned. And you know, my thought is, well, so before you invest for your portfolio, you should invest in yourself [00:29:00] and investing in yourself can include going to some of those events live.
[00:29:06] Dave Zook: It can include investing time into, you know, Hey, let's hear about what the investors are [00:29:15] saying on 506 or unless the old investor and I know some of those, some of the, some of the guys in those groups. Well, um, so, you know, that, that is part of it. That's part of investing in yourselves, going on those websites, educating [00:29:30] yourself, talking to people, getting on the forums, hearing what other people are saying about.
[00:29:34] Dave Zook: Different operators all part of it. So, no, I, I love it. You know, I, it can start with gonna local real estate meetup, you know, there's one within an hour [00:29:45] of just about any, maybe not, you know,
[00:29:49] Pascal Wagner: not in, not in Columbia, South Carolina,
[00:29:51] Dave Zook: Dave. Well, there, there, there are investor meetups all over the country. And, uh, you know, so that's a [00:30:00] place to start, but also the forums that you mentioned.
[00:30:02] Dave Zook: Great place to get information. Great place. Great way to invest in yourself. Yeah,
[00:30:07] Pascal Wagner: I mean, I'd probably just tag on to that. There are so much that you pick up just by, uh, being in some of these groups, [00:30:15] text threads, you know, understanding what people. Uh, look for what, what they like about a deal, what people don't like about a deal.
[00:30:24] Pascal Wagner: One of the things that I like to do when I'm, you know, looking for any of kind of investment, or as [00:30:30] I even just got started is, is you don't know what to look for or what risks are present. And so hearing the reasons why a lot of other people are not investing. And then taking that information and critically thinking, okay, do I agree with that [00:30:45] statement or have I found data that refutes this angle or, um, our approaches that, uh, I've found have really worked for me in my journey and that I've been able to pick up being in
[00:30:55] Dave Zook: these groups.
[00:30:57] Dave Zook: No, I agree. I agree. Invest in [00:31:00] yourself first before you invest in the asset class. Yeah. It's
[00:31:03] Pascal Wagner: like, uh, it's like anything in life, right? You got to kind of know how the game is played before playing the game. If you really want to win. A hundred percent. That's a, I'm going to quote that one. That's a trademark that I did myself right [00:31:15] there.
[00:31:15] Pascal Wagner: There we go. Um, sweet. So Dave, to kind of like one of the last kind of sections I want to cover here with you is this, uh, is an inside look into how syndicators pick the funds that they present, uh, [00:31:30] to their investors. So you've raised over, uh, if, if I'm accurate, over 25 different funds, uh, or, or somewhere in that ballpark, what have you learned about your target customer [00:31:45] and.
[00:31:45] Pascal Wagner: How to match offerings to them.
[00:31:49] Dave Zook: Yeah. So I don't know what that number is, but you're probably it's somewhere around 25, but many of those were sort of, uh, it [00:32:00] wasn't 25 different asset classes. Back in the day, we used to do a self storage facility in a, you know, as a fund today, we can, you know, typically we'll have 10 to 15 [00:32:15] institutional grade.
[00:32:15] Dave Zook: Self storage facilities in a fund. You know, but back in the day when, you know, one property, one fund, you know, those start adding up pretty quickly today. We have 4 different asset classes, and I really have no [00:32:30] desire to have 8. I want to go deeper and not wider. I want to pick out star players and the asset classes that I'm interested in, and I want to go deep with them and do a lot of business with them.
[00:32:43] Dave Zook: Um. [00:32:45] You know, and each one of those for me personally, uh, in my portfolio, I have a specific reason I want that asset class in my portfolio. It could be for long term equity growth. It could be for, you [00:33:00] know, to help me stay tax efficient when you have an asset class, it gives you. You know, 80 percent bonus depreciation in year one.
[00:33:06] Dave Zook: That's kind of a big deal when you're trying to stay tax efficient. Um, so, you know, each one of the asset classes does a different thing in my portfolio for a different [00:33:15] reason. And so once I take care of myself, you hear the thing about put your own oxygen mask on first, and you can help other people. Um, but that's really kind of the way that I take, uh, the approach on investing is.
[00:33:29] Dave Zook: You know, [00:33:30] make sure that that asset class works, make sure that it does what you want it to do for you and then go help others.
[00:33:36] Pascal Wagner: That makes sense. That totally makes sense. So, so essentially you're attracting investors who are interested in the same types of things you are is probably [00:33:45] how we would frame it.
[00:33:46] Dave Zook: Yeah. I mean, so there's, you know, you know, like I shared early in the conversation, you know, somebody may have a liquid, I get these conversations, I'll get into these conversations all the time about. Hey, [00:34:00] I'm selling my business and I'm going to have, you know, half a million dollars, uh, in profits, or I'm selling my business.
[00:34:09] Dave Zook: I'm going to have 10 million in profits. I mean, I've had many of those and, and, and our investors rank. I mean, we do have some [00:34:15] family office folks. We have some institutional grade investors in our, you know, that invest with us. Regular, uh, mom and pop, uh, you know, operators have run very successful [00:34:30] businesses, contractors, you know, you name them, doctors, lawyers, CPAs.
[00:34:34] Dave Zook: There is a dentist who has his own practice who makes, you know, a million dollars a year. And then there's a, an attorney [00:34:45] who works for someone at a W 2 job and makes, you know, 750, 000 a year, a million dollars, whatever. And, and so that's very different than when somebody comes to me and says, Hey, I sold my business.
[00:34:58] Dave Zook: It was, you know, I was active in this [00:35:00] business. Sold the business. I got a million dollars, 10 million profit. How are we going to shield this thing? Those are all different conversations to have. And we have those conversations, you know, on a regular basis. But, you know, it's, it's about [00:35:15] meeting the investor where they're at and fixing a problem for them.
[00:35:19] Dave Zook: And it's really what syndicators, uh, should look at themselves as, you know, you mentioned, you know, there's some syndicators, there's some folks out there that, [00:35:30] you know, there's some deals that get structured that are fee heavy. That's often what you see in wall street. Now, if you tear apart those deals, many, almost all those deals are fee based.
[00:35:42] Dave Zook: It's not like, if you win, then we [00:35:45] win. It's like fee based. It's like we collect our fees and, you know, whatever happens after that happens. Um, but no, this is, this is about, you know, finding the deal, putting it, you know, and solving problems for your investors. Investor [00:36:00] syndicators should be as a number one question.
[00:36:02] Dave Zook: They should be asking themselves, how can I solve a problem for my investor?
[00:36:06] Pascal Wagner: Dave, what are, what are maybe three of your biggest lessons or [00:36:15] learnings, uh, working with investors that's made you a better steward of their capital. Now you've been doing this for a while. Uh, and so I imagine the mindset that you started with, uh, you've learned along the way.
[00:36:29] Pascal Wagner: And [00:36:30] you're here now, so what what's maybe changed along the way that that's made you better.
[00:36:36] Dave Zook: Yeah, so, uh, that's a good question. Um, I'll tell you, I'll, like, I, I take investors' capital much more [00:36:45] serious than I do my own. If I lose my own money, I can sleep at night. I'll make it up on the next one. If I invest, I lose an investor's money.
[00:36:53] Dave Zook: Uh, I, I, I keep me awake at night. Um, so you don't wanna go there. And [00:37:00] diligence is a big part of that. Being able to, you know, do diligence and. Look under the hood and, you know, if they're. Audited by third parties that, you know, that's kind of the gold [00:37:15] standard. If, you know, if you can get, you know, audited financials, great.
[00:37:19] Dave Zook: Uh, that's not always possible, you know, in the realm that most syndicators play in where you're dealing with an operator and they're not, you know, they're not all fully audited, [00:37:30] um, you know, and, and, and there is a trade off. You know, if you want to invest. Uh, like an institution and you want the fully audited financials and all that, and you want to settle for, you know, three to 5%, [00:37:45] uh, ROI or 7 percent ROI.
[00:37:48] Dave Zook: Okay. Um, but many times when you're dealing with a smaller operator, that's closer to the deal and you know, they're operating lean and mean many times, you know, you don't [00:38:00] get fully audited. By one of the top four firms in the country. And, you know, so that's kind of a trade off you want the margin or you want to deal with, you know, you don't want the kind of returns that institutions are used to getting.
[00:38:12] Dave Zook: So it is a trade off, but I [00:38:15] say diligence and get to know your operators and get to know their investors and talk to people who've done business with them for a long time. Those are all ways that you can reduce risk
[00:38:28] Dave Zook: for your investment.
[00:38:28] Pascal Wagner: Has that been your primary focus? [00:38:30] Like, you know, first you launched your first fund. What was your first fund that you syndicated?
[00:38:34] Dave Zook: Uh, the first, really the first one that I did with scale was multifamily apartments. Uh, I got into the multifamily apartment space, build up a portfolio of three to 4, [00:38:45] 000 doors.
[00:38:46] Dave Zook: Uh, I, I was totally out by 2022, sold everything. Um, and then, you know, transitioned into self storage. Actually, I started transitioning into self storage while I still [00:39:00] had a bunch of, uh, of multifamily, but really kind of transitioned from multifamily to self storage. And,
[00:39:07] Pascal Wagner: and from there, I mean, I guess what I'm trying to dig into is.
[00:39:11] Pascal Wagner: Is, is it that this recurring theme of, Hey, [00:39:15] you know, I wanted to add self storage to my portfolio and that's why I transitioned or were there things that you noticed in that asset class that maybe, you know, as you went and moved on to others like self storage that, um, you know, were good for, for all [00:39:30] those who invested with you.
[00:39:31] Dave Zook: One of the things that attracted me to self storage, I started getting really interested in self storage in 2017. Um, I just felt like we were getting closer to the top of the market [00:39:45] cycle, uh, than we were to the bottom. And during the research that I did, I recognized that self storage typically did very well in times of.
[00:39:56] Dave Zook: Stress and distress and when things [00:40:00] weren't going so well, and then when you look at, I mean, look, when, when you've studied the space and you look back in 2008, 2010. Self storage was the best performing asset class in all of its commercial real estate [00:40:15] peers. You know, it was least affected on the downside and most affected on the upside, you know, going into and coming out of 2008 to 2010.
[00:40:25] Dave Zook: When you look at what happened in 2020 to 2022, it was number [00:40:30] two behind data center. And so, you know, you just realize that self storage is sort of a hedge. In your portfolio when things aren't going well, that's when you want to own self storage. And so it was sort of market. [00:40:45] I don't know if it was market.
[00:40:46] Dave Zook: It wasn't really market timing, but I kind of, you know, I felt like, um, you know, we were closer to the top of the market. It felt a little frothy to me. Obviously I left some meat on the bone. I started selling in 2019. [00:41:00] I should have helped for another year or two before I really started selling a lot, but uh, like we, you know, we made some money and so good.
[00:41:08] Pascal Wagner: Yeah. Dave, thank you so much for joining us today. This was incredible to have you. Where can [00:41:15] people go find you?
[00:41:16] Dave Zook: So our website is therealassetinvestor. com. And if any one of your listeners reaches out to my team at info at therealassetinvestor. com. We will [00:41:30] reach out to them.
[00:41:33] Pascal Wagner: We will have a conversation.
[00:41:34] Pascal Wagner: Cool. Cool. Thank you so much, Dave.
[00:41:35] Dave Zook: You got it. I enjoyed it. Thanks for having me on your show.
[00:41:38] Pascal Wagner: All right. Now I have some final thoughts for our listeners. There are over 350 of you who are already on my email [00:41:45] list. But if you are not already, if you'd like... Access to our database of private placement opportunities that we see every week and get a first look at the opportunities that we're putting together at Grow Your Cashflow.
[00:41:57] Pascal Wagner: You can join our investment club at [00:42:00] growyourcashflow. io. Now, if you found this helpful, don't forget to share it with, uh, your friends who might benefit from this particular episode as well. And lastly, if you have any questions, suggestions, or just loved a [00:42:15] particular episode, reach out to me on Twitter.
[00:42:17] Pascal Wagner: Thanks for joining us. And I will see you on the next show.