How to Start and Grow Your Own Real Estate Investment Family Office

Speaker 1:

What's up everybody, and welcome back to another episode of Loop It In, the DoorLoop podcast, where we pick the brains of experts in property management, real estate, and investing. Tech, we cover it. Marketing, that too. So, whether you want actionable tips or the insider scoop from top performers in their industries, this is one show you won't want to miss. Be sure to subscribe so you won't miss out on any future episode.

David:

Hey, everyone. This is Dave Bitton, co-founder and CMO at DoorLoop. I'm going to be your host for today's podcast as our guest today is Dean Brodesky, one of DoorLoop's other co-founders and investors, and overall, just an extremely impressive guy with incredible personal and business experiences. With a master's degree in real estate from one of the top universities in Europe, Dean also has extensive property investment and management experience. I am super excited to share his story with you today and see how you can learn how to start and grow your own syndication fund through Dean's experiences. Dean is also originally from Israel and currently resides in London, but I am lucky to have him in our Miami headquarters right now with me. So Dean, thank you again for your knowledge and wisdom you've shared with us over the years, and I am super excited to have you on today and thank you again for sharing your time with us and the Looper community today.

Dean:

Thank you very much, David, for having me. I'm really excited.

David:

So, I know a lot about you, but the listeners don't. So, please explain to everyone a little bit about yourself, where you grew up, and stuff like that.

Dean:

Hello, David. Hello to everyone else and the Loopers community. First of all, thanks for having me, I'm super happy and excited to be here in the Miami office, probably the last time before we're moving. So, my next visit is going to be in the new office, very much looking forward.

David:

Exciting. Exciting.

Dean:

Yes indeed. Going back to your question, I'm Dean, I grew up in Israel until 2007, after six years of serving in the Navy. And then basically I moved to the UK and started my personal business career life, and did my undergraduate at the University of Birmingham in England. Studied business management, at the moment I'm happily married with three kids and enjoying life in London. I have two lovely girls and a baby boy.

David:

Okay, amazing. And I know that you had a very serious experience in the Army. So, tell us, what were you doing in the Army, how long were you there for? It was the Israeli Army, correct?

Dean:

Yes. Well, I served in the Navy, and basically the training took three years, so you had to sign for additional three years of service. I was a Navy officer, ship commander, had my own ship at the age of 21, which is now thinking about it, is insane to have that responsibility at the age of 21. A team of 10 warriors with you. But it was definitely very, I would say almost life-changing experience because it changed you from being a boy to a man. It gave me a lot of good traits and made me the man I am today, probably. So, it was overall a very positive experience.

David:

What would you say was the number one thing you learned from the military service that you took into the work life, into your career?

Dean:

Probably I would say it's about self-belief. In the military, generally, in the program, in the selection process, we started after thousands come in, and then you start a very expensive lucrative course, 70 people. And you know that on the end of the tours it's only going to be 30, maybe 35, if you're lucky. So, the fact that you can, every time you have a challenge, every day you have a new challenge, every week you have a new challenge, every time they push you further and further, and once you start to believe in that, that you can do that, something clicks in the brain.

David:

So, confidence. Confidence.

Dean:

Yeah.

David:

So tell us about your business today, what do you do?

Dean:

Okay, so DBM Advisory is a specialist UK commercial real estate investment and asset management firm. We are based in London. We offer bespoke service. Think of it as a wealth management service for only commercial UK real estate investment.

David:

Okay. And how did you get started in this industry? Did you just one day decide I want to open up my own property management company or did you work for someone before?

Dean:

I was fortunate, to be honest. I started as an employee. My journey start, so I mentioned I moved to England in 2007, graduated 2010. I was working in a tech company, research and development in the traffic enforcement field. So, that business back then was doing red light and speed cameras. Not very fancy industry. It wasn't for me, I realized that, but I had a very good click with the shoulders of that company. There was already a trust built in that relationship, and they basically offered me the opportunity, said look, "It's good time. It's after the big financial crisis." And they said, "Why won't you explore this commercial market, real estate market, and make some investments for us?"

So, I started as an employee for one client, and then we did, I basically bought a few books on Amazon, like property for dummies, property and money, you just see it then you just consume as much knowledge as you can from others. I still have a very good friend in the industry, his name is David as well, and he works at Cushman and Wakefield, it's like one of the top four companies.

David:

Yep. We've heard of it.

Dean:

Yeah, he was an intern then, and he basically took my hand and guided me, and whatever he learned, I learned from him. And actually, we did our first deal together. So, he was the agent, and it was in early 2012 when he presented an opportunity which was good for my client and this is when we started. Since then, it was almost unstoppable.

David:

And then you branched off on your own to start your own company or you were partners with him for a while?

Dean:

No, so I was an employee until 2015 I would say. We grew the portfolio back then to over 50 million pounds, and I think at that time it felt like I'm too big to sit on the company's books.

David:

This was commercial properties?

Dean:

Only commercial. So we do UK wide and very generalist investments. So, it could be offices, it can be leisure, it can be retail, it could be industrial and logistics, you name it and I look at it as long as I can see some sort of an angle of value.

David:

So, then you started your own property management business, and then you started trying to attract owners and investors to manage their commercial properties for them. Is that right?

Dean:

So, it took a while because I set up my own business, DBM Advisory in late 15, I think January 16 was the first month of trading, but nothing really changed because I still had the same client, the same properties to manage. I was just self-employed, self-employed, some tax benefits, but nothing clicked in my head. It's only after probably maybe two and a half years that I became hungrier and I wanted to achieve more. And then I said, "Okay, well, I have no exclusivity with this client. I'm offering amazing service. He's happy, I'm happy, but I can do the same for others." And I started to look at that field, but I realized it's not easy to get new clients, especially that caliber. My minimum requirement of investment is 10 million pound. Now go find it and build that relationship and trust. Happily I can say now that I have a few clients, but it took a while.

David:

So let me ask you the golden question, how'd you get that first client?

Dean:

So I mentioned, I was fortunate enough to have my first client as my employer.

David:

Oh, wow.

Dean:

So, I was an employee for that client, and then we shifted. I said, "I'm going to set up my own business. Would you be my first client, my anchor client?" And he said, "Yes."

David:

Wow.

Dean:

Nothing changed in the conditions. So he paid the same, nothing really changed.

David:

Okay. Just paying your company LLC versus you directly now.

Dean:

Exactly. Yeah.

David:

Okay. So, that was easy. You already had one client under the...

Dean:

Yes, that's it. I was fortunate enough to have that.

David:

So, how about a real client then?

Dean:

A real client. I think this is where you actually have to use all your senses and basically all your contacts and relationship, which is accountants, solicitors, tax advisors, surveyors, agents, brokers, and basically look for that new business. Recommend you, in some cases you need to offer them a fellow scheme or some introduction fees. And the good guys that actually recommended me, you get to know a lot of new people, and some of them you develop some sort of a click relationship that you take it to the next level. And then after Zoom, you have a coffee, and then you have lunch, and then you have some phone calls and present some opportunities. My second client, they took me over six, seven months after developing that trust that they actually gave me money to invest.

David:

But it's all word of mouth. It's all relationships.

Dean:

It's all relationships.

David:

Connections, networking. There's no marketing, advertising, Google Ads. It's all just networking and relationships.

Dean:

Yeah. How much can I advertise on Google for finding clients over 10 million pounds?

David:

I'll let you know, let me check. Okay, got it. Got it. For people tuning in that have not started their own property management business, would you recommend doing the same path as you, just consuming information, books, YouTube videos and working for someone else first?

Dean:

It depends on your personality, but you can do either way. Yes, you can go and actually work for one of the big firms, learn a lot, gain that knowledge, and then, if you have that entrepreneurship bug in you, you're going to leave at some point because you're not going to be happy in a big corporate world and you're just going to set up your own business. But at least you have the fundamentals and the know-how. Some guys can do it straight away, especially if you have some good contacts. There's no right or wrong. There's like right or wrong for you, whatever.

David:

Right. Yeah. Now, when you said earlier that your minimum was 10 million pounds, what does that mean exactly, what is the 10 million pounds?

Dean:

It means that I have a lot of guys now approaching me, hey, I saw what you're doing, I heard what you're doing, I like that deal. Wow, can I join in? And I said, "Yeah, of course, but how much?" Well, I have a million dollars or I have a million pounds.

David:

Let me pause you there. So, you are putting together the deal and you're buying a property, and they're investing in it? Or they already own it and you're just managing it for them?

Dean:

Let me reorder that.

David:

Yeah, big picture.

Dean:

Big picture. Think about it like a wealth management. Let's say you sold the company and you made $100 million. You say, "I want to put that 50% in the money market, stock market, and I want to put like 25, 30% in either residential or commercial property." Okay, I want to get income-producing assets over the long term. I want to leverage them, get some bank finance. You can do it by yourself or you can just find someone that he does it like private equities-

David:

Or syndication of fund.

Dean:

Syndication clubs, whatever, you name it. And I'm one of these other options. You can just approach me because you heard about me from a friend that does the same. And I will tell you, "Look, I can take you, let's meet, let's understand what's your risk appetite, what do you want to invest, and I will take you only if you have 10 million pound available cash to invest."

David:

Got it. So, the properties that you're acquiring are generally 40 million pounds?

Dean:

No, I'm probably going to do like my sweet spot is anywhere two million to 50 million. Don't forget that if you offer a minimum of 10 million pound 50%-

David:

That's over a few deals.

Dean:

... that's like 20 million pound of cash that you can invest.

David:

So, 10 million minimum isn't just for one deal, it's for a few deals, portfolio of deals.

Dean:

Yes. I would always prefer to diversify it in a few deals, few different locations, different industries.

David:

Okay. And how many investors are you putting together per deal?

Dean:

My preference would be always to work with one investor on one deal. This year, 2022, I've done two deals that actually were JV between two of my clients, so 50, 50.

David:

What does JV mean for people tuning in?

Dean:

Yes. It's a joint venture. You take two-

David:

Partnership, two people.

Dean:

Exactly. There's a partnership. I'm going to be the LP, I'm going to be the GP, I'm going to manage it, the asset manager. And my role in it is actually source the deal because I know what they're looking for, like a wealth manager that can build you a portfolio. So, I'm trying to create this S&P 500 in UK assets.

David:

Got it. Got it. Are you also borrowing money from the bank?

Dean:

Of course.

David:

What LTV, loan to value ratio?

Dean:

The highest we have done was 60%. I think our sweet spot is probably 50% at the moment. I manage about 100 million pound of assets, which is leverage I would say at 50% LTV.

David:

Got it. And what returns are you... I know there's no guarantee, but what returns are the investors looking for generally, cash on cash, IRR?

Dean:

The world is changing right now as we speak. I would say probably before, six months ago my guys would look to six, 7% cash on cash, return on equity annual basis but with an exit point of low double digit. So, anywhere above 12%. Luckily, all the exit we've done so far, so the lowest was about 14%, the highest was about 36%.

David:

Nice.

Dean:

That was a lot more asset management intensive. Add value with some planning processes or rezoning.

David:

Do you have any minimum hold periods? Are you planning on exiting within three years, five years? Is there a maximum hold period or is it just market conditions?

Dean:

On one end I'm lucky enough that I don't have that pressure as a fund because as a fund usually you have like five years plus one, plus one, and you have this pressure to buy, to sell. And sometimes, you don't control the market conditions, so I'm lucky enough I don't have that pressure for my clients because they say, "Look, it's for my grandkids. I don't really care as long as I get the income, everything is solid. Property value can go up, fluctuate, go down, I'm fine." On the other end as DBM Advisory, my business model is apart from management fees, it's also upside on the success. So sometimes it means that they can buy an asset and they're not going to sell for a long period of time, which I'm not going to see any upside. You can claim that on the other end, that you still get management, which is fine.

David:

So, that was my next question. You still make money no matter what. So, what's the typical rate here? It's a property management fee, you are doing all the property management yourself first of all, or are you outsourcing it?

Dean:

No, so I'm doing everything in-house from sending invoices to VAT, to tax guys, to accountant.

David:

Maintenance.

Dean:

Well, I'm an asset manager, I'm not a property manager. We have a few assets which are multi tenanted, and then we take a local property manager.

David:

Got it.

Dean:

But this doesn't come out of the pocket from the clients because you have a service charge from the tenants that occupy the building, to maintain the building. Property manager get paid from that service charge.

David:

Got it. How do you make money on the deal?

Dean:

How do I make money on the deal?

David:

Is this confidential information? No. Well, obviously you have a prospectus when you look for investors and they know exactly how much you're making, what percent you're taking.

Dean:

Yeah.

David:

I'm assuming it could be something like a pref, 8%, anything over 8% you take 20% of, after you sell the deals. Anything like that?

Dean:

There are so many different models and options.

David:

Options.

Dean:

My model is quite basic. I don't actually take any prefer, I don't offer preferred. It's a fixed fee on acquisition. Usually, it's anywhere between 0.75 to one and a half percent of the asset acquisition value. And that's only if the deal is successful.

David:

That means that if you raise a million dollars, you take, let's just say 1%, you make $10,000 day one as soon as the deal goes through.

Dean:

No, doesn't mean like that. It means that, let's say I have a client who came in with 10 million pounds, and then on the next day we found a deal which was actually 10 million pound, let's put bank aside at the moment. If we are successful in the due diligence, in the billing process and we actually complete the deal, I'm going to get 1% of this value, which is 100 000 from 10 million.

David:

Got it. Right away, day one.

Dean:

Only if we complete the deal.

David:

Yeah. Of course.

Dean:

And at that point of time, my clients start to get dividends.

David:

Distributions.

Dean:

Distributions, yeah. On a quarterly basis.

David:

And that's it?

Dean:

So I have management fees, actually.

David:

Exactly.

Dean:

That's quarterly. So every time we charge the tenant and money comes in, you take a percentage. I would say the market standard is anywhere between three to 5%. This is usually what I charge, market standard. And the difference where I actually differentiate myself from others is the upside. A lot of commercial property do it as a private equity model, which is like 20, 80 preferred, six, seven, 8%. And then you have like 70, 30 up to 50, 50, it really depends on the model. I'm fairly straightforward. So, once you sell it, once you get all your money back, usually you just split it 90, 20.

David:

90, 20?

Dean:

Sorry, 90, 10. And if you go above some sort of level which is abnormal-

David:

You do this?

Dean:

What do you mean?

David:

This is what you do, your model? If the deal is a home run-

Dean:

This is my model. Yeah.

David:

So, let's just dumb it down for people listening. The deal, they put in 10 million, they get back 12 million, they make 20% of their money, let's just say in one year, it's a home run. Really quick flip.

Dean:

Okay. So, that's easy. Let's say you put 10 million, that was the acquisition price, but you have actually stamp duty, land tax, you have solicitor fees, you have other surveyor's fees. Let's say everything all in was 10 and a half million with acquisition costs, and you sell it at 12 million. But then you have selling cost agent, let's say-

David:

You make a million profit.

Dean:

A million profits, I'm going to take 10% out of that, which is only 100K. However, let's say-

David:

Only, only 100K.

Dean:

In compared to private equities, which usually going to take 20% or more.

David:

No, it's a good business for those listening, if they want to get into this. There's serious money but you need serious investors also. That's probably the hardest part. And finding the right deals, and doing the right due diligence, and being trustworthy. It's not easy to get started, it sounds like.

Dean:

I mean it's an old industry, it's very difficult to differentiate yourself in this part from actually being a good person and develop this relationship. Why would they choose me and not someone else? It's all about who you are, do they have this, do you have the integrity, can they actually know that even if the deal is good or bad, you can stick to them and make sure we're going to ride this wave.

David:

How important is skin in the game here? Are you always investing your own money in every deal?

Dean:

I think it's important. Until now, I haven't invested in every deal, and it's mainly because a lot of my clients are in a different level that they do more wealth preservation or core deals, and I'm younger and I want to work my money out there. So, I'm looking for-

David:

Value add.

Dean:

Value add stuff. But every deal we have value add stuff I joined in with my own money, and deals that felt very boring, they were fine with me not joining or just managing it.

David:

So explain to everyone what core versus value add means. People that want wealth preservation, they're happy with six to 8% a year, and people like you that want more wealth generation are looking for eight to 16% a year and that's more value add. So explain that, core and value add. There's actually a few more, I believe.

Dean:

Well, you can say that there's a spectrum of a risk reward profile for deals. You can have wealth preservation, which means you buy an asset on, I don't know, Fifth Avenue in New York.

David:

Steady.

Dean:

It's steady, it doesn't really matter if you have a tenant now or not, it's going to preserve it's value over the long term because it's like a very unique location, it's a very unique building. Whatever reason it is.

David:

You don't need to flip, renovate it or do anything crazy to it. It's stable.

Dean:

Exactly.

David:

Maybe there's a 30-year tenant in there already, maybe the government's paying you, is very, very stable.

Dean:

Solid income or solid location that's going to maintain its capital values in that location.

David:

Got it.

Dean:

And that's what preservation, it means that you need to maybe be like beat inflation, which used to be 2%, but not anymore.

David:

Not the last two years.

Dean:

Exactly. After that you can say you have core and core plus, and then you basically increased a little bit your risk, but you increase your reward. You're expecting six to 8% on a core, and then core plus, anywhere between eight, 9%, and then add value, it's already starting to be double digit. And then, you have opportunistic, which is completely on the other end of the spectrum. You buy a vacant building, you need refurbishment, you need to find a tenant for it, you need to sell it on the market. It's timing, it's planning, or add value, add mass, all that hard work, you expect to actually get 25, 30%.

David:

What happens when a deal goes south? Something happens, it could be in your control, out of your control, the market tanks, something happens, maybe foreclosure happens. Do you completely lose that investor? How do you still keep their trust?

Dean:

Difficult question.

David:

Has that happened to you?

Dean:

Luckily, not yet. I think we're in the process now of some, the portfolio I manage definitely came down in value. I protected my clients with some taking fixed loans for long terms. A majority of our back finances already fixed.

David:

So, you're helping them refinance during these times?

Dean:

Luckily, we don't need to refinance now only I think the next refinance is in five years times, so hopefully by then things will settle down. It's a lot about preparation in advance. I'm lucky enough to, I don't have a deal that we actually lost money. At the moment, what I told my clients is to set some money aside just in case, I mean it's 100% valuation went down and probably when the bank's going to call for valuations, if we have any breaches in the LTV covenant or whatever, we have the money aside, we're not going to give the keys. But I doubt it. With 50% LTVs, let's have a podcast number two in 12 months, but so far so good.

David:

And then that's why you go with lower LTVs. So, you protect yourself. You have a little bit of cushion room basically. What happened to me during COVID was I had a few deals, very similar deals, syndications, funds, and two of them didn't have enough money in their reserves. So, they started doing capital calls. Have you ever, well, explain to everyone what that means and why they would do capital calls, and how it affects the deal if you can't make a capital call.

Dean:

I'm curious too from you because I've never done anything like that. I understand what it is. The deals I do, this is why I make sure my clients have the money in advance. Everything sits there. I'm not going to call for capital. Were they like development deals?

David:

No, they were just, one was an apartment complex. Tenants couldn't pay rent. They were getting rent abatement. We couldn't evict them. I think it was in New York. So New York was very protective of the tenants, but for the landlords and for the investors, we were getting no income, no distribution. They had no money for other projects they were doing, renovations, whatever it was. So, they ran out of money, they ran out of reserves. So what they had to do was start calling capital from existing investors that already invested three years ago and like, "Hey, instead of us paying you now, you need to pay us, we need to raise an extra 300 grand. Your part is 10,000 more."

And if you do not contribute within seven days, whatever the time is, according to the legal agreement they will be able to get the money from someone else and give them 30% interest. Something ridiculous or even dilute you and your shares in the portfolio. That was tough call because if the deal was going south and you didn't want to put bad money or good money after a bad deal, you just will suck it up and lose some shares.

Dean:

Yeah, it happens even in real estate. This is why when you actually do the due diligence, the initial one, you have to look at the basic, the fundamentals and it goes to location, covenant strength, what's the alternative use value, what can you do with it if everything goes south? When I started the first one, I was an employee then so my boss told me, first of all Warren Buffet book, he said, "You do not lose money. You go into a deal and you understand how you don't lose money."

David:

And rule number two, remember rule number one.

Dean:

Exactly. And then you actually build it up how you can actually make money like the market, and then how you can outperform the market with some add value.

David:

Got it.

Dean:

This was my methodology from day one. Something similar happened to me, to one of my clients' portfolio during COVID. We have a cinema, audience cinema, which is owned by AMC Global. And obviously as you know in COVID cinema were shut down. Cinemas were completely, the business model is so bad.

David:

Wow.

Dean:

Once it's shut, they don't have any alternative income. They cannot sell popcorn or coke.

David:

I think they were renting out the theaters for private parties only. That's what they were doing in Miami.

Dean:

You were not allowed to have private parties during COVID.

David:

Yeah, wow.

Dean:

You don't have commercial, you cannot sell popcorn, you don't have film, you don't have productions coming in. You basically have zero income with lots of commitments. So one of my clients is an Odeon cinema and they approached me and said, "Look, then we cannot pay rent." Look, and you're not the only one, we have like thousand of cinemas all over. And I said, "All right, can you pay me something?" They said, "No." I looked at the lease, I spoke, there was a lot of government support for this kind of business.

David:

Same in the US.

Dean:

Luckily I approached the bank, we had the loan and the bank said okay, that's fine. We can delay your interest payments as well for the next six, nine months. Now we stand that Odeon paid us all the debts they owe and they're operational, and the bank worked with us. Things happen. You just need to be prepared and you always need to have cash aside. Lots of cash.

David:

Yeah. COVID was a wild ride. I mean here at least in America the government was handing out so much money to help everyone because people don't realize that as a tenant, if you're not paying, your landlord can't pay their mortgage, and the bank doesn't get their investment back. It's a whole cycle. Everyone needs to compromise here. But with AMC, I'm curious and other tenants like that, were you setting up, I don't know if the word is rent abatement, where they would eventually pay you back?

Dean:

Yes. Okay. It's called the deferred rent. We just basically deferred it to next year. We spread the payments and we worked with them because we wanted them to succeed.

David:

So just to switch gears a second here. For people listening that already have their own syndications and funds and they're already doing what you're doing, how do you take it a step further and grow? I'm sure in one part of your business you said okay, I want to take it to the next level. What does that mean for you and how do you do that?

Dean:

I know I'm still in the process. I'm actually still doing it. It's always about sit down with yourself, reflect where your business is, where you want to go, understand of the map, where you want to go and how do you get there because you have a few options and everyone is different. What might suit you might not suit me. And I think my, at the moment where I stand actually I have a debate of should I go into the syndicate and clubbing and approach a lot of these new clients. Should I lower my threshold to below 10 million pounds. We'll see, I don't know.

David:

Now do you ever mix business with family and friends? Do you ever invite them, if they have enough money, to join in or participate or is that a big rule and no-no, never invite family or friends.

Dean:

No, I don't have any rules. Actually we've done it. One of the other DoorLoop co-founders who tagged along on a deal, which was very lucrative. You remember I mentioned the 36%, that was an add value. I got in and our friend, your friend just decided, I told him, "I'm going in, you want to join?" He said, "Yeah, I'll match you, whatever you put in."

David:

Wow. That was lucky. That's great when the deal goes well, but if that deal lost that money, it's hard-

Dean:

Well at least he knows that whatever he lost, I lost the same. So I told him, this is what I put. If you want you can put more, you can put the same. A lot of psychology in it. So if you know I lose something, it's painful for me, it's painful for you. I'm in it the same as you know.

David:

Let's see. Do you recommend this business to someone, doing what you do? To me it seems like a lot of stress managing a hundred million pounds of other people's money, does that keep you up at night?

Dean:

Yeah. I sleep quite well I think, I'm being honest. I think it's the systems I've put in place. I think it's the knowing and the confident that what I buy from day one, how south could it go, how wrong could it go. We had COVID, which was a black swan event and we survived and we got the money back. You have to be very confident in the things you buy. If you buy high risk and you cannot tolerate the damage that can come with it if it goes south, just don't buy it. I know what my clients want. I know what they want, what kind of returns and what assets I can buy for them. I sleep well at night.

David:

Now you mentioned black swan, not everyone might know what that means. So explain what is a black swan event?

Dean:

What's the definition of a black swan, it's probably something that you put on your Excel sheet. You have probability and likelihood of events, you do risk analysis, but you can only go so far. A black swan is something on the Excel that you wouldn't be able to find no matter how far you're going to go on the right, on the left, on the top, because it's something you cannot predict.

David:

It's the unknown unknown that we can never, ever think will happen, like COVID.

Dean:

Exactly. Yeah.

David:

Okay. Yeah, black swans are always scary because they can destroy your business overnight and you'll never see it coming.

Dean:

Or it could be the greatest opportunity for you.

David:

Yeah, for some business during COVID they exploded. What is the most important part you would say when dealing with your clients who are these investors and who are these typical investors first of all, before you even get into that, are they institutions, funds, just super high net worth individuals?

Dean:

Yeah, so I deal with the, you call it ultra high net worth individuals. Everyone above I think 10 million in net worth, probably not net worth, sorry, I think it's 30 million net worth, the definition. But don't-

David:

Whatever, it's different for everyone.

Dean:

It's private clients. I don't deal with the institution money. I think they have a lot tighter regulation. I'm not sure even if I qualify to deal with them.

David:

Okay, so it's like family offices, private trust.

Dean:

Family offices, private trust, yeah. I don't deal with charities, never had a chance. I've actually dealt with the public listed company in Israel that they were acquiring an asset and I gave them a consultancy and I brokered the deal. They didn't want me to manage because they have their own in-house management team. But I've done it last year.

David:

So what's the number one most important part dealing with these investors and clients?

Dean:

Number one, I think I mentioned that it's all about integrity and trust. When you earn money and you put it to a wealth manager, bank, whatever, even if you forget about investing, your own bank, you want to make sure that you trust them, that they're not going to, it's your money.

David:

I'll tell you for me as the investor, because I've joined a few of these deals, for me the number one thing was obviously I wouldn't have gone in the deal if there wasn't trust. I also probably wouldn't have gone in the deal if there wasn't skin in the game, if the operator, like you, didn't have some money in. I always loved deals where they had money in. I always loved deals where their family and friends had money in, and I saw the investor list and I said, okay, I know half these people and I know that a few of them are your family and friends. That for me was a big one.

And then after the deal went through the number one biggest thing for me was communication. You would be shocked how many of these funds don't communicate for a year. Zero. They'll give you your distributions, they won't send quarterly reports, they won't tell you what's happening, and then you'll find out in the news that the building is getting foreclosed or whatever the story is and you're like, hey, what's up with this? And then still, no communication. To me that was my number one thing. And then you have the pros who over-communicated, send me 30 page agreements that no one's reading, but okay, it's nice. If I ever want to one day I can read it. So to me it was communication.

Dean:

I think I learned something from you. I need to improve my communication skills probably with my new clients because I'm already used to a lot of my old clients and it's like, it's all on WhatsApp already, and we communicate on the same level subconsciously. He knows what I'm going to do. But having new clients, I think it's good that you mentioned that.

David:

I'll tell you one more thing that I liked a lot, not every investment has it, it's like an investor portal. I know Juniper Square is a big one in the industry for you too in England.

Dean:

Less, less.

David:

In the US, very big.

Dean:

And it's really good for club and syndicate investments.

David:

Yes, yes.

Dean:

Fund style. When you deal with one client or two, you don't really need it. But what you mentioned initially it's so true, and it's so difficult to create this pure alignment of interest. You study that in every business school, about the principal agent issue to create essentially I'm looking at my own pocket, everyone looks at their own pocket. How do you create this alignment-

David:

Balance.

Dean:

... and balanced, you're not too greedy, you want them to succeed. I think the switch for me is that realizing, look, this is my life, this is my business, this is how I support my family. I need to make sure I don't lose them money. I need to earn them enough money. They go, I will go, it's always been the mantra. The more I can make for you, I'm going to go with you.

David:

Right. Interesting. Walk me through a typical process start to finish from finding a new deal to closing on it. Who's doing that analysis and research first?

Dean:

Myself. I'm very lean business. I have an executive assistant and I have service providers that I use for building surveyors, mechanical engineers, stuff.

David:

So I mean that's exciting for people listening. You don't need a giant team, but what you do need is the knowledge and experience yourself.

Dean:

100%. I think I'm at the verge probably that if I'm going to go from 100 to 200, I'm going to need another analyst or assistant with some deal acquisition and transactions. But at this stage it's still all fine. How does it go, I mean first phase is to know what your client wants. Once you know what your clients, now you communicate with all of your agents to source you the deals, you get a few options.

David:

Okay. Let me pause you there for a second because the deals that I'm part of, they don't ask me what do you want, they already know they're going to find a deal, they're going to put together 20 investors and they're going to say, David, do you want it or not? I need 24 hours, they always put the urgency for some reason. But you're very different because you're dealing with one big whale investor.

Dean:

Exactly. This is how differentiate myself from all these club investments that you can come in at 250 K minimum or whatever. Join us or not, someone else will join. We going to do this deal. Again, I'm like a wealth manager for commercial public investment, if you made a lot of money and you said you want to allocate that to commercial property for income producing, we have a chat, we build that strategy. How long, what's the risk profile. Once we realize that, then we can see some deals together, it's a lot about educating, mainly me educating the other person, it's different.

David:

So you ask them what they're looking for, what's the risk appetite and profile, how much they want to make. They want to preserve wealth, increase wealth, and then you go out, you do your research, you find the deal, you analyze it, you have your spreadsheets I'm sure.

Dean:

Of course, cash flows, projections, you show them different deals to see, also to check if they're actually what they say it's true. Because you can say, yeah, I'm up for this, going to get 20% on my money, and then you send them a deal and they ask you, yeah, but what happen if the tenant leave? Well basically it's a one or nil, you're going to lose a lot of money. So maybe we go with something, different direction, and you do that. This is all about the relationship. Once I ask the agents source me some options, they give me opportunities, I analyze them. By now after 15 years in this industry, you know a deal if it feels right, you feel it in your bones. Their market rent is correct, it's not overrated, it's not underrated, the location is good, this is the bad, this is the positive. Analyze the macro, the micro, the tenant, the credit risk. Is it actually fanciable, you go to a bank, you ask a bank, would you loan me how much, okay, so I'm going to get a bank loan. I know it's passing that, and then you put it in the numbers in the Excel, you do a SWAT analysis, you send an email, let's have a chat.

David:

Do you recommend using, I don't know if the word is a broker to find a loan, where they just contact 50 different banks in their network, or do you have your own connections?

Dean:

If you are a beginner, 100%. Now I'm at the stage that I already have direct relationship with banks, but for some deals I know that my banks wouldn't be able to provide and I've done it on a big facility, over 50 million pound of loan and I use the broker and the broker actually gave me very good terms.

David:

Got it. Now for these clients, why would they choose to invest money in a fund like this versus just throwing it into a REIT, publicly traded VNQ, Vanguard's REIT.

Dean:

It's a philosophy. Look, some people like, real estate it's real assets. Some people like holding directly under their own name, under their own LLC, making sure-

David:

More control.

Dean:

... more control. I don't have all the statistics, but buying a REIT is also really good. But when the market goes down, REIT is being affected as well. The benefit is liquid, but it's more fluctuate. And compare that if you own directly, no matter what, you're still going to get your quarterly payments or your monthly rental payment until you have a tenant.

David:

Right. Now talking about control, and then we're going to wrap it up, how much control do they have because technically they own it, it's under their name and you're just managing it for them or you're in control. What do the legal docs say exactly?

Dean:

I'm fairly easy to be honest. 100% under their name.

David:

Okay, oh, their name.

Dean:

Their name.

David:

Oh, okay.

Dean:

Usually we do it with an SPV, special purchase vehicle, which is a company, they own it, they'll either be a 100% director or 100% shareholder. Sometimes they have 100% control over the bank, some cases I have control. I have access to the bank as well to do payments up to this amounts that we are doing in advance, so they're going to have less communication, but I'm fairly easy, whatever they feel comfortable. It's all about this trust.

David:

Yeah, of course. Of course. Okay, cool. All right Dean, thank you. That was awesome.

Dean:

Interesting. You learned something.

David:

I'm learning a lot. Yeah. Is there anything I'm forgetting to ask? Anything else you want to share or important to people just getting started or have already have a successful business and want, anything else?

Dean:

I'm thinking it's a good question. I don't know.

David:

Okay. No, no worries. If we covered everything, that's great. Any final words of wisdom?

Dean:

Final words of wisdom?

David:

Let's hear some Tony Robbins. Come on. Dean recently went to a Tony Robbins seminar, unleash your mind. What is it?

Dean:

Unleash the power within. I highly recommend it, it's actually my wife gave me my 30th, 40th birthday, which going to be in January, she signed me up for Business Mastery, which is for business owners. One of the free packs was you get a free ticket to unleash the power within, which is completely different event, not for business owner, more holistic, more like things, you walk on fire and it is a lot of energy there and I said, I'm going to go there, but only if my wife comes with me. And we really enjoyed it. I recommend it if you're like into this personal development and whatever is the thing. If not, that's fine as well. I love it.

David:

So leave us with one piece of wisdom from Tony, what's the number one thing you got out of the course so far? Besides house music, besides house music.

Dean:

Well, he says always repetition is the model of all skills. You have to repeat whatever you do until you created a habit. You need that momentum with you and habits, good habits to create in your life, it takes time. So take it easy on yourself. I'm used to set up a target, let's do it, and if not, I'm unhappy and take it easy. Take a breath. It's a life journey. It's not about the targets.

David:

Right. I love it. So how can people get in contact with you or follow you online or anything like that.

Dean:

I don't have any website presences to be honest. It's on my to-do list. I'm not sure that I wanted that, but ...

David:

Message you on LinkedIn?

Dean:

Yeah, if someone needs me, they can find me.

David:

Is that Liam Neeson. I will find you.

Dean:

It's funny, you know the story from Tony Robbins, so I was this at this event, sorry, I'm going to take one moment.

David:

Go ahead. Go ahead.

Dean:

I was there and I was chatting with this Israeli guy I met accidentally, we're sitting together and we started to chat. Where you from? What do you do? Real estate property. Very nice guy. Very good vibes, good energy. 15, 20 minutes, and then we say goodbye. I Googled that night his name, and oh my god, he's the chairman of a public listed Israeli property company, worth over five billion Shekel, he's holding 50% of it and he is like, this guy is a billionaire and I didn't even know that. But he's so nice and cool and I'm going to have to reach out to him just to have a chat, just to keep proximity's power, just to learn from him and see what I can offer him. Maybe even if not, let's connect somehow. And in Israel, within a few texts or phone calls, you could go to the president or the prime minister and I managed to get his call and I texted him and he emailed me and he even sent me emoji. I said, let's meet up for coffee, lunch, whatever, when you come to London or when I come to Israel. He said, of course.

David:

Cool.

Dean:

Things happen.

David:

Yeah. Cool.

Dean:

You can contact me if you really want to, I'm sure you'll find a way.

David:

We're always what, like three degrees of separation from everyone. All right. Thank you again, Dean. I appreciate it and more to come in the future with future podcasts. Thank you again for your time.

Dean:

Thanks.

Speaker 1:

Thanks for listening all the way to the end. Don't forget to give us a good rating on whatever platform you're tuning in from and we'll be back soon with another new episode. We hope to see you there. And until next time, this has been in Loop It In.

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