Episode 84: Hear from "Master Investor" award winner on how to vet the sponsor and the deal?
In today’s show, Pancham interviews Adam A Adams – multifamily investor, founder of BlueSpruce Holdings, and host of the Apartment Investing Show.
After taking a leap in real estate investing, Adam didn’t take long before it became his full-time passion. With what he learned from his different ventures, he has been helping people launch podcasts, manage apartments, and has been increasing his company’s brand to grow as one of the top syndication teams.
A three-time Hall of Fame winner from RE Mentor, top MeetUp organizers in the world, and the “Master Investor” by Think Realty magazine – you’ll see why he is the perfect investor to hear tips and advice from!
In this episode, you’ll see why he was awarded as the Master Investor. He discusses how his career started from the game “Cashflow” and a gift from his stepdad. He also shares his experience from vetting out sponsors that will surely help with your investment decisions!
Want to know vetting out techniques that will certainly help you find the right sponsors? Listen until the end of the episode!
Tune in to this show and enjoy!
- 3:34 – Pancham introduces Adam to the show
- 5:05 – How the game “Cashflow” and his stepfather’s gift made him invest in real estate
- 12:54 – Emotions he had when he received “Master Investor”
- 17:51 – How he started with vetting out sponsors
- 24:04 – 3 things to look at when vetting out the management team
- 35:48 – How gratitude, workouts, and intermittent fasting attributed to his success
- 40:15 – Taking the Leap Round
- 40:15 – His first investment outside Wall Street
- 40:26 – Questions he had with his first investment
- 41:50 – His investment that didn’t work out
- 45:50 – Why you should get your free report to learn to vet out sponsors
3 Key Points:
- Always pour your heart out into your work and all the hard work will always be awarded.
- Real estate investments are the route to have high cashflow when it comes to investing.
- The management team is the most critical aspect when vetting out sponsors so always trust your gut first before anything else.
Get in Touch:
- Get your FREE Report on how to vet out sponsors at email@example.com
- Adam A Adam Website – https://realbluespruce.com/
- Cashflow Classic Game – https://www.richdad.com/products/cashflow-classic
- The Gold Collar Investor Banking – https://thegoldcollarinvestor.com/banking/
- The Gold Collar Investor Club – https://thegoldcollarinvestor.com/club/
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. Before we get started I wanna remind you we are doing some great, great investments and deals in our investment company and if you’re not part of The Gold Collar Investor Club, I will highly, highly recommend you to join the club and you know, be part of these some of these opportunities and if you’re accredited investor, you can — you have this, you know, amazing opportunity to invest in different kinds of investments across the board and you know, we provide some of those as part of The Gold Collar Investor Club and if you want to join the club, you can go to TheGoldCollarInvestor.com/club. Again, it’s TheGoldCollarInvestor.com/club. Once you sign up, you know, we can have a 30-minute phone conversation to go over your investment goals. Now, let’s get into today’s show. If you ever give a software engineer who loves programming a problem or a bug to solve, they will get immersed in the issue and will not rest until they find a solution to the problem. One such issue is related to memory thrashing meaning that the program is misbehaving because inside the computer program things are not where they were supposed to be. You can spend hours debugging issues like that. Smart programmers have ways to find these issues quickly because they understand at a macro level what this program is doing and have a strong computer science fundamental background. So, people who are not computer engineers or engineers at all why do you think I’m talking about this, right? It’s relevant to the topic of discussion today. Just like a smart programmer can solve an issue quickly by having a macro-level understanding of the program and the computer science fundamentals, a smart investor has that kind of understanding and clarity about the investments and people he or she invests with. Smart investors know what to look for in these sponsors, the investments and see if they can — if they match their own investment objectives. The challenge comes for people who are starting out and they want to get to that level of clarity. Also, if the new or experienced investor — also if the new or an experienced investor is considering investing passively they need to also be able to vet out the sponsors and that is the topic for today. We have discussed this topic in the past, however, this is an evergreen topic and it’s always good to hear from different people’s experience. Today, my guest Adam A. Adams is going to discuss this topic. A little bit about Adam, Adam A. Adams also known in the real estate community as Triple A has devoted himself to educating and inspiring investors through real estate conferences, radio and podcast interviews, his program and his thriving meetup group. Adam has been podcasting since 2017 and currently host the apartment investing show with hundreds of thousands of downloads, Adam’s podcast listened around the world. His efforts to educate and inspire other investors has earned him the prestigious title Master Investor by Think Realty Magazine and he is also a three-time hall of fame winner from RE Mentor for his successes in multifamily syndications. Meetup.com recognized him as one of the top Meetup organizers in the world in 2018. Adam, welcome to the show, man.
Adam: Thank you, thank you, thank you.
Pancham: So excited to have you on the show today. Are you ready to fire up my listener break out of Wall Street investments?
Adam: I have been thinking about firing up the listeners and helping them breakout of Wall Street investments. Since yesterday I’ve been so excited. It has been difficult to focus on some other things because I’ve been really wanting to do this show. So, I’m excited, Pancham.
Pancham: Wow, that’s great. Sorry to keep you up at night. All right, so Adam, you know, tell my listener about your background and more importantly the person behind that background.
Adam: Great. A little bit about my background is I have a strange history that not everybody else could say that they are part of. I was born in a very weird place in the middle of nowhere Utah on a ranch with polygamist colony, but I’m gonna go past that. I’m gonna go further than that. And then my mom left and she remarried for such an amazing man. I don’t know if you have ever heard that song wish that I could be half the man that he didn’t have to be, it brings tears to my eyes every time it’s a country song and it reminds me of my stepdad who I grew up with. And my mom started dating him when I was 5. She knew him all her life and the coolest thing happened when I was around 5 years old is he started taking me under his wing and showing me what he’s been doing. So, he was a real estate investor and he owns some companies and in 2006, no, in 1996 I was just in junior high school in 1996 and he purchased the game called Cashflow, the month that it came out. And he tried to talk me into reading — playing this book, playing this game, playing this game. And I was saying, no, no, no stepdad. I would never do that. And then in 1997 the book came out and he bought it the same week, not the same month like he did with the other one but the exact week he purchased that book and he started saying Adam you gotta read this, you gotta read this. I was in junior high school, I wasn’t interested in that. I was about to start high school and like you’re old and boring, dad. You’re old and boring. I’ll do that some time but not now. So, that’s a bit of my like background and I believe is — the listeners are gonna be able to easily remember about me polygamist colony then I get the stepdad, he’s all about real estate, he’s all about this, we bought tax deeds when I was young. I went to auctions with him. We were sending letters to people that were delinquent in their taxes and it was not until college that my dad finally realized or I guess my stepdad he’s my main dad even though, you know, but I say it because I want the listeners to know that he’s my real dad even though he’s my stepdad and he didn’t have to be as amazing as he was but the point is in college he bought this piece of property and he gifted it for me in 2005, you know, 11 years after he tried to get me to play that game and we never played that game, he bought this piece of property, gifted it to me and then his CPA told him you can’t just give that to your son, he has to pay for it. And then he reneged on the deal because his CPA told him you gotta give it back, you gotta make him pay for it because if you just give this thing away to your stepson you’re gonna have to pay a lot in taxes. Of course my dad didn’t wanna pay a lot in taxes so he decided to make me pay for that. He decided to make me pay for that and I was like how much and he says “Well, just what I paid for it.” And I was like what kind of Christmas present is this? How much did you pay for it, dad? And he said he paid 100 bucks. Basically, what my dad did is he sent a letter to this person who owned that property and he said, “Hey, if you do a quit claim deed and I take ownership of this property and deal with all your back taxes would you be willing to have me just give you 100 bucks so that you don’t have to have this foreclosure on your record”? The guy said, yes. The guy was like, yeah, I’m totally good with that. So my dad bought it for 100 bucks now he sells it to me — he gives it to me and then sells it to me for 100 bucks and I thought it was pretty cool. It was the first time I ever owned a piece of America. First time I ever own it. It was just a cabin lot and it wasn’t worth very much maybe three grand at that time and then they started bringing in utilities to that place and so I actually ended up being able to sell that and after all of the expenses that I paid with real estate commissions and taxes, property taxes over the two years that I owned it, in 2007 I made about 12,000% return and that’s when I finally said to my dad okay fine I’ll play your game Cash Flow. Okay fine I’ll read that book. So, it was 2007 that finally got me — 10 years later finally got me to decide I’m gonna be into real estate. That’s kind of a little bit of background on me that and I love CrossFit. I love mountain biking and I love my kids. I got two young boys that I hope that I can raise them to be as awesome as my stepdad was to me.
Pancham: That’s awesome. Did you buy the Cashflow game for them yet?
Adam: No, but we have the Cashflow game but I didn’t have to buy it. So, I guess I can’t say I bought it, but yeah, we have the Cashflow game and we are — I was playing it with my sweetheart’s daughters so there’s me and my two boys, her and her two girls, it’s kinda cool it’s like the Brady Bunch almost, but just not enough kids luckily. We are fine with four. But I was just playing with the oldest daughter and I finally got out of the rat race, it took me two days we are playing the Cashflow game I finally got another rat race and I was an airline pilot so my cashflow once you get out of the rat race is epic. So, yeah, we were playing literally last night to be honest.
Pancham: That’s great, yeah, I play that with my son too like he’s nine and he absolutely loves that. So, that is awesome. So, what do you do now like other than the CrossFit, the mountain biking, what’s your business and what you do now?
Adam: As far as business, there’s two things that we do. One, I help people launch podcast and two, I have — we just buy and purchase properties. We managed the properties and I’m sure your listener has heard about syndication literally exactly what we do, so my team is an operating team and we find deals, vet deals, we manage deals, we bring in passive equity, passive investors, and so we have been doing that part, I’ve been in real estate now since 2005, apartments since 2008, and we’ve been syndicating apartments since 2007 I think we started in 2016, but we really closed our first deal in 2017. So, that was like three and a half years. We just been managing our portfolio. Whenever I have an opportunity though, I go passive in other deals. So, for Adam Adams I think the listener probably wants to know I manage four properties, four properties it’s about — it’s four different unit deals and then I’m passive in three different properties. One of them is Joe Fairless, I know you and I both hold him in high regard, so I’m passive in one of his deals and a couple others. But all in all it’s 1400 doors but that’s not all that I managed. Some of them passive, some are active.
Pancham: Got it. Got it. Thank you for explaining that. So one question I wanna ask you before I get into how do you actually decide on vetting out the sponsors before you even invest with them like you got this prestigious title Master Investor by Think Realty Magazine, how cool is that like, you know, tell our listeners about that story. How did you get there and what does that even mean, Master Investor?
Adam: Yeah, so Think Realty is a big company, a magazine, they have podcast and they put out regular magazines and they have these things where they select different people to earn different awards and they reached out first to people that they trust maybe others that have won the awards in past and that’s exactly what they were doing and I think this is probably the third year that they were doing this awards. Somebody that was old or previous not old, she’s great, a previous award winner, she nominated me for the Master Investor and Joe Fairless I think won the Multifamily Investor of the Year, the same year Joe Fairless I think got Multifamily Investor of the Year and I got Master Investor of the Year.
Adam: And there was a bunch of other category, single family, property management company of the year, but the Master Investor apparently is the most prestigious title that they have and I remember just feeling honored that I would even be nominated and I saw the other two people that had made it past, you know, the first couple of rounds and I thought to myself the truth is I thought to myself these two are incredible and this was a couple years ago. And so like my brand has been growing a lot but it has grown a lot since then and so even back then I’d only had a podcast for like two years — about two years I had a podcast and I was thinking to myself I’m not gonna win, I’m not gonna like actually win against these people but they have you fill out, they have you fill out like a little bit of bio about you, what you care about and I just thought I’ll pour my heart out to this and if I don’t win, I didn’t expect to win anyway but if I do and if I don’t and I do that I can’t be hard to myself but if I don’t win and I don’t do that. So, I just shared my story, shared exactly where I was, what I was doing and it was peanuts compared to these other two that I was going up against but somehow I won. And I couldn’t accept the award in Atlanta that year because I was hosting my own conference during the Think Realty conference, I had my own going on and so what they did is they did something out of ordinary, they flew this guy named John to me and he had this gorgeous box and inside this box was like wax paper and it was like a leather looking box and then you open it up and inside when you open that up, there’s this giant shiny trophy that’s made of like crystal or something or it seems to be like crystal, I get emotional pretty easy. We were talking about my stepdad, I get emotional when I think of just how incredible he is and trying to grow my own kids and make them — I got emotional when I open this present like when I open this award and it said, you know, Master Investor of the Year and they told me it’s the most prestigious of all of their awards and I’m just like I felt proud I guess but more just like humbled more like how would this happen. But, yeah, I didn’t expect to talk about that. I don’t really ever talk about that award but that’s what was happening. That’s how I got it. So then they play this video, he comes and I just I say thank you for the awards, sorry, I can’t be there and they play it in front of I think hundreds and hundreds and hundreds of people if not thousands. They play this Joe Fairless is there and a bunch of other friends that I have are there because this is a huge thing and people are taking pictures of me and they are like holy cow this is so cool. And so I’m getting text messages from friends, people like Joe that are at the event and that are like I’m so proud of you, congratulations, this is — what an honor and I’m just like feeling that same thing again. It overcame me. What a nice award it was, yeah.
Pancham: That’s awesome. Congrats once again. That’s good to know that story and thank you for sharing that. So, you know, let’s move on to this question that, you know, a lot of people who are now in the stock market has been going up and up it’s crazy after the March crash, you know, just before COVID and a lot of people who, you know, my listener that they are working in tech or they are high paid professional and you know, they have been investing in stock market and a lot of times they have this question on like how to vet out the sponsors when they are getting started out and it’s very overwhelming to begin this journey so how did you start that and you know, what tips do you have for my listener who is going to that and want to vet out the sponsors?
Adam: Yeah, no, I think going into some detail on the episode about just vetting sponsors it’s going to be critically important. I had a strange route though because I’m exact opposite of your listener. Your listener probably works at Apple or Google or Facebook or Netflix or you know, one of those prestigious technology companies and for me I switched my major in college bunch of different times and I finally graduated with an education degree which if I would have used it I probably would have gotten paid 25,000 dollars a year back then. So, it’s complete opposite, right? And for me I found real estate I sold this piece of land in 2007 and I made more than I had ever made in a single year from that one transaction and to me in college I decided that day that experience that I’m not probably gonna go and become a teacher. I’m probably not gonna work for the man. I think your listener enjoys what they do and so they are probably automatically getting their money put into the stock market. For me I never considered the stock market I always thought to myself that real estate was where it was at. I always thought to myself, well, my dad does this. This is what my dad focuses on. This is what’s working for my dad. We are my family’s millionaire I hesitate saying that because I don’t think my dad wants people to know. He likes to keep private but growing up that’s who we were. We were on self-storage units. We owned multifamily. It was very normal but we made that money with real estate investments. And so to me it just seemed like the obvious route. I invested in stocks now today through an app called Robinhood because I want to diversify and Robinhood it was easy but I’ve never had a W2. I’ve never been able to just have 401(k) automatically going into the stock. So for me real estate was the easy way to go. So, we will — I think we’re gonna answer that question for you but I just wanted to share like it wasn’t really a thought for me to compare them that much because it was working really well for us. But, you know, my sweetheart is an attorney and she’s got her 401(k) and she’s got her money automatically deploying in there and she’s got quite a bit in the stock market. And for her it was very difficult as she and I we’ve been together for several years as she and I were talking about this odd thing called real estate investing and getting your money maybe out of Wall Street. She wasn’t super comfortable with it at first. But what she did is she and I went passive together in one deal and then she and I — we did the minimum, we just did the minimum I think was like 25 or 50,000 and then she and I go passive in the next deal and she’s starting to see this returns especially like Joe Fairless is one of them that we went passive in and he does monthly distributions and she’s starting to see this monthly checks and she’s like, okay, well, this is better than I’m getting in the stock market, so she pulled a little bit more out and she put them a little bit more into the next one. She and I went together co-invested into the next deal. She wanted to feel comfortable that if — that it was something that I would put my money into as well. So we did that a couple of times and since I’ve now been passive in a few deals about a thousand doors or so, now that I’ve been passive in that and with her and I’ve seen my experience in hers we’ve really started to try to figure out what it takes to vet somebody and as we are running our own deals, my company Blue Spruce we run our own deals and we see other operators making some mistakes and other operators not — we’ve started to kinda figure out that there’s three major things really, three major things that you gotta be looking at. And some people miss them. And so when we vet and when I’m gonna go into my next deal and I cannot wait to have that capital to get into that next deal that’s what I wait for to be honest. If I had millions more dollars I would be in tons more deals because I prefer being passive personally. So, the three major things that I would say that we want to focus on and it’s in this order is the team, the management team, the actual market and then the deal. And a lot of people they don’t think so much about the market, they might think that they trust the team and so they go into crappy markets. I don’t know if I’m allowed to cuss on your show or not, but they just go into crappy markets that-
Pancham: That is fine.
Adam: -crap is fine. They were going this terrible markets where you’re not gonna get any returns. And there’s passive investors that make that mistake and they invest because, oh, this is a 10-cap. It must be better than a 5-cap because you make twice as much. I highly disagree. So there’s a few things that we do when we vet the team and then when we vet the market and then when we vet the actual deal. I’m happy to go into detail on any part that you’d like.
Pancham: Yeah, I know, I think what I want to really focus on is that your first check which is the management team, which is I think super critical because you know, deal is a deal and then, yes, market is also extremely important and I absolutely agree with you on the order that management team, the market and the deal. So, people would like to invest with people who they know, like and trust, but if someone has never invested before, how can they form that with the management team. So, yeah, it would be great if you can go over what do you do to, you know, vet out the management team.
Adam: There’s three big pieces that we use to vet out the management team and I think the listener agrees. I think the listener probably feels like I feel where here she says to themselves, hey, I get a good feeling or bad feeling about certain people and that’s step one. When it comes to the management team that is your absolute first thing. Do they pass your gut check? If they pass your gut check that’s when you can start thinking about going into anything else. But if you’re already feeling a little hesitant, if you’re already feeling a little sketchy about working with somebody then you know that you can just stop there. So, step one with the management team is just the gut check.
Pancham: So, would you say for the gut check, yeah, I agree with that, right, but in the COVID world, would you say like if they do not meet or they don’t have time to physically meet the sponsor, would you say to get on video call or a phone call?
Adam: 100% and if you’re — if you have an operator listening and they utilize those video calls and phone calls that can be a good way for them to show the passive investor that they can utilize technology that they are in with times and that benefits both parties. And if you’re a passive investor and you’re working at Apple or Google or Netflix or whatever, if you want to be a passive investor and you want to connect with somebody and dinner doesn’t make sense or flying out there doesn’t make sense today, I 100% love and we do this with our past investors all the time just jumping on at Zoom call with the operator. And so when I become passive I want to be passive with somebody that I know, like and trust. And the face-to-face is what helps me get to the trust factor the best. It’s what helps me understand that gut check the best because when you’re face to face and hopefully in person but if you’re even a couple hours’ drive, it can be very beneficial for you to just jump on a Zoom or at least to initially jump on a Zoom or a Skype or Google Hangouts, video chat, so yes, the answer is 100%. And with your gut check you wanna be just checking their authenticity. You just wanna see if there’s any time that you say to yourself not quite sure about this person because when you’re saying to yourself that I’m not quite sure that usually is a dissonance like a terrible cord in music, that’s usually this dissonance where something in your spirit is telling you that it’s not right. So, you can feel that. You can feel if they are being authentic with you or not. And that’s critical. You don’t want a smooth talker that simply tells you everything that makes you feel good. You want somebody that you can understand is giving you everything and giving it to you real and giving it to you raw. If you can sense that they are being honest and authentic with you right now it’s more likely that later on when something goes bad and almost every deal has something go bad that they are going to be there telling you the truth about it at that time. So, I like having — working with an operator that I feel comfortable going and grabbing a drink with them, going and sitting down, you and me Pancham we went and sat down at a restaurant and I loved that. I loved that experience and I would invest with you because I got that good feeling when I sat down with you and you know, the next time I have money I wanna see your deal, I wanna see what you have to offer because you’re one of those good guys that I was able to sit down with that gut check critical. May I tell you the — share with the other two parts?
Pancham: Yeah, absolutely. Please go ahead.
Adam: Okay, so within the management team, I still think there’s three major things. The gut check and then understanding their track record and then if that passes then you go to what’s called a background check. You literally do a background check. Most of these background checks are paid and most of them cost you may be 30 bucks and there’s a few different ones and I can help you find what background check you should be using but the point is if they pass the gut check, now you need to see if they have a good track record. Now, you need to sit with them and see Pancham you’ve sold three of your deals as I understand it as of today there’s three deals that you’ve exited, right?
Pancham: Yes. So, two actually with it sold and one is actually we cash out refinanced.
Adam: Okay, cash out refund.
Adam: Perfect. Perfect. And so what we would be doing is we would wanna sit down with you and we would wanna ask you have you exited any deals? What’s your track record? And then as we are learning that this piece is part of the track record and it’s critical. You gotta call references. So, you say to Pancham, you say, hey, man, you got some other people that have invested with you, right? Are you open to letting me talk to any of them? Can I chat with them? Could you share with me who that is? What deals they’ve been in? How many they’ve been? I wanna know the good, bad and the ugly just like you would never be able to get a job at your awesome tech job that you have today without having your boss call your references, you are not going to allow your money to go into this deal until you understand that someone has good track record. Now, if they are brand new and they have good people on their team, maybe that’s a little bit different, maybe that’s your gut check and that’s your decision. I’ve invested with one of the people that was brand new. They had never exited a deal and I was okay with that. I was okay with it mostly because they were willing to say that because they were willing to be honest with me. They were willing to say look I haven’t exited any deal. I own this two. I said, hey, I’m okay with that. I got a really good feeling about you. Can I talk to a couple of the investors that are in those deals right now? So, number two is just vetting their track record and you can do that in a lot of different ways but calling references is one of the easiest ways to understand that. And then the third thing is the background checks is a lot of people think, well, my gut check passed, my track record passed so I’m good. Can I tell you — you absolutely needed to do a background check. There are two people that I went to work with myself, I was gonna co-GP with some people two different times. This co-GP just means that I’m gonna be part of the general partnership and they would be partner of general partnership. In essence one of them found the deal and then together we would manage it and I would be one person to help bring in more equity because I had some investors that were looking to place capital as well. So we were gonna go-GP and what we found when we were doing the actual background check is that one of the people had a security violation. You want and if he or she, I don’t wanna give too much away to the listener about this person and try to get somebody in trouble that is not my game, so he or she this person who had a major security violation, if they would have told me ahead of time, look at them before you invest with me or before you bring in another investors to invest in our deal, you gotta know a few things about me. This is where I came from. This is where I’ve done and this is the time that I messed up. If you searched my name you’re gonna find it. I may or may not have been okay with that. I doubt it still but at least I would have been able to be educated upfront.
Adam: But once he or she hid that from everyone intentionally and then we find out through a background check it is an immediate obvious no-no. So me personally I’ve never gone to prison. I’ve never — I’ve had a couple of speeding tickets but I’ve never done anything else. And you will find that if you will look into my background. But if I did do something I should tell you ahead of time.
Adam: And so if you’re a passive investor, the first step with the background checks is if they pass this first two things you just wanna say, hey, Adam before I invest with you I just want you to know I’m gonna be running a background check. If there’s something I should know before I spend that money just tell me now. But if I find something in there that you should have told me I’m gonna be more disappointed and definitely not invest with you. If he says something like that that probably would spark and start getting this to be moved to the next step. So, those are the major things that we do about the management team.
Pancham: So for the background check, do you ask the sponsor for their SSN? How would you do?
Adam: There’s a couple ways that we can do that. You can ask the operator for their social security. You can ask the operator. But there’s other ways to do this. There’s TLO and there’s all this types of other ways that you can check this stuff. But what we have been doing when we go to work with somebody is I literally just send him to this website. I don’t remember what the website is like this second I’ve got it like it’s one with that we use, but anyway the point is that I send them there and they just put their social into the website because I don’t care, I don’t need the social I just ask them to put it in.
Pancham: That’s great, yeah, I know that you put together an amazing report for the listener that they can get a hands on. We can talk about that towards the end. So, thank you for sharing that and it’s great. I 100% agree with you the management team is the most critical thing even in the corporate world I worked in W2 job for many many years and I managed teams and I always say this that there were times that we had such a bad project which was struggling and if you put a good management team on a bad project they can make that project come out good but if you give up good project to a bad management team they can even screw that one up. So, it’s critically, very, very critical. Thank you for sharing all that. I have one question for you before we move on to the second part of the show. My question for you is I have asked this question now for many, many guests and you know, for all the successful people do you have a morning routine that you follow? If so, what is it and do you think that attributes to your success?
Adam: I have a morning routine, it’s not as cotton dry as some but I do definitely think that it attributes to my success. For my morning routine, there’s a couple of things that I do. The biggest one that I tried to do every single day before I get out of bed is I express gratitude and people can do this in all sorts of ways. Some people call it meditation. Some people call it prayer. The easiest way to say is I literally just close my eyes and think about where I am and what I’m grateful for and I love starting my day that way. I will start to that, I’ll try to exercise most mornings that’s one thing that I tried to do most mornings. Another one that I tried to do almost every single day I would say 30 days out of the month usually is I drink two big glasses of water. And so I just grab two big glasses of water. I’m one of those weirdos that practices something called intermittent fasting. It basically means that I only really eat between two and seven. In general I tried to just have one meal. It keeps me feeling healthy. It keeps me like the energy that I have right now I think comes from intermittent fasting. And some people like no, if I don’t eat, I’m going to — I’m gonna die. I don’t think that’s true. I fasted for multiple days in a row and I found that that’s not where I get my energy from at all. I can fast for days and still be fine. But I like doing just one meal a day. It helps me keep fit. It helps me keep looking good. I’ve lost lots of weight, so I do that. I do intermittent fasting. It basically means I just drank water in the morning. I don’t eat breakfast. Outside of that part of the morning routine I get my kids up. I get them ready for school based on if it’s COVID or not. I send them to the bus and that I do every single day and then I’m usually in my office because I’m waking up at 5:30 or something like this 6:30 whatever, but maybe 4:30. But I usually I’m up by 6 normally at the latest and I do all of those things exercise, ride my bike, go to the gym, whatever, get my kids ready for school and then I’m at the office usually by 8:15 that’s when I have my first appointment and it’s just work, it’s just work and I focus on work until I go back with the kids and then I try to go kid time again.
Pancham: Great. Thank you for sharing that. I actually do intermittent fasting as well, not as long as you do. I recently started and some days I’m successful, some days I’m not. But I do 16:8 like where I eat between 10 and 6, right? You know, sometimes that becomes 6:30 and sometimes in the morning it’s 9:30, so yeah, it’s not like exactly not that particular but I’ve been trying that definitely is very, very good. So, we will be back after this message.
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Pancham: So, Adam we are moving on to the next section of the show which I call Taking the Leap round. I ask these four questions to every guest on my show. My first question for you is when was the first time you invested outside of Wall Street? Was that 2005?
Pancham: Okay, great.
Adam: The very first time.
Pancham: Did you have any fears that you had to overcome when you bought that property by paying 100 dollars and getting that on your name?
Adam: Yeah, good question. I’ve never really thought of that. I absolutely had fears and one of the fears was I felt like I was getting swindled by my dad. I was like you paid 100 and now I had to pay 100. But it was only 100 bucks and granted I mean I was paying for my books so that was a lot of money for me like 100 bucks while you’re being a server at a restaurant paying for your own room and board, paying for your books, paying for tuition, etc. 100 dollars was like I didn’t just have it when I was in college. I had to pay for my own college. My parents wouldn’t do that like they bought me Tuba which they said it will get me a scholarship. It did get me a scholarship but I still had a lot of expenses. I still had — I was still living and I ate a lot. I ate at my parent’s house at home. But you’re asking if I had fears and the big fears were if I can come up with this money and put it into this investment like when do I get it back? How do I get it back? Will I just lose it? What happens if the market changes? I remember thinking lots of different questions at that time but it was a smaller deal. So, yeah.
Pancham: That’s great. So, my third question for you is can you share with us one investment that did not go as expected?
Adam: Absolutely. So many. So many, just one I will like to say I bought a mobile home and I didn’t know a lot about mobile homes at that time. This was 2015 or 2016. I was doing more flips back then and I bought this mobile home and I thought about it for an incredible price and the reason that it didn’t go as expected was a couple main things. Number one was where I got my comps. I was buying a mobile home or I guess it’s whatever they call it a manufactured home but it was in a neighborhood where there was some manufactured home but mostly homes with foundations and I did my comps on everything and I should have done my comps only on like kind. So that was one issue. The next huge issue which won’t be relatable to every listener but I hope that a couple people listen to this and say, wow, now I know. This mobile home was built in a year that makes it so you can’t sell it with an FHA financing. It has to be a conventional loan. The thing is that mobile homes they used to have 3-inch walls on the outside and then they had to go to like 6-inch walls with more X, Y and Z. And so with these 3-inch flimsy walls the mobile homes are unable if it was built before certain date you’re unable to get a lot of different kinds of financing and so you’re either only looking for cash buyers or a buyer that could put down 20 or 25%. In our case, we were hoping for and expecting to have a first time home buyer because of the neighborhood that we are in was more of that type of neighborhood, not the type that you would just pay cash. It’s more of like 3% down type thing.
Pancham: Oh, I see.
Adam: And so we bought this and we ended up selling the property before we did any work. We sold it for 11,000 dollars more than we bought it for. I think we bought it for 100 and we sold it for 111. And we like lost 500 bucks even though we sold it for 11,000 more. We like lost money because of hard money cost because we used the hard money lender and closing cost real estate commissions that the seller that was me had to pay for when I sold it. So, on paper it looked okay. But there was a few things and the take away for the listener is if you’re going to get into something that you manage yourself, you wanna think ready, aim, fire not ready, fire, aim. I just jumped into this thing because I thought we had so much equity and then it was very difficult for us to find another buyer, etc., etc., etc. So, if I would have spent a little bit more time on types of due diligence that I could have done on the property and understanding the lending and the dynamic ahead of time, we probably would have been a lot happier but it took three or four months and we lost 500 bucks.
Pancham: Not the biggest of failures but it thought you a lot. So, it’s great. My last question for you Adam is what is one piece of advice would you give to people who are thinking of investing outside of Wall Street that is in Main Street?
Adam: Honestly, the one piece of advice as I would say that they should email this email that we have set up for this free thing, firstname.lastname@example.org. And the reason why because it goes through everything that you need to do if you’re going to vet — if you’re going to put money with an operator like Pancham because I have found out recently that most private money is actually in this syndications. I bet you didn’t know that PPMs were so popular. They are, but if do them wrong, you probably will lose money and so if you send an email to that email then what you’ll get is you’ll get this whole PDF that’s gonna help you be able to know how to vet the team, make sure that they’ve been in that market before, how do you make sure that they have done that asset class before? How do you know that they’ve done that size of a deal before or that asset A, B, C or D? Is this their first C class they’ve ever approached? There’s a ton, a ton of information that you need in order to make sure that you’re putting your money with the right people because the most common thing is this private place in random and if you haven’t done it yet, you just need to make sure you’re gonna protect yourself and that’s why you would send an email to email@example.com.
Pancham: Great. Thank you Adam for sharing all your knowledge today. It was an honor to have you, you know, and we will make sure that listeners if you really want to know all the details much more than what Adam shared today on how to vet sponsors about the market and also you know, the deal it’s all in that report, so do check that out and Adam any parting words?
Adam: No, I appreciate having you having me on and I’m gonna get you on my show as well. I’m looking forward to that and I just think the world of you I think what you’re doing is incredible honestly you’re adding a ton of value to really good people and I don’t have much more than that. I’m just appreciative of you.
Pancham: Thank you. Thank you for the kind words and well, I’m more than happy to be on the Master Investor Show for sure. All right, thanks Adam.
Pancham: I hope you learn something from Adam’s experiences and also his vetting out technique for some sponsors for investing his own money. Thanks for listening. I appreciate you. If you have questions, email me at firstname.lastname@example.org. 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.