00:00 Dave It's not just about creating an ROI for our investors, return on investment. It's also an ROE, a return on experience.

00:08 Lincoln Welcome to Funds That Won, where we dive into some of the world's most renowned investment funds. We'll interview investment managers across the alternative landscape and learn how they built their million and even billion dollar asset management empires. We'll explore teams, structures, strategies, and best practices in launching and running alternative investment funds. I would love just to start out by you telling me about Axia. What is Axia Partners? What do you guys do and what do you stand for?

00:39 Dave Yeah, so Axia. So, you know, originally I used to do a lot of syndications and whatnot. And then I started investing into real estate funds and I fell in love with the fund model. And specifically just because it mitigates so much risk, right? In fact, statistically, a syndication, so one address, one property is about 2.7 times more risk than investing in a diversified fund. And so, you know, all of my investors, you know, I've got, I don't know, three, almost 400 different investors now. And they're all my friends and family. It's very organic. I've never paid for lead. I've never, you know, paid for a Facebook ad or any of that stuff. And so it's all people I really care about. And I'm really proud to be able to say I've never lost a dollar in investor capital in any real estate deal I've ever done. And so, you know, in the spirit of being able to protect that reputation, I decided to launch Axia Partners, our real estate fund about two and a half years ago and found a few partners that were on the same, you know, same wavelength, same mission, same core values. And we launched Axia and it's been an incredible ride. It's been really, really fun. And so, but the main reason why was because of that diversification, lowering the risk profile. And then also, you know, on a syndication, I usually have 10 to 25 people coming in as partners on a fund. I can have, you know, basically an unlimited amount of partners and create more value and more impact. Awesome. Tell me about the products you guys invest in. Yeah. So the primary focus of Axia Partners is mitigating downside risk. And so it's commercial real estate investing with a strong focus on being recession resilient. And so the three asset types we invest in are self-storage, love self-storage, multi-family, I mean, that's been bread and butter. It's kind of where I cut my teeth in real estate. And then we also just recently added industrial warehouse, like flex warehouse space. And the reason for that is because industrial warehouse is projected to be the top performing asset across the real estate spectrum over the next five years. And so in our first offerings, we did not include industrial warehouse, but in the current fund, which is called the Value Development Fund, we included that as well. And then multi-family, I mean, that's just, you know, it's a necessity, right? People have to have shelter. Self-storage, historically over the last two recessions has been the most resilient asset class. You know, back in 08, 09, 2010, you only had about a two point drop nationwide. And so we love those asset types. They're all, you know, hard assets. They

03:12 Lincoln create strong cashflow and also great tax benefits for our partners. So are these blended products where you get exposure to all the products within one vehicle? Do you segment them out by product?

03:25 Dave What does that look like? Yeah, great question. So it is, in order to achieve that diversification. So say an investor comes in and say, Lincoln, okay, I want to put, you know, million bucks in with Axia. One allocation, you're actually getting exposure to all three asset classes, as well as, you know, different geographical diversification as well. And so not only do you get multiple assets, but also asset classes, as well as geographies. And so it really is an extreme example of true diversification. And so, you know, a lot of our partners love that because it's a way for them to be able to really kind of lowering that barrier of entry to be able to get into having exposure to all those asset classes without having

04:09 Lincoln to, you know, hit that minimum investment amount per asset class. Yeah, because traditionally, you know, funds will segment them by product set, but you wanted to have them all come together under the same roof and investors getting exposure to all of them. So any other benefits, key benefits or the rationale behind, you know, what I typically call a multi-strat fund, was it primarily diversification or were your LPs asking for it and just seemed natural or any other reasoning?

04:40 Dave You know, part of it, honestly, was probably that's what I was personally doing. And that's worked really, really well for me individually, you know, a lot of self-storage and multifamily. Like that was my pedigree, if you will, my resume. And so that carried over a lot. And a lot of my friends, again, my investors, my social networks, my friends, right. They wanted that same type of exposure, that same type of cash flow, the lifestyle that they saw that I created. And so I would say mainly it was based on, I'd say number one was based on the fact that the diversification, like we don't lose money, no matter what. Like Warren Buffett says, rule number one investing is don't lose your money. Rule number two is don't forget rule number one. Right. So no matter what. And what I realized about myself is I hate losing more than I love winning. You know, and I love winning, but I hate losing. And so the initial approach was, hey, how do we make sure we can mitigate downside risk? This was in 2021, where the markets were pretty frothy, you know, and it was, we were, you know, towards the, you know, the top end of the market cycle. And so, like, hey, how can we create, you know, strong risk mitigation, but still create really strong yields for our partners? And so that was the kind of the core question behind it. And, but to answer your question, so it was diversification. It was the fact that we can create access to so many different research, research and asset types. And then, I mean, I think that's probably the main, it's based on demand. You know, as a sponsor, I love to ask my investors, hey, you know, what are you looking for? You know, what, you know, what are your investment objectives? You know, how can I create maximum value for you? So I was just listening to what,

06:18 Lincoln you know, what the market wanted. Did you get resistance from LPs as you were taking that out? You said you're listening to your friends, but did any of them resist about, you know, only wanting exposure to multifamily or having a prior bad experience with self storage? And did that, you know, muddy the waters in terms of the offering at all?

06:35 Dave Yeah, it's a great question. The answer is no. I got very, very little pushback on that. What I did realize though, is, you know, and I was syndicating previous to that, right, a lot of big multifamily across the country, the top golf we brought in here in Yosette County. I've been there several times. I think it'd be every time I go there. Nice. Yeah. Yeah. My partners and I, that was a, that was a really fun project, you know, syndication and project, but you know, some inland retail, you know, kind of the whole gamut of different commercial real estate assets. And I love that syndication model. And so when I switched over to the fund model, there were a few, you know, probably a few dozen investors that actually didn't like the fund model as well as an actual syndication. I'd say primarily because in a syndication, you can see the underlying asset, you know, what it is, you can, you can, you can visualize it. And so, whereas in a fund, you're generally investing more so in the investment thesis and the general partners and their competence. And so, you know, it's more like betting on the jockey versus the horse. Yeah. And, but, but on the flip side, I've also had dozens of investors come in that actually love the fund model because of the diversification it creates. And so, you know, it's just, it's not a fit for everyone. Yeah. But I would say it was a pretty even trade-off between those that like, you know, direct project level investments versus a

07:57 Lincoln fund investment. Oh, that's awesome. Well, I'd love, before we get too deep into the weeds on the fund, I'd like to take a step back and, you know, talk about, you know, how you kind of got up to this point in your career of, you know, having a, how much do you have under management, by the way? We have about a hundred and, it's a little under a hundred, about 130, 130 million. 130 million AUM for a real estate fund. That's awesome. So how did you, how did you get to this point? Where did you get your start in real estate? And I'd love to kind of take a step back a little

08:27 Dave bit. You bet. So I grew up in a very, very low income home right here in Utah, Manside, Utah. And, you know, I didn't really have much to speak of and kind of a, you know, broken home. And I just remember, you know, I was committed to doing whatever it took to reset the standard and to break through all of that and create an incredible quality of life for my family and my future family. And so I was going to Snow College and they had a recruiting booth set up to go out and sell home security systems. And so next thing you know, I knew it was going to be hard, but I saw it as an opportunity to not only get ahead financially, but to learn a lot of, you know, life skills, you know. And so next thing you know, I'm out in Chicago, Illinois, doing the hardest thing I've ever done in my life. And I failed miserably at it for the first, you know, month or two. And it's a long story, but 80% of my team quit. It was so hard. Lincoln, like, I don't know if you ever did summer sales. I did. You did. Yeah. So, you know, it's not for the faint of heart. It's not the easiest way to make a dollar, but, you know, I was able to make it through that summer and I made $31,000, which for me was life-changing. It was more than my parents ever made. And, you know, it was a, even to this day, I said that's the most important money I've ever made in my life. Because it was enough to come back to next year as a manager. And I ran the top, you know, first year man, team in the first, top first year team in the company made $156,000 that year, which was probably the second most important money in my life because it broke all those limiting police systems. You know, if you asked me when I was a kid or even as a young adult, like best case scenario, what am I able to make? And it would have been, you know, a hundred thousand dollars. Yeah. And to be able to blow through that my second year was really incredible. And then came back next year, you know, made a quarter million. Then next year, you know, half million just kind of grew the career from there. And so that's where, you know, that, that earning opportunity really gave me the fuel to be able to get aggressive investing in real estate. And so I went to my CPA after that second year, the $156,000. And I said, Hey, you know, what are all of your wealthy clients doing to invest into, you know, mitigate tax burden? Because I felt I was wealthy, right? To me, that was like, that's pretty incredible. And my CPA said they either invest in businesses or in real estate. And I thought, Hey, you know what? Real estate sounds, sounds fun. I don't know anything about it, but I'm going to become a student of the game. And I'm just going to figure this out. And so I just started, you know, trying to get proximity to people that knew more about real estate. I really believe there's power in proximity. And so just being around people that are actually doing what you want to be doing is, is so empowering and motivating, you know, it's one thing to read about it. It was to a podcast, but to be able to like sit with somebody and look at, you know, in the wider their eyes and be able to hear their story and how they did what they did. And I was like, Hey, if you can do this, like it can't be that hard, you know? And so it's been really powerful for me. But yeah, I just committed to learning about it. The next year I was able to buy a few homes that were short sells at the, at the auction. I'm going to summarize to keep it quick here, but I bought four town homes that were a hundred thousand dollars each paid all cash for that. Right. And so that's how I started off. So for those town homes, a few years later, they depreciated, you know, doubled in value. And so I do what's called a 1031 exchange. Right. So I took those four assets and 1031 exchange into four, four plexes with no additional cash out of pocket. Just that equity was enough of a down payment on the four plexes. So I went from four doors to 16 doors. Three years later, those four plexes that had appreciated about almost a quarter million dollars each. So the exact same thing. I 1031 exchanged each one of those individual four plexes into three new four plexes. Right. So now I have 12 four plexes again, no cash out of pocket. And then, you know, fast forward a few more years and the market's been amazingly, you know, it's been incredible. Right. So a few years later, I was able to take, you know, sell two four plexes and move that into a 20 plex. And then a few other four plexes into it too. Just 1031. It's really incredible. I love sharing that story because a lot of people are like, they want to scale and like, Hey, you know, how do you have ownership in over, you know, 1200 doors across the country? And it's actually, I call it the velocity of money and just paying attention to your equity in your assets. And 1031 exchange is such an incredible, you know, tax shelter, if you will, a tax tool to be able to really expand and grow portfolio. And yes, you're pushing, you know, you're kicking that can down the road on the taxes, but with depreciation recapture. But if I keep 1031 exchanging, I'm just going to continue to keep doing the same thing and get bigger and bigger and bigger and bigger assets. And what's really crazy is right now with the current United States tax code is, you know, when I pass away, my children actually would, you know, would receive my entire portfolio of real estate with a step up basis. And so they actually don't have to have any recapture depreciation. So I can literally kick that can down the road and they, you know, get this entire, this, this, this, this, this hopefully this empire real estate with no tax liability tied to it. And so anyway, that 1031 change has been really, really incredible, but yeah, so another goal in my life, a motto has always been always do bigger deals than yesterday. And so, you know, the four fluxes were fun. And then, you know, I started getting a smaller multifamily and then a large multifamily. And that was a progression there. After having done about a dozen of those, I was like, Hey, you know what, what's next. And for me, that was to launch a fund. And so that was kind

14:08 Lincoln of the progression there. What's up guys. If you want to learn more about how to run an investment fund, how to start an investment fund, how they're structured, how I became a fund manager, just visit our YouTube channel for more free value. So you, how much in real estate assets, if you don't mind me asking, did you have when you started taking on other people's money to do deals?

14:29 Dave Great question. I haven't actually tried to quantify that. What I did quantify very clearly was, I really wanted financial freedom, which I define as having a passive recurring income to pay for your family's cost of living. And so when I was 30 years old, I remember very clearly, I was on a Sunday, I sat down in my home office and I said, Hey, I've been talking about financial freedom for a long time. There's a big difference between wanting something and being committed to it. And so I sat down for four hours, got a spreadsheet out and I just tracked out exactly what I needed to do to be able to create that financial freedom. And it's actually a very simple equation. You know, take a spreadsheet and it's, you know, how much money do you need? Let's say it's a quarter of a million dollars a year. Next line item is what's my current passive income. Say you have $50,000 coming in from a town home or whatever. And the next line item is, you know, what's the gap there? So $200,000. And the next line item is how many years are you committed to investing to create this true financial freedom? And for me, it was 10 years. And so that comes out to, I just need to have $20,000 of additional passive income per year to achieve true financial freedom. And so the next step was, okay, well, how do I want to create that passive income? And so the numbers came out to be 40 rental properties. That's what I needed to get to. And so my mantra became 40 by 40, right? So 40 rental properties by age 40. And I internalized that, made it super important to me. I changed all my passwords, my, you know, my home screen on my phone, everything was 40 by 40. And which by the way, there's real power that comes from writing those type of goals down and having that level of clarity and intentionality behind it. And so I was able to hit that goal when I was 36. And it's actually when I retired from my career in door to ourselves and went full-time in real estate. And I reset that goal from 40 by 40 to a thousand by 40. Cause at that point I had some confidence and some competence and I had a team of advisors and I learned a lot. And so reset that goal to a thousand ownership and a thousand doors by 40. I actually hit that goal one month before I turned 41. So, but again, she's writing it down. It's really, really powerful. And it's not just writing it down, but it's the intention now you tie to it, right? It's not just another zero, another property. It's the freedom that we get from that. It's the quality of life for my children. You know, it's the experiences I can go and create for me and my family and the people I love and I care about. And so I really feel like the more you can tie purpose to our financial goals, not only is it easier to hit those goals, but it's actually more fun. It's more meaningful because there's purpose. It's not just about

17:18 Lincoln another, another dollar. Yeah. Well, that's awesome. And so then 41 is when, or no, when did you launch Axia? 40, yeah, four years old. Yeah, about 40 years old. And so tell me, talk to me a little bit about that. How did you identify your partners there? How did you just get that started and paint

17:38 Dave the vision and objective for Axia? So again, I explained why I like the fun model, right? So that's personally best and it's made a lot of sense. And, and again, you know, I foresaw a lot of these choppy waters that we're seeing now in the markets. And so how can we proactively navigate these waters? That's the best we can. And then just some like-minded people that were actually thinking similarly that wanted to go into the fun world. And a lot of those guys rushing in the same, the same circles. A few of them came from Vivint, Vivint solar as well. And, and another partner was one of the gentlemen that I've done a lot of business with previously, a lot of investments. And so it was just very organic. You know, it's interesting. You call it a lot of attraction. I call it, but you know, when you know what you really want, it just seems to come together pretty naturally. I will say it's very, very important though. You choose the right partners. I feel like in business, you know, business partnership is actually, I mean, it's, it can be harder than like an actual marriage sometimes. And so you really have to be careful with, with your partners. I'm grateful for the partners that we have on our team. It's incredible. It's, you know, I get the question all the time, like, Hey, why did you stop being a syndicator and go into, you know, fund management role? And I feel like you can go fast, try yourself. You can go far with the team. You know, it really created a lot of impact. You got to have a team around you be able to, uh, yeah, just go build together. And frankly, it's a lot more fun because you have, you know, people, you have a sounding board, you have an actual team where there's synergy and collaboration along the way. So, um, yeah, we teamed up and, you know, I'm proud to say we, we've never had one employee that we've lost from day one. We've actually added on a few strategic partners and including Brandon Fugal. Everybody knows, everybody knows Brandon's name. Like you literally can't drive down, you know, the freeway without seeing Brandon's name everywhere. And so we're honored to have him as a partner, uh, in our, in our current fund and looking forward to, uh, a few additional offers in the future with Brandon. Um, you know, Adam Long, I mean, he's probably the smartest guy I know, you know, he's a Stanford, uh, top of his class and, uh, Harvard, just, just very, very intelligent, uh, and competent partners. And that's really, really important. And so, yeah, looking forward, um, we're looking, so we're on our, our third offering right now, and we're also doing an SPV. And by the way, we, we talked about funds quite a bit. I mentioned how some investors like those direct investments or like a syndication. And so what we're actually doing nowadays is we're, we're also offering SPVs. So a special purpose vehicle where partners can come in direct level, right? So they're not in the fund, right? So the fund will participate then also the SPV. As an example, right now we're building a $15 million industrial warehouse, uh, right here in Salt Lake County, and it's a brand new development. And our fund is putting in, you know, a large allocation, but we can't put in too big of an allocation because we want to maintain diversification in the fund. And so about half the equity is coming in through our fund and the other half through an SPV. And it's interesting because again, some people, so we give them the option, which one do you want? It's like, ah, definitely the fund. I'd love the fund structure and other people like, nah, definitely the SPV. So it's really just catering to, again,

20:59 Lincoln to the investment objectives of your clients. Right. Well, when you get a risk of money, right? Like, uh, you know, tax money that's coming out of a self-directed IRA or rolling it over, those need to go into the SPVs to recognize the same tax benefits. Um, so something we, I have a lot of our, our, my portfolio funds, you know, they run into the problem with syndicators to fund managers and they have all these investors that just want to stay on their SPVs and their syndicates. And they say, well, they actually require, well, as long as you meet a minimum commitment into the fund of half a million, a million, you know, whatever X amount, then we can let you in on these, on these deals. And those, uh, first rider of a fuselage become very important as well as you start growing your business and start working with larger and larger allocators, uh, like institutional grade. So I think, I think that's awesome. Um, you know, along that same thread though, it sounds like the majority of your LP base is high net worths right

21:58 Dave now. Right. Yeah. The majority definitely mostly retail investors. Um, every investor is credited. Uh, majority are, you know, high net worth and quite a few ultra high net worth individuals. Um, you know, and again, I'm really proud of the, the traction that we have and having close to 400 people that are entrusting to their capital, but at the same time, you know, the relatively smaller check sizes, you know, six, six average, you know, 150, $200,000, some of that range. Um, but looking forward, you know, our, our goal with AXE is to become a multi-billion dollar investment firm. Uh, frankly speaking, our goal is to be best in class, right. And what we do, and the only way we get there is with larger check sizes. So, you know, kind of the natural evolution of the progression of the business is going from folks on that retail investor to more, you know, family office and ultra high net individuals and RIAs, and then eventually more, you know, actually institutional money. And so, but with that being said, one of my personal goals is to always make sure that we carve off some space for those retail investors, right. Um, you know, I'm really grateful for what real estate's done for me personally over the last 20 years. And so I want to be able to still create value for people that were, were, were where I was, you know, 15, 20 years ago. And so, you know, as long as I can, I want to always make sure I have some space for those, because I'm grateful for them, right. And I want them to be able to come back as repeat investors as well in these offerings. But eventually, you know, as you scale, you've got to look, you know, at bigger, bigger check sizes along the way. Yeah. Economics start to make more sense. Yeah. Yeah. And the investor relation is just the amount of, you know, just the relationship management side of the business. When we get to a certain point, it's, it becomes a lot, a lot of K ones you're sending out. It really, it really is. It really is. But, but again, you know, for me, I get a lot of fulfillment out of being able to create value for people, especially, I mean, I probably have, I mean, a hundred to 200 of my investors are actually guys I used to manage and work with in, you know, at door to ourselves. And so to be able to create value for them, you know, I used to be from a leadership perspective, and now it's actually creating monetary value with their investment opportunities. It's been really fun, man. One of my personal goals, you know, kind of going, getting personal here, but is I'm committed to creating direct value for at least 10 million people in my life. And I want to help at least 1000 people become financially free through real estate and passive income. And so, you know, that's one of the things that we're about to fund though, is you can create massive impact for so many more people.

24:29 Lincoln And so it really is about, you know, scale and impact. So as you start to scale, you know, like, what do you anticipate your biggest hurdles are going to be? Is it going to be infrastructure? Is it just raising the money? Is it the deal flow? Is it the product sets? You know, what does that

24:45 Dave look like for you guys? I think that the biggest challenge, at least in the current economy, is capital. Yeah. Right. It's become a little bit more difficult. People are just, you know, cautious right now, kind of puckered up a little bit with uncertainty on what's going to happen in the future. From there, I think that it probably goes to just making sure you have the right SOPs in place, you know, to, you know, you look at institutional money, they have so many, the checklist on their due diligence is so extensive. I mean, it's, you know, some of them are, you know, it's a 40 page document. And so it's looking at every single process, higher, you know, background checks, the entire, all the safeguards that are in place for the fund, right? So just the complexity of making sure that we're always operating perfectly correctly, right? And that's probably, and it's something we're going to cross that bridge. And we've already done a really good job kind of building. Our approach, it actually has been to basically build it correctly from the beginning and put all that hard work and infrastructure into it. And even though maybe it's a little bit overboard right now, it's going to, you know, in the future, that's what we have to have in place to be able to attract larger check sizes. So that's kind of a long answer, but I think the biggest thing is probably capital. And secondly, it's just making sure you have all the

26:04 Lincoln right systems and processes in place. Well, yeah, I love that you say that because truly, the institutional capital doesn't come unless those boxes are checked, right? It's not like the capital comes first. You know, you've got to build a business that's worthy of taking on, you know, those larger checks, you know, before they come. So I love that you added that in there. You know, on the human capital side, what, like how many employees does your firm have right now?

26:30 Dave We have about 10 employees. We're very nimble right now. You know, and that's interesting. I want to mention that I love the size of our firm as it is right now. A lot of investors are attracted to the fact that we are so nimble, right? We, you know, you get in these really big, you know, reeds and huge hedge funds and, and they have this box they've got to operate in. And so as, but as an emerging manager, for some investors that, you know, it's actually very attractive because they generally speaking, historically emerging managers do create larger or better returns. There's more volatility, there's more risk in it, but the overall, the average return structure is significantly better with emerging, emerging managers. And so, so it's just an interesting kind of dichotomy of scaling and growing quickly, but at the same time, making sure that we are, you know, sometimes the business slows fast, right? You got to make sure you build it right, have the right people on the bus and the right seats, and then you really can throw gas on the fire. I feel like that's what we've done so far, you know, and I think we've set up the foundation now where we can really go and build something special on top of this. And when I say that, I want to be sensitive to that because at the same time, I think, you know, raising, you know, having over a hundred million dollars, you know, in the first two and a half years is, you know, that's a pretty big fee. I'm really proud of it. But I feel like we've just gotten to a point where now we can really, really go and build something special.

28:00 Lincoln I think just a big conversation that a lot of emerging managers have is, you know, what should I do in-house versus what should I outsource? You know, can you talk to us about maybe some of the roles that you do outsource in your firm? I think, you know, I think we've got to be really, really careful about that. And I think that's a really good point, too, because I think that's a really good point, and I think that's a really good point to make. And I think that's a really good point to make, You know, can you talk to us about maybe some of the roles that you do outsource in your firm just from a management perspective?

28:34 Dave Yeah, you bet. So we actually do with a, you know, small team, we pretty much do all of it. We do all the acquisitions, all the underwriting, asset management, we do the marketing in-house, our branding, our dispositions. We're working towards becoming a fully vertically integrated investment firm. And we're pretty close to that. We have a development arm, we have all those in place. The one thing that comes to mind that we definitely outsource right now is property management. You've got to have a massive scale to make sense to bring that in-house. So right now what we do is we just look for the very, very, very best in class, third party property management companies in those markets that we're operating in. And I found that those groups have a lot more intricate detail in terms of the actual sub market versus somebody here in Utah trying to figure out, you know, what works in Kansas City versus what works in Toledo, Ohio versus in, you know, we don't have that. So I think that's probably the right play until you get to, you know, closer to, you know, eight to 10,000 units is where, in my opinion, where it makes sense to bring that in-house.

29:48 Lincoln So then you'll start looking at setting up your own property management company and be your own service provider of the fund.

29:54 Dave You got it. So that's really the only big service that we're not doing in-house right now. Yeah. Compliance is out? You guys doing that? Great question. Sorry. We do have a third party audits. You know, it's all third party outsourced, but we also have our fund management is managed. Third party administrator? Third party administrator, yeah, as well. And we use Juniper Square. Oh, yeah. They're fantastic. Yeah. They've really taken a turn over the past five years, really developed their tech stack out. But in my opinion, and actually Oscar's question, I feel like that's always good to have that as an outsourced service because it gives investors peace of mind knowing that, you know, there's somebody else outside of the firm that is basically managing is overseeing the processes and managing the management company. Right. Same thing with the third party audit every year.

30:49 Lincoln Yeah. No, totally. I mean, you know, fund administrators, you should, there's no reason why you shouldn't have a third party administrator. Compliance, it's not practical to have your own CCO at the beginning, right? Just like it doesn't make sense to have really have a full-time CFO sometimes at the beginning of a firm, you know, where fractionalized, you know, human capital totally serves the needs. So, yeah, I think you're, I think you're, I think that's spot on and, you know, I'm very in line with industry standards. But as soon as you start, you know, getting your structured entities, like a registered investment advisory, do you guys have one of those yet? You will soon, you know, as you start to scale. He shook his head no for the listeners there. But yeah, I mean, you will soon. And that's a, that's a whole nother beast and the lovely pains of growing an asset management firm, right?

31:37 Dave Yep. But, you know, I like the fact that we, our goal is to basically manage the entire process and control the process, right? Which is, you know, a lot of funds don't do that. They're more fund of funds where it's more about just raising capital. You know, a lot of local groups here in Utah, they're doing really well, but it's more about just soliciting the capital and then plugging that capital in with different deals, you know? And that's what I used to do as a syndicator a lot of times as well with a fund, you know, we take a lot of pride in the fact that we literally own the entire process from, from, you know, from finding the tail to management, to dispositions, to the entire process is basically on our shoulders. And so it is, frankly speaking, for your listeners, it's a lot of work. I don't underestimate how much like operational bandwidth that takes to be able to do that entire process. With that being said, I love that we can actually control the experience, not only for our investors, but for the communities as well. Like we have full ownership over, you know, whether it's,

32:35 Lincoln we hit out of the park or if we lose on it, it's on us. Well, I actually love that. I really do, because I think I have a lot of people that come to me and they say, well, I've got this other guy, I can get this money to, and I'm basically going to be a middleman. And by doing so, you're essentially diluting your own value prop, right? But I, you know, from what I'm hearing from you, you are the value prop at Axia, right? And I think that's really meaningful right now, and it will be meaningful in coming years. And, you know, by, you have to learn that step, right? You have to learn how to be the CIO. You have to learn how to underwrite, to acquire, add value, and then sell those assets at a premium. So I think that's awesome.

33:14 Dave Thanks. I appreciate that. And again, it's a lot of work. Like it's probably even more work than I originally assumed it was when I went into that, into the structure, but it's been awesome. And part of that, I think what's working so well for us is because all of our GPs and managing partners have a very robust background, not just in real estate, but in business. When we're partners in the islands, hundreds of restaurants and food and beverage concepts, and then coming from a door to ourselves background, like the principles and the skills we learned from that. Another one of our partners, you know, has created a multi-billion dollar firm, Brandon Fugles Experience, right? And anyways, it's just a very extensive, robust background where we can bring those elements into real estate. And one of the terms that I coined for Axia is experiential investing. If you go to our website, it's on the homepage, big font, experiential investing. And can I tell you a quick story on how I love to hear about that? Yeah, this is one thing I keep saying I'm so proud of it, but this is one I'm really, really, really proud of. You know, so what it means is it's not just about creating an ROI for our investors, return on investment. It's also an ROE, a return on experience. And that experience comes from several things. One is we hold a monthly webinar, and it's called an experiential webinar. We have the top real estate guys in the country come on and just teach for 45 minutes followed by 30 minutes of Q&A. So you can ask them anything you want. Every time that we have a deal we're going to close on, we do a full one hour webinar, full transparency. This is how we found the deal. Here's our underwriting model. We actually share that live, you know, webinar. Here's how we sourced the debt. Here's our business plan. Here's our value add, you know, strategy, the entire full transparency, which very, very rarely, actually I've never seen an investment firm where they pull back the curtains and they show you the back office and how they actually do what they do. But what I've found is that, you know, a lot of people are investors. They want to be doing commercial real estate. They just lack the confidence or the competence on how to do it. And so if we can create value for them, not only on an ROI on their investment, but also help teach them and educate them on how we do what we do, that's been received very, very, very well. And it's a very unique value proposition because I haven't seen anybody else do that. And so that's been, and for me personally, you know, when I coined that term, it really came from the fact that when I stepped out of this leadership role as a VP of sales and when I was managing hundreds, you know, thousands of employees, hundreds at a time, I really missed the human side of it because I ended up in my office looking at spreadsheets and looking at the MLS and, you know, looking at all these numbers and, you know, real estate deals, but I really missed that interpersonal communication, that development side of it. And so the question I asked, like, how can I, you know, kind of bring that relationship side of the business into real estate? And so that's where the initial idea came from. But it's been awesome,

36:21 Lincoln man. It's so fun. It's so cool. Like, I mean, so many LPs don't get that experience, right? And a lot of people, they don't, you know, they get weary and worried that, you know, they invested in a Ponzi scheme or that they don't know what their money is being put to use as. And I think, especially for those technical minds out there that want to understand and be exposed, like, what a cool value prop. And it's not, it's not like it's easy to have all those transparants, you know, to be so transparent, right? I mean, it's additional burden on the management, you know, to do so, to host those webinars, to do all those things. But I think that's fantastic.

36:55 Dave Thanks, man. You know, like swag, we, you know, when you come on as an investor, you get a swag box and, you know, Christmas cards, like we see a lot to try to, you know, really create an experience out of, out of investing. But with that being said, you know, some investors, they love it, they eat it up. Some don't care about it. They just want the ROI. And that's totally fine, too. I'd say about, but the majority of our partners are very engaged with all, with all that. And, you know, another thing I've noticed is a side, as a benefit of that, or a side effect is, and I won't give the exact numbers here, but, you know, subscription documents, industry standards, probably, you know, you get an investor to sign a document commitment. It's 80 to 85% of the time they'll actually come through and wire their funds in. You have about a 15% attrition rate. No, no, yet. I'd say in the mark, in the market, in the market, in the real estate funds. And with, I don't know if you get it actually numbers, but we are incredibly proud of, it's 99% plus. Wow. And I think a lot of that is because of those touch points and that transparency and that focus on adding value and creating value. In fact, the name Axia Partners, when we came up with the name, it's, we chose that name because it's Greek for, to create value. Oh, cool. That's awesome. And so it's great value for our partners, but also every one of our projects that we do across the country, it's almost always, it's a very, it's a heavy focus on value add, right? Yeah. The traditional value add, you know, new appliances, you know, new, new carpet paint, right. All that kind of stuff. But even on that note, we take more of an innovative approach to where it's not just new carpet, new paint, new granite countertops. We do a lot more in terms of more of a modern approach to value add. So it's searching and optimization, it's online presence, it's using social media to create more awareness. And so a lot of these assets we buy across the country, there's no social media presence at all. And so we'll go and create that. It's adding, you know, dog spas. That's a big thing right now. It's adding like, we work shared office spaces and multifamily, but they're very unique value propositions that the market really wants right now.

39:06 Lincoln And so that's like, because I always tell people like, what is your edge, right? Like, what is your strategic edge? Because as you start to become a more established firm, it's not like, you know, when you go raise money from high net worth investors, it's, you're selling them on the benefits of real estate, right. When you go sell allocators, these capital allocators and institutions, they're looking at 20 different real estate firms a day and saying, you know, why you instead of all the other, you know, real estate firms. So it sounds like I'd love to go deeper a little bit on kind of your edge as a firm and where you feel like you perform, you outperform, you know, other players in the marketplace.

39:42 Dave So first thing comes to mind would just be our investment thesis, right? Recession, resilient, real estate, like the timing on that was perfect in 20, you know, two, two and a half years ago. Yeah. And it's even more relevant right now today. So I think just how we positioned ourselves from day one was really, really important. The second thing I would say is, is the core competencies of the management team and our own individual track records before we came into this. And I say this humbly, but you know, it's, you know, the track records of every one of our partners coming into it. I'm very proud of those track records. And, you know, another thing that was nice was, you know, we all came into this and again, I say this humbly, but we're all already independently wealthy where we don't need to take salaries. We don't need to take things off the table. And, you know, probably blow your mind if I tell you how much, if like we haven't, we're not taking things off the table along the way, right. It's all about the long-term carry and making sure we win for our partners. You know, we use a European waterfall, which really puts the LPs first. And so for us, you know, it's a five-year, five-year funds. And so we literally work for basically five years, you know, without taking any chips off the table along the way. And the investor get paid back first, plus a prep rate before we even get to participate in any of the carry. And so it really is about, we have to win big for our partners, right. Or else we're literally working for free along the way. And so having partners that were able to do that with me was really meaningful, right. And that's rare, I think, because usually this is the livelihood of, you know, it's your income source for the fund managers. And so they've got to be taking, you know, chips off the tables, you go, which again is, is, is there's nothing wrong with that, but it does sometimes take away from being able to grow the business quickly. Another edge would be that folks on experiential investing, like that's, you know, the transparency. I think that's something that really sets us apart from, from everybody else. Again, I've never once seen an investment firm that talks about transparency like we do and, and the educational side of it. I would almost reference it to, you know, being a partner with Axia is like joining a mastermind. That's it's an, it's an exclusive mastermind that's free for our partners. And so that's kind of the

41:55 Lincoln approach that we try to take with this. Well, I love that man. You know, so many limited, you know, there's, there's LPs, right? Your limited partners. And then there's the GPs, the general partners, you that's managing the firm. And I feel like so many people exclude, they don't treat their limited partners as partners, right? They just treat them as a check. And in reality, they're partners in your business. They're vested in it. You know, they're, their money's on the line just as much as yours. So I love that. You know, do you guys do any sort of special economics for large investors? How did you guys create your, your waterfall? Is it subject to change? You plan on changing it? If you mind sharing some of those

42:34 Dave details. Yeah, there's a big question. There's a lot and that's a good whole podcast specifically. So, so I'll start with a principle that I learned a long time ago, which is we, and this goes for anybody listening to this podcast and maybe wants to launch a syndication business or, you know, anything where you're raising other people's money. Right. And that is to always make sure you put the investor first. And when you first get started, it's not so much about what can I make in a profit. It's more about, it should be more about what, what am I going to, what's the education and the relationships I'm going to build by doing this. And so when I first got started syndicating or multi-family, I found the number one best, the number one syndicator from multifamily in the country. And I was able to gain proximity to him and I helped him, you know, with a few different things, including raising capital. And, and I got some, a little bit, you know, co-sponsored GP, but frankly speaking, it was crumbs. It wasn't, it wasn't very much. Right. But I learned so much from being around the top guy in the industry and, and, and, and, and, and and learning who his advisors are. I gave his legal team is now is my legal team. Oh, right. My tax strategist is his tax strategist. So it's a, it's a really interesting shortcut to be able to get around the very best people in the industry is just to look for ways to create value for them and, and, and, and, and don't pay as much attention as to what's in it for me right now. Right. And so same thing when I started doing syndications and, and same thing on our first, first fund offering. And it's a very, very generous waterfall in our opinion. It's definitely, you know, below market. And, and so it's not always going to be the case, but it's just about making sure we win for our investors. And, and, and, and, and, and frankly, it's, it's, it's not just because we want to be a nice guy. We want repeat investors, right? We want to make sure we win for them and then come back in and they redeploy with us over and over and over and over and over. And so, so we structured that is, and the same thing is on our current fund offering right now. It's a two classes of shares. And so a larger allocation gets you an 80, 20 split on the carry. And then a smaller allocation is a 70, 30 splits. It's a natural incentive to come in with a larger, investment and check size. And then another way we've done that with the capital calls, which has been received very well is you can choose either come in 100% upfront on the first capital call, or you can choose to spread that out over, you know, with one capital call per quarter throughout the year. And so for people with any, you know, liquidity constraints, that's a little bit easier for them. And so that's helped us out a lot as well. We also agree to give a hundred percent of the tax benefits to our LPs, which again is definitely not market, you know, usually you take a 20, 30, you know, your carry on the depreciation as well. But again, we've given 100% to our investors and that's probably gonna be the last time we do that on this fund because, you know, there's a lot of, anyway, so we want to win on these first ones. So the waterfall, 80, 20, 70, 30, investors get paid back 100% of their principal, first and foremost. Second highest priority is get them the 8% preferred return, right? And then once that's taken place, whatever the pool of profits is left over, then that's the, you know, 70, 30, 20 split. And so again, investors get paid back first plus the prep rate, and then and only then do we get to participate in the carry. So we just feel like that's, it's a, it's a compelling, it shows our investors where our priorities are. And frankly, it puts a lot of pressure on us. Yeah. Oh, that's

46:02 Lincoln awesome. You know, very along the same vein, you know, how do you guys think about in terms of distributing your capital? You know, there's always this decision of when you have maybe a proceeds from a refi or you're kicking off rental income, you know, are you distributing that regularly back to investors, giving them a small check every month or quarter or semi-annually? Are you reinvesting that and, you know, promising them the carrot at the end? How do you think about,

46:28 Dave you know, your distribution cycle? The beautiful thing about, you know, a fund is you can literally write the rules in your PPM, right? So in our first fund offering, we are able to churn capital. So we'll have a disposition and we can immediately redeploy that money again and go to the same thing, you know, so, so we can do that basically twice within the capital within the three to five year fund life. And so it's a little more of an aggressive approach where you can, you know, hopefully generate a higher IRR for your investors because you're continuing to redeploy that and make put that money to work. On our current fund, we're not doing that. So as soon as you're at disposition, it's an immediate repayment. It basically lowers your capital account. So it goes out to investors immediately. And so, but one thing I'll share, you know, getting, you know, being open with you here is on our first fund, you know, we have a 7% of prep rate and we plan on paying that out along the way. However, you know, it's all very heavy value add. And so every asset is requiring, you know, millions of dollars of improvements. And I quickly realized, hey, you know what, if we're going to be paying out a prep rate when there's actually not positive cashflow coming in, right, we're literally just taking investors' money and, you know, coming in one door and then out the other door as a, as a prep rate distribution, it doesn't make sense. Yeah. Right. And so we had to tell our investors, hey guys, just, you know, we're in the middle of this J curve, you know, we're really excited about the capital improvements and, you know, rent projections look really, really strong, actually even better than what we were projecting originally in the pro forma. However, with that being said, there's going to be a few quarters here without any, any distributions because there is no actual cashflow, positive cashflow from the portfolio. Right. And so it's sad and everybody received that very well, but it was a lot of explaining, you know? And so one thing, if I did that over again, it would just be really communicating to the investors, hey, we want to pay a 7% prep rate. We're committed to that. However, if it's a heavy value add fund, you know, there's going to be a period where you guys be patient. And then there's going to be a catch up or you're going to be made in, you made a hole, you know, from day one,

48:30 Lincoln but there's going to be a lag there. So much of it is just managing cashflow. I love that story. And thank you for sharing that. I think that's, I think that's awesome, man. I've got so many questions. I would love to ask you, we're running short on time here. I want to ask you, I want to ask you this is, uh, how is the current rate environment, uh, you know, affecting you and your firm, if at all, um, are you slower on deploying funds right now? Has it decreased

48:54 Dave IRRs or, you know, and how are you navigating just the current high rate environment? So if my director of investments was here, he'd be able to give you like a very articulate, like an impressive answer. My answer is pretty simple. Uh, in our first fund, we have an average blended rate, about 4%. And it's all long-term fixed interest rate. So we're really, really excited about that. And in fact, the timing there was, was perfect.

49:19 Lincoln Hey guys, thanks for listening. As you know, we don't run ads on this channel. So if you could really help me out, if this podcast has added any value to you or your business,

49:28 Dave um, in our current fund, we are, so our first project is actually this, our anchor project is a $15 million industrial warehouse and we're able to secure some incredible, um, financing on the construction side of it. Um, but besides that we've, we've, we've actually been the key right now has just been patients, you know, uh, what we believe is in the market, there's still a, a pretty big Delta between where sellers believe their, their valuations are versus where the actual market value is because of interest rates. And there's, so that there's that lag there. And, and we're finally starting to see it catch up to where that Delta is, is narrowing, but we still feel like there's, there's more, um, softness and, and, and price corrections coming. And so it's really been a game of just being patient right now and holding for a little bit longer. I don't necessarily think that rates are going to go a lot lower than they are in the next two years, but I do think that price points, because with cap rates and overall valuations will cease further, uh, softening through Q4 and potentially Q1. So it's really been a game of just being really careful and very, very, very selective right now with acquisitions. Um, two more things to share. What we really have found success with though, is looking at a suitable debt, right? So for example, we have a deal in Montgomery, it's, you know, it's 3.85% fixed interest and it's a suitable price. We can come in and acquire that asset and take over that low interest payment. Um, another one is to, uh, what we're really excited about right now is, is seller financing, right? So you find, you find a buyer that's willing to carry the note for you, you know, at four or 5%, it makes a lot of sense. And so those are, those are, that's how we're navigating things right now. It's definitely a different environment, but we're, but, but one last thing I just want to say is we overall though, the overall sentiment is, is very opportunistic right now because there are a lot of, uh, you know, multifamily deals and specifically and self stores where they've got to refinance their debt and they're not going to hit their DSCR, uh, requirements with the current interest rates. And so, you know, we, uh, we're calling it DSCR, McGetton, you know, and so we're going to be some really incredible buying opportunities. So more than anything, we see this as a really interesting time. Uh, let me say this, Bridger, uh, your partner, he shared a slide with me, uh, a few months back and it showed that the most successful real estate funds are those that have launched during economic downturns.

52:01 Lincoln Yeah. So my biggest answer here is we're really excited about it. Yeah. So, no, that, that is awesome. I was just going to say, I love the point you made about, you know, there's somewhat, uh, maybe early real estate principles of like, oh, you don't have money to take down a deal, go sell our finance or, oh, you know, uh, go buy some, assume someone's interest rate, but, and I love that you're applying those on a massive scale because I think it's, it's ridiculous not to. And I think some people think that they're maybe over sophisticated or, you know, they don't need those types of financing, but if that is there, then man, the contribution that they can have to your fund is just, I mean, why would you not, you're doing your LPs is a disservice by not doing it. So I love that. Uh, okay. A couple of rapid fire questions, uh, as we wrap up here. Um, what is

52:52 Dave something you wish you knew, uh, when you just first started out that you know now? The fact that going bigger is not always necessarily harder. Uh, you know, I started off with those four town homes and some four plexes, which again, it worked out great, but what I've realized is that sometimes doing even bigger deals is actually even easier than smaller deals. And so, you know, I wish I wouldn't have kind of messed around with the single family homes would kind of straight to multifamily. I just wish I would have thought, thought bigger, you know, and, and frankly speaking, Lincoln, my whole life, I looked back at it. Like when I was 20 years old, I was really proud of what I was doing. Then it was 30 looking back at 20. I'm like, man, I was playing small. And then as a 30 years old, I'm like, man, crushing it. This is awesome. Right. Yeah. Yeah. For looking back, I'm like, man, I was, I could have been playing so much bigger. Right. And I hope that when you have to look back at 40 and feel that way and actually hope that I'm a hundred looking back at 90, I still feel that same way. I could have been doing better, right. Could have been doing more, but I think it's just thinking bigger. Yeah. I love that. Um, what are some of your maybe either investment or business pet peeves? I would say on the investing front, my biggest pet peeve is poor communication. Like if I deploy my capital to somebody and I can't get an answer, I can't get a phone, I return on a phone call. That's probably probably my biggest pet peeve. Um, in business, I'm going to say the lack of taking ownership. Like when somebody won't actually two things, the lack of ownership. And secondly, I'm going to say just not doing what you said you're going to do. If you, to me, that's like the most important thing I want to see in a business partner is you say you're going to do something you're going to do and having that level of trust and confidence. Yeah. On the flip, any, any habits that you feel like have really contributed to your success? I'd say number one is having a growth mindset and realizing that wherever we're at in life, it's on, it's on us. You know, it's not anybody else's fault. And it can be hard to accept that sometimes, but I feel like that's the key to being able to make change and to be able to become the best version of yourself is taking full accountability and responsibility, really embracing delayed gratification. You know, a lot of the harvest, like I think it's a lost, that's a lost skill. You know, nowadays people want instant gratification on the dopamine head immediately and being able to lean into the fact that sometimes, you know, the things that are the most worthwhile, you don't see the results for it takes time. Yeah. And, and that can be really hard, but, and the next thing I want to say is, is one of my models in life has been if something scares you, it usually means you should just do it. So if it scares you to do it. And I've, I've, I've, even in real estate, sometimes like if it's kind of a scary deal, sometimes it's, it's the most profitable deal because other people are just scared of it because it's, it's, you know, it's a little scary. And I feel like if you just lean into doing the things that scare you, you know, that's how we grow. And, you know, my life right now is only a few things that really scare me. There's probably only three things that still scare me. One of those is, is like standup comedy and public speaking. And so I actually hired a, a standup comedy coach last month. Awesome. And I'm committed to doing that the next, the next year. Open water swimming. I've done a few competitive, like Iron Man's and whatnot with like Iron Cowboy and some of the guys. And I just think I'm not, I can't, I don't know what it is about me, but I'm not very buoyant. And so I'm working on that. Third one is my daughter. I've got three beautiful daughters and I gave them dating, like still kind of scares me too. I don't know how to, how to manage that one very well. But besides that, though, everything's scared me. I just, I just done it, you know, went running with the bulls last month in Spain and Mount Everest excursions and, you know, I'd having eight times. But you gotta tell, you gotta tell people about running with the bulls. Like tell me about that. It was a, it was a bucket list. I put it on my bucket list when I was 27 and had a few friends reach out. They're going to Spain and, and I was like, Hey, you know, let's, let's go, let's, let's do this. And so six days, I knew it was going to be intense, but it was actually so much more intense than I thought it was going to be really cool experience. And we're down there. I mean, the quick, the quick story on it is the bulls ended up running a full minute fashion or average pace, which resulted in 19 hospitalizations, two critical injuries. I mean, the videos are just incredible. And, but the biggest risk was actually all the people around you. So like, when I saw the first bull, you know, you just want to hold your ground as long as you can. I turned to run and immediately there's two people already down in front of me. So I had to hurdle over them. I'm 42 year old, but I heard, I haven't heard old for it's been a long time. So hurdling something hurled two people kept going. There's a huge pile of about 15 people all piled up on top of themselves tripping over each other. So actually had to cut out in front of the bulls literally right in front of the bulls and five to eight feet in front of them. So the pictures looked really cool. Cause it looks like I'm like trying intentionally to run right, like right in front of the bulls, right. It's actually excited to get around this, this huge pile of people to get around that. But, um, it was, it was, it was awesome, man. It was a, the adrenaline lasted for a few days and it was an experience I highly recommend. Um, so it was, it was cool. But what was really fun with that trip too though is, uh, I have a tradition where when my children turn 16, they can choose anywhere they want to go in the world. I'll pay for a one week trip with them, but they've got to choose the location, the excursions, the food, the cafes, learn the local language and whatnot, just to teach them about being more open-minded and about culture. And so my daughter was torn between going to Italy or France. And so one of my biggest, my favorite models in life is and not or sometimes it's not about or it's like an end situation. Right. So I came back to my daughter, my Kayla, let's do both. And so I flew from Spain into Venice for two days, then up to Rome for three days and then to Paris for five days with my, my oldest daughter's, my wife, and create some incredible experiences and memories with them

58:40 Lincoln as well. Amazing. Dave, thank you so much for sharing some thoughts today, sharing your wisdom, really excited about Axia and everything that you're putting together there. I think the future certainly bright. All information shared are the sole thoughts and opinions of the author. Do not take any information as legal or financial advice. You should seek a certified accountant and a professional legal team for taking any further action. We are not selling or soliciting a security in any way, shape or form. This content is for educational purposes only and is not to be construed as financial or legal advice. Clients of fund launch or black card capital partners may maintain positions and securities discussed on this podcast.