I recently had the pleasure of attending The Family Office Club Mastermind event in Los Angeles.
However, before I dive into some of my key takeaways from the event, let me take a moment to explain what a family office is.
A Family Office is an organization set up to manage the wealth and assets of the ultra-wealthy with the goal of growing the assets over time as well as passing on the family values across generations. Such Office could be in charge of managing the assets of a single family or multiple families.
I was introduced to this event through a fellow investor and was pleased that I was able to join.
Let’s dive in!
Your financial IQ must scale faster than wealth or it will find an unpleasant surprise
This message resonated with me because education is a key first step every investor should take as they begin their investing journey or before they expand into a new asset class. There are no shortcuts. Real estate is a dynamic field, impacted both by macro and micro economic and market factors. As such, it is also imperative to continuously learn in order to make informed investment decisions.
I myself consume a ton of information via books, podcasts, meet ups, conferences, investor forums not only for my own personal growth and development, but also because I want to be a resource for my passive investing partners.
I am on a mission to create educated and empowered investors who make savvy investment decisions – this is why I dedicate a lot of time creating educational content for my investor community.
Do not underestimate the power of focus
Especially at the beginning of one’s investing journey, it is easy to fall prey to the shiny object syndrome. And while it is important to diversify in the long run, if one jumps around a variety of assets classes or markets, it becomes challenging to learn an asset class or market well. This is especially relevant for operators who are expected to be the subject matter experts on the asset class they syndicate or the market they syndicate in.
Our firm specializes in stable value add cash flowing multifamily 150+/- unit apartments in the South East. We also partner only with carefully vetted handful operators (vs. many). That is not to say that we would not expand geographically or pursue other business models related to multifmaily (e.g. new construction, build to rent, etc.) in the future. However, for the time being we are intentionally choosing to be focused on the areas above as that is how we serve our passive investing partners best.
Find your niche and what makes you unique
From a family office/passive investor perspective, it is important to define your goals and investment criteria (design the rules of your game) as well as choose the unique game you want to play (define your cause – charity, health, adventure, travel, etc.). Being clear and focused on your criteria is key in selecting investments that serve your long term goals best.
One of the aspects that makes our firm unique is leveraging my former commercial lender background in thoroughly vetting deals as well as the underlying deal structure and financials (underwriting). We have intentionally chosen to adhere to underwriting fundamentals and doing only the deals where the numbers make sense and meet the criteria of our investor community vs. focusing on volume and doing many deals at all cost. This approach has served us well based on the performance of our syndications in the current turbulent economic environment.
Build relationships
This is still a people’s business after all built on relationships (hopefully lifelong) and not transactions. I personally cringe when I meet sponsors whose first question is about money how much I can bring to the table. No money can cover the damage of getting into bad business relationships.
It is also important to trust but verify and allocating trust randomly (that was described as a $250K mistake; in prior articles I shared some of the questions I ask when vetting sponsors).
Create an If I Die document
This may sound somber but I found the topic practical and useful. It basically means creating a document where you outline for your loved ones how to access important documents/passwords/policies/social media accounts they would need to reach should you unexpectedly pass.
Top 5 Mistakes Private Investors Make
The wealth advisor team from Oppenheimer also discussed the Top 5 Mistakes Private Investors Make, which include: (1) Lack of diversification; (2) Timing the market; (3) Emotional decision making/ lacking discipline; (4) Ignoring fees and costs; (5) Lack of research and due diligence (do you see a common theme here?)
Lastly, the founder of The Family Office Club, Richard C. Wilson, shared so many more golden nuggets but one last one I want to share with you is: “Strive to work harder at working smarter AND work hard because you love what you do.”
I feel blessed to be able to do what I love and now I am on a mission to help other high achieving professionals and business owners create more optionality in their lives via passive investing in apartments, so they can enjoy a life of financial freedom and abundance.
Should you have any questions or want to learn more about real estate investing or for an overview of our target markets, please reach out to info@dbacapitalgroup.com.
Disclaimer: The information presented does not constitute legal, accounting, tax, or individually tailored investment advice. Past results do not represent or guarantee future performance.