WS1978 Building a Predictable Passive Investment Portfolio | Tom Dunkel

Find deals that match your goals. You know, run through the safe method. It's, it really is that simple. But you got to do something. And so I would say, you know, that that's one of the things we really like about the safe method is we think it's pretty, it gives someone some very easily followed steps so they can break that inertia and move forward.

This is your daily real estate syndication show. I'm your host Whitney Sewell. We're continuing our conversation today with our guest Tom Dunkel. You know, he's the managing director and chief investment officer at Bell Road Bellrose Storage Group. But today we're going to dive into even more steps that you know as a passive investor ways for you to build a predictable portfolio. And I, I love these steps as many of this I wish I had known years ago as well. And this could again, few of these, they seem simple but most people don't do them unfortunately. And then they end up losing 50 or $100,000 and, and that's hard to swallow when you could have just taken one of these steps and, and prevented that. Tom, welcome back to the show. Looking forward to diving back in. I want to remind the sponsors to listen to yesterday's segment where Tom laid out a method that I feel like is could save many passive investors thousands of dollars. And I think it's so valuable and I mean just a very simple thing that is not done typically. So I want you to go back and listen to yesterday's segment. If you didn't. Today we're going to dive further into their business and, and building a pred. Predictable portfolio and how they've done this. And Tom, welcome back.

Hey Whitney, so much fun. Thanks. This is great.

Yeah, honored to have you back and continue the conversation. Well, Tom, you know you and I briefly talked about it but just the, these steps to building a predictable portfolio, how you've done that, how you recommend doing that with your experience, I'm, I'm all ears. I know the listeners are as well, but let's dive in there.

Sure, yeah. So, yeah, so yesterday we talked about the SAFE method. Safe. And that's part of our three step plan. But it really starts before that, right before that. Step one is as an investor which is, I mean it's, that's what I think of myself as an investor. Right. I've invested in lots of different asset classes over the years. We happen to be building a business in self storage. But guess what, I still invest in multifamily. I still invest in short term rentals I still invest in other stuff. We're just happen to be building a business in self storage, which we, which we love. But when you're starting out, when you're building that predictable portfolio, number one thing is you got to have your goals. Like what is it that you're trying to accomplish with your investing? Some people are more cash flow oriented. You know, they're trying to get out of their 9 to 5 job or you know, maybe they're at a point in their career where they're, you know, they're wanting to leave the work workforce entirely. So you know, those are going to be cash flow investors, right? They're looking to replace their income, they're looking to gain that financial freedom where their passive income is exceeding their monthly expenses. Or there might be someone like my son who's 21, he's got a long Runway in his investing career. So he's going to be more growth minded and he has a, and he has a great career he's heading into. So he's going to be making money but he's probably going to be more interested in like a growth perspective. Right. And then other people are, you know, maybe a little bit skittish about what's happening in the world and you know, wars and all this other stuff. And so they might be thinking, hey, you know, I really just want to put my money someplace where it's going to be safest. So capital preservation might be a big goal for them, but at the end of the day, Whitney, and a lot of these are, you know, it's a combination of things that might shift and they're going to shift over time. So you need to maybe start out with some goals today. But you know, you got to revisit them once a year and just make sure that, you know, they're still relevant goals to what you're, what you're trying to accomplish. A lot of investors, especially high net worth or accredited investors that we work with, you know, they've gotten, they've already achieved a certain level of success, right? And those investors, you know, a lot of times they start out, you know, stocks, bonds and mutual funds, they're doing their 401k, they're doing their, you know, know, mix of, you know, growth and you know, funds and value funds and all this stuff. Well, the wealthiest investors in our country are investing in alternative assets. So maybe about half or less of their portfolios are traditional stocks, bonds and mutual funds. The other half is self storage, multifamily, you know, office building, you know, hotel, you Know, Right. So they have this whole retail strip centers, so they have about half of their portfolio in alternative assets and they get a lot of diversification that way. Right. Diversity, diversification, easy for me to say, is super important. You know, the wealthier you become, the more money you have and you really want to spread that around so that it stays safe. And then also tax efficiency is a big one. Right. So for your high earner, you know, commercial real estate is a fantastic vehicle to help protect your income. So you got to go through those different aspects of investing, decide in step one, you know, what are your goals? Step two.

Yeah, goals are something that I feel like, you know, as I've grown as an entrepreneur, like they changed of course. Right. You know, even through different business cycles, you know, things like that. But even for my, more recently I've tried to have even goals for my family. Right. And even your personal goals and think through that. Not just corporately. Right. Or even as a passive investor. Right. But, but I love how, you know, even when you're investing in a deal, you know, not only are you thinking about those things in safe method, which we're going to talk about again, but we talked about in detail yesterday, it's like, what are your. I love, like what am I trying to accomplish here? Because that's, even if the deal is great, the sponsor is great, all those things, it may still not achieve what you're trying the best thing for you. For you. Right.

That's great.

So love that. But totally.

Yeah, yeah, it's. And you know, hey, maybe you're, maybe you're saving for college, maybe it's retirement, maybe you're trying to get that vacation home. You know, you got to keep those things in mind as, you know, what is that you're trying to accomplish through your, through your investing.

For sure.

Okay, step two. Ready?

Ready.

Step two is go and find deals that match up with your goals in step one. So for example, this is actually a really good example. I have a, actually a really good friend of mine who I trust with money and anything else, but I don't invest with him because.

His deals aren't structured the way that matches up with my goals. So I like to go out and find other sponsors that are, that are doing things and where they're structuring deals that line up better with Michael. So it's, you know, so that's where the sponsor, he passes the sponsor, you know, test, no problem. But the way the deals are structured, I like actually like the asset. It really is the financial aspect that, that just doesn't line up with what I'm trying to do. But you know, there's all different kinds of asset classes out there. You know, there's, there's multifamily, there's self storage, there's short term rentals. And there's so many ways that these deals can be structured. Some of them are geared more towards a back end kind of profit split, right? So if you're a growth oriented investor and there's not a lot of cash flow, maybe it's a development deal. And development deals a lot of times could be good for someone who's looking for long term growth and near term tax efficiency because there's going to be a lot of losses in those early years that can be written off your taxes. I'm not a tax expert, so check with your tax expert. But that's typically what a lot of people are doing there. And then they get their big hit at the end of when the, when the property is sold or refinanced. So if that matches up with what you're looking to do, perfect, go find more of those deals. I'm actually, you know, so I'm 56, you know, I'm looking at, you know, kind of riding off in the sunset here pretty soon, which I don't think I'll ever do by the way. But I'm keep trying to convince myself but you know, I'm starting to look at, hey, going to, I want to start replacing my income or start, you know, building up my passive income more than where it already is so that I can, you know, have the luxury of, you know, going and you know, working from Key west or, or Scottsdale or something. But you, it's just, you got to go find and, and it's, it could be work, right? This is where the work comes in. With alternative investments, you got to get to know different sponsors, different asset classes. So you can find those deals that are structured the way that match up with your goals.

Is there a place like you would recommend somebody that's a brand new past investor to even go and meet some sponsors or somebody like that?

You know, there's some, there's some great conferences. I've never been, and I'm embarrassed to say because I should have been going to this, but the best ever conference, the BEC is out in Salt Lake City this coming April. And I just can't make it and I couldn't make it last year. But anyway, that's a, that's a great event where syndicators, investors, you Know, different sponsors, you know, are all kind of coming together and I gotta make a point to get out there next year, but it just hasn't worked out. But the best ever conference is a good one. Hunter Thompson puts on a great event that I was just at in Phoenix called Raise Fest. That's a great spot for, for investors and syndicators as well. And then if, if there is a particular asset class that you're really interested in, you know, go find that, that industry event. So for example, in, in April I'm going to be speaking at the iss, the Inside Self Storage World Expo out in Las Vegas. So that's another event where it's focused in on self storage. But there's going to be investors there, there's going to be sponsors there, there's going to be operators there. And so it's just kind of a nice mix of those different folks that can get to know each other on a personal basis and maybe, you know, maybe get some deals done.

Yeah, best ever. I've been to everyone except the very first one. I know, yeah, Joe really well, I've known him a long time. Joe Farrell. Good. Yeah. Also recommended. It is a great place for to meet sponsors, for meeting sponsors. There's it really turns out more high level sponsors I would say than most say your real estate conferences will, you know. Yeah, it's not focused as much on say beginner newbie type investor, you know, so a lot of, you know, a lot of actives, you know, bigger name sponsors will come and we've sponsored it a few years and whatnot. But, but great event. So couldn't. Yeah, couldn't agree with you more. I've enjoyed being there and speaking there numerous times as well. And, but.

Oh great.

All right, step three.

Step three. All right, so you've, you figured out what your goals are. You've gone out and you've identified some opportunities that look to match up with your goals. Now step three is to implement the SAFE method which we talked about yesterday. Safe, that's, that's s. Is for sponsor. You gotta ask a ton of questions of your sponsor and if you want to grab this ebook off of our website, you know, feel free to do so. It gives you a list of all the, all the qu. Not all the questions. It certainly isn't exhaustive but it gets you started to think about what do I need to be asking in these four areas. One is sponsor know who are you handing your hard earned money over to? A is for asset. What is it that you're actually investing in if you're investing in a syndication, a lot of times you're going to be buying membership interests in the LLC that owns the apartment building or that owns a self storage facility or that owns the short term rental. So you just need to know what it is that you're, that you're buying. F is for financials, you know, what are the projections look like, are they reasonable, what are the tax implications, what are the returns they're projecting, you know, all those kinds of things. And then E is for exit. How do you get out of this thing? If you participate as an investor in a syndication, your money is going to be tied up for a period of time and you're probably not going to be able to get it out of there until that exit happens. So you need to know how long your money is going to be tied up and what needs to happen for you to get your money back. So that's just. If you want to listen to more about the SAFE method, download the ebook and, or listen to the, the prior episode because we, we went into a lot more detail there.

Yeah, no, that's great. How many steps were there, Tom? Were there 23? Is that what you said? I'm just kidding. I'm just kidding.

Only four. Only four.

Step four. Just.

Oh, and just, just a, just back to the safe method real quick.

There are tons of opportunities out there for alternative investors. So if you're going through the safe method and you're starting to get answers that you don't like, just stop, just stop and go find the next opportunity. Because once you start going down this rabbit hole, you're going to be like, wow, there are tons of opportunities out here. There's a gazillion apartment operators and self storage operators and all these different operators in these different asset class. Don't ever feel like there's a scarce amount of deals out there. So just be willing to say, you know what, this deal isn't for me and go find the next one.

So I think that's rush into it. Right?

That's right. Don't rush into it. Definitely not. Okay, step four is.

Pretty simple, Whitney. Just go do it. Go do it people. Okay? Get your goals, find the deals, do your homework and go do it. This is, this has been life changing. Not and not just for me, but for investors and actually family members in particular that we work with. Quick short story.

So my dad passed away in 2004. My mom was. And then a year, you know, a couple years prior. Right. Had the big stock market crash when the Internet bubble burst. So, so my parents were trying to retire then and my dad passes away. So now here's my mom, her nest egg basically cut, you know, more or less in half, right? And at the time, you know, CDs were paying nothing, right? And, and so here's my mom really trying to figure out, like, how do I retire? You know, dad's not here. I don't want to be working till I'm 80 years old, right? So it was round about that time. So when I got fired from my corporate job in 2006, like we talked about in the prior episode, I started learning about alternative investing and lending and rental properties and self storage and apartments, stuff like that. So, so what through what I've been able to learn.

Now, you know, fast forward. It's been 20 years now since my dad passed away. My mom is still alive and kicking and cranking and very sharp. In fact, she's a wicked smart investor. She has learned, I guess through me how to look at these deals. So, like my mom's, she's ruthless now. Like she won't do a deal unless she's getting like 10 or more and she wants her cash flow payments every month and she wants that security, you know, so she does a lot of, she does a lot of private lending and such. So, you know, now she is a, she has a great lifestyle, money is not a problem for her and she thanks me all the time. And of course she's my mom, so I would do anything to help her. But we take that same kind of thought process and philosophy so that we can, we can help others in our investor community as well.

Love that. I appreciate you mentioning, even helping your mother do this. Right. You know, as you've learned so much and yeah, congratulations to her as well and making sure and doing it right. Taking steps.

Yes, we're doing it.

Yeah, that's. Yep.

She was, you know, 60 something when she started. Now she's elite, she's in her late 80s and she's still, she was on our investor webinar last night. We were pitching our latest self storage deal. She was on the webinar. I was like, hey, hi, Mom.

That's fun. That's fun. Wow. I'm sure she's proud. All right, well, Tom, I'm gonna jump to a few final questions and dive in and get your take on a few other things, but let's do it. You know, as, as everyone wants to know, right? You know, you're, you know what's going to happen right, over the next six 12, 18 months. And, and you know, what, what do you predict? And you know, I say I know. None of us know. Right. Nobody knows for sure. However, what we believe is going to happen affects what we do today. And so what do you think's going to happen? What do you predict, you know, the next 612 months for the economy and real estate and anything in between?

Sure. Well, you hit the nail on the head, Whitney. I mean, I don't know. You don't know. Nobody really knows. But what we can't do is just do nothing, right? We can't, we can't sit still and stuff our cash and a mattress because, you know, cash in a mattress just declines in value over time and it does nobody any good. So don't do that. So just, you know, look for the, you know, get your goals, find deals that match your goals. You know, run through the safe method. It's, it's really, is that simple, but you got to do something. And so I would say, you know, that that's one of the things we really like about the safe method is we think it's ready. It gives someone some very easily followed steps so they can break that inertia and move forward. I think that rates, interest. Let's talk about interest rates, right? I mean, I'm not an interest rate predicting business, but I just, I feel like inflation is going to be persistent. In fact, we just saw a headline today from the Wall Street Journal. You know, the inflation numbers came in higher than was what they were expecting. Not really what I was expecting. You know, a lot of people are saying, oh, well, you know, rates are going to be dropping and cap rates are going to be going up and you know, real estate's going to be doing great. Well, I think, yeah, long term, yes, real estate is going to be doing great this year. You know, 2024, I think it's going to be a tough year. I think 2025 is going to have, there's going to be a little more stability in the market and that's really what we need. Especially after 500 basis point increase last year. I mean, man, it just threw the real estate industry across the board, across asset classes just really into a wild and crazy time. And it, it, we can't have that. And then, so what I don't want to see is rates coming back down 500 basis points because, you know, then, you know, then property sellers aren't going to sell. So, you know, I'm just hoping we can just get some, some stability. But we're still bullish on self storage. You know, all the demand factors for self storage are there and increasing same for multifamily. You know, I think, you know, our population is growing. People need a place to live and they need a place to store their stuff. So I, I do, I am bullish on, on multifamily and self storage. And we have some niches within self storage that we're excited about as well.

Nice. I appreciate the detail, Tom. You know, Tom, what would you say is your, your best source for say, raising capital or meeting new investors right now?

You know, we kind of have a two pronged strategy. Obviously we've been at this a while. You know, We've raised over $65 million from private investors over the, you know, the history of our companies. So we do have a pretty solid, you know, what we call our warm list of investors. But I would encourage, you know, syndicators out there to, to use what we call cold outreach. Right? So, you know, get out there on social media, build your, your personal brand, you know, identify that investor avatar that you're, that you're going after and speak to them, speak to them specifically, because if you do that, you're gonna, you're gonna get a lot better results. You're gonna find your people more so than just blasting like general messages out there. I think the more specific you can be, the better. And we're starting to see those, those results here. I mean, we're, you know, I'm just a dumb finance guy, but the last couple years I've been trying to learn more about marketing and social media and that sort of thing. And you know, we're learning. You know, sometimes you win, sometimes you learn, right? So we're, we're learning what to do, what not to do. But the, I know a bunch of people who have raised a lot of money just like off of LinkedIn, for example, or off of YouTube. So one of the things I'm looking to do is pick a platform and just kind of go deep in that platform because it's, you know, it's already a full time job to do that. So to, to try to be everywhere on every platform, which, you know, we do have a presence on, on each platform, but I think it's important to, to pick one and go deep with it. You know, something that resonates with you and your message you're trying to get out there.

What are the, what's the most important metrics that you track could be personally or professionally?

Well, you know, our metrics for capital raising are, we, we look to add two new investors to our investor database every week. And I think we've been crushing that goal recently. So I think we're going to be bumping up that KPI, that key performance indicator. But yeah, we're always tracking for capital raising. You know, we're tracking how many investors, you know, we are looking at our interactions and our analytics on social media and those kinds of things. But at the end of the day it's am I raising the money that I need to close on these deals? And thankfully, the answer has been yes. And I think that boils down to just a lot of things. Right. We have a fantastic team here at Bellrose Storage Group. We do a lot of nurturing and educating of our investor list in between deals so that when a deal does come up, you know, we're ready to rock and roll and. Yeah. And just, you know, treating them like people treating, you know, trying to just help them like. I think it was like we talked earlier about helping out my mom. You know, we try to, you know, really keep that purpose, you know, front and center.

Love that. What about some habits you're disciplined about that have been proven success for you?

You know, I, I've been a. I'd say I've been a lifelong learner and I, and I've always just been curious about things and wanting to get around the right people, you know, go to the right events and things like that. I mean, that's really helped to propel me personally and propel. Propel our businesses. You know, we were talking earlier about, you know, joining different masterminds and such. I've probably, I haven't tallied it up recently. I did this a couple years ago, but I've spent well over $300,000, my own money joining masterminds, going to conferences, getting. Trying to get around the right people. Because all kinds of great magic happens when, when you're in with. Around those, those people that are, you know, just really achieving and, you know, it rubs off on you. So, you know, you want to be around those kind of people.

Yeah. I appreciate you even being willing to share the investment of that. Right. Because it. A lot of people will, I believe, oh, they can just do it without, you know, without making that kind of investment. And there are ways to meet people, but oftentimes people operating at that level that you want to push you are. Are willing to pay to be in those rooms. Right. And there's a. Adds a hurdle, right, for sure to who gets to be in there.

Yep. Yeah, I know there's some mentors of mine out there. I've followed Darren Hardy for a long time. You know, he says you should, you should be investing 10% of your earnings into your education. So going to the conferences, going to the mastermind, et cetera. And, you know, there's also a different way to think about that. It's like, let's, if you want to be making this much money, then this is 10% of that. So you, you know, this should be how much you're investing so that you can get to that, that level. So, you know, there's different ways to think, to think about that.

Love that I, I, that's challenging and I, I appreciate that. That's going to make me rethink maybe some of my goals right there.

Right? Yeah. Oh, yeah.

Yep.

It's y. You gotta buck up, man. You gotta, you gotta do what you gotta do.

What's the number one thing that's contributed to your success?

Definitely being around, being around the right people. I, I would say, I mean, if that's, that's probably the biggest thing for sure. Because when you're around the right people, you know, the ideas are just going to start flowing. You know, the connections are going to happen, the energy is going to be there, you know, the business is going to take place. You're going to attract the, you know, the money and the, and the financials and the p. And the additional people. And, and that's just, I think it just helps you to kind of snowball and leapfrog and all those other, all those other metaphors. But if you can get the right people around you and, and get a niche where you can get really good at something and get really educated and go deep in that niche, I think those are the, I know, yes, for one. But Those are the three things. I gave a, I gave a whole 50 minute talk last year at Ray's Fest in Louisville. I was on stage. That was my, that was my, my giveaway was, you know, get around the right team, find a niche, get educated. Those are the big things, the common thread in the businesses that I've built that were successful. And it also tells me why the businesses that failed fail because we didn't follow those three things.

And how do you like to give back?

You know, Whitney, I just, I love doing stuff like this. I hope the listeners out there are getting something out of our talk, you know, these last couple episodes. But, you know, at this point in my career, I feel like I've learned a lot, I've made a lot of mistakes. But I've also achieved some pretty cool stuff. And if I can just help, you know, somebody out there, you know, with a little nugget here or there and help them make their lives better, I mean that's, that's really, really important to me.

Tom, I've enjoyed spending the time with you over these couple segments here and learning from you personally. I know the listeners have as well. Very grateful for your time and experience, your willingness to share and desire to give back in that way. So, you know, just even going through those, the steps to building a predictable portfolio I think is so helpful to any investor. You know, yesterday's show and today, both these segments I feel like are just, are full of stuff that, man, I wish I had known before I started passive investing. Right. You know, years ago. I mean, I do a number of these things. I'm like, man, if I had just thought about that one thing, I may have, you know, been in a better position today.

Right.

And so great content, very knowledgeable and appreciate you very much. And so I tell the listeners how they can get in touch with you and learn more about you. But also I know you all have a deal that may potentially still have some room where not sure.

Sure. Whitney, this has been a blast. Great, great interview. Thank you so much. Yeah. So I'm Tom Dunle, Chief investment officer here at Bellrose Storage Group. B L R o s e just1l bellrose storage group.com you can find me all over Facebook and LinkedIn, maybe even Instagram. But yeah, we're, we are a value add self storage shop. So we, we have some great deals. We have one going right now which in just, in less than a week. We're already 50% committed so they'll probably be full very soon. But we have another deal in the pipeline coming up after this one. So if you, if you go to bellrose storagegroup.com you can learn about me and, and the team. You can see some of my other podcast episodes, you can see our investment thesis and how to get started with us. But more importantly, you can, you can register and become part of our inner circle investor network and by joining our portal. And that's where we are able to inform investors when a new deal comes up. So when a new deal comes out, you'll get a notification and then there's a webinar and then we're kind of off to the races raising money. But they do fill up pretty quickly. So we encourage folks to pay attention their email box and, and you know, we'll give a call or maybe a text message here or there to remind.

Folks as just so the listeners or any attorneys listening know it's a 506C deal. I did. I did confirm that before.

506C. Yes, that's right. Yeah. Compliance is very, very important.

Thank you for being with us again today. I hope that you have learned a lot from the show. Don't forget to like and subscribe. I hope you're telling your friends about the real estate syndication show and how they can also build wealth in real estate. You can also go to lifebridgecapital.com and start investing today.