I recently had the pleasure of attending SF Bay Real Estate Summit again. It’s my third time attending and it’s fun looking at the growth each time.

The first year I attended was in 2016. A friend of mine told me about it and it looked cool so I went. Really just sat in the audience and took bunch of notes, didn’t talk to that many people. The second year I went in 2017 I made it a point to meet more people and those connections paid off major dividends later down the line. There might be a time where I needed some help with a deal or a project, and through one or two degrees of connections someone I met at the event was able to help me out or vice versa.

There wasn’t a Summit in 2018, but this year it seems most of my time was spent catching up with other investors, hearing what they’re up to and sharing ideas. I’ve also gotten a few people commenting about my blog, newsletter, or calling me Mr. Snowball after the name of our real estate Meetup. It’s pretty cool to see how these circles are connected.

Comment below if you went and what was the biggest nugget you got out of the event!

on Raising private capital

We are currently at a stage where we need to graduate from friends and family money and raise outside capital. Because of that I found Brian Burke‘s session on deal structuring and Matt Faircloth‘s talk on raising private capital most beneficial. Whether you’re the sponsor or just the investor, Brian showed some fine print to pay attention that could end up making a big difference. For example:

  • Management fee – when someone says 1%, do they mean 1% of the equity raised, the asset purchased price, or the gross income?
  • Is the capital returned first then the preferred dividend calculated or the other way around? If the capital is returned first then the overall return for the investors will be lower
  • How different is the gross vs net IRR? The difference is essentially what the sponsors are raking off. If it’s above 8% the sponsors might be taking too much of the deal.

In essence, the more work you do as the sponsor the higher you can justify your split and fees. Whether you use a tiered water fall or some kind of catch up provision, the numbers should make sense compared to the risks the investors are taking on.


biggest takeaway

I thought I was motivated before, working 100 miles per minutes. And then I met Raul Luna.

Seriously, this guy puts me to shame. I might as well be hanging out at street intersections with a cardboard sign. He’s got a great story of someone working his ass off sending out 10,000 mailing pieces each week to get to where he is. Something he said though, really hit home for me.

“Before you find the deals, you have to find yourself.”

There are a million and one way to make money in real estate. At conferences like this specially, there are so many subject experts sharing their best tips. As a newbie it’s easy to have shiny object syndrome and wanting to do everything. I admit I’m guilty of that sometimes as well. It’s easy to lose focus on the latest sexy asset class.

I’ve noticed before when I was in equities trading the different styles. Some people swing for the fences and they strike out a lot as well while some are just Steady Eddy grinding out base hits or doubles. It is really worth the time to gut check who you really are, point to your true north, and double down on your strengths.

So who are you?