For today’s episode, we will be discussing a quite popular topic in the investing community, Funds.
Funds in the past 2 years have been seeing a lot more growth. There will be fund opportunities in the future, it is better to understand what they are, who they're best served for, and whether or not it's a good vehicle
New book coming out tomorrow! Passive Investing Made Simple: How to Create Wealth and Passive Income through Apartment Syndications. Email for a FREE copy. The book is coming out on August 11th!
[00:01 – 15:52] Opening Segment
[15:53 – 25:06 Let Us Talk About Funds
[25:06 – 30:59] Fund of Funds Model
[30:59 – 38:50] Closing Segment
“And let's be clear, there's a difference between investing in something you don't understand and speculating. You could speculate on something you understand quite well.” – Dan Kreuger
“money and your finances are too important to outsource. I'm sorry. There's not a world where I'll ever say that you should take a complete hands-off passive approach and just trust somebody else" – Anthony Vicino
"the first thing that's really valuable about a fund for an operator is that you get to have the money already in the account." – Anthony Vicino
"I feel like it's kind of like it depends on what your personality is, you know" – Dan Kreuger
LEAVE A REVIEW if you liked this episode!!
Keep up with the podcast! Follow us on Apple, Stitcher, Google, and other podcast streaming platforms.
To learn more, visit us at https://invictusmultifamily.com/.
**Want to learn more about investing with us?**
We’d love to learn more about you and your investment goals. Please fill out this form and let’s schedule a call: https://invictusmultifamily.com/contact/
**Let’s Connect On Social Media!**
LinkedIn: https://www.linkedin.com/company/11681388/admin/
Facebook: https://www.facebook.com/InvictusMultifamily
YouTube: https://bit.ly/2Lc0ctX
For today’s episode, we will be discussing a quite popular topic in the investing community, Funds.
Funds in the past 2 years have been seeing a lot more growth. There will be fund opportunities in the future, it is better to understand what they are, who they're best served for, and whether or not it's a good vehicle
New book coming out tomorrow! Passive Investing Made Simple: How to Create Wealth and Passive Income through Apartment Syndications. Email for a FREE copy. The book is coming out on August 11th!
[00:01 – 15:52] Opening Segment
[15:53 – 25:06 Let Us Talk About Funds
[25:06 – 30:59] Fund of Funds Model
[30:59 – 38:50] Closing Segment
“And let's be clear, there's a difference between investing in something you don't understand and speculating. You could speculate on something you understand quite well.” – Dan Kreuger
“money and your finances are too important to outsource. I'm sorry. There's not a world where I'll ever say that you should take a complete hands-off passive approach and just trust somebody else" – Anthony Vicino
"the first thing that's really valuable about a fund for an operator is that you get to have the money already in the account." – Anthony Vicino
"I feel like it's kind of like it depends on what your personality is, you know" – Dan Kreuger
LEAVE A REVIEW if you liked this episode!!
Keep up with the podcast! Follow us on Apple, Stitcher, Google, and other podcast streaming platforms.
To learn more, visit us at https://invictusmultifamily.com/.
**Want to learn more about investing with us?**
We’d love to learn more about you and your investment goals. Please fill out this form and let’s schedule a call: https://invictusmultifamily.com/contact/
**Let’s Connect On Social Media!**
LinkedIn: https://www.linkedin.com/company/11681388/admin/
Facebook: https://www.facebook.com/InvictusMultifamily
YouTube: https://bit.ly/2Lc0ctX
Anthony Vicino: [00:00:14] Hello and welcome to Multi-family Investing Made Simple. This is the podcast where we take the complexity out of real estate investing so that you can take action. Today, I and your host, Anthony, the CEO of Invictus Capital, joined as always by Dan. It depends. Krueger Hmm. Now, some of you might not know this, but Dan is an avid user of adult diaper products. Depends. And he wants to talk to you today about the game. I just really do the the the the buzz there. But you you have been dealing with a whole lot of people
Dan Krueger: [00:00:52] Have been buying a lot of diapers lately.
Anthony Vicino: [00:00:53] So you're not. Yeah. Yeah. How old is Coaker now? She's like eight months
Dan Krueger: [00:01:00] And about 10 days. She'll be eight months.
Anthony Vicino: [00:01:03] I can't believe it, I'm almost like it, but when this episode goes live is pretty much. And it might be Coco's 18th month birthday on the 11th. Think about that, people who actually are going to go out on the 10th. So August 10th. Well, tomorrow, Dan's daughter's birthday. How exciting is that? All right. So in a battle. Let's get to actually a
Dan Krueger: [00:01:25] A story about a milestone or birthday in December
Anthony Vicino: [00:01:30] It just, I don't know, parents. I'm not a parent, so I don't know. You all seem weird to me. You seem pretty obsessed with your children. You celebrate your eighth month's birthday. Is that one that's a milestone and doing anything interesting?
Dan Krueger: [00:01:44] Well, Liz will take pictures of her with these little milestone blocks that say numbers and months and weeks. And so when she is matched up with whatever it is, you take a picture. I mean, the first month was like a big deal. And then the second month I was like kind of a weird incremented. And then third is like fourth after like the third month, I was like, I'm going to wait until like six months because that's half a year and then a year. And then once you hit a year if you're still talking and weeks and months, I'm done with you.
Anthony Vicino: [00:02:12] You're done.
Dan Krueger: [00:02:14] If you say like three hundred weeks or like forty-seven,
Anthony Vicino: [00:02:17] Don't make me do the math. What do you do? I don't have to I don't have a reference for three hundred years.
Dan Krueger: [00:02:23] As soon as you hit a year, you hit 12 months, you switch to years.
Anthony Vicino: [00:02:27] I am still telling people how old I am and weeks like that's just I don't want to be passive. If you can tell somebody I am one thousand nine hundred and twenty-four weeks old, people go.
Dan Krueger: [00:02:39] Cool. Is that accurate?
Anthony Vicino: [00:02:41] That is accurate. That's thirty-seven. Actually, I'm probably, what is it, one thousand nine hundred and probably thirty-two weeks at this point?
Dan Krueger: [00:02:48] Oh, it sounds exhausting.
Anthony Vicino: [00:02:50] I've been around the bend a few times, but that's good for you people because you're going to get to learn from my experience and my mistakes, my failures, my successes today in particular. We're going to talk. Actually, I have no success or failures on the topic that we're going to talk about today, which is why should you invest in a fund and the profits that we're going to talk about, what the heck is a fund or have to listen to groundwork to define the term, so to speak, and then we'll talk about who it is a good fit for. I'm just going to spoil the ending. And I kind of spoiled it at the very beginning by telling you it depends. There you go. So if you're listening to this and you're expecting a definitive answer one way or the other, by the end of the episode, you're going to get it depends. But hopefully, we can frame it in a way where you can decide if it works for you. So before we get there, because that's the meat and potatoes, but I'm here for the dessert. Give me my strawberry cheesecake of bad investing advice. I want it now. I want to eat my ice cream before dinner. Thank you. So what is your best investing advice this weekend?
Dan Krueger: [00:03:52] Hmm? Invest in Bitcoin. I was going to think of how to phrase these things is I have the idea and I'm like, how do I make this sound? How do I word this word, this invest in that the next cutting edge thing? Right. Invest in the next new market, invest in innovation. You know you give them trying to say here, yeah.
Anthony Vicino: [00:04:26] You want to be early. Yeah. I think that is what you're getting to do. You want to be an early adopter, not just an early adopter. You want to be like the early, early adopter, the moment that we start making the transition to living in a completely virtual environment. But right now, do Fullan or like Bitcoin and block change? I would say it's pretty early and I'm not actually saying that it is, in fact, very, very early days. And so I think there's a lot of truth in that. I think a lot of people are very interested in new markets because there's a potential ton of growth. There is a lot of opportunities for a 10 x one hundred thousand on your investment, which if you're like an angel investor, call if that's what you're going for. But if you're looking for your meat and potatoes like solid investments that churn consistent, predictable returns, then something is a little bit more proven and timeless I think is prudent.
Dan Krueger: [00:05:24] Yeah, there's something I want to say here and there when you are entering into a position of any kind, any kind of investment, there are two kinds of risk you can take the time, risk and information risk. And getting in early, you're taking information risk because you don't really have confirmation that the thing that you're speculating on is actually going to play out. So you get in early because there's more potential upside, but you don't have enough information yet. The things haven't really come to fruition, like in Bitcoin or in the crypto space. There's a lot of unknowns around regulations and taxes and which will have a big impact on things. So, people who are getting in with the intent of investing as opposed to just trading it, they're taking the information risk. Right. They don't have all the information, but they're getting in early and hoping that the information does come out, plays in their favor, or you could wait a little bit longer until more information comes out and you've got your confirmation, but now you're getting in later. OK, so now that's your time risk. You've lost some time.
Dan Krueger: [00:06:27] You've lost some of the meat of the move, whether it's real estate stocks, creped, whatever it is like, you can either get in early and potentially make big returns, but there's more risk or you can get in later and miss some of the movement. But at least, you know, like the concept has been proven and things are moving in the direction I thought. And that's why I say another thing. And this is something that I've kind of taken from Warren Buffett because he says it a lot, specifically with innovation in tech and things like this investment. You understand we're just talking about Warren Buffett in the last steps a little bit because I brought up his book or the book about him called Snowball. And that's what he says all the time. Like, no matter what you're doing, if you're investing in what you understand, you're going to be OK, right? It's when you start to get outside of your zone of confidence, that's didn't matter how good the thing is and how much money is going to be made there. If you don't understand it, stay the heck of it.
Anthony Vicino: [00:07:19] Yeah, I agree with that recently I alluded to angel investing there just a little bit ago, what I would say is take it, take a look at your entire investment thesis and you don't have to go in on all one thing like you. Diversification is an interesting concept. Some people have really strong stances on it. But I think the bulk majority of your investing should be in things that you have a very good understanding of, things that you can reasonably project the returns, especially if you're planning on living off of that money at any time in the near future. But if you want to speculate, if you want to play in the Bitcoin and the blockchain that world and you want to try to take that chance for like the thousand X return, you can do that, but do it with a very small portion of your total investable pie and be completely OK with that going to zero.
Dan Krueger: [00:08:09] And let's be clear, there's a difference between investing in something you don't understand and speculating. You could speculate on something you understand quite well. There's nothing there might be a risk of loss, which is what makes it speculation. But even if you're speculating, you still need to understand what you're doing. If you're one of those people that's just on Robin Hood, just pushing buttons and following people in chat rooms like stop doing that, that's stupid. You need to understand what it is you're doing. And if you don't understand it, stop do something that you do understand and work your way up to the thing because maybe it's too advanced for you or something, but there should never be a lack of understanding. Like, that's just a rule of mind. Like, don't do things you don't understand.
Anthony Vicino: [00:08:48] Just yeah, I have a degree because I would I would completely agree with that. Even if you're looking at really speculative opportunities like stay within a zone of competence and understand like at least have an investment thesis that you can articulate clearly to yourself and to others why you think the thing that you think I'm a big fan of, like deal journals or deal memos where you write out like when you're and I utilize this as a decision journal. So whenever I make a really big decision in my life, I try to create a journal and write out what I was thinking, what I was feeling, what the expectations were in six months, a year. And I write this all down because we're really horrible judges retroactively. When we look back on the decisions that we've made, we tend to rose-tinted a little bit and say like, oh, of course, I thought it was going to do that. You didn't you didn't like. Generally, you're giving yourself the benefit of the doubt. So a decision journal or a deal memo when you're like making an investment can be valuable because it's a touchpoint in time. You can look back on it and say, that is exactly what I was thinking. And that's really useful information because if you're going to discover there a lot of times it's like what you think now versus what you thought then. Very different things. And you can start to notice patterns and where you were right and where you were wrong, you could start to notice some of your blind spots. And I've been on this kick recently where I'm just preaching to everybody that self-awareness is not a superpower, it's the superpower. And so anything that can help you become a better investor by understanding where your blind spots are or where your strengths are is very helpful. So a decision journal may be a good tool.
Dan Krueger: [00:10:25] I got mine right here. I'm glad you said that. I do because we talk about real estate all the time on this, but I'm just a passionate trader as well. I don't really invest in anything, but I do a lot of trading and it's a very emotional thing. And so I take notes. Every time there's a thought or a feeling and you'll see I have my criteria for everything and I need to check at least all four, if I check less than that, I've noted. All right, when I'm feeling and what I'm thinking and you look back and you realize that there are signals there that there might be some emotions brewing, whether it be greed or fear or anger or tilts. Right. And you can start to pinpoint these things starting before they actually turn into you, melting down and blowing up your whole account. Right. So this practice is insanely valuable because the stuff that spills out here when you go back and read it later, you're like, oh, man, it was interesting. I do the same thing every time this type of thing happens. And if I just go back and when this little trigger pops up, I make this change and I don't make that mistake anymore. Infinitely valuable.
Anthony Vicino: [00:11:30] Nivel Robert talks about how judgment is like the thing at the highest levels when it comes to investing or entrepreneurship. Judgment is everything. And if you can just be like one percent better than the competition and Warren Buffett is his quintessential example, he's like, if Warren Buffett can be right just one percent of the time, more than the competition, then on a long enough time frame, he's going to win everything because everybody is going to come to him. His judgment is going to prove out to be consistently better. And one of the difficulties is like, well, how do you develop good judgment? How do you know? Like if you have good judgment and this is one of those ways where can you exactly. You can measure it. You write out your thoughts and then you come back to it and you review it later and say, OK, what have I learned? Where have I? Whereas opportunity for growth here and most people I think just don't even think about one their life that way. But definitely, they don't think about their investments that way.
Dan Krueger: [00:12:25] Yeah, it's amazing how a little edge can have such a dramatic impact on things over enough occurrences. A casino is a great option. Pretty much all games at casinos are very much slanted in the House. But the one that's got the best odds for the player is blackjack and blackjack.
Anthony Vicino: [00:12:47] Like they have point five or something like that.
Dan Krueger: [00:12:49] Exactly. It's half a percent. They have a half a percent edge and they make billions off of that half percent. Right. And we were just we've been talking a lot about F1 lately being there because it's really good to show on Netflix. I check it out. Those guys get ready four milliseconds, less than a second like these little minuscule things are just super.
Anthony Vicino: [00:13:08] And no, I love it. I and I think if anything, from today's episode, which we haven't even got to the topic yet, but this has been a really, I think, a really important conversation because it's to succeed as an investor, you should be rigorous and your understanding of your all appearances and of your goals. And listen, we wrote a book called Passive Investing Made. Simple passive investing is still something that you need to be rigorous with in terms of understanding the operators that you want to work with, the markets, or the deals that you're investing in. Like I'm not a big proponent of ever just shutting off your mind and giving somebody else your money and saying, here, good luck, go, go for it. Like, that's money and your finances are too important to outsource. I'm sorry. There's not a world where I'll ever say that you should take a complete hands-off passive approach and just trust somebody else. Like, don't give us your money hoping that we're just going to do everything for you. Like you need to, at minimum, understand your investment thesis and come to, like, clarity on why you believe we're the right people. To be giving your money or go down the street is the right guy to give your money to.
Dan Krueger: [00:14:20] And you can make that really simple, too. It doesn't need to be an exhaustive process after some initial study. I mean, I showed you my trading notes. I got four things. I could look at anything if I see these four things, I know it's good if you could whittle it down to a few specific parameters that you're looking for, you can make that vetting process of things still fairly passive. You're not outsourcing one percent, but you've simplified the process of vetting opportunities to a point where you can determine whether something is appropriate rather quickly. It's just about being clear on what your parameters are, what your goals are, and having this mental peace locked down because the technical aspects of anything are quite simple. It's knowing how to control your emotions when money and risk get involved that people struggle with. So you've got to really make sure that you don't deviate from your parameters when something emotional pops up. A really, really pretty exciting, ego-driven deal. Or, you know, FOMO, that's a big one these days with everyone jumping on the Reddit bandwagon and trying to find it like there's so much foam out there, like anything like the number of questions I've been asked by people like, hey, Dan, should I get into this? Because this guy making all this money, like if that's your question, like
Anthony Vicino: [00:15:37] That's where your starting point
Dan Krueger: [00:15:38] Is, I don't even need to hear the risk if it's a female-driven thing. No, that's never a good thesis. So get this mental piece under control. Figure out your parameters, act like a computer, stick to the rules, try to control the emotion and you'll be OK.
Anthony Vicino: [00:15:53] So this is a good prelude then into today's conversation, which is about should I invest in a fund. So first is, you know, let's understand what a fund is, how it's different than, say, single asset syndication. And because funds are a conversation that has become increasingly popular in the last two years in the multifamily and commercial real estate space in particular. And so you're going to be seeing a lot more of these opportunities in the future and understanding what they are, who they're best served for, and whether or not it's a good vehicle for you is going to help. You know, I would say Coalgate, that investment thesis that we've been harping on for the last 10 minutes or so is like, hey, you got to have your investment thesis. So let's dive into it. What is a fund?
Dan Krueger: [00:16:47] That's a really broad term. So to be clear, the term fund is going to be used all over the place and in a bunch of different contexts. But the way we're talking about it today is basically we're making a distinction between our deals where we go and we find a specific property or portfolio of properties and bring that specific opportunity to our investors and say, here is one, two, three, Main Street. Do you want to invest in this property here? The specifics, do you want to invest in this specific thing? A fund is actually where money is allocated for a specific business model, a specific business plan, but the assets are not necessarily identified yet. They've got some parameters over what they're going to be looking for, where these things are going to be, how much they're going to cost, what the return requirements are going to be for it to get into the fund. But it's you don't know exactly what the assets are. You might it might be in the multifamily Cleveland Fund, where we're looking for asset class value and multifamily assets that produce 15 plus percent IRR. And it's going to be a 10 million dollar fund over five years. Right. That's what you know.
Dan Krueger: [00:18:04] And if you like that idea, you can put your money into this thing. And I guess the benefit for a lot of people is that they don't have to analyze the specifics of the deal. They get the diversification of it and I guess simplifies it for certain people. But for like a type analytical guy like me who likes all the details, I would much rather prefer to be, OK, show me each deal and let me look at each one independently and pick and choose. So in my opinion, I feel like it's kind of like it depends on what your personality is. You know, if you're one who's much more excited to outsource things and get them off your plate and you just kind of want to find a good jockey, you know, if you like our horse analogy about betting on the jockey, in this case, the operator, as opposed the horse, the deal like. Might be a good solution for you, but if you're super analytical and the type and you want to see all the details, maybe the ideal single assets indications might be different. So I think that kind of summarizes right there. I think on this, I think
Anthony Vicino: [00:19:04] You know, I think that was a good explanation. The funds, you know, the really popular let's talk a little bit about why it is operators in particular over the last year have started leaning into the funds a little bit more. And a term that you hear thrown around is a blind fund. And that's really what we're talking about here, is when the fund is first launched, the goal is to say, hey, we're going to raise five million dollars and then they're going to set parameters like Dan was saying, like, this is the Cleveland Fund and we're going to look for three to five assets in the 40 to 100 unit range. See, that's going to generate roughly around 50 percent. And so that's all the information to get. You then say, hey, that sounds like a great, great thing. I want my money in that. And you put your money in and then we take all your money. We go out and we deploy it to go and buy these assets. And so that's the first thing that's really valuable about a fund for an operator is that you get to have the money already in the account.
Anthony Vicino: [00:20:01] So when you go to a broker when you go to a seller, you can move a whole lot quicker because you already don't have to raise the funds. So instead of saying we can close in 60 days, but we're going to spend 30 of that going to raise capital from our investors, you can step in and say, hey, we have the money ready to go. We can close right now. And that can boost you and the seller or the broker's eyes can move you and make it more likely that you can close the deal. And so that's like the real big value for an operator is like being able to move really, really quickly. The downside for you as the potential investors, that you don't necessarily know what that's going to be invested in the single asset. You don't know. You don't get to see. It doesn't really matter to you because it's going to you're going to maybe see it once it's done, but you're not going to have any say in the judgment of should we move forward on this deal or not. Yeah.
Dan Krueger: [00:20:53] And so it's going to jump in and clarify whether you kind of hit. If I want to make sure that we're not misleading people with the term blind fund, it's not like you never know what's in there. It's not a black box. It's like, you know, once it's purchased, all these funds are transparent. Once the assets are in there, you know what it is. But so I don't want people to think that it's like a super-secret black box that you never get to see into it. That's a surprise. If you're ever pitched a super-secret black box, that's a scam run.
Anthony Vicino: [00:21:19] That's definitely a scam.
Dan Krueger: [00:21:20] Yeah, I'm investing in a black box.
Anthony Vicino: [00:21:22] Now, here's the thing. Like, should you invest in a fund versus single asset syndication here? Here's what I would say is you should probably if you're new to passive investing, go the single asset route for a while. Find the operators, invest in a couple of deals, and spread that across multiple operators to get to know them, how they operate, and how they communicate. And after a while of that, I would say if you've if you found a couple of operators, if you like, I really like these guys. You've done a handful of deals with them. And the deals that they do are always within this type of parameter. They focus on this area that this type of asset and they're launching a fund to say we're going to do more of what we've been doing. Well, that might be a situation where you consider jumping into that fund with them because you have that track record, you have that experience with them. What I wouldn't do is just jump into your very first investment vehicle as a fund. Personally, I wouldn't, because I think I think there's a lot to learn from looking at individual deals first and understanding the mindset of the operators, how they underwrite what they're looking for, and getting that deeply understood before. You're just throwing your money into the larger pot for them to just go and deploy. So that's kind of like my stance on it, but that's also jaded by my personal investment thesis. So you'll have to come to terms on your own and decide what do you believe in this?
Dan Krueger: [00:22:50] Interesting, I disagree. I don't get it. I knew it when I mean, when you first posed the question, my initial response was going to be it all kind of depends on the individual's personality, right? Whatever suits their personality. But I will say that you are right. You will learn a lot more invested in single asset deals because you get to see how individual deals, properties perform, given certain variables changing. So you get to see that change. So, you know, outside of that, I would stick with my initial gut reaction that whatever jives with your personality, I will say that a fund approach would probably be the simplest way for somebody to diversify some capital over multiple investments. So let's say you find a fund with one hundred thousand dollars minimum, and that's really all the capital that you have to invest and you want to split that up over as many deals as possible. Most deals closet syndications like ours have a minimum of fifty thousand. So if you go a single asset, probably you get to get into two deals and maybe you can get in with a hundred thousand dollars to a fund and that's going to have five or six assets. So maybe that gets you a little bit more diversification as an argument to be made there.
Dan Krueger: [00:24:05] I will say that just fundamentally, if you've got an operator buying five assets in single assets, syndications, and you also have the same operator buying the exact same five assets in a fund, like, there's no difference in performance from that structure. Like there's nothing inherently different about the returns you'd see from the single asset deals in the funds. You'd have to go through five investment transactions in the single assets indications, but also that the returns are going to be better in funds. I want to make it clear that there's really no inherent difference in performance or risk between the two outside of the risk of not exactly knowing which assets you're getting. Like if at the end of the day, if they're the same assets, five of them are in five syndications, and in the other situation the same assets are in a fund like the investors are going to get the same amount of capital. So there's no real big difference. Do you want to get diversified over several deals or do you want to kind of pick and choose which ones you like best?
Anthony Vicino: [00:25:06] So the push I'll push on that a little bit, because if and this is this is very dependent on how the fund is structured that this is, say, a fund of funds.
Dan Krueger: [00:25:14] Well, that's a shitty upside, but just.
Anthony Vicino: [00:25:17] Well, I'm not a pooh-pooh it like I. I'm going to I'm going to leave it. I'm going to leave it out. There is a lot of men. Exactly. So let's fund a fund model is say, a person or a company who creates their fund. And the idea of it then is they're going to go deploy that fund in a variety of other operators deals. And so what we're talking about, if the operators are the ones that are actually creating the fund and deploying that fund into their own deals, and generally they're not going to charge fund maintenance fees in addition to the acquisition fees on the property side, that's not always the case. Look into the paperwork because you might find some scrupulous, unscrupulous people who are like double feeling you, which there's really no point in doing that. And so your returns would theoretically be affected. But in the fund to fund model, generally, your returns are going to be a little bit less than if you had gone just investing directly with the investor. And I don't work for free. Exactly. Because the
Dan Krueger: [00:26:19] Reason. I'm sorry. Go ahead.
Anthony Vicino: [00:26:21] Yeah, that middle person, the funda fund manager, has to get their cut and that makes sense. And so you maybe I think you'd have to have a really compelling reason personally to go and work with somebody who's creating a fund to fund knowing that you're probably going to get maybe one or two basis points and less return than if you had just gone straight to the operators themselves.
Dan Krueger: [00:26:45] You know, the only place I see for a fund of funds is for providing access to a shape of this. Let's say there's a large hedge fund that only takes checks of a billion dollars. I can see a place for a fund of funds where there's a fund that pulls together small investors into a fund to invest in this larger hedge fund that has a very high hurdle that only billionaires can reach. Right. That's where I see a fund of funds making sense, where it lets people aggregate their capital to get into something extremely large with a higher hurdle. But at the end of the day, I've seen a lot of guys in our space just packaging up investors and investing into our deals like no one's done it with us specifically. But there's a lot of that going on and it's just all middlemen. It's almost like a wholesaler. It's like the same thing. It's like, let me get wedged myself in the transaction, try to pull a few bucks out, but I'm not really providing much value. I'm just kind of wedged myself in between the capital and the source. I'm trying to make a little bit. So that's the kind of stuff that irritates me. The other stuff on the bigger side, I think that that makes a lot of sense. But some of the guys that are in our space are making fun just because they don't want to actually run a deal and do the work, but they still want to get paid for something like that's kind of silly.
Anthony Vicino: [00:28:09] I think the billion-dollar hedge fund example is an interesting one, and you can make a compelling argument that another reason why the fund, a fund might be beneficial and can justify its existence is when private equity or say, a family office investor comes into a deal. If they're a substantial portion of that, they might negotiate for very special return rates or more control because they're bringing, say, a five million dollar capital raise. And if they're going to bring four million of that, they might negotiate for better terms, whatever that might mean. And so you can make an argument that in the fund to fund structure, if you're going to be the single investment source for that deal or the primary that that fund manager might negotiate and get you better terms, then you could have gotten as individual investors. But then again, that's like I don't know if that's true or not. You just have to figure out your operator in the deal specifically if that's what's happening there. So that's just a nuance. It's something that's very popular these days in the Spaces fund of funds. You'll hear that a lot from. It's just becoming very, very popular. As the market is becoming more and more competitive, there are more entrants trying to acquire fewer and fewer deals. So those deals, they're getting bid up and they're going faster with less due diligence and all these things. And so anything that can put an advantage into an operator's corner, which is really what the fund allows you to do, is go in close quickly and be more competitive in closing, then that's why we're seeing so many of them pop up right now.
Dan Krueger: [00:29:40] Do you know how Bernie Madoff got most of his money?
Anthony Vicino: [00:29:44] I don't think Bernie Madoff is doing super good right now. Well, how much money he's got at the moment,
Dan Krueger: [00:29:48] It's probably no. I mean, it's all going. But you know how you have, you know, where most of the capital that got invested in him came from?
Anthony Vicino: [00:29:56] I have no idea, actually.
Dan Krueger: [00:29:59] Feeder funds, funds, funds. I was going to make the point that the amount of things between you and where the money is actually ending up is usually like you don't want a bunch of layers between you and who you're actually investing with. Right. A lot of the people that lost money with Bernie Madoff didn't know their money was with Bernie Madoff because they invested in a fund that invested in his fund. And all of a sudden all this money's with this guy and it's going to fund models.
Anthony Vicino: [00:30:27] So it's the hedge fund model like you're giving your money to like a hedge fund manager. And they're deploying it
Dan Krueger: [00:30:33] For, you know, it was like a mutual fund that invested in hedge funds, which is effectively a fund of funds. That's not the hedge fund business model. But like that's just kind of the issue you have when you've got multiple layers between you and what your actually your money's actually ended up. And you don't really have the clear visibility that you would if you were just investing directly with. You get what I'm saying, middle managers, become muddy the waters.
Anthony Vicino: [00:30:59] I want to start singing a song now. I can see clearly now the rain is gone. And now, you know, dear listener, whether or not you should invest in a fund or not after losing dollars if you wanted to keep digging into it. There's a lot of resources out there. I would recommend figuring out if it fits with your investment thesis. And then before he jumps into one, make sure you keep your decision journal close at hand. You run through the scenarios and really vet your thesis before you just jump blindly into a blind fund. So that is that's the fund. Let's transition let's roll over to the book recommendation. Now you've been in the last couple of weeks, you've been holding up a certain book each time. And I want you to hold up once more because when you're listening to these listeners at home, that means it is the eve, the night before the book goes live before it launches into the atmosphere, passive investing made simple how to create wealth and passive income through apartment syndications. If you want to learn how to be a passive investor, you're listening to this podcast. That's step one. Step two is going by this book tomorrow. The moment that it launches. Go get it. OK, that's enough of myself. So, Dan, what good books have you been reading recently? What's something that's on the top of your mind?
Dan Krueger: [00:32:13] Well, I mean, if there's a book launch Eve, I mean,
Anthony Vicino: [00:32:15] Definitely, that one that's a killer book. I mean, if I
Dan Krueger: [00:32:18] Say I'm going to say something. I'm going to make it like a book recommendation. That's for this one, too. But like just like not even for the sake of, like, promoting this book. It's like I was on Anthony the other day. I've never actually sat down and read a book on the real estate investing stuff that. Packaged up our philosophies and beliefs so well and in such a clear way. And it's like one of the only, passive investing books out there like there are so many books for the active guys like us, which is great. But that's not really what the average past investor wants to read. It's kind of like too much data about the, you know, the boots on the ground stuff. And like the negotiating with lenders and finding a deal like this is just literally exactly everything you need to know on how to find operators that the deals from what passes for passive perspective and then get back to your life like this, like this information is scattered all over the Internet. But right here it's all packed up and do about three hundred or so pages, which you can read through, you know, a weekend on the beach, on the plane, or whatever. So, I mean, it's just so easy to read yet, so. Packed with information, and this is just such an underserved audience, I guess so. So go out, buy it, read it
Anthony Vicino: [00:33:43] And take pictures of it and then tag us if you're on the beach, reading if you're reading passive investing made simple on the beach right now, I don't know. Maybe this is a couple of weeks after the book is launched and you've got your copy. You're in Mexico, you're sitting on the beach drinking a mai tai and you're reading passive investments. That will do me a favor and snap a picture and send that over to us. We'd love to see it.
Dan Krueger: [00:34:02] Yeah, buy them built. Let's be. That's locker detail
Anthony Vicino: [00:34:09] Where he recommended this one, actually. All right.
Dan Krueger: [00:34:12] A different
Anthony Vicino: [00:34:13] Way. It's so good
Dan Krueger: [00:34:17] To see if I can recommend you have a recommended Amazon unbound yet.
Anthony Vicino: [00:34:25] Uh, I've never heard of that one.
Dan Krueger: [00:34:27] Ok, Amazon about Bradstone. He wrote another book about Amazon as well. I think that one was written earlier. I haven't read it yet, but I want to go back. But this one was specifically about Amazon instead of the everything store. I think that that was the first one.
Anthony Vicino: [00:34:43] Ok, I read that one.
Dan Krueger: [00:34:44] Yes. I think that one was written for at least ten years.
Anthony Vicino: [00:34:47] I'm looking at my shelf right there.
Dan Krueger: [00:34:49] Yeah. So so I think that one was kind of like about like the early like it was kind of up through like maybe two thousand twenty-five or somewhere in there. Like this is kind of like a little bit more detail about like I think it talks a lot about the early stuff and it also kind of talks about a lot of the recent stuff.
Anthony Vicino: [00:35:05] Things have changed in the last decade.
Dan Krueger: [00:35:06] Yeah. I mean, these go into space like that's a big one in the whole, like, the space race, Elon thing like that's been going on. I can't they just said. And so just getting like an inside peek, like you guys would notice a trend, like all the stuff I recommend is like books about like really successful people. I'm just fascinated by it. And they're usually pretty entertaining too because these guys are not boring people I really liked. He is an interesting character. This one does give kind of a deep dive into his character and personality and yeah, I liked it. So check it out.
Anthony Vicino: [00:35:44] To go support Amazon, your local Amazon dealer, I read that everything, sir, I thought that was really cool, too. I'm a big fan of studying interesting people. And then. You know, I think one of my goals in life is to try and be as interesting as possible and take some of the things that are working for them and try to,
Dan Krueger: [00:36:05] Yeah, hopefully, adopt it. Someone writes a book about us who's not us, like someone other than us. It's about us.
Anthony Vicino: [00:36:12] That's how you're not in a good way, not like the Bernie Madoff story. Or was the Adam Newman that we were a guy. He had a book and that book that came out with him.
Dan Krueger: [00:36:24] Oh, I got to get that one that
Anthony Vicino: [00:36:25] I don't want to. I don't want anybody writing a bad book about me.
Dan Krueger: [00:36:28] Now, I want to read that one next. I want to because I thank you, guys. It was great. I've read a lot about it. Not like a book, just like I've just been keeping up with the madness of his company and just I mean, everything. He trademarked the word. We sold it to the company, sold it back to them.
Anthony Vicino: [00:36:48] So they get like French millions is like five or six million.
Dan Krueger: [00:36:51] Yeah, yeah. And his whole model was like he was like a lot of the properties and then leasing them to we work at like exorbitant rates. So he's personally just getting loaded and screwing over the company. And it's just he was just pulling money out of that place every way he could. It's just they don't do business. It's going to be an entertaining book. I'll tell you, there's a
Anthony Vicino: [00:37:14] There's a fella in the real estate space. We're not going to name names because that might just get to make that connection. You just very similar thing. Very similar thing. A very, very big name in the space.
Dan Krueger: [00:37:26] So he's working towards Adam Newman. I don't know. He's not there yet.
Anthony Vicino: [00:37:29] He's very similar concepts. But let's get
Dan Krueger: [00:37:33] To the trademarks. The letter X, then we're.
Anthony Vicino: [00:37:36] Yeah, ten little million, maybe ten. Oh, now you're
Dan Krueger: [00:37:38] Really giving it away.
Anthony Vicino: [00:37:39] What I just said a number. That's all I said was unrelated to my letter. Unrelated completely. So that's going to do it for us guys. If we're still around next week, that means that we haven't been sued off the air. We appreciate you taking the time to listen. Make sure that you're going to leave us a review if you've listened this long. Good God. First of all, thank you. You're a masochist. I don't think I could listen to us for this long, but I appreciate it. Now, leave us. Leave us a review. Go join the conversation. Don't just make this weird and listen to us in the corner like we have no idea that you're there. Join the conversation. Leave a review that's going to do it for me while dad just giggles over there. Yes. Don't make it weird. Fantastic.