Podcast: Cashflow Connections Real Estate Podcast with Hunter Thompson

Why He Left a Lucrative Opportunity In Tech to Pursue Real Estate

Transcription below

Hunter: [00:00:00] Accredited investors. I am very excited to announce that we have a live opportunity. Available right now, it's an 88 unit multifamily apartment in Phoenix, Arizona, and the rents are about 20% below market for renovated units. To learn more, all you need to do is go to ASYM capital.com. And as a reminder, I'm a registered representative under Stonehaven LLC, an SEC registered broker dealer and FINRA member firm. Just because that's the case doesn't mean those organizations endorsed this deal. For more information, you can visit Stonehaven Llc.com and for more information about my status, you can visit FINRA brokercheck.org. Also, please refer to form CRS on our website. Always consult with your financial advisor, tax accountant and attorney before making any investment decisions. Having said all that, all you need to do to learn more is go to ASYM. Capital.com. Look, we all know that real estate has created more millionaires than pretty much any other business. The problem is it's also created a lot of heartaches and bankruptcies. Sure, we can get access to a ton of real estate education on the Internet, but that's precisely the problem. How can we tell which strategies will consistently produce asymmetric returns and which should be avoided at all costs? My goal is to give real estate entrepreneurs, capital raisers and investors all of the secrets so that we can grow our portfolios without dealing with costly investment nightmares. And that's what this program is all about.

Hunter: [00:01:32] I'm Hunter Thompson and welcome to the Cashflow Connections Real Estate Podcast. All right. Welcome back to the Cashflow Connections Real Estate podcast. Today we have an excellent guest who is taking the hybrid approach to investing, which, as you know, I'm a big proponent of. And what I mean by the hybrid approach, which is a term I think we're going to hear more and more, is focusing on passive investing and then creating either a fund of funds or acting as a registered representative under a broker dealer to direct capital in the same way that you're directing capital as a passive investor, I think there's going to be more and more and more of this for all the reasons that I'm sure many of you are familiar with. So in this episode today, we're going to talk about how our guests vets his deals. This is a very detail oriented vetting process that he goes through that takes somewhere between 3 and 6 months. And as you know, I'm very sympathetic to that, have done that and more on many deals that I have invested in personally and also made available through Asym Capital. We're also going to talk about investing in the wake of COVID. How has the coronavirus and the respective lockdowns impacted our guests interest in various asset classes? And of course, we're going to discuss some challenges that he's had through his career as an investor and the owner of Madison Investing and the lessons learned by those challenges.

Hunter: [00:03:00] Of course, that's the key takeaway. If you go through anything challenging, that's half the battle. The important part is gaining knowledge from that challenge. Pretty much the only time you can learn anything is through some sort of challenging situation. So really hope you enjoy that. And by the way, speaking of COVID, if you haven't yet seen our webinar on doing deals in the wake of COVID, make sure to go to CFC mentorship program.com/questions. And don't forget, if you're listening to this show and you haven't yet let a review into iTunes, make sure to do so. It makes a huge difference in terms of being able to attract quality guests. Of course, if you leave a review, you can screenshot it and tag me on Instagram. I'll reshare it. It's Hunter L Thompson underscore on Instagram a lot of cool content on there. Shoot me a follow and I hope you enjoy the episode. How's it going everyone? Our guest for today is Spencer Hilligoss, who is a passive real estate investor and co sponsor and former technology leader. His company, Madison Investing, has co-sponsored deals totaling more than 5000 units, which have a combined value of more than $600 million. Spencer invests in syndications as a limited partner and actively leads Madison investing alongside his co-founder and wife, Jennifer. Spencer - Thanks so much for jumping on, man. Really appreciate it.

Spencer: [00:04:27] Hunter It really is an honor to be here, man. I've been listening to your podcast for quite some time and thank you. I really appreciate it and excited for the conversation.

Hunter: [00:04:34] Happy to do it and really, really impressed with what you've done so far and really looking forward to the trajectory continuing that you're currently on. Let's talk about your story because I think that a lot of people will resonate with kind of your background and then also your transition into this world, which obviously we're all just a huge, big believer in.

Spencer: [00:04:54] Yeah, happy to. And you know, I might go a little bit deeper than some folks tend to go here in terms of being showing vulnerability because I've gotten feedback that that's where most folks tend to get value out of hearing this story of mine. So, you know, I actually found this whole thing of passive investing through an interesting journey of kind of just like hardship, hard work and good timing in hindsight. And it really, you know, now I'm focused on passively investing in things like storage and multifamily, but it didn't always start that way. I mean, I, you know, I mean, these days I reflect back on an early time not to go too far back. Hunter But when I was first growing up, I mean, I was actually in a real estate household. I mean, I was introduced to real estate at the ripe old age of, of six, which I don't know if that counts for meaningful experience or not, but my dad was a broker in residential for 30 years. He eventually had me do an open houses when I was in my teen years, you know, So I was like glad-handing People in these very, you know, multi-million dollar affluent mansions in these nice neighborhoods. I absolutely hated it, man, and I wanted nothing to do with it. And so that said, I was soaking up some learnings, right? I mean, I didn't really know how they would be applicable until later in life.

Spencer: [00:06:03] But, you know, before this is all before my technology career of 13 years where I was building teams across five software companies. But I bring it up because I watched my dad build really healthy, active income, you know, and that's what brokers do, similar to a flipper like all these active real estate investing strategies where we we think of the Kiyosaki bucket versus the pipeline and you're creating these one time moments, right? It's one time moments of income. You dump the money on the table, figuratively, of course, but then it's gone. And I watched my dad build that lifestyle and it was a comfortable lifestyle, like our household, you know, our lifestyle. Was very nice. And then it wasn't because we went through some really challenging times and my younger brother got diagnosed with pediatric cancer and he passed away after a beautiful life and all that stuff. That kind of dominoes fell. My parents got divorced and a bunch of stuff. I won't go TMI with people on beyond that, but I'll just say we call it kind of the dark decade. And I watched my dad's business really collapse and crumble over time. And so that's important to me and it's relevant to this story and it's relevant to your listeners, because I think that when it comes to picking a strategy and the one that we landed on in terms of investing in these larger transactions, these larger projects, I'm looking for predictability.

Spencer: [00:07:18] I'm looking for, you know, this ethos that I have honed using those principles that I got from firsthand observing all these things that occurred back then is like this notion of financial offense and playing financial defense. And those are integrated throughout all everything that we do in our family and in our business and beyond. So, you know, I try to take those learnings and really keep them close to my heart because now predictability, the ability to go and say like, Wow, this investment looks great for all the following reasons. I just wanted to run that plan and I don't want any surprises and I want to create multiple streams of income for my livelihood and for my family as we try to de-risk some of these projects that we're going to work on. That's where I found multifamily. But yeah, flash forward to technology and around 2016 I was already well into my career in the software world and I joined a company called LendingHome. It was the biggest fix and flip lender in the country it is right now. I didn't have real estate experience to speak of besides the childhood stuff I told you about Upfront Hunter.

Spencer: [00:08:16] And so I was experienced as an operations leader and as a sales leader, and I'd been hiring hundreds of people and growing high velocity teams across, you know, some some of these really awesome software companies. But I had to learn how to become a loan originator. I had to get licensed. I had to go hardcore and learn all this deep underwriting stuff about fix and flip deals and then eventually more complex stuff, run rentals and so I was like, This is amazing. I just don't really want to get that into flips. And all my coworkers were trying to tell me, Go become a flipper. And for all those reasons earlier, I wasn't that into it and I could barely swing a hammer, so I didn't want to run down that path. Long story short, I got the multifamily bug around then and I realized as we were starting to go buy rentals and do smaller investments in residential, it just didn't make a ton of sense for us because it wasn't stable enough, it wasn't fast enough. And I really aligned to the investment thesis that comes with multifamily. So that's where initially we started investing as LPs and eventually we kind of organically grew a business out of that because all of our friends and family wanted to know how we invest in these syndications as LPs.

Hunter: [00:09:18] Yeah, I appreciate you sharing that. So let's go back to kind of when that light bulb was turning on. Were you open to other types of investments or was real estate just so clearly favorable on a risk adjusted basis, particularly when it comes to predictability, that that's the only kind of vehicle that you pursued?

Spencer: [00:09:38] That's a good question. So I would say I was open, you know, the narrative and the playbook, which I think is worth mentioning to this question, is that the playbook you hear about in Silicon Valley very frequently is that, you know, if you join the right company, then you might get access to early stage equity and maybe that becomes the next Facebook, right? The next Google. It's a very attractive sounding narrative, but unfortunately, it just isn't the reality that happens for many for many people. So I was kind of banking on that for a while, you know, And so, okay, I'm thankful that I do have some equity in early stage companies, but I had evaluated some of those other other things I had looked at. We had index funds. You know, we had the other very traditional 401k's that I had been dumping money into for a very long time. And so all those things were very much in the in the in the in the set of investments that we were taking a look at.

Hunter: [00:10:29] Well, let me ask you this. I want to follow up because we do have a guest that was on the show previously kind of discussing this, the model that you just kind of mentioned. And it was very interesting to me. But let me hear your thoughts on this. When you say that most people doesn't end up that you can just join a company and then three years later they IPO and you get a seven figure payday. What is prohibitive in that? What is the likelihood of that happening? What is going to reduce the likelihood of that? Like, how does the math look like on that situation?

Spencer: [00:11:01] Yeah, I mean, I don't want to necessarily put out a specific source data point as to what percentage of companies are making it versus not making it. These days, at least I can say the majority are not going to have the size of exit, that it's going to be life changing even if they do. And so, you know, when you join a company early, unless you're going in at a role that is significant, meaning like a leadership role and you're able to negotiate and have an awareness as to what percentage of things that you're going. You should be getting and are owed then. And, you know, I'm not sure how savvy I know you have a very savvy audience hunter, but like in terms of the stages, the early stages of a tech company or any any young company you have like these these names, right? Like seed seed, round of funding. You have series A, series B series, series C and etcetera. So all these different things, the earlier you get, the larger percentage, you can usually negotiate in an offer. And if you happen to get a meaningful amount, then that's great, but then you still have to have the company make it. And by make it meaning like have a big, you know, liquidity event of some sort. So it just whittles down the percentages of people that can actually make make that a reality. And I did get into a debate as a side note and quick tangent. I got into a quick debate with someone the other day who had never actually worked inside of a startup.

Spencer: [00:12:20] They had been an angel investor. So that's kind of a different category, of course, because if you're going to go and be an angel investor and you have the capital and liquidity to go do that, well then that that's awesome. I think the more common experience that people are typically banking on and I speak from personal experience on this as well as many, many hundreds of people that I've known in Silicon Valley and still do now who are actually running this plan. And they think that it's going to help them. And unfortunately, it's not. I mean, at least I hope that it does. And there is a select few folks that, you know, they might have a really nice big exit, I think, at a company that, to be specific, not to plug them, don't use their product and haven't worked for a company that does. But Snowflake Snowflake just had the biggest quote unquote, the biggest tech IPO in history. And I have a there's a couple of people I personally know and used to work with who are now at that company. And I'm so pumped for them. Like I'm so excited for them, you know, like they're actually achieving something that is really rare. It's kind of like winning the Silicon Valley lottery. And so I celebrate those moments for people. I don't I don't wish them to miss out.

Hunter: [00:13:19] Sure, that makes sense. So let's talk about kind of your transition to Madison Investing and also your outlook right now. What are the things that you're finding compelling in the investment space? You obviously started with multifamily. Is that still the bulk of your portfolio and what are the asset classes that you're finding most compelling?

Spencer: [00:13:38] Yeah. So to your point, Hunter, multifamily has been historically the biggest focus of ours when I first got into commercial real estate. It was just as an LP and we invested as an LP and as a limited partner and then eventually it was pretty organic. You know, colleagues and friends and our network started asking like, Oh, what are these things you guys are investing in? And I got really interesting feedback from one of the earlier mentors specific to real estate that I worked with. I was trying to decide did it make sense to go become a pure like owner operator, you know, to truly go out and become, you know, manage the asset from the Bay Area? I don't intend to move. You know, so geographically, it didn't make sense for me to go, I'm not going to be buying any any apartments here in California. I mean, some people prefer California real estate. I mean, I think if you're looking for cash flow, you can usually find that in the south and southeast and Midwest, depending on where you look. So that's where I was looking. I didn't necessarily see it working on becoming that owner operator. And I got a piece of feedback from this mentor. Then they said, Spence, you've got to take stock of your geography and and you live in a money state.

Spencer: [00:14:48] You don't live in a deal state. And I was like, okay, you're kind of crushing my dreams, but okay. Like, I reflected on that feedback and it led us to it led me to really hone in on building a business as a truly excellent co sponsor. And that means that we focus on doing things such as equity capital, helping with that investor relations and frankly, wanting to become the best partner that an investor, an LP, can have when trying to go find the WHO and like figuring out who are the sponsors that you can truly rely on and trust with a great track record. And also the deals that are like pressure testable. The one the ones with the plan that just makes sense in a market that makes sense, you know, so that that's what we lean into now is how do we build a decisioning engine that is excellent. And a lot of those principles come from my experience in the tech world too, just trying to build a good a lot. A lot of the lessons I've learned from being part of the biggest fix and flip lender in the country and decisioning, 600 loans per month. So some of those principles are pretty darn helpful now when we're trying to look at these kinds of deals, right?

Hunter: [00:15:49] Because the template has been proven through the volume and the scale. So let's talk about that. I want to hear a bit about your vetting questions, your vetting process, how you identify which operators are going to perform and which ones should be avoided.

Spencer: [00:16:04] Yeah, happy to. And so, you know, the first and you already know all this, Hunter obviously, and I've learned from our conversations many a time and I cherish them. So I think the operator the market and the deal and your listeners are pretty savvy, so they're already probably familiar with that three part framework. You know, you're still just talking about starting with the Who. If you're a passive investor, you are betting on the jockey, as they say. I mean, you know, you have the market. Of course, you want to analyze that down to the submarket in the neighborhood. You have the deal. So you have like the property and the asset and the business plan around whatever you're going to do with that thing to produce the returns you want. But it really all starts with the WHO. And so I put together a framework. One of the things I love about working in tech was I tried to reconcile this one principle that goes into our framework. And I'll tell you what the framework is in a moment here, which is great decisions are typically not made quickly. And in a software company that's growing really rapidly, the hard part is you have to make decisions quickly. You don't really have another option. So how do you make a good decision? Quickly and consistently? You build a framework.

Spencer: [00:17:08] So really, the only way I've seen that work and I didn't come up with that, I mean, I'm learning this from people that are far smarter than I am, just trying to tailor it to our business and our goals. So put together that framework and I use five part framework for vetting sponsors and the asset managers in our deals. So we look at, you know, their track record. It's kind of a duh. If for anyone who's already been a savvy real estate investor, but you've got to look at their background, you got to look at their track record, their performance. And each of these have at least 6 to 8 different questions underneath them, which we don't necessarily need to go into unless we want to drill down, but track record their approach, their communications, the legal side. And then we also want to look at like the team and this this might sound corny for some folks, but it's crystal clear and concrete for me, which is their values. And there's really ways to test for that and, you know, and get to know, does a sponsor operate based on principles and values in action? And so those are the frameworks, buckets, you know, that I look at when it comes to, you know, vetting a sponsor.

Spencer: [00:18:08] There is a process. Usually it takes about it sounds long for most people, man. We take more time. We take about 3 to 6 months to get to know a sponsor. So I meet them personally. Like our most recent sponsor we've added is a self-storage sponsor. Love working with them So far, we're literally just finishing up a deal today with the last wires coming in, so we're excited about closing on that one in about a week. This sponsor and I met there in Texas. I toured their offices six months ago in person, got to know them, invested in one of their deals with our own money, put them through an investigative background check, which we pay for. All of that stuff occurred before we even brought a single deal to our passive investing group. And so that. That is what we commit to our investors, is that before a single deal goes out in front of them, all that has occurred and I don't really necessarily know that many people out there who are doing it with that level of patience and caution, because it takes time to do things the right way. So a long winded answer to your question.

Hunter: [00:19:03] Agreed. And I've been through that many times before. And, you know, we're actually talking to a self-storage operator recently where I'm under the gun on a current deal. They were trying to raise $3 million for an offering and only could come up with 700,000. And we jumped on the phone and they were thinking, okay, well, how many days would this take for you to fund the remaining 2.3 million? And, you know, we're just not the company for that. We're not going to be able to solve that problem. We don't know each other. You know, this is our first call. And it's just an interesting dynamic where 3 to 6 months, I agree, you know, that maybe even sometimes 3 to 6 months before I invest personally, receive a quarter or two of distributions and reports and then decide to bring it to our passive group. And that's something that I'm sure you've done as well. And you know, there's groups that we've been talking to and in and out of deep due diligence on for more than a year where, you know, the opportunity slipped through and came up and I'm sure we're going to figure it out eventually. But it's like we have to be patient for the right opportunity. We don't want to force it through just because we like them personally. It has to be checking all of our boxes for us to move forward. So yeah, I appreciate that. In terms of thinking fast and slow kind of dynamic there. On the other side of that, what are you weary of? What are you looking out for? Are you seeing anything in the space that's concerning that you should caution other investors to pay attention to?

Spencer: [00:20:31] Yeah, man, that's such a great question right now. And now in particular, I think that, you know, a year ago when people would ask me, what's the market look like mean? You get that question probably just as much, if not more than I do. Hunter Right. And so when people ask what's the market look like? And what they're really asking is like, what are the things? What are the risks that are out there now and expected to come in the near mid term? And we used to say like, well, theoretically, what happens when a black swan event occurs? Well, we're living in one now. So it's interesting, right, Because because that has really evolved to now people asking this other question of like, well, this Black Swan event. Yeah, it's bad. We know covid's bad and truly it is. I mean, it's a tragedy and it's living on real time right now with many people losing their lives. But for some people, it's not that bad. I mean, this whole k-shaped recovery thing is very real. So a lot of folks are thriving. I mean, I think that right now investor sentiment is the most positive I have ever personally experienced in the market, which is a very confusing dynamic when you know that there's an unemployment that's out there really, really high right now. So I'm not going 0 to 60 on this question, but it's a great one and it gets my brain going.

Spencer: [00:21:39] So the way I would answer it would be I am a little bit cautious about bullish investing moving forward in a couple of these very attractive asset classes that we still believe in and we still invest in. And we are literally just working on projects right now like multifamily, right? So multifamily multifamily continues to be probably the the most popular. I don't know if you were to actually put numbers behind that. You know, you've got these really great asset classes like I believe in multifamily, I believe in the thesis, I believe in storage. I do think that we focus a little more on storage right now, despite the fact that, you know, I think people would argue there's still plenty of multifamily opportunity. I bring all this stuff up because a lot of buzz is still there and you have to parse through so many deals from people that are out there, you know, just just trying to win, trying to make a name for themselves. Right. And they're trying to do good work. And you want to be supportive of them and you want to give good feedback. But truth is, for all the thousands of deals that are being floated around with these amazing pro formas and attractive looking returns, they aren't all deals, you know, like they aren't all deals. You really have to go and make sure that no matter how good a return looks like that the person who is operating it is actually capable of delivering on that return.

Spencer: [00:23:00] Knowing that the forecast in 2021 specifically for multifamily and I'm only speaking for myself, it's probably not that rosy like like I think it's not necessarily going to get better. I think it's going to get a little worse before it gets better. And so I don't have a crystal ball hunter. Like I think that I think well-run assets in markets that have that have great fundamentals and not not just the buzzword version of that, but meaning job supply is looking good. And in fact, COVID may have even exaggerated and accelerated some really good job supply in certain markets where they're friendlier to work from home, stuff like that, you know, where you really just got to be careful about saying yes to a project unless it's going to be truly recession resistant, recession resilient. And I'm seeing. I'm seeing the phrase recession proof on certain offering memorandums and that doesn't exist. So like, I don't know what recession proof even means, but I do think recession resilience is what I am looking for, as evidenced by job supply and other fundamentals in the market. So overflow of deals. It gives me a lot of pause and kind of scares me sometimes when people start throwing around terms like recession proof.

Hunter: [00:24:08] Yeah, agreed. I mean, we as I've mentioned before on this program, we did take about eight months of doing no deals. Now, the first three months was just kind of luck. So January, February, March, we just didn't see anything that checked all our boxes and then did not transact until our recent ATM fund. And it's a non-real estate deal. Right. And the reason for that, despite being focused in the recession resistant asset classes, to your point, when there is downward pressure, even if it is an inverse correlation with demand for the product and the overall economy, meaning that the worse the economy does, the more demand there is for mobile home parks, for example. You still have other weird things taking place in the market, right? So as an example, the debt market basically froze up for March and thereafter for several months it was kind of concerning. Now the agency debt, there was still a lot of lending going on, but for a moment there was like a big question mark. What's about to happen? Is there going to be government interaction, etcetera, and how is this going to go forward? So you can't really transact regardless of your recession resistant thesis, you can't transact without debt. So that created some issues. So let's ask this then. It sounds like the recession resistant component is important to you, but has there been an impact in terms of your thesis? Do you find yourself more drawn to other asset classes now because of COVID, such as self-storage, that maybe you weren't as drawn to pre-COVID?

Speaker3: [00:25:38] Well, that's a surgical question, Hunter Um.

Spencer: [00:25:41] Yes. You know, I think back in Q3 of 2019, I clearly had no idea, along with the rest of the world, that COVID was going to be coming and manifesting itself in the way that it has and invading every aspect of our lives and making, you know, parenting of young children even more interesting in this day and age while also being an entrepreneur, that's a whole different podcast conversation. And so in Q3, we were heavy on multifamily. We'd done a handful of self-storage deals in commercial, and I think I had a hunch and looked at the data and I was already a big fan of the asset class. So we deliberately said, okay, we're going to lean in harder on storage and we're going to actually move multifamily down in our prioritization stack. You know, we're not going to leave it behind. We've already done and we'll continue to do multifamily like we're doing when literally right now. But I subscribe firmly to the narrative that storage is a bit more recession resilient. And, you know, because of all those big deals, you know that everyone and potentially some of your listeners are already familiar with. You know, in a downturn in hardship, there is tends to be upticks in things like divorce and dislocation. You know, I mean, unfortunately, it's a little grim to talk about. But death, you know, so so these are reasons why people have to store their stuff. And as a result, it makes me more bullish on storage within a recession. Now, of course, you still have to go do all the appropriate diligence on the people you partner with on the market and the submarket that you're going into. But I would even say there's some markets that we've gone into more recently where I'm not that bullish on it for multifamily, but I am okay with it from storage perspective. And so we've actually done our last deal on storage was kind of like that. So big fan of storage and I think that we will continue to be focusing on that.

Hunter: [00:27:32] If the portfolio has held up relatively well in the wake of COVID. Has there been other challenges that you've dealt with since starting your past investing career as well as kind of running Madison Investing?

Spencer: [00:27:46] Yeah. And to clarify, by the way, in the multifamily front, I would say that I am the candor guy, right? I mean, I think anyone that works with me and knows me that I'm very direct and upfront and I try to live with my heart on my sleeve. And so on the multifamily front, briefly, what I want to comment on is that of our projects to date, I am over the moon pleased with the fact that the vast majority of our projects have been not only performing well, but we see so many of them with occupancy rates that are actually strong, if not in some cases stronger than they were pre-COVID. Mean Now there was early hiccups and a lot of proactive work that had to get done back in April. In March when there was like peak fear in the market and everyone was still every state and municipality was still trying to figure out how they're going to attack this thing and keep people safe and right, how our partners were going to actually maintain a safe community for all of their tenants that are living there. Right. So so that happened. And the response was overarchingly overwhelmingly good. Now, there are a couple partners that we work with, and I'm the guy that brings this up proactively to people where they strategically and proactively held off on distributions for a bit because because they're like, let's go build up more cash cushion because we're not quite sure what 2021 is going to bring or maybe even Q3, Q4 2020. And so, you know, the majority have paid distributions without interruption, without interruption. A couple have actually held off on distributions but have now resumed. So on the multifamily front, I just think that that's appropriate to bring up. I think not enough people talk about that and it's a reality of investing that I think is critically important for people to wrap their heads around as they're getting into this stuff, particularly if you've never done it before.

Spencer: [00:29:20] So. Great. Yeah, just wanted to speak to that on the kind of otherwise challenges, man, I would say that education in a time of confusion and economic fear is just a tricky beast because, you know, imagine the tech stocks, right? You got tech stocks working, working for people and the portfolios generally right now and like holding up so much of the markets. And so people you know, we have a lot of folks that come from technology because that was my background and a lot of folks in our group, at least like maybe 70% number of our LPs in our group are from technology companies and they are heavy on stocks for their own companies. We're talking about like Facebook employees now, Netflix employees, all these folks. And so they see, okay, I want to go invest in this new asset class. But the education and fear combined because it's new and because we're in this strange time where, like it's just tougher to underwrite, It's tougher to analyze, I would say education in a time of heightened fear, it just takes a little longer. You want to be really patient and you want to be really compassionate and want to give people the resources to make good decisions. And so that has been probably a little bit trickier than than it previously was because people's people's radars are up and they're trying to go very deep on the on the diligence and they should like, I really believe that they should. So we're trying to help them make sure that they got the resources to make informed decisions Makes sense.

Hunter: [00:30:44] And as far as like some of the challenges that you've had, I'd love to hear kind of some of your takeaways in terms of lessons learned. I think that you're someone who's very astute in terms of picking up what went wrong, for example, and remanufacturing that to something that, okay, now we have the rule book for what not to do. Again, I'd love to hear any insights you have on that topic.

Spencer: [00:31:05] Yeah. Geez. You know, I think, um, there's this notion in, in the tech world, which I apply to Madison investing every single day, and Jennifer, my co-founder and I talk about this regularly, which is what does it mean to have healthy growth? And like when a company is growing in a healthy way, You know, I would argue that you are doing things that are repeatable, they are sustainable, they are undeniably ethical. And so all of those things go into healthy growth. Now in real estate, when you are going out and trying to, you know, establish your own unique presence and there's just a ton of players out there and you really stand by what you do like, we believe so much in what we do and how we vet and look at deals and partner with our investors and set them up for success of their own. However, it's easy to look across and like always notice like how other players are making their own or carbonating their own destiny and saying, Huh, like that approach is really smart. Like, I wonder if we should think about doing that. And the 1 or 2 times I've ever compromised on, on this notion of like, run your own race, right? Like, like as an individual, as a company, you like the best competitor.

Spencer: [00:32:21] Really, the only competitor you're truly going up against is yourself. And that is something that I think the the times that I've violated that and I thought, huh, maybe we should put together some educational content because that because that other firm put together some really good stuff that way. Or maybe we should, we should, you know, communicate with people that way because, because they did that and it looks really good. It just hasn't worked the way it's been distracting, it's been time consuming, and it hasn't necessarily landed because it wasn't us and it wasn't authentic. And so I think not to get too corny for people, but I really do think that, like whether it's business or personal, the person next to you is not the thing to focus on necessarily. When you're coming to when you're coming to competition and performance, it comes down to you and how do you perform and how does your business perform against your prior results.

Hunter: [00:33:07] Yeah, really like that and not really what I was expecting to be honest, but very deep wisdom and everybody can get caught up in that. It's never a good idea to be focusing on other people's businesses. I mean, the phrase is mind your own business, mind your own beeswax. That's the whole point. If you get caught up in that, you're going to potentially make some decisions that are not in your client's best interest over the long term. And that's kind of the algorithm that we use, by the way. You know, what is in our investors interest over the long term. And sometimes that can be challenging. Sometimes is, like you said, a perfect example. You know, if you hold distributions, there's going to be some pushback from investors. But is it in their interest in the long term, perhaps you may even lose an investor because you halted distributions. But is it in from your perspective, is it in their best interest from the long term? And that's the algorithm on which we decide things. So I really like that there. Um, you mentioned a mentors and such. I wanted to give you an opportunity to talk about any resources that you found super helpful, whether it be books or podcasts or anything. I think that a lot of people that are listening to this probably share your sympathies when it comes to a lot of these topics. And I'm sure we'd be interested to learn where you've gotten a lot of this information.

Spencer: [00:34:22] Yeah. So I will say this, you know, oftentimes when people have reached out more recently and they've asked like, where did you learn all this stuff? And I usually what they're referring to is just my my soapboxing and talking about values and talking about practices and all these best practices, Right? And truth is, like I learned a truckload from being thrust into the corporate world. And in some cases I was promoted too quickly into the corporate world, and I was leading teams of 200 people at the age of 26. I mean, I was like way in over my skis, you know, And I like skinned my knees and learned the hard way. So there's really no other there's no school that's more effective rather than the school of hard knocks. So I think a lot of that I got from from experience. But, um, the book that I would say got to be on my list for one of the top most helpful pragmatically and you know favorite real estate book of all time is still going to be rich dad, poor dad, of course. But the next on the list I've read it three times is Essentialism. So if people haven't read Essentialism, particularly if they're like working full time and they're trying to build side hustle or they're trying to find the ability to go side hustle the full hustle and scale, whatever your jam is, Essentialism is just great because it's written by this guy named Greg McKeown. And I'm not paid to say any of this, right. I just love the book. It's great because it. Tells you how to say no, and it gives you multiple ways to do it. And it matters because we all have the same number of hours in a day. Bill Gates, Oprah, what have you. People that are wildly successful and massive influences on this world that we live in and the difference between them and us is in some cases, resources, but also, man, they know how to say no and they know how to focus.

Spencer: [00:36:00] And they've done that over decades at a time. So if you want to get more productive, if you want to get more out of each hour, if you want to find more hours to be effective within, you got to find a way to to carve out your key priorities, goals and then be able to say no a lot, but do it compassionately to people. And that's where most people get hung up and they never achieve their goals in general. Hunter, I believe, is because they say, Oh yeah, I'd love to go grab that lunch coworker. I would love to go have that coffee. Yeah, of course, friend. I'd love to go to the bar and have a drink with you tonight. But they're not willing to sacrifice those moments for a brief period of time to go and achieve what they want to what they need to achieve and what they need to build, and just sacrifice some of that personal satisfaction and relationship stuff in the meantime. So it's got to be Essentialism. I would say that I've used four separate paid coaching programs in real estate, and I also think that without any kind of endorsement here that is compensated. I got to say, your book is an excellent book. I think that Hunter's book on Capital Raising is Outstanding. And I have recommended it even in the last 24 hours to people when they say like like like what's the best book? Should people pick up on the topic of scaling from a capital raising perspective? So big, big endorsement for that.

Hunter: [00:37:06] Yeah, I appreciate that. And I also really like the concept of essentialism. We all yes, we all do have the same number of hours in the day. And it is certainly not the difference between me and you and Warren Buffett that he has been able to work four hours more than us every day. And actually, I mentioned Warren Buffett. He has a specific quote about this. And I'm not going to give the exact quote, but it is something about, you know, the difference between someone who's successful and someone who's very successful is that the person who's very successful says no to almost everything. Yeah, some kind of version of that. And it's interesting because when you get started, it really is about saying yes to everything. It really is. You have to fill your calendar up to get any momentum whatsoever, and you have to prove to yourself that you have the grit and the grind to make it work. Yes, but as you start to grow in your career and sometimes this can happen in six months, 12 months, 24 months, but you start to tip the scales towards focus and saying no and removing things off your list. And where you used to perhaps say yes, let's take that meeting. Then all of a sudden you say, You know what, let's wait four weeks and you still want to do it. Then we can do it too. Then saying, No, we're not going to do that meeting. And it's interesting to kind of go through that as someone who's probably interested in taking that meeting because it's a friendly thing to do. So look, Spencer, I really appreciate you coming on. We definitely covered a lot of ground, especially like your passive approach, which you've kind of turned into a hybrid, which as you know, I'm a huge proponent of. So without jumping off before, though, I'd love to hear your resources where people can learn more about you and reach out to you.

Spencer: [00:38:44] Yeah, and thanks so much, Hunter, for the opportunity to be here and just chat. I think the two places to find me, number one is our website. And so if you go to MadisonInvesting.com, that's where you can actually just sign up to like very brief form. If you sign up, you can join our email list and that's where we share opportunities. We are only accepting accredited investors there right now. Also though, on LinkedIn, I am a daily LinkedIn person who's posting daily with educational content. You can see my rantings on the internet anytime, so you can just please do come and connect with me on there as well.

Hunter: [00:39:16] Excellent. So we will actually link to that in the show notes page. Much appreciated. Spencer.

Spencer: [00:39:21] Yeah, thank you so much. Hunter. It was a blast.

Hunter: [00:39:25] Hey investors, hope you enjoyed this podcast. In case you didn't know, we just launched a new opportunity. It's a multifamily deal in Phoenix, Arizona, one of our favorite markets, and it has fixed rate debt at 4.9%. To learn more, just go to ACM capital.com. And as a reminder, I'm a registered representative under Stonehaven LLC, an SEC registered broker dealer and FINRA member firm. Just because that's the case doesn't mean those organizations endorsed this deal. For more information, you can visit Stonehaven Llc.com and for more information about my status, you can visit FINRA brokercheck.org. Also, please refer to form on our website. Always consult with your financial advisor, tax accountant and attorney before making any investment decisions. Having said all that, all you need to do to learn more is go to ACM. Capital.com.

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