Moses Kagan, Founder of Adaptive Realty - Perspectives on Real Estate - The Michael Girdley Show Episode 44

Hey, Michael here. Welcome to Michael Girdley Show. Another episode today that we just finished recording and turned out really awesome is with my buddy Moses Kagan out of Los Angeles. He is a real estate private equity professional, runs a firm there that he started about 10 years ago and does apartments in Los Angeles. So we spent a lot of time talking about something I'm very curious about, which is real estate. He talked a lot about different things, you know, how real estate's different in California, how his strategy works there, and maybe why it doesn't work in other places, the effect of interest rates on what people are doing with real estate, um, and all that kind of stuff. So, um, we did go through and give some advice for people considering real estate private equity as a career. Um, so if it's something that you'd be interested in, this is a good episode for you. Uh, and then talked a bit about, um, the different paths to get there— brokerage versus starting your own firm and all that kind of stuff. And lastly, we spent a bunch of time on niche events. So a lot of the conferences that people are doing now, including one that he runs called Reconvene, is something that we talked about as well. So really interesting episode, super smart, thoughtful guy. And Moses is somebody with a real unique perspective on life and the world of work. So really enjoyed this one a lot. And here is the episode after a quick word from our sponsor. Hey, Michael here. Sponsor for today's show is actually a product that I'm a part of called DM Bridge. And what DM Bridge is, is a service that we built to solve the problem that Twitter's direct messaging functionality is a total mess. So we built DMBridge to help you fix that. Um, a lot of the other solutions, uh, do things like requiring you to install a whole nother inbox. We didn't want another inbox, so we created DMBridge. And what it does is it takes all of your Twitter DMs and has them appear inside of your email inbox. So you can reply to them just like it's a regular email. You see them just like it's a regular email. You can search them later like it's one of your regular emails, all just by using DMBridge. So we're currently live with the product. Would love for you to sign up and become a customer and check it out. So you can find that at dmbridge.app and go on there, put in your name, and be either part of the beta or join us as part of the live use of the product. And again, check it out, dmbridge.app. Moses, thanks for being here, buddy.

Oh yeah, thanks for having me.

Uh, you know, it's been so good getting to know you over the internet, and we've— you're, you're one of my OG internet friends, which is like super cool.

Likewise, likewise, super fun.

Well, I mean, so some of my audience likely doesn't know who you are and what you do, though I think anybody on Twitter does know, um, which is a tribute to the good content that you produce there. But maybe start with like who you are and what you do, and then like I got a lot of stuff I want to talk to you about.

Yeah, happy to do it and excited to be here. So my name is Moses Kagan. I am one of the two founders of Adaptive Realty. We are a boutique real estate private equity firm and property management company based here in Los Angeles. To give you a sense for the size, we kind of like own $200, $225 million worth of assets. We manage about 800 apartments currently. Um, we've been doing this, well, we've been renovating apartment buildings since 2008, uh, started Adaptive in 2012. So, uh, you know, a decade of doing this now.

Yes, I totally dig it. Well, one thing I've seen a lot of, and I'm curious to get your take on it, is there seems to be real estate private equity people that are on Twitter and those that aren't. And I was curious if you've seen, because I haven't talked to many that aren't on Twitter, all my REPE friends are on Twitter, but like, have you talked to the ones that aren't on Twitter? Like, what What, what did they do?

There's definitely, um, I mean, there's definitely a huge, huge world of, uh, of operators who are not. Um, and, uh, you know, I think there's a couple different things going on. One is that it's, it's historically been quite a, like, a closed-off, um, business where people try to kind of like keep their secrets. And some of that is totally understandable. I mean, obviously I've leaked plenty of information to competitors, um, but, uh, I found the benefits of kind of building in public, or however you want to describe it, to vastly exceed the costs. Um, so, and I think that there, there are sort of a small subset of the business who, uh, who have, have sort of discovered the same thing that I have, which is to say that by sharing more, uh, you get more opportunities and potential partners, and you learn more yourself and all that stuff. So it's a very, um, it's a very positive thing for my career, but, but it's only a tiny subset of the industry that participates.

Yeah. Well, it's super interesting how open real estate people are on social media because I mean, my theory has been that the dynamic is such that you guys don't, you know, you have a geographic moat a lot of times or a strategy moat where you don't have to worry about like some rando coming in or moving up to slightly bigger deal sizes or like, I couldn't even imagine going to compete with you with like the niche you go after.

Well, I mean, people do. And, but I mean, part of it is like, look, I'm in Los Angeles. There's no like definite opposite of, um, people who want to buy apartment buildings. So it's like, okay, great, I've invited in 2 more competitors. Now there's, you know, a million and 2. Um, so that's, that's part of it. Um, but, uh, but another thing is you— I mean, obviously I'm not going to talk about deals before we land them. Um, but once you have them, I mean, it's, you know, it's— you, you can be pretty, pretty candid. And there's some stuff obviously that I don't talk about, but I, you know, the— again, the the benefits of that, like, teach, learn, and then get opportunities and capital, uh, uh, cycle are so profound. And I'm sure we'll talk about, uh, some of them on this during this conversation that it, it's, it's an obvious yes for me.

Yeah. Well, so it does seem like the niche you're in, which is kind of these smaller apartment subscale apartment buildings in LA, is a pretty unique one, which is most markets don't have a ton of that, like, like supply, right? I know you came to visit Austin and, and, and went to the Midwest to visit some stuff there last year. And like, very few, it's very few and far between. Like, Austin, I don't think has a ton of that kind of supply. Like, how special is like the LA real estate market? And then I assume it also shifts by neighborhood, or Orange County and stuff like that has to be an entirely different beast.

Yeah, yeah. No, I mean, I don't know enough about Orange County to say definitively. I think it's pretty similar to L.A. in terms of the land use. I mean, all this is is really like a zoning question, right? It's like what? Because from a, from a purely from a pure capital deployment perspective, like you obviously want to build the biggest buildings that you can build. Like it's better, it's better for the developer. It's in some ways better for the capital partners. It's just a more efficient way to provide housing. What has gone on in LA is that we have this just draconian zoning code pretty much since like the early '60s that has prevented very most very large-scale development. We also have this thing called CEQA that allows your neighbors to sue you if you build 50 or more units. And if you try to do that, if you try to build 50 or more units in Los Angeles, it is 100% guaranteed that you will be subject to a CEQA lawsuit. So the result is that we have this very interesting market, which is a lot of like 4 and 8 and 12 and 20-unit apartment buildings, which is interesting because it's a very fragmented market. So there's a lot of little mom-and-pop owners who own 1 or 2 or 3 of these things. And frankly, many of them are not amazing stewards of the assets and don't really understand how to run the business and all that stuff. And So from the perspective of a real estate entrepreneur, what's cool about it is to do your first deal, uh, you don't have to raise $50 million. You know what I mean? You can, you, you know, you, you, a million bucks. I mean, maybe now maybe it's a million and a half or whatever, but it's, it's, it's surprisingly sort of attainable and therefore has proven to be like an interesting, um, kind of a, a nursery, let's call it, for, for real estate private equity entrepreneurs, many of whom have been smart enough to then go out to other markets and other parts of the country where easier to scale. I'm the idiot who stayed here, if that makes sense.

Well, it's, it's interesting, you know, one of the things that you talked about over the past few years is there, you know, cap rates, you know, the prices these buildings are paying for relative to yield has gotten somewhat kind of nonsensical in some situations to where like you guys haven't done many deals. And I know you talked publicly about like returning an entire fund that you ran. Like, so, like, how do you look back on that past couple years now? Like, do you think that that was a mistake? Should you have been like, you know, on the merry-go-round? Or how do you think about that going through?

No, I mean, well, it was a mistake for— just to quantify it for everyone, like, so we raised, you know, we're a tiny shop, but we raised what was at that point, you know, by far our biggest fund ever. So it was like roughly $23 million of purely discretionary capital. And, um, depending on how much we would have levered that was like, you know, probably like $3 million worth of fees, uh, plus what obviously— plus the ownership upside, um, that we sort of gave back. Um, so which is extremely painful for me and for my partner personally. Like, that, that's, that's a material amount of money to me. Um, but in looking back on it, um, in, in light of what we've seen subsequently, it was the right call. I mean, it, it, um, we We did a few smaller deals, um, after we gave the fund back. We did a few smaller deals with, uh, as part of like one-off joint ventures, partnerships, um, with investors who had somewhat lower return expectations than we had created for the fund. So these investors came to us and said, look, we want to be in this business, we'll do deals that you would not do for a fund. And so we did some of them, and it's been excruciatingly painful. I mean, I think the results are going to be good, but Los Angeles, uh, like, uh, drove into the ditch during COVID um, in terms of permitting and inspections and ability to get the construction done and all kinds of other stuff. And, um, and it would have— frankly, it would have been a freaking nightmare if we had taken that money and put it out because the, the numbers were not good. Like, I was looking at the deals and going, these deals are already not good. And so if we had done a bunch of what were marginal deals to start with and then had them impacted by rising construction prices and longer time periods for inspections and permits and all that stuff, it would have been a disaster. So, yeah, so the money hurt, but, but it was inarguably the right thing to do.

Yeah, it's, it's interesting. I wanted to share a data point I heard with you, with you. So, you know, there's all kinds of different strategies that people are doing, you know, in real estate, private equity. There's what you do, there's, then there's what you do but in different asset classes and then different sizes. And then there's ground-up development asset and then different classes. And then that all is permutated based on where people are as well. But I talked to somebody that works at a pretty big-scale, like, apartment developer, and I asked like, oh, what effect has like 200 basis points of interest rates had on your ability to underwrite deals? And this person told me, a third of them don't work unless rental rates keep going up like crazy. And I was like, oh, this is such a different world when you're in real estate and like that small amount of, that small amount of interest rate can like make or break something.

Oh yeah, totally. I mean, it's, you know, you, uh, if you're doing like, uh, uh, small, you know, micro or lower middle market private equity, you're basically buying it like 5 times or 6 times or whatever. Well, fair enough. I mean, you're doing, you're doing slightly higher end stuff. So, Maybe, but oh, and you're doing software too. So the multiple is a little higher, but we're buying it, you know, effectively like 22 times or whatever the number is. I mean, it just, so, uh, microscopic movements in interest rates matter a lot to pricing.

Yeah. It was interesting. I was talking to one of my colleagues this morning and he's like, oh, that'll be at a 5 times EBITDA multiple. I was like, yeah. He's like, uh, you could finance that no matter what the interest rates are in the economy is. It's not a problem. But yeah, it's so interesting how real estate. I guess I didn't internalize it, is so intensely tied to the, you know, the funding market, the debt market. Whereas like other stuff I've been involved in where we've financed owner-occupied stuff, like people ask, like, do you care that interest rates have gone up 2%? I was like, well, it kind of sucks, but hopefully it'll make building costs a little lower. But the deal still underwrites, like it goes from 32% IRR to 29% IRR.

Like, yeah, that's, I mean, it's just, it's, I mean, I'm sure that there are people picking off, you know, one-off subscale assets in like weird markets and stuff that are, you know, you get some owner who doesn't know what they have and you find some off-market deal. And, you know, there are, there are certainly deals like that out there. But there, it's pretty hard to build a real, like a sustainable business at scale in real estate private equity picking those off. Like I'm not saying it's impossible. I'm sure someone's done it. But if you're trying to build a big firm, like you're basically going to spend a lot of your time bidding on, um, on market stuff or like, you know, stuff that maybe it's off market, but it's not really, but a bunch of people see it. You can't, you just, you're not, you can't, it's not sustainable to be looking for needles in haystacks all the time. Um, and so therefore you're, and, and, and so therefore you're getting bid up and therefore the interest rates matter a lot.

A ton. Yeah. So how do you think about, like, I kept hearing and I keep hearing over and over again how the Class B and light industrial people have just killed it, like, over the past 3 years from a real estate private equity and LP standpoint. Like, do you have any FOMO from seeing those guys, like, do super well?

Yeah, of course. I mean, oh yeah, no, I mean, uh, yeah, no, that's, I mean, that's like my life is FOMO. You have to understand, like, I had a bunch of friends in LA who were doing the competitors of mine who went out to like, uh, you know, Denver and Phoenix and whatever in like 2015 to buy apartment buildings. And I was like, oh, that trend's already over. Like, I, I'd like to— I wish I had done that, but it's too late. I'm already too late on that. And so I've already been having FOMO from those guys making fortunes since, since 2015, 2016, uh, when I was like, uh-oh, we're you know, we must be in the 8th or 9th inning here. I don't want to be the last idiot who buys in Phoenix. And like, by the way, it's been on like an absolute tear ever since then. So, so have I felt FOMO about the industrial guys? Like, yeah, and self-storage and a million other things. Look, I'm also happy I'm not in office, right? Like the nature of our business is that assets are good, asset classes are going to go in and out of style. Markets are going to experience growth and decline, and that's just the nature of it. We are trying to be permanent holders of assets. Like, we want to buy stuff that we are very, very confident 30 years from now is going to be desirable and cash generative. And I don't mean to say that industrial is not— like, I actually— we're looking closely at industrial deals right now. So I'm not, I'm not making some sort of comparison. But Um, to me, I am extremely risk-averse when it comes to product type and market, and, and to my detriment, and, you know, frankly. But, um, but I'm, I'm a risk-averse person, and I, you know, I'm trying to build something that is gonna go on for multiple generations. And so I just need to be a little bit careful about trend chasing.

Yeah, well, I mean, is, is going to light industrial right now trend chasing? Like, it's kind of like, here's how I think about it. Some of the light industrial guys have showed up in private jets recently, and it's like, okay, well, now you're getting into it. Like, you know, like, maybe it's time to get into office. Like, I don't know. I, I, I know nothing about this.

It's a valid consideration. I mean, um, the thing I like about light industrial in Southern California— I— so we wouldn't— I'm not going to be flying around in private jets anyway because we don't, um, we because we don't sell, we don't crystallize promotes. And so I'm effectively like all in on these deals forever. And like, eventually it takes 7, 8, 10 years for us to refinance out the money and then we start generating or earning cash flow from alongside our LPs. So, so the whole PJ thing is not, not really— I'm not going to happen for me, or at least not for a very long time. But, but what I like about light industrial is that it is it has a very large land component. Like, so if you just think about like what is a, what is an industrial deal, it's like a big hunk of land with like pretty crappy like structure on top of it. That's one story, right? So the components of value in that, like there's always in any deal, the components of value are structure and land, right? And they're, they. So if you imagine like a Class A apartment building, you know, with there's a parking lot and there's multiple stories above it and there's all kinds of fire sprinklers and electronic door locks and washer dryers and, and that's great because it generates very high per square foot rents and people need places to live. And there's, there's a strong argument for doing that. Very complicated to manage and requires a lot of maintenance CapEx and OpEx to continue running. Light industrial is nice because the, the structure component of value is so low. Like it's really just you're buying a really huge piece of industrial, industrially zoned land. And the, the, the real-life depreciation— I don't, I don't mean depreciation from a tax perspective, I mean like in real life— there's just not that much CapEx that's required. It's just like, it's a, it's a single-story thing, right? Um, and so if you're a long-term investor and you believe that your returns are going to be driven to a large extent by land appreciation, in some ways, like, you want the least complicated capital, uh, uh, you want the least capital, um, complicated capital situation that you could, you know, the CapEx situation that you can find. And light industrial sort of qualifies. By the way, storage would too in a, in a really high-quality market.

It's super interesting. I mean, and I think the other thing that, you know, a trend I want to talk to you about is routinely I hear like the coastal kind of California, like real estate guys who are San Francisco, LA, Santa Barbara, San Diego, like that whole thing, like wander into like a place like San Antonio that are not supply constrained and like get their butt handed to them like over and over again. And I think every real estate private equity guy from California on Twitter has like a San Antonio story where they're like, and I've had a 98% rate, except for this one place I bought in San Antonio. And like, it's, I was curious your thoughts about how How does growing up in a supply-constrained market like California, whether it's light industrial or residential, you know, skew your perception of the world to where you come to a place like San Antonio or Dallas or Houston where we keep building like, like crazy and you walk into like a big problem. So I was just curious how you think about that.

Yeah, I mean, look, it's, you know, we're used to the idea that our buildings are going to be full all the time. And there's just like whatever, there's just tenants, you don't have to do very much to attract them. And, and the government like literally puts you in jail if you try to build new buildings in a lot of the neighborhoods where we own stuff. Like just like we, we have a 7-unit building. This is my favorite example. We have a 7-unit building that was built in like 1962 or something, and then the government downzoned the entire neighborhood to R-1. So it's literally one apartment building on a street with single-family homes surrounded by other streets of single-family homes. And it is illegal to build more apartment buildings there. It's like, that's a moat, right? Like, like the government puts you in jail if you compete is, is about as good a moat as you are going to find. So, so it makes me very nervous to go places where, you know, I hear from people who develop in Texas where the city council member calls them up and they're like, hey, really excited that you're building here. How can we be helpful? Like, how do we expedite these permits and make this happen for you? And it's just like, whoa, like, that is a— that's just the complete opposite from what we experience here in California. And it's just a different mindset. I think that that's required to invest in those places and operate those places. And, you know, people have made a ton of money in those kind of growth markets. So I just want to be very, very clear that I am not I don't mean to disparage them. And I think actually for society, it's much better to have development happening. It's just, I mean, that's— we need— you need development. What we do in Southern California is frankly insane. But it— but it's— but operating here, it's very complicated to operate here. There's like all— you're like weaving your way through these thickets of insane regulation, but you are operating fundamentally with a net beneath you because it's so hard to, to compete. And there's basically like always way more demand than there is supply.

Yeah, it's, it's really super interesting. And, but, so I mean, I guess the upside there is like you have a pretty nice moat both around like knowledge and geography, right? Which is, is pretty great. And you just have to worry about some local competitors. The downside is that just really has a, a limitation to the deployment of certain strategies, right? Which is what you've gone through the past 3 years. So, you know, me and look, I think I'm less risk-averse than you are, so I'm just curious how you think about it. Like, me when I'm like, oh, I can't find any deals, I'm like, I'm going to go learn something else. Just go, go manufacture a deal. You know, what is it about your personality where you were like, no, no, like this is, this is what we do. And if there's nothing here, we're going to sit back like Warren Buffett and Charlie Munger do and just wait for, you know, deals will come someday. Like why, why do it that way? And why is the way I would approach it so crazy?

Do you? I don't think it's crazy. I mean, I think one thing that's going on is that you, um, correct me if I'm wrong, but you have operated with a lot of your own capital over the years, and, um, we have not. So we are— we're— so I, I am much more risk accepting with my own money than I am with investor money, if that makes sense. Like, I, I, I, you know, um, I really just like— I'm not I will make that phone call to investors and tell them I lost their money, but I really don't want to do it. Um, and you know, I'm sort of like a people pleaser. I was a good student in school. Like, I, I, I take that— I, I, in some ways maybe to a fault, I take that investor trust like extremely seriously. So, um, uh, and it's weird because like, uh, uh, really good investors accept a lot of risk in some sort. And risk is maybe when the reward is, is, is disproportionate to the risk, they accept risk. Um, and, and for me, I think, uh, I'm probably risk-avoidant to a fault. Um, but another thing to say is, like, I know what really a really good buying environment looks like because I lived it from like 2000, you know, really like 2012, '13, '14, '15, '16. Like I was literally— I would go on the MLS, like, that was available to everyone, and it was like, there's a deal, there's a deal, there's a deal, there's a deal. And we just like, you know, we were ex— we were renovating 15 or 20 apartment buildings at a time. Um, and so like, I, I'm not gonna sit here and fool myself when I'm just looking at the numbers and it's just like, this is not a good buying environment. Like, there's— I can't— you know, I haven't seen a single thing that works. Uh, and so It's like I'm— I, I have done some new things and we can talk about it, but in terms of, um, in terms of our core business, it's just like sometimes we, we've always known that we were going to be in this forever, and therefore we've always known that there were going to be times where we should act like pigs and just grab every single thing we can, and there were times when it wasn't going to make sense. And like, so we've sort of designed our business to tolerate that, and that's kind of one of these times. And so we're sitting around bored in our offices right now.

Tweeting.

Tweeting. Yeah, exactly.

The one thing that you said that inspired me to share something, which is like, yeah, like I put my own capital at risk a lot. So whether it's 100% me or it's 5% me, like I make sure that putting that amount of money in is something that's meaningful to me. And what I found is I hated raising money for deals. Like I hated— I always felt yucky. And those those people that could go out and go into like somebody else's office, have no skin in the game, and like sit there and swear up and down the thing's going to be great, like, I admire them because it is impossible for me to do that. But when I walk in there and I'm like, hey, I'm putting this much money in this deal, do you want to come with me? Like, and my money's at risk like yours is, like, I suddenly stop feeling yucky about syndicating deals or raising money to make bigger stuff happen that I couldn't do on my own.

Yeah, I mean, look, yeah, I, I, well, so our business is a little bit different in the sense that we actually, we, we, because we're permanent holders, uh, we have, so we don't sell, therefore we don't crystallize huge amounts of promote at any given time, therefore we are never that liquid, therefore we can't really and have never been able to put very large amounts of our own capital into deals. Um, and, uh, And so what's interesting is I live every day with the following idea, okay? Uh, I could choose a random deal that has been sent to me, definitely raise the money and do it, and put whatever, $300 grand in my pocket, right? You know, within 90 days. Like, in other words, we developed enough investor trust that I could— I basically could sell any of those deals. Deals. And it would happen, and I'd put that money in my pocket and go in our management business. And like, so my life is basically an endless series of looking at those, those like, and being like, nope, not gonna do that one, even though like a bunch of money would come in 90 days later with no risk to me. Uh, nope, not gonna do that one. No, not gonna do that. So I've just like, I've just always been comfortable with the idea that that my, that my reputation is really the thing that's on the line. And that because I want to do this for the rest of my life, my reputation is just far more important to me and more valuable to me than almost any amount of capital or any amount of cash would be. So I've just taken seriously from the very beginning that I'm just not going to sell stuff that I don't— to investors that I don't, I don't really believe in. And that, that's unfortunately for me and my bank account right now. Like, right now, like, there's not a ton of stuff. We're closing some small things here or there, but there's just, you know, it's just not a— it's not an exciting time to buy. The numbers don't make sense, and I'm not going to sit there and tell people that they do.

Yeah, I totally get it. So one thing I wanted to ask you about, and, and I see real estate private equity is like a pretty good career path for people, like, especially if you're somewhat more of a generalist in terms of skill set, like like, what are the best paths for somebody to do that? Like, is it go start as a broker or broker's associate? Is it get on the asset management side? Is it just like go find a deal and do it like the Chris Powers model? You know, how do you think about like what is optimal? And maybe it just depends on what people's personalities are like as to what the right path is.

I think that the two, the two most important skills for real estate private equity are knowing how to spot and execute on a good deal, knowing how to spot and buy a good deal, and then knowing how to raise capital. So, so if you have those two skills, you can hire everything else. Like, it doesn't mean that you're going to be world-class at those other things. You maybe you can partner and be world-class at those things. That's, that's what I think I've done is partner with my partner is just like, if there's someone who's better at designing the renovations of and renovating small apartment buildings in Los Angeles, I certainly have met them. Um, so, so anyway, so the— you want to be able to find deals and you want to be able to raise capital. Now, um, you can learn to do that in a number of different ways. If you are personally very disciplined, uh, and, uh, you— and you like to read and think a lot and you're not afraid, you can do it on your own. Like, I basically am self-taught, um, for better or worse. I've made a lot of mistakes because I'm self-taught, but I'm self-taught. Um, Two other maybe easier ways to get into it are one, brokerage, or two, working as sort of working on the buy side, like working as an analyst at another real estate private equity shop. Um, I would say though that, um, I want to be careful about the brokerage, um, uh, advice because what makes a very successful broker is doing a lot of sales, like listings. Okay. And that when you're in real estate private equity, what you're doing is effectively you're buying. I mean, it's called buy side. Like you're, you're, you, you are. So the, the, the skill sets for successfully selling just an apartment building, industrial, whatever, are that the, that skill set for building a brokerage career is very different from the skill set that is necessary in real estate private equity. One is about, oh, this is going to work out great, and here's why this building is awesome, and all this great stuff about it, and don't mind the details. Like, that's what really good brokers do. They just like, you know, they try to— that's what they're doing is trying to get people excited about the asset that they're selling. Being an effective real estate private equity operator is all about managing downside risk. So it's like you have to be absolutely obsessed with all the things that can go wrong. Here's what, here's what is, here's what's bad about this building. Here are the issues that I see. Here's what's broken. Am I being compensated for the risk? Um, so brokerage is a good place to start because you see a lot of deals and like learn the mechanics and meet people and stuff, but you don't, you don't want to stay there too long because in a certain kind of way it, it, it warps your thinking. You become too salesy and not enough of a detective.

Yeah, totally dig it. It, it's interesting. The reason I brought that up is like a broker that I worked with on the tenant rep side, so representing us as a buyer and a tenant, who actually helped me buy my best real estate deal ever. I'm sure everybody's got their war stories, but yeah, I called, I called this guy and he, he was like, I don't know who has that listing, but I'll find out. Nobody had the listing for a building. Anyway, thank Great, great recession. It was great. Um, anyway, no, there are no more deals like that trading at 30 caps. Anyway, uh, the, um, but the— in the grand scheme of things, I called him like a year and a half ago and I was like, hey, we're looking to, you know, do this kind of tenant rep search again. He's like, I'm, I'm not working with clients anymore unless you're an investor. Like, I've moved to the investment management side. Um, so it's interesting, and that's why I brought that up. But your, your hypothesis and thesis is that certain people have to be really scared to kind of make that transition. You got to be the right kind of person to make sure you're not, you know, the hand-wavy, everything will be great.

Yeah, I think that's right. Well, look, the truth is, and I don't— again, I don't, um, I'm trying to like, uh, uh, cast dispersion on, on anyone, but, um, the— over the last 10 years, actually being hand-wavy and just buying the biggest thing that you could buy with as much debt as you could buy was the right thing to do, right? Like, my whole, like, downside protection thing, uh, was great, and I'm a lot less rich than I would have been if I was just been like, whatever, just wave it in and buy everything that wasn't nailed down. So, um, so, so yeah, so like, uh, I don't mean— I, I operate our business in the way that I can go to sleep at night And, and that is to really understand what we're buying, really understand the market, use relatively moderate leverage, control the assets ourselves. Like, this is not— that's just the way I can do it. That's the only way I know how to do it. It doesn't— but it certainly doesn't mean it's the only way to do it.

So one thing I keep seeing, and I'm curious your opinion on it, is if you look on Twitter and social media, especially financial social media, the sky is falling, everything's over, good times, RIP. And every time I turn around, every private investor I know, or every acquirer, or every like, uh, baby boomer, like their bank accounts are still full of a ton of money and it keeps growing. And so there seems to be this disconnect where the sentiment has traded has transitioned so negatively that everybody still has so much money, but everybody's scared shitless. So I'm just like, it's really just fascinating to me, like how there's this disconnect from what's going on in social media and the news. And then when I look at the street, like everybody's out spending money and trying to invest it and still looking for, you know, good places to invest.

I think that's fair. And I think, I mean, look, we're, you know, we have the lowest vacancy rate we've ever had in the entire time I've doing business and we're pushing rents. And like, so, um, you know, from a, uh, purely from an operational perspective, things feel great. I mean, I will say that the stock market— people who are on Twitter, like, are— there's a lot of public markets type people, and obviously the stock market has got hammered recently. So, um, so there's probably some of that going on. And then there's the question of, is that like, you know, is that predictive of the rest of the economy or not? I don't— I just don't have any I don't know. I'm not smart enough to predict any of that stuff. I'm just looking at like, I know how to operate these buildings and I know what the rents should be, or either what they are or what they should be. And I know how much it costs to borrow. And so I'm just like looking for deals that feel like we're getting a reasonable yield and the prospect for more, you know, and feel like our downside is sufficiently protected that I'm not not scared. Um, and, uh, and that's— so, so anyway, so in other words, it's not a macro view, it's literally like a ground-up looking at deal after deal after deal after deal. And for me, it seems like there's— there must be tons of buyer interest. Either— well, either there's tons of buyer interest because someone's buying this stuff, or there's at least one guy who's doing a 1031 exchange and willing to pay that crazy price, and the rest of the buyers are on— like, are like me, on strike. But it only takes one, you know what I mean, to set the market price. So the truth is, I don't know. All I can do is just look at the deals that are in front of me and obviously beat the bushes for more. And it feels like a terrible buying environment. So but it's not. But I don't know that that's any kind of like prediction about the wider economy. You know, it's just ground level intel.

Well, if it's a data point for you, my landlord here who's 50 feet that way. By the way, I went to go, you know, I set up this office which is like a co-working space for like badasses. That's the, that's the pitch.

Oh, I love it, it's such a cool idea.

Yeah. And, uh, yeah, anyway, it's— guess what it's full of? Badasses. Uh, so it was great. Uh, anyway, the, um, it turns out if you only let badasses into your office, you end up with only badasses.

It's a good thing. I mean, it's a— I, I really admire what you did, and I think you saw, like, I, I have been playing around with idea of replicating it.

We'll see. Yeah, well, there's this, there's this infamous office here in San Antonio that I don't know if it still exists, but it used to be like 10 or 12 of the guys that were doing self-storage development and manage management. So they've built, you know, the companies that have done that as private equity guys, and they were all in one office together, which is the most bizarre thing like ever, which is like, wait, aren't you guys competing on spots and stuff like that? And I think they found it much more collaborative. So that was part of the inspiration was these guys were in the same place. So anyway, I highly recommend it. The one thing that's been kind of a surprise doing a coworking space like this is how often people are not in the office, including me. And I think like today is like one of the most popular populated days and only about two-thirds of the people are here. Like there's the office across the hall has Hasn't even been filled anyway. So my landlord here, because when we went to go set this up, I was like, hey, I'll go buy a building. And then, you know, I realized me paying them, you know, paying, paying some landlord a 12 cap was a better deal for them than me going to buy someplace at a 3 cap. Like, there was just nothing, nothing interesting. So anyway, we rent. But so I talked to him this morning and the two interesting things. One is he's still blown away that like normal private equity deals pay only a 20% promote, carry to the, to the GP. He's like, wait, it's usually 50/50, like over an 8% pref or something. So he's still— it still blows his mind when we talk about that. But he said like they own a bunch of stuff and like he's like, we would sell some things, but where am I going to put the money? I was like, oh, I can't really argue with that. You know, what are we going to do, trade some 5 cap for a 3 cap somewhere? Like, who cares?

No, no, we looked at it. We own a bunch of very nicely renovated but rent control stuff, which like in theory I'd like to sell and 1031 into a toddler product. But it's just when you start looking at what the cash flow implications of those trades, just like, you know what, instead we're going to lever up the stuff we own and if we want to buy more stuff, we'll buy more stuff. But it's just that in-place cash flow is just irreplaceable. We have like a California has Prop 13, so we have amazing tax treatment. That's one of the reasons that we're long-term holders is like it doesn't really matter in the beginning, but once you own these things for 6, 7, 8 years and the value has gone and the rents have gone like this and the property tax is like this, there's just— there's a lot of NOI that you just— that only accrues if you continue to own it, because if you sell it, the tax gets reassessed. So it's like you just look, you're like, I'm never going to I mean, I'm kind of a never sell guy anyway, but you start looking at the numbers and you're like, nope, no chance I'm selling that.

Yeah. So if you're a never sell person, which by the way, like I tend to be that way too. People ask me like, what are you going to do with the things you're accumulating? And I'm like, huh?

Like, I don't know.

Um, but so like, what's the end state for being a never sell person? Is there like, are you guys going to have like a generational transition? Are you going to bring in junior partners at some point where 30 years from now? Expectation is like a new group of people is going to take over and your interest will convert into LP interest. Is that basically, is that, is that what you have to have as a plan?

Yeah. I mean, I think so. I have, um, I have 3 sons and I would, you know, I'd love it if one or more of them want to be in the business. Um, you know, I, I talk to them about it all the time. They're very aware of what I do. I don't, so in that sense, I'm maybe I'm pressuring them into it, but I don't, I'm not like, I'm neither telling them that they have to be in it, nor do I want them to get the impression they have to be in it. Like, I, you know, hopefully, you know, but if— but I happen to think it's an amazing business, and I think they would be kind of dumb not to be. But anyway, um, so, uh, so, so hopefully one of them will take it over. Um, we already have employees who have, um, who've been with us for a long time who have some, uh, carry in the deals. Um, and so it is conceivable that one or more of those people will ultimately be, you know, in a position to to succeed me. Um, or it's possible we'll bring in more younger people and one of them will kind of rise up. So, you know, I'm only 42. I've got, I've got some time to think about it. I'm not— the nice thing about our business model is that, um, I, I don't— it's not like I'm like burning the candle at both ends. I mean, sometimes I work really hard when there's a deal that we're chasing or whatever, but we have a really experienced team. And, um, So I don't end up doing a ton of scut work. And that means that I'm not like, there's like, I like my life. Like, you know what I mean? Like, I like my job. I, I don't know what else I would do. So I'm not in any rush to not do it anymore. Um, I suspect that I'll be coming into an office like this one when I'm 75 or something, just cause I like it. Um, so, so yeah, the, the answer is So there's a couple different options. Don't exactly know how it's going to shake out yet because the kids are too young.

Yeah, no, I dig it. Well, you know, downstairs in my office is an old, you know, an 85-year-old's office, which is just full of like filing cabinets of paper. And, you know, like they just moved him down there because his cabinets were taking up too much space up here. But he's just like an old real estate saw. And I think that's one of the coolest things about becoming not necessarily a real estate professional, but becoming a real estate investor, is that something you can do your whole life? Like my dad, my dad loves it. Like he's still like buying and selling properties and he's managing stuff and gives him something to complain about sometimes if people act like jerks. But like it's a career you can do forever. And, you know, he talks about going on vacation and like somebody like signing an LOI or an earnest money contract to buy a property from wherever, you know, and he's like, I could do this anywhere.

Like, yeah, yeah, no, it's, it's, it's pretty good. And I mean, it's, it's fundamentally— I mean, I think a lot of businesses are like, um, are like this, but real estate maybe more so. It's a, it's a decisions business. It's like there are relatively few decisions that need to get made by the person in charge. I, I choose for various reasons to make more decisions than I need to. Like, I'm involved in tenant screening and setting rents and that kind of stuff, in part because I like it and because I don't have that much else to do and it's worthwhile for me to spend my time. But I don't have to do that. Really, you're just making a few decisions. Should we buy this or should we not buy it? Like, what overall is the financing strategy? What are we going to do with this building? Should we sell it or not sell it, or should we refinance it? Like, there's just not that many decisions. They're really important decisions that you need, and The good thing is that the, um, the wisdom, the experience that you need to make those good decisions continues to accrete because you've just seen more and more things and more and more deals and you've seen different things go well and badly and all that stuff. So you, you can keep getting better at making decisions your whole life. I think, um, you might, you know, you'll be slower to do the math when you're 70 than you were when you were 30, but the math on these things should be pretty easy. It's not, it's not rocket science. So, uh, so yeah, so it's the kind of thing, it's not physically or, or, or intellectually that taxing. It's just about judgment.

Yeah, totally dig it. Um, so one thing, switching gears a little bit, one thing I've been really curious to watch is like the emergence of all these like super niche conferences. Like, like I think social media has enabled those to be somewhat viable businesses, at least on a break-even standpoint. So you do one around real estate, there's, there's a Holdco conference, um, which, you know, I'm really in the holdco business, so I should go to that one amongst all the other ones, except they put it in Cleveland in July during a family vacation. I can't go. Um, you know, there's a small business one that we had in Orlando and I spoke at that was pretty fun. And then they just, you know, they seem to be permutating. So I was curious your thoughts on the explosion of these things, or is it just me catching onto them? But, you know, what do you think about what's going on with all these like niche events?

Yeah, well, um, So I think we all owe, at least we on Twitter, all owe a big debt of gratitude to Patrick O'Shaughnessy and Brent Bishore for putting together Capital Camp, which was the, uh, the first one that I know about. I mean, I'm sure that there are others, but, um, uh, that, you know, I, I, I basically found out about real, about Twitter, finance Twitter, roughly at the same time that I went to Capital Camp for the first time, for the first Capital Camp. And, um, that was just a, it was, it was a real mind-blowing experience. And, and, um, And I, and I won again. Um, so, and, but, and in, and in being there, it's like you, you don't have to— if you're an entrepreneurial person, you're like, well, here's what the ticket price was and here's how many people there were. And you're like, this is actually a pretty good business in addition to being like a very, very valuable experience for everyone. Um, so, um, so anyway, so that's, that was where I got the idea. And then, uh, to your point about social media being the facilitator, I mean Yeah, you, you, uh, it's another example of a way to both grow and further monetize, uh, an audience that you create on social media. So, um, I think traditionally if you want to do a conference, it was like, okay, we're going to do a conference, it's going to be whatever, a real estate conference, it's going to be in Los Angeles. Okay, you start planning your conference and you hope that you're going to be able to sell tickets. Right. What happened with Reconvene is I was like, huh, that Capital Camp thing seemed like it worked. All right. I just literally posted a tweet being like, thinking about holding a real estate private equity event in Los Angeles. Do people think that would be a cool idea? And it got like 400 likes and people being like, yeah, I would come. I was like, okay. Made a landing page with like, uh, you know, with a, with purchase, uh, functionality to put down a $100 deposit. And I was like, okay, here are the dates. I have no idea what the, uh, you know, what the format's gonna be yet, or, uh, you know, or who's gonna be there, or the speakers, or anything like that. But if you think you might want to come, pay me $100, and I'll, you know, I'll refund the money if you don't come, or whatever. And if you do come, we'll give you a little bit of a discount on the, on the, um, face value of the ticket price because, uh, you committed early. And it was like, wow, like whatever, 300-something people put down the $100 deposit. Okay, fuck, I guess we gotta plan a conference. So what I mean to say is it was— it, it just wasn't that risky because there was already an audience there that I was pretty confident would respond, and they did in fact respond. So then I was just like, okay, there's demand, like, let me go see if I can supply it. And in a way that worked. Now, that works the first time. Like, you could sell a bunch of tickets if you have a good reputation and people trust you. The question is, can you— is the event going to be good enough that they'll buy a ticket again the next time? Um, and, you know, so we're, we're in the process of, uh, planning and selling tickets for our second, uh, iteration of Reconvene. And thankfully, we are selling a lot of tickets, and it's gonna, you know, it already will be a success. Hopefully it'll be a little bit bigger success. Um, but so it, so it worked out for us, but I, but I, but I think that's really the key is, um, is to build audience first and then that's, and then, and then, uh, an event is one way to monetize a good audience.

Yeah. And what was your, you know, I don't know what it costs, but what was your, from a ticket standpoint, what was your strategy in terms of kind of like finding the right sweet spot for how much you were going to charge? Versus like the caliber of what you were going to deliver? Because I think Capital Camp, which I just went to, by the way, if you were there, I'm sorry.

I didn't go this time. I mean, I went twice and I was like, okay, I could take a year off.

But yeah, uh, there were people, there were people there that like DM'd me later and they're like, sorry to miss you at Capital Camp. I was like, oh, this is what happens when you have 400 people, like, you don't get to see everybody. Um, I forgot who it was that I was like, they were like, yeah, but did you go? I was like, yeah, I was there the whole time. So, but how did you think about when you were putting together the event, like where to end up on a quality versus price end of the spectrum? Like, because I know Capital Camp, like, like it's out of control expense. I mean, it's out of control in terms of their expenses. Like they, they had almost more staff there than attendees, but it's not cheap. Like it was $8,000 to go, which is a lot of money. So anyway, I'm just curious how you think about that. That, you know, in terms of the grand scheme of things?

Yeah, we were, um, well, a couple different things. One is I, I didn't want to— I didn't think that I could justify a price that was anywhere near that level. But that actually was useful to me because it was like, okay, well, if those guys are here, like, I feel like I can come in under that, still put on a good event. Um, but then I— but, and the other thing to say is that we, we have never thought about this as like a profit maximizing kind of situation. I mean, like, basically, I think where the— I got a whole litany of complaints about the traditional conference business, but like, I feel I've gone to a lot of traditional conferences and it's like you've paid for the ticket and yet you feel like you are the product. You know, you know, the, the expression about like internet businesses where like if you didn't pay for something, then you are the product someone is paying, right? Okay. Paying to advertise to you, whatever. It's like these conferences, you pay thousands and thousands of dollars for a ticket, and then they're like, every single thing is sponsored, and there's all the content is people who paid to be on stage, and your name is being— and your email address are being sold to 50,000 different sponsors, and they're minimizing the quality of the food and the, and the environment and everything. You just feel like it— the whole thing is like a max— a margin maximization, um, exercise. And, um, so I just, I find that whole thing gross. In, in fact, the, the part of it that I find grossest actually is, um, the paying for people to be on stage thing, because I value my attention so highly. Like, this is, I mean, it's some combination of arrogance and laziness, whatever. Like, I really don't like people forcing me to pay attention to things that I do not want to pay attention to. And so when I'm sat in one of those conference rooms rooms and there's some panel up there and they've clearly paid to be there and it's like substandard in terms of the quality of the content, it makes me like irrationally angry. I just, I, it, because it's, I'm like, I've paid to be here and you've hijacked and sold my attention. And like, that's just, it's like among the worst things that you could do to me. So, um, anyway, so, so the way that I think about Reconvene is just basically like, we're not gonna do any of that. It's not gonna be profit profit maximizing, and that's okay. Like, we, you know, we, um, I think we're charging $4,000 this year for tickets with discounts for people who came previously. Um, and that allows us to spend a lot of money on making a really awesome event, uh, and still have it be profitable. I mean, it's not like wildly profitable, but it's profitable enough that it's like worth my time and the time of my wife who does the logistics, uh, and her— and she has some people who work for her doing that. So the whole— I'm not doing it as charity. It's— we make some money. It's not an insane amount of money, but it's enough to make it worth our while to do it. Um, but, but there are, um, there are some major benefits to being the convener of one of these things that are over and above the money involved. Like, you just meet a whole bunch of interesting people. You have interesting people who want to come and who want to speak, and it opens up whole array of opportunities and potential partnerships and all that stuff that are separate from the dollars.

Yeah, that's really interesting. Um, so I— no, I, I'm not saying that's really interesting because it's not. It's actually really interesting. I just hope that didn't come across the wrong way. Um, yeah, I love, I love the meta kind of benefit that people get, you know, like out of that kind of networking thing. It's also one of the things that I I have two main frustrations with conferences, especially when they get larger, is what you're talking— the byproduct of what you're talking about, where like there ends up being like a green room where the special people get invited and everybody else doesn't. And I think you start to see that necessarily when conferences get bigger, right? Like you can't— there's a special speaker room and like people are sequestered. And I saw that like at the Berkshire Hathaway annual meeting. That's, that's there. To some extent that happened at Capital Camp a little bit where like some of those people were just kind of so isolated. I'm also like a really sucky person to go up to a famous person and be like, hello, you're famous. I would like to talk to you. Like, I just can't do it. I'd rather just talk to a normal person.

Well, I'll tell you the thing that, the thing that really impressed me about the first Capital Camp, really like the thing that blew me away was watching these speakers who they had really, I don't know who spoke this year. The first year Capital Camp, it was like a murderer's, just like really great people, murderer's row. And like, they would come off the stage and then like go into the audience and sit down and wait to watch the next speaker. And I had never seen that at a conference before. Usually it's like the panelists come and then they're trying to get the hell out of there as quickly as they can to go on to their next thing. And it was just like, no, the quality of the event was so high that the other speakers wanted to hear what the other speakers had to say. So that's kind of— That was really inspiring to me, and that's kind of like what we're aiming for with Reconvene. I think we succeeded in that last year, and I'm just not interested in running an event where there's that green room type thing that you're talking about. We maxed it at 250 people for that reason. Like, we just won't— I don't want to be running like a mass conference. I want to be running, you know, a place where people can make real relationships.

Yeah. And look, I had a great time at Capital Camp, but I think, I think what you're— what I saw this time is as conferences get bigger, like going from 250 to 400, like there were a lot of those 150 people that were there that it was basically my Twitter DMs. It was just like, hey, give me free advice on stuff and whatever. So, you know, there's a trade-off there between, between scale and kind of quality. That you have. Um, the thing that I like— oh, go ahead.

Sorry, no, I mean, I just wanted the one— the example. And this is my friend, um, Jim Burden, who, uh, was actually the person who introduced me both to Capital Camp and to, uh, Finance Twitter. He was just like, Allen Company conference. Like, that's, that's the mindset you want to have. And for people who don't know, uh, Allen Company is a media and tech-focused investment bank that puts on just like the most epic event, uh, uh, in the media business every year. And they just have like Rupert Murdochs and, you know, Mark Zuckerberg and you name it. It's like literally the best of the best. And it's like they're not— they don't monetize that by selling a lot of tickets. It's they, they, they just focus on really, really, really high quality, both I imagine the programming and also the attendees. And then— and that's— anyway, that's, that's the mental model that I have for what I'm trying to do with Reconvene.

Yeah, I dig it. Um, yeah, the thing— and on the positive note, the thing that they implemented at Capital Camp this year that I like the most is something that I've seen at Collision. I tweeted about the other day— is, is basically having these small group roundtables that were led by experts in that particular niche. Like, I think it's the exact opposite of what you're talking about with the, you know, the, the paid advertising stuff. Like, It's, it's people. It's actually the only real-world replication of Twitter I've ever seen. And like, those two hour-long sessions that I went to were the best, like, parts of the whole thing. And then like, I went and took an hour-long walk with Jesse Pujji. Like, that was— those are the highlights, right? And he's really funny. Um, there were, you know, um, there were a handful of Sikh Americans there, and they're like some of my favoritest people, just because the attitude is just so peaceful and calm. Like, if I had to pick like a culture to go join besides whatever the hell culture I'm in right now, which whatever, I'll just stick to like, like, that's it. Like, those guys are just, they're just so sweet, like, just so nice, so kind, so positive. And I think a lot of it comes from, you know, the religion has got that level of equality, and I think it's just super cool.

But anyway, like, I think badass business people too. There's a lot of, a lot of, I think trucking companies in particular, but there's just a lot of very, very successful Sikh business owners. It's really cool to see.

Uh, it's funny, if you talk to somebody who's like a successful person with the last name Singh wearing a turban and you like start to mention some successful Singh in like another town, they're like, oh yeah, I know him, his name's Gopal. Like, it's just like, yeah, like we hang out. Like, yeah. So it's super—

no, we're doing— just to, to, uh, to just follow on from that point, one of the pieces of feedback that we got from the first, uh, uh, reconvene was that, um, that it relied too much on serendipity. That like, yeah, like it's good for extroverts because you just go and start talking to people, but for introverts or people who just didn't get lucky, that there wasn't enough sort of structured, um, introduction. So what we're doing is, um, basically hand-curating one of the dinners and one of the lunches and putting together small— we're doing— we're surveying all the attendees about what their interests are, and then just literally like playing Tetris and putting together groups that we think would be interesting so that people come away with those, uh, having had those real, those opportunities to, to make like real relationships.

Yeah, I dig it. Well, and it sounds like people have so many options to what they can go to. So like charging more and giving them a higher quality thing, like that's just a virtuous cycle. Like, I really like that. Um, so you and I put together kind of a list of stuff we want to talk about today, and then One I definitely wanted to talk about before we finish is you mentioned you highlighted advice for people starting out, and I left that very vague. So when you saw that, what did you— what did you think I was talking— what kind of people do you think I'm talking about?

Oh, I don't know. I mean, when I hear that, I kind of like immediately I start thinking about like, you know, 22-year-olds or whatever.

Yeah.

But what were you talking about? That?

I don't know, I can't remember. Uh, well, I think a good thing, like, let's do, let's do first, I am curious about your advice for people that want to start out in re— that want to have a career in real estate private equity. Like, what is your, what is your like straight line, most of you should do this advice for somebody that wants to become a real estate private equity professional and do what you do for a career?

Yeah, so there's, there's two real pathways, and it really depends on if you are, like, what your academic background is. So a really good thing to do if you are coming from a really good university slash business school is to go work at like Blackstone or something. Like, there's, um, there— it's really hard to beat getting a good, solid, uh, institutional investing background, um, before going off on your own. Because even if you don't you're, you're probably not going to do deals the, the size that Blackstone's going to do or whatever, but just like, um, getting— I had the privilege of doing a couple of years of, uh, uh, media and software M&A at the beginning of my career. It's being exposed to like a really professional environment where people demand really high-quality work quickly. You have to work really hard. You can't screw up. There's real money on the line. Like, that's a very good way to get get socialized into the business world generally. So if you have that opportunity to go spend a couple years working at like a really high-quality shop with a good brand name, like, I think that that's a good thing to do. Um, there's actually— there's a lot of people like me when I got into real estate who didn't have that opportunity. Like, I couldn't— I was, I was 27, 28. Like, I had already had like a weird background by then. Like, there was no way I was gonna get a job at Blackstone. Um, so, so for that kind of person, I really do think that brokerage is, is the right place to start in Los Angeles because of the weird nature of the way we started the conversation, that kind of very fragmented zoning and therefore small assets. And the fact that we have a very active MLS means that you can build a business representing buyers. Because listing brokers will sell— will share, uh, half of their listing commission with the broker representing the buyer. And, um, that is an incredible way to learn. We, we used to, when we were growing our firm before we could raise enough capital, we, we did it. We actually built, um, a small, uh, 100% buy-side firm, so just representing like reasonably wealthy people who wanted to buy a fourplex. You know, or 8 units or whatever, like small apartment buildings. And, um, it's just an incredible way to learn because you get a lot of reps. Like, we— I think we did like 50 or more deals over the course of 3 years, like separately from the deals that we were buying, just like brokering. So you see, you just get a lot of at-bats. And because you're representing the buyer, you have to think in terms of Is this a good deal? What are the risks? How do I protect my client from doing something stupid? And those are the same thought processes that you need to be a good real estate private equity operator. So it's what I was saying before about how brokerage can be like a little bit of a bad way to start. That's representing the sellers. Representing the buyers is actually an amazing way to start. And if you, if you happen to work in a market or in an asset class where that is possible and you can get paid to rep buyers, I believe that that That is probably the best kind of non-institutional training that you can get.

Yeah, dig it. That's a great answer. Good thing I'm not 22, otherwise I'd probably do it. So what would your answer be to the same question, but for just people getting started straight out of college, like in their early 20s?

Well, that's a good thing to do. I mean, you go work for another broker. I mean, you go get licensed. You can get licensed in California with like, uh, it takes like 3 months. You take the classes for $200 online or whatever, um, and you can just go— you, you want to find the, the key thing. I think people get— if you want to be a broker, go find the biggest brokerage shops that are doing the best deals and whatever. If you want to, if you want to ultimately end up in real estate private equity, what matters more than anything else is reps. And so what you're looking for, I think, is like a smaller entrepreneurial shop, like like a smaller entrepreneurial brokerage firm that's doing a lot of deals with investors. Because those are the type of deals that you are likely going to start out doing when you get in the business. Like, it doesn't— it's sort of like you're gonna— first you're gonna help a bunch of other people buy a bunch of fourplexes and 8-unit buildings, whatever. And then once you've done 25 of them and you're caught, you're like in the deal flow, and you know all the other brokers, and you know how these things work, and you've met a good inspector, and you know the lenders because you've helped your buyers work with the lenders, and like you kind of now, you know, the whole market and you're just constantly seeing the deals and then eventually you will spot one and you're like, this is good. I should— this is— this one is worth doing. And you've got the knowledge and the people and everything to execute it successfully. P.S. the people who you represented as buyers, but those rich people who are buying fourplexes and you were helping them, like, guess who's likely to invest in your first deal? Like, you just— your job is to go meet a bunch of smart, rich people who are interested in investing in real estate. Like, that's your, that's your list of initial investors right there. Yeah.

So get it. So get on there. Yeah.

Yeah.

Get on the buy side. Get, get exposed to a lot of reps so you see what's good and bad and learn how to underwrite deals and then develop relationships and learn how to talk to people that are doing these kind of deals from an investment side. Yeah, totally.

Yeah, I know. And the thing is, they're going to tell you when you're, when you're brokering, you're going to be like, you're going to bring people deals that you think they should buy and they're going to explain to you why they are or are not good deals. They're going to be like, this is why I don't like this. This is why I do like this. And you just get to hear a bunch of really smart people explain to you what they think, you know, experienced, smart people explain to you what their criteria are and why. Like, like, it's really— it's almost like tough to imagine a better way to get started than that.

Yeah, well, I think it's really underrated how much raising money for a deal or trying to sell something to someone who wants to buy it— it's like the world's best free consulting. Like, because everybody has skin in the game, they're not like a hired gun, they're trying to tell you what you want to hear. Like, they really are making a decision, and then you just have to listen closely and understand Okay, is that a good deal or not? And these people are like, it's just like free consulting. It's like, amazing. Yeah.

No, they're smart people. They've done a bunch of reps. They've done a bunch of deals. We had our, our biggest management client. We did a ton of fee development for them. And these guys are super experienced, actually office developers who are getting into multifamily. And we did— I probably did 20 or 30, probably like 20 deals with them. And it was just, it was like getting— going to graduate school with like real estate private equity operators. We were like hearing how they underwrote and thought about things and whatever, and just like sitting there taking notes. Like, here's, here's how we would like the pro forma presented to us. Okay, that's how you make a pro forma. Like, it's just, um, it's impossible to understate how valuable that, that kind of experience is.

Yeah, super cool. Well, cool, man. Well, thanks for being here so much. It's been great to connect with you again and record our conversation, so really appreciate it. It, um, and learned a lot about real estate private equity.

It—

I do have an admission for you. I knew basically nothing about real estate private equity until like 3 years ago when I joined Twitter. I totally learned. Everybody said— and now I'm like, I get tagged on everybody's list for real estate private equity.

I'm like, uh, experience doing deals. Uh, uh, maybe you weren't thinking about them as private equity. Well, you actually do private equity deals. Maybe you weren't thinking about real estate deals in the same way. But I mean, it's the same, same skill set. Find an interesting opportunity, convince a bunch of other people that they should be interested too, put together a group, do it. I mean, that's what we're all doing here.

That is it. Everything gets easier when you have a deal. That's all. That's the whole key. That's the whole key. That's it. Everybody wants to worry about everything else. I'm like, just shut up and go find a deal. When you have a deal, everything else is easy. It all shows up.

Amen.

Cool, man. Well, so Reconvene, how could people find Reconvene?

Yeah, I mean, uh, let's see. So it's, uh, reconvene.com, R-E slash convene, C-O-N-V-E-N-E dot com. Uh, that's for the waitlist and we'll let them on. And, uh, and then, you know, since we're plugging things, uh, go follow me on Twitter. It's @MosesKagan, K-A-G-A-N, and, uh, you can hear more of my daily pontificating.

It's— your strategy is super interesting on Twitter. I really admire it. Yeah, you do.

Thank you.

Your threads are 2 tweets long. Super genius. As a guy writing 14-tweet threads, it seems a lot better.

Well, I think your strategy works. It's worked. It's worked amazingly well. You should be proud of it. I write one thing and then I'm like, oh shit, I didn't explain this part clearly enough. And then I like write a clarification underneath it basically is how it happens.

I have this goal of getting to 150,000 followers this year, which by the way, I need to get 49,600 more to get there. Uh, not, not that I'm counting, but I just broke 100.4 thousand. Uh, but I'm— it's, it's starting to feel like a total vanity metric. And I'm— I think I need to get to the 150 because I put it out there. But like, I would have much rather gone for something like, you know, an impressions metric, you know, measurement or something like that, than followers, because it's just, it's just a vanity metric.

I, I have— I'm, I think I'm very sensitive to how Twitter works. Um, I'm just interested in language and all that stuff. Um, I basically decided early, early on that while— that I care very, very much about follower quality and not very much about quantity. And, um, so I'm just like, I've just, I've sort of made that my North Star with respect on that platform. I'm just gonna like say I'm I'm not going to dumb down what I write. I'm not going to get involved in controversy. I'm not going to, you know, and it, and it means that it doesn't grow as quickly, but I feel like I, I, you know, it just, the quality of the relationships that I've built as a result of my time on that platform have just like totally transformed my life. And so it's, it's, uh, anyway, so, so for me, that's, that's how I think about it.

Yeah. That sounds a lot better than my approach.

Well, I mean, I don't know. You're doing great.

So we'll see. Oh, I'm gonna get to 150 and then I'm pretty sure I'm not gonna care. I'm gonna stop caring about it. But it's like, okay, well, now that I've had this epiphany that follower count is a vanity metric, then— but at the same time I put out this goal that, hey, I'm gonna get to 150 this year, like, okay, like, I'm sorry, the, the I gotta do it is, is gonna win. So yeah, more threads about 10 tips to do better in your next job interview.

Allison, I like your— I like your threads very much. There's a lot of, uh, at least I know that you actually have done some stuff. Uh, some of the people who do— who, who write threads, I'm not sure have done anything. But you, you're— it's very clear, everything that you write, it comes through that you've, uh, had a lot of experience what you're doing. And I, I think they are extremely valuable. I read them happily. Cool.

I appreciate it. I appreciate it. All right, man, thanks for doing this. And, uh, I appreciate your friendship. And, um, really, really cool watching what everything you're doing. And thanks for teaching me some stuff today.

Thank you, Michael. Appreciate it.