#80: Real Estate Investing Strategies & Best Practices

 
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What are your thoughts on investing passively in the office space? If you thought like me, that offices were falling out of favor due to COVID? We are mistaken, offices in the right demographic and area are thriving and ripe for the picking. Brian Adams is going to let us know the details on why Excelsior Capital is investing in offices.

He has 10 years of experience in Real Estate private equity and has advanced knowledge in best practices for strategic real estate investing.

Prior to forming Excelsior Capital, Brian co-founded Priam Properties (an institutional Real Estate Private Equity Sponsor) in 2010 and provided leadership and direction for the firm in connection with capital markets, investment management, and investor relations.

Brian served as a member of the Board of NextGen Advisory Faculty for the Institute of Private Investors/Campden; a program designed to support next-generation family members in preparing the following generation for the responsibility of being a steward of family wealth.

In this episode, we’re discussing…

·       [2:30] How he started the company probably with some mistakes

·       [3:50] Then they started offering up co-investment opportunities to their fund investors and how they expanded significantly

·       [5:58] They focused on suburban office product in secondary markets. The good-enough investor’s relationship they have.

·       [9:58] The importance to have a strong infrastructure around the business

·       [14:53] How automation makes the difference, quality reporting to investors and communication

·        [19:41] Why now offices space still being popular during COVID and employee behavior

·       [26:54] They only work with accredited investors and how it works, focused on taxes advantages

·       [29:59] How the family office works and what’s the proper deck to get in front of an office, what is the process like? When to invest with your family office

·       [32:22] The importance of empathy and understand exactly what means to have a family office and how he helps people

·       [37:12] How meaningful relationships take time and energy to both succeed

Brian’s Top Tip’s

·       “And where we see opportunity today is elsewhere. And so, from that perspective, I think a fund is suboptimal when you want to move quickly”

·       “We started offering up direct co-investment opportunities to our fund investors as sidecars. And that's really when we expanded pretty significantly because they started to bring in their friends and family on purely a deal-by-deal basis”

·       “We are not out there hunting big IRR. We are not 2, 3 years holders who knew the kind of buyers that when they buy something, they hate it the next day, we are long term yield focused investors and we're chugging along at double-digit cash and cash yield, you don't necessarily want to have a fund of those product types because of the product is performing”

·       “The biggest mistake I made was, early in my career I was a deal guy. Let's go do deals, let's go raise some capital, let's go find some opportunities. And the deals were good. But my infrastructure around my small business was awful. Marketing, reporting, Investor Relations, HR, tax audit, legal”

·       “And I spent about a year, two years of my life, getting my teeth kicked in by these investors. Because even though the deals were doing well, they didn't know about it, because I had no reporting mechanism. And I had no way to market everything that we were doing”

 ·       “If you don't have institutional quality reporting and Investor Relations, because it's inexcusable. And it does take a lot of money, it does take a lot of time. But when you're dealing in the syndication business, I have over 500 investors, it really does cut down to the amount of time that it takes to get on the phone and explain to them what's happening with this individual asset”

 

·       “I have an in-house comptroller who's a CPA with a public accounting tax background, and you'll pay up for that personnel. But it will make your life a lot easier. And it will make your company perform so much better on an execution level”

·       “Do I think it's sustainable to have the massive concentration of employees work from home? No, I think that spike of productivity that we saw in q2 was because of novelty, and people worried they were going to get fired. But as the months have gone on, we've seen burnout, depression, lack of productivity, lack of creativity”

·       “And the office will become a place where collaboration occurs, right, big multipurpose offices, big conference rooms, where you can do that kind of groupthink, or have very quiet time, if you don't have your own individual office in your home, if you're a younger person and have an apartment, working your kitchen, etc.”

·       “I think another big miss application of the term or misunderstanding of the term is that a family office is not represented by the number of zeros in the bank account. It's represented by a mindset”

·       “And they generally fail if they try to extend over multiple generations. So, I think the biggest thing for you if you are interested in networking in the family office space, is to understand what their problems are”

Mike’s Top Tip’s

·   “One of the biggest things that you hit on is when you are a sponsor, and you're the general partner, it is so important that to protect yourself. Is your number one goal, you want to make money, you want to have funds, but you want to protect yourself. And the easiest way is to say you know what, I refuse to do my own books”

 
Resources from Brian

LinkedIn | Excelsior Capital LinkedIn | Twitter | Excelsior Capital Website


+ Read the transcript

Mike Stohler
What if you could be doing something smarter with your money that creates income. Now, if you're wanting to get ahead financially, and enjoy greater freedom of choice, if you want a comfortable retirement, and you know you'll have more choices, if you can do more with your money. Now, if you've wondered who else is creating ways to make their money work for them, and you want actionable ideas, honest pros and cons, and deal flow. Welcome to the Richer geek podcast, and work here helping people find creative ways to build wealth and financial freedom. I'm Mike Stoller, and in this podcast, you'll hear from others who are already doing these things, and learn how you can too.

welcome back to the Richer Geek podcast. In today's episode, we welcome Brian Adams, president and founder of Excelsior capital, where he spearheads the investor relations and capital markets arm of the firm his extensive knowledge in real estate private equity. Now, what are your thoughts on investing passively in the office space? If you thought like me, that offices were falling out of favor due to COVID? Well, we are mistaken offices in the right demographic and area are thriving and ripe for the picking. And Brian is going to let us know all the details on why Excelsior capital is investing in offices. All right, everybody. Welcome back to another episode of the Richer geek. today's podcast, we have Bryan Adams, who's the president and founder of Excelsior capital. How you doing? Brian? I'm good.

Brian Adams Thank you for having me.

Mike Stohler Yeah, it's very interesting, we're going to do a little bit of a spin on on what our normal podcast is. Normally we bring on people that are actively involved in these little different ways of doing real estate and and how they market and how they do this. But tell us a little bit about what Excelsior capital is kind of the history behind it. And where are you started at and what you're doing now? Yeah, happy

Brian Adams
to. So I'm a New Yorker who married a Nashville girl. But then Tennessee for 15 years, I met her in college, did the Northeast thing went to law school up in Boston, practice law for a couple years, and had the huge benefit of obviously married my wife for a lot of reasons. And one of them is that her family has a family office, which I think we'll probably get into later in this conversation about what they are, what they aren't. It's kind of become a buzzword. Yes, in a lot of ways. And I think it's really misunderstood. But in any event, because I joined the board as an ex officio member, I started getting exposure to all the investments we were making with the with various sponsors and GPS and phones, etc. and I fell in love with with real estate as as a asset class as an investment vehicle connected with my partner, who's also an attorney by trade. And we started the company 10 years ago. And so started raising small commingled blind pool funds, which I think your audience is probably pretty familiar with how they function. That was probably a big mistake looking back on it, frankly, I think funds are an imperfect vehicle and suboptimal for a lot of our investors for a host of reasons. But that's how we got into the business. About six years ago, we started offering up direct co investment opportunities to our fund investors as sidecars. And that's really when we expanded pretty significantly because they started to bring in their friends and family on purely a deal by deal basis. So we pivoted towards a direct syndication model where we raise capital deal by deal we get into kind of what we do, but to set the perspective and the framework. Today we have 15 employees, we're based in Nashville. We have about two and a half million square feet under management in 12 markets. And that's about a $400 million portfolio. You know, 35 some odd assets

Mike Stohler and, and not very long period of time. So there's it's very impressive. It's It's wonderful.

Brian Adams Yeah. made a whole bunch of mistakes. Yeah,

Mike Stohler
well, we will we'll get into that. It's before we get into that the the fact that you said one of the mistakes was doing it, direct funds. Now During COVID, and you know, with me being in the hotel business, I can't sit there and say, Hey, everyone. These assets now that did not make it during COVID are now going to go to auction I need money fast. I also do the syndications. But for our investors out there that are sitting there say, Well, I thought the way that we should have done it is, hey, I need all this money, 3 million, 5 million, 10 million, whatever it is, just pull it together, then wait for something to come up. Instead of a specific type of asset and we're going after this office, or we're going after this hotel. Is that how you're seeing it now or you just have enough people in your backlog? In a fund that then you can then turn into a syndication?

Brian Adams Yeah.

So the issue with a with a fund is, and again, I can only speak to my lot to my investor base, right, because my experience is a fund is a great vehicle. For a set of investors, it's a great vehicle for certain investment types and certain return profiles. It just is not a great fit for us, who we work with and what we do. And part of that is because if today, we were deploying out of fund for right, we raised three funds in the past, we would be beholden to that fund ppm, and really just focused on, you know, suburban office product in secondary markets, which our portfolio has held up really well, we've been able to make distributions, I'm a big believer in office, we can get into that if you want. But underwriting an office deal today is very challenging from you know, a lease renewal probability and, and new leasing momentum. And so and frankly, there's been no distress in that space, you know, secondary suburban office, cap rates have gone down, if from COVID. And I see the deal flow. So to deploy capital to that space and be beholden to that ppm and that specific investment thesis, it just means that you can't deploy capital. And where we see opportunity today is elsewhere. And so from that perspective, I think a fund is suboptimal when you want to move quickly. And frankly, we're at a place where we have enough investor relationships. And we've had great LPs that, you know, they come along with us for the most part. And that affords us the ability to, you know, go where we see value today, which you know, is for the most part in kind of this industrial, single story, flex product type. And, again, we're trying to solve for three things. And I think this is also the reason that the fund is not a great fit for us. We are not out there hunting big IRR. We are not two to three year holders knew the kind of buyers that when they buy something, they hate it the next day, we are long term yield focused investors and we're chugging along at a double digit cash and cash yield, you don't necessarily want to have a fund of those product types because of the product is performing. I don't want to have a set timeline where the only way that I get paid my incentive is when I sell my last asset, because, you know, you're a fiduciary, but at the end of the day, if it means you're going to get your carried interest, you're gonna sell that asset. Whereas deal by deal. You know, I listen to my investors, and it's continuing to perform if it's continuing to cash flow. You know, I've other carried interest hitting and other locations, and it just feels like the right fit for who we are what we do.

Mike Stohler
Yeah, but it makes sense. Now, something I always like to hit on because, oh my god, there's too many people that they get their start in doing what we're doing by watching HGTV, right, and they think they can make money in an hour episode. And I keep pinpointing that look. Even though I am now at this point where we're doing syndication, we have these this many millions of dollars in our portfolio. I stunk and I burned it at the beginning. And it's those types of things that have really, really taught me how to become a good syndicator a good person who finds the assets. I don't care about everyone because everyone in their brother on LinkedIn and everyone's saying how wonderful they are. What have you learned, you know, talk to us about some of the things that you just sit there say, Man, you know, it's this dunk, but I really learned the hard way I learned from that lesson. And

Brian Adams
it's a great question and to your point. I think there's a lot of people running around on LinkedIn saying that their sponsors and that they're doing these multifamily deals. And Time will tell right? I mean, the numbers don't lie is like hockey coach told me growing up tape don't lie, we'll see what the tape says. But I will say that the biggest mistake or risks that I see in the investment space today for funless sponsors, and one that LPs Do not ask enough questions about, in my opinion, when they're doing diligence on the sponsor is the fact that the real estate deals have to make sense, right? I mean, your investment theory, your thesis, your execution, your underwriting, etc, your technical abilities, to find good deals, manage those deals and exit those deals has to be great. But there's this whole other risk that I think is hugely under appreciated that these people, even if you are a small funless sponsor, you are running a small business. And that small business has really nothing to do directly related to the real estate investments you're making. But it will make or break your company and your ability to be successful. So the biggest mistake I made was I early in my career was a deal guy. Let's go do deals, let's go raise some capital, let's go find some opportunities. And the deals were were good. But my infrastructure around my small business was awful. Marketing, reporting, Investor Relations, HR, tax audit, legal. The fact that we had an office and we were a tenant, all of these things were put on the backburner. I didn't put proper resources of time and money into them. And I spent about a year, two years of my life, getting my teeth kicked in by these investors. Because even though the deals were were doing well, they didn't know about it, because I had no reporting mechanism. And I had no way to market everything that we were doing. And so I had to go, you know, to an apology tour, basically, and I think ultimately has made me a much better manager, and is allowed me to scale much more efficiently over the last three to four years. It was a very painful experience. I learned about vulnerability, I was reading a lot of Rene Brown. I mean, it was it was tough. But I had gone from, you know, working in a coffee shop, being an attorney to having a $200 million portfolio in about three years. And it just happened really quickly. And so I think one of the things that I tell aspiring sponsors and entrepreneurs and also LPs that they're looking for advice about their diligence is ask all the questions you want about the deal in, you know, Dallas that the apartment guys doing. But ask about all these other things, and what are the expectations both from your perspective as an investor and their perspective as a GP and sponsor? Because I just think that not everyone really appreciates the amount of time and energy and resources it takes to have the built out small business that allows you to be a real estate investor.

Mike Stohler
Yeah, it's, it's fascinating. And I think everyone's knows that because right now, everybody in the brothers coming to me wanting me to invest in their syndication. And I'm looking at these kids, and I'm, like, us being, you know, a little more seasoned. Know that the questions to ask, but someone says, Yeah, I mean, here's 50,000 in, you know, just give me a return, you say, it's gonna be two and a half times three times whatever, preferred returns, and then, yeah, it's like, they never hear, but they know how to find the multifamily place. But all of a sudden, it's like, they don't know that they need this portal to put all their recordings and all their monthly reports and, and their accounting, and then they don't have the money to pay for these portals, you know, for their investors. And what, what I've learned, and I've learned the hard way, also is it takes a lot of time to do that reporting, and, and a lot of thought process, when all I could do is monthly synopsis in all of our weekly reports that are done, most of them are automatic. I have our systems and our team, just load them. You know, have you found that the automation process, all of a sudden, it's like, wow, where you thought that was gonna be so complicated really gives you a lot more time to focus on the assets and what your, what your strength is, because you have all these automated processes now.

Brian Adams
Yeah, I mean, even the last five years, right, I've been in the business 10 but in the last three, four years, the advancements in the prop tech space have been tremendous and remarkable. And you'll still pay up for quality, we use Juniper square, you know, as our 20 473 65 investor portal. And it's not cheap, we have a lot of investors. So you know, that's kind of a function of that. But I will tell you, you know, my season investors, they won't begrudge you a bad deal. I mean, some deals are great, some deals are good, there's a spectrum. But they will begrudge you if you don't have institutional quality reporting and Investor Relations, because it's inexcusable. And it does take a lot of money, it does take a lot of time. But when you're dealing in the syndication business, I have over 500 investors, it really does cut down to the amount of time that it takes to get on the phone and explain to them what's happening with this individual asset. I mean, even coordinating amongst my various asset managers on whose deal that one is getting my controller in the mix and understanding what they're, you know, which deals are no peon. I mean, all of that kind of goes away, because it's an open architecture, infrastructure of reporting and communication and marketing standpoint. Yeah. And it really has been a total game changer for us.

Mike Stohler Yeah, and for our listeners that are looking at doing it, you know, it's very important. Brian mentioned Juniper square, which is very good one, update capitals, another good one, spend the money to do the automation, because you are dealing with other people's funds. And a lot of times, it's all about communication. You know, investors understand that COVID is happening, they understand that things are happening, the returns may not or May, you know, mate might be there might not. But if they don't hear about whether or not something's going on, then that's when you're going to be a one and done with them.

Brian Adams
Yeah, I can tell you from experience that if you just go radio silent, or you have sporadic reporting, or it's just not well thought out, and the investor thinks that you're hiding something from them, their mind will go to the worst possible place. And I promise you, and you do not want to experience that, you know, it's just, it's, it's a terrible experience, you don't want that type of relationship with your investors, and you can avoid it. And this is what I tell aspiring entrepreneurs and sponsors on the front end is, you know, you're gonna want a third part of your bookkeeping, you're gonna want to outsource your accounting. And I understand you don't have a lot of cash flow, you may not have a lot of capital, it's a very capital intensive business. But I can tell you personally, that, you know, we have a CFA level three, we have somebody who's a Masters in real estate, I have an in house comptroller who's a CPA with a public accounting tax background, and you'll pay up for that personnel. But it will make your life a lot easier. And it will make your company perform so much better on an execution level.

Mike Stohler
I think that's so important. One of the biggest things that you hit on is when you are a sponsor, and you're the general partner, it is so important that to protect yourself. Yeah, that is your number one goal is you want to make money, you want to have funds, but you want to protect yourself. And the easiest way is to say you know what, I refuse to do my own books. You know, if there's one thing that you have to have is that third party, CPA, who knows real estate, don't get your local CPA that just is does taxes get one that knows real estate, and oh my god, get a third party bookkeeper pay for those people, just so that there's that third party? You know, that's that has responsibility. Because if you get into a syndication, you have a lot of people's money and you are doing everything yourself, then the worst things, you know, all that stuff comes into people's heads. It's so important. That great, great information. Brian, now, offices is something that, you know, I would not have thought that would be popular now. But you know, we're seeing here in my area, that things are going pretty steadily, but I would have thought that everyone's working from home. Everyone, you know, I'm not thinking that this is, is a popular play. But you're you're telling me otherwise in this fascinating. So tell me a little bit about what's happening in the office space and what you guys are doing.

Brian Adams
Sure. And like a lot of things. There's there's dynamics in play here. And one of them is recency bias, which we think the way that we live for the last nine months will be the way that we live for the next nine years. And that's just never the case. I mean, you've you've been in the game longer than I have and you know It's just not true. The other thing is we're seeing this this story about, you know, office and secondary markets. And the suburbs where we spend a lot of our time is a story that predates COVID. And, and our investment thesis is around the concept that this maturing millennial generation, which, because of the great recession in 2008, had to push back their typical family formation, phase three to five years, had started to get married, have children and go up against this wall street narrative that these people were going to wear skinny jeans, and live in Brooklyn and eat avocado toast and never have children for their entire lives. It just was not the case. But that's what kind of the Wall Street was pushing. So what we saw playing out was, especially in Nashville, we saw this anecdotally on the employee side, right? The the high net worth individual who was working on wall street with 1.5 kids, making over a million a year getting murdered on taxes, and having a really poor quality of life was saying, screw it, I'm gonna move back home. What's been more interesting, and this is occurring, pre COVID, but accelerating because of the virus. Employee employers started seeing this trend play out. And they were relocating and planning flags to where they thought the human capital was going to be, from a physical standpoint. So this is all kind of taking place in real time, and you're seeing it take place in New York, and what's happening in Miami, literally in real time as we speak. And so for office, pre COVID 4% of the workforce worked remotely, which is different than work from home, it's important to draw that distinction. Do I think in a post COVID world, more than 4% of the workforce will work remotely 100%? Do I think it's sustainable to have the massive concentration of employees work from home? No, I think that spike of productivity that we saw in q2 was because of novelty, and people worried they were going to get fired. But as the months have gone on, we've seen burnout, depression, lack of productivity, lack of creativity. Meanwhile, big tech, which is now kind of driving the economy was picking up cheap office leasing throughout the country, because they understand long term for them to be competitive in the marketplace, they need the best human capital possible. So I think we are going to see a world where people are spending less time in the office maybe three days a week as opposed to five days a week. But this massive trend line that we saw towards densification, like in a work location in New York that had 75 square feet per user, the pendulum will swing the other way where it'll be more of a traditional office layout, which is 350 square feet per user. And office will become a place where collaboration occurs, right, big multipurpose offices, big conference rooms, where you can do that kind of group think, or have very quiet time, if you don't have your own individual office in your home, if you're younger person and have an apartment, working your kitchen, etc. So all those things taking place, I think it'll be a wash in terms of how much square footage is used. And another thing that people kind of don't think much on is if this population is really leaving the coastal markets and going to these places where they are, you've got to be able to park it. And parking ratios in suburban office are usually four to five per 1000 square feet, they're really robust, you can put some people in there, not the case for CBD or downtown areas at all. So I do believe there'll be winners and losers, I would not be picking up office buildings in midtown Manhattan right now, or San Francisco. Unfortunately, I think those markets are places where in order to take care of budget shortfalls, they're gonna have to increase taxes on affluent people and cut spending and services, which will create a little bit of a death spiral where they're gonna continue to increase taxes and continue decrease services until there's some kind of equilibrium.

So I would not be going to the big councils today. I just think the tax regimes are going to be very challenging, but, you know, secondary markets that are experiencing population growth, that have knowledge based economies where you can still find attractive yields. I think a good place to be for the next five to 10 years.

Mike Stohler
Yeah, great. You know, being in Arizona, you're, you're hitting it right on the head. Do we have so many with Arizona, Texas. I know Tennessee. Nashville is exploding. In and around Memphis. These are great taxes. Great real estate buys as far as big corporations, you have governments that are pro business. So those types of, you know, they're moving, you know, there are so many I see people and companies moving out of California and do these things because they're just like, we can't sustain. And with your point on the offices, I agree, you know, as a populace as a as human beings, we love interacting with people, we missed that one on one, we're going in the office, talk at the watercooler, you know it or do whatever it is that and that was our norm for so long. And so a lot of the people even though it's nice working from home, they're at a kitchen table, you know, they're not set up, they don't have homes, with offices. And I do believe what you're saying is, is as soon as people can they miss that human interaction, they miss going to a conference room, they miss going to an office. So it's it's very, it's very well thought of that, you know, sometimes we kind of forget, because we're concentrating on now. And for someone like me that I work from home three, four times, days out of the week. I didn't see the change, you know, or the difference, but it's nice having your perspective on, on why offices are going to sustain. Now, with your syndications, what you're doing now, do you have anything open? Now things that you're working on that our listeners who love that passive investment? What are you doing now, that might entice some of our listeners?

Brian Adams
I appreciate that question. As a caveat, we only work with accredited investors, which I think your audience is pretty familiar with the definition. All that being said about what I just kind of commented on Office, it's a challenge right now to underwrite office deals, because of you know, new leasing and lease momentum, some things that I went through, which I love being a funless sponsor, and for us, we're trying to solve three problems that we have in our investor base. One is is a place to put capital to work that's uncorrelated with the volatility of the stock market, or maybe macro economic issues that we see playing out to we're solving for that yield something that double digit cash on cash annualized yield. And we only work with taxable investors. So no, no institutional LPs, which means that we're very focused on the tax advantages that come with direct real estate ownership. And so the ideal is for us to see, you know, a 10% cash on cash yield. And for the first one, two years, you're seeing a loss under k one that you can offset gains elsewhere in your portfolio. That's kind of what I tell people all the time, as you you hear, don't fight the Fed, which is true. But don't fight the IRS mean, the IRS code is set up as a series of incentives and disincentives to to change human behavior. And it is very clearly structured to incentivize you to own your own home, and to invest in commercial real estate. So go with it. That that's kind of the pitch. But we are working on we're about to launch a deal this week. I'm not sure when this episode is going to air, but it's a single story, flex opportunity that's 100% occupied off market that we're pretty excited about, it's going to be about a 12% yield, which is pretty remarkable. And we just got our debt quote back. And the debt market is definitely roaring back. There's a lot of appetite there. So we do have an open opportunity as of January night tea, and although it's gonna launch later this week.

Mike Stohler
Okay, yeah, so we're looking at the date. So we're talking, depending on when this will go live, or maybe the last week of January or so. Around the other 20. Yeah, towards the end of January, maybe the third or fourth week. Yeah, that's fantastic. Now, for our new guys, you're on the board of director of of a family office. And that's kind of like, the pie in the sky. You know, everyone says, oh, the family offices, you know, and I saw that HGTV episode where if I do a couple for plexes, then I can just start talking to family offices, you know, and I'm sure it drives you nuts because you can't probably sit down anywhere and say, yeah, I'm on board director of a family office and Oh, hey, you know, I'm thinking about getting started multifamily one invest with me. Yeah. No more,

Brian Adams
no more.

No more crypto deals, please. No blockchain, please.

Mike Stohler
There you go. That's Hilarious. So to our listeners out there who may not be it's a it's a this myth. It's almost like this unicorn that the family offices break it down for us what the truth and and not the Hollywood speak of what it's like to be on the board of the family office. And for people that might be interested in some day, developing the proper deck to get in front of an office, what is the process? Like? What do you look for? When you invest? with your family office?

Brian Adams
Yeah, so these are great questions. And I'm trying to want to make sure I get all of them. So your first point is really well taken. And I talked to folks about this a lot, because some people, a lot of people reached out saying, you know, tell me your secret sauce or raising capital, which there isn't one. And And oftentimes, I will tell them. Listen, this is a capital intensive business. raising capital is probably the hardest, most challenging part of the business. And the biggest mistake that I made as an entrepreneur, looking back on it now was I was looking for a turnkey solution always like, oh, if I could just connect with the right family, if I connect with the right group, if I could connect with the right overseas investor, it'd be this golden Chalice, right, like all the doors with a lock, and I could just sit my ties. The reality is, it's supposed to be hard. It is supposed to be challenging to raise capital, you, you have to get a lot of nose, you've got to work on your pitch, you've got understood your value proposition, you have to really be empathetic with your logical investor base and solve the problem that they have in their financial lives. Otherwise, you will fail. And if you're not the chief sales officer, I'm not interested in investing with you, because you need to be the one telling the story. So that's the first one is, there is no easy way out here. family offices are not going to just be this magical solution for you. And half the people on LinkedIn that say they are in one are or not. So just stop

Mike Stohler there. Listen to that people.

Brian Adams
If you you have recently 12 to 15 hours a day where you can be productive if you have a family or want to like be functioning long term, do not waste it going down this rabbit hole, I promise you. That being said, I think another big Miss application of the term or misunderstanding of the term is that a family office is not represented by the number of zeros in the bank account. It's represented by a mindset. There are a lot of ultra high net worth individuals and families that could have a family office that they wanted to, but they don't, because they don't want to have that culture. It's just like being an entrepreneur. And being a sponsor, you're also running a small business. and small businesses are a lot of time, a lot of effort. And they generally fail if they try to extend over multiple generations. So I think the biggest thing for you if you are interested in networking in the family office space, is understand what their problems are. Because just because they have a lot of money doesn't mean they don't have problems. And the issue they're trying to solve is they are trying to maintain a quality of life over an exponentially growing size family with inflation. And when you do the math and all that, they've probably got to solve for a 10 to 12% annual return. To maintain, right, so it's a very challenging investment criteria. But if you can help them solve that, they will look at your pitch and they will have a real conversation with you and you will get a real meeting. But it's not one of these things where you just reach out they're gonna write you a million dollar check. And, and I think that's the biggest misunderstanding is, you know, they are fiduciaries to their lineal descendants. And they're stewards of capital have a corpus of capital for theoretically three to four, five generation plus. And if you can help them execute that, that's great. But not and not every product type, or every deal that you pitch them is going to be a fit, and they're not just in the deployment of capital business. That didn't get to where they are by making those choices. And so I think that's kind of the starting point there. And another thing I would add is my family included a family office, the biggest part of that term is the family part of it and families are crazy. They're schizophrenic, they changed their minds. They change their lineup. People get to Horse people pass away, they get new executives that come in they they leave. priorities change, depending on who's running the show that that year. And so you've kind of got to be communicative. And understanding that the conversation you have with one last year may not be the same conversation you have with one this year. And the old adage is, once you've met one family office, you've met one family office.

Mike Stohler
Mm hmm. Yeah, it's very interesting. And, you know, the friends that I have, and acquaintances that I have, that are in family offices. A lot of times the people that I deal with, you know, the directors of the boards, the people that handled real estate, are not part of the family. A lot of times, these are attorneys, or these are people that were in the financial world, that have been hired by the family in order to oversee or dispense with just the real estate portion of the family office. So, you know, everyone, when you're not talking to some of the happens that have, you know, eight or nine figures worth of worth, you're talking to, most of the time very seasoned, very hardened. Attorneys or financial experts that are hired to not make mistakes.

Brian Adams
There. No, guys.

Mike Stohler
No, guys, they're the no guys. And you have to be extremely good, extremely confident. Have. And do your research with these family offices find out if you can, what type of real estate that they're getting into what their endgame is, you know, and sometimes it's, they maybe only want 10%, but they're really big into the K ones, you know, they they want to see some losses on paper, to reduce their tax burden. whatever they want, but get that deck, right? Is that kind of you know, what you're seeing Brian's just,

Brian Adams
yeah, and, and, and more so than the high net worth space. The entry point is really important. How you get that warm introduction and how you get that referral, or what affinity group you met them through, will really be a determinant to how that relationship moves forward. Yeah. Which means don't just blind email them, or blind ping him, I'm like, like, just don't do that.

Mike Stohler
Hi, I'm Mike, and I want to buy a hotel, you know, you have, can I have 5 million?

Brian Adams
Yeah,

it's, you know, it's a long sales cycle. And they would tell you that too. And that's where if you're willing to put three to five years in, which is kind of what I've been doing with with a group of LPs, it can be great. But, you know, it's like, meaningful relationships take time and energy.

Mike Stohler
Yeah, and that's so true. It's, a lot of people that I talked to that are sponsors, they don't want that. They don't know about the relationship. And that's, that's so important. Because it's, you don't want these people to be one and done. You want them to have a relationship. You want to get that Christmas card, right? You want to be able to have that. And so it becomes a first time deal, then the third and then the fifth, and that now you are growing together and you're you're bonding and you're you're able to do this. And both of you succeed. And that's what it's all about. Brian, you know, this has been absolutely amazing. I've really enjoyed talking with you. How can people find you for this next fun that you're or this the syndication that you're opening up?

Brian Adams
Yeah, I appreciate that question. I'm very active on LinkedIn. So you look up Brian C. Adams, Excelsior, capital, connect with me shoot me a message. I'm happy to set up a call. And then the websites probably the best entry point to you know, get qualified as an investor. Excelsior, GP calm, and you can kind of go through the steps there.

Mike Stohler
Okay, and everybody. Excelsior is EXC, el si Oh, R. Capital. And, Brian, I appreciate the time and thank you for your insight. It's been wonderful. Thanks for having

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ABOUT BRIAN ADAMS

He has served on the Board of Sirrom Partners, LP, a single-family office investing across private and public asset classes since May of 2008. Since May of 2017 he has served on the Investment Committee for Solidus LP, an early-stage venture capital firm focused on investment opportunities in Healthcare and Technology. From January of 2016 to January of 2018, Brian served as a member of the Board of Next Gen Advisory Faculty for the Institute of Private Investors / Campden, a program designed to support next generation family members in preparing the following generation for the responsibility of being a steward of family wealth. He has also served on the Advisory Committee for the Southeastern Family Office Forum since December of 2016. Brian is a former practicing attorney, earning his J.D. from Suffolk University and his B.A. from Wesleyan University with Honors.