Ep. 132 How to Analyze a Deal with Sam Giordano

You know, all these little bullet points that I eventually transformed into an Excel sheet that when I would get a deal, I would put it in that Excel and you know, we, and basically see if there's any risk points that would say to me, you know what, I'm going to pass on this deal or this deal looks pretty good.

Welcome to the Next Level Income show where it's our goal to take your income, your investments and your life to the next level. I'm your host, Chris Larson. If you haven't yet, get a copy of our book for free at our website, nextlevelincome.com. that's www.nextlevelincome.com. just click on the book link and I'll even send you a copy if you put your address in.

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Not only am I excited to launch our coaching course which is going to be talking to you, it's an online course, Six Figures of Passive Income Roadmap. It's your plan to develop six figures of passive income stream. But on today's episode, we're also going to be having Dr. Sam Giordano. Dr. Sam Giordano is a practicing gastroenterologist, he's an author, he's a real estate investor and he's the co founder of passive advantage.com which is a website designed to help physicians and high income professionals vet passive real estate syndication deals. He and his partner Terry have designed tools specifically geared towards passive limited partner investors to help objectify and bring light to the risk points of various real estate syndication deals before choosing to invest. The tool also has built in functionality for tracking investment performance versus pro forma as well as a separate tool for tracking your progress on your path to financial independence. He's been investing in passive syndication deals, a limited partner, since 2017 and initially developed a tool for himself, but now he's focused on helping other physicians and other investors and bring this tool to the masses, which we're also doing as part of our course. His ultimate goal and others is financial freedom and be able to live life on your own terms. So more information, more resources is what Sam's going to share during this podcast and he's going to give you a special discount as well as you getting a special discount on our course launch today. Dr. Giordano, welcome to the show.

Thanks for having me, Chris. I really appreciate it. I know we've been talking about this for a while, so it's great to finally talk to you on the, on the podcast realm.

Absolutely. Well, you know, it's look, as I mentioned in the intro, you're still in the thick of your practice. I know you just wrapped up some procedures here today, and, you know, I'd love for you to share with the audience before we get into this amazing spreadsheet, this amazing tool that you've built for investors and why you did it. You know, please share a little bit about your professional background.

Thanks for asking. So basically, born and bred in Jersey. So I've been in Jersey.

I wouldn't know it here in your accent.

I know it gives me away a little bit. So I did all my, you know, college, my training in Jersey, and then eventually during residency and fellowship, went into the Philadelphia area and we've kind of resided the South Jersey area, my wife and I. So somehow I convinced a California girl to stay in Jersey. Although it's a. It's a fight I fight every single day.

But you should have gone into sales, man. That's strong.

It takes a lot of. It takes a lot of. But so, yeah, so we, we did the sort of additional personal finance things as you, you know, paying off your student loans as. As soon as you can, being frugal with some of the, you know, personal endeavors in terms of house buying and those kind of things, and paying off your credit cards. And then eventually we transitioned to where, you know, we're. I'm going on 10 years out now, which I can't believe how fast time flies. But about five years in, when we were, you know, paying off the loans, we started to invest in some, you know, stocks and, and maximizing our retirement accounts and, you know, investing in taxable brokerages, account and, and 529 for our children. And that's all I kind of knew at that time. And, and then soon thereafter, I would say probably about 2016 is when I began to learn about real estate and I started to have what, what many people are aware of, like a tax problem where. When we lost the ability to deduct state and local income taxes back in, I guess with the Tax Cuts and Jobs act, we started to feel a little bit of a hit from a tax standpoint. A bunch of people brought up real estate to me, and that's what sort of introduced me to real estate and that. That started the ball rolling.

Yeah, that's amazing. You know, this is a common time. I mean, as you know, Sam, I worked with lots of doctors, lots of surgeons for nearly two decades, and I'm fortunate to call many friends and we have a lot of investors that are that. But it's really interesting that doctors Seem to struggle from a financial perspective, getting to where you've gotten. That's not common, although it seems to be more common than it used to be 10 years ago. Why do you think that is?

I think there's a couple of things. So I definitely learned a ton of personal finance from White coat investor.

Yeah.

So, yeah, back in 2008, 2009, when he first started, he put out a ton of education material on personal finance. Built the foundation for what I. I kind of built my personal finance education on. And then from there, I just kind of add layers on top of that. Like, I think it's like. It's a. It's like the law of diminishing returns. Like, in the beginning, it's just like what real is when you educate yourself on real estate in the beginning, it's like trying to just soak as much in as you can, and then you get to a point where you're not getting new knowledge and a. Not in a lot of the things that you read. And I got to that personal finance, not that I knew it all, but it just. I wasn't feeling like I was getting a lot of extra information, and that's sort of when I transitioned to real estate. So that's one component is that there are some realms out there that our personal finance focus, physician education, which is certainly helpful. Yeah. I think the second thing that I've experienced over these last couple years with COVID is that physician burnout has gone through the roof. And that's part of the impetus for me to getting involved. Like, I'm just a doc doing my thing, investing on my own. But I've gotten so many questions from colleagues and friends, both in my personal life as well as online, to kind of help educate them on this, because they do want to cut back a little bit. They're burnt out from COVID They want to go down to four days. They want to retire a little bit earlier. And that those two sort of perfect storms where there's some education on personal finance, that financial independence, as well as the physician burnout epidemic over the last last few years have kind of like, been a perfect storm for this space.

Yeah. No, I mean, what you say is something that I've heard. I've heard a lot. And. And you also said something else, like go down to three or four days a week. What. What I found, Dr. Giordano, is that doctors that, you know, want passive income to come in, they don't say, hey, I don't want to do this anymore. They say, you know, What?

Chris?

I'd rather. I just ran into a friend at the bike shop, as a matter of fact, earlier this week, and he works half time and he loves it. He, he rides his bike, he spends time with his kids. His wife is also a successful doctor as well. Has a, has a big practice and, and he really enjoys it. I've heard that multiple times. Not, hey, I don't want to practice medicine anymore. Doctors seem to enjoy it, and I think you have to because, I mean, Jesus, I can't, I can't stand it when people talk about any, anything negative about doctors. What, what you go through and devote your, your time to is amazing. But that seems to be a common theme, that they want to continue to practice, but just a little bit more on their own terms.

I agree. 100. And I was talking to somebody about that the other day. I forget how much the Powerball jackpot was, but we were talking about it. When I'm, when I'm sitting there doing procedures with some of my nursing staff and they're like, if you won that lottery, would you still practice? I said, no doubt.

Wow.

I probably would go down to three days a week, but I hope so. I, but I love what I do. Like, I feel like I'm helping people. I feel like I'm making a difference. I feel like, you know, in a not con. Conceited way, I feel like there's not many people out there that may be as qualified to do what I do. So I would keep doing it. But, but, but you're right. That's the whole key thing that you said at the end there. On your own terms, because that's different for everybody. Like, if that means I want to spend more time with my family, if that means I want to do a side gig and get into real estate, like we're discussing, if I want to help a family member in need, like there's that, that sort of definition of, of on your own terms is very different. But I think it's more and more important to people nowadays more than ever.

No, it's, it's amazing. And I really, you know, my belief and why it's so important to me. Helping other people achieve financial independence is because, you know, money is, is a form of your life energy, right? That's how we store it. But then I think if you have that financial independence, you're free to do what you want. And a lot of people do love what they do because they've been doing it for a decade or two decades and, you know, so it's it's pretty. It's pretty wild. So as a gastroenterologist, you know, you've heard the expression, oh, you can either eat well or sleep well when it comes to investing. You're not a sleep doctor, but you are a gastroenterologist. So, you know, I think what's really cool. And I've. I know your partner, Terry. We've worked together on some projects. Fantastic individual. I'm so glad that he introduced us. You and Terry have built a tool that is going to help investors analyze a deal and really give them some metrics and look as an engineer. When I saw this, I said, this is amazing. Because Terry's like, you're going to love this. I said, yeah, this is amazing what you guys have built. And, you know, we talked about the course launch here that we're doing. So you get. We're launching our course. And as part of the course, if you buy that course, you get the spreadsheet that Sam and Terry have put together. So, Sam, tell us the impetus for deciding to build out this tool, this spreadsheet, and how it went from just this idea to what it is today.

Yeah, no, I appreciate that and I'm looking forward to sort of trying to bring some value to your investors. Basically, when I started investing in real estate syndications and I primarily invest passively into real estate syndication deals. And so, you know, since I still do have my day job, I don't. I chose not to take the additional time, though there may be some benefit to active, be actively involved in the real estate realm, but I'm more focused on the passive side of things. Although initially it's not passive at all. And that's where. Right. This analyzer tool came in and that I would see, you know, after I started talking to different syndicators, getting deals my way, when I first started seeing these deals, it got. Had my head spinning, like I didn't know what to look at. Am I. This is a lot of money. Am I really going to put all this money in? I really know, you know, is this a risky deal? Is it not? And over time, I spent probably a full first year in the beginning before I invested in anything, coming up with risk points in these deals. What's the debt structure? What's the return structure? Is this sponsor experience? What's the track record of the sponsor? You know, all these little bullet points that I eventually transformed into an Excel sheet that when I would get a deal, I would put it in that Excel sheet and, you know, we. And basically see if there's any risk points that would say to me, you know what? I'm going to pass on this deal, deal, or this deal looks pretty good. And, and I was just using that for myself just so I can be strategic and to be, you know, complete in that I'm not going to forget things when I'm looking at certain. And then eventually, when I started talking to friends, started talking with some real estate, real estate colleagues that I have, they're like, oh, you know, could I have a copy of that sheet? Or show me that sheet or show me how you use it. And next thing I know, I'm like, you know what? I, I love it for myself, but I'm not as confident in it to help other people with it because I take, I feel it's more important for it. I don't want someone else to lose money. I'd rather lose money myself than somebody else. So I wanted to enlist someone that was adept in the space as basically a dealer. And that's where the relationship with Terry came in. I talked around to a bunch of syndicators that I'm invested with and other people, and his name came up several times. We connected with each other and we said, you know what? Let's put something together that we can be proud of and that can help other people understand the risk points of these while you're evaluating them.

Yeah, no, it's fantastic. And look, I set off, as you did to build one of these tools. And Terry was one of the people I spoke to as somebody that I partner with on valuations on some of the projects we worked on in the past. And when he told me about what you guys were working on, I couldn't wait to see it. So I actually started building something out. And after I saw your tool, I said, this is, this is what we, you know, this is what we'd look to build. What, what's impressive to me, Sam, is that you have a snapshot so you can help people see, hey, what is your, like, what's your plan? What's your path to financial independence? I think you call it the FI path, right. In the spreadsheet. Yeah, but you also go basically from soup to nuts and with your spreadsheet. And again, I, I, I purchased this with, you know, 100% so I could go and see how this works for myself before we, we even had Sam on the, on the show here. But, you know, it walks you step by step, not only through the quantitative metrics, but it walks you through those qualitative metrics along the way.

Yeah, absolutely. And so what we try to do with the spreadsheet is to make it as automated as possible so that the metrics we use in there are not stuff that hard to find. Most of them. Once you get familiar with looking at investment summaries and the way deals are presented, you can kind of weed those things out pretty quickly. And it looks at several variables. The three key variables that we look at in any deal is that in this order is the sponsor, the market and the deal. So it goes through in a quantitative way, as you mentioned, those different factors and the key factors we look at in that in those deals.

Do you want access to the exact formula that I use to achieve financial independence? My coaching clients pay $30,000 a year for one on one access to the same information that I've put into my new course. And now you can get the same information and the resources for less than $1,500 when I release my course next month. But I'm giving you a limited time offer for anyone that subscribes to my course before it launches. You'll get $1,000 off the course and you'll get immediate access to our new deal analyzer spreadsheet which includes your path to financial independence, which will tell you when you will be financially free. The spreadsheet alone is $199, but you'll also get access to our bonus asset protection course as well. Click on the link below and use the code pre launch. That's one word. Pre launch. All caps to save a thousand dollars today. I want you to repeat that you just said there's a specific order. You said sponsor, market and deal. And I think in talking to hundreds of investors over the years here and you know, even when I, early on I was guilty of it, I'd immediately grab a deal. I'd be like, what's the return? What's the return? What's the return? And investors jump towards that. But look, if you have a poor sponsor, if you have a sponsor that you know, let's, let's talk about worst case scenario. If a sponsor defrauds you and takes your money, that's worst case scenario. You know, the deal is probably not going to gobble up all your money. It's still going to be worth something at the end of the day. But if you have a bad sponsor, it's a terrible deal. If it's in a bad market, you can't move it like they did with Springfield in that episode of the Simpsons and pick up the city and drive it down the road, you can't. But investors start with the deal. So I love it. You start with the sponsor, you start with the market, you end with the deal, which is perfect.

And I felt guilty as well early on. I'm like, what's the return? I was like, I just could. Let me just compare the returns. But to now the last thing I look at is the return. It's always the sponsor first. And that's the difficult part of the sponsor is there are some objective and quantitative variables that I look for in the sponsor that are very important that I don't budge from. But then I really have to have a conversation with them if I if possible meet them. If they're. Sometimes some sponsors go around the country and have meetups or if I'm in that area visiting a family or friend, then I can, I can say, oh, you know, can we get a cup of coffee? Or something like that. Yeah, that's the biggest thing because I try to, you know, I try to judge someone's character as best as I can. But it's hard to do it if you're not kind of front to front, face to face there. And. And that's the biggest thing. So no doubt 100 the spawns. And in our, in our tool, in our analyzer tool, it assigns points to each of those different categories. And that's why the sponsors point total for that category is the. Is by far the most.

Yeah, no, I think it's fantastic. And I mean when I was looking at places for our family to live and some people don't believe me when I say this, but like I moved to Asheville cause I had a stank. A stack ranked Excel spreadsheet where I had all these cities ranked. And it was on there and I had all these different metrics. So I was like, this is fantastic. This man, this man, this, this, this, this man has built a. A tremendous tool that really, really tickled me when I saw it. So it's fantastic. My only complaint, Sam, is that we have too many deals for your spreadsheet now. So I have to, I had to like do multiple sheets for that. So that's the only, that's the only thing I would, I would change with it. So any things that you have improved upon, any plans for the future with respect to the spreadsheet and if somebody finishes listening to this today, they buy it. They say this is great. You know how, you know, what are the plans for the future? How do they kind of, you know, utilize it going forward?

Yeah. So basically the way we do it right now. It's in the form of Dell spreadsheet and it gives the most flexibility for different users to kind of input different things, input different deals. It's the analyzers primarily focus multifamily deals because that's kind of what I focus on. I do have a little bit of mobile home, little bit of self storage and the plan is to transition to have similar analyze for those other asset classes within the passive investing space. But in addition to that, it helps you analyze a deal, but it also tracks your current investment. So I currently have about 15 passive investments that I'm tracking and I couldn't find a tool out there that did what I wanted it to do. So this tool you put in, it's called our deal tracker, which is a part of the Excel sheet where you put in your distributions that you receive from the deal. And it automatically calculates the main metrics that we look at in each deal, roughly the cash on cash, the IRR and the equity multiple on an ongoing basis versus what the performa of the deal was. So you could see is this deal performing to where they said it was going to do? Is it, is it backtrack which, which deals performing over and then it then sort of adds your total sort of portfolio in the real estate space. What is then my monthly income that I would achieve from those deals? And then right now you separately have to input that monthly income into our financial independence calculator. And that's based on what your expenses are. So if you want to cover just your basic expenses, we that that's sort in the sheet and then if you want to cover your sort of, you know, lifestyle expenses, and that's also in the sheet so you can see where you're at. But eventually the next iteration we want to automate that to where, where what your monthly income is based on your actual deals, it automatically goes into the path to financial independence. Goal down the road is to make as much of this less manual as possible.

No, that's fantastic. So yeah, what, what I, you know this, the course that we built it steps through, you know, not only how to make more money, how to keep more money and ultimately put this together, but the big piece is, you know, what are your expenses? Because that gives you a metric, right, that you can aim for. And you know that that level one, as you mentioned is, and, and what do you call it? You call it in the spreadsheet your, your level one kind of your basic.

Expenses we call basic living expenses.

Basic living.

And then the second one we call lifestyle.

Yep, your lifestyle. And then the bonus round, as I like to call that we talk about in our, our mastermind is we go, we shoot for 200%. So that's kind of like, that's your bonus. So maybe you can incorporate that in the future. But once you, once you blast through lifestyle, you are, you're going to get there at some point. I love it. So I think I've covered most of it. Sam, what am I leaving out that, that an investor that gets your spreadsheet is going to see?

Yeah, I think that's the big thing. I think there's unique things that we look at in the spreadsheet that once again there's basically areas where you input the deal and then a lot of that information gets automated throughout the sheet. So there's one component of the sheet or one tab of the sheet where it looks at general partner alignment which you don't see very often and it's not calculated as much and it's not a typical metric you look at. But where you can see based on the fee structure of the deal, based on, you know, based on the split structure of the deal, where that crossover point is where the, depending on how the deal performs, where the limited partner and the general partner are in alignment and the further that crossover point is, the less, the less reliable the deal is. So say a passive investor wanted to look at one thing that she. And it gives them an idea. Is this weighted towards the general partner or is this weighted towards me? And so Terry and I are very proud of that particular. Because it's not something you hear about in the typical real estate realm when you're looking at these deals.

No, it's a fantastic feature and I think it's also very challenging because as a newer investor it's hard to understand what's called the waterfall structure and that alignment between passive investor and general partner.

I agree with you 100%.

Yeah. So Sam, not only do you have this tremendous tool that you built with, with Terry, but you also have a book. So please tell the audience that's listening, where can they go to get a free copy of the book? Where can they go to get your, your, your spreadsheet, your tool and all the videos and all the instruction on how to use that.

Yeah, so I appreciate that, Chris. Yeah. So our website is Passive Advantage, Calm and, and basically there you, there's a free downloadable 80 page ebook that goes over a lot of the stuff we're talking about and a lot of the sort of backstory and how we came to some of the metrics within the sheet itself. So for anyone that wants a free book to kind of get a foundation for this stuff. And there's other books on the website that we also recommend if someone wants to keep getting deeper and deeper into the knowledge base and then there you can also download the tool, use it for yourself, try it out. If you have any issues, certainly reach out to us. My my email is samassive Advantage calm and we're happy to help in any way we can, you know, along your journey.

Awesome. And in the show notes, we're going to have all these links where you can get in touch with Sam, where you can get a free copy of the book, and also where you can get a discount on that spreadsheet as well. And of course, if you want to get a copy of our course, all of that is going to come with that as that course as well. So when you're done with the course, when you've built your plan, you have a spreadsheet where you have quantitative metrics that you can use to figure out when you can achieve financial independence, just like my friend here, Dr. Giordano, has done.

I appreciate it, Chris. My pleasure. Thank you for having me.

Oh, it's been great. Good to see you, my friend.

You too, Chris. Be well.

Hey Chris, here again. I hope you found this episode valuable. Now I have one more thing to gift you. We have a page for my coaching clients where you can get a free copy of my book as well as much more from previous guests on the show. Just check out nextlevelincome.com coaching to get a free copy of my book, audiobook and much more. I'll send you a copy of my book and cover all the shipping costs as a thank you for listening to the podcast. Also, please like share and take just 90 seconds to give us a rating on Apple Podcasts.