Stay ConnectedThe Alternative Investor is a show about investing money outside of the stock market (private equity, real estate, venture capital, etc.) where the returns are typically higher but the investment decisions are less straightforward. Join Brad Johnson from Evergreen Capital as he discusses investing in alternative assets to help you make better decisions with your investment portfolio.
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Copyright: © Brad Johnson
info@evergreencap.com
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Mastering Alternative Investments with Evergreen Capital's Brad Johnson
In this episode of Roger Becker of Street Smart Success, interviews Brad. They delve into a range of alternative investment topics, emphasizing Brad's core investing principles. Brad briefly shares his background, including his journey from a career in real estate and private equity to establishing Evergreen Capital. He explains how his company focuses on durable investments with significant cash flow elements. The conversation covers various alternative asset classes, including real estate, private credit, and private equity strategies like GP stakes. Johnson provides insights into the allocation strategies for individuals looking for capital preservation and growth. He stresses the importance of avoiding over-leveraging and focusing on downside protection. The episode offers valuable lessons for investors interested in diversifying their portfolios with alternative assets.
00:00 Introduction to the Episode
00:48 Meet Brad Johnson: Real Estate and Alternative Investments
01:45 Brad's Journey: From Real Estate to Mobile Home Parks
03:55 The Challenges and Rewards of Mobile Home Park Investments
06:46 Transition to Evergreen Capital and Investment Philosophy
09:04 The Role of Alternative Investments in Portfolios
15:58 Understanding Private Credit and Debt
20:36 Client Strategies and Asset Allocation
23:37 Investor-Friendly Alternatives
23:58 Investment Minimums and Retail Investors
24:47 Future of Alternative Assets
25:48 Fee Structures and Fund Preferences
28:13 GP Stakes and Private Equity
36:03 Real Estate and Inflation Concerns
40:23 Key Lessons in Investing
41:46 Personal Insights and Conclusion
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Email: info@evergreencap.com
Durable Alternative Investments
www.evergreencap.com
Private Equity and the NFL: A New Frontier in Pro Sports Investment
This video discusses the recent development of the NFL allowing private equity firms to buy minority interests in its teams, marking the entry of professional sports into the alternative investment space. Historically limited to billionaires, pro sports investments are now accessible to high net worth investors, with the NFL's sizable media rights and diverse revenue streams making it an attractive asset class. The speaker shares excitement about the potential for direct NFL deals and the expansion of pro sports investments in investor portfolios.
00:00 Introduction to Pro Sports as an Investment
00:32 NFL's New Private Equity Investment Opportunity
01:14 The Appeal of Pro Sports Investments
01:28 The Financial Dynamics of Pro Sports
04:46 The Future of Pro Sports Investments
05:23 Personal Insights and Conclusion
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Email: info@evergreencap.com
What works in mobile home park investing today.
In this episode, Brad Johnson, managing partner of Evergreen, delves into the intricacies of mobile home park investments. Drawing from his extensive experience, Brad discusses the evolution of the market over the past decade, highlighting both the challenges and opportunities in today's landscape. He emphasizes sustainable rent increases, strategic operational approaches, and the need for proper capital allocation. Brad provides insights on techniques that work, such as incremental property improvements, creative transactions, and thoughtful management, comparing successful operations to precision military tactics. He also covers the importance of market conviction, unique deal flow strategies, and the complexities of total overhauls and infill strategies. Whether you're an emerging investor or a seasoned operator, Brad's advice offers valuable lessons on navigating this increasingly institutional asset class.
00:00 Introduction to Evergreen and Mobile Home Park Investments
01:18 Challenges in the Mobile Home Park Space
03:30 Common Mistakes in Mobile Home Park Investments
07:16 Effective Strategies for Mobile Home Park Operations
10:28 Advanced Tactics for Driving Alpha
17:41 Creative Deal Structures and Market Insights
26:45 Why Now?
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Email: info@evergreencap.com
Mastering Fundraising: Tips and Strategies from a Decade of Experience
In this episode, the speaker shares insights and strategies for successful fundraising, gleaned from over a decade of experience. The session covers four main steps to secure funding, understand what high-net-worth investors seek, maintain legal and compliance standards, and build trust with prospective investors. Key points include the importance of focusing on a niche for easier market entry, dedicating efforts to one marketing channel, sharing your journey with investors, and providing transparent and professional documentation. The speaker also discusses the distinctions between accredited and ultra-wealthy investors, common mistakes to avoid, and how to use friends and family funding smartly. The episode concludes with thoughts on the broader benefits of mastering fundraising, such as financial security and new career opportunities.
00:00 Introduction to Fundraising Insights
00:11 Four Steps to Successful Fundraising
00:16 Understanding Investor Expectations
00:48 Choosing Your Investment Niche
03:00 Focusing Your Fundraising Approach
04:28 Sharing Your Investment Journey
06:16 Building Trust with Investors
08:24 Engaging High Net Worth Individuals
11:20 Common Fundraising Mistakes
13:20 Q&A Session
20:38 Final Thoughts and Advice
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Private Credit is a favored asset class among ultra high net worth investors. Due to its much higher return and reduced risk profile, we believe it should replace a large percentage of bond allocations in investor portfolios. This episode covers a few of the basics to set the foundation for later podcasts that will go deeper into the weeds on Private Credit investing.
Private credit has existed since the early 2000s but is relatively new to many investors. The concept involves making large-scale loans to companies that can't obtain credit from traditional banks. This need emerged post-financial crisis when banks faced stricter regulations. Private credit offers benefits like high monthly returns with lower risk compared to bonds or stocks. The script explains vital terms such as capital structure, preferred equity, mezzanine debt, senior secured debt, call protection, and covenants, illustrating their roles in making private credit a safer investment.
00:00 Introduction to Private Credit
00:18 The Rise of Private Credit Post-Financial Crisis
01:41 Understanding Capital Structure
03:24 Key Terms in Private Credit
06:01 Conclusion and Final Thoughts
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Access GP Stakes Research:
https://evergreencapital.ck.page/a03f9580fe
GP Stakes investing is Brad's favorite alternative investment asset class - learn why in this episode.
Evergreen Capital
www.evergreencap.com
info@evergreencap.com
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Evergreen Capital
www.evergreencap.com
info@evergreencap.com
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Today is an incredibly big day! Grayson may be closing on a huge deal tonight. It’s been a long time coming but it’s finally happening! He quit his last job about 3+ years ago and since then he’s been looking to buy a business and has gone through about 5000 different companies, sorted through many different websites, and talked to lots of different owners — but it was all worth it, because he’s finally found one that he loves and is super excited about. He’s completed all of the purchase agreement documents and soon… all will be finalized!
So today’s episode is going to provide as a recap for what Grayson has been up to for the last couple of years. Hopefully it will serve as both inspiration — but also as a cautionary tale for those of you who want to get out there and buy your own deal! Today we’re going to be sharing the good, the bad, and the ugly. So tune in to learn some of the ins and outs of buying your first deal!
Key Takeaways:
[:11] All about today’s episode!
[3:18] So what is Grayson buying?!
[6:33] How Grayson and his partner found this deal.
[7:58] What does the transition look like after purchasing this deal?
[10:34] What Grayson learned from being an investor!
[15:30] The importance of balancing investing and operations.
[19:03] What’s next for the podcast? Topics we’ll be focusing on in future episodes.
[20:58] Opening it up to you! What would you like to hear from us next? Email us!
Mentioned in this Episode:
Brad@EvergreenCap.com
Grayson@StablesPartners.com
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
The Alternative Investor on iTunes — Leave us a review!
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et’s say you find yourself in the fortunate position to have a wonderful asset that you’ve operated for a number of years — whether it’s real estate or an operating business — and you’re ready to sell it. And now, you’re faced with the decision of how to actually sell it. Do you hire a banker or a broker? And if so, how do you go about finding a good one?
Today we’re answering both of these questions and filling you in on all of the juicy details of hiring a broker!
Key Takeaways:
[:11] About today’s episode.
[:48] Should you hire a banker or a broker? And what is the difference between the two?
[6:02] Why don’t people hire a banker or a broker?
[8:49] How much does a decent banker or broker cost?
[11:51] How to find and identify a good broker!
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
The Alternative Investor on iTunes — Leave us a review!
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After 2 ½ years of looking for a software business to buy with my partner, I think we’re finally getting towards the end! And at the end of the due diligence process when you’re going to buy a company… you’ve got to sign a purchase agreement. This purchase agreement is thebig contract; it’s the document that lays out all the final terms and conditions. And when it’s signed, the money is wired — and it’s official: you own the company.
So because this is all so timely for us, today we’re going to be talking all about purchase agreements! In fact, we’ll be going through the actual 57-page document I received for this software business to explain each section to give you all an idea of what to expect when it comes to negotiating your first purchase and sale agreement!
Key Takeaways:
[:11] About today’s episode on purchase agreements!
[2:22] We begin looking at the 57-page purchase agreement word doc, starting with an overview of the table of contents and section 1, the glossary.
[5:09] Reviewing section 2: the purchase and sale of parent shares.
[9:40] Reviewing the following three sections that cover representations and warranties — first up, those concerning the company.
[16:30] Next up, we take a look at the sections covering representations and warranties of the sellers.
[17:55] Taking a look at the representations and warranties concerning the buyer.
[18:58] Reviewing the section that covers the additional agreements.
[19:52] Checking out section 7: identification and related matters.
[23:03] Wrapping up the podcast with some final points about purchase and sale agreements!
[24:54] What should you be focusing on when negotiating these documents?
[28:14] Thanks for tuning in!
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
The Alternative Investor on iTunes — Leave us a review!
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Today is going to be our all-encompassing, definitive episode all about on cap rates! What are they? How they are used? What’s the whole deal here? Tune in to find out!
We discuss how they relate to interest rates, what they indicate, what they’re useful for, what they’re used for on a day-to-day basis in real estate investing, and how you should be thinking about cap rates if you’re thinking about getting into the real estate investing world. We also give several examples of how to find the cap rate!
Key Takeaways:
[:11] About today’s episode.
[1:01] What is a cap rate?
[2:59] A quick example of how to find the cap rate and what it indicates.
[4:51] How cap rates relate to interest rates.
[7:52] What cap rates come down to and what’s important to remember.
[10:51] The useful thing about cap rates!
[11:29] How those in real estate use cap rates on a day-to-day basis.
[14:24] A range of where cap rates fall now.
[16:27] How you should be thinking about cap rates if you’re thinking about getting into the real estate investing world.
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
The Alternative Investor on iTunes — Leave us a review!
Hosted on Acast. See acast.com/privacy for more information.
In this episode we’re going to be talking about investor relations — i.e. staying in touch with your investors and maintaining good relationships with them.
Investors are people too, y’know! Just like your friends or spouse, they want to be kept in the loop and know what’s going on. They’ve given you money to go out and do a job… But they don’t want to just give you the money and be left in the dark; they want to know what’s going on!
Tune in to learn more about what goes into a typical investor update, how often you should send one out, and the many benefits that come with it!
Key Takeaways:
[:20] What is investor relations?
[1:10] The hard part about investor relations.
[3:32] What is in a typical investor update? And how often should you send them out? How long are they?
[12:50] Should you reach out to your investors outside of the formal updates?
[15:22] Summarizing our key points about investor relations!
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
The Alternative Investor on iTunes — Leave us a review!
Hosted on Acast. See acast.com/privacy for more information.
Today’s episode is all about taxes! Specifically, we’re going to be talking about K-1s. A K-1 is a tax form that you get from private investment (typically an LLC.) on an investment you’ve made. This is the tax form you’re going to get yearly from that sponsor so you can pay your taxes on that income.
If you’re ever going to be making investments in alternative assets, most likely you’re going to be getting a K-1. Be sure to tune in to get all the basis on what exactly a K-1 is, how they work, the key pieces of information within them, their benefits, and our tips!
Key Takeaways:
[:12] About today’s episode!
[:48] What is a K-1?
[3:54] The key pieces of information in the K-1; covering box 1 and 2 of the K-1.
[10:21] Discussing box 19 of the K-1: the distribution (the actual cash flow you receive that year from your investment.)
[13:07] Discussing box L: the partner’s capital account analysis (which keeps track of your basis in the investment.)
[14:53] Working through an example to illustrate how a K-1 works.
[15:26] When do you get a K-1? How should investors investing in alternative assets be thinking about K-1s? And are they a huge headache or are they pretty straight forward?
[16:44] Our tip for if you’re receiving many K-1s.
[18:41] The bottom line of K-1s!
[19:12] How to go about doing your K-1s.
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
The Alternative Investor on iTunes — Leave us a review!
Hosted on Acast. See acast.com/privacy for more information.
Productivity and how you get things done on a day-to-day basis is an ever-present issue for most everyone — including those in investing and alternative investing. There’s lots to do on a daily basis and you’ve got lots to juggle, so we want to help you make sure that you’re focusing on the right things to truly maximize your productivity!
Tune in to learn more about how to prioritize the right tasks, manage your calendar and emails, maximize your productivity, and how to accomplish all your goals during your work day.
Key Takeaways:
[:12] About today’s discussion.
[1:47] Mind, body, and wellness — how to get your mind and body in check to maximise your productivity.
[5:55] How we prioritize throughout the day.
[10:16] Getting stuff done — our tips, tricks, and tools for accomplishing your goals during the day.
[18:00] How to manage your calendar and emails.
[24:15] Where we think we can most improve productivity-wise during our work days.
[26:30] Email us your favorite productivity tips and we’ll read them out on a future episode!
Mentioned in this Episode:
Getting Things Done (David Allen)
Grayson@StablesPartners.com
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
The Alternative Investor on iTunes — Leave us a review!
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We’ve talked about finding deals, sourcing deals, putting a pitch deck together, raising money, and all that stuff — but we haven’t yet talked about how to go aboutraising debt for a real estate project.
So today, we’re going to outline how to get debt from the more conventional (or traditional) sources. We’ll be covering: seller financing, regional banks, agencies that are representing Fannie and Freddie, and large commercial mortgage-backed security loans.
Pull up a chair and join us for this real estate-centered conversation on raising debt!
Key Takeaways:
[:12] Reading our favorite funny review from the last couple of weeks!
[1:45] About today’s episode.
[2:25] The first step to raising debt for a real estate project: obtaining a loan.
[8:11] If you’re just looking to borrow money for a deal, how much should you care about the structure of the loan?
[10:16] What information is a balance sheet lender or regional lender going to need to know in order to make a decision about whether or not they’re going to lend you money?
[14:24] So which loan should you take — an agency loan or a CMBS?
[18:18] How do you know if you’re getting a CMBS loan? And what do these types of lenders look like?
[19:32] How big does a deal have to be to qualify for a CMBS loan?
[20:05] Where do the big costs come in with a CMBS loan?
[21:31] Summarizing the four sources of debt mentioned in this week’s episode and giving some final, additional pieces of information.
[23:04] In conclusion: our take on what the best options are.
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
The Alternative Investor on iTunes — Leave us a review!
Hosted on Acast. See acast.com/privacy for more information.
We’re getting technical today — so fasten your seatbelts, buckle up, take an extra sip of coffee and get ready for today’s show.
We’re going to be diving into the topic of the three most important investment metric:; NPV (Net Present Value), IRR (Internal Rate of Return), and MOIC (Multiple on Invested Capital.) These metrics are incredibly valuable because, at the end of the day, these are the measures that help investors know how much money they’re going to get back in their pockets after investing in your deal. We hope you’ll join us today to learn about these three important metrics!
Key Takeaways:
[:12] About today’s topic!
[:41] What do NPV, IRR, and MOIC stand for?
[1:54] What is NPV? What does it indicate?
[5:48] What is IRR? How does NPV and IRR compare?
[9:08] What is MOIC? What does it indicate?
[10:11] Key takeaways of IRR, NPV, and MOIC — and what investors are looking for.
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
The Alternative Investor on iTunes — Leave us a review!
Hosted on Acast. See acast.com/privacy for more information.
We’ve talked about sourcing and analyzing deals — but, we’ve yet to really get into the details of what goes into the pitch deck. The pitch deck is the document you’re going to send out to your investors to let them know about the deal, market it to them, and give them the opportunity to make a decision.
So today we’re going to talk about when you’re going to go out and buy a business, what should be in your deal deck. Brad also plays the role of a potential investor, and gives his take on each section in terms of what he would want to see to feel confident in investing.
Key Takeaways:
[:12] About today’s topic.
[:50] Where to start with creating your pitch deck.
[1:33] The first pieces of information you should include in your pitch deck.
[4:22] How to provide an effective overview of your business in the pitch deck. And what investors are looking for.
[8:26] The next section you should include in your pitch deck: an industry overview and a look at the market.
[10:07] The meat of your deck: the financial analysis section. And the key metrics investors look at. And the key scenarios you should include in your deck.
[15:00] The next section: a summary of key opportunities and risks.
[18:08] The last section: the post-acquisition plan.
[22:09] Summarizing our key points.
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
The Alternative Investor on iTunes — Leave us a review!
Hosted on Acast. See acast.com/privacy for more information.
This week on the show, we’ve invite on a real estate expert: Moses Kagan! Moses is a partner of Adaptive Realty — a property management company in Los Angeles.
Adaptive Realty has a unique strategy with apartment buildings; instead of simply buying buildings and repainting and upgrading appliances, they do huge, wholesale renovations. They vacate all the tenants and completely redesign the properties. This enables them to double the rent whereas most apartment value ad folks incrementally increase the rent 20-30% after renovations.
It’s a very unique strategy, and in this episode, we’re going to get into all of the juicy details on how Moses has pulled this strategy off. We talk about how he originally fell into the industry 10 years ago, how he survived the early lean years of being a real estate entrepreneur, the mistakes he’s made along the way (including selling way too early for his first few deals), and finally, his graduation from short-term funds to more long-term permanent equity vehicles (where he can renovate the properties and hold them indefinitely).
Today’s episode was incredibly insightful and we hope you have as much fun listening to it as we had recording it!
Key Takeaways:
[:11] About this week’s episode with Moses Kagan.
[1:10] Welcoming Moses to the podcast!
[1:41] Moses explains what they do at his company, Adaptive Realty.
[4:55] Moses tells the story of how he got started (before starting Adaptive Realty) and some of his early experiences in buying real estate.
[22:02] How Moses originally got funding, and how they got people to leave the apartment so they could renovate.
[23:52] How they renovated the buildings to beat out the competition.
[25:25] Moses talks about the possible percentage increase for rent in these renovated apartments.
[26:52] Moses explains their second apartment deal, whether or not they were making money at this point in time, and how they made that second deal.
[29:05] Their strategy over the next couple of years for buying buildings
[29:19] Moses talks about what they did after having to liquidate all their buildings, starting back at “square one.”
[34:19] The steps Moses took when trying to rebuild: starting a blog, discovering that the best deals were the fixer-uppers, and ultimately, the creation of Adaptive Realty.
[44:09] After raising their first fund, Moses explains his next steps.
[48:37] What Moses recommends to anyone who is starting out in this business.
[49:24] How Moses and his partner continued to build Adaptive Realty.
[55:15] Moses discusses some of the challenges with their business model and the way their business has grown.
[1:00:22] Moses speaks about their progress towards more permanent equity.
[1:02:20] Moses’ advice to those new in this business.
[1:06:15] Where to find Moses online.
Mentioned in this Episode:
The Alternative Investor EP.38 — “We Talk to a Guy Who Bought a Business with an SBA Loan”
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
The Alternative Investor on iTunes — Leave us a review!
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We’ve spent a lot of time on this podcast telling you how to find alternative investments — how to buy them, how to raise money for them, and more — but we haven’t talked a lot about what to do after you close.
It’s really no exaggeration to say that a lot of stuff happens after closing — so today, we’re going to get into everything you need to know about what happens afteryou buy a real estate property! We talk property managers, important steps to take before closing, what you should do immediately after closing, how to go about improving or changing up things in the property, how quickly you should roll out these changes, and more. We hope you’ll join us!
Key Takeaways:
[:12] About today’s episode!
[1:04] What should you do immediately after buying real estate?
[6:50] Do you have a property manager set up before you close? And what is the property manager’s role? And what kind of revenue do you need to be taking in per year to be able to support a property manager or property management company? And what percentage of the total rent do they take?
[10:10] Should you use the building’s existing property manager?
[10:47] Other things you need to make sure you’re doing once you’ve acquired a real estate property.
[14:00] More important details to remember after acquiring a real estate property.
[14:57] How to go about improving or changing things up in the property.
[15:41] How quickly should you roll out changes? Should you give people time to settle in to the new ownership?
[18:50] How to make renters excited about change.
[20:44] If you had to raise capital to purchase this building and have investors, what should you do immediately after closing?
[21:55] Wrapping up this week’s topic.
[23:55] We’d really appreciate if you could leave us a nice review on iTunes!
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
The Alternative Investor on iTunes — Leave us a review!
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Just as this title says, we talk to guy who bought a business with an SBA loan! Nick Haschka is an entrepreneur and investor who lives in the San Francisco Bay Area, with his wife and two kids. He owns a small business called The Wright Gardner, which is a plantscaping business (where they help companies maintain beautiful plants around the office). He purchased The Wright Gardner along with two other folks he’s in business with using an SBA 7(a) loan.
Neither Brad or I have used an SBA 7(a) loan to purchase a business so we thought it would be a great idea to invite on someone who has! And, if you haven’t already, be sure to check out our other episode on SBA loans — episode 35: “How to Buy a $2 Million Business for $200K.”
Key Takeaways:
[:12] About today’s interview with Nick Haschka.
[1:23] Welcoming Nick to the show!
[2:30] How Nick landed in the business of buying other businesses.
[6:17] Why did Nick decide to go with the SBA 7(a) loan rather than using a search fund model.
[7:54] How Nick found out about SBA loans.
[9:44] Why Nick moved on from McKinsey and wanted to switch up his career.
[10:49] Nick speaks about his (and his partners) process of buying a small business.
[16:13] About The Wright Gardner, previous owner, and employees; and how Nick found it.
[19:03] How long it took for Nick to lock down the deal with The Wright Gardner.
[19:35] Nick shares some details and metrics of the deal.
[23:30] The process of getting an SBA loan for The Wright Gardner.
[25:45] Nick talks about the personal guarantees he signed for the business.
[29:15] Did this one business get Nick to his $90k/year goal?
[30:49] How Nick and his business partners split up the ownership and responsibilities.
[31:24] Add-ons Nick was looking for to support the objectives of the business.
[32:43] Have they done any tuck-in or bolt-on add-ons?
[34:32] Nick talks about his business growth in the two years since he bought The Wright Gardner.
[35:45] Are Nick and his partners actively looking for outside deals, or is this going to be a platform for them (where they’re going to continue to bolt-on plantscaping businesses)?
[37:15] Did Nick (and his partners) fund his businesses (following The Wright Gardner) out of the cash flow of The Wright Gardner?
[38:03] Is Nick at the scale where he can be less involved in the business day-to-day or is it still his full-time job?
[39:04] Looking back on everything, is Nick glad he did everything the way he did?
[41:55] Where to find Nick online.
[42:09] Nick’s parting words of wisdom.
Mentioned in this Episode:
The Alternative Investor on iTunes
Nick’s email: nick@cubinvestments.com
(California) Contractors State License Board
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We often get emailed by 25-35 year olds interested in getting into private equity, venture capital, or real estate private equity, wondering if it’s worth it or not to go get an MBA.
Both Brad and I have our MBAs (which serve us well) — but there are definitely pros and cons to getting an MBA. So we thought it’d be a good idea to address this question and get into all the juicy details of why you should (or should not) get it, some of the pros and cons to both of the options, and the other possible pathways you can take. We also share our own experiences in earning our MBAs and how they have benefited us in our own careers.
Key Takeaways:
[:12] Reading a review that made us laugh from our iTunes page.
[1:28] If you give us a 5-stars and leave a funny review on iTunes we’ll read it next episode and send you a prize!
[2:22] About today’s show.
[4:09] Do we have our MBAs?
[4:56] Some of the pros and cons of why, or why not, you should get an MBA.
[9:11] How we benefited from getting our MBAs.
[16:52] Some of the cons of earning our MBAs and potential cons that could arise.
[19:06] When you should take the opportunity or time to get your MBA and when you shouldn’t.
[20:24] How getting an MBA aided in our confidence and expectations.
[21:58] A few more points on maybe why you shouldn’t get an MBA.
[22:44] Should you get an MBA if you want to break into private equity or venture capital? What are the other pathways?
[28:15] Summarizing our main points on whether or not you should your MBA!
Mentioned in this Episode:
The Alternative Investor on iTunes
Master of Business Administration (MBA)
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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Use a self directed IRA to make private investments for higher returns
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Today’s going to be a fun episode because we’re really excited to talk about today’s topic: SBA loans.
If you think you need $1 million to get started in buying a company then this episode is for you. You don’t always need to have the capital or the rich uncle — there’s another way.
In this episode we’re outlining everything you need to know about SBA loans — specifically the SBA 7(a) loan — and how you can go from dreaming about owning a business to owning one worth millions, yourself.
Key Takeaways:
[:13] If you’ve been enjoying the show we’d really appreciate you leaving a review on our iTunes page!
[1:00] About today’s show!
[2:33] What an SBA loan is.
[7:50] Do these loans have fixed or variable interest rates?
[9:07] A few of the caveats to getting an SBA loan.
[13:21] Why you may not want to go to 90% loan to value.
[14:36] Another important caveat if your business depends on the location that it’s at.
[16:54] Giving an example of a real business scenario using an SBA loan.
[19:07] Who SBA loans are good for and who they’re not good for.
Mentioned in this Episode:
The Alternative Investor on iTunes
Grayson@StablesPartners.com
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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In this episode, we’ll take you below the surface for a much deeper analysis on all the variables you need to take a look at before closing the deal.
Key Takeaways:
[:13] You’ve been running a great piece of real estate for the last two years and then suddenly you get a fantastic unsolicited offer… so, what do you do?
[1:06] Brad walks us through how he thinks about a hold vs. sell analysis.
[4:23] Brad outlines some more variables to think about in the hold vs. sell analysis.
[5:59] What happens if you think you can grow the asset and sell it for 3x your investment, but it takes another 3 years?
[8:08] After factoring in all the risks, and still feeling 100% confident you will achieve a positive outcome, should you take the deal? What else should you take a look at?
[9:47] The third piece of information that is important to factor into a hold vs. sell analysis: what can you do with the money you’ll be making? And what happens if you’ve brought in investors?
[12:16] So, what do you do? Is there a right answer?
[13:25] Another important thing to think about beyond the numbers.
[15:48] Recapping the main points of this episode.
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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oday’s episode is about Covered Land Plays!
A Covered Land Play is when you buy a property based on the existing use of that asset… but, what you’re really buying for is the land (in the hopes that someday it’s going to be redeveloped by you, or, perhaps the next buyer.) It has limited downside, because of the current cash flow, with big upside — so it makes for a very interesting investment strategy.
In this episode, we’ll cover everything you need to do about Covered Land Plays; what they are, why you might want to use it as one of your next investment strategies, who they’re perfect for, some examples, and how to go about pursuing one.
Key Takeaways:
[:14] Some background on today’s episode.
[:57] About today’s topic.
[1:21] An overview of what a Covered Land Play is.
[1:50] An example of a Covered Land Play.
[2:58] Who a Covered Land Play would be particularly useful for.
[4:16] If the strategy doesn’t pan out, are you at least still making a good investment?
[5:23] Can you mess up this strategy?
[6:18] Some of Brad’s projects that are considered Covered Land Plays.
[7:02] Why all investments that involve land and a business are not considered a Covered Land Play.
[9:09] An example of what a fantastic Covered Land Play investment could be.
[10:49] Some more examples of potential fantastic Covered Land Play investments and some of the potential risks.
[15:00] How to go about pursuing a Covered Land Play deal, and some final thoughts on the downsides and upsides!
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Today we’re talking about an incredibly important topic: the dangers of mistaking EBITDA with Cash Flow.
It’s so tempting when you’re looking at a lot of these small businesses to buy and you see this metric called EBITDA and you think, “Hey, this is how much cash I’m going to have distributed at the end of the year to my investors.” But looks can be deceiving.
So in this episode, we want to explain to you why this is so crucial when evaluating businesses, red flags to look out for, and how to resolve this potential conflict. We also give some examples on why exactly it is so important not to mistakes EBITDA with Cash Flow and how depreciation and amortization can get you into trouble.
Key Takeaways:
[:46] About today’s topic.
[1:36] What EBITDA is.
[2:21] An example of how EBITDA comes into play when buying a small business.
[4:47] Another example of why it is crucial to not mistake EBITDA with Cash Flow.
[6:49] Another way depreciation and amortization can get you into trouble.
[9:11] How to resolve this potential conflict: look at the Cash Flow statement!
[11:18] Bottom line: be very careful when you’re evaluating a small business and you’re just looking at the EBITDA.
[11:38] Particular businesses you want to be especially careful of.
[12:06] What are some red flags?
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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In this week’s episode, Brad and I discuss search funds! We explain what a search fund is (and who’s funding them), the four main steps, how they originally got started, who they’re great for, and why you should use one. We also talk about how my partner and I founded our firm, Stables Partners; the process of acquiring companies through search funds; and the general, broader community around search funds.
We hope you join us for today’s episode!
Key Takeaways:
[:11] About our topic today: search funds!
[:30] What is a search fund? And who is funding them?
[2:58] The four steps to a search fund: fundraise, search, find, and sell.
[8:30] How did search funds originally start?
[9:34] Who a search fund is great for.
[12:53] How my partner and I founded our firm, Stables Partners.
[14:16] Why, or why not, you should have a partner.
[15:55] The community around search funds.
[18:15] The process of acquiring companies through search funds.
[22:23] How many of my deals were off-market?
[23:55] Why use a search fund?
Mentioned in this Episode:
Stanford - Center for Entrepreneurial Studies - Search Funds
Grayson@StablesPartners.com
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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In today’s episode we answer one of the questions that we probably get most frequently from people looking to break into the industry, and that is: ‘Once I’ve found the deal, how do I make it happen?’
Using the example of discovering a $10 million deal and looking at it from both the private equity side and real estate side, we take you through the steps on how to secure it, raise the necessary funds, as well as some additional tips to ensure you’re as prepared as possible!
Key Takeaways:
[:11] About today’s topic.
[1:35] The first step you should take after finding that $10 million deal: get all your materials in order (a teaser, financial model, and a deck)!
[6:15] What should be in your deck.
[8:09] Documents you definitely will want to have (especially when going to people you don’t know): a PPM and subscription agreement.
[12:14] How to initially raise funds to afford your deal — and the pros and cons of going to your friends and family first.
[16:58] How to raise funds outside of your personal network.
[28:38] Some more additional tips for securing deals.
[30:48] What to expect and be prepared to answer when asking for money.
Mentioned in this Episode:
Private Placement Memorandum (PPM)
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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Today’s episode may not be about the happiest of topics — but it’s definitely a necessity. So today, we’re discussing all things retrade. We’re going to explain the ins and outs, give some examples, explain how we handle them, and give you some advice and key takeaways with negotiating.
At the end of the day, we hope you don’t have to have these types of conversations too often — but when you do, we want to make sure you’re well equipped going into them and have a successful outcome!
Key Takeaways:
[:11] If you like the podcast, be sure to leave us a 5-star itunes review!
[1:01] About today’s episode.
[1:20] What is a retrade?
[2:10] Brad gives an example of a retrade conversation he has had recently.
[6:06] I give an example of a retrade in the private equity world.
[9:58] Brad gives us his general strategy, and how he typically handles a retrade.
[14:55] My strategy for handling a retrade, and some of our other tips and tricks.
[17:05] Some of the differences between retradring in private equity, and real estate.
[18:04] Some more retrade strategies.
[18:45] Reflecting back on old retrade deals, and our final pieces of advice.
For More on The Alternative Investor, Check Out:
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When I was on the other side of private equity (i.e. operating businesses), I always thought those in investing were out there counting money, doing deals, and going home at 4 p.m. … but now that I’m doing deals, I realize the reality is a lot different.
So in today’s episode, Brad and I are talking about some of the surprising and counterintuitive aspects of being in private equity and real estate private equity. There’s some misconceptions out there about how “unsexy” it can really be.
First Brad kicks it off by telling us about some of the surprising things he has learned (having run his own real estate private equity fund), and then we take a look into the surprising aspects I've discovered working in private equity. We also discuss how much art tends to go into making deals versus science and how learning how to make these deals is kind of like building up a muscle!
Key Takeaways:
[:11] About today’s episode: surprising aspects of private equity.
[:52] Brad talks about some of the surprising (or counterintuitive) sides of private equity in real estate for him.
[7:37] Brad’s advice on if you’re looking to get into private equity, and how long it took for him to get his first deal in the industry.
[8:45] Brad gives some more surprising aspects of private equity.
[11:38] One of the surprising aspects I’ve discovered while working in private equity: how much art goes into it versus science.
[12:40] Brad explains how, similarly, “art” plays into real estate.
[14:05] How looking at deals is like building a muscle.
[18:33] Our last surprising aspect of private equity: taxes and regulatory aspects.
[23:49] How the private principal applies to real estate private equity.
For More on The Alternative Investor, Check Out:
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In today’s episode we thought it would be fun if we did something a little bit different! We want to share with you some of our favorite tools that we use in our jobs everyday — from software and technology, to resources and newsletters.
A lot of these tools can be used in many different industries and we hope we can help streamline some of what you do everyday by sharing a few of our most-used tools and giving you the inside deets on how much they cost per month, our favorite attributes and features about each one, and how we utilize them within our business.
Key Takeaways:
[:11] About today’s episode: our favorite everyday tools.
[:33] A quick refresher on what it is that we do day-to-day.
[1:33] Brad kicks it off with the most important software he uses in his day job.
[3:00] Brad’s favorite software, tools, tips, and tricks that uses in real estate.
[18:54] My favorite software and tools that I use in private equity.
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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Today’s show is going to be all about asset prices and what we’ve been seeing lately. Don’t lose hope — it’s not all bad! Things may seem expensive right now (and are expensive!) but there are somethings you can do to to ensure you’re investing in worthwhile assets!
In this episode, Brad and I go over what we’re seeing right now in terms of pricing in both the real estate and private equity side of things, how sometimes a deal may look really expensive when it is actually an incredible deal, and some of the “tricks” to figuring out what makes a worthwhile asset vs. one that is not worth your time.
Key Takeaways:
[1:01] About today’s show!
[1:17] What Brad is seeing right now in terms of pricing in real estate.
[4:46] Remember when Facebook bought Instagram? Seems like they overpaid, until you look back on the deal.
[6:03] Why the Instagram/Facebook deal worked out and how to do the same for yourself.
[7:13] Taking a quick look at the private equity side.
[7:42] The “tricks” to figuring out the worthwhile assets vs. the not worthwhile.
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
What Exactly is Adjusted EBITDA? - EP. 21
Eddie Lampert’s Plan to Save Sears
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In today’s episode we’re talking all about qualified opportunity zones — these things are amazing. They’re portions of the country that are economically disadvantaged, and if you invest in those areas you get incredibly favorable tax treatment.
First, we take you through the history of qualified opportunity zones (which has a pretty interesting history in itself!) — then we get to the really exciting part: the incredible tax breaks to be had by investing in these zones and how to go about it. And then, to wrap it all up with a bow, we take you through a real world example to illustrate how it’s done.
Key Takeaways:
[:12] All about today’s episode!
[:55] The history of qualified opportunity zones and how they came about.
[3:31] What an opportunity fund is.
[5:42] What a qualified opportunity zone is.
[7:35] The exciting stuff: the tax benefits from investing in a qualified opportunity zone via an opportunity fund.
[11:51] A quick recap on all the amazing tax benefits.
[12:24] Brad takes us through a real world example.
[16:48] Our final warnings on qualified opportunity zones: make sure it is still a good deal — a bad investment with a good tax treatment is still a bad investment.
[18:57] One last thing you need to remember: you do have to do this through a qualified opportunity fund.
[19:56] Does this all make sense in the private equity world?
[20:41] A final note about qualified opportunity zones on the real estate side.
For More on The Alternative Investor, Check Out:
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In this episode, Brad takes us through some of the different types of real estate asset classes and gives us the pros and the cons of each! He also gives us some ideas on what we should think about when investing in each of the types, why some people choose to invest in them (or not), and the risks vs. the rewards.
From multi-family real estate investing and affordable housing to office buildings, industrial, retail, and hotels — Brad gives us the insider scoop and breaks down what we all need to know about investing in these different types of real estate.
Key Takeaways:
[:30] If you want to get in touch with us or have any suggestions for the show, you can always email us at Brad@Evergreencap.com and Grayson@stablespartners.com.
[1:13] About today’s topic: the different types of real estate asset classes.
[1:57] Brad explains the basics of multi-family real estate investing.
[4:54] Do student housing and affordable housing fall under multi-family?
[6:21] Pros and cons of affordable housing.
[8:36] The difference types of niches in office buildings.
[9:31] The pros and cons with office buildings.
[13:29] Brad explains the industrial asset class.
[16:09] Risk vs. reward for warehouses compared to office and multi-family.
[17:10] Brad breaks down the different types of retail facilities.
[19:22] The pros and cons of retail real estate.
[21:46] Is retail similar to office as in their risks vs. reward?
[22:05] About investing in hotels and the risks involved.
[24:34] Brad reviews some niche asset classes: manufacturing housing, data centers, cell towers, casinos, single family rentals, and medical.
Mentioned in this Episode:
Brad@Evergreencap.com
Grayson@stablespartners.com
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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Today we’re talking about how to source off-market deals!
It’s easy enough to go on LoopNet or MLS Deal Finder but anybody can get those deals, so we want to share some solid trade secrets with you all today and help you find those sweet, sweet off-market deals.
In a prior episode, we’ve gone into the differences between off-market and on-market deals, but today we want you to join us to get right into the nitty-gritty of how you can actually findthese off-market deals.
Key Takeaways:
[:12] Our topic today: how to source off-market deals.
[:26] What we mean by how to source an off-market deal.
[1:06] What is an off-market deal?
[2:39] Brad talks about how to find off-market deals in a real estate firm.
[14:10] How to find off-market deals on the private equity side.
[21:10] Concluding this week’s episode and where to find more resources!
Mentioned in this Episode:
Broker Deals VS. Off-Market Deals - EP. 11
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Just in case you were wondering if you have what it takes to be an alternative investor, today we thought we’d share with you all of the things — the behaviours, the attitudes, and the skills — that go into sourcing and doing diligence on closing a deal!
There’s a lot of aspects that go into shaping an excellent alternative investor — from qualitative to quantitative skills. You need to be an expert generalist, while also having strong project management skills, lots of optimism, and most importantly: be able to make STUFF happen. In this episode we cover the three major buckets of the skills you need to have, as well as the three specific parts of what goes into making a deal, such as sourcing, diligence, and the closing process. Tune in!
Key Takeaways:
[:11] About our topic today:
[:55] The first of the three big buckets that fill the skills of what an alternative investor needs to be: an ‘expert generalist.’
[2:46] The second: being a ‘professional cat herder.’
[4:38] Our third bucket: make ‘stuff’ happen.
[5:54] The three specific parts of what goes into doing a deal: sourcing (find the deal), diligence (analysis and doing the work), and the closing process (getting the deal over the finish line).
[6:24] Firstly: the skills, behaviours, and attitudes that go into sourcing a deal.
[8:38] Secondly: the diligence side and its related skills, behaviours, and attitudes.
[13:06] Thirdly: the skills involved in getting the deal closed!
For More on The Alternative Investor, Check Out:
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Today we’re going to talk about Adjusted EBITDA — or in Brad’s world, Adjusted NOI; Net Operating Income. So what is it? First off, it depends who the player is. Are they legit?
It’s a super critical number and important to get right — so tune in for today’s short and sweet episode all about Adjusted EBITDA!
Key Takeaways:
[:13] About our topic today: Adjusted EBITDA!
[:22] What is Adjusted EBITDA?
[2:42] A simple example of Adjusted EBITDA.
[3:32] Non-valid Adjustments in the real estate world to Net Operating Income (NOI).
[5:23] Valid Adjustments Brad has seen in the real estate world.
[9:35] A couple examples of valid Adjustments we see in the private equity world.
[13:00] Wrapping up today’s episode!
For More on The Alternative Investor, Check Out:
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Today on The Alternative Investor we have our first guest on the show: Brent Beshore! Brent is the CEO and founder of Adventur.es — a private equity firm in Columbia, Missouri. Adventur.es has a unique investment approach: they seek boring businesses. They explain this perfectly themselves:
“Boring businesses endure because they consistently solve a meaningful problem and were patiently built over decades,” “Truth be told, our responsibility is not just to seek and sustain boring businesses, but to be boring ourselves. Boring is reliable, faithful, and predictable. Boring is sustainable. We are committed to doing what we say we would, when we said we’d do it.”
This episode, Brent, Brad, and I discuss the workings of Brent’s firm, how they go about securing deals, their due diligence process, what deals they look for, and how he deals with a variety of situations within the firm. He also gives his views on growth, what industries he won’t touch, and what he thinks about current asset pricing.
Adventur.es has some pretty contrary views and approaches to traditional private equity firms so it was an extremely interesting interview that we recommend you all tune in to this week!
Key Takeaways:
[:10] Our guest, Brent Beshore, introduces himself and tells us a little about his background and how he got to where he is today.
[2:28] How Brent started up his private equity firm, Adventur.es, and what they’re all about.
[8:09] About the makeup of Aventur.es’ portfolio: what kind of companies they currently have, what they like, and what they’re looking for.
[11:05] How did Adventur.es get comfortable with some of the more cyclical deals (especially with the pool companies).
[14:14] Does Brent believe that volatility does not equate to risk?
[17:11] How do they have the liberty with their fund where they can hold a deal indefinitely?
[18:58] Are they reinvesting dividends each year?
[19:55] Do they have discretion?
[20:16] Does Brent find that the sellers they buy deals from generally involve competitive bidding?
[24:40] How Brent keeps a sense of urgency in their operation (without the pressure of the 3-5 year time frame a traditional private equity firm generally has with businesses).
[27:37] In most cases, is Brent dealing with the CEO who’s selling the business with a management team stepping up or is he hiring other operators to come in?
[29:21] When the owner is not staying around, and a new management team is stepping up how does Brent keep those people incentivized?
[31:05] Brent’s process of finding deals.
[34:30] If a broker sent Brent a deal he would normally want to buy, but it’s part of a bigger process with multiple firms bidding on it, does he step out?
[37:52] Brent gives us a back-of-the-envelope approach to how he thinks about what is an attractive business for Adventur.es.
[42:31] How Brent thinks about due diligence and the major things that kill a deal.
[46:53] In their due diligence process, how much time is spent within the company internally and how much is spent thinking about the market and external factors?
[50:31] About Brent’s meeting with Warren Buffett.
[52:04] What kind of multiples is Brent seeing in business right now? And how does he think about what’s the best multiple to pick?
[55:11] How much is too much customer concentration?
[57:05] How much does Brent care about growth?
[58:24] Are there any industries Brent wouldn’t touch?
[59:48] How does Brent think about current asset pricing?
[1:03:22] Where to find more of Brent’s content and Adventur.es online.
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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Today’s an exciting show — we’re talking about business quality. Who doesn’t want to buy a quality business?
Business quality is a little bit of an amorphous term, but today we focus on thoroughly explaining what it is and why you should care about it as investor. We also put together a framework of categories for high quality businesses, such as: the organic grower, the mergers and acquisition machine, and the ATM machine (yes, we know that the M in ATM is machine.) And of course, since we talk about the businesses that are the most high quality, we also had to talk about what we call “the valley of death” — the category of businesses that we would never touch.
At the end of the day, any investment you make in a business, you want to get that investment back in the form of cold, hard cash. But to do that, you have to think not just about the price, but about the quality of the business.
Key Takeaways:
[:27] About today’s topic: business quality.
[:41] Why, as an investor, should we care about business quality?
[1:59] Our first category of a high quality business: an organic grower.
[4:52] An example of an organic grower.
[6:48] The second category: a mergers and acquisition machine (“an inorganic grower.”)
[8:57] Some examples of a M&A machine.
[11:01] Our third category: an ATM machine.
[12:38] Examples of an ATM machine.
[14:18] The category of businesses that are (usually) not high quality: “the valley of death”.
[17:49] Wrapping up today’s show with our key point: “quality, quality, quality!”
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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Today we’re talking about debt! It’s an investor’s best friend … or enemy.
We answer all the questions you may have about debt, such as: what is debt? When do you get debt? How much debt do you put on an investment? We also address the various restrictions that come with debt, why you should get debt (and some of the great — and not so great — reasons that can come with it), how much debt to put on your deals, and some examples of how debt can change the return on a deal.
Debt can reduce the amount of cash you have to come up with to buy a deal — but it comes with some promises you have to make to the bank (and other people) that might end up coming after you one day. But, done thoughtfully, it has its place in alternative investments — so tune in to hear more of our take!
Key Takeaways:
[:11] About today’s topic: debt!
[:35] What is debt?
[1:42] Restrictions that come with debt.
[3:10] Some great reasons to get debt.
[4:58] How Brad thinks about how much debt to put on his deals.
[9:42] Brad gives an example of how debt can change the return on a deal.
[13:10] An example in real estate, with the same numbers.
[15:22] Summarizing our key points about debt.
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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In today’s episode, we address a recent listener’s question on how to identify or pick out an investment theme. We think of investment themes as something that can help you narrow down (what seems like) an infinite list of opportunities into something more manageable and actionable.
Not only does a theme help narrow down your own list of investment opportunities — it helps differentiate you in the minds of brokers and bankers when they see deals. A theme can be an asset class, a business model, a trend, or macro trend that’s occurring in the economy.
Today we go through just some of those ways you can pick a theme to help you stand out in a sea of investors.
Key Takeaways:
[:11] Today we answer a listener question from someone who asks, “How do I identify an investment theme?”
[:52] How we think of an investment theme and why they can be so beneficial.
[5:29] Why you won’t be taken seriously if you don’t narrow your criteria.
[7:31] How to pick a theme that resonates with you.
[11:33] When you think about a theme, think about the macro trends in the world.
[13:00] How to do multiple deals within real estate while having an overarching theme to your investments.
[18:19] Summarizing our key points.
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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Risk is an often misunderstood and poorly communicated concept. Even professional investors can be afraid of risk.
However, risk is going to be a part of every single investment decision that is ever made and there’s no such thing as a risk-free investment. So hopefully, in this episode, we can provide some tools and a framework to help you think about risk and overcome any hesitance you may have. Brad and I discuss risk from the academics’ perspective, real estate, and private equity side; as well as risk deal killers, and general risks that factor into any investment.
Key Takeaways:
[:10] About our topic of discussion today.
[1:51] How the academics think about and talk about risk.
[9:43] How we think about risk (in real estate and private equity.)
[12:26] How Brad looks at to evaluate real estate risk.
[14:42] More factors that go into risk analysis in real estate.
[17:28] Are there any risk deal killers? What risks would kill the deal?
[20:51] How I think about risk in private equity.
Mentioned in this Episode:
Modern Portfolio Theory (by Harry Markowitz)
University of California San Diego
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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Today we’re going to talk about how to figure out how much to pay for an asset. When you’re buying an asset, price is the most important variable you’ll be looking at — probably not the only variable — but definitely the most important!
Arguably, you should be spending 90% of your time answering the question: what is this asset worth? So today Brad and I cover — from real estate to private equity — how to know how much to pay and which factors you should consider.
Listen in to learn how to appropriately price assets!
Key Takeaways:
[:13] Our topic of discussion today: how much to pay for an asset.
[1:52] Brad walks us through how much to pay for an asset in the real estate world.
[4:58] A real estate example for figuring out how much to pay for an office property.
[9:03] How the exit price factors in to how much you’ll pay.
[11:17] How much to pay for an asset in the private equity world.
[15:04] Summarizing our key takeaways.
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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Today we’re talking about accredited investors. To become an accredited investor you have to meet the SCC’s income and net worth requirements (such as needing to have $200k of income in the last 2 years if you’re single, $300k if you’re married, or $1 million in net worth not including your home.)
So why would you want to become an accredited investor? Or how? And if you became an accredited investor, what opportunities open up to you? How do you verify that you’re accredited? Brad and I answer all these questions this episode — as well as giving you an update on the latest changes the government has made in regards to accredited investors!
Key Takeaways:
[:12] About our topic today: accredited investors.
[:26] Brad’s experience dealing with accredited investors.
[4:02] What is an accredited investor?
[8:15] Why does it matter that you’re an accredited investor? What opens up to you?
[10:42] How to become an accredited investor.
[12:20] All the ways to verify that you’re accredited.
[14:57] The latest update on what the government thinks about accredited investors.
Mentioned in this Episode:
Jor Law at Verify Investor (Linkedin)
Financial Industry Regulatory Authority (FINRA)
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Today’s episode is all about preferred equity — so we’re going to try and keep it light and fun.
Firstly, we talk about what equity is and how preferred equity differs from it — then, we get into common reasons for using preferred equity in a real estate or private equity deal. We also give some examples of the differences between it and common equity and explain why, more and more, we’re seeing preferred equity in deals.
Preferred equity may not be sexy — but it can be sexy when the payments are coming to you.
Key Takeaways:
[:13] About our topic today: preferred equity.
[:55] What is equity?
[1:40] The two types of capital: debt and equity.
[2:29] An example of common equity in a real estate project.
[3:49] What is preferred equity?
[4:30] An example of preferred equity in a real estate project.
[6:42] Why do we typically see preferred equity in deals?
[8:00] Another reason for preferred equity.
[9:16] Expect to see preferred equity in your future deals and do more research on the topic!
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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It’s finally here — the day we talk about blockchain. Blockchain is a new technology — providing a global marketplace, allowing you to transact with a click of a button. Blockchain is a highly evolving area and not a day goes by without some new, interesting developments.
So don’t worry if you don’t understand what the blockchain is — we’re here to give you a basic understanding so you can go forth and use the technology!
Key Takeaways:
[:13] About our topic for today: blockchain!
[2:27] What is the blockchain?
[5:20] An example of the practicality of blockchain in real estate.
[7:27] What is a security token?
[11:30] What is a utility token?
[12:16] Definition of a token.
[13:18] How tokens relate to alternative investment.
[14:48] What are the advantages of using the blockchain and tokens to represent ownership in an asset? Why is the world going in this direction?
[16:10] The difficulties of liquidating assets and how the blockchain helps.
[18:37] A huge advantage of the blockchain: increased transparency.
[19:25] All the great advantages to blockchain.
[21:35] Recapping all of our info on the blockchain.
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
Hosted on Acast. See acast.com/privacy for more information.
Broker deals and off-market deals are night and day. Everybody thinks that an off-market deal is the holy grail and that you’ll score a way better price. At least that’s what most people think — but it’s not necessarily true. So today, we’re going to go through the key differences between broker deals and off-market deals and break everything down so that you can make an informed decision as a buyer or investor.
Key Takeaways:
[:14] The difference between broker deals and off-market deals.
[1:02] What is a broker deal?
[1:44] What is an off-market deal?
[2:24] The difference between the processes on a broker deal vs. an off-market deal.
[5:05] The difference between a broker and banker.
[6:00] How many sellers go to brokers? And why?
[7:40] The process of narrowing down the buyers.
[9:18] Are buyer interviews held?
[9:47] The process for an off-market deal.
[10:50] Likelihood of closing between an off-market deal and broker deal.
[12:34] The quality of the deals on an off-market deal vs. a broker deal.
[13:40] How long it takes to close an off-market deal vs. a broker deal.
[15:42] The valuable role of a broker.
[20:48] The range of prices in an off-market deal vs. a broker deal.
[25:44] Wrapping up our thoughts on off-market deals and broker deals.
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
Hosted on Acast. See acast.com/privacy for more information.
You find a real estate property you like, you sign it, you wrap up the deal under LOI, sign the purchase agreement, and then you get into diligence — which is what we’re going to be talking about on today’s show.
Diligence is that 30-60 day period after you sign the purchase agreement and before you get into the official closing documents. In this episode, we highlight everything that happens during that period, such as; the title, zoning analysis, building permits, surveying the property, environmental analysis, the appraisal, deeper market research, property condition report, financial due diligence, and the lease review.
This is real estate due diligence 101!
Key Takeaways:
[:13] About today’s episode.
[:48] How long it takes to go through the entire diligence process.
[1:34] Issues that can arise, starting with the title and title insurance.
[5:50] What is zoning analysis? Why is it important?
[6:50] Where are you completing the title, title insurance, zoning analysis, and building permits?
[9:18] About the survey portion of the property and its purpose.
[12:00] What information does the surveyor give you on the property?
[13:53] What is involved in the environmental analysis?
[19:22] All about the appraisal; how much it is, who requires it, and how it can kill deals.
[22:40] Some of the deeper market research that is done to make sure that you’re getting a reasonable value for the property.
[23:45] Can this deeper market research also lead to killing deals?
[24:34] What happens during the property condition report.
[28:04] The process of financial due diligence.
[32:25] All about the lease review.
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
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Today, we take a deeper dive into looking at private equity. Private equity is Grayson’s world — so we switch the script and I ask him all of the questions I have about private equity.
We discuss how private equity can help grow businesses, get debt to help your returns, the high risk/high return nature of private equity, precise strategies, what to look for when you’re investing, how to know how much to invest, and more!
Key Takeaways:
[:13] About today’s episode.
[:44] An overview about private equity, how Grayson defines it, and what sort of businesses he goes after.
[2:29] How do you grow the company with private equity?
[4:04] Are there any precise strategies that focus on particular markets in private equity firms?
[4:48] Who are the big private equity firms?
[5:30] Do smaller private equity firms do one-off deals in addition to funds (similarly to real estate)?
[6:28] Why does private equity have higher return (and in turn, a higher risk)?
[7:59] Can you get debt in private equity?
[9:12] High leverage, big buyout vs. the smaller deals.
[10:40] Multiple expansion and why it’s so great.
[12:41] What to look for when you’re investing in private equity.
[17:44] How do you know how much to invest?
[19:09] How do you pay a multiple on revenue?
[23:40] In an auction process on a deal, what would the variability between lowest bid and top bid be?
[24:50] A real world example of a private equity deal.
[29:06] What about exits? How do you make the most money in these deals?
Mentioned in this Episode:
For More on The Alternative Investor, Check Out:
TheAlternativeInvestorShow.com
Hosted on Acast. See acast.com/privacy for more information.
Today we’re going to talk about what goes on behind the glass curtain — what it actually looks like inside of a real estate private equity firm.
We go over the different types of teams within the firm, the importance of each of their roles, as well as their hierarchy; the two types of private equity funds; how these firms make money through the different types of fees they charge; and the general atmosphere and physical environment of the firms.
Tune in as we pull back the curtain on real estate private equity firms!
Key Takeaways:
[:13] About our topic for today: behind-the-scenes of the goings-on of a real estate private equity firm.
[1:09] The general atmosphere and physical environment of a real estate private equity firm.
[3:30] The teams that work inside the office and their roles. Firstly, the acquisition team and the hierarchy of the roles (the managing directors, directors, vice presidents, associates, and analysts.)
[11:59] The asset managing team’s role.
[12:58] The other teams in the office and the roles within them: the accounting team and the investor relations team.
[16:00] The difference between the two types of private equity funds.
[20:00] How these firms make money (through the acquisition fee, asset management fee, the disposition fee, and more).
[24:27] The biggest, most important fee of them all: ‘the promote.’
For More on The Alternate Investor, Check Out:
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We’re talking real estate today. Brad walks us through the ins and outs of finding a good deal in real estate — covering the basics and then diving deep further into the episode.
Everybody should have some real estate exposure outside of their current residency. You don’t want to think of your home as a real estate investment so you should get out there and look at some real estate deals!
This episode we discuss the three main reasons why real estate is a worthwhile asset class to be looking at, what cap rate is and why it’s an important determining factor when looking to invest, how to measure the risk of return, and when you should ultimately decide to “pull the trigger” in a deal.
Key Takeaways:
[:27] Why we’re talking real estate today and the three reasons why it’s a worthwhile asset class.
[7:17] As a sponsor, how do you know you’ve found a good real estate deal? What do you look for?
[8:25] Clarifying what ‘cap rate’ is and what it indicates.
[10:50] What other metrics does a sponsor look at when trying to find a good deal?
[14:13] The different real estate strategies and the opportunities you’ll see as a passive investor.
[15:42] How do you know how much you want to pay for something? And the right way to consider cap rate in a deal.
[19:03] How to decide when to ‘pull the trigger’?
[21:05] The most important but toughest aspect about looking at an investment: Figuring out what your annualized return on a deal will be and how certain you are that you’ll get that.
[22:20] Considering cap rate and measuring the risk of the return.
[23:40] Ultimately, it comes down what your annualized return is going to be and how risky it is.
[24:52] How to think about growth in real estate.
For More on The Alternate Investor, Check Out:
TheAlternativeInvestorShow.com
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Today we’re talking about LOIs — Letters of Intent. LOIs are kind of like you and the seller are dating — you’re testing the waters and have the intent of moving forward with a relationship, but not the obligation — you’re still shopping. When you sign an LOI you don’t have inclusivity but it can help you lay out the basic business terms of the deal and get it moving forward.
This episode we discuss everything we know — and think you should know — about letters of intent! From the major points of the deal you should include in the LOI, the bullet points we make on our LOIs, and some of our real world examples using LOIs.
Key Takeaways:
[:28] What is an LOI? Information on the non-binding, legal document.
[2:27] The key part to an LOI for us, as buyers. And what’s the next step after a LOI?
[4:14] About the inclusivity of a LOI (from the both the real estate and private equity side), and when exclusivity is reached.
[7:19] So why should you care about a LOI as an investor?
[10:26] The major points of the deal you can include in the LOI.
[11:23] Key terms in the LOI; the price you’re going to pay, how and when you’re going to pay it, how much is going to be seller financing, debt, or equity.
[12:02] About the recent deal we got under LOI.
[13:55] The bullet points we make on our LOIs.
[14:38] Exclusivity in a LOI? The binding element we could put in an LOI.
[15:55] One of our first deals that we put under LOI, signed up the purchase contract — and the seller still backed out, proving that contracts are a step towards closing the deal — but they’re not set in stone.
[18:27] Summarizing LOIs: When you want to see them and when you’ll use them.
Mentioned in this Episode:
The Alternative Investors EP.05: Don’t Get Bernie Madoff’ed: Avoid Ponzi Schemes and Fraud
For More on The Alternate Investor, Check Out:
TheAlternativeInvestorShow.com
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Today we’re talking about how not to lose your hard-earned money through fraud. One of the advantages of alternative investments are that they are less heavily regulated by the federal government — but that also means you have to do more work when you’re investing in alternative assets to make sure you’re investing in a legitimate opportunity.
This episode, we discuss a few things you can do to to minimize your chances of getting involved in a fraudulent scenario. We share our general tips and tricks to making well-informed decisions, what you should be looking for when initially investigating a sponsor on an alternative asset, and the actionable steps to take pre-close and post-close on a deal.
We hope you get access to many great deals — but don’t be a sucker. Before you put your money into a deal listen to this week’s episode.
Key Takeaways:
[1:15] A few things you can do to minimize the chances that you’ll be getting into a fraudulent scenario, and the two ways of accessing alternative investments.
[1:54] Some things you should be looking for when you’re investigating a sponsor on an alternative asset.
[4:58] Pre-Close: What do on the deal before it closes (and before you wire that money over!) to help avoid fraud.
[11:03] Post-Close: Steps you should take after you’ve closed the deal to make sure you’re not being subjected to fraud.
[15:34] General tips and tricks to be smart while making these kinds of deals.
Mentioned in this Episode:
For More on The Alternate Investor, Check Out:
TheAlternativeInvestorShow.com
Hosted on Acast. See acast.com/privacy for more information.
The guys go deep on what a private equity investment in a operating business looks like. Grayson tells the story of how he purchased Birdwell Beach Britches, a beloved surfer brand that was underperforming relative to its potential. This episode covers the how the deal was identified and closed, how the investors analyzed this private equity investment and how they formalized their ownership. For more episodes go to thealternativeinvestorshow.com. Sign up for our investor insider list, where you’ll gain access to our latest findings within the world of alternative investments.
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In this episode, Grayson and Brad go in detail on how to put your money to work in alternative investments. They cover how to source investments from your network or online via a crowdfunding platform. They also compare the trade-offs between investing in a fund (private equity, real estate, venture capital), which is a pool of investments vs. investing directly into one off deals.
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On today's episode we review all the benefits of alternative investments and why retail investors should take the time to learn, evaluate and invest in alternative assets.
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Brad and Grayson discuss alternative investments and cover the various alternative asset class options investors should strongly consdier adding to their stock and bond portfolios.
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