From Medicine to Real Estate Millions: Dr. Tyson Cobb's Transition to Real Estate Wealth Formula

Welcome to the Raise Capital Legally podcast and YouTube channel, where we talk about topics of interest to real estate syndicators and fund managers with an opportunity for live questions and answers before we sign off. I'm Krisha Young, co-host and business development director, and this is attorney Kim Lisa Taylor, the founder of Syndication Attorneys. Before we get started, please note that audio and video from this event will be posted on our podcast platform, YouTube channel, website, and social media and will be made available to the public. You can go And ask questions at the end of the broadcast by raising your hand or typing it in the Q&A. Information discussed during this event is of a general educational nature and should not be construed as legal advice. Now, today's topic is From Medicine to Real Estate Millions: Dr. Tyson Cobb's Transition into Real Estate Wealth Formula. Please join attorney Kim Lisa Taylor and co-host Krisha Young as we interview Dr. Tyson Cobb, a semi-retired orthopedic surgeon who transitioned into full-time real estate investing With over 40 years of investing experience, he's built a diverse portfolio exceeding $1 billion encompassing multifamily properties, RV parks, farmgrounds, Texas vineyards, hotels, triple net commercial investments, car washes, and self-storage units. Wow. He is the founder of Timber View Capital, a firm that assists professionals in achieving financial independence through real estate syndications. Dr. Tyson will share his formula for escaping the daily grind of a professional career and making it big in real estate investing. Wow, this is going to be exciting. Hello, welcome. Hi, Kim. Hey.

Hi, Krisha.

Hey guys, how are you?

Um, yeah, we're great. I love your background, by the way. I'm a lake person, actually, uh, looking out at the lake right now, Lake Coeur d'Alene in Idaho. Uh, I grew up on a lake in Michigan, so lakes are dear to me. Um, but, uh, welcome to our show. Thank you, sir.

Yeah, so great to be here. Thanks for the invite. Did you say that, uh, you do spend some time at Lake Coeur d'Alene?

Actually, yeah, we have a house up here.

Okay. Yeah, I came very close to moving to Coeur d'Alene. I used to say that that's where God goes to vacation. It's, uh, it is, uh, it's a beautiful place for sure.

Yeah, it is. It's, it's really—

I feel that way about Vancouver.

Yeah, Vancouver's nice too, but it's— yeah. So, all right, let's get started. So tell us how you began, like, you know, share your journey of how you went from orthopedic surgery into full-time real estate investing.

So I grew up in Texas on a ranch. And so, you know, my first investing as far as real estate goes involved ranch land. And then later farm ground. And did the usual thing that professionals do, just a lot of different paper asset-type investing. And then at one point, I was just ready to slow down. So, I dropped back to 1 day a week doing orthopedic surgery, moved into real estate investing, started in the triple net space, which is—

Yeah.

A pretty benign spot to start. You know, it's pretty simple math and long-term leases. You know, it's pretty much just vetting the tenant, if you will. And then later moved into syndications. And I enjoy syndications a lot more. Investing with teams is just a lot more fun. You know, I love hanging out with entrepreneurs and love putting deals together. And it's just fun doing life together with other people that are successful. And as you put teams together, you'll have different team members that have different skill sets, and you can capitalize on that so that, you know, everybody's benefiting from your skill set and I'm benefiting from your skill set and so forth and so on. So, you know, one of, one of the sayings that I like, if you want to go fast, go alone. If you want to go far, go together. And it really is that way with real estate. I mean, if you want to really make a big dent, join great teams and be a great partner to great people.

It sounds like you actually take more of an active role than just a passive role. Is that true?

You know, I do both. So, I'm in 58 syndications right now. Around 2/3 of those are GP-LP combinations, and around 1/3 are straight LP.

Okay. And when you come into a syndicate, are you coming in by yourself with your own money, or are you bringing your, you know, your contacts with you?

Yeah, we do it both ways. So if I'm going to bring it to my network, which is Timberview Capital, Those are the ones that I feel sure and safe. If I don't feel sure and safe, I might still invest if I'm intrigued because it allows me just to put a finger on the pulse, take a look under the hood, and follow a team for a period of time. So that's been a pretty common scenario for me over the years where I'll invest a small amount of money just to to get to look at the team on a regular, you know, monthly basis and see how they handle difficulties and how well they perform and so forth. And then, you know, if we really love what they're doing, then we go big and bring people with us.

Oh, I'm going to deviate from our prescribed questions because you're saying things that make me want to dig deeper.

Yeah.

I was like, what So, what do you look for in a team, whether you're going to be passively investing or if you're going to take a role in the GP side of things?

Yeah. I mean, I think the biggest characteristic, if I'm going to bring it to the network, is people that have a good track record. You know, it's not always true, but it's frequently true. How you do anything is how you do everything. So, if you find people that have done multiple full-cycle deals and have done a really good job with those, Then, you know, then they're likely to do that again. And, you know, it's like investigating anything else. I did a ton of research as an orthopedic surgeon, and you just have to know how to turn the rocks over and look for red flags and problems. And so I'll do that with the team. I do it with the asset itself, and I do it with the geographic location. And if you can check all 3 of those boxes, You know, it's not guaranteed to be a home run, but there's a very good chance that it will be.

That's pretty sound. I like the fact that you're looking at the team as well as the assets and the geographic locations. We see, you know, sometimes we get exposed to teams where, you know, we see things that are red flags just within the team itself, and we try to point them out when we're able. Sometimes we're in a position where we're representing the whole team, so we can't really say anything, but You can usually tell who's gonna be successful and who might end up running into some problems. And most of the time, the people that are gonna run into problems are where there's too many people on their team or they haven't done the legwork to set up their own group of investors and now they're trying to bring in capital raisers. And those are the ones that always concern me the most.

Yeah, sometimes with the larger teams, you don't really have anybody that's truly responsible for anything. And that's a Prescription for a train wreck.

Yeah, I think that's, that's a really good point. And we see that as well, even when we're drafting the legal documents, is that, you know, we were— we have a team of 4 people and nobody's, nobody's looking at our emails and, you know, reviewing or responding to the documents. And so nothing's moving forward. So, yeah, I think it's important. You've got to have 1 or 2 decision makers that are actually staying focused and actually, you know, paying attention to what's going on with the deal all the time.

Absolutely.

With that, I think you create a greater chance of success.

Can we stay on this for a quick second? Because I wrote down like these are red flags, right? So what I'm hearing in terms of the team is too many people, too many decision makers, or not an assigned decision maker, not enough investors brought in the deal at the beginning. So needing to find capital raisers. Are there any other red flags in terms of the team and what are the red flags in terms of the asset and the location?

Yeah.

So there's a ton of potential red flags. I think their track record is one of the big ones, the way they handle decisions. So, I mean, as I watch some of the new teams that I haven't brought to my group, but maybe I threw $50 grand in just so I could put my finger on the pulse. The ones that tend to go off the cliff are the ones that can't make a decision. So, I mean, as soon as you know you have a problem with your property manager, you have to step in and say, okay, these are my expectations and we need to correct this immediately. And if they give you an excuse or they don't correct, you need to cut them loose and bring somebody else in. So we see that frequently. They can't make a decision. They're afraid to, you know, to make a change. And, you know, a bad property manager will just take you off a cliff with them.

Yeah, we've seen that and we've seen people and we've experienced it. My husband and I syndicated some properties and we had a property where we had to fire the property manager every 2 years without fail.

Yeah, it's painful, but it's just part of the, part of the process.

Yeah.

Yeah.

I'll come in with, you know, grand plans and, oh, we're going to do this and we're going to do that. But then you've got to look at how they're actually performing and someone has to stay on top of that.

Absolutely. I mean, a lot of times they'll tell you that you're— they're doing great. But if you don't have the KPIs that you can, you know, that you can validate, you don't really know.

Well, and some periodic site visits so that you can see that things aren't just getting out of control because you'll know it when you drive into the property. If it's starting to look a little derelict or you're seeing the wrong people hanging around and, you know, nothing's happening to Fix any of that. So what, what, like, what did you invest in in the beginning? And, you know, so it seems like you've evolved into this pretty diverse portfolio. Where did you start?

Well, as I mentioned earlier, I started in farm and ranch ground, moved into triple net. Those were gas stations/convenience stores. And these are long-term, 15, 20-year triple net leases. With, you know, national guarantees. So it's a pretty safe environment, but, you know, your cash flow is pretty skinny. So, you know, there's ways to make a lot more money and get a lot better cash flow than that. But it's, it's a pretty safe place to start. And it's not a bad place to, you know, to bank some capital. And the depreciation on, on those buildings are good. So, you know, there's pros and cons and benefits and downsides to every asset class. And I think in general, if you just have a very well-balanced, diversified portfolio, it's just a lot safer in the long run. And if you can have a lot of uncorrelated asset classes, that's even better. So we've moved into Roll-up strategies now. So, we have a roll-up strategy with medical dental office building portfolio. We have one with a paving company. And with the roll-up strategy, you're basically just— the thing I love about that value-add is it doesn't cost anything. So, to get a value-add out of a multifamily, You're taking some risk and you're spending some money, right? So we have to go in and remodel. We don't know for sure what it's going to cost to remodel 6 months from now. Maybe the tariffs affect it, maybe they don't. But you know for sure you're going to spend some money, you're going to take some risk, and you're going to run into some problems that you're going to have to deal with. But with a roll-up strategy, you're just doing the same thing over and over again until you build a portfolio that's big enough to attract people that want to write a check for $80 or $100 million. And when they write that check, they're They're willing to give you a premium for that portfolio for the convenience of not having to put that together themselves. So, it takes a lot of sweat, blood, and tears to work through all of those various properties or businesses depending on whatever the roll-up is and then put them together. So, for instance, we're doing a roll-up right now with a paving company. And the first value-add with that is basically just come in and improve operations. So, we have people very experienced in the paving industry, and they'll include and improve all of the aspects of how the business runs, trim the expenses as they put the portfolio together. Hopefully, they're able to pair up in geographic areas so that maybe they shut one yard down and sell it off, combine various expenses so that they lower the overall expense. Improve the revenue flow, hire better people, and just increase the net operating income. So, that's your first bump. And then, as you do this over and over and over again and you build the portfolio up, then you have venture capital come in on the backside or a REIT or whatever the case may be that's willing to write you— maybe you buy it at a 3x multiple of the free cash flow and sell it as maybe a 7x. Depending on, you know, the desirability of the asset class, how well they're running, and how big your portfolio is.

Nice. That sounds like a really great strategy. So it sounds like, you know, getting the right people on that team that understand how to implement new systems and, you know, kind of figure out, ferret out what's wrong and make those changes that are required is really key to that type of a strategy.

Absolutely.

Well, great. Yeah, I like that model a lot. Um, you could do a whole, whole, uh, podcast just on that. So what investment strategies have been the most successful for you?

Boy, um, you know, I guess that depends on how you define success. You know, there have been some opportunities that, that have been seized at the right time in the right location. And, you know, you just get a 2x multiple in, you know, 11, 12, 13 months, which is a beautiful thing when that happens. But it's also a beautiful thing when you pick up a property that you're proud of and come in and make some nice improvements and, and hold that long term. So. I think you can define success a lot of different ways. And there are opportunities in every single market. You just have to be able to recognize what's coming next or potentially what's coming next and recognize a good opportunity when you see it. And so, it's a little less glamorous doing multifamily in today's market, right? Because it's just been a little rough. But we all know what's coming. You look at the numbers, the permits down, the starts are down, the under construction set to deliver sometime in the next 12 months, they're all down. The absorption is up. The cost of housing just keeps going up. It just— every time they come out with a new report, the average cost of housing in the United States goes up again. So, it's less affordable. Around 25%, as the last stat I saw, of the houses or households can even qualify for a loan. So, 3 out of 4 can't qualify for an average-priced home in the United States. So, You know, we're pushing people into renting because they can't afford to buy. And the housing shortage is about to really reveal itself over the next 2 years because, you know, the Fed's really hurt us badly. And a lot of people just walked away from the industry. So there's a ton of people that aren't coming back. And there's a, you know, a bunch of people on the sideline waiting on things to turn around. But Once they jump back in, there's roughly a 2-year window before those new units are going to hit the market. And the people that are willing to buy when there's blood in the streets are the ones that will capitalize on that really big bump when it happens. And I don't have a crystal ball, so I don't know when it's going to happen, but I know it's coming.

Yeah, I have to say, I've had a few disheartening calls with people over the last several weeks, you know, with properties that are really in trouble, and they're just saying, you know, we can't fix it, you know, not with the tools that we have available to us right now. So it's, it's, it's challenging times right there, but right now, but if those properties do end up back on the market, then that's going to be a brand new opportunity for somebody else who can come in at a price that's fixable and, and do what needs to be done to, to take advantage of the next run-up in real estate prices.

Yeah. Yeah.

There's a lot of people just, you know, bailing water out of the boat and rowing the boat to try to get to the other side. And that strategy works if you can do it. But as you mentioned, a lot of people are in a position where they can't. So it's You know, it's just time on the calendar until their clock runs out and then they're done. Frankly, I'm surprised, you know, the government created this, this problem. I'm surprised they haven't stepped in to, you know, come up with some type of solution. But, you know, it'll work its way out one way or the other. But in the absence of some type of intervention like a lower interest rate, there's going to be a lot of housing that goes into disrepair because the first thing that happens is you lose all the cash flow. You don't have money to do the repairs, so things go into disrepair. And, you know, one thing leads to the other and it starts circling the toilet. So, you know, I think it's a shame to see that happen with, with our housing in the United States, but a lot of it is heading in that direction. And then finally, when it goes off the cliff, if somebody doesn't step up and buy it, now a bank's running it. And Which is never a good situation. So, yeah, there's going to be a lot of opportunity moving forward.

Yeah, I just hope— well, I think we have, you know, administration that's proactively looking for ways to address that. So, you know, hopefully they're successful in that effort. So what is your primary mission with Timber View Capital?

We, you know, we provide an educational platform for, you know, people that want to learn how to invest. We cater primarily to professionals. So, we started out as a handful of orthopedic surgeons investing together, and it's just grown exponentially over the years. We'll invest about $30 million this year as a group. And so, with that, it opens a lot of doors for for very good investment opportunities that frankly I didn't have available to me at all in the early phase of investing in real estate. So it's been nice to see that turnaround. So we're able to negotiate better splits and better preferred returns and get into better deals. So we provide that investment opportunity. We have an educational platform. We have people in our, you know, in our network that have either been sourced through various masterminds that I'm in or by other members of the network, attorneys that specialize in a variety of different tax mitigation strategies. And, you know, these CPAs are just like physicians and attorneys. They all specialize in an area. They have their area of expertise. And, you know, we just learn all the time something new that's coming along. So, we had an investor just yesterday set me up with his attorney and we went over a new tax mitigation strategy that we're investigating now. So, I'm a lifelong learner and constantly looking for, you know, something new. So, it kind of makes it fun.

Right. Um, so I, I heard you say a couple things I want to explore a little bit more. If— do you mind sharing with us, like, how many investors you have in Timberview Capital?

Um, like how many as in a number, or, um—

Yeah, as in the number of investors that, that you think invest $30 million in the next year.

Yeah, I think we have 200 and some change. You know, and some, some of those people are high net worth that are investing more. Others are just learning the ropes and saving their money so they can, you know, can, can get into a $50,000 minimum. So they're, you know, all over the board with respect to how much they're, they're investing. One of the things that we're able to do now that didn't have opportunity in time past is For the high net worth people that are looking for kind of a sidecar deal, we're able to negotiate those. So we can, if a person wants to come in for, usually requires a minimum of $1 million, sometimes more than that depending on the investment. But obviously the more they're willing to put in in a single investment, the better deal we can negotiate with a sidecar agreement. So they basically have their own class of investment. And those are kind of fun to put together and very beneficial, obviously, for the investor.

Yeah, we do a lot of that in our syndicates and our funds is we'll set up different tiers based on how much somebody invests, you know, and sometimes they want some, you know, at least some control rights or better information rights or something like that than some of the smaller investors, but not always. You know, mostly they're just looking for the returns. And, you know, you can change the splits. There's all manner of things that you can do. And then, as I think you mentioned earlier, when you go to make that investment into somebody else's deal, you also, you know, depending if you're bringing enough money, you can start negotiating some better terms with them in the same way.

Yeah.

Yeah.

And are you guys doing that, your sidecar deals with, with like side letters, or is there, you know, are you getting in in the beginning where they're actually carving out Classes for you? How is that working for you?

Yeah, so it really just depends on how big the investor is and the timing. So, you know, as soon as we learn that there's somebody looking for something, we'll pitch it out there to people that we think are interested and just look for opportunities. And sometimes they're open at the time, and others we just put them together as, you know, as they come up.

And your Timber View Capital, is that an all-accredited offering?

Yeah, so the majority of our offerings are 506s, but we do the occasional 506.

And so you're doing them as you're putting together a group specific for a deal versus having a large fund?

Well, actually do both.

Okay.

Yeah, we do both.

Right.

So I just want to kind of point out to people, you know, that Dr. Tyson told us he has 200 investors. So I have a— we have a lot of people that come to us and, you know, they get stuck in this, well, I'm talking to 1 or 2 people and, you know, and they just get stuck on that and for months. And, you know, what I keep trying to tell them is that all of our most successful clients are, you know, they have 300 to 500 or, you know, 200 to 500 investors that invest with them again and again. And, uh, you know, that's, that's your goal. You know, your goal, if you're listening to this, is to go out and create a pre-vetted group of, you know, ready, willing, and able investors who know you well enough and, and you know them well enough to know you want to do business together. And, uh, so then those people are ready. Uh, you know, I've seen clients of ours who have been able to raise You know, with that kind of a database, they've been able to raise, you know, $7 to $10 million in a week. You know, what's been your experience with that? Are you able to, you know, access your network quickly? And they're usually pretty responsive now that they know that.

Yeah, it really depends on the deal. So we, you know, we have a lot of deal flow. So, you know, we keep people a little bit tapped out, but In my experience, if you, you know, if you come in with a different asset class that people are interested in picking up and the returns are good, they'll just keep investing over and over again. You know, the other thing to point out that, you know, we see time and time again that I think, you know, maybe people when they're first starting don't really understand is that These investors have to, you know, have to kind of be touched by your team a number of times. And it takes a while for people to get comfortable. So, one of the things that we do every week, you know, we go through a bunch of KPIs, but one of them is we talk about new investors. And so, we'll go through the history of a new investor. You know, where did they come from? How did they show up? What's been their touchpoint? You know, maybe they showed up to a webinar, maybe they soft committed, and then they dropped off the planet for a little while. 6 months later, they come back, and that's kind of a recurring theme. It takes people a while to get comfortable, you know, maybe with you, comfortable with investing and making their own decisions, or whatever the case may be. But it's, you know, it's a process, and you're planting seeds. And you have to give those time to germinate and grow. And as long as you're consistent and continue to bring value, your network will just continue to grow. And people who were not ready last year will hopefully be ready this year, and if not, the year after. And you just have to have that mindset. No is usually not no with investors. It's frequently, no, not now. So, just be available when they need some help and bring value the rest of the time, and people will just show up and get in the deals. I mean, obviously, you have to have good investment opportunities, but as long as that criteria is met, as long as you keep bringing value and Making yourself available, they just keep showing up over time.

And I heard you say that you kind of started with your own peer group. You know, you started with a handful of other orthopedic surgeons, like-minded, and then started expanding into their network. Is that a fair assessment of how kind of your network organically grew?

Yeah, I mean, I think your closest friends or colleagues or whatever is your best, you know, so I would encourage all the people that are wanting to raise more capital or do deals, I mean, look at your hobbies. If you're an avid golfer, talk to golfers when you're out golfing. And if you're an IT guy and this is your network, then start there. I do very well with orthopedic surgeons, but other people are not going to do as well with orthopedic surgeons because you don't have that connection. So, start out with the people that you have some kind of connection with. And I started with people that knew me well. And so, you don't have to build the trust when you have that situation. It's already there. And then you just build on it from that position. And, you know, as I mentioned earlier, I think bringing value to your group is critically important.

And when you bring value, you're talking about like education as well as great deals, right?

Right. Yeah. Education. Teach them about, you know, tax mitigation strategies, break everything down because unless people are already in the real estate space, they don't understand these terminologies. They don't know what a preferred return is and they don't understand an LP versus a GP and they don't know a 506 from a 506. So, you know, you have to spend some time going through all of those things, put it on your website, do some webinars, send out a newsletter. You know, you'll find Whatever works for your personality or however you want to do it. But, you know, by some mechanism or another, provide that information so that you can educate your network.

Yeah, absolutely. And one of the things that we harp on is that, you know, the thing that everybody needs but nobody has is an investor marketing plan, right? Where you actually kind of sit down and methodically think through how, you know, who is my peer group? How am I, you know, who am I going to reach out to initially? How am I going to expand my network? Am I going to go to live events? Am I going to do webinars, podcasts, create a newsletter? How is it that you're going to meet people, follow up with them, stay in touch with them, keep them engaged? And then when you're ready, making sure that you've taken the legwork to have the right relationship to know that you even want to have that person in your deal because it's not, you know, just because someone has money doesn't mean you want them in your deal. Have you ever had an experience where you've turned down?

For sure. Yeah.

Yeah. You've got to be ready to say no, you know, no, I'm not gonna let that happen because, you know, it just doesn't seem like a good fit, you know, whether personality, whether it's just, you know, style, you know, it doesn't mean there's anything wrong with that person. It's just not a good fit for what you're doing and maybe do their own thing.

Not only that, I mean, you know, some people are in a position where they need cash flow. So bringing them into a value-add multifamily that's not going to have any cash flow for quite some time is something that needs to be explained very well so they understand the difference as opposed to, say, the medical office deal that we're doing now. Those are all stabilized and they cash flow from deal from day one. So we're paying monthly distributions starting 30 days after we close a tranche. And that's one of the funds that we're doing. So we'll close a tranche of maybe 6 buildings at a time, bring in the money, close everything off for those investors, start paying them 30 days to 90 days later once we get everything processed, and then move into the next series, if you will. And it's just an ongoing evergreen fund. So everybody's in all of the buildings as we add and work on the roll-up. But the people that come in first are obviously getting paid first and getting the cash flow. That's completely different. Completely different investment opportunity as compared to, you know, maybe a multifamily development where there won't be any cash flow at all. And it's a big bang on the back end, which would be not a good investment for somebody who's retired and needs cash flow.

All right. Well, I think we've got a ton of questions here. Before we go to— yeah, this is like more questions than we ever get. So people are really interested in what you're saying, Dr. Tyson. But let's give out your contact information first in case anybody does have to drop off. How would people reach you or learn more about Timber View Capital?

Yeah, so they can go to timberviewcapital.com. There's signups there to get on our mailing list. You can schedule a call to Get on our 506 list. You can schedule a call to, you know, for us to kind of go over any questions you have. You can sign up for the webinars there. So there's, you know, there's a lot of opportunity. So that's, that's probably the easiest way. I can drop my phone number into the chat. I don't answer the phone, but I do answer text.

Okay, great. Um, Krisha, do you—

Yeah, I don't even know where to start. There's so many. Okay, I'm gonna start in Q&A. And there, there, it seems that we're having some technical stuff. I don't know, it seems to be working on my end. Links are working on my end. Maybe just try refreshing or something like that. Q&A is working. Um, but if somebody, if somebody's having issues with the Q&A, just put your question in chat. Um, All right. So Bob says, does Tyson look for anything particular in a deal or team? How many does he feel is a good team size? I think we addressed that one already. That was kind of at the beginning. We said smaller is better. Do you have anything else that you want to add to that one?

No, I don't think so. I mean, you just want to make sure you have all the bases covered. So I'll have small teams or young new teams come to me that don't have any gray hair in the group, and I'll usually recommend they find somebody. That's done some full-cycle deals. Number one, I have been through some market change-ups like we're going through now or like '08. The people that have been seasoned and have done a bunch of full-cycle deals can see red flags coming that maybe the younger guys that don't have that experience don't. When you're talking about risking investor money, you have to make sure you've got all those bases covered. So even if the older guys they bring in aren't going to be part of the boots on the ground, they need to be on all the Zoom calls and dealing with the issues and overseeing these guys. And I have seen it where they bring in these folks that have experience and they're never around, they don't contribute. And so there's no real value there. In that setting. So it's, you know, they don't have to be there on a daily basis, but they do have to be involved with the deal.

The wise elder, right?

Yeah. Somebody watching over your shoulder that's been there before, right?

Yeah. I say is, you know, number one, you know, my rule is no more than 5 people on a management team that are actively involved in making decisions just because it's too many people. You can't even get them all in a room together to make the decision. Always there's a The 6th person and beyond always come with dissent. And I've learned that I'm the dissenter when I'm the 6th person in a group sometimes. So I know that that actually does happen, and I've seen it happen time and again with our clients. I mean, one thing is you get too many decision makers, but also you spread the money too thin and nobody's happy, and 2 or 3 people end up doing all the work. So just be careful of getting so exuberant that you invite everybody in and you allocate all the percentage interest based on the assumption much and that everybody's going to do work as hard as everybody else, and that rarely happens. So, you know, one of the things I say to mitigate that is always create a job description for every single person on your management team and attach it to the management asset manager's operating agreement so that in the event somebody isn't performing or can't, that you have a, you know, much more gentle conversation with them about reallocating some of their percentage interest to those who are And it becomes a lot easier to do that. So—

That's in page 252. Here's one we made earlier. I'm gonna Vanna White this for a second. We have 2 books, and this is the encyclopedia version that Kim had written, and it goes into like greater detail to help support people who are raising capital in this way. But on page 252, there is a whole list of these jobs that people people can do. Yeah. I've had many conversations with people who are like, oh, we have like 10 of us together, 15 of us together. And it seems like it's a really great idea because everybody's excited and everybody's like, we have this to contribute and that to contribute. And I'm like, yeah, but who's making a decision here? Like, you know, you can't even decide on a law firm. Like, how are you going to decide on all these other things? Right? And so this is a— it's a good point. It's like, What seems like it could be really beneficial by having all these master brains, it actually is a huge hindrance for sure. All right. So Jason says, hi, Dr. Cobb. Going back to your very first deal as a GP, what did you do right and what did you do wrong? Good question.

Oh, my first deal. I'm going to skip the farm ground and ranch ground and just go to commercial real estate. So, my first deal, I bought a gas station/convenience store and owned 100% of it myself. The deal did fine. At that time, I didn't know as much about vetting a location as I do now. So, in retrospect, I would have I would've hit that a little harder and probably searched a little longer before I pulled the trigger. But the deal did fine and no regrets there. Had I been in a different cycle of the market, the outcome could have been different. So, your market cycles can make or break. And so, if you look back before the Fed started running the interest rates up, There were a lot of operators who were not very good operators that made a lot of money. And I think I was one of them when I first got in because I didn't vet things very well because I didn't know how to vet them very well at that time. And one of my old profs used to say, and he credits his dad for this saying, but experience is a masterful teacher. In a fool learns by none other. Experience will teach you very well, but it's a painful and expensive process. So you're better off to learn from people that have been there and learned it either from someone else or themselves. And, you know, your goal should be not to learn the bad things from experience, but rather learn that from, you know, from people before you, reading books like the one you were just showing. That You know, that basically outline how to get through each step of the process without, without getting a haircut.

Yeah, yeah. You make $100,000 mistakes with other people's money. It's a ticket to not doing very well in this business and maybe so much that you won't do it again. I've seen that happen to some people, but also it's very painful to try to explain that to your investors. So, you know, I loved your idea of get some gray hair on your team. And, you know, what you're really saying is you need somebody. If you don't have experience, you can leverage off other people's experience. That's how I got started as a securities attorney. I started working with a securities attorney that had already been doing it for 8 years and learning how to do syndications and funds and things from him. I worked with him for 8 years, and then I went off and started my own thing. So, you know, you can do the same thing too. And I've seen people that have done that. You know, there's some teams that stay together for a long time and there's some teams that kind of fluctuate. You know, you start over here and that's not such a good fit and you find some other people and, you know, you stay with them longer. But the beauty of syndication is you're not married to the same people forever.

Right.

You can shift around. You're only, you know, only stuck with someone for the duration of that deal. So, yeah.

And, you know, sometimes you'll, you'll go through the process, like you mentioned earlier, you were basically talking about setting expectations in your written documents. And it's amazing how easy it is to get into a deal and not have that set forth in the front. And that's a recipe for disaster. So it's worth taking the time to make sure your documents include As you pointed out, responsibilities and what that's going to look like and how the decisions are going to be made, because you don't want to be in the middle of a deal with investor money at risk and then try to sort all that out because it's a little messy at that point.

Yeah, absolutely. And by then, you know, that's where the litigation risk comes in, because if somebody is just not agreeable or, you know, they're like, hey, this is where we started, we're not making any changes, you're kind of stuck. You're either stuck, you know, just keeping them along for the ride or, uh, you know, litigating sometimes to get them out. And, uh, if you don't set those expectations up front, then that becomes much, much harder to do. Um, the other thing I say, and I don't know if you've had any experience with this, is don't bring in, uh, people to your management team who are people who are just providing a service that you're going to pay them for anyway.

Yeah.

You know, so he's going to provide a professional service, just pay them. And if they're going to do something extra towards the syndication, like they're, you know, going to have deal flow, they have a group of high net worth investors that they're going to try to, you know, help you raise the capital. If they're going to apply some different and unique skills beyond the professional thing that you're hiring them for, then that's fine. You can bring them into your team, but beware of allowing professionals in that are providing services to the team. Because if they don't perform well, it becomes very difficult to get rid of them. Right.

Yeah. You know, and you can set that up so that they get bonuses based on performance without having to get them, you know, tied up in the deal with an equity position. So there's ways to incentivize them and keep it fair, if you will, so that they're motivated and everybody's interests are aligned. But yeah, you're exactly right. Yeah, you know, once, once they have an equity position, uh, uh, then it gets a little messier if you have to replace them.

Yes, yes.

Um, what I'm hearing here, if I, if I may, what I'm hearing here is, is okay, because we're talking about, um, the entrepreneurial spirit in a way, right? We are talking about running a business and how to find, you know, people, and, and there's a lot of parallels here. between, you know, starting your own, launching your own business and launching a fund in this way, right? However, the key thing that I keep hearing is we're using investor money. And so that's what changes the entire game here. You know, you need to really pay attention to what Dr. Cobb is saying and what Kim is saying, because this isn't just your own money. This isn't just your own reputation. This isn't just your own thing that you're doing here. You are now responsible for other people's money, and that changes the game completely. And so, like, following what these, what these 2 brilliant minds are saying and having that, that wisdom on your team is really important, um, you know, at this level. That's what I'm hearing loud and clear.

And one of the things—

they definitely go up when you have investors that you're responsible for. So in my mind, that's, it's a whole different animal. You know, I'll take chances all day long with my own money if I, if I like what I'm seeing and I want to take some chances with a young team or something like that. But I don't bring investors into those deals.

Exactly. Yeah. All right. So I'm going to go into the webinar chat now and I'm going to popcorn back and forth here between the Q&A and the webinar chat. Ryan, what level of due diligence do you Do you request on an LP deal? Is it normal to ask for the purchase agreement, loan commitment letter, title work, appraisals, etc.?

Yeah, I usually don't for an LP. You know, I think it kind of depends on the deal, who you're getting involved with, and, you know, what you know about them. I'm in a lot of masterminds, so I do a lot of my research by, you know, texting or picking up the phone calling somebody. And I can't tell you how many times that's saved me from going down a lane that looked like it was going to be good. And, you know, it turns out that people had, you know, partnered with them in the past and had a terrible experience. So, you know, you want people that are able to navigate difficult waters and overcome problems. And still kind of keep all of the partners whole, if you will, from a standpoint of, you know, they were fair and equitable and so forth. You know, when you have people that just feel like that they were burned and so forth, at least for me, I don't get involved with those people. You know, it doesn't mean every deal is going to be good. And I tell investors, When we're going into a deal, this is just the estimated returns based on the assumptions that may or may not be correct and they may not do well. So, just because a partner has a deal that didn't do so well, that's not really the issue. But I mean, if they have dealings that are felt to be dishonest or otherwise didn't hold up their end of the bargain. I just, I try not to get in a boat with those people.

Yeah.

So it's, you know, sometimes it's just simply just doing some investigation with some phone calls to start off, you know, look and see, you know, what they've done in the past on the full-cycle deals, and then just start drilling down. And it's not uncommon for me to just, you know, keep drilling. And I've got a team of people that help me with a lot of stuff. So I don't, I don't do this myself. You know, we do background checks, we, you know, run all the comps and, you know, you just have to have somebody that's good at what they do, look under the hood from a lot of different directions and, you know, make sure there aren't any issues there.

I would like to provide a quick response to Ryan also. And the answer to it is, is it normal to ask for the purchase agreement, loan commitment letter, title work, appraisals, etc.? Well, realize this: if you're syndicating a property, you are conducting this due diligence not for yourselves, on behalf of your investors. So they have a right to see all of the due diligence that you did when you made the buying decision for this property. And some people, you know, hardly anybody's going to ask for that, but if somebody does, it should be available to them. And the SEC requires it. They require that if you're doing a securities offering, that every investor has the right to ask questions and to get whatever information is reasonably available to them. It doesn't mean you have to go out and commission a report for them, but you do have an obligation to provide the information that you looked at. And, and then they can— your job is to give investors all of the information they need to make informed consent. And that's everything that you looked at when you made your buying decision. So if they're asking for that information, that's not necessarily a bad thing. And if they look at it and they decide, okay, that's good, they're satisfied, they had all those material facts, they made their decision. if that deal were to fail, they've assumed that risk. So if you don't give them that information, then they're, you know, likely not going to invest with you anyway. But they are— they do have a right to it. So, you know, just be aware of that. We actually have in our syndicates, we usually, if it's, if it's a purchase for a property, we usually always include the purchase agreement as one of the exhibits just because that way the investors feel more comfortable. They know it's a real property. It's not something made up. And then all the other things are available on request. And again, some people will ask for them, some people won't, but you really need to have an investor management platform where you can post all that information and let people know it's available. And then, you know, if somebody wants to see it, they can go look at it themselves and you don't have to be sending it out individually to those that ask.

And it brings up another good point too. When you get a bunch of people in the room, including investors, You know, you got a lot of eyes on this deal. So it does allow you to vet something more thoroughly as the weeks roll by and so forth. So I'm in a group called Connected Capital. I don't know if you're familiar with them, but, you know, it's a group of individuals that basically do due diligence together. And, you know, when you, when you get a larger group that's looking under the hood like that, you know, It really does kind of broaden the concept of the due diligence approach. So, you know, I'll occasionally have investors that'll, you know, find something that was interesting that, you know, maybe we didn't see initially. So it's good to have a lot of eyes on a deal as you're trying to sort it out and decide if you want to go down that lane or not.

All right. So on to our last minute. Just want to say, you know, go to TimberView Capital if you want to connect with Dr. Mr. Tyson, this has been really fascinating. We've learned a lot. We've learned a lot about your capital raising strategies and some of your best practices for evaluating teams and deciding which deals to be in, which ones not. I think that's been really enlightening for me as well as for our audience. So I appreciate the fact that you were willing to share all that information.

Well, thanks for the invitation. I enjoyed being here and Yeah, fun, uh, uh, talking with your crew and, and answering the questions.

That's fantastic. Well, we'll have you back again. Uh, you know, this sounds like something we need to make like an annual event just to, uh, your take on what's going on in the market, because you are seeing things from a more unique perspective. I mean, we, we have a lot of real estate trainers that we're connected with. We'll have them come on and talk about it from their perspective, but you're, you're out there in the trenches. You're, you're there as a passive investor. You're there as an active investors. So, and you're in a lot of different asset classes, so you're really seeing, you know, some different perspectives than some of our other guests have had. So we appreciate that very much. Do go to syndicationattorneys.com if you'd like to schedule a call with one of us. You can schedule a discovery call, you can do a paid consult with me. There's some options there. You'll see a button to schedule a consultation, but also check out our Capital Raising Launchpad. That is a newer service that we're offering. It allows people who are not ready to syndicate to get comfortable with talking about securities laws and, you know, what the different exemptions are and their corporate structures, how to split money with investors, the dos and don'ts. Then, you know, based on the experiences of our 400+ other clients that we've had over, over the years. So we look forward to having all of you as clients at some point. And, um, Krisha, do you happen to have the, uh, the podcast review link that you could throw quick in the chat? If you could, if you love our podcast, please give us a review. Um, we'd love to have your feedback, and, um, we appreciate all of you. Thank you for taking time out of your busy day today. Dr. Tyson, it's been our pleasure. Uh, we hope to have you back again.

Likewise. Thank you so much.