TGCI 82: How to vet out sponsors?

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Episode 82: How to vet out sponsors?

Copy of EP #18 - 2 Guests

Summary

In today’s show, Pancham interviews Adam Levine – managing partner and founder of Levine Capital Management, LLC.

Adam has been following in his father’s footsteps ever since. Learning from his father’s failed investments, he has built his system on how to vet out sponsors. Aside from that, he has also been preserving and growing his family’s capital by investing with the top sponsors!

In today’s episode, Adam shares how he started his career from his father’s investments, his purpose in building his model to vet out sponsors, and the power of establishing relationships!

Learn the secrets to vetting out sponsors so listen until the end of it!

PanchamHeadshotTGCI
Pancham Gupta
Screen Shot 2020-12-11 at 9.21.07 AM
Adam Levine

Tune in to this show and enjoy!

Copy of Quote #00 - 1 Guest

Timestamped Shownotes:

  • 1:38 – Pancham welcomes Adam to the show
  • 2:33 – How his dad became his biggest influence in investing
  • 11:44 – On building his vetting system
  • 14:48 – Key things to look for when vetting out sponsors
  • 22:08 – Educating himself through building relationships
  • 25:19 – How health and fitness attributed to his success
  • 30:57 – Taking the Leap Round
  • 30:57 – His first investment outside of Wall Street
  • 31:42 – Why he didn’t felt fears when he invested outside of Wall Street
  • 32:46 – How a handshake deal from his dad became the worst investment
  • 34:27 – Why you should make your research before investing
  • 36:50 – Adam’s contact information

3 Key Points:

  1. Importance of knowing who you’re gonna invest with
  2. Learning from other investors about things you don’t know
  3. The value of building relationships with investors

Get in Touch:

Read Full Transcript

Introduction

Welcome to The Gold Collar Investor Podcast with your host, Pancham Gupta. This podcast is dedicated to helping high-paid professionals to break out of Wall Street investments and create multiple income streams. Here is your host, Pancham Gupta.

Hi, this is Joe Fairless. If you wanna diversify out of Wall Street investments, then listen to The Gold Collar Investor Podcast.

Hey, this is Mauricio Rauld, founder and CEO of Premier Law Group and if you are serious about investing in real estate, listen to The Gold Collar Investor podcast with Pancham Gupta.

Robert: Hi, there. I’m Robert Helms, host of The Real Estate Guys Radio Program and if you want to have better results in your life, you gotta put better ideas in your mind. You’re in the right place here at The Gold Collar Investor Podcast.

 

Pancham: Welcome to The Gold Collar Investor podcast. This is your host, Pancham. I really appreciate you for tuning in today. Let’s get into today’s show. If there is one thing that has been instrumental in my investing journey, it is being able to diversify outside of Wall Street investments to create passive income. I like investing in stocks and index funds, but you miss out on some of the benefits of investing in alternative asset classes. Some of those benefits are diversification, tax benefits, passive income generation and leverage. As an engineer who was making a high salary, the only diversification I knew was buying stocks of companies in different sectors. It is only after years of learning I started discovering different avenues of investing. One such avenue being investing in private placements. These are the opportunities which are available to high paid professionals. One thing that really becomes important when you’re investing in a private offering is vetting out the sponsor. It is really important to know who you are investing your money with. A bit about Adam now. Today, my guest Adam Levine is going to discuss that topic. Adam pursued his Master of Science in Property Management from Drexel University. He has been managing his family’s wealth portfolio with multiple northern New Jersey and Philadelphia, Pennsylvania investments. Adam is the managing partner and founder of Levine Capital Management where he manages families investing with high quality experienced sponsors in order to generate superior risk adjusted returns helping to preserve and grow his family capital. Adam, welcome to the show.

 

Adam: Thank you for having me on here.

 

Pancham: It’s great to have you here. Are you ready to fire up my listeners break out of Wall Street investments?

 

Adam: Absolutely and I love this subject because, hey, wealth is built in Main Street.

 

Pancham: Yeah, exactly, exactly, so you know, I’m super excited for the show today. So, tell our listeners Adam about your background and more importantly the person behind your background.

 

Adam: Okay, I have a background, I started off working for a real estate developer, well, before that my father—I was always following his footsteps, he started off as a dentist, he built a very successful practice. He always was investing in stocks but that never really workout for him, you know, and he would show me stuff as a little kid and then he will show me the real estate that he was buying. He’s like Adam, stay out of stock market, but this is more in his active investing days. Later on around 2012 he started investing with a company as a passive investor and then later on I started working for them and that’s why I develop my passion in real estate like, you know what,this is something I really wanna do. I decided to go to grad school to get my masters in real estate property management from Drexel and later on I started really learning a lot working for this developer and start following my father with his passive investments. This is when he starts to really start getting invested passively and basically it opened up a whole new world. I saw that once you have capital—it obviously it takes a while to build up that capital but also once you have that the whole idea is to preserve it, right? And there are so many opportunities available that people don’t have like they don’t really know about it. My father started private lending and he’s like Adam I would have so much more if I was doing this 20 years ago.

 

Pancham: Right.

 

Adam: It’s unbelievable.

 

Pancham: Yeah, so Adam like you won’t believe like this show is catered towards people who are working and they love what they do and they are making a lot of money like in their high paying jobs or professions like your dad who is a doctor, you know, one thing you mentioned and your dad who is retired now, he’s a true testament to this is that the wealth is really made, yeah, you’re earning  your earned income which is you are making that income by creating your hours is important and yes, you need to have that mass to build your wealth but it’s built outside of those earned hours like you know, like earned money which is trading for hours and it’s built by investing passively in private equity and in the main street where your father actually learned that and he did that for many, many years and now he got you hooked as well into the same thing. So, he had a successful practice which was his earned income, but at some point he had that money invested and it kind of I would just say created a lot more wealth for him. Where that wealth freed him from his actual practice?

 

Adam: To answer that, yes 100%, there was a minor scare, it was around early 2000, yeah, around that time I mean 1999 I forgot, I was young I was about 14 he got a minor heart attack.

 

Pancham: Wow.

 

Adam: Yeah, so what ended up happening was he realized just like he’s a dentist, it’s a very stressful occupation and he said I don’t need this anymore. I don’t wanna do this. I wanna enjoy life. That was a major scare but the reason why he was able to pick up and retire, he sold his practice it’s because of the cashflow that he had from his real estate. This is mostly active investing. Later on he discovered passive investing and he could tell you it was all a testimony that he doesn’t wanna be a landlord anymore. Even when he has property management in place and you think that it’s passive, it’s not passive. When there is a problem you had to answer to that problem and you may have to write a check to cover that problem. 

 

Pancham: That’s right.

 

Adam: When you’re passive you don’t worry about the tenants, any of that stuff or making decisions. All you care about is how much money do you need, what is it doing, or when I’m getting it back. That’s all you care about.That’s what he care about at least.

 

Pancham: So, really the path that he took was he was a dentist, successful dentist and then he also became an active investor and then he discovered passive investing and he’s like, oh my god, what did I do like why I didn’t know about this, right?

 

Adam: Yeah. And now he’s like I wanna sell off everything. I just wanna invest passively. He’s retired. He’s in his 70s. He’s in Florida and he just wants to play golf and enjoy his time. He doesn’t wanna pick up phone calls. He doesn’t wanna deal with all the headaches of being a landlord, you know, because I hear like I said I hear people say, oh, I’m gonna own rentals, I’m the property management. There’s still problems you got to deal with.

 

Pancham: Right.

 

Adam: You know, it’s not like completely passive. It could be but you maybe losing money you know.

 

Pancham: Right. Right. So, going back to your story now, so he retired and then he had this, he wanted someone to take his money and invest for him and that’s where you came into picture and you started your career off that.

 

Adam: Yes. So, I started working for a developer then he interestingly enough, he started—a friend of his referred him to a hard money lender and basically he started investing with them and this is how it all started. Everything happens for a reason. The market changed where there was a lot of Wall Street money coming into the private lending space or hard money lenders and rates were starting to compress because of it became an interest rate competitive environment.

 

Pancham: Can you explain what is hard money lending for people who don’t know just real quick?

 

Adam: It’s just asset based lending. Basically, it’s a short-term loans that banks won’t lend up because of the restrictions that were put in place, you know, and basically these are loans that could close quick, the higher interest and they are asset based basically and typically you’re lending because with the way you understand it is you go because you own it, you know, this is something you wanna buy but you’re lending just typically 35% equity caution, 30% you know, 65% like you wanna lend plus or minus I mean I can go more into it.

 

Pancham: No, yeah, that’s great. So, basically where you cannot get…

 

Adam: The whole industry is a bomb I mean now we are Wall Street money and the equity, the market would—these loans are being securitized, so the industry is changed from manymoments ago like 20 years ago to now it’s completely different—it’s a lot different now.

 

Pancham: Yeah, you were saying that you had this hard money lender.

 

Adam: Yeah. So, basically he started cold lending and actually that’s it until these are called fractionalized loans where they had a loan scenario let’s say someone looking to flip a house and they would say, hey, I had this borrower that’s looking into, you know, this is their track record, this is the property, this is the loan, how much do you wanna invest in this loan amount? So, they’ll say, yeah, I’ll give a 100 grand so then we own a percentage of that loan. They were paying him a high interest rate at that time I think it was 12% at one point.

 

Pancham: Nice.

 

Adam: And they are like, okay, well, fortunately it’s becoming interest rate competitive environment, there’s a lot of influx of new capital coming into the market so in order for us to lend we have to reduce our rates which means we have to pay you less. I looked at my father and said that I could underwrite a fix and flip, well, you can call it hard money but now the term is fix and flip loans that is above and I said I could find you a borrower and I could underwrite the loan for you. But at this time we were holding onto the paper meaning we held onto the note for maturity and then when the loan matures, we sold the house, they will pay us back. I realized that wait a second like there’s a lot of money and there’s a lot of lenders out there how they deploying 100 million dollars a year or this much money like where does money come from, I discovered there’s a secondary markets. They are not holding onto the paper, they are actually selling the loans off which they are basically transferring the risk meaning you have the risk, you transfer it, you will pay your capital and you could keep on recycling that money and lend it out. And then I realized that you don’t even have to lend out your money, you could actually invest in B-pieces like a percentage of the loan or you could be a loan participant in big pieces. So what I did was like, okay, well, I wanna start this company I kinda I know how to do it I had the institutional partners that I could go over with because I spoke with them and I figured out the business model. Now, I don’t know construction, that’s not my thing, I know how to underwrite but in order for me to take this business to the next level I need to partner with someone that knows flipping houses, so I partnered up with someone that’s been doing it for the past 10 years, now it’s 15 years, you know, I met them about 5 years ago. I said, hey, I have this idea, you guys have been flipping houses, wanna open up a hard money lending company and then I explained to them the business plan.This happened about 3 years ago. We went off to the races, we probably done over 70 million in loans, but there was a lot of liquidity for my father meaning you don’t have to hold onto the loans anymore, we could actually fund the loan, sell it off or now we don’t have to fund the whole loan, we could just participate in B-pieces meaning we don’t have to put up the whole amount.

 

Pancham: You raise other part of the capital from external investors basically.

 

Adam: Institutional investors.

 

Pancham: Yeah.

 

Adam: And then they are selling the loans, they securitize these loans, they are packaging them and they are trading them out. But this business is flourishing, it’s amazing, it’s great and then there’s the private equity now. The private equity what I realized was from my father so going back he was very aggressive in investing he became very comfortable with the idea of passive investing and this is where the light bulb went on. He basically decided that he met some people because when you have money somehow people always ask for money from you, the nature of—it’s the nature of it. So everybody is asking for money from him and they are posturing this high returns and I was like, dad, look I don’t know these people but it looks attractive. I don’t know but he went for it. He went for it for a few times. I didn’t give him the okay. He did it on his own and then it ended up badly. It didn’t workout. The good thing is that I studied this stuff. I started looking over it and then he decided that he’s gonna rely on me now before he makes a decision, hey, Adam, what do you think? And then what I would do is I help create a way of vetting a sponsor. There’s a whole process to vetting like he wasn’t running background checks.

 

Pancham: Oh, wow.

 

Adam: He didn’t do any of that. He would just like he would actually invest on like a handshake because he actually like the person. You know, this people they are very [Inaudible] [13:15] you wanna like them and some of them people were actually completely scams, some of them actually weren’t scams but they just were inexperienced. So, I created a whole way of vetting, you know, a whole system that I rely on my own system. But bottomline was I realized Levine Capital the reason why I created this was because I wanna help other people because there’s other people like my father that their high income, they don’t know how to properly vet  and now there’s a whole bunch, there’s a plethora of high equity opportunities out there because of the recent changes in the jobs, it’s in your face like all these opportunities and it’s overwhelming and they look very attractive but there’s a lot of room for bad actors in this arena. So, I wanna help other people. I wanna educate other people of our story and how I can help them and so what I have done was I basically we have a few sponsors that we currently invest with that we fully vetted, we are fully invested with them and I’m opening up to other investors basically. Typically, these sponsors have a higher middle investment to invest directly with them and I made a deal with them because of the capital we already have invested with them say, hey, you could invest a small denomination with Levine Capital and we will have a better deal investing through the capital version of investing directly. I also created education platform to which I could talk about. I know you wanted to say something.

 

Pancham: Yeah, so I wonder actually this is a great segue way into what I wanted to pick your brain on is how to vet out sponsors, right? So, you mentioned that you have couple of them right now where you are investing and your dad had couple of handshake deals that didn’t go as expected and now you’ve come up with the model way, you go through it and it’s your own model like can you share with us like if someone wants to vet out a sponsor how would you tell them to do it?

 

Adam: So, I could give you a really quick here but I have something even better. I have a blueprint that I created. Actually, it’s like a spread note that I can share with you. You could actually share it with your audience.

 

Pancham: Great. That would be awesome.

 

Adam: Yeah, basically this is the way I do it, right? Obviously, like so there’s a few things that go into it and actually I just had a webinar with one of the sponsors that we invest with. He comes from a private equity, well, actually lending background over 25 years ago opened up his own PE shop and now he’s a sponsor but he basically gave a whole presentation on vetting sponsors I share that with you too. It’s brandnew. It was just on last night but there’s a few things you have to understand like when you’re investing a large amount of equity, majority equity you could ask for more things. Like if you’re investing $100,000 you’re not gonna get all the information that someone that’s investing majority of the equity. Those are the few things, right? A background check can you get that? Yes and no. Maybe they won’t give it to you, but for example you should try to get a background check maybe credit but you may not always get that from someone. So, what I realized was it’s like one of the sponsors we are investing with I didn’t have to ask him for a background credit because I already know who they are lending was I saw the term sheets and in order for them to qualify with this lender, there’s a background credit check already. In order to get the terms that they were offered, they would have to have excellent credit and experience. Does that make sense?

 

Pancham: Yeah, that make sense. So the number one point that you are mentioning is to summarize that we have to do the background check either directly or indirectly through someone like in your instance your example you had this lender who you knew and they would not offer good terms and you know, without having the background and credit check run. So, that was one way, that was an indirect way. There is a direct way. So, background check is one point so what else?

 

Adam: That’s a good starting point. Another way is obviously references. I always feel like talking to references is always a good thing I mean we live in the age of like computers where you could Google people and basically there’s information out there and you may see positive reviews, you may see a lot of negative stuff and if you start seeing a lot of negative stuff there’s something, something is off, you know.

 

Pancham: Right.

 

Adam: Another thing is maybe you wanna go visit them but I like to visit, see like the organization, that could tell you a lot. They organize like do they have like I can give you my blueprint but the way this is what I look for to keep it very simple, you know, I look for experienced sponsors. That’s what I look for. A minimum of 10 years or more. I wanna make sure that they’ve been around through multiple cycles because everybody could look like a genius after 2008 when the market is going up, well, let’s see how they handle this situation right now that we are going through.

 

Pancham: Yeah.

 

Adam: Obviously, there is no perfect science to like, you know, you got to invest in bad deals, it’s gonna happen but how do you handle these situations? How do you communicate with your investors, you know, how do you handle things and this is all very important. But I look for more experienced sponsors, you know, I want them to tell me the good, the bad. I look for vertical integration meaning they are handling everything in house. I like to see that they manage the properties if they are doing something with value added construction. I want to make sure they handle all that, you know, obviously they could sub out certain things you know, like plumbing stuff like that but keep in mind like this isn’t have to be everybody’s way of vetting. This is my personal way of doing it because I’d like to invest with more experience, but hey, you could probably achieve more yield and ask for more if you’re going with the less experience sponsor.

 

Pancham: Yeah.

 

Adam: You can probably negotiate a really sweet hard deal and I’m not saying these less experienced sponsors are good, they could be rockstars but it just not the game that I’m willing to take at this time. Another thing is I like to look for sponsors I mean this is my thing, the more institutional caliber meaning that the margin of that they have institutional capital partners or they could have maybe like for example I’m investing with sponsor right now where they created new entity meanwhile some in their past they had institutional capital partners but now it’s a new entity, they are growing and now they have a family offices looking to deploy a significant amount of capital to bring them nationwide. May I ask, hey, do you have room for me like I will have room for you, but the point that’s what I look for. I’m not saying that needs to be the case but that’s something that I like to look at and I wanna speak with these references and another thing is I wanna make sure they’ve done this type of deals before, let’s say it’s multifamily like have you done this? This kind of deals like I wanna see a significant amount of deals that were done and look at like historicals like show me financials on how everything performed. I’d like to have direct correspondents like I wanna have communication because I’m investing a large amount of money, so I have a little bit of a different relationship. May be if you’re investing hundred thousand or less you are not gonna have that constant communication, you may just get the important and that’s about it. I can go on more but I think that’s the blueprint and that will give you a good start.

 

Pancham: Yeah, I would love to see the blueprint and we can share it with the audience and tell them how to get that, so just to summarize what you said background, checking their references; number 3 visit, meet physically, see the organization, see what they do; number 4, being experience, you know, a good bad and ugly and also like 10 plus years of experience you mentioned and light kind deals they’ve done like for example you gave example of multifamily. You also see for number 5 vertically integration like, you know, they are vertically integrated and they are doing a lot of things in house. Number 6 is institutional capital is investing with them they have access to in situational capital and they do not want to invest and number 7 I have here is when I was taking notes is the communication like you want to see how they communicate and it’s not about whether you’re gonna make the money or lose the money, it’s how you actually handle the situation, how you actually communicate when the things are not going your way, right? And you tell the investors in the face of adversity basically.

 

Adam: So keep in mind like this is my own way of doing it.

 

Pancham: Right.

 

Adam: It’s my own way of doing because I like to follow the smart money like I know that the way institutional investors they underwrite, they could also ask for more. A lot of the sponsors would go after smaller investors because they could get away with a lot.

 

Pancham: Right. Right.

 

Adam: You know, but in a nutshell that’s a good starting point, you know, if you need anything always contact me and be a reference and I established very good relationships in the business where if I don’t know something I have access to someone that does have an answer. 

 

Pancham: Right. Exactly. That’s great.

 

Adam: Yeah and someone that I admire a lot is his name is Daniel Edrei of TCS Anika Homes, you know, for me I’m 35 years old, you know, I have a masters in this business but you know, you can’t buy experience. Daniel has over 25 years of experience as a lender, developer, owner, operator and investor. So, he started out as a lender back in the 90s then opened up his own PE shop. He could tell you a story of how he got started and it’s very interesting and I learned from him how to vet to be honest with you. I picked his brain and basically he partnered with one of the largest real estate families in the nation, the Oller family. So, the Oller family, the father Richard Oller, he is the principal CEO of GoldOller Real Estate Investments they managed like 40 or 50,000 units or something like that. Daniel Edrei partnered with his son Ben Oller. Ben Oller owns like the largest property management company in Philadelphia. They managed over 3,000 single family rentals and they managed multifamily. They managed also for more larger investors as well but we are talking about SFR over 3,000 SFRs but they also managed multifamily. They also owned the largest Keller Williams brokerage franchise in Philadelphia. They’ve over 500 agents. They owned titled companies. They owned a lot. They are very well banked into the real estate arena. They also have another partner Gaurav Gambhir. I actually interviewed him he has a very interesting background. So, TCS Anika Homes is a partnership between Anika Equities which is Daniel Edrei that’s his PE shop, TCS Management Services which is the property management company and that is Ben Oller and Gaurav Gambhir. They partnered up to create TCS Anika Homes and that’s what I mentioned to you before the interview was they wanna be the black stone of workforce housing. They wanna own and manage thousands of these rentals and affordable and they mentioned they wanna open up a REIT and I love the business plan because…

 

Pancham: So, you’re part of their network?

 

Adam: I’ve invested in two LP with them already.

 

Pancham: Okay. So, that’s great. What you’re mentioning there is like in summary that you have like to say in this business your network is your net worth and you are associated with people like them and if anything you always reached out, pick their brain and you know, someone who knows what you don’t know and that’s how you kinda grow.

 

Adam: And I have a Mastermind with some investors of mine and I had Daniel last night on an interview about vetting sponsors.

 

Pancham: Nice.

 

Adam: He does it because of our relationship. Some of this caliber, there is better things that he could be doing and jumping on an interview at 8 o’clock at night. 

 

Pancham: Yeah, so you know, it would be good if you can share that we can put that in the show notes. So, yeah, I would ask you one last question before we move on to the next section of the show which I call Taking the Leap round, so my last question for you is it’s a completely different question I actually added this recently so do you have a morning routine that you follow and if so what is it and do you think it attributes to your success?

 

Adam: Excellent question. I am trying to find too my morning routine. I started off really good waking up at 5:30 in the morning this pandemic hit and then things changed. But my morning routine I try to wake up around, right now I’m waking up around like let’s say 6:30 today because I was up late last night watching football, I fancy football, yeah, I enjoy life a little bit.

 

Pancham: Yeah.

 

Adam:I go to the gym. I tried to workout at the gym. I like to read for my own personal stuff like I’m reading an interesting book, stuff of health, something different but that’s—I wanna do a certain time at 8 o’clock in the morning now usually if I’m available at 8 I have a call every morning with one of my partners for Levine Capital, he’s in Korea now. We talked about the business for like an hour or so, what we are doing about plan, I talk to him. Then I have meetings with my partners at Archive. We were talking about the lending. This is a Mondays we have like management meetings and we have meetings with the sales team. Monday is a pretty hectic, but that’s pretty much my routine, you know, and then later on there’s this bunch of things end up on the calendar like maybe meetings just things that just fell in there.

 

Pancham: Yeah, those are like more business related, yeah, so personally you are just saying is like you like to wake up around 6 and…

 

Adam: Or earlier, I’m trying to wake up earlier now. I’m gonna try to like 5:30. My wife wakes up like 5 sometimes 4, but yeah, I realized when you wake up earlier you have more on your own time. 

 

Pancham: Exactly.

 

Adam: And you wanna workout and then you know later on like 9 o’clock the phones, emails, it starts and then you have to attend to your…

 

Pancham: Yeah, you get on with your day basically, yeah.



Pancham: We’ll be back after this message.

 

If you want to know the top 6 reasons on why you should consider diversifying outside of the Wall Street then you are in the right place. I have written a free report for you. It goes into not just the top 6 reasons why investing in stocks, 401(k)s may not be the sound strategy but also what are the alternatives. Get your free report today on TheGoldCollarInvestor.com/download. I repeat TheGoldCollarInvestor.com/download.

 

Pancham: So, Adam let’s move on to the next section of the show which I call Taking the Leap round. These are the 4 questions I asked every guest on my show. My first question for you is when was the first time you invested outside of Wall Street?

 

Adam:The first time I invested was around 2014, 2015, that was the deal I did—I was investing a lot of stocks at that one time I told you I was working for a developer and then my father got involved with the hard money lending company and I decided to invest I think I invested 40,000. It was a larger check where I said I’ll invest 40,000 I was in my 20s like 28 or 27 and we invested, we participated in a hard money loan.

 

Pancham: Got it.

 

Adam: That’s how I learned the business but that’s my first time how I got started in an alternative investment or private lending.

 

Pancham: Got it. So what fears did you have when you invested that 40,000 dollars?

 

Adam: I wasn’t scared because I understood what I was getting into. I was investing on a lot of stocks. I used to trade a lot. I was investing a lot more money in the stock market. That was taking a lot more risk and that scared a hell out of me because there was the volatility and that was trading options. This I wasn’t really scared because I knew I had a hard asset and I knew the underwriting and I knew my cash flow, I knew the way we mitigated risk. So, I wasn’t actually scared at all if that make sense.

 

Pancham: No, that’s great. Yeah, that makes actually absolute sense. Robert Kiyasaki says that for investors, the game are real investors investing is a game of skill not chance.

 

Adam: The stock market was chance. I got very lucky it made a lot of money very quick like robin hooders are making money and they’re blowing themselves up because they don’t understand trading. 

 

Pancham: Yeah. So, that’s great. Number three, question number three is can you share with us one investment that did not go as expected?

 

Adam: So, for me personally investing with my parents I never experienced something that my father for example he gambled and made some bad decisions and there basically it was a hand shake deal, you know, I warned my father that I don’t really trust like this sounds—the returns are attractive but I don’t know anything about it. To make a long story short, the guy was not ethical, had no ethics, he took the money and run basically. It just—he supposed to buy a piece of property, they’re gonna develop it in Connecticut, the guy became very close to my father, you know, I could tell,you know, the deal too. My father invested in joint venture with a contractor and then the guy went over budget I guess and he asked for more money and I was like dad, no, don’t do that as a personal loan, to make a long story short, the house took forever to close, it was a flip and they ended up getting paid the loans because they went over the budget. But now it’s closed my father, there was nothing left to pay my father. So he was out like 150 or 160 grand. But I warned him from the start like I love him but he tries to, he wants to do things on his own and then he went and learned the hard way that he should have, you know, get some help.

 

Pancham: Right. That’s why he got you. So, thank you for sharing that. These are the lessons that you, you know, do and you learn from them. So, my last question for you is what is one piece of advice would you give to people who are thinking of investing in Main Street that is outside of Wall Street?

 

Adam: Do your research, you know, like study. I’m a big believer in studying relationships, you know, I have a Mastermind group of people investors from all areas of, you know, we are talking about Wall Street traders to engineers, you got to build your network because you know, a lot of times there’s opportunities that come and it’s good to have someone that you could pick their brain and ask them stuff that’s my piece of advice like that’s how I get further because I build a nice network of people that I could learn from. I don’t need to be the smartest one in the room. That’s the wrong room to be in. 

 

Pancham: Right.

 

Adam: You know, I pick someone like Daniel, he’s a mentor, friend and basically I came and he was like look I wanna learn from you. How can I invest to you so I could learn? So, I gotten and so that’s what I’m doing. So, you know, there’s a lot of fluff in the air, quick schemes, oh you could flip a house and make big money with no money in. I am a lender myself and that’s I want people to borrow from me but the reality is it’s not easy. 

 

Pancham: Yup.

 

Adam: It’s not as easy as they make it sound. There’s always risks. Build relationships, you know, read the blueprint, you know, study. There’s a lot of resources out there that you could look into. If you look to invest passively, there’s resources out there that you could talk to. That’s my piece of advice right there, you know, study,build relationships, you know, there’s other ways you could get started in real estate. If you wanna be active by all means you could do that too. But keep in mind that when you are active investor, it’s not a part-time gig. It’s not. That’s how you lose money especially if you think it’s part-time. My father was able to actively invest because he is very hands-on. He looks over every little detail that he doesn’t miss a pen. When we go out to eat, he looks at the bill to make sure everything is charged according to and if there’s a little missing, something is wrong, he’s gotta let them know. Of course you got to be like that with your money, don’t be blind, you know, because you’ll be surprised of the things that pop up on like that’s a mistake so that’s a big advice you got to be hands on if you’re active, find a part-time job by no means, that’s how you lose money.

 

Pancham: Great. Thank you Adam for sharing that. So, this has been great. How can listeners reach you if they wanna connect with you and wanna know about more about your company and what you do?

 

Adam: Hopefully you can Google me. The one thing is on my name Adam Levine, not the singer but you can find me on LevineCapital.com. You could find my website Levine Capital. You can find me on YouTube, I have LinkedIn, I have Facebook, they can contact you and have an e-book as well. You could go to my website LevineCapital.com, you scroll down, you complete your information in there and you’ll get an e-book and then you could sign up for content. We are constantly releasing like new content because we wanna educate investors, that’s my mission is really to help and educate investors so you could make wise decisions when investing passively so you don’t run into the same mistakes that my father made or others just I don’t want other people make mistakes and try to avoid that because wealth is built in private equity real estate and there’s a lot of benefits, tax benefits and a lot of stuff that we could share with you.

 

Pancham: Thank you Adam. Thank you for sharing your knowledge in how to vet out sponsors and I will get the blueprint from you. We will share it with the listeners and thank you for your time today.

 

Adam: I appreciate. Thank you.

 

Pancham: So, guys if you are trying to vet out a sponsor and want to know how to do that, Adam had a great checklist, it’s pretty comprehensive and it’s sometimes not easy to do all those things but if you’re able to get through that, you will definitely will have done your homework and thank you for listening. I appreciate you. If you have questions e-mail me at p@thegoldcollarinvestor.com. That’s P as in Paul @thegoldcollarinvestor.com. This is Pancham signing off. Until next time. Take care.

 

Thank you for listening to The Gold Collar Investor Podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollarinvestor.com and follow us on Facebook at The Gold Collar Investor. The information on this podcast are opinions. As always, please consult your own financial team before investing.

Copy of EP #18 - 2 Guests

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