Lincoln: Well, Jeff, good to have you here with me today. Thanks for coming on.

Jeff: Thanks for the invite.

Lincoln: Yeah. So you bet. I mean, you sit on boards, you've ran funds, you run syndications, you're part of a family office. I mean, where do we even start today?

Jeff: I don't know. You pick. Take it easy on me. Yeah. All right.

Lincoln: All right. We'll be too tough on you. I'd love to just hear about your first investments experiences. Right. Your exposure to investments.

Jeff: No, it's a really good question. So I come from the direct to home space. So I always had the premise in my mind of we knock doors to buy doors. So I've always been enamored with real estate. I love all the things that involve real estate, the depreciation, the appreciation, the cash flow, the permanent revenue that you get once you have a tenant in there, just how efficient it is in all aspects of investing. And I have, you know, I did a little bit of VC right out of the gate, too, just to take those little moonshots because they were sexy, attractive investments. But I've always anchored heavily to real estate because it's it's a really good way to protect your basis.

Lincoln: All right. So to be able to invest, you got to have money to invest. You made your money primarily through Vivint, right? Was it was your first main liquidity event or Vivint?

Jeff: And then There was a precursor to that one, but yeah, Vivint was definitely a place in which I was able to get a lot of liquidity and a lot of active income as well, to be able to deploy.

Lincoln: Give me the 60 second on that Vivint trip.

Jeff: So, joined Vivint in the fall of 07. We had a transaction in 2012. It's public knowledge, so Blackstone came in, purchased us for about 2.1 billion. So that was really, that was a good, cash deposit there into the company, cash injection, we're able to really increase our enterprise value, have a lot more intellectual property, and just a lot of things that actually gave us that true valuation that differentiated us from all the other players in the space. And then we actually went through a SPAC, and then we actually went through an IPO. So really three big liquidity events along the journey.

Lincoln: Gotcha. Love. And your role, your title at Vivint was?

Jeff: So when I exited, it was executive vice president of sales. Excellent.

Lincoln: Gotcha. So then you made this money, you started allocating personally into, it sounds like real estate deals, anything specific?

Jeff: A lot of real estate deals, mainly three asset classes, storage units, multifamily apartment complexes, and manufactured housing communities, otherwise known as trailer parks.

Lincoln: And how'd you fall on those?

Jeff: Was it just happenstance? Not necessarily happenstance. I stumbled upon mobile home parks in 2010. I was actually knocking doors inside one of these communities. It was really pristine, really nice. And as I was knocking doors, nobody was answering, like couldn't get a single person to the front door. And outside of that community, everybody would answer the door. So then after my sixth or seventh door of being unsuccessful, one of the residents, one of the homeowners approaches me and says, Hey sir, do you have any permission to be here? I'm like, yeah, I have my department of public safety license with the state of Texas and actually have my city permit for the city of El Paso. So yeah, I'm permitted. No, no, no. Do you have permission from the front office to be in our community? I'm like, well, wait, wait a minute. What? It was so dialed in so systematic that I just fell in love with that. I'm like, whoever owns this property, is essentially controlling a really cool city within a city. And they've done a phenomenal job creating sustainability, creating elegance, and creating a community where people really love being there. You could just tell by the reaction I was getting from this gentleman. And also how they respected the front office because the front office hadn't advised that I was there. So in my mind, I thought, I would love to get into this asset class, because this is really dialed in. And I'm sure whoever controls this is monetizing really well, and is actually able to provide something beautiful to a very needed demographic. It's affordable housing. So I just loved it at that given point in time. And then in 2016, I met an operator that had been in the space since 26, so 10 years in the space, specifically in mobile home parks. And I chose to partner up with him, and the rest is history.

Lincoln: So were you primarily, when you were just getting started, were you coming in as the limited partner, in a sense? Or is it well-structured joint ventures?

Jeff: It was a one-off deal. I said, hey, I have X amount of dollars that I'd like to deploy. I want to get into the asset class. Can you please help me with this? Because I don't know the asset class. You do. I have cash. Let's go. Yeah. Able to do it. Loved it so much. A few months later, I did a second one. And then the third one, some friends came in and the fourth one, it went wider.

Lincoln: And so that's when you started bringing on other people's money.

Jeff: That's when we started bringing on other people's money. And then we, we launched our first fund, which was an opportunity zone fund, which was just North of a hundred million bucks. And it was subscribed like this because of the Opportunity Zone legislation. People are just looking forward to being able to deploy dollars into Opportunity Zone funds.

Lincoln: Yeah. And tell me about that, how that opportunity came out, like with the OZ funds.

Jeff: So we had a network of high net worth families, and one of those families had a gentleman who was actually helping Washington with the legislation of Opportunity Zone. So this was a person that was writing the docs and everything. So he knew Opportunity Zone front and back. So it was really easy for us to tie in mobile home communities with what Opportunity Zones was designed for. So that's how we stumbled upon it, if you will.

Lincoln: Gotcha. And so you raised a hundred million dollars. Yep. How was that? And that was a pretty quick raise?

Jeff: Very quick raise. There was a lot of pent up demand for that product of Opportunity Zones. And then when people understood what the manufactured housing communities asset class provided, it was a perfect fit for what that legislation was designed for.

Lincoln: Was that primarily retail investors, just friends and family? Did you have some institutional allocators?

Jeff: Not very much retail. Some institutions came in, but a lot of high net worth families. Yeah. Gotcha.

Lincoln: Bigger check sizes for sure. Cool. And then, so you deployed those assets rather quickly, I presume? Correct. What year is this?

Jeff: This is… 2017. 2017. And then we did a subsequent fund. It was more of a value add fund, which was just shy of a hundred million bucks.

Lincoln: Okay. So you pivoted strategies a little bit?

Jeff: Pivoted a little bit because there was so much demand for the OZ, but then there were OZ dollars that also wanted to be serviced. So we decided to do a value add fund for folks that wanted to get into the asset class that didn't have opportunity zone type dollars. They still wanted to participate in the asset class.

Lincoln: So was it a multi-strat then, where you kind of allocated to both, like a multi-strat?

Jeff: One fund was strictly OZ, the other fund was non-OZ.

Lincoln: There we go. Love it. And then you scaled that business up over the next couple of years?

Jeff: Scaled it up. Then we got some JV partnerships with some really big firms, firms that everybody listening has heard of. We got some pension funds in there and yeah, we got really big really quickly.

Lincoln: Yeah, so we've we've talked before we were in Hawaii a couple years ago, or a couple weeks ago. And you were talking about that experience. And, you know, we on this podcast, we often talk about the pros of running a fund, the benefits, and, you know, it's a it's a great vehicle to scale. And, you know, you I had a great experience, but nonetheless, you had expressed some, you know, hesitancies, you know, with the difficulty of it. I'd love to, you know, focus on some of those things, you know, some of those hurdles that you faced or reasons why you maybe didn't like the fund structure as much.

Jeff: Yeah, that's a really good question. So let's dive into it. And I still love funds. There's a place for them, obviously. But I also like SPVs and direct deals or syndications because you get to choose those specific addresses that you want to take down. Now, if you want to deploy massive amounts of dollars, a hundred million plus, then obviously a syndication is not the cup of tea that I want to be sipping on. But if I want to take down, let's call it 20 million bucks, 30 million bucks, I'd probably opt to do a syndication. get some specific addresses, assets that I really love that I know I can go run the playbook, and then I'll raise directly to those in a shorter time frame. And I feel like I can turn on my cash on cash, cash flow checks quicker, and I can refinance out even faster by just choosing these you know, two assets, three assets, four assets. So I've done many funds through two packs or three packs, where it's just not one address, but two addresses, three addresses, four addresses, et cetera. So it's a mini fund, but with more of a syndication type feel to it, if that makes sense.

Lincoln: So you've basically pre-identified all the assets.

Jeff: And what happens is when my investors are wanting to deploy, I can actually show them exactly which assets they're putting their cash into versus more of a theory or a type of asset where they're investing directly into these deals. And then when I underwrite my Performa, it's that much more exact because I have the rent rolls. I know exactly what my OPEX is going to be. I know exactly how much I'm paying for taxes, insurance, so forth and so on. Instead of just more of that theoretical invest in the theory, invest in the team, if that makes sense. Again, there's a place for both. But today I really love syndications, but it's a lot more pressure on me as the GP because you have a more strict, a stricter timeline. Because you go under contract and then boom, you got to start raising. But before I start raising, I get my anchors. I get my whales, so to speak, to anchor me. And then I know I can go raise on top of it.

Lincoln: And I think that's where the majority of the market struggles in the syndication market is they don't have that Rolodex of LPs that they can call on and fund a deal in 30 days. And that's ultimately where I think the fund structure surpasses that of a syndicate. is because you can pre-raise all the money, you can go get the subscriptions, and then you can allocate over the next year.

Jeff: In a fund structure, you can always be raising. So sometimes I'll be meeting with LPs and they really want to deploy cash, but I don't have a deal on the table that they can deploy their cash into. With a fund structure, you can perpetually be raising. The other thing that I've noticed with funds sometimes when you have those timelines, sometimes you would underwrite deals that maybe didn't pencil as well as some of the ones that you would syndicate, just because you need to add some of those deals into the fund. So I've seen some operators fall into some of those situations as well. Yeah.

Lincoln: So, so how come, well, did you have the desire to be, I feel like a lot of emerging managers, you know, they have the desire to manage billions of dollars of assets as you alluded to in the beginning. Uh, did you just not want to do that? Or was it, there was no fiscal motive for you or, you know, what was it that kind of dissuaded you?

Jeff: Oh man, it's a really good question. So it's, I don't know. It's kind of Founder's Dilemma. And I don't know if you've read that case. I think we've chatted about it. Explain it. The premise is this. You can either be rich or you can be king. It's difficult to be both. So when you take on big money, quite often that comes with a hefty price tag. You have a certain amount of ESG compliance that they want to see you comply with. There's certain ways that they like underwriting deals, certain reporting styles that they want. They want you to be Sarbanes-Oxley compliant, even though you're not public, just all these different things, which is fine. But you have, if you're doing all these JVs, you have these different bosses, different ways of doing business, et cetera. So it can become cumbersome. And then sometimes you're just performing for that JV instead of just for your team. So again, rich or king, difficult to be both. So for me, it's kind of like been there, done that, worked with the big funds, work with the big JVs, work with the big private equity firms. And I just love getting my hands dirty. I love the blue collar mentality. I just love doing things the way that I prefer doing them because it's just more hands-on instead of more bureaucratic, if that makes sense.

Lincoln: I love it. I love it. So at its peak, how much was being managed through your funds? Oof.

Jeff: So, I mean, one of the JV partners alone is like 1.4 billion. There was another one that was another billion. Then those two funds, the one was just north of 100. The other one was shy of 100. And then there was another fund that was about 200 million.

Lincoln: All right, so now you're primarily focusing on syndications, right? You run somewhat of a quasi-family office. Correct. Talk to me about that.

Jeff: Yeah, so it's my partner and I, we're real estate folks at heart. We eat, drink, sleep, breathe real estate. We call it boiling the ocean. We underwrite seriously like 300 deals to find the deal that we want. And we allow people to co-invest alongside with us. So we have family offices that always like doing their multifamily projects with us. And then we have a lot of LPs that are always ready for their re-ups. So we deliver a deal about once a quarter. And like I said earlier, some of them are singles, some of them are two packs, three packs, four packs, et cetera. depending on what we can underwrite and depending on what the appetite is for me, my partner, and also our LPs. And we do a lot of 1031s too. So we'll have clients that need to go satisfy 10 million bucks because they just had a transaction that occurred. And then I service those 1031s for them as well. Gotcha.

Lincoln: And how many employees do you have on that side of the business?

Jeff: Employees I'd have to count so Roughly about 50 employees counting people on the ground So that's property management side because we own everything. We're vertically integrated. Gotcha. So I run the asset management I run the property management and even the capex slash construction management not ground up but but value add. Gotcha. So we buy a lot of assets that have deferred maintenance. There's some dilapidation so we can get some, some juice out of it. There's some squeeze there. You can't turn a four seasons into five seasons. So I like buying, you know, class B. I like buying, um, three star stuff, four star stuff in the MHC space and then class B class C plus and M and M F and multifamily.

Lincoln: How's the current environment affecting your business?

Jeff: I love it. I love the current environment. Yep, so we bought about 2,000 doors this year, so we're super active. In fact, I'm closing on 700 more doors in the next couple weeks. So very active. Congrats. Thank you. Think about it this way. If I can get my DSCR to pencil today with today's interest rates, I know that interest rates will pivot down. I don't know when, but I know they will go down. So if I can get into pencil with today's rates and get a good return, a good cash on cash. then when they drop, then I know that I'm gonna be in that much better shape. And I'm not buying variable rates, I'm buying static rates. But I'm getting really good Amort schedules, and I'm getting really good IOs, so it's penciling now. But again, it takes a lot more work to go find those deals. And when I do my underwriting, I fill the kitchen sink at it as well. I don't want them to pencil. I think where operators get in trouble is when they want the deal to pencil, so they reduce their expenses. Start massaging the numbers. Yeah, they massage the numbers. So if my seller says, hey, I run this thing at a 30 op-ex, 30% op-ex, I'm like, no. I tell my team, go underwrite that thing at a 55, 60 op-ex and see if it passes the stress test. You know what I mean? So that's how I like underwriting my deals. And then you look at all the insurance, the taxes, prepaying them, all that stuff. You just have to throw it all in. And then when you're underwriting, you have to think what all can go wrong. You can't just underwrite it. This will go right. You have to really think about all the hazards that are in the way. so that if you can underwrite all those hazards and it still comes out looking pretty, then you can take it to green light. So what type of hazards are you guys anticipating? It's everything. Massive vacancy loss, job losses in the specific MSA, interest rates not going down in the next five years. So if I can't refi, what am I gonna do? Is this still gonna give me good returns even though I can't refinance within the five year threshold of a recap? Insurance premiums going up, taxes going up, all of the above. And then even what do we do if another pandemic type of situation occurs? What are our guiding principles with that, et cetera? So I just want risk mitigated returns and that's why I'm in real estate. Real estate's not sexy, it's predictable. and just really underwriting the heck out of it so that when you go execute, you have breathing room. If you underwrite with a lot of massaging, you have no breathing room. Everything has to go right. In business, not everything is gonna go right. Being an entrepreneur is escaping a thousand deaths. Like, things are gonna go wrong, that's why we're in business, because we love the challenge. We love solving problems. And the more problems I can solve, the more I'm gonna get compensated for those problems that I'm solving.

Lincoln: Right, I love it. So when you're looking at underwriting, and these deals specifically, what return metric do you look at the most? Do you look at IRRs, ROIs, like MOIC, like what, or cash-on-cash, like what is the most important to you and your investors? All of the above.

Jeff: All of the above. So my investors, they love the cash on cash component. So I deliver, I usually deliver checks 90 days after close and I deliver them monthly. Yeah, monthly distributions. So cash on cash is important, but I call that the cherry. So my investors, the carrot is the whole picture. Because in real estate, you have depreciation on one end, which you can call phantom cashflow. You don't see it coming in through the books every month, but you see it on your K-1. And that's real money. And it's real money that's there until you deplete it all. So I have a deal right now where I can deliver 70% depreciation year one. That's through my cost seg and through bonus accelerated depreciation. And you book that in 2023, you can use it in 2023, 24, 25, until you need it. So my investors love that. And then they love the monthly cashflow checks. So I don't distribute quarterly, semi-annual, or annual, I distribute monthly. And then I send reports monthly. The reason I do that is to, Again, render that rating fan service to my investors. And also it helps my team stay accountable because if I'm delivering quarterly where time decreases, intensity increases, then you can maybe hide with performance within a bad month of the quarter. You can have maybe a bad month, one bad month too. I'll make it up by month three because that's when I'm delivering my checks where every month I'm pulling back the curtains and we're delivering a check. So if your team's not performing on the property management side, collecting the checks and doing the lease ups, Like there's some exposure there. So I want to hold my team accountable so that we deliver, you know, every single month because I don't want us to be lackadaisical in any way, shape or form. And then I'm delivering monthly reports too. So cash on cash is important. The depreciation is always important in real estate. People want to be tax efficient and they utilize real estate to do so. And then sure, the net IR is important. It takes into consideration your cashflow and your appreciation. We buy right. So we make a lot of money on the purchase. You don't want to hope for depreciation. You want to buy or sorry, you don't want to hope for appreciation. You want to buy appreciation. You want to buy equity. So right now I'm paying $1.40 a door in Dallas. The market today trades for $1.90 a door. And then people ask, how do you get these deals? Well, that's what we do for a living. We know how to find these deals. We know how to negotiate these deals. And then for my mobile home parks, I'm buying each pad in this two. So I'm doing two mobile home parks. They each trade for $40,000 a pad. Today that market trades for $75,000 a pad. So we're buying equity out of the gate. This isn't hyperbole. This is real costar vetted data. Wow. Um, so it's all of the above. So I think all my metrics are important and I always target at least a two X NYC. And then I like to be in the high teens, twenties on the net IRR. And obviously that doesn't underwrite your, your depreciation. It does not underwrite your, your, uh, cash out refinances. So when you add those two levers in there, your net IRR is even higher.

Lincoln: You ever lost money on any of these deals?

Jeff: Never lost money. Never lost money. Hey, there we go. And again, it's real estate. If you buy it right and you get a good basis in, you're going to be really well protected with that moat.

Lincoln: Yeah. How are you accessing credit right now? Are you a traditional?

Jeff: Freddie Fannie. OK. Freddie Fannie. So I'm on both of their platforms as one of their preferred operators. So thank goodness that they're there because we get really good, not just good rates, but also good terms. Like I said earlier, good IOs, good amorts, the whole nine. I've gotten 35 year amortization schedules before with them. So even loan assumptions may not make sense. I can assume a three or 4% loan, get a new loan at a six, but with the new terms and Amort schedules and IOs, it's better to get a new loan.

Lincoln: Interesting. So Jeff, I want to pivot, or I guess take a step back here for a minute. This podcast is called Funds That Won. So we identify the winners in the capital markets space. So I want to present the question to you, what makes a fund win?

Jeff: Oof, I don't think I've ever had that question asked that way because I'm sure it's a loaded question. What makes a fund win? Listen, it's a fund that actually delivers on what the fund manager is saying is gonna occur. That for me is a win. It's a fund where if I put my money in that vehicle versus keeping it elsewhere, it's a much better vehicle to be in. So in order for a fund to win, for me it comes down to people. For me, regardless of how technologically advanced we become, all business is done through people. So when I'm investing in companies, even with me, people don't invest in the brick and mortar. They're investing in the team that's executing the playbook. They're investing in the asset manager and the company that collects rents and does the lease-ups and all the CapEx. The chokehold of a business, it's the psychology or lack of, the high psychology or the low psychology of the business leadership. That's the chokehold of a business. So if I have a good team and great leadership, like we're going to win as long as they're working the asset class that they understand. So a fund that works is a fund that is investing in people and that is in an asset class that's very well understood by the people running it and where the underwriting is par for the course of what's actually being received in actuality. Don't like funds that have hyperbole. Just give it to me straight. Let me know what I'm getting myself into and just delivering what your say is going to be delivered on. Another thing that funds need to have to win is they have to deliver K-1s on time. Please stop delivering late K-1s people. It's not that hard. Like get your accounting right, get your accounting done on time and deliver your K-1s on time.

Lincoln: That's, that's great. I haven't heard that one yet. What's, are you, are you personally invested in other funds other than your own?

Jeff: I'm in a lot of, a lot of funds. So I have a lot of K-1s hit my, my investor portal every year.

Lincoln: So, and what are some of the things that, you know, as both an LP and a GP, you know, what are some things that you like that other funds do and what are some things that you don't like?

Jeff: Oh my goodness. Okay. I could write a book on this and I probably should. But listen, there's a lot of things that we don't like, and we're a lot more critical of others than we are of ourselves. We often say, I'm not responsible instead of admitting that we're responsible for things. But a few guiding principles for me is, it's interesting, but when people are raising money, they're very available. They're very like approachable. I'm here for you. When can we meet? Can we meet tomorrow? And quite often, once you've funded, it's crickets when you're asking a question. So you have to be responsive to your investors. It's a long game. So be very responsive and be really good with your reporting. Even if it's bad news, report the bad news. No news is bad news. Like, don't just report the good stuff, like report the challenges. We all have challenges, we get it. Like, this is, again, this is why we're in business, because we want to tackle problems.

Lincoln: Let me hit that. So how often would you want to be contacted, you know, about your investment?

Jeff: Via email, me personally, once a month. Okay, that's sufficient. That's me, and that's what I do. So I'm not hypocritical on this. So I deliver my month reports, detailed, 14 pages long, Balance sheets on there, statement of cash flows, what the O cash is doing, what the CapEx cash is doing, what the before and afters look like, all that stuff. If I have to text you or call you to please give me an update, that's not good. And I mean, some folks are not even delivering quarterlies. And sometimes when they give me a report, it's this encyclopedia that I don't have time to comb through. How long should the report be? me 15 pages or less. Just concise. Simplicity, Leonardo da Vinci. Simplicity is the ultimate form of sophistication. Give it to me simply. You do the work. Take that sophisticated thing that you're trying to deliver via an encyclopedia and give it to me in simple form. Quite often when you're delivering so much content, it's because you're trying to like embed stuff in there that I may not want to see. Just give it to me. Yeah, give it to me. So listen, you have to deliver K1s on time. We went over that. So I closed my book monthly, third party, so I can deliver on time. And so I can sleep well at night knowing that my team is being vetted out every single month by third party. And give me the reports and then just communicate with me on all fronts. I'm not saying call me, I'm not saying do a Zoom, but just you want to be elegant with your investors. You want to create a raving fan service because if you launch fund two or fund three, Guess who your best investor pulls. It's the people in your first fund. Those are your best ones. So like long game, like create raving fans and they will always redeploy capital with you.

Lincoln: I love it. You mentioned that you might have several things of things that you like or don't like. You know, I'd love you to keep going here.

Jeff: I think these are great. So what else do I like? I like. Listen, I like funds that also make a difference, as corny as that might sound, but I'm in some companies where I feel like the total addressable market is massive and there's no Sam right now. So I love those funds, I love those investments that have a purpose and that make sense, okay? Let me think of something else I don't like. I don't like when there's hyperbole. or when big names are dropped, when they shouldn't be dropped, both on a persona or an entity. And then you find out that that fund or that person has no relationship with either that person or that entity. There's fibbing going on.

Lincoln: So people exaggerate sometimes. Is this through maybe advisors or?

Jeff: Oh my goodness. It's through actual like GPs sometime that say, Oh, I talked to this company and they gave us this valuation and then I'll call the company. Hey, I'm here, I'm an LP in this fund. I heard the GP state this. Can you, can you please confirm? What are you talking about? We've never even interacted with these people. Wow. That's happened. No way. Yeah. Um, so again, just, and the other thing is make sure that you do everything right on the legal front. Like pay the price now to avoid the cost later. Like don't skimp on getting really good legal advice and really good attorneys that have done it before. That's key. That's crucial. Another thing I would advise us fund managers is do legal audits. I started doing legal audits with my firm once a quarter. My attorney team, third party said, that's a little bit overkill. Let's move to semi-annually. Good news for me. But just, Just go through those processes so that you don't accumulate issues. Just go through those stress tests so you're always protected.

Lincoln: So when you say legal audit, what do you?

Jeff: Your PPMs are in order. All the sub-docs are right. All the signatures are on the dotted lines. All the numbers are showing well. Everything that has to do with PPMs, with sub-docs.

Lincoln: Will you make amendments to your PPM then?

Jeff: Yeah, even if you've added amendments, make sure that everybody signed the amendment. Like just don't have any loose ends. And just make sure that everybody's name is correct. Addresses are correct. The performers are correct. Just anything that has to do with legal. Any loose ends, just tighten them up. And again, if you can pay the price now, you'll avoid the cost later. Like don't accumulate. Like I'm the type of operator where if I have a text message, I immediately respond. If I have an email, I get it out of my inbox because I just don't want that carry over. Like don't let things accumulate because then it's just too big. Like attack it when it's bite-sized. And if you can attack it when it's bite size, it'll never become a big issue.

Lincoln: Like always keep it simple. That's great. Because otherwise it gets so easy to start missing things. Yeah, you start missing things.

Jeff: And then, you know, if I can do things in a timely manner, then I can focus on the little things that make a big difference. Right? Let me go back to my Walmart days, if you're cool with that. Yeah, please. So after college, I was a Walmart store operator. I actually ran my own store in Statesville, North Carolina. And when I first got that store, I went to the back room where you receive the merchandise from your freight trucks. And it was a hot mess. Terrible. Pallets everywhere, junk everywhere, boxes everywhere, etc. The issue is, if your back room is a mess, how's your sales floor gonna look? It's gonna be a mess. Let me ask you this question. Guess who orders merchandise at Walmart?

Lincoln: Who orders merchandise?

Jeff: Yeah, what role? What employee orders the merchandise?

Lincoln: Back office?

Jeff: The cashier. The cashier. Once you scan in the POS, it tells the store, the machine, Hey, we just sent this out the door. Order it. Right. Okay. So check this out. If your backroom is a mess and I have SKUs back there, UPS, UPCs back there, universal product codes. The store thinks that I have them on the peg or on the shelf. Store doesn't know I have it in the back room. So the store's not reordering for me. So I'm missing out on that revenue. I'm missing out on that item because my back room is a mess. So I had to flush out my back room, get all my merchandise on the floor, so when my cashiers would scan, it was real. So then I said, hey guys, we have to do this right. I don't care about the sales floor right now, I care about the back room. If you don't have a clean locker room in sports, you're gonna have a nasty field of play. This is where everything starts. Let's get this back room done. I want all the pallets off the floor, all the boxes gone. I want it to be beautiful, pristine. I want this place smelling good. I want it shiny. I said, by next week, we're scrubbing this back room with a scrubber, with one of those big scrubbing machines. And I said, the following week, we're waxing it and sealing it. I want it shiny. And then we did it. And then every other week, we would literally strip the floor and wax it. It might sound like a lot, it might sound overkill, but it became something, it represented greatness. Guess what happened to our revenue? Guess what happened with our sales floor? Went up astronomically. Profits follow, everything follows, employee morale, everything is just booming. All starts in the back room. So doing those small things, since I was able to wax the back room and get all that stuff done, then I was able to pay attention to more of the small details. Does that make sense? Because then you start figuring everything out. So if you can do your legal audits, get that big stuff out of the way, then you can focus on the small stuff where you can actually create raving fan service for your LPs. And then you can focus more on the investments that you're in charge of. Does that make sense? Totally. So in order to get the small details done, you've got to tap the big things, get them out of the way, and then really start tweaking all the little things that really create a difference. So then what happens is I start doing tours with all the other store managers in my district and taught them the same principles. Obviously, they didn't like me at first because I was only 20-something, telling these 50-something, 60-somethings how to run a store, and they'd been doing it for decades. But after they caught the vision, they really were grateful for that new strategy, if you will.

Lincoln: Yeah. Love it. Great story. Phenomenal. You mentioned earlier that you also made some VC investments early on. I don't know if you still do today. Try not to.

Jeff: But sometimes I get FOMO and I do, but they're small check sizes.

Lincoln: Okay. So I mean, tell me about how you think about, so it's really angel investments. Cause it's not through a structure venture capital firm. It's more angel investment checks that you're writing early on.

Jeff: It's a little bit of both. Is it? Yeah. So it's, and it's more VC than angel nowadays. Oh, okay. Um, but it's just VC, you know, pre-revenue pre-C suite. It's, you know, it's, there's a product and sometimes that's a concept. And, you know, I lost the, I think it's, I've lost a little bit more than that in investments that I've made, but my first loss was a VC deal. It was a great product. It was actually backed by the state of Ohio. So I said, wow, Ohio, the pension of Ohio actually invested in it. Like they did their DD. Like I probably don't need to do as much DD as they did. So yeah, I'll go cut a check, a small check, 50,000 bucks. But lost, but I got, I got into that. That was my first VC deal. But I'm like, oh, this is how it works. And then you learn it probably takes 10 deals to get a home run. Nowadays, I've even heard that it takes 100 to find one. I don't know what the exact ratio is. I don't really live in that world every day. But after that deal, my mantra was 10 to get one. But the one that you get, it's not gonna be a single, double, or triple. It's gonna be a home run. So I'm willing to take those losses. It is what it is. And I have had some great VC deals that have just been massive home runs. that far surpassed the $50,000 loss. But it takes a different type of stomach to do VC. And I'm 47 now, so my appetite to do more VC today, it's not as big. I like more of the singles, the doubles, the triples, protecting my basis, getting my mailbox money, investing in stuff that I really understand, that can withstand the test of times, all that stuff. So, you know, I'll do some of the VC stuff, smaller check sizes, like I'm talking 25K, 50K, 75K. Don't go heavy in them. Probably won't invest in a full-on VC fund personally. I've done these one-offs, these SPVs. You know, if they hit great, if not, oh well, it was at least fun not having to go through the FOMO. I was a part of it. But… That's me with VC. And there's some VC guys out there that kill it because you live in it, you understand it. I'm just an LP.

Lincoln: So net, you think you've made more money in VC?

Jeff: Definitely made more money. Oh, that's great. So people listening reply like, well, it worked. I should be VC. Like, do it. It's just, again, my age, my appetite, where I am with my portfolio, where I am with my balance sheet, I'm just more now.

Lincoln: Yeah, just more conservative. Yeah. No, it's funny because I think you talk to most people and I think they're at a net loss on their income.

Jeff: Oh, I'm definitely at a net gain by far.

Lincoln: So you definitely made some great selections.

Jeff: I definitely, I cut a $250,000 check into VC, pre-rev, pre-everything, and it's worth a lot now. So I can continue doing these small checks and it will get nowhere near the losses that I've been able to surpass by this one specific game. Real estate. So, I mean, real estate's just, it's not very fun. It's kind of boring. Yeah. You don't. Yeah. You just, it's watching paint dry. I love chasing the deal. I love getting a deal under contract. I love closing a deal, but it's just very mechanical. It's very methodical. But I remember this specific deal and there's a, there's probably a buddy of mine watching this. Um, so he knows who it is. I'm not going to mention his name, but I'm literally on my way to the bank. and saying, Hey, I'm going to go put money in this deal. We could lose all of our cash or we can make a ton of cash. So it wasn't a very good sales pitch on my end. I said, we're probably going to lose it though. Do you want to come in 50 50 with me? His response was like, no, I'm good. But the company has done what it's done. And now he, I'm sure he's like every day, man, I wish I would have said yes. When Mendes called me on his way to the bank and done 50 50 with them. So yeah, it is what it is. So yeah, it's exhilarating. But when, I mean, yeah, I did one VC deal, I think two months later it went to zero. So it is what it is. But again, smaller check size.

Lincoln: Yeah. And let's see, I know you sit on several boards. So are those companies that you did invest in?

Jeff: Yes. Oh, okay. Yes. All the boards that I'm on, I have been either the lead for the round or a big chunk of equity, or that I own that company.

Lincoln: Gotcha. Tell me about that experience.

Jeff: Listen, boards can be awesome and they can be so much work. I would probably say all the boards that I'm on, they take a lot of work. Well, one of them doesn't so much. And I'm talking six, I'm on six different boards. One of them's taken a lot of sleepless nights, a lot of issues that I've had to fight through and correct. But the learning, it's invaluable. I say I have a PhD in board governance. And I'm sure that there's many watching that have way more experience than me, but in my world, in my limited world, from where I was to where I am now and serving on boards, man, I have a PhD. I've learned so much. What not to do, what to do, what to allow, what to disallow, who should be my cohorts, how I should interact, how committees should look, all that stuff. Unless you're doing it, you're not, I mean, you're not going to learn. You have to do it. And I've been tempted to renounce my position in some of these boards, but the learning that I gained far surpasses the sleepless nights because now I'm battle tested and I feel like I can add a lot of value in the different boards that I serve on. Love it. But my wife has told me, get off the board, get off the board, get off the board. And I was tempted. I almost sent the text. I almost sent the email, almost made the phone call multiple times. And I stuck through it. And I'm actually really glad that I have, because we're now, we're now in the clear. We're now into a really beautiful situation with the ones that were very sleepless nights.

Lincoln: Yeah, well, I want to talk about this for a sec, you know, because it pertains, I think, to our audience, you know, as emerging fund managers, they're building their credibility, they're building their rapport, they're building a team. One way that you can do that is, you know, obviously, you know, by having credibility yourself as GPs, but then compiling an advisory board, or professionals, an advisory group, you know, and then you can leverage their experience and their expertise, you know, alongside you as you go out to market and lean on them in different ways, shapes, or forms. So what are your thoughts on that? Maybe if someone were to approach you, how would you want to be involved as a board member? How should these guys be approaching prospective board members of building out an advisory team?

Jeff: You may not love my answer, but you have to be careful because one of the easiest ways for you to be sued is go serve on a board. because you have to understand your duty of care and your fiduciary. You have a lot of fiduciary once you're on a board. You have a lot of stakeholders. You have your employees, you have your customers, you have your investors, you have your fellow board members, you have your C-suite. There's a lot of people that you're serving. You have to understand the laws, you have to understand the compliance, you have to understand how the docs are underwritten, what your different pro rata rights are, et cetera. So I think a lot of people that are like, Oh, I'm going to be a board member. This is so cool. And I've seen that a lot. Just make sure that you understand your fiduciary and what it represents and what it means and make sure you have DNO insurance. Always make sure that you have DNO insurance. Now it doesn't give you a license to be frivolous. It just allows you to fulfill your duty and not have all those unintended repercussions that could come via lawsuit. Like you have to be on your A game at all times, being on the board. The buck starts and stops with you. So that would be my advice there. So that's kind of like an ice bath of advice, right? Just giving it to you raw and real. But I love advisors. I view it as buying a time machine. So I advise a lot and I coach a few CEOs too. And they mainly hire me or pay me for me to go over the mistakes that I've made. Not so much the things that I've done well, it's what are the things that I didn't do well? What did I do wrong so that you don't have to go through that stuff? So they're buying a time machine, so I don't want them to go through my pain. I say, I went through this pain because I did this, this, this, and this. Avoid these pitfalls, avoid these blind spots, put this in place, and then you'll do well. So I love advisors for that. And for me, it's you got to get rid of the ego. You have to allow these advisors to come in that are that are value adders. Now, there's some advisors that BTNA big talk, no action. that are experts. So Mark Twain, his quote is, an expert is an ordinary fellow from another town. Sometimes there's advisors that profess to be advisors that have never done the real work. So make sure that you're getting advice from people and hiring advisors that have actually done it. They've been through the battles, they've been through the sleepless nights, they've been through the fire and brimstone, right? But seek out advisors. And listen to your advisors. Don't just listen to listen, like actually apply the advice that they're giving you. I say this all the time. Knowledge is not power. Knowledge is potential. It's the application of knowledge that's power. So make sure that when you're getting good sound advice, you apply it immediately. But I love advisors and I seek them out all the time. In fact, I was talking to one of my fellow board members last night and we're gonna hire yet another advisor onto one of the companies that I'm sitting on the board. And we already have like three or four advisors outside of the board. We love advisors. We love people that can create value for us and that can speed up the process for us by them advising us through all the stuff that they went through that didn't go well so that we can avoid those pitfalls. I love it. I love it.

Lincoln: You know, you talked about there while I've got you, you know, some things that you've learned in your career and things that you've that I went wrong. Right. I love to hear, you know, a little bit of, you know, just generally.

Jeff: good practices or bad practices, you know, that, that happens throughout your, um, yeah, I mean, there's always going to be, I tell people I have failure amnesia because I always view the world as beautiful. I feel like the world's biggest lie is scarcity. I feel like there's, there's abundance in everything. So I don't focus a lot on the negative, if that makes sense, but I definitely learn from it and I pivot quickly from it. Um, but, but like I said, in underwriting, like I've learned this because sometimes I would want deals to pencil or I'd want people believe most easily what they desire most deeply. Oh, I really want this NFT to work. I want this new coin to be, to be it and retire me and make me a billion billionaire. So you invest without doing your property D et cetera, because you value what could be versus what is, and you believe most easily what you desire most deeply, right? We all want that new Uber. We all want that new Facebook. We all want that new Google, that new Amazon. which is fine, go chase that, go dream of that, but also be disciplined in your investing approach. And only put at bay what you're willing to put at bay, right? You should have your investing account that you can go deploy, and if it goes south, it is what it is. Like you made the choice, right? So don't over-invest yourself, and just understand the different asset classes and what your portfolio should look like. Create a moat, have stuff that gives you cash flow, have stuff that is a good annuity, have stuff that's tax efficient, and then go take your moonshots. And again, just be really good with your underwriting and be really good with seeing what's out there, not just with what's in front of you. Yeah, I love it. I love it. And again, I can't reiterate this enough, but you're investing in people. You're investing in people. The products are mainly commodities. It's it's the people or the or the alpha.

Lincoln: Jeff, as we wrap up here, I would like to ask you a few more questions of the personal side. OK, thanks. I guess. Well, let's just start with what advice do you have for somebody who's just getting started in the fund world, you know, starting a fund?

Jeff: Yeah, so I would say do it for the right reasons. If you're doing it merely for the money, I'm sorry to tell you, you're gonna fail. Like, you're dead in the water. You failed before you started. Do it for reasons that are bigger than that. And it might sound cliche, it might sound hokey, and I'm okay with that if you feel that way. But do things to create value. Do things because you feel that what you're doing actually makes a difference. Because when you wake up in the morning, you're going to be so charged with energy because you have a holier higher cause than just making the money. In fact, Um, when I finished my bachelor's, I was going to go into law school and I think I had this conversation with you in Hawaii. I think so too. Yeah. But please share. So, um, I was going to go to law school and then I was prepping for the LSAT, taking those practice tests and everything. And my wife could tell I was stressed out, you know, getting prepped and moving on to this next phase of life, you know, going into more of adulthood, whatever. I had been married for less than a year at this point in time. And then she asked me point blank, why are you going to law school and do you really want to be an attorney and why? I'm like, I want to go to law school so I can learn the law and I want to be an attorney because I'll make a lot of money and I can provide for you and our future kids, our future family. She says, is the main reason only the money? And I go, honestly, if you want me to be real with you and transparent, yeah. She says, you should not be an attorney then. do not be an attorney. And it hit me like a ton of bricks. I'm like, whoa, because that was my path. It was like done. It was dialed. That was my destiny. Right. And I didn't even take me a minute. It took me less than a second to decide I'm not going to be an attorney. And because I was only doing it for the money. And you've heard this quote before, some people are so poor, all they have is money, right? So I'm like, okay, I'm not gonna be an attorney, done. I'm not gonna do the LSAT test anymore, I'm not gonna apply to law school, we're done. So I learned that lesson early on. And then a mentor of mine told me, dollars follow value, not the other way around. If you focus on the money, that's all that's going to be there. And it's going to be short-lived. It's only going to be there momentarily. It's not going to be perpetual. Because value creation is unlimited. But if you're chasing the money without really truly creating value first, you're not gonna have it. It's not gonna come your way. So focus on the value and the money will always be there. It's a byproduct of value creation. So I'm like, okay. And then he taught me, when you wake up in the morning, the first thing that should come to mind is what can I do today to create more value than yesterday? How can you affect more people in a positive light? And boom. So every single day, I kid you not, I think how can I create more value, how can I create more value, how can I create more value? And it's not always easy. Sometimes you get caught up in business and you get caught up in, you know, different disputes that you have with partners, so forth and so on. Your heart tells you, I'm going to create more value than I take. I want to help other people. I want to expand the piece of the pie. I want to be abundant. So you're gonna definitely have back and forth in your mind, but as long as you have your North Star being, I wanna create more value than I'm taking, I wanna, in my partnerships, I'm gonna give more than I get, you will always have bounty and you will always dominate in whatever you choose to do. This goes for personal life, this goes for friendships, this goes for anything. Get in relationships to give, not to get. Be more of a value giver than a value taker. So my advice for guys creating these funds is don't do it for the money. If you're doing it for the money, that's all it's gonna be. It's gonna be short-lived. Do it because you know that you can create a lot of value via your fund. And you will dominate.

Lincoln: Love it. What about personal habits that you have that have attributed to your success?

Jeff: So personal habits, I work a lot on my mental. If you get in your head, you're dead. So just always clearing the mind and getting rid of the clickbait that's out there. Like turning off quite often the news. I want to know what's happening. But I don't want to be entrenched in a way where it's affecting my ability to move forward in life. I believe there's never been a more beautiful time to be alive. Like I said earlier, I believe in abundance. I believe that the pie is massive. I believe we can all win. I believe that we're blessed beyond measure. And that's the reality that I choose to live in. So personal habits, it's staying in that mind space and working really hard at it and convincing my brain and my state to be in a peak performance place and to just get out of all these limiting self-beliefs that just literally don't serve me. And it takes a lot of work. And then focusing on the whole person paradigm, right? Your social, your intellectual, your physical, and your spiritual. Because I don't want to just be great at one thing. I want to strive to be great at all things. Like I don't want to be a great business guy and then a terrible dad. Or a great dad and not a good lover or husband. Or not a good friend. Not a good brother. And it's tough, man. Again, there's no such thing as Work-life balance, that's just the facade. It doesn't exist. I think it's easier to find a unicorn or Bigfoot than it is to find work-life balance. It's all work-life harmony. You have to harmonize with whatever's in front of you. So right now, I'm being a terrible dad because I'm here with you. We're conducting business right now. I'm being a terrible husband, I'm not with my wife right now. But if I'm on date night, I'm leaving my phone in the car, I'm not taking it with me, and I'm paying attention to my wife. Or if I'm with friends, I'm leaving my phone in the car and we're hanging out with my friends, right? If I'm in business, like right now, my phone's on airplane mode, I'm here. I'm not answering my investor's phone calls or anything. It goes in ebbs and flows. It's harmony. I have to harmonize with you right now, then I'll go harmonize elsewhere and then this weekend I'm with the family and I'm being dad and I'm being husband and I'm being everything else. But then, how do I become uncle? How do I become brother? You know, like it's hard because you have so many roles and labels that you need to fulfill on. But in order for you to breathe and be okay with life, you have to understand that it's all about harmony. It's not about balance. You'll never receive, you'll never be in equilibrium with everybody or everything. So that's one thing that helps me too. And then, like I said, just getting the physical right. You know, I'm 47 years old. I try to stay young. I started like, I do a, I do sauna every day thanks to one of my mentors. So I do like 190 degrees for 20 minutes every single day now. In fact, I had a sauna at my home for like two years and I never had gone in. Then one of my buddies told me about the health benefits behind it. And I'm like, I'd be an idiot to not leverage this thing that I have in my own home. My kids were using it, my wife was using it, I wasn't. So boom, doing that, that's helped tremendously, working out every day. You know, all those basic things and then trying to eat the right foods and everything else. And then spirituality, manifesting, staying calm, yoga, meditating, reading good books. On the intellectual, putting myself in situations such as the one where I joined you guys in Hawaii to learn more about funds and being in a cohort of guys that are doing the same things that I'm working on, mining best practices out of everybody. And also being willing to learn from everybody. Because I believe in this. I believe that everybody is superior in me in at least one thing. And I want to know what that one thing is, and I want to extract it, and then I want to quickly implement it so that it becomes a part of me now. So there's just some guiding principles that I live by that help me in my persona. Incredible.

Lincoln: Incredible. On the flip side, what are some of your pet peeves in life?

Jeff: Pet peeves in life. Um, I don't like unresponsive humans. I'm very responsive today. When you texted me, how quickly did I respond to you? Almost immediately. Yeah, immediately. And you can talk to my network. And that's one of the things that I, I, I love that. I love responding quickly and I love quick responses back for me. It shows respect. Um, so a pet peeve is if I reach out like Sure, it may not be urgent, but at least acknowledge, like, you exist and I value the relationship. Okay? Because I know you're checking your text messages. I read this once, I don't remember the exact numbers, but guess what the average response time is for an email? Gosh, I don't know. And you guys might have to Google it if you want to, but I heard this at a conference, three days. What? Sounds long, but it's three days. Yeah. And it could be all emails that are out there or whatever. I mean, attorneys I'm sure respond quicker. CPAs respond quicker. So it's three days. Guess what the average response time is for a text message? What? 30 seconds. So I know that you've had that text in your phone for at least 30 seconds, bro. Like text me back, at least give me a little thumbs up thing that Apple put in there that's easy. So I just, my pet peeve is unresponsiveness. And my pet peeve is when we try, when we judge others by their actions and us by our intentions, like I know I'm not perfect. Like maybe give me a little bit of a break. Give me a little bit of some slack here. Like we're all trying and I'll do the same for you. Does that make sense? Like let's give each other a break. We're all dealing with stuff. Sure. Be responsive, but also I'll like, I'll roll with you. Let's be patient. The twin killers of success, Jim Rohn said this, are impatience and greed. Like be patient. Everybody, everybody's trying their best and just don't be greedy with, with things like that's a pet peeve too.

Lincoln: So Jeff, last question here. What are some of the things you love most in life?

Jeff: So my number one response would be family. That's the essence of life. That's the purpose of life. That's everything. And I, I love, so my oldest is, he'll be 23 this month. So I have a 23, a 21. I have to do the math here. An 18. as soon to be 17 this month, and then an 11. And then my wife, we will be married for 25 years this year, at the end of the year. And then we have two dogs. So I love my family, love everything about what they do. I'm a big protector. And I wanna make sure that they're, I don't wanna give them the things I didn't have. I actually wanna give them the opportunities I didn't have. Right? So first generation makes it, second generation enjoys it, third generation destroys it. I want all my kids to be first generation hustle. My wife's from Argentina. I'm from Puerto Rico. We're both, I mean, I'm a US citizen, Puerto Ricans are US citizens, but first generation mainland, my wife, first generation mainland, she became a citizen, um, you know, by being naturalized here. And we don't take this country and this opportunity for granted. Like this, the opportunities that we have here are insane. And we see it and are grateful for every single day that we can breathe every day that we're alive. And I want my kids to see the same thing. In fact, my two oldest boys, they're knocking doors right now because they're going to be first generation. Again, first generation makes it, I'm teaching them how to make it. And I'm not just talking monetarily. I'm saying, I'm going to teach you how to create what I believe is a beautiful family, beautiful legacy. Honesty, integrity, how to love your spouse, all that stuff that comes along with it. Um, I don't want them to be these bratty. I get everything handed. Like I'm just not doing that. Yeah. In fact, when I pass away, I told my wife, I want to take the U-Hauls and Penske trucks with us and we're going to go burn all that stuff. Cause I don't want to damage my kids. I want them to go have to figure it out on their own. I think that's a great gift that I can give them. I'm so glad that my parents gave me that gift and gave me the opportunity to figure things out on my own and that were willing to let me leave Puerto Rico and come here to the States and figure things out and play in a bigger sandbox, if you will. Same thing with my wife. She came here, taught herself English, by the way, And as she was leaving her apartment, it's a family of, of six, including the mom, dad, four siblings. And she may not love me saying this, but when she was leaving for the States and she had no idea what Utah was or anything like that, literally the family said, please don't take the towel. That one towel for six people in the family. I choke up every time I say that story, like not a lot of stuff, just hustle grit and just, massive potential. She's a full-time author now. You should actually have her on the show here. 24 books published, all in English, just killing it. But again, what I love in life is being able to see the opportunity, harnessing the opportunity, creating the opportunity, and then celebrating with people when they've also embraced and crushed those same opportunities.

Lincoln: Love it. Jeff, thank you so much for being extremely generous with your time today, sharing incredible insights. It's been great having you.

Jeff: Much love. Appreciate it. Thanks for having me. And hopefully we have a lot of nuggets there.