Insider Secrets Podcast Season 2, Episode 8
Guest: Brock Vandenberg
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Brock VandenBerg established TaliMar Financial in response to elevated uncertainty within the banking industry and to provide an innovative alternative to the restrictive practices of traditional lenders. With more than 14 years of experience in real estate finance, Mr. VandenBerg has earned the trust and respect of a strong network of clients and business partners.
Mr. VandenBerg’s experience includes serving as Vice President of KeyBank’s Private Equity Group. In this role, Mr. VandenBerg assisted in funding more than $200 million in mezzanine debt and joint venture equity investments and worked closely with leading real estate developers and institutional investors worldwide.
In addition, Mr. Vandenberg served three years with the Federal Deposit Insurance Corporation (FDIC), where he supervised the orderly dissolution of failed financial institutions. His responsibilities also included the sale of more than $500 million in performing and non-performing loan assets on behalf of the FDIC.
A graduate of the University of Michigan, Mr. VandenBerg is an active member in the Urban Land Institute and the Mortgage Bankers Association and holds a California Real Estate Broker License. He lives in San Diego with his wife and two children and enjoys staying active with CrossFit, mountain biking, and skiing.
Persistence is key in real estate; success takes time and requires continuous learning, networking, and skill development.
Focus on investing in your local market but be open to opportunities outside if scaling is necessary.
Accessory Dwelling Units (ADUs) have opened up new opportunities for real estate investors in San Diego and other coastal markets.
Talimar Income Fund offers a better strategy for investors by pooling their capital into a diversified portfolio of loans.
Approximately 60% of the investors are retired, and there is a small percentage (7%) of investors with a net worth of $10 million or greater.
The typical investors in our fund are often from the banking or real estate industry.
Having a clear exit strategy and alternative plans is essential for maximizing the performance of real estate assets.
“Having a clear exit strategy and alternative plans is essential for maximizing the performance of real estate assets.” – Brock
“”There’s opportunity in the multi-family sector. Definitely an opportunity in the private lending sector. It’s just depending upon how you wanna invest.” – Brock
“There’s so much noise out there in the market that you could just be stuck and not do anything. I would almost say you just leave your money in the bank, but you don’t even wanna leave your money in the bank anymore.” – Brock
“In today’s market, it is crucial to invest in performing markets for asset growth and success.” – Mike
“We’re not in the business to loan to own. We wanna have a very healthy balance sheet.” – Brock
“Focus on what you’re good at. And just be very persistent about getting that message out, because I can tell you, it will be successful over the long term. It just takes time.” – Brock
“Rich Dad Poor Dad got me starting, got me in the mindset of starting a business, investing in real estate.” – Brock
[00:39] Intro to Podcast
[02:18] Intro to episode guest
[03:32] One word that describes Brock personally and professionally.
[08:45] Let’s talk about your background a little bit.
[12:51] If banks aren’t lending, where does your capital come from?
[16:04] Brock explains how they educate their investors and why it’s more beneficial as compared to other investments.
[19:22] Brock discusses the difficulties of finding houses in the San Diego market.
[21:27] Let’s talk about your Talimar Income Fund One.
[26:14] What do you tell people today to get them over all the doomsday experts out there that are saying what they are saying?
[32:11] Talk about a couple of the techniques that you use through your company and to attract investors and start those conversations with investors?
Kristen: [00:00:00] 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.
Mike coaches you to buy investment real estate, creating short-term cash flow 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.
Mike Morawski: Hey, what’s up everybody? Good morning. Hope you are up enjoying the day. I am glad that you’re here today and buckle up cause you’re gonna be in for a ride today. Have a little bit of a twist on what we’re gonna talk about, but we’ll get to that in a minute.
Let me ask you, are you being intentional? Are you being intentional about what you’re trying to accomplish [00:01:00] today, this weekend, in your life in general? Are you investing in yourself? Are you investing in your future? I always talk about if you invest in yourself, whether it’s a seminar, whether it’s reading a book, whether it’s listening to a podcast or getting some coaching, investing in yourself to grow personally. The more we grow personally, the more we’re gonna grow professionally.
And I think we all need to be intentional about that. Hey, I’ve had a coach in my life for 20 years and I still invest in myself today because it helps me to grow professionally in my business. And it helps me to be able to bring better guests, better content, more information relevant to today’s market, today’s world.
And my guest today. I know that we’re gonna talk a little bit about that, but if you’re new to the show, I’m glad that you’re here today. Please like us, love us. Smash the subscribe button if you’re out on YouTube, help [00:02:00] attract some other people for us because we are always bringing on a daily basis new relevant content. Little tips, little suggestions, they’re gonna help you grow your business.
And isn’t that why you’re here, right? You want knowledge, you want information, you wanna be able to grow your business a little bit. And that’s what I wanna bring to you. Hey, this morning I am joined by Brock Vandenberg.
Brock is a friend of mine that I met a while back through a long time friend of mine. And Brock’s with Talimar Financial, he runs the Talimar Income Fund One. We’re gonna talk about that. He’s from beautiful Southern California, San Diego, and his history is he worked for the FDIC back closing the banks down.
So that will be kind of interesting as we get into this this morning. Hey, Brock, how’s it going?
Brock VandenBerg: Mike, great. Thanks for including me on the podcast.
Mike Morawski: Yeah. I appreciate it. And we kind of caught you off guard this morning cuz you [00:03:00] thought you got here via a different way than you got to.
Brock VandenBerg: Yes. And so, I’m excited to be here today and I’m excited to share my story. And yeah answer some questions.
Mike Morawski: Yeah. It’s kind of like going to a surprise party for you.
Brock VandenBerg: Well, I’ll tell you what, going to this or just generally what’s going on in the economy or in the real estate industry, seems like a surprise party every single day.
Mike Morawski: Yeah. Right. Hey, so I always start, and kick this off with famous question and that’s one word what best describes you personally and professionally?
Brock VandenBerg: We were talking about this and I was thinking of it and it’s persistence. So, when I talk to real estate investors, especially young real estate investors that are just getting into the industry, there’s this perception, and especially what you see everywhere, is that people are getting rich quickly. Making money immediately, like as if success is going to be within their first year.
And it really isn’t the case. And it takes a lot as you know, it takes time to learn your craft, to build your network, to find out what you [00:04:00] love to do and then build upon it. And you’ve got to be persistent. I’ve been at this, what I’m doing for over 20 years. And I’m just starting, you’re always learning something new and so it takes time. So persistence.
Mike Morawski: Yeah. So let me ask you this. That persistence, do you think that that’s something that you innately were born with? Or do you think that was something you learned? Where’d that come from?
Brock VandenBerg: That’s a good question. Not saying that was not persistent, but I seemed to always think that success was gonna be pretty quick. And talking to the right people, if you’re gonna make it pretty quick in the industry. And I got lucky. Early on, I had some people that I could look up to and kind of show me the way of being successful, read some books that gave me some insight into the success of investing in real estate.
Even prior to investing or being in real estate, I was in the tech industry and it really wasn’t kind of the passion that I had, but when I got involved in real estate, I knew exactly that is what I [00:05:00] wanted to do. I just didn’t know how I wanted to be involved. And then I was able to kind of narrow it down to real estate finance. Again, early on, pick up a couple of mentors that really kind of showed me the way and have been there the whole time as a mentor.
Mike Morawski: Yeah. If you just talk about the mentor thing for a minute, what do you think they mentored you on to get you where you’re at today?
Brock VandenBerg: So I think as a mentor, kind of giving you an idea of where the big picture is, especially in real estate financing. How do things work and not as much as the industry changes, the dynamics of the industry changes. The big picture really doesn’t change. So I got lucky. When I got involved in real estate, I worked for a private equity fund. And really their focus at the time was to invest in residential development projects as kind of almost like a limited partner.
They’re more of a we’ll call mess debt. So second position behind a construction loan. So they would step in and develop out large projects and it was such a great opportunity. I was put behind a [00:06:00] computer screen on Excel and ran cash flows literally for two, three years on projects. And I have hundreds of projects I underwrite and you start to learn a lot. And then you’re out there, kicking the dirt, looking at these projects.
And then, unfortunately, but fortunately, 2008 hit and I had started in about 2001 and I was growing with the company. There was a lot of opportunity for me. And then one day, it all came crashing down. They decided that this wasn’t a strategy they wanted to do anymore. And literally I was a real estate banker out on the street. And there were no job prospects for a real estate banker at that point.
Mike Morawski: Yeah.
Brock VandenBerg: But my mentor who ran the company, had always stayed in touch with me and guided me, and provided me some really insight as to kind of what I should be focusing on.
Mike Morawski: Yeah. Interesting. Hey, you talk about those spreadsheets and looking at numbers, our Buddy Force always says, the math [00:07:00] never lies.
Brock VandenBerg: And I learned that more and more so the industry as a private lender, you know, it is just mathematics. At the end of the day, you’re looking at certain statistics and you’ll see it. Oh, we’ve done it for so long now if something is off, there’s a likelihood that the loan isn’t going to perform if this one piece statistic is off.
Mike Morawski: Yeah.
Brock VandenBerg: So he is right. Forrest is very, very keen on that.
Mike Morawski: Yeah. And here’s what’s interesting. I love that you said statistics, because I think it goes beyond just the asset, right? I mean, the asset could perform. But if the market that assets in isn’t a performing market, and I think that can be even more important in today’s environment than any other environment. Because, I know there’s assets in markets out there that are not performing.
But then there’s assets and markets that are performing or emerging. And I think that they’re different, those are different things that we all need to look at too, as a real estate investor, [00:08:00] multifamily investor. However your makeup is in this business.
Brock VandenBerg: Yeah, I mean that’s a good point. And again, one of the things my mentor told, so I’m on the finance side, I don’t go out and buy a lot of real estate. I look at it from a private lending standpoint is understanding the exit strategy of your loan. And kind of the same idea of, you’re buying a multi-family property is what’s the long-term goal? But if something occurs, what alternative strategy do I have to make the asset perform.
Mike Morawski: Yeah.
Brock VandenBerg: And especially today in today’s market, I have to imagine the multi-family industry. I know, I mean my colleagues that are in the multi-family injuries are having to make decisions based upon where interest rates are from just a year ago, and how that impacts the exit strategy they had when they bought the property originally.
Mike Morawski: So let’s talk about your background a little bit. How’d you get into the world of real estate? But then I mentioned early on you worked for the FDIC. Talk about all that a little bit.
Brock VandenBerg: So it’s funny, so I was in the tech industry during the tech boom, up in the Bay Area. It was a great opportunity. Loved to see kind of [00:09:00] the rage. I mean, this was even before Amazon or anything, if you remember that, pets.com, everything was .com back then. And, so I really had an opportunity to kind of see the tech industry, but it wasn’t a passion that I had. Picked up a book. I think we’ve all heard it. It was a Rich Dad Poor Dad book.
Mike Morawski: Oh.
Brock VandenBerg: And Kiyosaki was sitting there talking about was number one, owning real estate, investing in real estate and really owning your own business to do it long term. And I don’t know, it just clicked for me. I’m like, that is what I want to do. And so I went out and actually ended up, started buying up some of my own properties up in the Bay Area.
Actually still hold them too. And then met my wife, my now wife, and moved back down to San Diego. Luckily someone took a chance. I had read a couple books on real estate finance. I took some accounting courses and got on the bottom level of the private equity fund we were talking about.
And they literally just stuck me behind a computer and was just doing cash flow. I mean, not basic, but boring work you can think of. But [00:10:00] it was such a great opportunity and we talked about kind of what occurred. But as the market adjusted and I went back, I had an opportunity to take a two year term position with the FDIC.
And again, it’s just funny how stars kind of aligned. I call it the white collar prison for real estate bankers because we unwound everything that we created. So I would be shipped off to a bank, it would be a Wednesday afternoon. They would say, Brock, you are going to go to Arkansas and we are going to shut this bank down.
It’s not performing. Your responsibility with your team is to go and underwrite all the loans. Give us a value of those loans and then assist us in selling those loans to the open market. The FDIC would step in on the bank, typically just hand that bank over the depositors to another assuming bank.
So the depositor funds were always okay. It was just they needed to carve out most cases, some of those bad loans. And so I spent two years on the [00:11:00] road looking at loan files, underwriting loans, and then packaging them up and selling them off to private investors.
Mike Morawski: Interesting.
Brock VandenBerg: It’s just funny how I from spreadsheets to underwriting loans got me to where I am today.
Mike Morawski: So, how does that market, when you were doing that, compared to today’s market?
Brock VandenBerg: Yeah, the dynamics of what’s going on in the market are so different. And, the biggest difference right now, obviously here, the banks were lending under standards that resulted in a massive amount of foreclosures. Completely different from today. I mean, banks who have been very stringent on the guidelines that they’re lending.
But what happened because of that, created a whole cottage industry for the private lending industry where banks would have been funding loans that my company and others would be funding, are no longer funding. And so this opened this opportunity for private lenders. Bloomberg had a recent article and I thought it was kind of funny. They called us shadow lenders, so they said, all [00:12:00] these shadow lenders are coming out of the dark alleys of lending on real estate. I mean, we’ve been here for the beginning of time.
We’re no different than any other bank lending money out just a different platform of which it occurs. But the industry has exploded. And they kind of jump ahead here with the recent closures of, and that’s why I brought up the FDIC with you when they went in and shut down Silicon Valley Bank, Signature Bank and others.
Not only do I know some of the guys that were involved with that, but it further opened up the opportunity because banks right now do not want to lend. They need to create liquidity on their balance sheet. And so they’ve really pulled back the lending that they’re doing, create that liquidity on their balance sheet, which has opened up again, a bigger market for the private lending industry.
Mike Morawski: So obviously in order to do that, it’s a function of capital and you have to go get capital somewhere. If banks aren’t lending, where does your capital come from?
Brock VandenBerg: So we assist high net worth investors, family offices, pension plans that [00:13:00] want to get involved in this type of investment. At the end of the day, what we’re doing, we’re acting as the bank lending money to real estate investors. Majority of these people are buying up single family or multi-family properties to renovate them and then sell them for a profit.
Others, the other 50% of our business is just bridge loans. So maybe somebody is buying a service center. For example, we just did an automotive service center and the bank was supposed to go in and close the loan. But they couldn’t. And so they went out to the private lending market. The mortgage broker came to us and we funded a bridge loan for them, giving them the time to close on the property and then get more conventional financing in place.
And so that is our target market and the investors that are coming in want to take advantage of the returns that you can now get in this market. Mike, we were also talking about a lot of the investors that want to get involved in real estate but don’t wanna own [00:14:00] property, don’t wanna manage tenants, don’t want to go find, locate properties.
This is an alternative option for them to earn consistent monthly cash flow, get some of the tax advantages of owning real estate, and get involved and engaged and take advantage of this opportunity now without really having to again, own a portfolio of real estate.
Mike Morawski: Yeah. And it’s interesting cuz we call that passive investing, right? And that’s that limited partner that comes in and partners alongside of us in our syndication business when we’re doing a multi-family deal. It’s the same philosophy in your space where those limited partners have the ability to invest and you are the guy who looks at the other deals out there to invest in.
Brock VandenBerg: Yep.
Mike Morawski: And it’s funny because I talked to an investor yesterday, or potential investor, and he says, well, I’m trying to decide whether I should do this myself or if I should just invest my money with you or another [00:15:00] type of entity. I said, let me ask you a question. I said, you sold 75 houses last year. You made half a million dollars. I said, you have to keep your foot on the gas to do that, right? He said, yeah.
I said, so you know, everything that goes into an investment opportunity. All you got to find the property, underwrite the property, do the due diligence, do the construction, do the financing, manage the whole thing how much time is that gonna take away from your day job? Where you’re making a half a million dollars a year. And you’re gonna get caught up in this. Wouldn’t it make more sense just to add to what you already have in place and keep your foot on the gas?
Brock VandenBerg: Yeah.
Mike Morawski: I think that a lot of times people think that, there’s that saying, “The grass is greener on the other side”. But when you have all of this work that you do yourself for them [00:16:00] doesn’t make more sense for people who invest in a fund like yours.
Brock VandenBerg: Mike, you bring up a great point because I do, I educate and you do as well on this podcast of how people can get involved in the multi-family sector, invest in it on their own. Go out and you give, you hear the tips. And I’m an open book. I’ll tell everybody the strategy that I use in lending. But at the end of the day, you’re right.
And I think one point that’s also very important to note is we typically will find the better deals. We’re more networked, we’ve been doing it for a longer period of time. So, if you go out and you want to do it yourself, you got to just, number one, build your network to find the opportunities. That’s just step one. Then step two is execute on whatever strategy you decide to use.
So I tell that to investors that what we call trustee investing, so investors that do one-off loans, they may lend money themselves to a real estate investor. But you’re right, do they have the time to find it, to identify the loan, to manage the loan,[00:17:00] if something were to go bad, do you have the background to get yourself out of that position?
Mike Morawski: Yeah. So let’s talk about the market a little bit. Before we get too granular into your fund and what you’re doing, talk about the market. You got a banking background. You’ve been in numbers for a long time. Where the hell are we headed?
Brock VandenBerg: I can’t prognosticate as to where we’re gonna go into a recession or not. Because again, this is something I’ve learned like, I don’t know. All I can tell you is, or I can say is that I am comfortable and confident that the markets that at least I lend in are going to perform well over the long term, and I can look at historic numbers. So 80% of our portfolio is located just here in San Diego. Do I think 10 years from now a single family home in San Diego is gonna be worth more in 10 years than it is today?
I’ll take that back. That’s how I look at it. Now, in the meantime, yes, there could be some turbulence, some [00:18:00] volatility in the market. I mean, we’ve seen it. We saw covid, we’ve seen the closure of banks. We’ve seen the rise of interest rates. But if you were to look at single family houses and most markets, they performed well.
They’ve been extremely, extremely resilient. Now, I can’t say this on behalf of all markets, but I can say in San Diego and some of other markets that I would suggest investing in is that the supply constraints that we have buffer you from that volatility. So you can hold out and not be massively negatively impacted by something that happens geopolitically or economically.
Mike Morawski: Why San Diego over chicago?
Brock VandenBerg: Well, I like to invest in my backyard. That’s another thing that I talk about. It’s like, look in your backyard. I’m not saying, look, if you have to scale, absolutely you’re gonna look outside of markets that you can generally drive to, but there’s enough demand from what I offer in San Diego alone, that we’re confident, just really focused in San Diego and really just [00:19:00] Southern California.
Mike Morawski: Yeah. So what’s interesting to me is knowing what home prices are in your market and that there’s a fix and flip market there.
Brock VandenBerg: Yeah.
Mike Morawski: And that just goes to show you that there’s business everywhere. You just uncover enough rocks, right?
Brock VandenBerg: Yep.
Mike Morawski: And open enough doors, and you’ll find those opportunities and find that right opportunity.
Brock VandenBerg: Well consider this. You talk about difficulty in finding opportunities. Obviously it’s, everybody has difficulty finding opportunity. But if you were to look at the San Diego, the multiple listing service right now, the MLS, they have 1500 homes listed for sale right now in San Diego for a population of a little over 2 million people.
Brock VandenBerg: It’s legit. Literally zero homes are available. And so when talk about like how do you get comfortable in the market that you’re focused on? That number, I mean just not enough housing. And then you talk about flipping even in San Diego, like how is that even a market?
Well, they’ve layered in now and we can get in this accessory dwelling units, ADU units. And that has just opened up a whole another market for, we call flippers, but real estate investors.
Mike Morawski: Are you loaning ADUs on the construction of ADUs?
Brock VandenBerg: So, it’s interesting [00:21:00] because again, this is the problem that a lot of markets have is that an investor can buy a property, but it’s gonna take them nine to 12 months just to get the permits to build the ADUs.
So they need the short term financing to simply close on the land or the house, the property. Then they have to follow up with another loan just to get the financing to build out those ADUs. And then the final loan, if they wanna hold onto the property, is a long term rental, get some longer term financing for that project. So that’s a big market here in a lot of coastal markets like San Diego, in LA, the Bay Area.
Mike Morawski: Yeah. I have a good friend up in Long Beach who is just focused a hundred percent on ADUs and be a good connection for you. We’ll talk about that later.
Brock VandenBerg: Yeah. But I gotta lead into what exactly you’re doing, which is investing in the multi-family sector. ADUs are no different than just investing in multi-family, that’s what you’re doing.
Mike Morawski: Right, exactly. You’re adding it really.
Brock VandenBerg: Yeah.
Mike Morawski: Hey, let’s talk about your fund. Talimar [00:22:00] Income Fund one. Now somebody would think, wow, fund one. This is your first fund, but it’s not, you’ve been doing this a while. So, talk about how you got there and, and what you’re doing?
Brock VandenBerg: Yeah. So after I had the opportunity to be with the the FDIC over two years, I started to lend money myself out to real estate investors. These were people that were buying houses at foreclosure sales or from the banks, and there was absolutely no financing available for these investors.
So I started lending my money out. Didn’t really understand there was an industry behind it. Had some very good success doing it. Some other investors wanted to invest with me. So I started to allow investors to invest in individual notes. So, somebody comes to me with one loan and then I would place investor capital into that loan and I was able to build a business around it.
So we got up to about 60 million in loans outstanding in the Southern California market, and that was probably about 300 some odd investors, and it just got too big. There were too many investors on too many individual loans, [00:23:00] and it was unwieldy. And so, I looked at a better strategy that I could help my investor clients invest in this sector a little better.
And that was simply to pool their capital into an individual fund. So by that time, we had already funded, again, 350 million, we had 60 million outstanding. And after some discussions with investors said, look, this is a better strategy because number one, you’re not jumping in between loans.
Number two, it’s more diversified. So we building a portfolio of loans that you invest in. And then number three, the way we structured it as a real estate investment trust, there’s some significant tax advantages. So for example, like the 20% tax deduction, so any distribution that’s paid out of our fund is qualifies for that 20% tax deduction.
And a lot of my investors said, okay, that’s definitely a better platform than what we’re doing. And for me, it was able to scale the business bigger, so we were able to do more loans more efficiently.
Mike Morawski: Do you only take accredited investors [00:24:00] into your fund or do you take accredits also?
Brock VandenBerg: So, yeah, we’re a Reg D fully accredited fund.
Mike Morawski: Okay.
Brock VandenBerg: So the prototypical investor for me is probably either someone that’s nearing retirement or in retirement that’s looking for consistent monthly income. Again, that lengths that tax advantages. Average investor probably is around 250,000 invested, but we have a minimum investment of 50,000 for people that want to just get started.
Mike Morawski: And what kind of return can people see on that?
Brock VandenBerg: Oh yeah. So I just had a conversation with a potential investor on this one. So, when we formed the fund back in 2021, our target yield was seven and a quarter. Now, remember, the Fed funds rate was near zero, I think it was at a quarter percent.
So we were happy to get a seven to seven, seven and a quarter percent return. That changed. So about June, may timeframe of 2022 is when the Fed started stepping in and increasing rates. So what that did was directly impact what we were charging borrowers [00:25:00] for our capital. So from 7% now our target yields at 9%.
So all secured on first trustees and it’s starting to make very attractive returns to be in this market. I said Bloomberg had a great article about the shadow lending industry. BlackRock was just being interviewed today on CNBC, the CEO, and he was talking about the opportunity in the private lending market, and he immediately went to the fact that banks were really pulling back on the financing and that they were investing heavily into this sector.
Mike Morawski: Yeah. So you know what’s interesting is when you talk about the private lending sector. You and I really do the same thing. We’re just in a couple different asset classes. And, so I want people to understand that especially, somebody who might be sitting on the sidelines going, well, Grant Cardone is saying the world’s coming to an end and, all the banks are closing down and interest rates are so high.
Brock VandenBerg: Yeah.
Mike Morawski: I think all [00:26:00] that noise affects the judgment of our client. And yours, and my client really is the limited partner, the people that invest alongside of us that see a return from our efforts.
Brock VandenBerg: Yep.
Mike Morawski: And so what do you tell people today to get ’em over all the doomsday experts out there that are saying what they’re saying?
Brock VandenBerg: Mike, you’ve brought up a really good point is noise. And I’ve been saying that’s why you use that term because it is. There’s so much noise out there in the market that you could just be stuck and not do anything. I would almost say you just leave your money in the bank, but you don’t even wanna leaving your money in the bank anymore.
Mike Morawski: Yeah.
Brock VandenBerg: Again, really isn’t the case. Obviously as an investor you need to look at where the opportunity is. I think absolutely there’s opportunity in the multi-family sector. Definitely an opportunity in the private lending sector. It’s just depending upon like how you wanna invest.
One of the advantages I talk about investing in the private lending, especially our fund, is that there’s no lockup period. So, you can invest, and if you don’t feel confident with the investment or you [00:27:00] wanna increase or decrease your investment, you can get it out a little quicker, so there’s more liquidity in I think, the debt market than holding an asset longer term. But then again, there’s some disadvantages on that as well.
Mike Morawski: Yeah. And I want people to understand that. Because a lot of my listeners, if they’re not new this morning, know that I syndicate multi-family. And it’s less liquid than what you do.
Brock VandenBerg: Yep.
Mike Morawski: What you do is you offer some liquidity. So somebody’s looking for a short-term position where they’re waiting for something else in their life to happen, but they wanna park some capital. You have a great resource for that.
Brock VandenBerg: Yep. Absolutely.
Mike Morawski: Hey, I just talked to somebody who said, well, I need to invest in hard asset, brick and mortar, because when the dollar goes to zero, I’m gonna be protected.
Brock VandenBerg: Yeah.
Mike Morawski: What’s your thought around that?
Brock VandenBerg: Well, I don’t know if the dollar is going to go to zero. I guess I don’t invest [00:28:00] using that methodology. But yeah, I mean obviously owning hard assets, is I can buffer you against inflationary factors. That’s one of the advantages of owning the physical asset or owning real estate. One of the things I talk about that cuz people ask, well Brock, I’m investing in this mortgage fund. What if rates go up? Well, that’s really like an advantage for us.
So as rates go up, we just increase the borrowing costs to our borrowers, which directly impacts, positively impacts the returns to the investor. So that’s a positive impact. Now, I get kind of into the weeds here because there’s a lot of investors that will invest in individual trustees.
So these are individual loans. And the hurdle they have when investing in individual loans is that Yes, when rates go up, you’re stuck in that loan until it pays off. And then when you reinvest, you can get a little higher return, but unless you structured the loan as some type of variable rate loan, you’re stuck in that loan for however long it is.
Mike Morawski: Yeah.
Brock VandenBerg: And that’s for people that want to move to a mortgage fund [00:29:00] structure to invest in, that’s one of the advantages.
Mike Morawski: Yeah. Interesting. I think we’ll see some deals come on the market and probably even in your space because of variable rate loans. Some operators thought that they were brilliant cuz they got a floating rate debt at 2% and now all of a sudden and they’re like, oh no.
Brock VandenBerg: No, I think that every investment, every industry has to deal with some type of hurdles out there. The private lending industry, you wanna make sure that you’re lending and that you’re securing your loans on assets in good areas with good operators. We’re not in the business. I think there’s this idea that private lenders are in the business to loan to own.
We look at it more like a bank. We do not want a non-performing loan. It is very time consuming and takes a lot of energy to deal with a non-performing loan. So that’s not what we’re looking to do. We wanna have a very healthy balance sheet.
Mike Morawski: Yeah. I find your world is a little interesting cuz you really have two customers. [00:30:00] You have the investor and then you have the borrower.
Brock VandenBerg: Yeah.
Mike Morawski: I always found that, that kind of business is interesting because you’re dealing with two customers.
Brock VandenBerg: Yeah.
Mike Morawski: And my space, I have one client. And that’s where I have to answer to them and make sure that their profit is there. But you have two. So how does that work in your world?
Brock VandenBerg: So, I equate it to being a bank, right? I mean, at the end of the day, that really is kind of how we’re structured. So I tell my investors who may not have a real deep knowledge of what we do. As I say, look, consider yourself a depositor into Talimar Income Fund. We then take your funds and lend it out. Instead of earning zero on your deposits at a bank, you can actually earn a decent monthly cash flow on the money you deposit. That money you deposited is lent out and secured on real estate throughout the Southern California market, just as a bank would do with your checking funds.
Mike Morawski: Interesting. How [00:31:00] much are you raising in your fund?
Brock VandenBerg: So, yeah, it’s interesting. So we came outta the gate. We had a lot of investors that we had already. So, within the first probably six months, we had about 10 million. Since May of 2021, we’ve raised a little over 40 million for the fund, and our goal for the year end is at 75 million.
Mike Morawski: Okay. All right, great. So you are two-thirds of the way there?
Brock VandenBerg: Yeah, we’re getting there and you know how it is, Mike, raising money and a lot of conversations, a lot of follow up, lot of explanations of what we’re doing but it’s been I gotta tell you. I go back to the term of persistent, right? You just gotta be persistent and again, it’s educating your customer both on the lending side and then also obviously on the borrowing side of what you’re doing. But a lot of educating, this is what we’re doing, this is why the opportunity exists, and then showing them the stats of why it exists and it’s been a good ride. I’ve really enjoyed making that transition and been raising money for this fund.
Mike Morawski: Yeah. Interesting. Hey, [00:32:00] your word was persistent. Mine’s always been tenacious. Kinda the same thing, right?
Brock VandenBerg: Yep.
Mike Morawski: So I have a lot of people that listen in who raise capital.
Brock VandenBerg: Okay.
Mike Morawski: Talk about a couple of the techniques that you use through your company and to attract investors, to start those conversations with investors?
Brock VandenBerg: Yeah. So I would say that like our number one strategy is literally social media. So going on and kind of explaining and educating people on what I do. I’m an open book. I’ll tell everybody the strategies that I use to lending money. So, my focus is loan sizes x amount, credit scores are this, markets are this. I’m an open book and they can use that strategy to go out and do it themselves. I would say though, that most people would say, okay Brock, it sounds interesting.
I get it, but I’d rather have a professional manage my money and allowed me, and we were talking about this earlier, Mike, [00:33:00] is focus on what I do. Maybe they own their own business, or they’re doing something that they wanna focus on, and so they just want to get invested in this investment, which the mortgage fund allows them to do.
Mike Morawski: Yeah.
Brock VandenBerg: So that would be the number one is just social media education. And then it’s amazing because, and my operations person actually pointed this out because we were looking at who was our prototypical investor? Where are they coming from? And we looked through age and income and all that.
But the one thing that stuck out, which I was blown away with was, either they were or currently in the banking industry. So they had a background of banking or they were in real estate. But both of ’em were not confident in investing in the stock market. They were not, they did not like the volatility. They wanted something that was a little more predictable, more cash flow, and not something they understood.
Mike Morawski: Did you get granular on those statistics? Like, they’re currently in real estate from [00:34:00] what capacity?
Brock VandenBerg: So, yeah, we talked about banking. We talked about like, either they were operators and owned real estate. And so they wanted to move some of the money into maybe the financing side. But like, if you were to like age group, I can tell you right away it’s 50 to 65 makes up about 70% of our portfolio. And then there’s some of the older, so remember we’re gonna credit an investor, so we’re probably not gonna pick up much of the younger population just yet.
What do we have, net worth? Yeah. Easily probably between the two and a half. I think we have about like a little over two and a half million was net worth. Average investors around 250,000. What other things did we have? Oh yeah, about a little over 60% were retired, which I thought was interesting.
And then I look at, okay, who are the people that have 10 million or greater? And that made up about 7% of our investors in our portfolio. We’ve right now, about 145 investors in the fund.
Mike Morawski: That’s a huge number. On that 10 million or greater number. Good for you. And again, that comes with [00:35:00] persistence and time, right? Continuing to stay in the game and doing it. I think so many times people fail on a deal or slow to come out at the starting blocks or they keep beating the pavement and don’t get anywhere, and they quit.
And I don’t think any of us can quit. We have to stay focused and stay on track. I have an underwriter, he’s 20 years old. He’s a finance major at TCU and he’s got the vision, he’s got the same vision that I had when I was 40. But he’s got it at 20.
Brock VandenBerg: That’s so important to have.
Mike Morawski: Yeah. And somebody like that is going to do really well long term in this business, but you gotta stay persistent and focused and keep doing the same thing. We just underwrote a billion dollars in assets, Brock.
Brock VandenBerg: Wow.
Mike Morawski: Between June and January 90 deals. A billion dollars in assets between Florida, Atlanta, and Texas. And then we finally found a deal in Oklahoma, cuz it came to us off market. And it made [00:36:00] sense. But if we’d acquitted 88 or 87 deals, oh, there’s nothing out there. We wouldn’t have got to it.
Brock VandenBerg: You’re tenacious.
Mike Morawski: Thank you.
Brock VandenBerg: So, yeah. And you bring a awesome point up because you don’t know what’s gonna come out of that conversation and you don’t know what’s gonna trigger that investor to decide to invest as long as you’re in the back of their head and saying, okay, man, who is that guy that I talked to about the mortgage fund? That was Brock, that was years ago. But maybe it’s a good time right now.
You need to get your message out. You need to stay focused. Focus on what you’re good at. And just be very persistent about getting that message out, because I can tell you, it will be successful over the long term. It just takes time.
Mike Morawski: Absolutely. A hundred percent. Great way to end. Hey, tell people, I don’t know if you have a book or an ebook or something somebody will get, but tell people how they can get ahold of you.
Brock VandenBerg: Yeah, so best way to reach out to me. I think my email address is on the screen here at [00:37:00] email@example.com, but you can actually go to our website, go into the dropdown menu investing, and you can get a copy of our executive summary so we update it monthly of all the returns and kind of the portfolio of loans that we’re currently managing, size of portfolio returns and all that. You can get an access to that. And be more than happy to share that with you.
Mike Morawski: Okay, awesome. Hey, I always like to end on, three bonus questions.
Brock VandenBerg: Okay. All right.
Mike Morawski: Best book you’ve ever read?
Brock VandenBerg: Well, I gotta say it’s Rich Dad Poor Dad cuz it did get me started. And there’s some great leadership books out there, but Rich Dad got me starting, get me in the mindset of starting a business, investing in real estate.
Mike Morawski: Okay. How about the best restaurant you’ve ever eaten at?
Brock VandenBerg: Oh, it’s Roberto’s. If you’re in San Diego, you have to go to Roberto’s. It’s the best Mexican food in San Diego.
Mike Morawski: Okay.
Brock VandenBerg: It ain’t healthy. There’s nothing healthy about it, but it’s a great restaurant.
Mike Morawski: You know, me and Forest are coming soon, so.
Brock VandenBerg: Oh, well,[00:38:00] you know what? Robertos in a hole in the wall. I’ll treat you to a little nicer of a restaurant. There’s some better Mexican restaurant. You gotta experience Roberto’s. It’s an experience.
Mike Morawski: I’m in. And, best tourist attraction?
Brock VandenBerg: Tourist attraction. Interesting. That I’ve gone to and enjoyed. I had an opportunity, when I was young to go out to actually see Wall Street. The trading floor. And I was so mesmerized by the activity and everything and the energy that was going on. I always wanted to be a stockbroker. That’s like kind of what all through like grade school and high school. So Wall Street, I saw it and it was really cool.
Mike Morawski: It’s a little different today than it was back then.
Brock VandenBerg: Yeah. I know. I mean I haven’t seen it, but what, just all computers now.
Mike Morawski: Yeah. Hey, thanks for being here. I appreciate it.
Brock VandenBerg: Hey Mike, thank you very much for having me on.
Mike Morawski: And, you definitely have a lot to offer people. So, hey, I’m gonna move you to the back room. If you hang out with me for a minute, I’m just gonna say goodbye.
Brock VandenBerg: Great. Thank you, Mike.
Mike Morawski: Hey everybody. That [00:39:00] was eye-opening, huh? A little bit different, a little twist, a little different way maybe to invest. And to participate in real estate, participate in some real estate term, or returns that can keep you a little liquid and help you get to the place that you wanna go.
But hey, I would highly urge you to reach out to Brock, go to his website, grab his summary so that you can see exactly how that works and see if it’s a place that will help you for a while to put some capital while you’re waiting maybe to do your next deal or for the environment to change or whatever you’re waiting for.
But, thanks for being here this morning. We are here every bringing some content, bringing some information, helping you grow, helping you prosper. And if you’re looking to invest in multifamily, give me a call. If you have questions or anything that I can do for you, don’t hesitate to reach out. I’m open. Love to network. Look forward to talking to [00:40:00] you soon and everybody have a great week.
Kristen: 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 management. If you are 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.