Spotting Red Flags in Syndication Documents feat Dugan Kelley

Hello, future billionaires. Welcome back to another episode. We have a very unique guest today. Have you ever received a legal package for a deal that you're looking at, opened it up and thought, wow, this is a lot of information. I don't know where to start. Well, we all have been there and we're very excited to bring on our guest today, Dugan Kelly, who's an SEC attorney, and he breaks down the components of the PPM, the private placement memorandum. All the things you need to watch out for, the potential red flags and the gotchas and more in this episode. So be sure to tune in and you will guarantee to learn something.

Don't let that document scare you away. Listen to this episode and jump on board.

This is the Invest Like a Billionaire podcast where we uncover the alternative investments and strategies that billionaires use to grow wealth. The tools and tactics you'll learn from this podcast will make you a better investor and help you build legacy wealth. Join us as we dive into the world of alternative investments, uncover strategies of the ultra-wealthy, discuss economics, and interview successful investors. Looking for passive investments done for you? With Aspen Funds, we help accredited investors that are looking for higher yields and diversification from the stock market. As a passive investor, we do all the work for you, making sure your money is working hard for you in alternative investments. In fact, our team invests alongside you in every deal, so our interests are aligned. We focus on macro-driven alternative investments, so your portfolio is best positioned for this economic environment. Get started and download your free economic report today. Welcome back to the Invest Like a Billionaire podcast. I am your co-host Ben Frazier, joined by fellow co-host Bob Fraser. And today we have a very special guest, very excited to talk with Dugan Kelly. So he's the co-founder of Kelly Clark, which is an SEC law firm and specializing in his, with his clients in acquiring multifamily commercial residential properties. And last year, I think you told me the number, but I'm still, you know, trying to make sure it was a B and not an M, but you said $5 billion last year and just in transactions and volume with your clients. And so you definitely have seen a lot of PPMs. You've written a lot of PPMs. And one of the things we wanted to talk about were what are some of the common red flags that, you know, you've seen in working with syndications, right? You worked with a lot of syndicators and, you know, one of the great things you do is help provide education with passive investors to help them really break down a PPM, really understand what are the potential pitfalls in these legal documents and to avoid them.

So, so just to set this up though, so PPM is that big, ugly, massive document that you, that the sponsor sends you when you said, yeah, I kind of like getting in that real estate deal. And so this guy is the guy who writes that junk, right? You're the guy that puts that together and forces us all to endure this horrendous, you know, experience.

So this news best, right? I barf every time I have to read one. Yeah. Thanks for having me on, guys. I really appreciate it. It's, it's like people like yourself that have a mission in horror to educate the retail investor, the people that want to get into this business, because I'm passionate about it. It's really the only place for many investors to get the excellent tax benefits as well as grow their money and build legacy, building wealth for themselves and their family members. So I'm, I've been doing this for 23 years plus, but you're right. I'm, you know, I'm one of the guys that's out there drafting these long, arduous things that look like those old dusty telephone books. I'm old enough to remember what happened when we were getting books, but it's important. It's important.

So what is it about? Why is this? I mean, so I look, I can go tomorrow, open an account at Robinhood and buy a dollar's worth of Tesla shares and don't have to do any of this stuff. What is this rigmarole about?

Yeah.

So we are the, you got to remember there's this wonderful organization, it's based in Washington, right? Where we've got all these, where all good things come from, right? Where all good things, and it's called the Securities and Exchange Commission. And they really have 3 components that they're really looking out for. One, and most importantly, is to protect investors. And so those investors are not just the people that are buying stocks of IBM or Apple on the public exchanges, because the vast amount of trading that takes place inside the United States is not in the public exchanges. It's in what we call the private offering space. That's where people like yourself or maybe others are essentially trying to buy an asset. Doesn't really matter what that asset is. Most people that are, that are syndicating right now are syndicating what we call the qualified non-recourse debt space. Multifamily, self-storage, mobile home parks. Those are kind of— that's the holy triumvirate of qualified nonrecourse. But they, in order to be able to sell a security— and the security is nothing more than an interest in a limited liability company or a limited partnership interest in a limited partnership— they have to do that in a compliant way, both for the sponsor, operator, syndicator, those terms are used interchangeably, but most importantly for the protection of those investors. And so that private placement memorandum, that big stack of documents that you get, that's really composed of some key ingredients. That's what the retail investor— that's what protects them from the SEC's perspective. That's what helps foster the pillar that one of the foundations that the SEC was formed for. Over 100 years ago.

So walk us through a PPM.

What are the big—

what are the big chunks? What are the big building blocks? And, you know, how do we read this thing?

Yeah. So every PPM— so if you're listening to this right now and you're thinking about, man, I really want to invest in multifamily or self-storage or maybe even like a bowling alley, again, it doesn't really matter. But the key ingredients inside that private placement memorandum, which is just the long word for PPM, are the same. And first and foremost, it's comprised of the risks. So if you're a retail investor, what the hell are the risks involved in this? Yes, I know I could lose my money or potentially some of my money, but how, how could I lose my money? And so every PPM should start out with being able to describe to the investors what are the risks associated with the transaction.

All the reasons why you shouldn't invest, basically.

Absolutely right. And then you're going to often see essentially, okay, I see the risk. What is it that I'm buying? Like, what's the minimum investment amount? Is this a limited partnership structure? Is this a limited liability company? If I'm buying a multifamily property, do I know where the property address is so I could Google-fu my way around the internet and actually see the damn thing, touch it if I wanted to, drive by it if I wanted to? So most of the syndication that I do is in hard assets, real assets, tangible assets. That's why we love real property. It's not like the commodities or the futures market or the equities. This is a real asset that's being syndicated. We're raising money from passive investors to back it to the loan, to get the keys to the asset, to deliver real value and passive returns for the retail investor, but it's a real thing. You can see it. So if you've once— that's one of the other key components of it. And then obviously, how much am I going to pay the people that are putting this together? It's not for free. So I get asked by family offices, high net worth individuals, people that are looking to invest, and they think, what's this thing called the promote? What's an acquisition fee? What's an asset management fee? What's a KP or guarantee fee?

What am I paying the operators here to do this?

Yeah, right.

They don't, they, but they, but they want real information. That is not weird. It is not weird or bizarre for you to pay the operators or the people putting the deal together. That's normal. That's expected, right? So you should be, you should be expecting that as an investor. And if, if If you're not, then this probably isn't the right place for you to invest into, but it should be disclosed. All of those fees should be disclosed. You should never be curious about, oh my gosh, I didn't know how much they were getting paid, or, or where would I find that? Well, it should be in that, in that PPM. And then we also, we, we talk about from the standpoint of investors is this concept suitability, right? So the SEC says suitability. Investor says, what does that really mean? Well, really what it means is not every investment is great for every potential investor. And so there are certain offerings that are only for what we call accredited investors. And if you don't meet this strict definition of what an accredited investor is, The typical way that we define that is somebody whose net worth is north of $1 million backing out the value of their primary residence, or somebody who in the last two taxable years with the reasonable expectation of this year have $200,000 in income or $300,000 with their spouse. If you don't fall into those buckets, then, then an offering that's only for accredited investors is not suitable for you to invest into. Most suitability components from sponsors, operators, syndicators is done through a questionnaire. So in your PPM, you are going to see a questionnaire that asks for you, the retail investor, some, some very confidential information that they're going to be asking you about your finances, your net worth, your risk tolerance. All of those things. If you don't see that in your offering, that's a warning sign because the sponsor operator syndicator does not care about suitability, but yet the SEC does. So there always has to be a component of suitability involved in that, that process. And then last but not least, the biggest ingredient that you should expect to see is What's the document after we've closed this thing? We've got the keys. I'm expecting my distributions and what that's going to look like. Well, that PPM, most of it is going to go into a filing cabinet somewhere and you're never going to see it again because it no longer applies. But there is a governing document that applies to you, and it's either your limited partnership agreement Or your operating agreement, depending on whether you're investing in the governing doc of the business.

So all disclosed there. Here it is. Here's how we going to accept money. Here's how we distribute. Here's how we do our taxes. Here's how we manage liquidity, liquidation or liquidity requests, et cetera. Oh, it's all there, right?

100% redemption. Whether they're going to be a redemption request, whether you're going to force, be able to force the buyout of your interest. What happens in the event of divorce? Or death, or I want to transfer my interest from my LLC to my trust or from my trust to my kids or things like that. When is the distributions going to be had? Is there going to be a capital call? All of those things are going to be listed in that governing document.

All right. So now we know why it's so big. But so how do we— so I'm just Joe Investor. I decided I want to get out of the public markets and I want to— I like the private, I like the tax benefits, I like the lack of volatility. I like the returns. I want to get in this and I get this giant document. What are the things I need to be careful about? How do I want to read this? What are some red flags? And why don't you just walk us through just, you know, from the beginning?

Yeah. So if I get it, so like I, if I'm a retail investor and I get this giant stack, I usually will go to the summary page because it'll have broken out typically by page number, the certain sections of the offering documents. And so if you are interested in, obviously you should always read everything, but I, I get it. They're so, they're so thick. So don't discount the fact that maybe you need to go ask your CPA or your own lawyer to assist you in reviewing these documents because they are so dense and so thick. But assuming that you're a seasoned investor that has been on— this is mostly the rinse and repeat game. So most investors who invest with operators and they receive decent returns and they like the experience, they're going to do it again and again and again and again. And that's a great thing. That's a great thing for them being able to grow their portfolio. It's a great thing for tax benefits on an annualized basis. And they need to reinvest the gains that they have essentially earn from each offering back into another opportunity. I'm going to be looking at that, that basically that table of contents, and then I'm going to be essentially making notes theoretically to ask questions, right? So a lot of times people, if you're a retail investor and you read something and you don't understand it, you stop right there and then you just say, well, this isn't for me. And I want to encourage you to not do that. I want to encourage you that if you're a retail investor and you're reading through the offering documents and you don't understand something, welcome to the club. I've been doing this for 23 years. There's certain offerings that I read, right? I do this for a living. There's certain times and I read it for a client to evaluate it and I'm like, what? What did they just say there? And I have to read it 3 or 4 times, but I usually will make a note. Of that. And that just means that the operator, sponsor, syndicator, we're going to call them or email them and ask them our questions. We're not going to immediately discount the opportunity that exists because we don't necessarily understand something. So you want to make questions, you want to question, you want to write down questions. And then there are certain things that if I, if I, if I don't see, in an offering, it raises a red flag or certainly a yellow caution flag.

Yeah. What are those?

Well, one of the most recent ones is the absence of a capital call provision. So we're, we're now in a, in a very interesting market. Now, I have lots of clients that they love this market. This is the only time that they get off the sidelines and they're in this because of the possibility of what we call distressed debt or the possibility of deals to be made. Lenders still have to trade. They still have to make money by offering loans. So you're going to see additional new loan products roll out both at the agency level as well as the bridge level. So it's important for you not to think to yourself for the next 12 to 18 months, if you're a retail investor, you're not going to invest. That's silliness. No, it just means you need to scrutinize and evaluate the, evaluate the products more closely. In this environment, but I've been seeing a couple of offerings right now that have no capital call provision in them. And I'm like, what? How can you not have a cap? Let me tell you, if you're an investor, what you want to— what you want to see in every offering that you invest into, in my opinion, is you want to see a voluntary capital call mechanism built in there. Notice I said voluntary. This is not compulsory. This is not something that's going to penalize you, but if your sponsor, operator, syndicator hasn't thought to themselves, what happens? What in the unlikely event that the business plan doesn't go exactly to plan and we need even the possibility of raising additional capital and we're not going to have a member loan or the general partners on the deal aren't going to be able to short fund. Of that aspect, you want to be able to have a capital call provision baked into your governing documents. Otherwise, what, what, what are you doing? You just give up? You're just going to hand the keys back into the lender.

That's, that's silly. Maybe don't know what a capital call is, or that word kind of scares them because they've heard, I was a friend that was in a deal that had a capital call. It can be a scary thing, but to your point, if you're going to that route, it's generally to protect the capital and protect the asset.

100%.

Yeah.

This— the sponsor-operator-syndicator, their number one job is to protect the asset, protect your money, and protect the asset. They have— typically they'll have fiduciary duties of loyalty and of care that they owe to their investors. And so if, if you get into a situation, you could get into a situation even in a great market where I had a client where A building burned down, part of the property in the multifamily burned down. It's almost like apartments attract fire. They attract lightning and fire. So if you're going to own, if you're going to be in this game long enough, you're going to have a fire in one of these apartment buildings, but the building burned down and the insurance, the replacement insurance, the draw to be able to get the replacement insurance was going to be so far out that they were going to take a significant hit on their net operating income to be able to make that. So what they did was they had a voluntary capital call with existing investors to say, here's our business plan, here's the money that we need in order to shore up the construction funding so that we can start construction right now. We don't have to wait for those insurance proceeds to flow back in. So having that mechanism in place to be able to do that, and if you don't want to participate, Don't worry about it. No problem. We're just going to dilute, meaning your percentage of equity will be, will be reduced proportionately to accommodate all the other investors that did choose to participate in this voluntary capital call. I'm not talking about when you have a capital call where you're going to be, there's an extra penalty, like a fee or something like that. We see that in the institutional markets and many of the hedge fund offerings and things like that, where there'll be an extra penalty or fee assessed against the retail investors. Most capital calls in the multifamily syndication space are purely voluntary. But from a retail investor perspective, you might say, what does that really mean? Well, it means like, just like my hypothetical or my, this story that actually happened to one of my clients, Building burns down. You know, you need some money to rebuild immediately. You know, you have insurance there, but insurance companies are so painfully slow, move at a glacial pace to be able to have that. You want to be able to do that. So you go to your investors and you say, here's our business plan, here's the amount of money we, we need. And we want each of you to contribute on a pro rata percentage your amount of the actual capital that we need. That's a capital call, right? It can happen in a variety of other ways as well.

So it's good to think about it ahead of time, basically, and plan on it as an investor. Hey, you know, worst case, I'll keep a little dry powder for this deal. And because it happens, you know, so 100%. So what are some other red flags?

How do I get these guys out? Meaning how do I fire the manager? Let's say the manager, right? And sometimes the manager is another entity that's controlled by the sponsors, operator, syndicators. Are there any situations in which we, we as a passive investor should be able to pop them out of position? And most of the time there are limited reasons that you should expect to be able to say, Yeah, they should be, they should be gone. Just like most lenders in the qualified non-recourse space will have what we call a bad boy or a bad girl carve-out guarantee. If those managers do something that was, that's beyond the pale, they steal the rents, they, they refuse to insure the property. They, they tell the lender that they're not going to cooperate with them. They, they run the property into a waste dump, things like that. You want to be able as an investor to have some protections. Now, don't expect as an investor to vote on every issue. That's silliness. You wouldn't even want that. Even if you had that, you wouldn't want that. In my opinion, you shouldn't want a bunch of voting rights, but you do want to be able to protect your investment and you want there to be certain restrictions in place on the operators, like they can't automatically dilute you. It was a 70/30 with an 8 pref. Now it's going to be a 60/40 or, or an IRA 90/10 flipped the other way without your vote. You wouldn't want that, right? So you want certain safeguards to be baked into that governing document as a retail or as a passive investor. And if you don't see that, That's a potential warning sign in my, in my opinion.

What are the most common mechanisms or structures that you've seen to vote out, you know, the operator? Because a lot of, you know, passive investors may think, well, I don't want to take back this property.

Yeah.

What am I going to do with that?

You know? Right. So it's, it's, it's kind of almost a negative, but at the same time, you know, you can, there are other operators that can come in and just to have that ability to do it, to protect your capital if there's you know, not maybe gross fraud, but there's, you know, major negligence.

And sure.

And what are the kind of more common structures of what does it take to do that, right? That you'd see or would want to see?

There's usually a voting threshold. It's either 51% or sometimes it's a 67%, like a supermajority. And then remember when the lender is the biggest investor in any of these deals, right? B, and especially if it's non-recourse, that means that the lender has given the money with very— the only security in the deal for the lender is the property itself backed by the underlying leases of the tenants that live at the property. But if the lender believes that this is a good deal, they're going to be significant safeguards in place to safeguard the biggest investors' money in the deal. and that's the lender. And don't think that you're going to be able to easily pop out the operator sponsor without the lender's consent. It won't happen. Anytime, anytime managerial or general partnership control is removed from one group and given to another group, it's almost always in concert and discussion with the lender itself. So you're going to be able, you're going to see that sort of, that sort of thing, but it might be, it that discussion might be tipped off initially by one of the bigger investors or limited partners in the deal to be able to do that. And sometimes people get what we say from where I'm from, Montana, a little head over their skis, which just means that they bought, they bit off more than they could chew as a younger operator. And maybe they're not in the best position to be able to manage the asset throughout the lifecycle of the asset. And so you want a mechanism in place by which you can have a, a peaceful transition. Not every transition of power has to be some sort of angry coup. It could be a very peaceful transition from one group to a more seasoned group that can actually manage your investment throughout the lifecycle of the asset.

You know, one of the things I spend a fair amount of time looking at is fees, because you get a real sense of, you know, is it going to be one of these heads I win, tails you lose kind of deals where the managers are very manager-centric and you get a real feel for it. I do when I read that. I don't want to do any deals like that. I want to make sure that you know, I'm taking care of as a passive investor first. So, you know, I've seen a lot of fees that just seem outrageous to me.

Yeah. I mean, we're, I mean, 15, 20 years ago we were all doing the same structure. We do what we call 2 and 20s, right? Where the sponsors of the deal were taking a 2% straight, 2% of the equity that floated in the deal. That was essentially like the acquisition fee. And then their promo after the, either the investors got received back 100% of their capital or they split dollar, every dollar out, 80 cents went to the limited partners or the passive investors and 20% went to the people that were actually managing the fund or the thing. And that's still a very common structure today. But what you see in the multifamily syndication space is is all sorts of types of fees now that hopefully are always disclosed to all their investors, but everything from acquisition fees to asset management fees to construction management fees to KP guarantor fees to exit disposition fees to then the promote, and then you have hurdles that are built in to the waterfall. So I'm not saying that any of those are bad per se. I think what resonates most, most with passive investors, at least the ones that I talk to, is one, simplicity. Do, can I understand this without having to hire somebody from MIT or Harvard to actually tell me what this means? And two, do I believe that it is fair or reasonable that the people that are actually working, that they have their sleeves rolled up, and are trying to drive revenue into your pockets, get paid, and are the fees that they're asking you to pay, does it pass the smell test? And if, if, if your gut says yes, then it's probably fair. And if it doesn't, don't just, again, don't just blindly throw the thing into the trash. Ask some questions. Try to understand exactly what it is, why the fee structure deviates from what you believe is market. Because I can tell you what market is for an acquisition fee or an asset management fee or an exit fee or a KP guarantor fee or construction management fee or a PM fee based on, you know, seeing hundreds, if not thousands of these things on an annualized basis. But it's more important for you as the retail investor that you have faith and confidence in the people that are running the deal.

Yeah.

Because if you don't, that's going to lead to dissension.

I love it. Ask the questions, you know. You know, one of the other things that I actually read is the risk factors. Now, sometimes it's kind of ridiculous, like, you know, risk factors. Should the Earth stop turning, then we will likely have a full, you know, failure of our, you know, and it's kind of ridiculous. But then you see, you got to skip those, you know, but There's a lot of good stuff in the risk factors. And for example, you know, I mean, I've been reading a lot of PPMs recently and I can't figure out what the terms of the debt structure are underneath. And if I can't figure out the terms of the debt structure, I can't understand the slightest value, the risk of this deal. And so, you know, if that debt's not disclosed and the structure of the debt's not disclosed, I'm like, I'm not touching a deal because I want to know, is it variable? Okay, well, what's the maturity date? All that. But the risk factors a lot of times show all that stuff. They show, you know, hey, by the way, this is in a flood zone. Or hey, by the way, you know, here's the risk is that they, we don't get the tax benefits renewed. And oh, it makes me think about the things that I wasn't thinking about, you know? So I actually like to read them and it's kind of entertaining.

It's a great, great point. I remember a few conversations I've had where investors, they read the offering memorandum, which is like the, you know, sales or pitch deck and they're talking about all the, you know, amazing benefits of this deal and how awesome it is. And then they read the PPA or they read the risk factors and they're like, this just seems like a totally different deal. It's the same deal, right? But it's two sides of the same coin, right? Because it's, you know, first here's why we believe in this deal, but then to really understand the potential downsides, to your point, you can really get a good sense of what are the risks you're taking for that projected return? And do, does that line up right? Is, is that a kind of a, a good match? Is that a fair return for that risk?

100%. And I, I, I, I couldn't agree more. If you see a deal and there's not any risk factors discussed, that is BS. That's crazy.

Should probably run from that deal.

Run from that deal. And if all you ever see is risks and it's like, the world may get hit by a meteorite and wipe everybody out. That's, that's silliness. But I want to know about taxation. I want to know what submarket concerns there might be. I want to know what the capital stack theoretically looks like. I want to know what type of leverage and what type of debt product the sponsors typically have. And I want to know if it's a floating rate, theoretically, you know, what the plan is from a standpoint of how do we cap our risk, right? So, you know, just a short period of time ago, guys, we were buying rate caps on floating rate debts for like peanuts. Now that is a major, major driver in the, in the capital base, in the capital markets. And so, you know, are we going to move to more fixed debt? Are we looking at recourse possibilities? Are we looking at, you know, things like that? All of that should be disclosed, it should be in your PPM. If it's not, then again, make some notes, ask some questions so that you fully understand exactly what it is that the business plan is really predicated on. Is it based on hard ground or sand?

As guys who've written a lot of PPMs, I can tell the listeners, you know, I want to put all those risk factors in there because, because basically I'm going to put those in there. I'm trying to think up everything that could possibly go wrong with this deal. Which is a good exercise, but I'm doing that because I know that's protection for me. That's CYA, right? That means if I've disclosed this and it happens, I can't be sued for negligence or fraud or something. Hey, I disclosed it. But if I haven't disclosed it, it potentially opens me up. Did you not think about this obvious thing that you could not get renewed on your whatever you need? And I never thought about it. Well, then I could really be sued. So, so it is CYA in one sense, but it's also a really good thing to, to, you know, to understand that these, these, these sponsors are trying to think up the things that, that, that are the issues and they're trying to disclose them because that's protection for them from a lawsuit.

Absolutely.

And to go back to your earlier comments, Dugan, is suitability, right? It's— we want to make sure we're getting the right investors in our deals and they understand the risks that they're taking and they're comfortable with that. Right. Because we don't want to get someone that comes in expecting a a core deal when it's a development, ground-up construction play, right? And they don't understand the difference of risks of those because there's, you know, so it's really, it serves both sides of the transaction.

That's right. You always want to meet the expectations as best as you can, authentically and transparently with your investors. I couldn't agree more. I had a potential investor who was looking for a short-term play. And I'm like, well, why are you looking at a product that's going to be locked up at HUD? Like, that's the very, that's like the very polar opposite of where you're, you're looking. You want to be in the bridge space of 18 months to 24 months, not in the 35 years. I mean, come on. And it's just that the, but those are fundamental things that is you as a retail investor, if you don't read or you don't understand the opportunity where you can find yourself maybe investing in a good thing, but it doesn't meet your expectations. And that leads to dissatisfaction, disappointment, resentment, all of those bitterness, all of those things that no sponsor, certainly not the ones that I— they don't want you to be unhappy. They want you to be happy because again, This is really a rinse and repeat game. This is investing is meant to be a lifelong pursuit. It's apolitical. It's not Republican. It's not Democrat. It is, it is meant for everybody. I really believe that it's not meant just for the rich or for the corporations or anything. It's really meant for everybody. But some opportunities might just not be suitable to fit your particular palate. Of investing. And so you just have to find the ones that are, that fit your criteria.

Yeah. Makes sense. Well, dude, I have a little hack here you may not have heard about to get through a PPM faster. So I had an investor, this is hilarious. He called me and he's like, yeah, I read the whole entire PPM. I was like, way to go, man. That's awesome. You know, a lot of people don't do it even though I encourage them to do it. He's like, yeah, I took the transcription and I turned it into an audiobook and I listened to it on 3x speed. And I listened to it working out. And I was like, that's the first I've never heard of someone turning PPM into an audiobook, but he did.

I wonder how his workout went.

Yeah, probably a little sluggish, I would imagine, but I thought that was kind of funny. But that is one way to get through a little faster.

No doubt. I love the creativity, the engineering.

Any other kind of final parting thoughts here you'd say for those that are, you know, feel a little bit daunting to look through this, you know, PPM and final thoughts you'd share there?

Yeah, I would just say it is, I believe one on a couple things. One is the power of positive thinking, but two, There is a real thing of paralysis by analysis. So if you're trying to take the next step to help your family's future and you know, you feel convicted that investing is really a way that you're going to be able to accelerate that, but yet you're analyzing every deal to death, you need somebody else to help you with that. You really do.

Good advice.

You're going to be, you're going to be paralyzed. It's paralysis by analysis. And there's one thing that I do know that kills deals and it's procrastination. So at some point that deal will close, your ability to invest into it will pass, and then you will live either with disappointment or regret. Now I'm not saying rush into every opportunity and invest blindly, but what I am saying is if you have made the decision to invest and you have identified the operators that, you know, like and trust. And so you have to take that first step and it might be scary. It might be scary to step into that opportunity, but you need to do it. And so I'm a big, a lot of this might sound like motivation, but the reality is a lot of people need help. This is a team. Spore. Nobody syndicates by themselves. And there's, there's very few deals where there's just one investor. So you're in the same boat with a bunch of investors into a, into a deal. So when you're thinking about these things, start thinking about, am I really trying to talk myself out of this? Or am I honestly assessing the risks? Do I really understand this? Those sorts of things. And then just ask questions, right? Get on the phone with the sponsor or the investor relations person, the acquisitions person for the group, and ask some questions because at the end of the day, you will not, you will not receive any returns if you ultimately don't invest. And we just know empirically, statistically, if you just take a 20-year snapshot from the S&P 500 to the Russell 2000 index, to what we, what we do in the private space. The private space has outperformed all of those. It's not even close. It's like double. So the reality is we are looking at the greatest transition of wealth in human history right now. We're living in it right now. So if you're thinking about investing in the private space and you think that's bizarre, or because your Merrill Lynch guy doesn't have this on their, on their platform, you're in the wrong space, right? That's just not, that's just not what we're talking about. The vast majority of these opportunities, like we've been talking about this afternoon, are in this private placement area and the assets that are being syndicated that are actually delivering the revenue to generate the returns for the passive investors. Are the ones that have historically outperformed some of these other public exchanges, some of these other types of asset classes. So I would just say take a step of faith, ask questions, be curious, not judgmental. Those are very important components, I think, for success.

So good. And know that this, like as you just pointed out, there's, these are such lucrative opportunities, many of them. And And it, the first ones can seem daunting, but after you do a few of 'em, they, they, you really start to see they're very boilerplate and they're easier to get through. So it's just this first barrier, get over that hump and, and dive into this market.

That's right.

That's awesome. Dugan, thank you so much for coming on, sharing your knowledge. I know this is gonna be very, very impactful to our listeners. What's the best way for folks to learn more about your firm? And if they are operators looking to do their own PPMs or, you know, just passive investors that, you know, I don't know if you guys are willing to review PPMs with some other attorneys on your staff, but you know, what's the best way to help folks find you?

Yeah. Thanks for asking. We're, we're always willing to help people. We're in this business to serve people. We can't, if we can't serve you and help you on your way, then we're not interested obviously in just doing something for, for nothing. So. Thankfully, my parents gave me a very unique name. You can plug it into Google. I'm probably the only one out there, Dugan Kelly. That's a securities and a real estate attorney. You can find our contact information. We're in Dallas, Texas, in Santa Barbara, California, but all our clients are hunting, buying, and selling deals all around the United States. We'll be happy to chat with any of you for free, give you a free consultation. So I'm just, I'm happy that you're, you're listening to this and I'm happy that you're taking that next step, hopefully in your family's financial future.

Awesome. Well, thank you so much for coming on and appreciate it.