Flipping the Model with Brian Adams

Welcome. This is the Insider's Edge to Real Estate Investing with James Nelson, the principal and head of Avis and Young's Tri State Investment Sales Group. In this program you'll learn game changing strategies to outperform the market. James will teach you how to source, execute and capitalize on the best real estate opportunities in New York and around the world. Now here's your host.

Welcome to episode number 137 of the Insider's Edge to Real Estate Investing. This is your host, James Nelson. As always, principal and head of Tri State Investment Sales for Avison Young. Thank you so much for joining and sharing this episode with your friends. Subscribing your comments. That's what helps spread the word. And we are here to help make you the best investor possible to give you this inside edge to outperform the market. And that is exactly what my upcoming book is about. That's going to be coming out at the end of January through McGraw Hill. Thank you to all of you who have already pre ordered. If not, please go to james nelson.com. that's where you can find links whether you like to order it, Amazon, Barnes and Nobles, or better yet, you can email us to order a bulk package and we can also pair that with a speaking engagement where I can come talk to your group about how you can put this actionable information to work. So with that, I'll tell you about today's show. We have with us Brian Adams, who is the president and founder of Excelsior capital. He has 10 plus years of experience in real estate private equity, previously co founding Pream Properties and according to his firm's website, Excelsior Capital now has 200 million of assets under management for a total of 1.1 million square feet. But Brian was quick to say it's not about the statistics. He's more passionate about about their track record of serving their 200 plus active investors. So we spend the majority of our time discussing his fundraising process as they do not operate as a fund. They raise capital for each transaction. He talks about how he cultivated this investor base and even admits that he scaled too quickly by going into too many markets at once. He also talks about bringing a lot of their operations in house, including their bookkeeping and accounting.

So.

So by listening you'll learn what worked and what did not. What I find most impressive about Brian is his continued dedication to expanding his donor base. This means five meetings and 10 cold calls per day, which has now led to a database of 6,000 potential investors. He believes that most sponsors are really great at finding and repositioning deals, but very poor with this equally important component, raising capital. So I know you're going to get a ton out of this episode and you can learn more about Brian and his group@excelsiorgp.com but we're going to have a brief word from our sponsor and we'll get right into that interview with Brian Adams.

A different approach to putting our clients first. Avis and Young's Tri State Investment Sales Group sells multifamily office, retail development and specialty sales throughout the New York metro area. As experienced thought leaders in our industry, our 35 member group is available to help you make informed investment decisions by advising you on your current holdings or identifying new opportunities in the marketplace. Our one unified team is built on an industry unique platform which promotes unparalleled collaboration and teamwork. We share core values of hard work, integrity and expertise. We we put our clients first providing tailor made strategies to achieve superior results. Please Visit us at aytristateinvestmentsales.com and follow us on Twitter LinkedIn and Instagram amesnelsonnyc to learn more.

And now it's time for our investors Spotlight. And with us today we have Brian Adams who is founder and president of Excelsior Capital. Brian, welcome and thank you so much for coming on the show, the show today.

Yeah, absolutely. Thank you so much for having me.

Great. So Brian, where, where are we finding you today? Where, where's, where's home base and where's your office set up?

Yeah, I'm a native New Yorker, but I've been in Nashville, Tennessee for the last 15 years. So the company is based here in Nashville.

Okay, great. So maybe tell us a little bit about growing up here in New York. That's where I'm based out of. Obviously a lot of real estate here. But was, was this something that was in the family or what kind of led you down this path?

Like pretty much everything good in my life it was through my wife. So I grew up in upstate New York outside of Albany. For your listeners who are familiar with that part of the world, went to college in Connecticut and that's where I met my wife who is from Nashville. So we did the northeast thing for a little bit. We both went to graduate school in Boston and then moved to Nashville 15 years ago. And initially I practiced law here for a couple years. But when I married my wife I was given a position as an ex officio board member on her family office's partnership board. I didn't know what a family office was I didn't really know what private equity commercial real estate was, frankly, until I joined the family and through our CIO and my father in law got exposure to some of the investments that the family was making through GPS and funds and sponsors. And that was initially what led me down this kind of journey of entrepreneurship.

Got it.

So you said that you had a law degree and you were a practicing attorney. Is that that was the first thing that you did out of school, is that correct?

Yeah.

So you got a little bit of exposure, I guess, through the family. But then how did you. Did you then just learn on the job or how did you understand that fundamentals of real estate investing?

Yeah, very much learned on the fly because of the family and the relationships we had in town. I was able to get pretty much any meeting that I wanted with commercial real estate professionals. And so kind of learned through that and then partnered with my now co gp, who is actually also from New York, he's from Long island and he was a Wall street guy. So we kind of combined forces. I became investor relations, marketing, capital raising, kind of going out there and telling the story. And he had pretty deep background in kind of acquisitions, commercial real estate financing, et cetera. So we kind of combined forces, helped each other be synergistic with the skill sets the other one didn't have, necessarily. And that's how we started the company.

Yeah, I love how you just kind of jumped right into it. And of course it's always helpful when you have connections. And I know sometimes people are a little bit hesitant to make those connections, especially if they're through family, but finding the right partner to understand the landscape, it seems like that you definitely took the necessary steps. So talk a little bit about, you know, starting that venture. How did you all decide what you wanted to do? I. I see now you've been investing a lot in medical as well as industrial. Maybe you could just give us a little of a background on Excelsior Capital. So. So our audience understands what you all do.

Sure. So we initially started a legacy company called Priam Capital. And it was a series of blind pool commingled funds. So we started raising these relatively small fund vehicles. And it was really hard. It was hard to raise without a ton of track record. I think a fund is a really suboptimal investment vehicle for a lot of investors. What we started doing was offering up our fund, limited partners, the opportunity to invest deal by deal as a sidecar on any given acquisition. And we had a very strong response once we offered it up to our LPs on a deal by deal basis. Then they started bringing in their friends and family. And so by the end of priam, it was really a hybrid where we had these funds. But then we were starting to build up this network of direct real estate syndication investors. And so we made a ton of mistakes with Pream. I could go into that if you want, but eventually kind of worked through them, recapitalized that entire portfolio was around a $300 million portfolio. And then I took some guys with me and I started Excelsior four years ago, five years ago, before COVID now to try to have a version 2.0 and next iteration of the business and not make the same mistakes I made the first time and really optimize some things and try to do it the quote, unquote, right way. And it's been terrific. We've been very active the last, really two, two and a half years.

Yeah, that's fantastic. And definitely appreciate your willingness to share some of the challenges, because we certainly learned from them. And that's part of the show is sharing stories like yours where talking about those early days and how you got your platform off the ground and, you know, what advice you can give to others. So, you know, one thing you mentioned, which I think was interesting to hear right from the start, is that, you know, trying to raise a blind pool fund is, you know, that's the holy grail to have discretionary capital. Everybody wants to have that, you know, on demand. But very challenging, especially in uncertain times like today, to have investors sign up for a fund where, you know, you've got an idea, but you. They don't know specifically what they're going into. Especially when you don't have a track record to say, look, we've done this six times before, so it's good that, you know, you realize very early on that deal specific was. Was a much easier way to get off the ground. But, you know, what other things did you learn? And I mean, to amass $300 million. I mean, how many investments was this over? Can you maybe talk about how you capitalize that first investment? I know kind of the. The first one can. Can oftentimes be the most challenging.

Yeah, I mean, the first one was really challenging. I remember having to go chase down an investor. He was downtown Nashville trying to get a $25,000 check from him to close out the. The acquisition. It was kind of a partial fundraise within this fund vehicle. And so it was really hard. Fundraising is always hard. I think the biggest mistake we made Looking back on it was not being realistic with who our investor base was. Right. So to your point, people view these blind pool funds with discretionary capital as this golden key that will unlock success. Sure, maybe. But realistically, if you want that, you need to be raising a 250 to $500 million fund. You need to be with institutional limited partners, and you need to have all kinds of things to make that work. Right. And so for us, we had a network of high net worth individuals, of families, of some boutique wealth management firms. They were not going to write checks big enough to afford us to raise a big enough fund like that. And frankly, they didn't want a fund vehicle. And so I think the biggest challenge was we were bringing to our marketplace a product that we thought was great. We weren't listening to our investor community in terms of bringing them a solution set to their problems. We were trying to cram down a product down their throats. What ultimately shifted and what allowed us to really scale efficiently was we spent about a year Talking to our LPs and asking them, okay, how do you want this to look? How do you want to be pitched? What do you want the investor relations to look like? The communication, the reporting, the return profile, etc. Instead of giving them something that we thought was really fun and exciting and sexy, we gave them a solution set to their problems. And once we created that widget, it may not have been the most exciting product in the world, but we're able to raise very efficiently on it.

I love how you realize that your role when raising capital was to give something that the investors wanted as opposed to try to swim upstream. And look, if early on you were getting pushback back from the fund, you know, because a lot of people say, look, I'm not going to throw in the towel, I'm going to keep, you know, I guess need more persistence, but sometimes it's okay, well, if I'm not offering something that people want, you know, why, why swim against the current again? Why, why not go and try to figure out what they're looking for? And maybe to your point, it's not as exciting, maybe it's more obvious, but, you know, then you can at least get that track record, especially for your early deals. And then if you want to try to do something that's a little further outside, you know, the typical spectrum, you know, then you've got that loyal investor base to, to approach. So, so you were able to, what was the first deal that you close? Maybe, you know, tell us where it was, what type of property. What was, you know, what did it cost? What was the. The business plan?

The first ever.

Sure, yeah. Some of those early transactions.

Yeah, you were mostly. We were mostly doing urban infill work in Nashville. So the first property we bought was a small office recording studio on Music Row. Actually it was a small deal. Call it $500,000 acquisition, pretty well occupied, had kind of two main tenants, fairly stable. And the investment thesis was basically Nashville was going to grow. We thought Music Grow was well positioned for like long term growth. But there was no immediate work really to be done on the property. Some. Some small property management things. And surprisingly, the investment thesis proved to be true. Even though, you know, we're just kind of winging it, it seemed like at the time. But it ended up being part of a larger assemblage that was put together by a multifamily developer. And actually kind of crazy story. So this assemblage was put together. We were a small little piece of it, but it was over an acre total by this big multifamily development group. And this is 2011, 2012 Nashville. So just booming. Music Grove is a very hot neighborhood, still is. And we had everything lined up. The broker had put together this assemblage over years, built these relationships with these really quirky music industry people that are very hard to get in touch with. We had argued for a very high valuation on our property piece. It was all good. But we had a tenant that had a long term lease in our building. It was the only one that was holding up the deal. And he wanted. He was just completely leveraging the situation. He wanted a buyout package, he wanted a replacement property, he wanted a convertible. God only knows. It was a hostage list, ransom list. And we were working through this and they forgot to pay rent in a timely manner. It was a bookkeeping mix up. It was owned by this huge conglomerate out of Japan. And so they missed rent by about a week and that actually violated their lease. And so we were able to get the deal done because of administrative scrivener's error where they forgot to send the wire like they had been doing for years. That broke the lease, unlocked the deal, and we closed. And we probably made, you know, 3x our money on that.

That definitely sounds like karma if they were trying to drive too hard of a bargain. So you can't really feel sorry for them. But you know, it's really interesting story because, you know, yes, you like the fundamentals of the deal. You knew the area was improving and then, you know, there Is that luck aspect to real estate where if you pick the right neighborhoods, especially where there's redevelopments happening, kind of being, you know, part of an assemblage is a great way now for our listeners. It's not something that I would count on, but you know, we always talk about, you know, in some instances covered land plays ways that, you know, you like the real estate the way it is, but maybe there's this future potential for the, you know, down the road. So that, that, that's really exciting to hear and I'm sure you could parlay that into other type investments. So did you. So early on, did you have a thesis of what you wanted to do buy? Was it more just, you know, geography or was it a certain type of property? And how did you decide on that?

Yeah, I mean at first it was just urban infill in Nashville because that's where we were, that's what we knew. We very quickly got priced out of that market, even though we should have stayed in it, looking back on it. But at the time it just seemed ridiculous. Little did we know that we had it had another 10 years in it. So we started going regional and so we went to Louisville, then we went to Birmingham, Indianapolis, Columbus, Ohio, Memphis, Tennessee. And part of the kind of mistake or the trap that we fell into is that we grew really fast. We had kind of unlocked this ability to raise capital. We had this ability to find these opportunities. But the back of the house, the administrative, the reporting, the communication, the investor relations, the accounting, the bookkeeping didn't keep up with the front half of the house. And so ultimately led to some very challenging situations with our investors. I didn't appreciate as a GP sponsor that I was not just a real estate investor, that I was actually a small business owner. And I had to do all these other things that were unrelated to the real estate deals in order to make the machine move. And frankly, it almost blew up the business. It was a really challenging period of time, but so we grew geographically, grew really fast. Like I said, We've raised probably $100 million in two or three years. We were able to right size it and learn from it, but it was definitely a challenging period.

Was part of that expanding the other geographies because I could imagine if everything that you were doing was within a 30 minute drive, you know, that that might have freed up some of your time. Whereas if you're traveling, you're trying to learn new markets, I mean that takes time. So is there a little bit of that element where maybe because you, you were, you know, growing geographically, that, that took away from kind of the, the core, the focus on the core business 100%.

I mean, I was on the road, you know, I was taking 100, 150 flights a year in order to go see these properties, find new deals, raise money, et cetera. And, you know, there was nobody minding the store in a lot of ways. And so that was certainly part of the challenge.

100 got it. Well, yeah, I mean, and depending on what market that, that everybody's in, I mean, sometimes you feel like, well, look, I've seen everything there is to see. Now, it depends if you're in a primary or a tertiary market, right? I mean, you could spend your entire career investing here in New York. And I think, you know, there's always going to be more opportunity. The size of the market is just so enormous. But, you know, look, I could definitely see the, the appeal. You've got capital, you're looking, you know, to find opportunities. So, you know, you mentioned that you raise $100 million in two to three years. I mean, that's, that's no small feat. So what was, you know, how did you expand your investment network? What was the average ticket size? And how were you cultivating these investors?

It was whatever cliche you want to throw at it, like burning shoe leather, whatever. So when I got into the business, I would, my goal for the week was that I would have five meetings and 10 phone calls a day. And so I did that for a couple years and it just cultivated this network of. At the time, it was probably 1500 contacts that we were sending opportunities to. Now we have about 6,000 accredited investors that we've curated a list of. But I found that most people in this business, especially at the time, this is really before LinkedIn, before social media was being used to create brands and that kind of thing. Nobody took the fundraising part of the business very seriously. It was always kind of a back burner, ancillary. They would try to third party it. And, and I decided, well, that was going to where I was going to spend most of my time and really carve out a niche there and take it very serious. And I found that once that I did, I had just kind of a knack and good timing and was very fortunate to have some great investors that turned out to be much bigger LPs than I would have imagined. So part, I think just kind of huge amount of brutal hard work that not a lot of people want to do. Not many people want to be told no 10 times a day. And also just super fortunate to be married to my wife's family, which gave me ingress to a lot of these circles of investors that were looking to deploy capital at the time.

Yeah, no, I've got to imagine, and I love the discipline, but no doubt hard work and a lot of rejection. If you don't mind me digging in on this, just because I know our listeners will get a lot from this because, you know, the idea of five meetings, 10 phone calls a day, that's, you know, to do that you've got to have, you know, a prospect list. So, you know, were you. I mean, I can't imagine these were all warm calls. I mean, these try to get names from other investors or where were you trying to find these people? And if you were cold calling someone for the first time, I'd be curious if you could just, if you can remember your pitch or what, what your, you know, your, you know, how you kind of opened up. I think that would certainly be of value to our listeners.

Yeah, I didn't really have a prospect list. We had an Excel file. I mean, this is like 2010, 2011. So we had an Excel of contacts. And every meeting that I had and every call that I had, I would try to get two to three contacts. Either people just mention names or they're willing to make an introduction, or they're willing to allow me to reference their name if I were to reach out to somebody else. And so at first it's brutal, right, because you're just calling like your dad and you know, you don't have anybody to call. Classmates, people, you know, socially. The nice thing about real estate is that brokers and part of the business is meeting people and networking, right? That's just how we get deals done. And so I was very fortunate to be in an industry where people are very open to meeting. Right. A leasing broker is going to meet you because they might be able to get of a couple commission at some point, et cetera. And that's where I started was with real estate professionals and then kind of got into this web world of just having coffee and lunch with weird people who are willing to meet. And just part of the skill set is to get the introduction, to get the referral, to get the meeting, to get the meeting to stick. And then figure it out on the fly, like once you get into the room, okay, what are we talking about here? And I always came about it from the standpoint of, okay, how could I be helpful to that person? How could I improve their business life? By making a couple of introductions or referrals for them and then building up that karma over time. And then when I would cold call people, it was typically somebody that I had heard of or that I knew of or heard their name and I would try to do some homework on them and again, just kind of, I would introduce myself and then say, hey, I'm, you know, new to real estate. There was an old adage that I lived by which was, you know, if you want money, ask for advice. If you want advice, ask for money. And so, you know, I would just say, hey, I'm new to this business. I'd love to get 10 minutes of your time to hear your story, understand it and, and get some advice from you. As I look to grow my company and most people want to talk about themselves in the day, so.

Wow, I, I love that. And it is a way to kind of open up a conversation as opposed to just pitching them a deal, you know, right out of the gate. Because I gotta imagine if you're calling someone for the first time, you might have the greatest opportunity in the world, but they don't know who you are. And so I think taking the time to get to know them and what they're looking to do and yeah, some of these real estate legends out there, you know, they've already made their fortune and they might not want to, you know, roll up their sleeves and do all the day to day and might, you know, get a kick out of investing, you know, with someone who's trying to, to get into the business. So I really appreciate your sharing that. So looking at your website and it seems like you have really turned this into a science. So you've got 200 million under management, over a million square feet, 200 plus active investors. And then I guess your team has 100 plus years of active experience. So. But it's a very user friendly website. If you go to excelsior gp.com and right off the bat you can engage, you can invest with us. So now this kind of fast forwards and I want to, I want to, we're going to get back to the portfolio and kind of how you built this out and what you're doing. But just while we're on the topic of fundraising, because you mentioned it'd be great to hear how you are now leveraging social media platforms and whether it's LinkedIn or Twitter, I've heard that a lot of people are raising money from these days and then I guess you're bringing them to your site where you can qualify them and then offer opportunities. Is that, is that kind of the business model now?

Yeah. And honestly, I mean we can go in the portfolio if you want. Some of the numbers you reeled off are a bit outdated, but I think to provide better value to your listeners, we should focus on the marketing and the capital raising because that's the one thing that people suck at, in my opinion. And if you take it seriously, you can become like a top decile sponsor very quickly because most people are terrible at it. And I'm not a big believer in like Aum or some of these ego stats. I think it's the wrong game to play. And if they're wrong statistics and metrics to throw out there, you know, a member of ypo. And in YPO we have a saying that somebody somewhere has a bigger plane. Like in real estate, it's very relative. And so I would not really focus on AUM square footage, dollars raised, et cetera. You should focus on your GP business. You should focus on being a good sponsor and your sponsor business because the end of the day, the rest is just window dressing. And I can promise you that if you put a lot of value in hitting whatever number you want to throw out there and you wrap up your identity with it. When you hit those numbers, if you work really hard and you get lucky and you're successful and you hit the number, it'll be one of the saddest days in your life because you realize nothing has fundamentally changed. So I would really caution people to shift their focus in terms of what they're trying to achieve if they're getting into this business. The big shift for us was the second iteration of the firm. Right when we started Excelsior, trying to learn from all these mistakes. I had a team meeting. The team, there's only three of us. I said, listen, we are not going to be a real estate company. We are a sales and marketing media company that offers up a real estate product. And when you wake up in the morning, that's how you have to think about the firm. And I think that shift in mindset is what has enabled us to grow and to raise the money we have. Because a lot of people in this business are very bricks and sticks oriented, which you need some of that internal. Right. Somebody has to be doing it. But if you want to scale and you want to work with individuals and families, I think you have to think about somebody telling the story every day. And to your point, we've gone very sophisticated in how we kind of think about top of the funnel Converting kind of end of the funnel, et cetera. But fundamentally we're all media companies now and you might just have a hedge fund widget, you might have a mutual fund widget, whatever, like whatever your toaster oven is. But we're out there just telling the story to this mass affluent group and you need to have a compelling story and you need to be able to capture that contact information and really provide value beyond just showing them a deal. I mean, I think we all see these LinkedIn bots where they send you a deal without establishing trust, a relationship, some kind of subject matter, expertise providing value beyond just showing them a deal. That's just not how you can do things these days.

Yeah, I love the mindset and it really reminds me of Donald Miller's story brand. I'm a huge fan of his work.

And he lives down the street from me, literally like less than a mile away. I was at his house for dinner two weeks ago. Incredible guy.

I've never had the pleasure of meeting.

Him, but his house is incredible.

Well, I know he uses it to bring like minded people together. And I think what really resonates with me is that it's all about, it's not about you, it's about who you're serving, how you are solving for pain, you know, someone's pain point or how you are helping them. And so that's very much in line with what you're, you're saying that it's not about, you know, you, your, you know, your success, your top line. It's just, you know, how are you making this a better experience, you know, for the investors. And so I actually, I worked with one of their coaches to build out james nelson.com and you know, I hopefully you find my website as easy to navigate as yours. But I really love kind of the marketing and sales aspect because you're right, that is for many people the most challenging part about getting into this business. You know, they have the real estate, know how they've got, you know, the deal flow, but the thought of actually having to go out and promote and, and I actually just got the phone with, with a, an operator who has thousands of units across the country and he said, you know, James, I'm not doing anything on the social media front. Like I just don't like to, you know, put my name out there, whatever. And I, you know, I said, you know, think about it in a different way. You're there to, you've got an incredible experience that you can share with others. Right. And if you do that and you put out great content, you know, the rest will follow. So sorry to go off on a tangent, but it was just, you know.

What you're, I can tell you're passionate about it, right? I mean, this is real. And I think the biggest fallacy going in the business is that you'll raise on a good deal. I mean, that's complete garbage. Because you might have the best deal in the world. If you haven't pre marketed your audience, if you haven't thought about your CRM, your cadence, your copy, the value proposition, if you haven't kind of gotten the machine ready, you end up just calling a bunch of random people. And if your fundraise process looks half cocked and unorganized, you're just not going to show well and people aren't going to think the deal is worth doing. And so people need to kind of reverse engineer this and think about, okay, what does my audience want? How do they want to be pitched down to the minutia? And then you bring them something, right? And lots of times, especially early sponsors and entrepreneurs, they're just so focused on their shiny beautiful object and they bring it to market and they realize they don't have anyone to talk to about it.

So talk about how you built the machine then. So, so you have, you know, years and years, you know, you said, you know, 6,000 investor contacts that you know, you put together in an Excel, you know, list. And I would imagine that that continues to be the, your investor base, but, but now, you know, you are leveraging, like I said, whether it's social media, whether it's website to help bring in investors. So maybe tell our audience a little bit how you went about doing that.

Yeah, so like I said, we had a lot of challenges raising capital initially. I mean, it's supposed to be hard. I think that's another truism, like it's not supposed to be easy. Once we shift in the mindset, we became empathetic, right. So we started actually listening to what people wanted. I have a presentation I put together about how to raise capital as a first time entrepreneur, first time sponsor. And it goes through in pretty granular detail the process that I did, which was again, if you ask people for money, get advice, ask for advice, you got money. So if you list 100 people that you know, and you start with kind of the most affluent person who's the most sophisticated investor in your world, and then you go down the list to 100 to the least affluent, least sophisticated person, this is not a judgment on them, it just is the business we're in, you start at number one and you say, hey, Uncle Bill, Aunt Mary, I'd love to take 20 minutes of your time, buy a cup of coffee, do a phone call with you, and you start going through the whole thing with them. Like, have you invested in commercial real estate before? Okay, yes. All right, well, what did you like about it? What compelled you to do this? If you were to invest in another real estate opportunity, how would you want to be structured? Fund, LLC, etc. How would you want the marketing materials to be presented to you? Would you want to do a phone call? Would you want to do a webinar? Do you want to look at a deck? Do you want drone footage? How much time do you think you'd spend on it? What would actually compel you to invest in an opportunity? Given the marketing parameters, how would you want to be followed up? What kind of allocation would you make? Return profile, tax treatment, geographic location, whatever. And you just go through this, right? In 20 minutes, you just keep a list of everything they want, and you work your way through from one to a hundred. And pretty soon you'll get a very good snapshot of like, okay, these are a hundred people that will take my call. This is what I think I can raise. This is what I think a deal would look like. And then you go to work, and you find something that checks the most box as possible. It has the most overlap concentric circles that everyone told you about. And then when you pitch them, you start at 100 and you work your way to one because you don't want to waste your pitches on your best prospects, right? So by the time you get to 50, you've probably got a bunch of good feedback, good pushback, overcoming, et cetera. So by 50 to 100, instead of having to spend all this time on fees and structure and all this stuff that detracts from the pitch, you're just saying, hey, Aunt Mary, you told me that you like things like this. You seem to have trouble accessing them. I'm bringing you a Widget that solves 99% of your problems in this area. Here you go. And it's just a very different conversation, right? And so that's mapping out the investor experience, and then it's the investor journey, right? So once you convert them, what do you want to look like? Daily, weekly, monthly, quarterly, annually? Do you want reporting? Do you want P and L cash statements? Do you want a quarterly report? Do you want it to be multimedia? You want it to be written? Do you care about K1s being on time. Like you can go really deep on this, right? But once you map it out, it's not so much a pitch as a continuation of this conversation relationship that you've built with them.

Brian, I love this because my sense is the majority of investors out there, their first call is when they have a deal. And the thought process behind that is, look, these investors are busy, so why spend the time, you know, making a call when you don't have something specific to offer them? Whereas, you know, you're taking the whole model and you're flipping it on its head and you're saying, I'm going to go find out what the investors want and then I'm going to try to go solve for it. And the fact, and I'm sure you're taking detailed notes on these meetings and calls, then you really know because you're showing that you've listened to try to meet those needs instead of just trying to fit everybody into the same product. So I mean, this is incredibly interesting. I, I love the approach. So to me this still sounds like a very, you know, one on one type approach. I mean I, I would. And I see on your website you put out a lot of great thought leadership pieces. So you've got blogs, white papers. So you know, I'm sure you have people who, you know, find out about your platform and you know, I'm sure people who listen to this podcast will probably, you know, check out what you're doing. So I'm sure you do get some inbounds. But, but you're telling me it's still very much a matter of just those one on one conversations, those interviews. It's not like you're not the point where you just, you know, you get a deal and because everybody signed up through your website that you could just, you know, click a button and all of a sudden the money is automatically raised.

Yeah, man. I think a big lesson for folks out there is, you know, if you want to be in this business, you're obviously motivated, you're going to work hard, you're smart. The, the challenge is your rate limiting factor is your time. Like you probably need to get five to six hours of sleep a day, you need to probably eat and drink. So, you know, you start doing the math. You're like, okay, well I can be quote unquote productive and if you follow the sun, which means like you call different time zones a different areas, etcetera, you can be productive for 12 to 15 hours a day probably. But if you do coffee meetings with every $50,000 investor like you very quickly run out of time. There's just not enough time to scale that efficiently. So, yes, at some point, you need to have the at bats, you need to have the meetings. Obviously, in my world, any investor who's over $100,000, is somebody going to be somebody that I'm going to meet in person. Like, that's going to be a lunch, a dinner. I'm going to go on a plane and meet that person the first time initially. But the cool thing about what's happening today is through podcasts, through webinars, through social media, through your website, through your personal brand, people can know who you are and what you do and what your value proposition is on their own time. So that if I'm pitching James, he'll do some homework on me. And instead of having to go through this really tiresome initial pitch, he's opting into my world. So he's doing his homework and he's saying, okay, Brian seems interesting. Seems like he knows what he's doing. I really like his mindset, the value proposition, investment thesis, et cetera. I'm going to opt into his world. I'm like, oh, okay, James now wants to talk. I don't need to go through the whole pitch with him every time. We're going to get really, really tight very quickly on what his need is and what I might be able to do to help him. And so that just saves you a lot of time and energy. And so if you take that content creation seriously and you're very honest about it, I think ultimately it will help save you a lot of time when it comes to capital raising. Because if you put the marketing materials together correctly and people are opting into your world, it's a very binary decision. Right. We've tried to put together marketing materials using video and drone footage so that people can really get a sense of the entire deal in under 10 minutes. So they're not wasting your time, and I'm not wasting their time with this tiresome phone call or a webinar or a conference call or a lunch meeting that's not going to go anywhere. They're saying, okay, I believe in Brian, what he does. I like this deal. I've got five questions. Okay, we can knock that out in 10 minutes. Done. Okay, what's your allocation? A hundred thousand dollars. Okay, move on to the next winner. Hey, this isn't my cup of tea. No, thank you. Okay, thanks, Bill. Move on to the next one. It's much more efficient for you and for the investor.

It makes a ton of sense. So what about matching the investors to live deals? Because I get that initial call, you're not pitching them a deal. But at some point, obviously you have to offer them opportunities. And I would imagine, you know, based on the team and the platform that you've built, you've got multiple deals happening at any time. So are you always, you know, you're always offering what, 1, 2, 5, 10 deals at a time? And if so, you kind of know where, based on the investor profile, where to place them? And then that would beg the question, are you doing different types of investments? So maybe this is where we are talking about some of the actual investments that you're doing, whether it's medical and industrial. How do you kind of offer that, that portfolio, those options to investors? And how do you make sure the timing lines up?

Yeah, so we typically are only running one deal at a time. In terms of fundraising. We might have deals that are moving towards diligence or closing that we've already raised on that we're bringing a new opportunity into the, into our marketplace. It's typically just one deal at a time. Not always the case. What we found was, um. It's actually a very good question. When you have 6,000 contacts, most people are like, oh, that's awesome and it's great and I love it. And it took a ton of work to get there. That the challenge is, when we first turned the machine on before we got a little bit deeper on our CRM process, you just start getting crushed. First off, you can't send 6,000 emails at once. You'll get flagged for spam and you'll have throttling issues, which we learned too much about. But the challenge is you started getting inbounds questions, phone calls, meeting requests from a million dollar investor and a $25,000 investor. And we didn't know how to handle it right. It was too much information. So we tranched the investors. So if you're a large investor with US million dollar plus allocation, you get an early look because typically you need more time. You have an investment committee, you have a process, you're going to make a big allocation that takes a big commitment. You need more time. We're going to really make sure that we give you everything that you need and we're not going to rush you. And they typically will want a call or a meeting. Right. So they get a week and then we have a second tranche where if you are a repeat investor, a legacy investor with us, you know us very well, you've participated in past offerings, you understand our process and style, you get the next look. So we've kind of gotten our anchor investor, then we fill it out with our repeats so that they get an early look at any deal to reward them for coming on the platform. And then we, we have a process thereafter where different people get access to different timing based on how active they've been in our community. So we assign them a point system if they've had a phone call, a meeting, attended a webinar, opened up past emails, if they've been on a wait list previously. So you're creating that sense of urgency, but you're also being realistic with kind of how you're progressing through your fundraise. And most people just don't think about that way. They just want to shotgun it, move on to the next one. But you've got to create some kind of value chain to reward your LPs, but also just to, to manage the fundraising process itself on the GP side.

And have you ever thought about just raising the minimum altogether or do you still think there's benefit just growing the audience and taking those $25,000 investors?

Yeah, so we actually will allocate, we'll segregate certain allocations to bring on new investors, to engage them, to get them used to who we are, what we do. Because the hardest thing to do in the business is bringing in a fresh contact to be an investor, converting them the first time, once they have a good experience, they get to know you, they start getting their monthly distributions. Your re up rate should be much higher. Right. And so we're always looking for ways to bring in new LPs while still kind of being true to our legacy investors, if that makes sense. But no, I'm a big believer. I always try to have 20% of my capital stack be new, fresh LPs. It doesn't always work out that way, but that's the thought process that we go into with.

Great. So now talk about the different types of offerings. So are you, you know, are you trying to offer different geographies, different asset classes, different risk profiles, maybe talk about, you know, how you go about and, and look for opportunities? Yeah.

I mean, again, I think this goes to the question of your ideal customer profile and your avatar. Most people in our business don't have a really good sense of who they're talking to. They think that they're talking to their, their grandma who's got $10, and they're also talking to some big pension plan and like that's a very large discrepancy of how those people think about the world, the type of media that they digest, what keeps them up at night, et cetera. So we're very particular, right? So we have 50,000 to kind of 1 million dollar investors. They're accredited, but non institutional. They're all taxable investors. And the way I think about it is what are they reading, what media are they ingesting and what's worrying them? And so for the last two or.

Three years.

It'S all been kind of light industrial flex medical office buildings in Texas, Tennessee and Florida and some select Midwest markets. Because when they watch cnbc, when they read the Journal, when they watch Fox News, those are markets that they hear about that are doing well, that are growing. And everyone's talking about industrial, medical for various demographic or macroeconomic reasons. And so what we do is we try to avoid any pushback we might get, right? So instead of pitching hard, pitching office, even if it's a great office deal and it's super compelling, you're going to get a ton of pushback there, right? I mean Covid work from home, blah blah blah blah. Same for like single tenant, triple net retail, right? Challenging market, cap rates are low, is the credit really there, et cetera. So it's really kind of again bringing them what they feel comfortable with. And what we're trying to bring them is a monthly coupon with some upside. And so when you kind of do all that math, you're looking at sub $10 million core plus for the most part pretty stabilized assets in again, Texas, Tennessee and Florida. We try to keep it really simple.

No, that makes a ton of sense. And that goes back to kind of the first part of the conversation we had about giving people what they want. But you know, if that is what the mainstream wants, aren't those asset classes and those geographies by definition more competitive to enter into?

Yes, yeah, 100%. So that's why we've had to go to sub 10 million dollar acquisitions. And that's why I have two VPs of acquisitions who I expect to make 50 to 100 outbound phone calls a day to find deals. If you join our shop and you think you're going to be on the buy side, don't bother coming in day one like we are sell side shop, either raising capital or finding deals. And so we have a very robust kind of pipeline when it comes to acquisition broker contacts. We have a whole CRM set up to replicate what we do on the capital raising side on the Product side as well.

And I notice on your site that you said that you're vetting off market opportunities. So is that, you know, I know investors love the idea of buying off market. But you know, I could also make the case that especially if the market's changing, that sometimes it takes a listed property for a seller to become educated. So. Yeah, just, just. I don't know if you track this. You probably do based on what I've heard so far. But do you have a sense of how many of these deals that you're bringing in? Are they on market, are they off market? Maybe talk a little bit more about the sourcing there.

Yeah, I mean, and you in the brokerage industry know that this con, this term gets thrown around very liberally and like who the hell actually knows what it means anymore? I've been doing this for 10 years and like, I couldn't really tell you. Some things are on market that they've got taken off market. But if you saw it when it was on market and participated in that offering, what does that qualify? I don't really know, but I'd say it's probably 50, 50. 50% are just legitimate listings that were on the email blast for. And we go after the deal. 50% are brought to us in a limited marketing capacity. I couldn't tell you how many people they show these things to. I wouldn't believe the brokers if they told me the number, but it's okay. But the way we do things is typically a leasing broker in a sub 10 million dollar deal has the best relationship with the ownership group. And because we're not vertically integrated, we will approach them and say, hey, if you give us a look, 30 day window off market, inside track, whatever cliche you want to throw at it, we will keep you on as a leasing broker. And that's a really big value proposition for a lot of these groups, especially if you're in a secondary or tertiary market where typically 80% of your income is derived from leasing activity versus investment sales. And so I have two VP's of acquisition. They both were in fraternities and SEC schools. And the 50 to 100 phone calls they make are talking with leasing brokers in these markets about college football and college basketball.

Love it. So they're actually calling leasing brokers who have space for sale and saying, would your client consider selling that it doesn't.

Have to be for sale, just we have a CRM of all the leasing brokers in the market and they just call them and say, hey, did you see the Georgia game last weekend. I was an SAE. Like, let's talk. Most of these guys were SEC or Big Ten or Big 12 guys. And so you just talk about sports and then it turns into talking about business and it's like, hey, if your owner's looking to make a move, would love to just get a phone call. And then when we go into market, so I try to go to every asset we own once or twice a year and we take the leasing brokers, investment sales guys that we know and we take them out and we get banged up at dinner together and we talk about sports for the most part. And that means the phone rings like it's a very simple business, but it's, it's one of these things that's simple but hard, right? It's very simple to say this. It's very hard to go to Tallahassee on a Tuesday night every six months. Like, not everyone's going to do it, right? I'll do it. I will do it.

So how big is your team now? And you know, maybe talk a little bit about how you grew that along with the platform. Because I don't know if these are all salaried people or if they, they're commission based on what they find. But I'm sure there's plenty of our listeners out there who maybe they have a couple deals under their belt and they're thinking about how do they scale their, their business.

If you include pream, it's probably 25 people. Excelsior, it's 11. Another big mistake I made was trying to outsource to third parties. What is mission critical work that should be done internally, especially within the accounting functionality. So bookkeeping accounting was something that we tried to outsource initially. There's a huge mistake. The first thing I did at Excelsior was I brought two guys with me and then I hired a controller who is a CPA with a public accounting tax background. And that was kind of the, one of the best moves I've ever done that and improving our tech stack. And so I think, you know, again, in our business you're always, it's always schizophrenic in terms of like, oh, you've got a lot of free cash flow, we need to build the team up or yikes. Like we feel a little bit risk off. We don't want to over expand. So we have kind of a rough arithmetic internally of the number of tenants and square footage we take on will dictate we have to bring on another asset manager and then we Kind of max them out, thinking we're going to cycle through them every two to three years. And then, you know, we've been slowly adding to, like we hired a controller, so now our controller is our coo. We hired a VP of marketing internally. So it depends on the asset class and the cash flow. And that's where I go back to, like, you really need to focus on your GP sponsor business. Because I know a lot of middle market fund managers raising $250 million funds that they don't make any money. It's a crazy business. I don't understand why they're in it, but I think just want to tell people that they have a $200 million fund. I mean, I don't know why they care, but yeah, I mean, that's been the biggest challenge is figuring out, especially in this environment, where to get somebody talented. It's probably six figures these days in Nashville. So.

And you still, your time is best spent raising capital and handling investor relations. So that, that, that's, you know. Yeah, I mean, that's not something you can outsource.

Yeah, yeah, no, I think you cannot outsource that. That's a very specialized skill. And so I meet with my control, my COO pretty often, frequently. And I think, okay, here are three things that are wasting my time that I need to get off my plate. Who on the team can take it if no one on the team can take them? Let's think about starting a position to take it off because I need to be hyper focused on it. Most sponsors don't feel comfortable talking about that. They feel like if their investors were to hear them say it, they would say, oh, you should be working on XYZ part of the business. But the reality is, if investors want exposure to more diversified portfolio of investments at lower minimums, your sponsored GP better have a really good plan to raise capital, because if they don't, it means you're not going to be able to do investments. Minimums are going up.

Great point. Well, Brian, usually one of the last questions I ask on this podcast is, what gives you the inside edge to real estate investing? And that's the whole premise of this show in my book, that there are great inefficiencies in the market and if you have the inside edge, you can outperform the market. But. But I've been taking notes and you've already given me at least a half a dozen ways that you exemplify the insight edge. So I will include those in the show notes for everybody. But Brian, for a Final question I would ask, what advice would you give to the aspiring investors, someone just starting out because you've spoken a lot about raising the capital, obviously you need the deal eventually to try to match it all up. So what you've done for someone who's just starting seems pretty daunting. So would you recommend that they go work for someone like you first and understand how the machine works and just kind of grow with that company? Or, you know, would you recommend for someone starting off to, you know, try to find an experienced partner like you did and just try to build it from the ground up?

You know, it's a great question. It's always very challenging to answer because everyone's situation is so different. But I would tell people to spend. Before you make a move, spend six months to a year doing informational interviews where you meet with leasing brokers, investment sales, GPs, sponsors, fund managers, attorneys, insurance, anybody who's in this ecosystem of our world. And to the extent that they'll tell you the truth, because everyone in this business is a little cagey. Like, understand again, if you ask them for advice, right? So, hey, how do you spend the majority of your day? Like literally? Really? Show me your calendar. Can I shadow you for a day? Because most people say, oh yeah, Brian, I want to do what he does. Like, do you really? Like, I get calls at midnight with people in Indonesia and I'm on a plane all the time and it's like I'm getting told no all the time. How do they make money? Like, how does the actual business make money? What's the incentive structure look like? Not everyone feels comfortable eating what they kill, right? I mean, it's a super scary thing. I haven't drawn a salary since 2011. It's not for everybody. Not everyone can do that. And then I would just be super inquisitive about kind of once you have that information, apply it and be realistic with yourself and your situation. Is this something that I really want to do? I think people just get into these businesses to have the position and the title without realizing what's kind of behind the day to day. So I'd spend 12 months doing informational interviews and be very honest with yourself about kind of what your skill sets are and how you want to spend the next 50 plus years of your life.

Brian, this was awesome. That's really great advice, which I would agree with. And there's just like I said so many things here that you've talked about. We've been doing this show now for, for two years. We're over 125 episodes and several things you talked about today I've not heard on the show before. So thank you so much for sharing your story and your time with us today. And I've already mentioned your website, which I'll put in the show notes, but is there any other way that our audience should follow you and hear what you're up to?

Yeah. Thank you so much for having me on. I'm super active on LinkedIn, so if you're interested in connect with me just Brian Adams, Excelsior Capital Shoot me a note, shoot me a connection request and reach out. I'm always happy to help.

Awesome. Well, thank you again Brian for joining and thank you to all of our listeners as always. This is James Nelson, your host. If you have not done so already, please definitely connect with me at James Nelson NYC on LinkedIn or Instagram or Twitter. And last but not least, Definitely check out jamesnelson.com I really appreciate those of you who've already pre ordered my upcoming book. I wrote this book for you to give you the inside edge to real estate investing. So until next week, thank you again.

Thank you for listening to the Insider's Edge to Real Estate Investing. We appreciate your subscribing and sharing with your friends. If you haven't already, please connect with James at jamesnelsonnyc on LinkedIn, Instagram and Twitter. Please also visit jamesnelson.com where you can find the show notes and other episodes along with an exclusive video series and other helpful resources so you can gain the Insider's Edge to real estate investing. Until next week.