Insider Secrets Podcast Episode #90

 Guest: Joel Block

 

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Guest Bio:

Joel is CEO of the Bullseye Capital Fund, a fund that rehabilitates distressed assets. Joel has taught thousands of real estate brokers, CPAs, attorneys, and Investors about raising capital and best practices for structuring group investments. He is a nationally recognized expert in Private Placements, deal structure, and capital raising for accredited and non-accredited investors.

SHOWNOTES

Key Takeaways
 
Be consistent in your efforts of networking. Make it so that you’re always in the back of people’s mind and that they can contact you when the timing is right for them.
 
Become an advantage player- someone who is so skilled at what they do that you have an edge over all the competition.
 
Raising capital is a deliberate process, it’s a thoughtful process, it’s not an accident. It doesn’t happen to some people because they’re more lucky.
 
Standout Quotes
“Treating business like that type of a game and how you can bring your skills, your expertise to the marketplace and take advantage of it.” – Mike
 
“When you’re sending emails month after month, you’re bound to have that coincidence happen.” – Joel
 
“ I think people invest in private deals because they know there’s a different upside and that they want to be involved in real estate.” – Mike
 
“The new crowdfunding rules do a really good job in inviting new people into the mix that wouldn’t have otherwise learned about these deals.” – Joel
 
Timeline
 
[01:02] What are your intentions?
[02:29] Introduction to today’s guest, Joel Block.
[03:23] One word that describes Joel personally and professionally.
[04:59] Filling in the gaps of Joel’s background.
[06:40] The right way to raise capital.
[10:37] Attorneys, accountants, and investors…oh my.
[12:45] The first time Joel raised capital.
[16:33] New investors and raising capital.
[19:44] Networking in business and investing.
[21:47] Following up with people, clients, and potential investors.
[24:19] Difference between accredited and non-accredited investors.
[28:44] Making high stake decisions and handling high stress situations. 
[30:38] Using technology.
[32:06] Joel’s insider secret for new investors.
[33:14] Where the market is headed.
[34:44] Bonus questions round.
[36:31] Resources for contacting Joel and getting involved.
[37:46] Closing remarks.
 
Contact
 

TRANSCRIPT

[00:00:00] Kristen: Welcome to this edition of Insider Secrets, the weekly podcast that turns real estate investing goals into reality. Each show we interview guests who are seasoned real estate professionals, actively closing and managing real estate deals. Mike is the founder of My Core Intentions and would like to help you make your real estate investing dreams a reality.

[00:00:29] Mike coaches you to buy investment real estate, creating short-term cashflow and long-term wealth, your host and real estate coach. Mike Morawski has more than 30 years of real estate investing and property management experience. Here’s your host, Mike.

[00:00:46] Mike Morawski: Hey everybody, welcome back. It’s Mike, your host of Insider Secrets, brought to you by My Core Intentions. I am glad that you’re here, we are really in for a treat today with the conversation that we’re going to have about private capital and raising capital for your multifamily deals. Before we get started, I ask you every week what your intentions are, what are your plans? What are you trying to accomplish? What do you want to accomplish in your life? Start your day today by sitting down, your morning discipline, write down what those core intentions were, maybe for today, maybe for the week, what do you want to achieve?

[00:01:21] Who do you need to talk to? Who do you want to meet? Hopefully Insider Secrets is part of those core intentions for you, where you get some fill every week about multifamily, about opportunities that exist. Please follow us on the social media platforms, wherever you get your fill or your fix for social media, whether that’s Instagram or LinkedIn, Twitter, Facebook, Tik Tok, wherever you’re at. Follow us, both My Core Intentions and myself personally. Like us, love us, subscribe, go to our YouTube channel. There are hundreds of hours of material out on YouTube, anything that you want to grab your hands on, feel free to do that. Today’s episode is brought to you by Urban REI Property Management here in Chicago. We are a core asset property management company, dealing with single family as well as multi-family properties. So if you’re in the market for a new property management company or you’re buying an asset and you would like somebody to evaluate it, we have a team of experts that can help you take a look at that. So don’t hesitate to DM me and we’ll get you more information on that. All right, so let’s dig in, I’m joined today by my friend Joel Block, Joel is the CEO of Bullseye Capital. Joel, you want to say hi real quick before I intro you?

[00:02:38] Joel Block: You know what, listen, why don’t you keep going and then I’ll fill in the gaps.

[00:02:42] Mike Morawski: All right, good. I can’t wait, I’m excited, I’ve been thinking about this for days. Joel’s fund rehabilitates distressed assets, Joel has taught thousands of real estate brokers, CPAs attorneys, and investors about raising capital and the best practices structuring group investments. He’s a nationally recognized expert in private placements, deal structure, and capital raising for accredited and non-accredited investors. He’s raised a lot of money, a lot more than I have. You could take two or three of my friends and he’s raised more than all of us together.

[00:03:16] One question. I always start my episode with, I think it’s an important question because it really describes who you are at the core, in one word, what best describes you personally and professionally?

[00:03:28] Joel Block: Well it’s not one word, it’s two words. It’s a phrase and the phrase is advantage player. This is actually a nickname that was conferred upon me by the casinos in Las Vegas. An advantage player is somebody who’s an expert in a game of skill like blackjack. The house is unbeatable, they don’t like people that have any kind of an edge or any kind of capability. Anybody who has that edge is called the advantage player, and I was an advantage player because I’m an expert blackjack player. That made me not necessarily welcome in the casinos in Las Vegas. There are certain skills or certain attitudes, philosophies, that make advantage players what they are, and I’ve taken the skills of advantage players and I’ve really embodied that in my whole life. There are just things that winners do. If you are an advantage player, winning is inevitable. For the guys that I circulate with and the people that I teach about advantage play, winning is inevitable for them too.

[00:04:21] Mike Morawski: That’s such a great analogy for life and business. Not just blackjack or not just playing a game, but for business and treating business like that type of a game and how you can bring your skills, your expertise to the marketplace and take advantage of it.

[00:04:38] Joel Block: Let me assure you that advantage play has a lot to do with raising capital and we’ll get into that in a couple of minutes I’m sure.

[00:04:45] Mike Morawski: Good, I’m excited about that. So I kinda gave brief bio about who you are and about Bullseye Capital, but why don’t you fill the blanks in, how’d you get into the crazy world of real estate? What’s your background and where are you calling from today?

[00:04:59] Joel Block: First of all, I’m in Los Angeles, but I started when I was in college, I was playing cards and I pretty much paid for a lot of my way through college playing cards. But went into the CPA business, worked at Pricewaterhouse, the last engagement actually I worked on at Pricewaterhouse was this giant real estate syndicator, where I was doing the tax work for 500 partnerships and I hated the tax work, but I loved reading the partnership agreements. And I said, I don’t want to do tax, but I want to be dealmakers like these guys. So I quit the firm and met another guy, the two of us tied up a little building and we went out and cold called a bunch of doctors and we probably broke every rule there was, but we didn’t know any better. We did the first deal and the second deal, and we had done a total of about eight deals in the first couple of years. Then I fell into a venture capital transaction where me and another guy had invented the concept of delivering stock quotes to investors by fax.

[00:05:49] That was a brand new concept, this was like 1990. Because I knew how to raise money, I went out and I was successful in raising $10 million for this deal. I built it, grew it all over the country and ended up selling that company to a fortune 500. So I’ve done a lot of the things that entrepreneurs try to do. Then about 15 years ago or so an executive from Marcus and Millichap called and said, “Hey, can we bring you out to Florida, do a conference for us and teach us how to raise capital the way wall street does.” That turned into our syndication hedge fund symposium, now have had thousands of people learn from us how to raise capital. We’ve got libraries of videos and all kinds of things, I’m really a proponent if you’re going to raise capital, do it the right way and deliver something great to your investors and that’s what we try to help people to do.

[00:06:35] Mike Morawski: So let’s dig right in, when you say do it the right way, explain that. When you’re talking about raising capital, what’s the right way to do it?

[00:06:43] Joel Block: There’s two sides to this, there’s the lawyer side and there’s the business side. The lawyer side is very clear and what’s very clear is that when you have an active person that’s managing the investment dollars of a passive person, the active person has more information, they have more knowledge, they have more skills, they know what’s going on. So the law puts a big burden on those people. The laws are called securities laws. So you use a securities attorney, and that’s what the whole private placement process is really telling investors, all the stuff that they need to know to make an informed decision so that they can move forward. I’m not an attorney by the way, I’m a CPA, but everything that we all hear about, these private placements is really about giving investors the information they need to make an informed decision so that they can’t wake up one day and say well if I’d have known that I never would have invested with you.

[00:07:32] So that’s the first part, you have to get good legal documents that disclose everything to the investors. Good, bad, ugly, and otherwise. The second half of equation is the business part of the equation. The business part of the equation is that, the attorneys are gonna say things like “it’s dangerous, it’s terrible. It’s terrible. It’s terrible. Don’t do it. Don’t do it. Don’t do it.” Ultimately the business person is going to say, okay, now that the attorney told you all this stuff about do you want to do it or not? Often people say yes. If I told you how dangerous it is for your wife to get in the car and drive to the supermarket, you’d never let her leave the house. If you knew how dangerous it was to go on an escalator or an elevator, if you had to read a disclosure every time you wanted to do anything. Think about prescription medicine, they give you 50 different things that could go wrong with you and people still buy medicine.

[00:08:20] The attorney’s tell you all this stuff, the business people still need to make deals happen. People in the United States, we understand risk. We understand that a risk doesn’t get made unless we make some money, but you got to structure the deal in a way that investors can say yes, and you have to be certainly careful about the things the attorneys tell you, and you want to take their advice very carefully, but you also want to lay out the terms of the deal in a way they can say yes. Sometimes what attorneys do is they write deals that are so one-sided, the attorney’s job is not to be a mediator. Their job is to advocate for you, the investor or the promoter, whoever you are. If they’re advocating for the promoter and they’re telling the promoter, ” do this and this is good for you, and this is good for you.” You can’t have everything good for you because ultimately the investor’s going to say no way, I’m not going to do it.

[00:09:08] Unfortunately, investors don’t usually say, “you know what I didn’t like about your private placement or about your deal. It was so one-sided it had this problem.” They don’t do that, what they do is they call you up on the phone and they go, I really like your deal, but I totally forgot that my daughter’s getting married pretty soon and I need the money for her wedding. They make up some dumb excuse, they never tell you the truth. It’s really important that you balance the needs of the investors against your needs so that you both make money and everybody does good. That’s not usually part of what attorneys do, attorneys are busy advocating for you and their tendency is to protect you so much that they can be a little bit of a deal killer.

[00:09:48] Mike Morawski: Yeah. I can remember raising capital and bringing people in the office, giving them all the documents and they’ll go to their attorney and the attorney will look at it and they’ll call me back and say, my attorney said I shouldn’t do this. And I would say, okay. I just never tried to sell people. I think people invest in private deals because they know there’s a different upside and that they want to be involved in real estate. I’ll never forget the first time that I went to raise capital and I buy this a little 11 unit deal outside of Chicago. I throw an ad in the classified section of the newspaper. The ad said “real estate investors wanted.” From that little ad, my phone rang off the hook for the next two weeks. I think I raised somewhere upwards of $600,000 over six or seven months just from that ad.

[00:10:37] Joel Block: My experience is attorneys and accountants don’t have a lot of incentive to say it’s a great deal. Because the truth is, if anything goes wrong and they told you it was a great deal move forward. They don’t know if it’s a great deal, there’s no way for them to know. Then they end up losing the relationship with you and all the money that would come to them over the next many years. So they have a hidden agenda about saying no. Of course that’s just kinda their nature is to point out all the flaws. One of the things that’s important to understand is that the private placement business, the market for private placements, is bigger than the entire United States stock market. The reason it’s so big is what asset is held in private placements. What’s the main asset class held in private placements? Real estate. All that capital is used to buy real estate. So most of the real estate deals in the country are done in private placements.

[00:11:29] Investors are very familiar with private placements, especially wealthier people. They’re very familiar with this and they know that the attorney’s gonna look at the terms and all the attorney can really say is- these terms are reasonable, they’re not reasonable, they’re in line with what I’ve seen otherwise. The attorney and the accountant, probably without doing a lot of research, can’t go into the field and say, yeah, I like that building, that’s a really good deal. There’s a lot of pieces. There’s the deal, there’s the promoter, there’s the terms. There’s all this stuff that they have to evaluate. Unless they really do a thorough evaluation of all those pieces, then they’re only giving you a fractional opinion. They’re only commenting on a certain part of it. The investor has to do what works for the investor, it’s not my job to tell the investor they should move forward. It’s my job as the promoter to share with them the opportunity. If the opportunity looks like it works for them, then we’d like to welcome them into our deal. And that’s kinda how it is, but you have to make it enticing. You have to give them terms, profit sharing terms, your fees can’t be so ridiculous that they milked the deal out of all of its money. Putting their preferred interests first, and then your interest secondarily, those are investor friendly terms and you want to make sure that you build your deal around investor friendly terms to make sure that you have the greatest chance of being successful.

[00:12:45] Mike Morawski: Absolutely. So talk about your first deal, the first time you went and raised capital.

[00:12:49] Joel Block: Yeah, I remember it so well, it was in 1986. Me and this other guy had met each other right after I had left Pricewaterhouse. We tied up this little apartment building, a 12 unit deal in Los Angeles. I think it was around $500,000 at that time, we needed $165,000. We reached out to a bunch of doctors, some of them we cold called and some of them we knew or whatever. And then we got an introductions from one doctor to another doctor and we got basically 22 guys to give us about 7,500 bucks a piece. So we did our first little deal. There was a little private place, but I won’t tell you it was the greatest private place, but there was an attorney that wrote a little document that had the basics. At that time it was not an LLC, it was a limited partnership. We were the general partner and a limited partnership, and that was our first deal.

[00:13:36] Then once we have those guys in that deal, we went and did a second deal. We went back to the same guys and they put in some of them $25,000 this time. We just kept scaling it up and then we asked them for introduction as other guys and doctors and we just built this whole network out. We had raised several million dollars over the next couple of years. And that’s how I got started in the real estate business. You start with a couple of people and then you fan out to, across their networks and it’s a networking business. Back at that time, there wasn’t any advertising, we didn’t put advertisements in classifieds. There wasn’t any 506c crowdfunding rules, none of that stuff existed. So it was really a country club business. It was a confidential business. Which looking back at, it was an exclusive business. It didn’t really invite diversity people and other kinds of people into the mix because there was no way for people to find out about these deals, if they weren’t in your inner circle. So I think the new rules, the new crowdfunding rules, do a really good job in inviting new people into the mix that wouldn’t have otherwise learned about these deals. That was our first deal and it spiraled, parlayed into a bunch of other stuff.

[00:14:38] Mike Morawski: Yeah, that’s interesting. That was back in 1986 that had been before they changed the tax laws.

[00:14:44] Joel Block: That was right after the tax reform act of 1986. So we actually got started in 1987, now that I think of it. It was right on the heels of the tax reform act. I was in the tax business. I was very sensitive to all these rules, we were committed to doing economic deals anyway, not tax deals. My stint at Pricewaterhouse was all about tax deals. We were doing windmills, we were doing real estate deals. I was doing films, I was doing tax work for deals where guys were getting, these big tax rebates and I had a hard time understanding why as a youngster. I saw these credits and all this stuff moving and it really, a lot of it went away and I just was very committed that we wanted to do economic deals that made people money, where there was cashflow. So it was very much in sync with the times.

[00:15:26] Mike Morawski: That’s crazy, windmill deals back in the eighties?

[00:15:30] Joel Block: Yeah, in fact it was, talk about an interesting thing. The business model was fantastic, I don’t know if you’ve ever driven from Los Angeles to Palm Springs, but they have all these windmills. So different parts of California, we have these windmills in these wind areas between these mountains. Each windmill was $500,000. This was in 1985/1986. So each window was $500,000, it put four guys into a windmill. So each guy put up $125,000 and they get something like a $250,000 in tax credits for putting up $125,000. It was quite amazing, it was a multiple effect. The government stopped a lot of this, even the attorney general of the United States was involved in some of these deals. Even that guy, that high level, a lot of that stuff was pulled back and there were all kinds of recapture problems. There, there were a lot of issues with these things and the government really put the thumb on it. The eighties was a crazy time.

[00:16:23] Mike Morawski: Yeah so was the nineties.

[00:16:25] Joel Block: So were the two thousands.

[00:16:26] Mike Morawski: I knew you were going to say that. That’s what I said. So let’s fast forward a little bit, you mentioned a couple of times calling doctors. If you’re a new investor, you’re going to syndicate deals today. How do you go look for capital to raise?

[00:16:38] Joel Block: Here’s what you got to do, and here’s what I tell everybody who comes to our symposium. I had the same conversation with a guy this morning. He goes, where am I going to find the money? How long does it take? The first thing you got to recognize if you’re a real estate broker what’s in your world? People who want to buy and sell houses. Now why is it that those people are in your world? It’s because that’s what you’re looking for, that is what you’re looking for all day long. If we drew an avatar or a picture of a person who might invest passively into a deal, and you started looking, those people would come into your life. So what do you do? You ask every person that you need, you say something to them. You go to a cocktail party, hey, Joel, what do you do? We buy distressed properties, fix them up and share the profits with our investors. Then you stop talking. Now you’re going to get one of three answers from that person.

[00:17:25] The person’s either going to say, that’s quite fascinating. By the way, I’m going to Milwaukee next week, you know what the weather’s going to be? So they change the subject and move on and they’re not interested. So that’s one. The second kind is going to be a realtor who’s going to say, oh, did you know I’m a realtor? Maybe I could sell you houses, if you’re fixing up all this stuff. So that’s a vendor. The third kind of person is going to pull you aside, they’re going to whisper in your ear. Hey, how do I get involved in a deal like that? You take that person and you say you know what I can’t talk about that right now, cause we’re in the process of putting this together and everything. If you don’t mind, what I’ll do is I’ll put you on our list and as soon as we’re ready, I’ll give you a call. Without making any commitment, what’s the ballpark number of dollars you might be interested in putting into the deal, no commitment or anything.

[00:18:03] They’ll give you some number and you mark it down. My experience is that whatever your list ends up being, and you talk to everybody and you’re not selling anything. You’re just putting it out there and waiting for people to inquire. You’ll probably collect about 25% of whatever ends up on your list. Americans, we’re a special breed of people, we don’t want to miss an opportunity and we always say yes, even though we don’t always mean yes. So my experience is about 75% ends up being fluff, 25% ends up being real. So if you go and you have this conversation and people give you these answers and you mark it down in your list. You probably, if you had $5 million in commitments, you’ll probably raise a million,$1.25 million, $1.5 million, give or take. 25, 30%, something like that.

[00:18:47] That’s pretty realistic, that’s been my experience, that’s been the experience of many of our clients and people that we’ve taught this business. So we’ve taught this business to a lot of people, our program is probably spawned 75 or a hundred funds and another a hundred plus syndications. All total, probably a billion dollars has been raised by the guys who’ve come through our program. You have to go out and you have to start looking for something different than what you’re looking for now. That’s kinda what you gotta do. Raising capital is a deliberate process, it’s a thoughtful process, it’s not an accident. It doesn’t happen to some people because they’re more lucky. At the end of the day, once you’ve got your first million or a couple million dollars that you put into a syndication or a fund, once you’ve got your first money, then you can go back to those people and say, after six months, Hey, we’re doing pretty good. Would you introduce me to some new people? A lot of people will, some people won’t, but a lot of people will.

[00:19:37] Mike Morawski: Yeah, that’s always been my experience too, is that the referral side of the business, it really makes the business scalable. The more investors you have, the more referrals you get and I always teach people you got to plant the seed, water it, and then the harvest. So we have all this technology today, let’s say that you’re not able to go to networking events or you’re not going to cocktail parties or business events, where do you find people? How do you go source capital, source people?

[00:20:04] Joel Block: First of all, we have these new crowdfunding rules, which makes it possible to generally solicit, that kind of means pitch a deal online to an audience of people. I’m not really big on pitching deals. I think that this sort of thing needs to be more private. You could always go on LinkedIn, you can always make a post in any of these real estate forums and say, looking to brainstorm ideas with people about real estate. Have phone calls with people, have email exchanges with people. Talk about real estate, demonstrate that you’re an expert in real estate. I talk about being an advantage player, demonstrate to people that you’re an advantage player. People want to get onto the coattails of people who are successful, and if you can demonstrate through thought leadership, through sharing ideas, that you know what you’re doing, that you’re finding deals that you’re sourcing deal flow. You’re going to find that people are gonna say, I’ve been trying to flip houses myself, I find it to be very tiring, it’s really not yielding me very much. I want my money to work as hard as I do, but it’s just more effort than it’s worth.

[00:21:00] Why don’t I put some money with you and we’ll share some profits. That’s kinda how it starts. There’s a lot of people who are out there, but you have to be someone who demonstrates that you’re worth investing in. You have to demonstrate to people that you’re doing that. You’ve got some moxy, that you’ve got some attitude that they like. There’s a lot of ways to do that. And you can do that right online without soliciting, without reaching out to people in a way than an attorney would caution you against. You don’t want to pitch your deal. I just want to brainstorm, what are you seeing in your market? This is what we’re seeing in our market and here are things. Get to know people and start having conversations with people. The person is either going to say that they’re interested in talking further about it or they’re not, but I wouldn’t pitch people. I’m not a hard seller. I’ve never been a hard seller. I find that a soft sell works really well.

[00:21:47] Mike Morawski: Yeah. How about follow-up? So let’s talk about follow-up for a minute. I’m a sales guy, I’ve been in sales for 30 years of some sort. I think people miss the mark on follow up, if I have a conversation with you today about private equity or a real estate deal and you say no. Do you follow up with people? And how often, and what does that whole formula look like for you?

[00:22:08] Joel Block: Yeah I’m really big on drip systems and for me that means putting them into an email list. I do a lot of media, so I do a lot of commentary on economics and different things on TV programs. When that happens and I send it out to my list, let people know that I’m out there. Life is a lot about timing and your timing may not be just right today, but in six months, you’ve got a wind fall, you get a distribution from your 401k plan, something happens at work and whatever. I don’t know what, whatever it is happens. And then, that week they get your email that says, hey, I was just doing a media program or we just completed a project and here’s the video of the results and here’s what happened. Whatever your email is, you put people on a list every month, every year, every so often you gotta be sending them stuff out because they’ll forget about you. You send out something and coincidence’s are real, they get the email the same week that they just had something good happen. When you’re sending emails month after month, you’re bound to have that coincidence happen.

[00:23:02] Then the guy calls you and says, Hey, appreciate your emails, thanks for being in touch all the time. Now’s a better time for me to talk. It may be two months, it may be two years. It may be longer than two years, it happens to me all the time. I was on the phone just today with a guy I had her from in four years, but the guy’s been getting my stuff and “hey, you know what, Joel now I’m ready, I’m ready.” Oh okay, fantastic. You’re ready, let’s talk and let’s see what ready means. Ready means that the guys inside of a week of having some new things happen that make them ready, but if I had lost touch with the guy, if the guy had never heard from me for the next many years, he would not remember me when the time comes.

[00:23:40] Mike Morawski: Those are really important facts. I want my listeners to understand that you can’t take that initial “no” from people, you have to stay in front of them and build that database. I talked to a guy one time he said that he talked to a thousand investors in one year to start to build his database and has ultimately, from that thousand contacts, $15 million. So talk about that a little bit in your world, I know you have a huge database, you’ve raised hundreds of millions of dollars. Talk about that a little bit.

[00:24:10] Joel Block: Cumulatively, I’m probably around a hundred million for all my stuff just to be clear and that’s been over many years. That’s been from mostly accredited investors, that’s my thing.

[00:24:19] Mike Morawski: Okay, explain that real quick if you don’t mind, the difference between accredited and non-accredited investors.

[00:24:25] Joel Block: Yeah, the truth is that the government doesn’t really like people taking money from other people because things go wrong and people end up having hardships. Then the government’s got to put you on welfare. The truth is they really don’t like that, they really would prefer you to just go through registered securities, which is the stock market, where they can keep an eye on things and that’s their preference. But they also know that innovation and opportunity really is not what moves to the stock market. The stock market’s kind of more of a stability mechanism, the real innovation happens in the private placement phase. Wealthy people who can take care of themselves, who could hire attorneys to take care of them, that can be prevented from doing really dumb things. If they lose their money, are theoretically not going to be on the street. The government has an exception for those kinds of people. So the rule, more or less, is that everything has to be registered unless you’re dealing with these high net worth people which are people that are defined to make a couple hundred grand a year, or have a net worth of a million dollars or more.

[00:25:25] Plus you can have a couple of non-accredited people who don’t meet that definition inside of a deal, that’s the way that the rules work. So an accredited investor is a wealthier person, a non-accredited is not so much. In addition to accredited people, there also are institutions, pension funds, hedge funds, that are by definition, they’re accredited, but they’re not people. So my money has really mostly come from people, accredited people. Although I have gotten some money from some institutions in the past, but mostly it’s been accredited people. So when you hear people talking about I’ve raised billions of dollars, they’re not getting billions of dollars from individual people. They might get it from a pension fund on wall street, like when these big wall street outfits. They’re generally not raising money from people, they’re generally getting their money from institutions. A lot of us smaller guys get our money from people, and 10 or 20 or $50 million fund, that’s a lot of money when you think that you might be getting the money at a hundred or $250,000 a person. That’s a lot of people, it really takes a lot to accumulate that much capital.

[00:26:28] Mike Morawski: So does Bullseye do this? I’m a syndicator, I’ll put a real estate deal together. If I came to you with an apartment deal, would you guys raise the capital on that deal?

[00:26:40] Joel Block: No, we don’t broker any money, we don’t broker anything. We’ve raised money for our own account because we’re syndicators, fund managers to the difference is that in the last 10 or 12 years or 15 years we’ve been teaching other people how to set up deals, how to look for investors, how to find them, how to talk to them. We don’t raise any capital, we don’t get in the middle of those discussions with those investors, but we coach people on how to be successful in raising capital. Where to go look, how to position yourself, how to get organized. We counsel them through the private placement process and get them ready to go to the attorneys that we introduce them to and help them to get ready for that process. But we do not broker capital. My experience is capital is really valuable, and I stand to make a lot more money by raising the capital for my own account than I would by brokering it. The other thing is that when you broker capital, my experience is things go wrong. I don’t have any control over where that capital goes. Then the person comes back to me and says, Hey, Joel, you told me to get involved in that deal, I’m sorry that happened, I don’t have any control over that deal. So I don’t want to have anything like that happen to me, so I don’t get involved in that.

[00:27:48] Mike Morawski: So you do your symposium once a year.

[00:27:50] Joel Block: It’s always been twice a year, but cause of the pandemic, it’s been a little bit different, but give or take yeah.

[00:27:56] Mike Morawski: Are you doing it live or are you doing a virtual?

[00:27:58] Joel Block: No, we’re scheduled for the spring and it’s scheduled to be live. Right now it’s May, but there’s a good chance because of this whole new wave that’s happening, it’ll push back just a little bit. But we’ll take 40 or 50 high level people that have been successful, putting together deals, maybe not syndications or funds, but they’ve been fixing, flipping, developing buying some. They just need more access to more capital and we show them really what the ropes are and how this works and how to do it professionally and properly and how to be successful.

[00:28:28] Mike Morawski: Interesting. So here’s what we know, in the world of private equity, in the world of real estate times can come more things get very stressful. You’ve mentioned this a couple of times, but we’re held to a much higher standard when it comes to legalities and things like that. So when the stress mounts around what you’re doing, how do you personally handle those stressful situations? How do you make high stakes decisions?

[00:28:54] Joel Block: First of all you have to make sure that your planes not flying too low, you have to make sure you’re not going to run out of cash. The investors are going to look to the syndicator, so it’s the syndicator’s job to make sure that they reserve enough working capital, that they don’t find themselves in a pinch. They need to make sure that they’re not making leverage decisions that put themselves into a bad situation. So don’t over leverage, don’t fly too low. Those kinds of things maybe are more important than anything. You just have to be extremely careful. The second thing is that you have to constantly be looking at your environmental factors, what’s happening in the economy? What’s happening around you?

[00:29:30] You need to be talking to other syndicators, what are their experiences? Because part of the problem that syndicators have, and we run a group, once people run their funds we have a mastermind group for syndicators. It’s called our M4 group, money managers, mastermind. This is just people who are running funds. What happens is we sit down, we talk, we say listen, what’s the market like in your area where you affected, for example when all these eviction moratorium were in place, are you being affected by this? How are you dealing with this? How are you negotiating your terms? What’s happening? Are you losing tenants because of a commercial lease problems and other sorts of situations. We share information and that’s how a lot of that happens. So people can get a read on the marketplace and then part of what I do is I do a lot of forward-looking things and I help people look at asset classes in advance that they may not be thinking about.

[00:30:17] We share this information, you have to be part of a network that makes that happen. Whether it’s our network or some other network, you have to be part of something that gives you intel about what’s going on in the marketplace.

[00:30:27] Mike Morawski: That certainly makes a lot of sense. You know, I always say that there’s a great scripture in Proverbs that says “wise men seeks much counsel.” I think by doing what you’re doing, that kind of falls in line with that. How about technology? What do you like in technology today?

[00:30:42] Joel Block: Because I’m an older guy I’m used to using the telephone, but everything that I do pushes people to the telephone. Emails push people to the telephone, text messages push people to a telephone call. I use calendaring systems where people can click on a link that ultimately puts them onto a zoom or a telephone call. So ultimately my goal is to talk to people. It’s not to have a be all and end all conversation in an email or text or whatever the different thing is, so that’s one part. When I think of technology for a lot of syndicators and a lot of things that we’re doing there are companies that have come up with great programs that keep track of investors, keep track of the deal, they set up these portals where people can go and they can do self service. They can get their own tax returns and they can you can write your checks this way and automatically deposit the money to the investor. We’ve talked to different companies, we haven’t quite found one because a lot of our guys, they want this kind of thing for their investors. Unfortunately I haven’t found a great one to refer comfortably, but we’re always looking, so I just know that these kinds of things are out there and we’re always looking at them.

[00:31:49] Mike Morawski: Yeah, a decade ago when I was raising capital, there was nothing like that out there. Today there’s a bunch of things, so there’s those platforms where you can put your documents and put your webinars and put all your property information and quarterly reports and things like that. So there is the advantages out there today. Hey, this show is Insider Secrets and I always like to share some type of a secret that you might have that would help a new investor gets started in the syndication world. Anything that you haven’t shared that would be interesting?

[00:32:20] Joel Block: You know, probably the most important thing to reiterate is start looking for investors, start asking the question “would you be interested?” Start compiling a list of people who might be interested. Again, 70% of them are not going to be interested, but start compiling a list because if I said to you start looking for yellow cars, you’re going to find a yellow car here and there. In fact, you might see one every single day if you’re actually out driving around. That’s just the way that our brain works is that we find what we look for and if you’re not finding investors it’s because you’re not looking for them.

[00:32:55] If you are rebabbing houses, you’re probably finding hard money lenders, you’re probably finding private money lenders, but you’re not finding equity investors into private placements the way we’re talking about. The reason is because that’s just not what you’re looking for, so start looking for it and you’ll find that they’re out there in abundance.

[00:33:12] Mike Morawski: Yeah, absolutely. Where do you see the market going right now? We’re at a pretty high point in the market, cap rates are really compressed and cost of capital is starting to go up. Where do you see the market going?

[00:33:24] Joel Block: It’s a funny thing, traditional economic theory is not holding up that great. A lot of what we would expect to happen, a lot of the professors, a lot of their predictions are not holding up. So here’s a couple things, number one interest rates are certainly going to go higher and the fed is going to move them higher. Now that’s the short rate, not the long rate. Remember that real estate is driven by the long rate, but interest rates in the short run are going to be going higher. That would theoretically suggest that probably cap rates in order to be competitive, will need to go up a little bit, so prices might come down a little bit. That’s one thing to think about, but on the other hand there’s a housing shortage in the United States and that housing shortage isn’t going away. So as much as we think that real estate prices should go down a little bit as the interest rates go up, we have the shortage.

[00:34:10] On the commercial and industrial side, my sense is that there is going to be a softening because the pandemic has done a lot of damage and a lot of companies are reorganizing themselves. The Amazon effect has affected a lot of companies, so there’s a lot of things that have changed in the marketplace and we have to pay attention to those. It seems some prices on the commercial side should come down, but so far that hasn’t exactly been the case.

[00:34:32] Mike Morawski: Yeah, hey this has been great today, lot of information. I know that even myself, I’m going to go back and listen to this again, cause you had some really good high points and I always encourage my listeners to do that. On a lighter note, I always ask three questions, the bonus round. What is the best book you’ve ever read?

[00:34:50] Joel Block: There’s a couple of them, one is Negotiate Anything Herb Cohen, that was his book years and years ago, an old school book now. Harry Lorayne wrote a book called The Memory Book that was dramatic. I used to really like self-help and that really was big for me when I was young. Now I listen to podcasts and I do listen to some Audible stuff, but I listened to the wall street journal podcast every day. There are several other podcasts that I consume because I just think that that they do such a great job of telling stories. A lot of these podcasts are very highly produced, of course I have my own podcast, Profit from the Inside, which is really all about delivering the inside track. It’s a business podcast, not real estate, but we take business topics and we ask guests to deliver the inside track, which is the best, smartest, or fastest way to get something done. Those guys that do it are advantage players, so it’s a good podcast.

[00:35:38] Mike Morawski: Awesome. How about your favorite restaurant? Favorite food, favorite restaurant?

[00:35:42] Joel Block: Probably Mexican food.

[00:35:44] Mike Morawski: Okay, so you’re in LA. I love a place down in Newport called Javier’s.

[00:35:49] Joel Block: Newport beach is 75 miles away, which is sometimes three hours away. When I was a kid, San Diego was two and a half hours away and now it’s moved, it’s about five hours from here now.

[00:35:59] Mike Morawski: Yeah, it’s crazy. Favorite tourist attraction?

[00:36:02] Joel Block: Boy, that’s hard. I’ll tell you if you’re asking in Los Angeles. The normal ones come to mind, but really maybe my favorite city that has tourist attractions. I love New Orleans, I love Orlando, I love in New York City. I actually love a lot of our great cities of this country. I just think that every city has great personality and I’m a big fan of every one of those.

[00:36:21] Mike Morawski: You get to Chicago often?

[00:36:23] Joel Block: I haven’t been to Chicago in a little while, but we have family in Chicago so we get there once in a while.

[00:36:28] Mike Morawski: Okay, look me up when you get here.

[00:36:29] Joel Block: Next time I will.

[00:36:31] Mike Morawski: All right. Joel, tell people how they can get ahold of you if they want to talk to you about your fund or your symposium.

[00:36:38] Joel Block: For people who are looking to raise capital, the best thing for them to do go to syndicatefast.com and they can register, they can be part of our series, they can get videos from us. We have this giant library, people have written into us all sorts of questions, what’s the difference between a syndication and a fund? How do you pay the preferred? How do you figure out this? How do you figure out that? So we’ve got a giant library, like 150 assets that they can scroll through, it’s all free, go to syndicatefast.com. By doing that, there’ll be on our list so they learn about our symposium and when things come up and we share all sorts of free resources and information, and we’ve tried to build a really great community of people who were in the syndication and the fund business. We probably have one of the bigger communities that anybody has and we’re happy to share that.

[00:37:22] Mike Morawski: That’s awesome, wow, I’m going to go check that out myself. I really appreciate you being here today. Like I said, a wealth of knowledge and just great stuff, so good conversation, appreciate it. Everybody, thanks for being here and look forward to you being here again next week as we dive back into some more relevant information for the market and the world and your real estate investing, have a great week.

[00:37:46] Kristin: Thank you, Mike, and thank you for joining us for another great episode of Insider Secrets as always Insider Secrets is brought to you by My Core Intentions, wherever you hang out on social media, you will find Mike and My Core Intentions. Please like and follow us to get the most up-to-date real estate investing trends. Visit mycoreintentions.com, where you can get expert coaching on all things, real estate investing and property managers. If you’re looking to become an expert, Mike’s coaching will help you scale your real estate investment business. We’re looking forward to having you back again next week for more Insider Secrets.

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