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ISI Brotherhood Podcast
A podcast for growth-minded Christian businessmen who desire momentum and accountability in their business, family, finances, faith, and personal wellness. Each week, Aaron Walker, also known as Big A, shares authentically from decades of business ownership, marriage, and raising a family. He takes on listener questions and deep-dive into FORGE episodes with tried and tested co-hosts. Subscribe and visit our website https://www.isibrotherhood.com/podcast
ISI Brotherhood Podcast
99. THE FORGE: Can Bobby Transition to Attracting Larger Investors in the Real Estate Market?
"You've been selling to the kitchen table, and you need to be selling to the board room." When the real estate market came to a grinding halt during the COVID-19 pandemic, Bobby, a seasoned real estate developer, faced unprecedented challenges. Listen to his raw and emotional recount of navigating through financial turmoil, making tough decisions like laying off a lot of his staff, and the immense weight of responsibility he felt for his employees and their families.
Bobby's story isn't just about a business struggle; it's a heartfelt journey of resilience and leadership in the face of adversity.
Key Takeaways:
- How COVID-19 took hotel occupancy from 80% to less than 10% and what Bobby did about it
- The best way to approach a "Black Swan" business catastrophe
- How do you build relationships with the right market segment of investors?
- Bobby needs to go BIG on selling to larger investors than he's ever sold to before
Despite exhausting initial investor funds, Bobby underscores the importance of maintaining momentum and refining strategies to attract private equity investors. He shares the significance of building a robust investor base and the challenges of transitioning from small to larger investors, all while staying true to mission-driven goals.
Get valuable insights on the delicate balance between mission and profit, the art of crafting a compelling elevator pitch, and the nuances of investor relations in this episode of THE FORGE.
Join the Iron Sharpens Iron Community: https://go.viewfromthetop.com/community
Connect with Anthony Witt: witthouse.com or anthonywitt.com
Anthony Witt is a professional licensed counselor and a business owner with a deep understanding of how entrepreneurship impacts personal health and those around them. Having bought, sold, and started multiple businesses, he has gained valuable
experience at the intersection of personal health and business. His belief that "a healthy business owner creates a healthy business" underscores his approach to helping entrepreneurs thrive.
Connect with Bret Barnhart:
Barnhartexcavating.com
Bret’s Calendar Link
Bret’s Linkedin
Bret Barnhart, Jr. is the fourth generation in his family to start his own excavation company. He began Bret Barnhart Excavating (BBE) in 2002 with $1,500, a single backhoe and truck, and a trailer. Since then, BBE has grown to an entire fleet of heavy machinery and trucks, averages just under 20 employees, and grosses $4mil annually. Being specialized, along with having a personal mentor and joining a mastermind, has helped shape not only Bret's company but also himself as well. Bret and his wife Crystal have been married for 16 years and have two children, Cole and Adelyn.
If you want to hear more speakers like this every month and be with the guys on the call, join the Iron Sharpens Iron Community today: https://www.isibrotherhood.com/isi-community
Connect with Big A:
View From The Top Website: https://isibrotherhood.com
The ISI Newsletter:
Welcome to the View From the Top podcast, where we help growth-minded men who desire momentum in their business, their family and their finances get through the valleys and up the mountain to their very own View From the Top. Welcome back. Today is the Forge episode, woo-hoo. It's where we have a business leader who's in a ditch, looking for some guidance resolving a challenge. We've masked his voice for some confidentiality so we can lean in, take the gloves off. I am ready to go In the studio with us. We've got Brett back from sabbatical, anthony still hurting his seven kiddos and Big A fresh off changing smoke detectors. Big A, are you off the ladder yet?
Speaker 2:I'm off the ladder. Yeah, my mom had a smoke detector out. Man, I'm pretty fired up to see you guys. Brett, good to see you. Man, you've been off for 30 days. Yeah, back in the saddle ready to go. Anthony, good to see you.
Speaker 2:I'm sure you've had a lot of people on your couch today solving problems of the world and hopefully you guys have come prepared to help Bobby kind of solve his problem. Listen, let's get into it. So there is no question in my mind that we've all struggled from time to time financially. I can't even count Like I quit keeping up with the amount of times that I've struggled financially over a 45-year career. Some of the listeners you may be struggling right now. You may be saying like I could be on this episode, like I'm really struggling, I'm trying to solve for this financial issue in my life.
Speaker 2:Well, we've got a guest with us today, bobby. Bobby, good to have you today. I know we've got you masked up, but, man, it is so good to have you and I know you've been through it Like you've been through a financial nightmare, I would title it, and I just want to thank you for coming on today to help some other people untangle some of their financial situations. Hopefully they'll glean from your experience. But, man, it's good to have you today Well thank you, gentlemen.
Speaker 3:It's a blessing to be here today and I'm eager to kind of share my story and try to get towards those resolutions that we talked about earlier.
Speaker 2:Well, Bobby, let's dive into it Now. Give us a little background, Tell us more about yourself.
Speaker 3:So I'm a business owner, own a real estate development company and in the course of doing that, prior to COVID, had amassed several good assets.
Speaker 3:Some hotels were part of our portfolio major hotels, marriott, hilton had apartment complexes and was doing fix and flip houses in emerging markets and through that you kind of develop a lot of assets and those assets are great as long as the market is doing well and we have prepared for normal market downturns, actually have prepared recessions in our pro forma analysis. But what we hadn't prepared for was COVID-19. And that was what we call a black swan event. That pretty much took all of the risk mitigation models and threw them out the window and for the first time, I had to figure out how to run a business when the government says you can't have customers and so there's no MBA textbook on how to do that, there's no case study on that. You just had to roll up your sleeves and figure out how do you run a business when you can't have customers and you've got high debt and high leverage, and so that was a challenge that I faced in 2020 and have been working my way back from that ever since.
Speaker 2:Bobby, let's go back there for a second. How did you feel at that time? You realized, hey, I'm in trouble. Like your occupancy went from high 80% down to single digit percent occupancy in these hotels that you owned. Take us back there for a second. It's probably not a pleasant experience, but what was going on in your mind?
Speaker 3:Well, you know, what was interesting is, on the February, the 28th, I had just inked a deal with a private equity group. We formed a partnership and we were in the process of buying and acquiring about $110 million of hotel assets. We were buying five hotels, all major brands of Marriott and Hilton and major markets, and when I looked at what was in store for me in 2020, I started getting happy. I think my revenue, personally, that I was going to get in 2020 was geared to be $2 million, and so I'd come home, I'd already been thinking about my business, magazines, articles I was going to do, I was already thinking about my poses that I would do in different articles and I was ready to tell that success story. And then I'll never forget, it was March 11th. That's when Trump had the White House announcement on COVID, and for me it was like September 11th, because there was everything before then and everything after then and we had taken five years with my partners to develop a pretty massive portfolio of assets out of nothing and had already spent about half a million dollars in deposits and engineering and other things for that closing. Well, right after September 11th I mean I'm sorry March 11th happened. I was planning a celebration for my executive staff on March 11, you know, to reward them for the excellent job they had done in turning around our hotel and we were the sixth rated hotel for this particular brand with Marriott in the country and had just been celebrated at one of the national hotel conferences. And so to go from that career high to now, less than three weeks later, I'm having to lay off 95% of my staff that I was just planning a reward recognition events for, for them and their families, for all the hard work they had done.
Speaker 3:So it was a gut-wrenching time and the biggest thing emotionally was two things.
Speaker 3:One was responsibility is you know you now had the care of all these people and their families under your leadership, and it wasn't just that you had to let them go, but you worried about the ones you had to let go and you worried about the ones you had to keep, because with COVID and at that particular time nobody knew exactly.
Speaker 3:You know what safeguards to take and how you could prevent folks from getting illnesses, and I stayed awake many a night worrying about, you know, is my employee going to work the front desk of the hotel, get COVID and then bring it home to their family or elder family members, and then have a grandparent or father or mother die because they worked at my hotel.
Speaker 3:So it was a time of a lot of prayer, meditation as to what's the right thing to do, not only for my employees, but also for my investors, and how do I protect the assets, how do I protect them, and so it was a very weighty time, but I think the part that made it the hardest was I felt like Charlie Brown getting ready to kick the football and Lucy pulls it away from me at the last minute that you've done all this work, you kind of reach the success pinnacle, and I was a little bit dazed and shocked, because I was still mentally in we've made it mode, and having to quickly turn around to we may lose everything in a matter of weeks was a challenge.
Speaker 3:Part of my background, though, is I had worked for 20 years in a technology company, and so I lived through the dot-com crash, and so that's honestly what I went back to as a frame of reference, as I remember those days as well and how difficult and swift that downturn was, and so I kind of went back to the fortitude that I had gained from that experience.
Speaker 2:Lucky for you, you had already gone through a travesty that prepared those financial muscles, if you will, to kind of work through this. So now we're four years past this time. What have you done since then? Cause it left you in despair, right Millions of dollars in debt, property that you needed to sell, property that you needed to maybe rehab, to flip Like. What have you done since then to try to work out of this?
Speaker 3:Well, the biggest thing that I did, and to go back to the mindset, at the time, as I was building up this business, I had developed a plan, in conjunction with my late wife, of what we wanted to do to leave a legacy for our family, and was working towards that, and all along the way, you know, I prayed to God for guidance and I prayed for direction and to help me get through what those business objectives were. But, to be honest, those were my business objectives, right, those were plans that I put together. Those were plans that I put together, and one of the things that came out of this catastrophe for me was two things that I did wrong in retrospect. I was really praying for tactical achievements. You know we've got to make $100,000 a month mortgage next month. You know I've got $15,000 in revenue and another $50,000 in salaries. How am I going to come up with $150,000 this month? Right, so that was like a monthly requirement every month. And so I started praying for tactical things. Right, I don't know how this is going to happen, but, lord, just let me find a way, let me find an answer, and, in hindsight, that was a big mistake, what I should have done, which is. What I've done now was to try to come out of it, which is to sit down and kind of ask the Lord what is it you would have me do? What is my best and highest purpose, and what goals and objectives do you want me to work on? What's my mission?
Speaker 3:After trying all the things that I thought I needed to do intellectually and motivationally, to try to make it through, the one thing I wasn't doing was submitting right.
Speaker 3:So that was the biggest thing that I learned through there was to get to a level of submission and pride. To get to a level of submission and pride, stubbornness were two things that I had in abundance. It's what allowed me to kind of build a business from nothing. But when everything went south, it was really a time that I should have submitted and kind of recalibrated and sought the direction of the Lord as to which way I should go, and so that's kind of where the recovery started for me. It really started in 2023 when, after fighting for a couple of years to keep some assets, sell some assets and going through all that and litigations and other things, I just said okay, lord, what is it that you want me to do and how can I be of service to you? What's my purpose? And it's been through that journey that's led me to a more tactical plan of really kind of aligning your mission with your business.
Speaker 2:That's really good. You know, it's a shame that it often takes us to get to that point for that submission rather than doing it intentional initially. We have to get to a place to where we go hey, I'm on my knees, what can I do? I need you to direct me and guide me, and that's maybe a lesson that the audience listening today would be take that approach first rather than the last approach, and I'm glad you learned your lesson on that, bobby. Tactically, what is it that you've done in these past 24 months? That's helping you work through and out of this problem, and then, after that, tell us how we can help you today.
Speaker 3:So the first thing we did was we kind of me and my partners we sat back and we assessed well, we happen to be in those kind of six major markets in commercial real estate and we happen to be in all the major markets that required you to leave your house. That was bad. The other three markets are those that require you to stay in your house. That was bad. The other three markets are those that require you to stay in your house. Those are good. And so you know, we were in hotels, we were in shopping centers and we were in looking at retail outlets and things of that nature, and those all required you to have to leave your house. And all of those markets tanked, all the markets that required you to stay in your house, whether that was residential, multifamily or storage, like keeping all your stuff those expanded. So what we decided to do is we said, hey, let's shift our focus in terms of just the market segments we're in. So the first thing we did technically was to go after residential and multifamily and we partnered with a group to look at doing residential long-term rentals and multifamily development. So those are the first two things we did was just to shift the market focus. The second thing that we did is we started looking for what are the opportunities that we can get in that weren't as capital intensive, and so that led us into land development opportunities where we would partner with large home developers and we would acquire parcels of land that they would use to develop homes and we would just acquire the land, get it entitled and flip the land to them much less capital intensive. And the third thing we did was we got into the financing side. We said, well, we understand financing at a pretty high level. We also were members of a startup, of a bank, and so we started getting into the lending side for smaller home developers and started doing smaller loans to other developers to do house flips.
Speaker 3:To do house flips and in terms of how I can help from where I am today to move forward, I think the biggest thing that also happened as part of that challenge is that the established investor set, although they were happy with all the hard work and everything we did to try to save the assets that we were able to save and make them whole, we didn't hit our financial targets because of COVID and so we kind of exhausted that investor pool that we had developed over a five-year period pool that we had developed over a five-year period, and everybody you know we did a survey. At the end I think the number was 96% of our investors said they would invest with us again. But those investors all took losses as a part of COVID and so they just didn't have the retained assets to continue to invest at the level we needed. So we started expanding our network to really look for other private equity groups and other investors that still had available capital and are looking for, you know, outsized returns over what the normal market rates are.
Speaker 2:Guys, questions, clarity.
Speaker 4:Yeah, I'm sorry for some of the stuff you went through, but I'm excited that it's uh, it was on my birthday, so you can always remember march 11th, that's my birthday, to make things lighter. So, um, just, you know, when you think of that pain, just think ah, anthony, this is a good thing. Um, now I have something positive to think about, anthony.
Speaker 3:There you go.
Speaker 4:Exactly. I remember that very vividly because I was stuck in a Denver airport trying to get back with a couple of my kids on my birthday on that date, so interesting date. But it sounds like, okay, you had a traumatic thing happen or you had a business flip happen. Right, got flipped upside down, you've rebounded. So what is the problem here? Like, what do you need? Sounds like oh, you're on track.
Speaker 3:Sounds like things are going well. Well, I think the thing that's the most difficult is it's really getting the opportunities to match the investors. So the things that we've been able to find that are great opportunities still require an investment of around two, three, five million dollars sometimes, and so there's always a constant need for access to private equity investor capital to really make the opportunities on the table, and we've missed several of those because we just didn't have an expansive enough network. So the number one thing I need is a more expanded network of people who are interested in development, developing in real estate, and what we try to do very well is to mitigate our investors' risk. Right, and so I would say that's item number one right.
Speaker 3:Item number two is really kind of proof, testing the business plan and the strategy, and that's where I think ISI I see as a godsend and a blessing is that you have a group of men and business leaders you can go to and say, hey, this is a concept, this is what we're thinking. I can bounce that idea off of you and see, you know, is that the right strategy? And to really challenge that that's something that I had in all my career in corporate America is that you're always pitching to executives, you're pitching to your board and you're always getting constant feedback. But when you are, you know, leading your own small business, you know besides you and your partners, you're not really having someone that you test an idea with. The market tests your ideas, and so it's nice to have a group of folks you can kind of bounce ideas off of and kind of proof test things.
Speaker 4:Bobby, I got a question for you. I'm going to interrupt you. Do you have a? You have a fear of doing the work. No, when?
Speaker 3:you say doing the work, what do you mean?
Speaker 4:Yeah Well, so I'm just sitting here kind of playing the counselor for a second and listening to your story. I'm saying, okay, at the height of this, he had some very negative things happen, but they were on the heels of, or on the application of, very exciting and happy things. Right? So if I start to move towards getting excited about something, if I start to get happy about something the happy was your word If I start to think, oh, this is going to happen, yes, are you slowing down? Because when that happens, what happens? Well, chaos happens, because when that happened last time, it wasn't good. I'm just asking a question, I'm not making a statement.
Speaker 3:No, it's a great question.
Speaker 4:But I haven't Okay. So then let me ask my second question. I'm going to interrupt you again. I'm playing interrupter today, so if that's not the case, then what's stopping you from doing? And how big was your investor pool before?
Speaker 3:We had an investor pool of probably 36 investors okay, what's the finances on that? Oh, um, we probably had distributing any one particular project around about three million dollars.
Speaker 4:Okay, so it was smaller, yeah, so smaller than what you need to do now, correct?
Speaker 3:And so now I probably need the best pool of up to 10.
Speaker 4:Okay, so we just need to go three times bigger. So why don't we just build it exactly the way we built it before and just start doing the work to build it exactly the way you did it before, but you're just investing in a different asset.
Speaker 3:Well, so your asset class has changed.
Speaker 4:you're just investing in a different asset, well so your asset class has changed, but you're still going after assets and finding people that are willing to give their money or people that know like and trust and that you can build. Because I'm assuming you had 30 investors, you built trust in at least 30 people, right, and maybe they had investors as well. I don't know. Why don't we just start building exactly like we built before?
Speaker 3:Well, because the way I did it before what I didn't mention is I was trying to do something that was unorthodox, right. So most of these projects and assets would have two or three investors and invest a half million, a million dollars. You get that and you just do it with a small group. What I was trying to do was to leverage some new rules that Obama had put in place that allowed not just accredited investors but sophisticated investors, and so I was really doing some dream building with not sure financially well off folks, but your middle class well-off folks, but your middle-class working-class folks, to give them an opportunity for ownership. So when I built that investor set before it was kitchen table investing I would sit down with a group. They may invest $20,000 from their 401k and that was all they did and I would sit down with another group and a husband and wife and they may pull together their nieces and nephews and do another 50,000. So it was really kind of a small group, yeah.
Speaker 4:So, as you sit today, is it the who, the what, the how, like? What's the problem?
Speaker 3:So the biggest problem is what I. What I learned from that is that when you have an investor set of folks that are investing a little bit of their disposable income, that once you have a black swan event or something happens, you don't have the financial wherewithal to continue to see through a wave. Continue to see through a wave and that was our problem is that once we got into a financial challenge and we needed to go to investors for capital calls and other capital, my investors didn't have the wherewithal to help carry that property through the downturn. So one of the things that I learned from that is it has a little bit more financial wherewithal to weather some storms that may come through.
Speaker 4:Yeah, so you're. So you have to change your model. I get that. It's. Actually, I find it easier to go after someone that's accredited and an intelligent investor versus an intelligent investor. Like I understand, you're going after smaller people. Now you can change who you go after, but what's the problem for you today Is it I don't know who to go after. I don't know how or what to go after them with, and I'll let I'll let Brett jump in here after you answer that.
Speaker 3:I'll let I'll let Brett jump in here after you answer that, I think it's the who and it's the access and relationships, right? So there's tons of investors out there. There's tons of investors that would love the assets and projects that we have. I just don't know them and they don't know me. That's the disconnect right it's getting in front of them.
Speaker 2:You're just not in front of the investor.
Speaker 1:Correct, yeah, so why a quick question around this? And I don't want to go back too far and cause us to pick up another challenge. But Anthony kind of started talking about the past a little bit to where you are today, so a couple of questions within that. You're here today, I think. I think you said in 2023 is when you lost your last asset, right, is that right?
Speaker 3:Yeah, in the 2020s Right, and it's 2022.
Speaker 1:So it's been almost two years. You're looking at 18 months. What's prohibited you for 18 months of of being where you're at today? Like what? What's been the prohibitor there, like of you, why? Why haven't you been able to get where you want to go? Or is it? Has this been a recent discovery of where you think you need to go, and is there any? I know you mentioned late wife and I believe in 2020 is when your wife passed away. Is that correct?
Speaker 3:Yes.
Speaker 1:Yeah, yeah and yeah. And so you've got grown children and are there any dynamics around that? And you mentioned kitchen table investors. Are you holding on Like, is there fear there? Are you holding on to like, oh my gosh, like what are they going to think of me still? Or like, have you gotten past that? Like you're beyond it? Are you still carrying some guilt and maybe some fear and shame at all as you kind of transition into moving forward and leaving that behind?
Speaker 3:I wouldn't say fear and I wouldn't say guilt. On the guilt side, I would say one of the things that I should have instead of sharing that risk with some of the investors. And the other challenge is I think the debt was also part of that. But I think, kevin, the biggest issue is its relationships, and relationships take a long time to develop, and the other problem that I've found is that it's been hard to develop the relationships without a project, and so what happens is you get a project. You have to get it under control, so you get it under contract. Now you have a short time window I've got 60 days, 90 days, 120 days and in that time period that becomes sometimes your key to get in the door to talk to somebody is that you have an active project they can invest in.
Speaker 3:And so part of what happened is we spent a lot of time trying to execute a contract that, say, had a six-month window and if you can't raise all the capital or during the due diligence, that project doesn't pencil.
Speaker 3:Well, now I'm six months later and I have to start over again and I'm using that new project, which takes another four months to probably get to the point where you can have an investor ready, and so that's been that cycle right. So one of the things that I did the last kind of 18 months was find a great project, go look for investors, but if that doesn't pencil and go through, you're kind of starting all over again. What I'm trying to do now is to develop the relationships outside of a specific project so that when one comes across your desk you now have the confidence that you can execute according to your contract timeline. But most of my issue has been time. Time has been the big enemy, because I've been trying to have a great project and then get in front of people and with their due diligence and the window I had in the contract usually the clock runs out on you is what happens.
Speaker 5:So so why should I give you a million dollars today? You got a project right. I don't know you. I go to a real estate conference here in Tulsa, ccim. You're there, I meet you. You have an incredible project, great numbers. Why would I want to go back to my office and write you a million dollar check?
Speaker 1:So I think there's two things, or 500,000.
Speaker 3:Or 500,000, right, so the biggest thing, Anything, Anything right.
Speaker 3:So the biggest thing Anything, anything, right.
Speaker 3:So I think it all starts with the mission and visions right.
Speaker 3:So one of the things and the reason why my investors invested with us before is that my mission and vision was trying to kind of cobble together a group of middle-income investors to own assets that they don't normally get a chance to own, and so that was really my mission and that's what we executed.
Speaker 3:Now, really, I still want to save some for the little investors, because I believe in that that there's some benefit to allowing people to dream and to own things they didn't think they could own. But the primary thing that we've done is saying it's really a faith and value-based investment. So if someone's looking for a positive return in quality assets, but you're really trying to do something that is delivering to a broader mission and part of that for us is that we set aside a significant amount of our returns to Christian-based charities, and whether that's going to be charitable trusts or there's different charities that we work through and work for, as well as we try to work a lot of church organizations to help them out financially with their investments um, on the side, but that's really what I would say is one, it's a, it's a mission-based group that you'll be investing in. And then, two, we tend to pay more than what the market returns are by a couple of points.
Speaker 5:Yeah, yeah, so a few things that I that.
Speaker 3:I see is that number one yeah.
Speaker 1:Yeah, number one, I would lead with that, no.
Speaker 5:I don't want to. I don't want to be partners with small minded people I hate to say it that way, but like if they can't see the big picture, they're going to be a problem in the investment. The other, but like if they can't see the big picture, they're going to be a problem in the investment. Um, the other thing is I want to uh, give money to who I want to give to in missions and not leave that to you in case I disagree with that. Um, the other thing is I can't help but think is like you're trying to kill an elephant and you maybe need to shoot a couple rabbits because not one thing had.
Speaker 5:Did you tell me that you have past performance and why am I confident to give you some money to go and turn around and make me some money? Obviously you've been successful. There's a lot of things you've done but as an investor, there's, there's not one thing past performance. That said, if I give you a million bucks, you're going to cut me $150,000 check at the end of this year. Does that make sense?
Speaker 3:I didn't speak to past performance, but that makes sense.
Speaker 5:Yeah, yeah, and it just seems like we're trying to every question that gets asked. I mean to be honest with you. There's a little bit of an excuse. It's either time it's not the right people, it's not the right group of people, and I don't want to hear that as an investor, like what's the deal, put it out there and let's go or let's not go. So the other thing I'd tell you or ask is there any groups locally that you're involved with, around investors, that you can go and be a part of and get around the right people and start building close relationships locally and start building a portfolio? Are you in, are you any of the real estate groups or anything locally? Are you just trying to do this nationwide?
Speaker 3:No, we haven't tried to do it nationwide. We've had kind of targeted markets in the Southeast on the investor groups locally. Yes, there's a North, there's a an investor set that's in our state, that we're a part of and that we've been working with and typically when we do talk to investors, we do just as you mentioned we'll lead with here's the opportunity, here's the return, here's how we mitigate risk. But the reality is that since 2023, it's been difficult and the environment has shifted and probably one of the things that has to change is the way we market and talk to investors needs to shift as well.
Speaker 5:Yeah, you said something earlier too. I actually do real estate developments. I do the infrastructure on real estate developments and most of the guys that we would work for typically are the ones finding that same real estate deal and then turn around and end development themselves and not looking for a middleman to go find that piece of real estate because that makes the law prices so high and then by the time they add our infrastructure cost it gets so expensive that project never goes through. That's here, of course, that's different everywhere. But I think trying to be that middleman, unless you could pick up that piece of property for really, really cheap and make it feasible for them to turn around and develop it, that could get difficult. So, um, I would just really really work on your elevator pitch and how you present that and essentially the question.
Speaker 5:I remember going through a situation where we just really nailed down our elevator pitch because we got two or three minutes to make a difference and somebody and what they're basically first picture of who we are and it's great, your vision, your mission, your values and what you're doing and giving back. But uh, the one thing that I would want to hear is what is the return? We didn't even go there. We went through everything else and say the deal doesn't go through or you don't make money on it. Are you still giving the missions or is it about making this deal happen? You know what I'm saying From an investor standpoint.
Speaker 2:I want to take you back just for a second, and this may be a real curve ball, but I do want to bring it up because I think it's worth you thinking about. You were so passionate and excited about giving the for the lack of a better word the middle investor, the table investor, as you called it the opportunity. You seem very passionate about that, and you had 36 investors and you were helping 36 people that wouldn't ordinarily have that opportunity. That was your mission, it feels like, because you've run out of relationships. Your mission has changed and I just want to encourage you.
Speaker 2:There's a lot of those people still out there. They just don't know you yet and I want to be sure that you're not foregoing, possibly, what Christ has led you to do. You're a man of faith and you want to follow through with your vision that he's led you to, and I just want to be sure that you're on the same page with what your mission is currently and not just switching gears because it's easier or you don't have those people any longer that you can help. So just food for thought going forward.
Speaker 1:I want to tack on a big A saying. I think that when you know, it's funny some of the things that we say on here but I don't mean to sound spoiled or like that that's, that's not it, but so I'm just going to say it. Brett kind of alluded to this a little bit. When I was younger and had less money to invest, what you just described to me mattered more to me because I couldn't do it. Your mission was bigger than me. But when I've got $500 to a million to drop in your lap, that mission's different.
Speaker 1:What you give to great, I'm happy, I'm 100%. As soon as you said that on the call, I was like I don't mean to sound rude, I don't give a crap, it's like I'm glad that you're doing that. It's about like I've got bigger dollars because I'm trying to do something big. I've got bigger dollars because I'm trying to do something big. How are you supporting me to do something big Versus the other group of people? They don't have those opportunities like you talked about, that is bigger than themselves, that is inspiring and aspiring, and so it's interesting that Big A brought that up, that there may be a little bit of a mission kind of re-evaluation mission. Alignment on as you reach out to investors. Who is your, who is your investor you're really going after and what's important to them.
Speaker 4:I think that's the application change there. What I wrote down is you're been selling to the kitchen table and you've got to start selling to the boardroom. Now that's not an exact switch right, but you're selling to a different person.
Speaker 4:And so that person the pitches are different, the relationships are built different, and that's what I wrote down. I said I wrote down my question. One of my questions to you was going to be what are you doing to build those relationships? Because those relationships are built differently to your point. When I flipped houses, I can go get a guy to give me 10 grand to fill, flip a house in about 10 minutes with a 10 minute pitch. Yeah, but I can't get a guy to drop me a million dollars that fast because it's just different, right, unless you've already built up trust, unless I've already built up that you know that, know I can trust and all that.
Speaker 4:And so my point being you know the way that you have sold your deals before is get the deal, give the numbers, do all the stuff, share the mission. Let's do it when now I? I think you need to be building the relationships and then, when the deals come, you have the ability to explain the deal because you've already got the relationships, you've already got the relationships, you've already built the relationships. And that would be the shift is, you're actually just building relationships before you move forward with trying to pitch them something they get to know like and trust you because you're selling to a different group and or person, right, and I think it is group too right, cause you might be telling to you know a fund of some sort or something like that to be your investors, and so it's different. But I would argue some of these guys said, hey, I kind of like your mission. I would argue, I don't think there's enough clarity in your mission, and I know Brett kind of just called you on it.
Speaker 4:It feels, like it's switched. It feels like the mission has switched. No, I don't think it's precise enough. Like what?
Speaker 1:actually, I think we give him a little bit of grace, though, because he's trying to explain, but in principle I agree with you, right, get an explanation. He's trying to give us a big mushroom, right.
Speaker 2:And so there's a little bit of grace in there.
Speaker 1:But I think there's weight to what you're saying, Anthony.
Speaker 4:Yeah, Well, that goes back to the kitchen table investor versus the not, which is what Brett was saying, what you were saying, Kevin, or even you, Big A right. What I want is different than the kitchen table investor.
Speaker 5:Is it different Well most, most guys that come to me that have invested. One of the big things that they said was the taxable advantage they got by investing in that real estate. So not only am I getting a return on my money, there's also an advantage to depreciate some of the tax dollars that I'm making on a profit.
Speaker 2:Their needs are different, all their needs are different.
Speaker 5:So, like the table investors, I think it's a great idea and I think it's great they brought up the mission. It seems like to me that's a small multifamily development, because those people are going to give you 20 to $50,000. You're over here presenting a three to $10 million deal that scares the piss out of them, whereas you're working on a 500,000 to a million dollar deal and you pick up the table investors for that. Where those big deals, you got one to five guys investing in that, if not one guy.
Speaker 5:Yeah yeah and they're all in and you're that guy on the ground working for them to help them make more money, not all these people.
Speaker 3:That just scares them to death yeah, and I think I think aaron picked up on the key item, and I agree with Kevin and Anthony too, and that is you're right, the mission did change right.
Speaker 3:So the thing I didn't mention about the bigger part of the mission, about why it was that way, is that that passion was I was trying to target an underserved market, so I was specifically going after minority investors, female investors and folks that just never get invited to the big party, and so part of the reason for that investor strategy being what it is is that was what could work with that particular group, right and so, and and part of that was just, you know, when we bought our first Marriott hotel and we had those families gathered around and those folks could bring their you know sons and daughters to a grand opening of a hotel, and you know how many folks would say I didn't know we could own this.
Speaker 3:You know, I didn't know that this was something that we could do, because I never seen people who look like me do this Right, and so that was a big part of why we had had that strategy that way, and but one of the things that happens is that you're, if you're going to do it, you're limited as to what you can do, the business plan of the opportunities that are coming in the door. They don't match the historical business model that we were doing, because that business model is not as easy to operate today as it was in 2019, right 2017, 18, 19,. That was a business model that I could execute and own and have a whole market segment that I could own that other people wouldn't be able to get access to, right, and that shifted after the pandemic and so and so I do agree with the comments today of retooling the mission and vision of the business and going after the different market segments and building the relationships and what's really needed for that market segment to have trust, confidence and ability to execute in an investment.
Speaker 5:Do you believe that God's called you to this mission to help these people, or is this just your personal mission?
Speaker 3:I do believe that God's called me to help to provide some financial direction and kind of shepherding through opportunities for that market segment. But what God has shown me is that I can do that through other means, and so I still do some of that through personal speaking engagements and conferences, training classes, you know, through different organizations, you know from different organizations, and I'm in the process of writing a book that would be helpful to that market as well, and so, but the intelligence of the opportunities that we get at the table need to match the investor set. That's just, I can't say it anymore.
Speaker 3:Playing on that is we were trying to fit a square peg in a red, red round hole and the stubborn part was I'm going to make it work. Right, this hasn't been done before, but I'm going to do it, and that was part of the humbling had to take place is that through a lot of my career, I've usually done crazy stuff that nobody's done before and somehow made it work. And so you get this perspective that you can get hard stuff done, hard stuff done. Um, and this was a, the last couple of years was a uh realization that you know you don't have to always reinvent the wheel, that sometimes just going back and taking what works and applying that is the best strategy.
Speaker 5:Yeah, I would just say be careful, because god's mission is not always profitable, and the reason I say that is I've been done a men's breakfast for about seven years and, to be honest with you, um, I rationalized that, uh, if you will, at first because the initial picture I had of that breakfast was bringing in people that I could do business with. But what I would have told you is it's a men's breakfast to help men, but who did I want at the table?
Speaker 2:Brett, I'll just say it's profitable. It's just not financial. Financial, yeah, yeah, very profitable.
Speaker 5:Yeah, well, yeah, yeah, Good way to put that. I said that wrong, but I really got convicted over that, and this mission is for any man to show up and it's not about who I'm bringing to the table, and it's not to build my kingdom, but to build God's kingdom. So I'm just saying I'm not saying anything by saying that. I guess I'm just telling you to evaluate the situation, um, and your heart and what God's truly calling you to do inside of that and to really help those families.
Speaker 4:So I think that goes back to his mission. Yeah, I was just going to say I think that goes back to your, your mission, and I agree with Brett on what he was just saying on that. But I also think, kevin, I want to or, um, bobby, on what you were saying, is that you tried to, you know, create a new wheel. Potentially. You know, I haven't walked into this industry and disrupt it, this segment of this industry. Right, I would argue, okay, that's great, that's fun, I love people that can do that. But what about just changing 10% of it? And that's the application of your mission? Right, it's the.
Speaker 4:I'm going after the $20 million deal and I'm reserving this is a super easy way to and I'm reserving 10% of it for those table investors that you believe you're called to serve. You're going to serve them just as, maybe even better, right? So you're not changing the whole industry to disrupt the whole. You're saying the industry works the way it works. What can I disrupt to apply my I think purpose? Maybe the way that I feel like it's been called in a bigger stage, right, we don't have to totally disrupt the whole thing. We don't have to say, oh, we're only using table investors here, because that's what I feel like I'm called to do. You can figure out how to do it. I think there's a tactical way to do it and that's the application of what you're called to do, potentially which maybe there's a loss in financial profit there, but you're doing what you're supposed to be doing but let me ask the final comments.
Speaker 3:Yeah, go ahead, bobby, go ahead. Well, I just want to ask, I would love to hear the recommendations from you, know, each of the members here as to you know, what would they recommend, what would they do or how would they handle it?
Speaker 2:that's what I was just asking for. Final, what exactly?
Speaker 5:we've talked about a lot of things. Can you be specific?
Speaker 3:Yeah. So just in terms of, you know, developing the relationships with the right groups to match with the opportunities on the table Right. So those are larger assets, larger investors, more sophisticated investors. What would be that recommendation?
Speaker 5:I think you have a mission to help people and I think you have an investment business and you're trying to blend those as one and to me it's presenting a big development to a big investment partner. And they get to hear of the mission on other projects and maybe you bring those to the table for them and you say, hey, you bring a million, we're going to let 10 other table families come in and be a part of this and that's their decision and they get to play a part in the mission if they want to. But not everything is tied to the mission, if you will, I think you've got two different categories and I think it doesn't have to be either or. But I think you're trying to blend two different mindsets and I don't know if I would be willing to invest in certain things with certain people there. There may be a time I'm not going to say I wouldn't, but I think there's a time where I want to know who's sitting at the table and are we all in this together? When you have that cash call Because here's the thing you get in a situation where you've taken every bit of the money those people have you get in a cash call and I have the cash to bring to the table.
Speaker 5:You get in a cash call and I have the cash to bring to the table. Now I'm taking investments from those people. Yet you sold me on the mission of helping those people because those people have no more cash to bring to the table. You see what I'm saying. Yeah, like, like, okay, well, I'm the only one with skin in the game here. He wants a hundred and when he, when he has a cash call for another hundred, everybody else sitting at the table have capped out. Now it's just me. I'm keeping this thing afloat. You see what I'm saying. So I think you really need to think about separating the groups and presenting it to cause. I think you're going after something so big. Uh, I think that's some of your challenge. Possibly, possibly, I obviously I spent a lot of time with you, but that's what I feel like in this conversation is really you have two different investment opportunities and you need to separate those two yeah, that could be two different divisions of the same industry and you've got two opportunities.
Speaker 5:I love the mission, by the way, that's really really cool. What?
Speaker 2:you're doing, I do too, anthony. Closing comments.
Speaker 4:Yeah, I like the mission too and I think the application and clarity on the mission, which might be what Brett was saying. But I was going to go a slightly different direction with my final comment, which was they're in different places. You have to do something completely different. They don't hang out in the same spot. Yes, can I find them in the same spot? I can, but at a 10 to one or a hundred to one or a thousand to one ratio. So it'd be better if I can find out where they're at and how they move. And I sit in those places because a lot of the investors that you're talking about, man, those are the people. Those are, those are probably, those are probably the investors that you're talking about, man, those are the people. Those are probably the people that you hang out with. They're the people I hang out with. Well, if I want to change my level to you know, level enough, so to speak I've got to go to where those people are and I got to do the things that those people do to build those relationships.
Speaker 2:Wally closing comments.
Speaker 1:Yeah, first of all, I want to say, like what you know, I know COVID played a big part in uh, the demise of your plans and uh, by all intents and purposes, you were successful, and so I want to congratulate you for that. First of all, it takes a lot of co cojones if you will uh to to to execute on starting from you know, go from a corporate job essentially to becoming, you know, real estate developer, investor, so you know way to go on that. So you've learned a lot already through that. I think you've licked some wounds, which is fine, that's going to happen, because they need to be licked. And I'd really narrow in on your mission.
Speaker 1:I don't personally I don't know, if I'd, I'd confuse the two, maybe it's, I think. I think, based on some debt you have, you need a big win. You need to satisfy that and get it done. Not sure you're going to be able to accomplish that with the, with the smaller investor pool At the same time, like that doesn't mean that that can't be your mission at some future forward time, right, but but be really clear on who you're trying to serve. If you're trying to bring bigger deals to bigger to, to more sophisticated investors, uh, cause their their reason for investing with you like it's going to be different than what those other people are and you need to be really clear, understand what they need and what they want out of the deal to make that happen.
Speaker 2:Excellent, bobby. I'll just finish by saying you've had a lot of determination and grit and will to weather the storm that you've had on the horizon for a four-year period. So a lot of guys would have thrown in the towel and walked away and been done, and you've not done that. So great admiration here from this panel and what you've been able to work through for this period of time.
Speaker 2:My remarks or suggestions would be because you're a man of faith, get really clear on what it is that you feel God leading you to do right.
Speaker 2:We can give you advice here, but at the end of the day, you got to get on your knees before the Lord and you've got to follow and be obedient to his leadership, whether that be in a small pool one investor, a hundred investors, one investor, a hundred investors. Once I was clear on that, I would execute completely with great clarity, because God's going to take the credit, he's not going to share the stage with anybody and he's probably going to do it in a way you never saw possible. So it takes a great amount of faith to execute with that type of obedience, and so that's the place I would start first and then I would go about building my elevator pitch or my strategy or my presentation, and see who it is the Lord would have me to serve. So what is the largest takeaway for you today and what is it that you're willing to commit to this group, from an execution standpoint, that you'll go out and do next?
Speaker 3:Well, first of all, I'd like to thank the group for their candor and their honest feedback.
Speaker 3:It is definitely welcome and appreciated.
Speaker 3:I think my biggest takeaway is one which you just said A, which is to make sure that whatever I'm doing is in alignment with what God has called me to do.
Speaker 3:And the second thing is the strategy around getting clarity of mission, separating your investor groups and your investor pools and being able to target the right groups for the right projects right and through clarity as to what is in it for those individuals and what are their motivating factors.
Speaker 3:And so what I would commit to do to be is to come up with a strategy for larger investors, larger projects and getting to not only have the right linkage between needs and project, but also to kind of have that clarity of vision and mission so that the large investor set can be satisfied in getting what they want and need, and looking for opportunities for the smaller investor set to participate where it makes sense for them to participate. And that was the other kind of clarifying comment to take away is maybe you can allocate a portion for the smaller investors, the right opportunity, but not to try to commingle those things or to muddy the water, so to speak, by trying to be everything to everybody. So I will commit to developing those missions and visions, for you know, those two kind of bifurcated opportunities.
Speaker 2:Yeah, we're excited to hear back from you. We know that you're going to be very successful. We just don't know when that's coming, but we're going to stand in the shadows and wait for you to tell us, and we'll get to go on some of this journey with you. So, brett, thank you for being here today. Anthony, thank you as always, wally, it's been a delight today. Listen, if you're listening to this episode and you are trying to determine how do I recover financially, go back and listen to this. Make some notes of your own. What is it that you can do? Who is it you can get around you to help you also overcome these obstacles that you might be dealing with today?
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