WEBVTT
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Hey, welcome back.
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This is Craig Weir.
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As the, uh, intro said, um, hey look, if you are, uh, trying to figure out what's next in retirement, this is the show that it's designed to just kind of focus on you.
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What are the big questions in life, you know, that relate to money and finances, and what do you wanna be when you grow up?
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All those kinds of things.
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We just.
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Try to hit on all those things.
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You know, typically we talk about tax planning and general financial planning and stuff like that, but today we got special guests for you and a special subject, something that we haven't covered before, but I think you're gonna really dig it.
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So what if you're tired of the ups and the downs of the stock market?
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What if you're tired of having the euphoric increase and then all of a sudden the rug gets pulled out from underneath you and your statement?
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What that was a 401k, is the proverbial two ohk.
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Hi.
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And on the other hand, you know, I can't tell you how many conversations we've had with people that were like, well, you know, my balances were a half a million, or a million or 2 million higher, but you know what happened to all that.
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So there is a way that you don't have to suffer that if you're tired of the ups and downs, and you don't want to go to the extremes of higher hiding it under a mattress.
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Or sticking it all into an annuity someplace.
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Uh, we have some hope today.
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We are coming through our white shining night.
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Today is Ben Frazier.
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Ben is, uh, managing director of Aspen Funds.
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He's also their chief investment officer and he's, uh, gladly decided to come on and share some great ideas with us.
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So Ben, welcome to the show.
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Well, Craig, thanks for having me on.
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It's fun to connect again.
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We had you on our podcast not too long ago and it was a really fun time, so it's fun to to come on yours and, uh, you definitely set me up well, so didn't plan on being a night shine armor, but I appreciate, appreciate that man.
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Well, man, I tell you what man, for guys that are just tired of watching the Apple and Tesla and all the others, just kind of, yo-yo, I hope they really take this.
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To heart.
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Uh, I have done this in my own life, uh, in different ways and I hope that people will kind of just pay attention and maybe we can cast away some of the paradigms about the space we're gonna be talking about and talk about it just in real world terms.
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Before we get into that, tell us just a little bit about Ben.
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Kinda like, you know, who are you and what's going on in your life, what do you do when you're not, um, you know, putting on the official Unsmart business hat.
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Yeah.
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Well, uh, again, thanks for having me on and yeah, my, uh, my life is outside of work is, uh, mostly made up of keeping four little girls happy.
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So I got, I got four girls, uh, nine under.
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And, uh, you have a, a girl dog.
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So I'm, uh, very outnumbered.
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Um, but I love it.
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It's, it's kind of fun.
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You gotta just embrace it, right?
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So that's cool.
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We have a blast.
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Very, very busy life.
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But, uh, it's, it's all good.
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So, hobbies, I don't have many of them, uh, because of that, but, you know, started getting into pickleball recently.
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I've, I grew up playing tennis, um, cool.
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And, uh, just, just won a, uh, tournament the other week.
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Kind of fun with the buddy.
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You just won a tournament, you're getting into pickle and you and you.
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It's not a, it wasn't a very competitive tournament.
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We'll say that, but it was a, it was a fu fun time.
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Well, it sounds like there were two people that were real competitive and everybody else was wondering what happened here, right.
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Exactly.
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Yeah, that, that we had to, we had to tone it down a little bit.
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We started getting a little too, uh, a little too aggressive there.
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So are you guys like the, uh, you know, the, the college tennis players that go into the novice pickleball court and just clean house?
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Is that what's going on?
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Exactly, yeah.
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We just, we look for, you know, the tournaments that we just dominate and feel really good about ourselves afterwards.
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You know, it was, it was kind of funny cuz we started getting, we're playing in the final and, uh, This is our first time playing Pickle, me and my partner.
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And, uh, I'm gonna throw him under the bus here.
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He's actually sitting right over there so he can hear me.
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But, um, he, he started getting real into it and, and just slammed the ball right into this old lady.
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And she shrieked and, you know, he, he got a little, little too into it, but we, we went up winning the game.
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So that's all that matters, right?
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And, uh, It was.
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It was a good, no, it was all, it's fun.
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That's all matters, right?
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I'm gonna pick a bunch of senior citizens today.
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It'll be fun.
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It pretty bad.
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We like, oh, we should probably tone it down a little bit, is you, As you know, and I think many of our, listen, many of the people that listen to the podcast know, my wife and I have kind of a different gig going on in it.
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We live full-time in a bus.
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You know, we travel a lot.
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Summers we spend up in the mountains in Colorado and kind of do our thing.
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But a really big thing in a lot of the RV resorts that we stay at throughout the year is this pickle, pickleball, pickleball thing.
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And I will have to tell you that I'm, I'm fairly athletic, but I've never.
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Played pickleball.
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I always kind of turned my nose up at it, is like, I'm not old enough to play pickleball yet.
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Right.
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But I think I am, I think I'm right there in this Democratic, yeah.
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So it, it's fun.
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I mean it's, uh, I've grown up playing tennis.
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It's, uh, it's fun because it normalizes a lot of the skill level, right.
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To be able to play and just to have, have a fun time.
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It's.
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Not that hard.
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Like the, the higher level, you know, players, it's, they, they're, they're good, but you can, you can keep a game going and have a fun time doing without much, much experience in this.
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So that's, it's been fun.
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And it's pretty funny.
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I mean, it's, it's crazy to see how much of a wave is just taking over with, uh, the pickleball.
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I saw article, oh, it's crazy.
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I was a Wall Street Journal or something where they're converting, uh, this is a local, here in Kansas City, they're converting all these empty Sears buildings that have just been defunct now into indoor pickleball.
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That's great idea.
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You know, don't min money too min don't, don't MIT money.
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And it's just this big empty warehouse, you know, that's, no one's using it, but it's in a great location.
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And so it's ma makes sense.
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But it's, it's just funny to see how, uh, much is Colin.
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That's cool.
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That's cool.
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That's good stuff.
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Well, I'll have to discover my inner pickleball.
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One of these days I was, I was always a baseball, basketball guy.
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But, um, I did some racquetball and stuff like that, but hey, pickleball is all the rage.
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So I guess we'll have to get with it.
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There we go.
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So, um, so let's kind of dive in.
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Uh, if you don't mind, man, you know, I, I set up the alternative investment space, but before we kind of dig into some of those details, just kind of, you know, I'm kind of curious, um, how has, how has the company, I mean, how has Aspen Funds even launched?
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Tell me a little bit about why or how, how it came to be.
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Yeah, so it started 10 years ago.
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I joined about five years ago.
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Um, and so the company was, was formed actually one of the founders is, is my father, um, uh, which is pretty, been pretty fun.
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And his partner, they really saw an opportunity.
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Kind of post the great financial crisis, um, of investing in, uh, distressed mortgages, right?
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So obviously there, there's a lot of those back in the day.
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Um, but one of the unique things is that you can pick these up for very, very deep discounts, uh, relative to what's owed.
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And then you can work with borrowers, help'em stay in their homes, work out new, you know, modifications of of their terms, help them get back on track and, um, Actually do good and, and make, make some good money along the way.
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And so it started that 10 years ago.
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The initial thought was, Hey, this is a good time to get in.
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This is a good opportunity.
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Um, you know, timing is a big deal as we can get into down the road of, of investing And, um, Initial thought was, Hey, let's just do one fun, friends and family, make a little bit of money and move on.
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But really started growing kind of with this space and over the past 10 years have become one of the bigger players in this, uh, niche.
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And, uh, You know, now have, I think 3,500 mortgages in all 50 states, um, that we, you know, service and, uh, help our borrowers.
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And, uh, you know, and that business continues to go on.
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We have legacy funds, um, that, that continue to operate.
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Uh, just great, great track record there.
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And, um, still doing good with our, with our borrower.
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So one of our, our fun things we'd love to do with that is, uh, you know, tout the, the number of foreclosures we have, which is less than 2%, um, of all these workouts, ending foreclosure.
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And so it's been.
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Uh, we got an amazing team and, uh, a pretty cool model to still help people out, uh, while uh, making money.
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So been doing that.
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But that really launched us several years ago into kind of, um, broadening our approach in al the alternative investment space.
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Cuz really the original vision for Aspen was we wanna be kind of the premier provider of alternative investments, um, for the, you know, retail or accredited investors.
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And so, you know, we could talk more about, you know, why.
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Alternatives make sense and why you're probably hearing more about them now than you ever have.
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Uh, it's actually because of some recent regulatory changes about 10 years ago that kind of completely changed the game to allow access, uh, for the average individual to kind of get to participate in these types of things.
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And so it really kind of expanded approach.
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We've now, you know, since invested in.
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Um, you know, over 300 million of real estate, across multi-family, um, industrial storage, retail, uh, oil and gas.
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And so we've, we've really expanded in our, um, our goal is the same, is to help, uh, you know, accredited investors, individuals invest like the ultra wealthy and diversify out of just stocks and bonds.
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Um, cause what we ultimately discovered and when we, you know, we have a podcast like I mentioned earlier, called Invest like a Billionaire.
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And part of our, our thesis, uh, from the research that we, you know, did early on was.
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The ultra wealthy, you know, the billionaires of the world, the family offices, the pensions, endowments, you know, all these, you know, Yale Endowment you probably have heard about, right?
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If they're ultra success in investing, they've been investing very heavily in alternative investments, in private alternative investments for decades.
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Many, many decades.
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Yeah.
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Um, and they've been investing very differently than the average, you know, high net worth individual, which is mostly stocks, bonds, mutual funds, right?
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Not, not to, you know, say those are bad at all, but there's, there's um, you know, uh, some real wisdom in creating a diversification outside of just the public markets, into the private markets, into multiple asset classes within the private markets.
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Cuz many of these investors, the groups I just mentioned, the billionaires, family offices, et cetera, They are generally allocated, even now to this day, upwards of 50% plus of their total portfolios into these types of deals.
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You know, real estate, venture capital, private equity, hedge funds, and so it makes up a very big part of the portfolio or the average investor individual.
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Maybe 5%, you know, uh, in alternatives now, alternatives, quote, quote unquote, because most people think they're, they're invested in real estate when they're invested in REITs.
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And I'll make a very strong argument that REITs are not real estate.
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Uh, it's, um, you know, it has some ownership, real estate ownership in there, but yeah.
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Yeah, it's, it's very, very different.
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So that, that's kind of our thesis and we're seeing a huge trend to that.
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So, you know, our, our listeners are, you know, typically the guys and gals that are about to retire are, are already into retirement and you know, they kind of built a nest egg for many of them, at least the ones that we get to talk to and help is they built that nest egg by just ploting money away, sticking it in that 401k for the last 30 years.
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And they wake up one day and they got a million, 2 million, 3 million, 4 million plus sitting in an ira and they did it all through the stock market.
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Mm-hmm.
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Very seldom do we find people that really embrace this alternative investment space.
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But I'm the guy with just enough lack of hair and gray hair that I remember why they, most people didn't do that.
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It was, it was really the wild, wild West back in the seventies and eighties.
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You know, I remember the.
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They were just tax deals.
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You know, the, the cattle deals, the livestock deals, the oil and gas deals that had absolutely no economic value other than the tax benefits.
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And then of course, the eighties and the nineties hit and a lot of those things washed out.
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I think people just got really afraid of it, but, That's really not what's available now, right?
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I mean, yeah.
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The types of things that you offer and that other people in your space offer.
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It's really, it really, it seems to me like this space has really grown up and it has, I'm sure there's still some bad players, but for the most part, there really are some, some good things that can be, that can happen when you open your mind to doing things a little different than.
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What's comfortable or what's convenient.
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So, um, I've got my own answers, but, um, from your view, I mean, if you were 65, 70 years old and you had a couple million bucks sitting out in an IRA and some other money outside of other places, knowing what, you know, what are just one or two of the main reasons why you would be looking at putting some of the asset classes that you just mentioned into your portfolio?
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Um, why would you do that?
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Why, why would somebody want to wanna do that?
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Yeah.
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Great.
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Great question.
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Great observations.
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Um, and I think what's really changed, um, is not necessarily that these deals are, are all of a sudden now being done these, you know, better quality deals, you know?
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Yeah.
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Better access, better transparency.
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But it was, they were being done more in a vacuum.
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Right?
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They were mostly being done with big institutional investors.
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And in 2012 there was something called the Jobs Act, um, which kind of flew under the radar, but it basically changed the game.
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I, I think this was a revolutionary change from, uh, before this, this, this act.
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You had to have what's called a preexisting and a substantive relationship with an operator, a provider of these investment, uh, vehicles to even have the opportunity to see them.
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Right?
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And so most of these were traded through broker dealers.
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And when you, whenever you kind of go into the traditional financial plumbing system, right, the legacy system broker, et cetera, It's very high fees.
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There's just a lot of crap is being sold.
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Cause it's all commission based.
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Yeah.
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And so it, it kind of attracts, to your point, some of the wild west, some of the cowboy operators.
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But in 2012 the regulations changed to where these sponsors could directly market too, the individuals and be able to share openly about the things that they're doing, uh, without the worry of, um, these kind of a previous regulations.
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So there's still some rules you have to kind of be aware of.
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But that's, you know, if you go on Facebook or you know, wherever you're probably, you know, you have a decent net worth.
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You've probably seen some ads for different multi-family deals or whatever, right?
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So you're seeing a lot more of it.
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And because, uh, because of these change, it's allowed access.
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So obviously that doesn't necessarily mean all the bad actors are gone, right?
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You still gotta, you know, understand how these deals work.
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You gotta learn how to do some due diligence, um, and, and all that, but, The access has changed and, and since then, the amount of, of capital and retail capital has come into the market has been really extraordinary.
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And the projections from this point on are, you know, pretty one, one direction just going up and to the right, right?
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Because it's, it's got a lot of attractive benefits relative to just stocks and bonds.
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Um, and, you know, advisors and there's several surveys that I could.
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Reference, we have a whole podcast.
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Our, I think our first podcast episode, uh, references a lot of these studies, um, where, you know, most advisors are wanting to increase allocations to, uh, alternatives for their clients because one, you generally get better returns.
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Um, and two, you get true diversification.
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What, what has kind of come to happen over the past probably a decade, I would say in the public markets is correlations.
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Are approaching zero right Across all, or not approaching one, sorry.
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Of all asset classes, meaning Explain?
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Explain, yeah.
00:16:53.980 --> 00:17:05.351
Explain what that means to, yeah, so, so the, the traditional idea, you know, modern portfolio theory is if you have, you know, a good blend of stocks and bonds, um, you know, generally those trade in an inverse way.
00:17:05.351 --> 00:17:10.300
So if stocks are up, bonds are down, if, you know, bonds are up, stocks are down, and so you kind of create some balance.
00:17:10.300 --> 00:17:13.780
You create some mitigation, so you reduce kind of your variance of return.
00:17:14.361 --> 00:17:18.921
And if you have a little bit more stocks relative to bonds, you're gonna get a little bit more upside in growth.
00:17:18.921 --> 00:17:21.621
So you can kind of keep that, that average growing.
00:17:21.621 --> 00:17:21.861
Right.
00:17:22.250 --> 00:17:28.391
Well, last year, 2022 was the, the worst performance of the 60 40 portfolio in the past 100 years.
00:17:28.760 --> 00:17:29.030
Right.
00:17:29.125 --> 00:17:41.365
Because, uh, not only did the stock market suffer from some of the interest rate increases, but uh, you know, if you understand basic math, Interest rates going up, impacts, values negatively in bonds.
00:17:41.365 --> 00:17:44.665
So bonds had a terrible year because interest rates were going up, right?
00:17:44.665 --> 00:17:46.316
Driving down the value of bonds.
00:17:46.316 --> 00:17:55.496
And so there's the, you know, what was supposed to be this kind of risk mitigation from a diversification standpoint, uh, both went the negative direction.
00:17:55.596 --> 00:17:58.046
And that's what's happened even, even with REITs, right?
00:17:58.076 --> 00:18:01.135
Oh, I'm gonna get some diversification by going into REITs and sure.
00:18:01.135 --> 00:18:12.266
They all have different drivers of what's, you know, You know, driving the demand, but in the public market, so much of what drives performance and drives, uh, price, uh, discovery is sentiment, right?
00:18:12.266 --> 00:18:13.945
What is, what is the sentiment of the market?
00:18:13.951 --> 00:18:15.476
How does, what's the FNA do next?
00:18:15.476 --> 00:18:15.655
Right?
00:18:15.661 --> 00:18:16.855
It's very reactionary.
00:18:16.855 --> 00:18:22.855
And so everything is kind of in this vacuum and, and, you know, going off of trading off the headlines.
00:18:22.855 --> 00:18:25.645
And so the more that that happens, the more these.
00:18:26.395 --> 00:18:31.105
Different asset classes trade more similarly and reducing diversification.
00:18:31.111 --> 00:18:37.705
So it's a little aside in diversification, but in the private markets, these are not, you know, traded on any exchanges.
00:18:37.705 --> 00:18:48.236
And so, you know, if the Fed does something different, this, you know, tomorrow than they did yesterday, it's not gonna change the pricing of the asset you're going into.
00:18:48.236 --> 00:18:48.385
Right?
00:18:48.385 --> 00:19:02.306
If you're buying a multi-family apartment building in a good market with some, you know, positive population growth, positive rent growth, And you have direct ownership into that asset, you can drive a lot of value even outside of the external factors going on.
00:19:02.306 --> 00:19:02.516
Right?
00:19:02.516 --> 00:19:13.405
There's, there's things you can control and, uh, and have a lot more impact on that and re reduction of, of your, uh, variance of return, which is kind of the traditional measure of risk.
00:19:13.705 --> 00:19:13.996
Yeah.
00:19:14.385 --> 00:19:14.675
Yeah.
00:19:14.905 --> 00:19:18.655
And, and so, you know, you don't have the yo-yo.
00:19:19.195 --> 00:19:23.816
On your statement every month where you get, you know, it's, you're not riding the rollercoaster, so to speak.
00:19:23.816 --> 00:19:33.445
Certainly the values change and there certainly are risks in anything that you invest in, but to avoid that volatility, um, to me is huge.
00:19:33.445 --> 00:19:39.026
And to get into an investment strategy that allows you to participate in.
00:19:39.641 --> 00:19:48.161
Totally different components than what is the expected future value of this company's cash flow streams in the future is, is pretty huge.
00:19:48.520 --> 00:19:59.830
Um, let's define, I've been out, I've been away from the definitions for long enough because I haven't done the actual investment management work for now six or seven years.
00:19:59.836 --> 00:20:01.451
But so what are the thresholds?
00:20:01.451 --> 00:20:05.500
Now we're talking to people that have to be accredited investors.
00:20:05.500 --> 00:20:05.830
Right?
00:20:06.221 --> 00:20:14.520
So just, just real quickly, Before I get into some, some meat, I want to cover what is an accredited investor in today's definition.
00:20:15.296 --> 00:20:15.865
Yeah, great.
00:20:15.865 --> 00:20:16.615
Great question.
00:20:16.645 --> 00:20:24.986
Um, so if you haven't heard that term accredited investor, a lot of people think, oh, I have to go get some certification or some kind of test I have to pass to become accredited.
00:20:25.496 --> 00:20:29.875
Um, and it's, it's not that, it's basically you are or you're not based on your financial position.
00:20:29.875 --> 00:20:31.976
So there's, there's two ways to qualify.
00:20:31.980 --> 00:20:33.026
One is by income.
00:20:33.030 --> 00:20:46.076
So if you're a single income earner and you make over$200,000 for the past two years, Um, or if you're a joint income earner, uh, and making over$300,000 over the past two years and expect to make the same going forward, then you're accredited.
00:20:46.135 --> 00:20:52.465
Or if you have a net worth, uh, of greater than$1 million excluding your personal residence, um, then you're accredited.
00:20:52.471 --> 00:20:59.786
So the kind of folks you're talking about, you know, have the IRAs of, you know, two, three, 4 million, they're pretty comfortably gonna be be accredited.
00:20:59.786 --> 00:20:59.996
Yep.
00:21:00.536 --> 00:21:00.806
Yeah.
00:21:00.806 --> 00:21:18.746
And so as a, just a quick, um, commercial if you will, I'm a huge proponent of alternative strategies, but I'm even a bigger proponent of owning these alternative strategies in an, in a Roth IRA instead of in a regular ira.
00:21:19.195 --> 00:21:19.405
Yes.
00:21:19.411 --> 00:21:34.306
Um, Because of the potential in the demonstrated historical performance can, can be significantly higher than what I would say the average person's experience is with a typical investment advisor and investment management program.
00:21:35.026 --> 00:21:46.125
Um, you i'll, I, I can put it in the show notes, but if you'll go out to our website at craig weir, w e a r.com, um, you can download the books that we've got.
00:21:46.425 --> 00:21:54.101
Um, And the first book I wrote about the whole subject of why would you even wanna do Roth conversions is there and you can download it for free.
00:21:54.520 --> 00:22:03.671
And then the second one I wrote, which is The Five Biggest Mistakes, which is really Roth conversion secrets that kind of gets into the mechanics of it and all that stuff is available there.
00:22:03.675 --> 00:22:09.520
So all this stuff that we're talking about, it's great from a return standpoint, but man, you just.
00:22:10.030 --> 00:22:16.631
You put a multiplier on your benefits when you get it to where those benefits are forever gonna be tax free.
00:22:16.661 --> 00:22:18.971
And that's kind of what we talked about on your podcast.
00:22:19.300 --> 00:22:20.510
So, alright.
00:22:20.800 --> 00:22:32.786
So you know, a lot of the people are kind of, They, they probably got the same, you know, white goatee that I've got and, you know, the, the, the flowing hair is gone.
00:22:33.355 --> 00:22:42.806
Um, they remember the days of the shysters and the slick stories and the high fees and all those kinds of things.
00:22:43.675 --> 00:22:52.151
Um, As Ben's explained that that's, there certainly are bad players and you need, as he said, you need to do some due diligence.
00:22:52.151 --> 00:22:54.131
But that was the Wild West.
00:22:54.161 --> 00:23:03.401
Now, now everybody's kind of wearing jeans and flip flops, and it's a lot much more relaxed environment, but you still need to know what are the questions you need to ask, right?
00:23:03.671 --> 00:23:03.760
Mm-hmm.
00:23:04.000 --> 00:23:13.601
So you're gonna get this memorandum and this prospectus, and they're, they're written by attorneys so that we all stay totally confused and they still charge our a thousand dollars an hour type of thing.
00:23:14.421 --> 00:23:30.351
But what are the, what are just, what are the, what are the primary things that's, that you would go, if you went to your, if you had, if you had a big brother who knew nothing about this space and he said, what questions should I ask?
00:23:31.250 --> 00:23:42.141
What would you tell the listeners are the really the main two or three primary questions that are the most important thing before you get into the minutia of the details of the due diligence?
00:23:43.211 --> 00:23:44.861
Yeah, no, a absolutely.
00:23:45.431 --> 00:23:54.250
And you know, I wanna be clear too, you know, the, there is a lot of concern from investors because the private markets are largely unregulated, right?
00:23:54.256 --> 00:23:57.851
So there's exemptions from regulation, which is create this private market.
00:23:57.851 --> 00:24:01.481
And part of the reason that there's still, you know, you have to be a credit.
00:24:01.510 --> 00:24:05.830
So you have to have some financial wherewithal to be able to invest generally in these, these deals.
00:24:06.280 --> 00:24:10.391
And the idea is, hey, there potentially can be some risk here.
00:24:10.391 --> 00:24:11.891
And you, you gotta.
00:24:12.625 --> 00:24:23.185
At least have some sophistication to be able to understand what you're investing in so that you know, uh, you're, it's not someone that has a hundred thousand dollars to their name and they put it all in one deal or Bitcoin or whatever.
00:24:23.191 --> 00:24:23.276
Right.
00:24:23.276 --> 00:24:24.385
It goes, go, goes bad.
00:24:24.385 --> 00:24:24.596
Right?
00:24:24.986 --> 00:24:27.026
So, you know, I, I wanna be clear there.
00:24:27.030 --> 00:24:36.836
And, and, and the reason I wanna emphasize that is my biggest thing, why I always tell people is, the best thing you can do is.
00:24:37.300 --> 00:24:38.681
Get the education yourself, right?
00:24:38.681 --> 00:24:40.871
Learn about these types of deals.
00:24:40.871 --> 00:24:43.451
And I think it's even broader than just private alternatives.
00:24:43.840 --> 00:24:52.060
What I'm really seeing a trend of, um, which is really, really positive, I believe, is people are taking more ownership of their money, right?
00:24:52.060 --> 00:24:55.931
And, and traditionally the system has been, Hey, I'm gonna go make as much money as I can.
00:24:55.931 --> 00:24:59.471
I'm gonna step as much as I can into the 401k, get the match, set it, and forget it.
00:24:59.471 --> 00:25:00.401
Never think about it.
00:25:00.941 --> 00:25:05.230
But what people don't realize, and we talked about this a little bit on your podcast already when you had come on our podcast.
00:25:06.310 --> 00:25:11.861
You know, people work so hard to make their money, but then they spend no time maximizing what they've earned.
00:25:11.861 --> 00:25:12.070
Right?
00:25:12.070 --> 00:25:17.560
They're not making their money work for them and they just stick it into these mutual funds, but they don't really know what, what it's in, right?
00:25:17.560 --> 00:25:20.050
They don't really know what are the fees in and those kind of things.
00:25:20.381 --> 00:25:25.300
And so it's, it's not even just alternative, I think it's just a general approach of being more active.
00:25:25.300 --> 00:25:31.901
And so I'm, I'm seeing a lot more, I call it, you know, DIY investors where I say, I want to, I wanna take a little more ownership of my finances.
00:25:31.901 --> 00:25:37.076
Cause when you do that, Regardless of what you invest in, you're gonna have way better performance, right?
00:25:37.080 --> 00:25:41.185
You're gonna be able to identify the traffic, you're gonna be identify the things that are the red flags, right?
00:25:41.185 --> 00:25:42.715
And things that you wanna be aware of.
00:25:43.286 --> 00:25:51.796
Um, and so I say all that to say, and if you're just kind of getting started here, the best thing you can do is start really slow and really small, right?
00:25:52.256 --> 00:25:57.205
And so, um, the best way to do reduce risk is just reduce how much you're investing initially.
00:25:57.566 --> 00:25:59.125
Um, and just start.
00:25:59.621 --> 00:26:03.536
Building a track record, you know, uh, with, with, with some sponsors.
00:26:03.596 --> 00:26:06.205
Um, but even before you kind of get to that point, there's a lot of things you can do.
00:26:06.895 --> 00:26:09.865
Um, and I like to think of, of a few things, right?
00:26:09.871 --> 00:26:14.665
If you're investing money, imagine you're going to a horse race, right?
00:26:14.665 --> 00:26:18.477
And you've kind of got these, these three components of, of a deal.
00:26:18.865 --> 00:26:23.185
So there's, uh, the racetrack, there's the horse, and there's the jockey, right?
00:26:23.185 --> 00:26:24.655
So I like to think about these separately.
00:26:24.655 --> 00:26:28.316
So your racetrack is, What's the asset class they're investing in?
00:26:28.316 --> 00:26:30.326
Is this a multi-family apartment deal?
00:26:30.326 --> 00:26:31.915
Is this a self-storage investment?
00:26:31.915 --> 00:26:34.316
Is this, you know, land entitlements?
00:26:34.320 --> 00:26:36.596
Or is this oil and gas indication, right?
00:26:36.836 --> 00:26:41.155
What is the, the track that this, that this horse and jockey are on?
00:26:41.695 --> 00:26:47.576
And do I believe in the long-term, you know, sustainability, positive trends, the story of that, right?
00:26:47.935 --> 00:26:48.086
Yeah.
00:26:48.086 --> 00:26:48.596
Of the story.
00:26:48.596 --> 00:26:48.836
Right.
00:26:48.836 --> 00:26:59.306
So there's, I'm gonna have a very different feeling about investing in, you know, uh, Urban office than I am gonna be in, you know, suburban multi-family residential housing or something.
00:26:59.310 --> 00:26:59.455
Right.
00:26:59.455 --> 00:27:01.256
Those, those two very, very different things.
00:27:01.256 --> 00:27:06.506
You gotta understand what are the long-term trends supporting or not supporting these, these assets.
00:27:06.836 --> 00:27:07.976
The second is the horse.
00:27:08.395 --> 00:27:10.885
So the horse is the actual investment itself.
00:27:10.885 --> 00:27:12.056
What's the strategy?
00:27:12.461 --> 00:27:12.790
Right.
00:27:12.790 --> 00:27:14.500
What's the vehicle they're gonna do it with?
00:27:14.500 --> 00:27:16.330
Is this a development deal?
00:27:16.361 --> 00:27:19.601
Is this, they're gonna build this from the ground up and lease it up and sell it?
00:27:20.050 --> 00:27:24.671
Is this gonna be gonna buy an old, you know, class B apartment in a good area?
00:27:24.671 --> 00:27:27.161
They're gonna renovate it and lease it up at higher rates.
00:27:27.280 --> 00:27:29.260
This, you know, kind of value add deal.
00:27:29.770 --> 00:27:31.090
Um, is this in a good market?
00:27:31.191 --> 00:27:32.951
Is this in a growing market?
00:27:32.951 --> 00:27:35.441
Is this in a, you know, diminishing market?
00:27:35.770 --> 00:27:36.911
Um, right.
00:27:36.911 --> 00:27:39.385
And so, That, that's kind of the other piece of this.
00:27:39.385 --> 00:27:40.586
You gotta look at the big asset class.
00:27:40.586 --> 00:27:42.895
You're gonna look at the market and the deal itself.
00:27:43.526 --> 00:27:48.596
And then, uh, arguably the most important piece of this whole equation is the jockey.
00:27:48.685 --> 00:27:48.986
Right?
00:27:48.986 --> 00:27:53.155
And the jockey is who's the one driving the deal?
00:27:53.161 --> 00:27:53.935
Who's the one Yeah.
00:27:53.996 --> 00:27:56.846
That is making this deal happen, putting all the pieces together.
00:27:56.851 --> 00:27:58.705
What's their track record?
00:27:59.066 --> 00:28:00.236
How many deals have they done?
00:28:00.266 --> 00:28:00.506
Right?
00:28:00.506 --> 00:28:02.635
How, what's, what's been historical performance?
00:28:03.385 --> 00:28:04.945
Um, what are the backgrounds of.
00:28:05.395 --> 00:28:07.826
Of the sponsors, do they have any gray hairs, right?
00:28:07.826 --> 00:28:13.556
Or are they just kind of young, young bucks kind of getting started in, you know, trying out a new, a new strategy, right?
00:28:13.556 --> 00:28:17.846
So there, there's a lot of things you can just basic smell test, right?
00:28:17.846 --> 00:28:17.846
Yeah.
00:28:18.026 --> 00:28:27.056
Of you can, but, but think thinking about it in that way, breaking it down the different components and then, you know, if, uh, something jumps out, dig into that a little bit more, right?
00:28:27.056 --> 00:28:29.516
And, and if something doesn't make sense, you don't feel comfortable with it.
00:28:30.340 --> 00:28:31.691
Don't move on right there.
00:28:31.691 --> 00:28:39.760
There's a lot of deals out, there's a lot of things to, to look at, but that's the most simple way I've, I've kind of been able to describe, just to start and, and try to break it down.
00:28:39.760 --> 00:28:43.540
Like that's good and specific due diligence I can get into, but that, those are the good places to start.
00:28:43.546 --> 00:28:44.211
Yeah, that's good.
00:28:44.560 --> 00:28:44.861
Yeah.
00:28:45.010 --> 00:28:50.171
I don't think you want, you know, uncle Vinny who decided, man, there's some money in this apartment complex down here.
00:28:50.171 --> 00:28:50.500
Let's go.
00:28:50.671 --> 00:28:53.681
Uh, Hit up all the relatives and let's go in and do it.
00:28:53.681 --> 00:28:57.010
I, I don't know anything about it, but man, uncle Benny's smart.
00:28:57.010 --> 00:28:58.060
He can figure it out.
00:28:58.721 --> 00:29:01.030
That maybe is not where I wanna put my money.
00:29:01.030 --> 00:29:01.361
Right.
00:29:01.901 --> 00:29:02.260
Right.
00:29:02.711 --> 00:29:11.621
And the other thing too that was important to me back in the day is, and even now when I look at different things, um, I like to look at how is the sponsor compensated?
00:29:12.080 --> 00:29:12.300
Yes.
00:29:12.401 --> 00:29:13.840
What is their motivation?
00:29:13.931 --> 00:29:14.290
Right?
00:29:14.290 --> 00:29:14.530
Yes.
00:29:14.530 --> 00:29:20.260
Is their motivation just to make sure you stay on the hook, that where they can get management fees forever or.
00:29:20.846 --> 00:29:24.566
Do they, are they rewarded for, for, for great performance?
00:29:24.715 --> 00:29:31.165
And, you know, as long as I get my part as an investor, I don't, I don't really care.
00:29:31.195 --> 00:29:34.826
I, you know, what the sponsor gets, what I care about is me.
00:29:35.395 --> 00:29:42.625
So to, to focus too much on the fee aspect without looking at the track record of what have they been able to do in the past.
00:29:43.556 --> 00:29:45.205
I don't think that makes a lot of sense.
00:29:45.205 --> 00:30:00.115
And you, I know a lot of people get stuck on fees of any kind, and I do to it in certain instances, but what you really have to focus on, on anything is is it gonna give me what I need and what I want at a reasonable value to me.
00:30:00.516 --> 00:30:15.526
So, um, and I'm, I'm kind of jumping into a couple different areas here, but my primary, kind of the primary point is, You know, if I were looking at an Aspen Funds deal, I'm gonna, I, I want to figure out are they really truly a partner in this with me?
00:30:16.435 --> 00:30:22.016
Um, or are they just somebody to that's gonna hit my account and get their fees every single year?
00:30:22.016 --> 00:30:22.346
Right.
00:30:23.006 --> 00:30:31.256
And from what I've gathered from the stuff that I've looked at, you guys really have a really unique approach or a very equitable approach to that, in my opinion.
00:30:31.556 --> 00:30:39.715
So that kind of wants me to launch into kind of, so we can keep track of, keep some track of our time and what we're doing here.
00:30:40.165 --> 00:30:52.280
Um, Gimme the, gimme the pitch of, you know, why Aspen Funds, what makes, what makes Aspen Funds unique from the 20 other people that as soon as I click on an ad, I get to see their stuff too.
00:30:53.510 --> 00:30:54.530
Yeah, absolutely.
00:30:54.530 --> 00:30:56.871
I mean, you kind of hit a lot, lot of it.
00:30:56.871 --> 00:30:58.911
It's, I think, alignment of interest, right?
00:30:59.090 --> 00:31:07.851
So part of our kind of pitch, if you will, is we as owners invest in every single deal that we bring to our investors.
00:31:08.090 --> 00:31:10.490
Um, and we sometimes invest to nice.
00:31:11.111 --> 00:31:20.050
Nice chunk of the overall equity we're raising, um, on the same terms, on the same fee structure, everything as as our investors, right?
00:31:20.050 --> 00:31:22.211
Because how better do we align interest than.
00:31:22.961 --> 00:31:24.431
We're putting our own money in there.
00:31:24.580 --> 00:31:26.830
Um, and cuz we believe in the deal, right?
00:31:26.830 --> 00:31:33.520
And so our, our whole goal is we're not gonna bring anything to our investors that we would not, you know, excitedly put our own money in.
00:31:33.611 --> 00:31:36.701
And I think that's like the ultimate lit litmus test, right?
00:31:37.211 --> 00:31:38.060
So, yeah, that's right.
00:31:38.181 --> 00:31:41.260
I, I think, I think that that in of itself is, is a pretty big differentiator.
00:31:41.681 --> 00:31:43.931
Um, I think we got a tenure track record.
00:31:44.020 --> 00:31:46.361
Uh, we've been investing for a long time.
00:31:46.391 --> 00:31:47.830
We're a very, very diverse.
00:31:48.090 --> 00:31:51.090
Backgrounds of our principles who have four, four principles.
00:31:51.240 --> 00:31:57.270
Um, been investing, you know, combined over a hundred years and investing in lots of different asset classes.
00:31:57.276 --> 00:32:04.111
And we've seen the ups and the downs and, um, you know, we're, we're, uh, we're trying to do right.
00:32:04.141 --> 00:32:12.361
And we have a lot of investors that work with us and, and most of our investors invest more with us over time, so it's usually a pretty good indicator that they like what they're, what they're seeing.
00:32:12.361 --> 00:32:12.681
So, yeah.
00:32:13.080 --> 00:32:16.621
Yeah, I think it's a lot of things, you know, and I'd kind of even make another comment too.
00:32:17.455 --> 00:32:26.635
You're going back to, to the fees and, you know, just the, the more you kind of get into the space and understand, you know, what, what's the market rate for this fee?
00:32:26.635 --> 00:32:29.455
What's, you know, what's normal, right.
00:32:29.461 --> 00:32:30.086
Versus what's.
00:32:30.671 --> 00:32:39.191
You know, out outside of kind of normal range, and you can get a pretty good sense of a, a sponsor from, like, there's these things called ppms, private placement memorandums.
00:32:39.191 --> 00:32:43.000
Very simple or very similar to a prospectus for a stock right as you go.
00:32:43.000 --> 00:32:47.530
First thing I do, I go straight to the fee section and the, and the waterfall section.
00:32:47.530 --> 00:32:52.480
Because, because the, these two things show you exactly who gets paid and what priority.
00:32:53.096 --> 00:32:56.786
And what are the, what are the splits between investors and the sponsors?
00:32:56.786 --> 00:33:00.266
And then what are the fees that they're taking and when do they take them and how are they taking them?
00:33:00.715 --> 00:33:00.955
Right?
00:33:00.955 --> 00:33:08.816
Because tho those things, right, they're gonna be the most indicative of anything else in the deal, aside from you gotta believe, believe in the deal, believe in the strategy, believe in all that.
00:33:08.816 --> 00:33:10.286
But it'll tell you a lot.
00:33:10.405 --> 00:33:11.246
It'll tell you a lot.
00:33:11.306 --> 00:33:15.415
And, uh, um, to, to your point, it's, it's important to, to know that.
00:33:16.105 --> 00:33:19.135
Um, so yeah, I, I think one other point I I'd make too.
00:33:19.135 --> 00:33:26.306
I think as you kind of get into this, and obviously we're not financial advisors, I'm not giving any advice, uh, so I gotta throw that caveat out there.
00:33:26.306 --> 00:33:33.796
But, you know, I, I, what I, what I've seen a lot of people do is I kind of call it the, uh, you know, sock drawer of investments, right?
00:33:33.796 --> 00:33:36.625
They kind of, they hear about Uncle Benny's deal and they throw.
00:33:37.105 --> 00:33:38.395
You know, some money into that one.
00:33:38.395 --> 00:33:44.215
They see another deal on a Facebook ad and they're like, I'll throw some into that one, and then they're just getting referrals left and right.
00:33:44.215 --> 00:33:45.026
I'm just gonna throw these deals.
00:33:45.625 --> 00:33:51.445
Eventually they have this kind of hodgepodge of investments that they didn't really, they kind of looked at a little bit, but.
00:33:52.256 --> 00:33:57.296
Ultimately, they're now getting, you know, these, these tax forms and they don't even know what they're doing.
00:33:57.296 --> 00:33:58.165
How are they doing?
00:33:58.171 --> 00:33:59.635
What's the strategy behind it?
00:33:59.726 --> 00:33:59.965
Right?
00:33:59.965 --> 00:34:01.675
And it's just this kind of random assortment of deals.
00:34:01.675 --> 00:34:07.165
But what's so important, as with anything, is you gotta understand what are your goals first as an investor.
00:34:07.165 --> 00:34:07.286
Right?
00:34:07.290 --> 00:34:12.266
Are you looking for like passive income, like a current income stream, right?
00:34:12.686 --> 00:34:23.951
Um, are you looking to, you know, multiply the net worth and then within your portfolio, what kind of, you know, uh, Portfolio allocations do you want to have to these different buckets, right?
00:34:23.951 --> 00:34:35.471
So you gotta, you gotta think through that first and you gotta go and invest with a strategy, um, in the investments you do because a lot of times, you know, someone can do this kind of sock sock drawer investing approach and.
00:34:36.295 --> 00:34:43.585
Uh, they'll look back and, oh, I just did like 10 multifamily deals and they're all in Texas and they're all, you know, class B value ads.
00:34:43.916 --> 00:34:45.175
I thought I was getting diversification.
00:34:45.175 --> 00:34:48.146
You're probably not that diversified as well as you think, right?
00:34:48.146 --> 00:34:52.976
Because you don't have, you know, some other asset classes, some other sponsors, some other markets.
00:34:52.976 --> 00:34:58.255
So you can really, uh, be pretty selective, um, as you kind of build this over time.
00:34:58.255 --> 00:35:00.416
But again, you want to have a good strategy.
00:35:00.416 --> 00:35:01.166
So for example, we have.
00:35:01.690 --> 00:35:04.210
You know, uh, a debt fund, it pays a current income stream.
00:35:04.215 --> 00:35:06.371
We pay 9% every month.
00:35:06.431 --> 00:35:07.630
Uh, it's excess annualized.
00:35:07.990 --> 00:35:10.271
Um, and been doing that for 10 years.
00:35:10.271 --> 00:35:13.661
And it's just bread and butter, vanilla income, right?
00:35:13.661 --> 00:35:18.610
But some people need income, especially if they're retired and they, they want to live off, live off the, the net worth.
00:35:19.090 --> 00:35:22.826
Um, and then other people, They don't need income and they wanna kind of maximize growth.
00:35:22.826 --> 00:35:23.876
We have development projects.
00:35:23.876 --> 00:35:28.585
You can kind of come into a development project and get some pretty big IRRs if everything goes well, right?
00:35:28.585 --> 00:35:37.965
So there, there's just, you gotta understand what you're doing, what kind of risk you're taking, what are your ultimate goals, and, uh, use that as you're kind of going through this whole learning process.
00:35:41.065 --> 00:36:01.505
So I think one of the things that needs to be said before we shut down it here is we need to point out that, you know, one of the things that people really like about the stock market investing is that if they wanna pull their money and they, they wanna go buy something, uh, they make a phone call or they get online and they crank it out and you know, it shows up by wire.
00:36:02.291 --> 00:36:02.800
And their deal.
00:36:02.800 --> 00:36:13.570
That's because they're dealing with a marketable security that has a well-defined active market that's, in my opinion, controlled by, you know, a lot of different rules and a lot of different players.
00:36:14.201 --> 00:36:32.920
But man, when we go out and we buy, um, several class B apartment complexes and we throw'em into a bucket and a sponsor offers them to us, It's difficult to go get$50,000 out of a 25 million deal instantly.
00:36:32.920 --> 00:36:33.311
Right?
00:36:33.340 --> 00:36:43.001
So there's this, there's a liquidity issue that is, that exists inside of some of these that also needs to be part of your decision of how much you put in.
00:36:43.001 --> 00:36:48.221
And you need to look at where you're, when you need money, how often you need money, that kind of thing.
00:36:48.820 --> 00:36:52.481
So you're the, the deals that you put together are.
00:36:52.871 --> 00:37:13.030
Talk just generally about, you know, if, if I were, let's say I had a hundred thousand dollars of my million that I wanted to do a baby step, um, if it wasn't in the debt fund type of thing, am I, am I locking money up for 15 years, like if I were in an annuity or am I looking at a, a lot shorter timeframe than that?
00:37:13.030 --> 00:37:13.420
Ben?
00:37:14.320 --> 00:37:15.940
Yeah, so, so every deal is different.
00:37:15.940 --> 00:37:19.150
Again, you gotta understand what's your goals is, is it liquidity?
00:37:19.240 --> 00:37:22.960
Um, then that's gonna change the types of deals you invest in.
00:37:22.960 --> 00:37:28.990
So our, our debt fund, for example, we have a one year lockup period, and then, you know, full liquidity thereafter.
00:37:29.081 --> 00:37:34.780
Uh, it's not instantaneous, but it's, uh, within 90 days generally is, is what we target and we've always been able to hit that.
00:37:35.260 --> 00:37:36.760
Um, so you have some liquidity.
00:37:37.061 --> 00:37:37.240
Right.
00:37:37.271 --> 00:37:43.780
Um, uh, and, and that, that type of an investment, it's an evergreen funds, was kind of always going and put money in, take money out as you need.
00:37:44.260 --> 00:37:52.300
Um, and are there other deals, like we have oil and gas, uh, investments that we've done, and those are 10 year deals, and you're not getting any money out of it, right?
00:37:52.300 --> 00:37:58.360
Other than the cashflow coming from it because, you know, these are hard assets and we're reinvesting back into more drilling, et cetera, et cetera.
00:37:58.360 --> 00:38:05.670
So it's every strategy's different and again, That's probably the biggest knock that alternatives get, right?
00:38:05.791 --> 00:38:06.661
Well, they're not liquid.
00:38:07.141 --> 00:38:10.621
Um, and there's definitely some merit to that, right?
00:38:10.891 --> 00:38:12.061
Liquidity is important.
00:38:12.210 --> 00:38:15.811
Liquidity is, is you have to manage liquidity as a, as an investor.
00:38:16.380 --> 00:38:19.780
But what's interesting that we actually did this, uh, episode on our podcast, one of the first ones.
00:38:20.786 --> 00:38:24.445
Where we looked into some studies that was done by a, by, by a Bain company.
00:38:24.445 --> 00:38:29.996
It's a big consulting firm on, um, investment strategy and, uh, liquidity.
00:38:30.146 --> 00:38:30.445
Right.
00:38:30.451 --> 00:38:38.800
And what they, what they found was, Most investors, even through downturns, overestimate their need for liquidity, right?
00:38:38.800 --> 00:38:42.940
So meaning that they think they need more liquidity than they actually need.
00:38:43.601 --> 00:38:49.690
Um, and if that's a preventive, preventative thing from keeping you investing these things, then you gotta, you gotta think about that, right?
00:38:49.690 --> 00:38:51.391
Because cuz here's a really concrete example.
00:38:51.940 --> 00:38:53.831
So you talk about investing in Class B apartments.
00:38:54.851 --> 00:38:57.311
Well, you can go, well, I'm just gonna go invest in some REITs.
00:38:57.641 --> 00:39:00.880
Uh, cause I'm gonna have, I can have liquidity, but I'm still investing in apartments.
00:39:01.210 --> 00:39:02.530
Well check this out.
00:39:02.561 --> 00:39:06.431
So there's a metric called price to book ratio, right?
00:39:06.431 --> 00:39:07.780
You've probably heard of price to earnings.
00:39:07.780 --> 00:39:10.300
It's basically the price you're paying for a dollar of, of earnings.
00:39:11.246 --> 00:39:15.865
Um, annually, well, price to book is a similar ratio, but it's, it's great for real estate.
00:39:15.865 --> 00:39:18.746
So it's what, what's the price you're paying relative to the book?
00:39:18.746 --> 00:39:21.536
Value of the assets, right?
00:39:21.596 --> 00:39:21.686
Mm-hmm.
00:39:21.865 --> 00:39:25.615
So if you invest into a syndication or a fund, that's a direct private investment.
00:39:26.186 --> 00:39:31.346
Your price to book is generally gonna be pretty close to one, maybe a little bit less than long as you have some little bit about upfront fees.
00:39:31.346 --> 00:39:36.746
But say it's, you know, pretty close to, to one, um, that's really good, right?
00:39:36.746 --> 00:39:38.846
Most of your dollar is investing in the asset.
00:39:39.190 --> 00:39:45.280
Well, the average price to book of reit, and this has changed over time, but you know, pretty, pretty consistently.
00:39:45.280 --> 00:39:47.440
It's about five x.
00:39:47.891 --> 00:39:55.240
So that means that you're, if you put$5 into a reit, only$1 of that is actually going into the asset.
00:39:55.240 --> 00:39:55.601
The rest is.
00:39:56.351 --> 00:39:59.831
Goodwill and premium, and you could call that liquidity premium, right?
00:39:59.831 --> 00:40:06.101
So that's, that's the, the premium you're paying, uh, to get liquidity to that asset cost.
00:40:06.521 --> 00:40:11.771
I would argue that liquidity is probably not, that it's not worth that much, right?
00:40:11.771 --> 00:40:16.751
It's not worth, uh, only getting 20%, uh, you know, value, uh, in, into assets.
00:40:16.751 --> 00:40:19.271
So it's something that I think about liquidity's important.
00:40:19.481 --> 00:40:24.061
You know, I'm not saying put all your eggs into the private market, you know that that's definitely.
00:40:24.806 --> 00:40:29.036
If you do that, you gotta be really, you gotta know what you're doing and manage liquidity and manage lines of credit and other things.
00:40:29.666 --> 00:40:40.945
Um, but you don't want that to be a, uh, deterrent from investing in private alternatives because one, you're paying a lot more for liquidity than you probably should be.
00:40:40.945 --> 00:40:43.465
And two, you probably don't need as much liquidity as you think you do.
00:40:44.485 --> 00:40:44.815
Yeah.
00:40:45.235 --> 00:40:50.695
Well, you know, a lot of the people that we deal with, I've kind of coined the term IRA millionaire and they're.
00:40:52.076 --> 00:41:03.956
Other than the obvious, most of the people that we work for are folks that, generally speaking, are probably never gonna touch very much of their IRA over their lifetime.
00:41:04.735 --> 00:41:08.277
And so they're, but they're so used to being able to go get it.
00:41:09.715 --> 00:41:16.585
That they maybe would say, oh, I'm not gonna lock money up for three or four or five or 10 years because if I need it, I, I want it.
00:41:16.585 --> 00:41:36.175
And then like, to your point, in reality, you're probably, you're probably gonna die with more money than you have today, and there's some per percentage of that portfolio that the world would really have to change for you, for you to need that portion of that portfolio, whether it's 10%, 20%, 50%, 60%, whatever.
00:41:37.346 --> 00:41:46.766
So of course that's, that's our bailiwick, is putting together that comprehensive financial plan so that you can make better investment choices of what you're doing.
00:41:47.275 --> 00:41:50.726
We don't invest people's money, Ben, we don't manage it.
00:41:50.726 --> 00:41:53.425
We don't send them to investment advisors.
00:41:53.425 --> 00:41:56.425
We don't do any of that, but we help with the construct of.
00:41:57.126 --> 00:42:04.315
A structure of what that should look like and help them to understand the parameters that are necessary and that, that they need to make things work.
00:42:05.155 --> 00:42:08.635
Um, and I, you know, we, we love that part of it.
00:42:08.635 --> 00:42:16.916
And, and the, the tax planning portion of what we do is our intent to help them really make sure that they're able to maximize.
00:42:17.260 --> 00:42:28.210
At last half of life where they're not just feeling the pressure of Uncle Sam every April and all these huge required minimum distributions that come out.
00:42:28.931 --> 00:42:33.161
But, um, I, I, man, I really dig what you guys are doing.
00:42:33.221 --> 00:42:37.811
Tell me, um, what, how do, how can people connect with you?
00:42:37.815 --> 00:42:38.871
Gimme two or three ways.
00:42:40.045 --> 00:42:50.096
That people can connect, or if it's simpler than two or three, just how do they, how do they find out more about Aspen funds and try to be able to connect to ask some really specific questions for them.
00:42:51.340 --> 00:42:51.670
Yeah.
00:42:51.670 --> 00:42:51.940
Yeah.
00:42:51.940 --> 00:42:58.601
So probably the simplest way is, uh, you know, if you just wanna get more general education, our podcast Invest like a billionaire.
00:42:58.661 --> 00:43:01.030
Um, it's the billionaire podcast.com.
00:43:01.481 --> 00:43:04.061
Uh, we had you on the show, so you kinda listen to that episode.
00:43:04.065 --> 00:43:05.800
It was, it was a great, great episode.
00:43:05.800 --> 00:43:09.320
But our whole, our whole point of that show is just education around alternative investing, right?
00:43:09.610 --> 00:43:13.840
It's just, just breaking down and demystifying a lot of the things that go on there.
00:43:13.931 --> 00:43:23.596
Um, and then, yeah, if you really wanna learn more about the investment strategies themselves, uh, Aspen Funds, uh, US is the, the best place to go find out about it.
00:43:23.596 --> 00:43:32.476
And you can download, you know, a myriad of our eBooks and, um, other free content we put out there and schedule a call with our team.
00:43:32.715 --> 00:43:34.096
Um, if that makes sense.
00:43:34.096 --> 00:43:34.726
So, yeah.
00:43:35.266 --> 00:43:35.536
Cool.
00:43:35.865 --> 00:43:37.335
So they don't have to go.
00:43:38.155 --> 00:43:42.596
To their, to an investment advisor to, to work with you.
00:43:42.626 --> 00:43:47.726
They don't, um, they don't have to go through Fidelity or Schwab to connect with you.
00:43:47.726 --> 00:43:55.255
They can have a conversation and um, you can help them with a lot of the mechanics of how do we actually get that in my IRA or my Roth or whatever.
00:43:55.286 --> 00:43:56.606
Your team can do that for them.
00:43:56.606 --> 00:43:56.606
Right.
00:43:56.612 --> 00:43:56.965
Exactly.
00:43:57.536 --> 00:43:57.686
Yep.
00:43:57.896 --> 00:43:58.255
Absolutely.
00:43:59.096 --> 00:44:06.956
So is there anything else that I, that maybe we, that I, I didn't ask as a good, um, host that I should have asked?
00:44:07.525 --> 00:44:11.365
To get the point across that this is really a pretty cool space people need to check out.
00:44:12.146 --> 00:44:13.556
No, I, I think we hit it all.
00:44:13.556 --> 00:44:17.365
I think we hit that and more so I, I feel like we hit good, the, the big stuff.
00:44:17.365 --> 00:44:24.025
And I think, you know, the, the big thing I would just say is, like I said earlier, Really take an ownership mindset over your money.
00:44:24.025 --> 00:44:27.085
You work, you work so hard to accumulate this money.
00:44:27.655 --> 00:44:33.896
You know, don't just turn a blind eye or just blindly trust someone else to, to have your best interest at heart, right?
00:44:33.900 --> 00:44:35.425
Because no one's gonna care about it.
00:44:35.695 --> 00:44:36.956
You're on Nest Day more than you.
00:44:37.045 --> 00:44:40.686
And, um, it's not even just the investing side, but e everything about it, right?
00:44:41.036 --> 00:44:42.925
You gotta take ownership of it.
00:44:43.280 --> 00:44:50.150
You know, dive in, figure, figure things out, start to learn and you'd, you'd be shocked at this stuff is not that complicated.
00:44:50.150 --> 00:44:53.240
The whole system is set up to make you feel like you, you can't figure it out.
00:44:53.240 --> 00:44:54.201
You don't know what you're doing.
00:44:54.201 --> 00:44:54.920
You need help.
00:44:55.311 --> 00:44:56.661
It's really not that complicated.
00:44:56.721 --> 00:44:57.021
Right.
00:44:57.021 --> 00:45:04.221
It's some common sense, a little bit of curiosity, asking good questions and just, you know, experience just.
00:45:04.400 --> 00:45:10.760
Starting to read, read these things, you know, get on these email, uh, start talking with, with these different firms and just start doing it.
00:45:10.820 --> 00:45:11.121
Right.
00:45:11.121 --> 00:45:20.090
It's, uh, you just rip the bandaid off and start, start, start diving in cuz it's, you're really, um, there, there's some, some really good goal on the other end of the, of the, the side here.
00:45:20.210 --> 00:45:20.391
Yeah.
00:45:20.721 --> 00:45:20.960
Cool.
00:45:21.130 --> 00:45:29.780
Well I've listened to several of your, uh, podcast episodes up till leading up to me being on there just so I can get a feel of the vibe and what you guys really.
00:45:30.311 --> 00:45:33.911
Do and I highly recommend that you guys get out there and listen to one or two of'em.
00:45:33.911 --> 00:45:43.331
Subscribe to their podcast and if you haven't, click the button, subscribe to this one so that you can be right on the cutting edge of the stuff that we bring to you as well.
00:45:44.081 --> 00:45:45.851
So Ben, thanks a lot bud.
00:45:46.001 --> 00:45:53.231
I appreciate you being here and um, man, looking forward to maybe another time we can hang out and share some good information with folks.
00:45:54.041 --> 00:45:54.550
Sounds good.
00:45:54.550 --> 00:45:55.240
Thanks so much, Craig.
00:45:55.960 --> 00:45:56.351
You bet.
00:00:44.665 --> 00:00:45.536
Hey, welcome back.
00:00:45.540 --> 00:00:47.036
This is Craig Weir.
00:00:47.036 --> 00:00:56.856
As the, uh, intro said, um, hey look, if you are, uh, trying to figure out what's next in retirement, this is the show that it's designed to just kind of focus on you.
00:00:56.856 --> 00:01:02.725
What are the big questions in life, you know, that relate to money and finances, and what do you wanna be when you grow up?
00:01:02.725 --> 00:01:03.746
All those kinds of things.
00:01:03.746 --> 00:01:04.195
We just.
00:01:04.396 --> 00:01:05.775
Try to hit on all those things.
00:01:05.775 --> 00:01:18.225
You know, typically we talk about tax planning and general financial planning and stuff like that, but today we got special guests for you and a special subject, something that we haven't covered before, but I think you're gonna really dig it.
00:01:18.766 --> 00:01:22.637
So what if you're tired of the ups and the downs of the stock market?
00:01:22.641 --> 00:01:29.415
What if you're tired of having the euphoric increase and then all of a sudden the rug gets pulled out from underneath you and your statement?
00:01:29.445 --> 00:01:32.355
What that was a 401k, is the proverbial two ohk.
00:01:33.631 --> 00:01:33.900
Hi.
00:01:33.900 --> 00:01:44.760
And on the other hand, you know, I can't tell you how many conversations we've had with people that were like, well, you know, my balances were a half a million, or a million or 2 million higher, but you know what happened to all that.
00:01:45.210 --> 00:01:53.790
So there is a way that you don't have to suffer that if you're tired of the ups and downs, and you don't want to go to the extremes of higher hiding it under a mattress.
00:01:54.646 --> 00:01:56.986
Or sticking it all into an annuity someplace.
00:01:57.915 --> 00:01:59.656
Uh, we have some hope today.
00:01:59.686 --> 00:02:02.475
We are coming through our white shining night.
00:02:02.475 --> 00:02:04.486
Today is Ben Frazier.
00:02:04.490 --> 00:02:07.426
Ben is, uh, managing director of Aspen Funds.
00:02:07.430 --> 00:02:13.876
He's also their chief investment officer and he's, uh, gladly decided to come on and share some great ideas with us.
00:02:13.876 --> 00:02:16.336
So Ben, welcome to the show.
00:02:17.211 --> 00:02:19.520
Well, Craig, thanks for having me on.
00:02:19.520 --> 00:02:21.230
It's fun to connect again.
00:02:21.230 --> 00:02:33.950
We had you on our podcast not too long ago and it was a really fun time, so it's fun to to come on yours and, uh, you definitely set me up well, so didn't plan on being a night shine armor, but I appreciate, appreciate that man.
00:02:33.950 --> 00:02:42.920
Well, man, I tell you what man, for guys that are just tired of watching the Apple and Tesla and all the others, just kind of, yo-yo, I hope they really take this.
00:02:43.510 --> 00:02:44.020
To heart.
00:02:44.230 --> 00:02:58.600
Uh, I have done this in my own life, uh, in different ways and I hope that people will kind of just pay attention and maybe we can cast away some of the paradigms about the space we're gonna be talking about and talk about it just in real world terms.
00:02:58.931 --> 00:03:01.330
Before we get into that, tell us just a little bit about Ben.
00:03:01.336 --> 00:03:09.100
Kinda like, you know, who are you and what's going on in your life, what do you do when you're not, um, you know, putting on the official Unsmart business hat.
00:03:10.135 --> 00:03:10.526
Yeah.
00:03:10.526 --> 00:03:20.545
Well, uh, again, thanks for having me on and yeah, my, uh, my life is outside of work is, uh, mostly made up of keeping four little girls happy.
00:03:20.545 --> 00:03:24.265
So I got, I got four girls, uh, nine under.
00:03:25.225 --> 00:03:27.626
And, uh, you have a, a girl dog.
00:03:27.626 --> 00:03:29.635
So I'm, uh, very outnumbered.
00:03:29.906 --> 00:03:31.645
Um, but I love it.
00:03:31.645 --> 00:03:32.725
It's, it's kind of fun.
00:03:32.725 --> 00:03:33.985
You gotta just embrace it, right?
00:03:33.985 --> 00:03:35.006
So that's cool.
00:03:35.010 --> 00:03:35.876
We have a blast.
00:03:35.881 --> 00:03:37.075
Very, very busy life.
00:03:37.195 --> 00:03:39.175
But, uh, it's, it's all good.
00:03:39.175 --> 00:03:45.026
So, hobbies, I don't have many of them, uh, because of that, but, you know, started getting into pickleball recently.
00:03:45.026 --> 00:03:47.725
I've, I grew up playing tennis, um, cool.
00:03:48.026 --> 00:03:51.295
And, uh, just, just won a, uh, tournament the other week.
00:03:51.445 --> 00:03:52.945
Kind of fun with the buddy.
00:03:53.515 --> 00:03:57.265
You just won a tournament, you're getting into pickle and you and you.
00:03:57.265 --> 00:04:00.056
It's not a, it wasn't a very competitive tournament.
00:04:00.056 --> 00:04:02.786
We'll say that, but it was a, it was a fu fun time.
00:04:05.246 --> 00:04:10.286
Well, it sounds like there were two people that were real competitive and everybody else was wondering what happened here, right.
00:04:10.846 --> 00:04:11.656
Exactly.
00:04:11.656 --> 00:04:13.846
Yeah, that, that we had to, we had to tone it down a little bit.
00:04:13.846 --> 00:04:16.065
We started getting a little too, uh, a little too aggressive there.
00:04:16.675 --> 00:04:25.336
So are you guys like the, uh, you know, the, the college tennis players that go into the novice pickleball court and just clean house?
00:04:25.336 --> 00:04:26.055
Is that what's going on?
00:04:26.055 --> 00:04:26.656
Exactly, yeah.
00:04:26.656 --> 00:04:32.146
We just, we look for, you know, the tournaments that we just dominate and feel really good about ourselves afterwards.
00:04:32.146 --> 00:04:40.331
You know, it was, it was kind of funny cuz we started getting, we're playing in the final and, uh, This is our first time playing Pickle, me and my partner.
00:04:40.391 --> 00:04:42.581
And, uh, I'm gonna throw him under the bus here.
00:04:42.586 --> 00:04:44.831
He's actually sitting right over there so he can hear me.
00:04:44.831 --> 00:04:50.740
But, um, he, he started getting real into it and, and just slammed the ball right into this old lady.
00:04:50.740 --> 00:04:56.771
And she shrieked and, you know, he, he got a little, little too into it, but we, we went up winning the game.
00:04:56.771 --> 00:04:57.711
So that's all that matters, right?
00:04:57.850 --> 00:04:59.261
And, uh, It was.
00:04:59.261 --> 00:05:01.360
It was a good, no, it was all, it's fun.
00:05:01.990 --> 00:05:03.100
That's all matters, right?
00:05:03.911 --> 00:05:06.100
I'm gonna pick a bunch of senior citizens today.
00:05:06.100 --> 00:05:06.730
It'll be fun.
00:05:07.310 --> 00:05:08.261
It pretty bad.
00:05:08.261 --> 00:05:21.031
We like, oh, we should probably tone it down a little bit, is you, As you know, and I think many of our, listen, many of the people that listen to the podcast know, my wife and I have kind of a different gig going on in it.
00:05:21.031 --> 00:05:23.521
We live full-time in a bus.
00:05:23.526 --> 00:05:24.810
You know, we travel a lot.
00:05:25.261 --> 00:05:28.560
Summers we spend up in the mountains in Colorado and kind of do our thing.
00:05:28.560 --> 00:05:34.500
But a really big thing in a lot of the RV resorts that we stay at throughout the year is this pickle, pickleball, pickleball thing.
00:05:35.040 --> 00:05:39.151
And I will have to tell you that I'm, I'm fairly athletic, but I've never.
00:05:39.466 --> 00:05:40.216
Played pickleball.
00:05:40.216 --> 00:05:45.735
I always kind of turned my nose up at it, is like, I'm not old enough to play pickleball yet.
00:05:46.065 --> 00:05:46.365
Right.
00:05:46.456 --> 00:05:51.946
But I think I am, I think I'm right there in this Democratic, yeah.
00:05:52.065 --> 00:05:53.505
So it, it's fun.
00:05:53.505 --> 00:05:55.365
I mean it's, uh, I've grown up playing tennis.
00:05:55.365 --> 00:05:59.565
It's, uh, it's fun because it normalizes a lot of the skill level, right.
00:05:59.565 --> 00:06:01.696
To be able to play and just to have, have a fun time.
00:06:01.696 --> 00:06:01.906
It's.
00:06:02.456 --> 00:06:03.326
Not that hard.
00:06:03.326 --> 00:06:11.786
Like the, the higher level, you know, players, it's, they, they're, they're good, but you can, you can keep a game going and have a fun time doing without much, much experience in this.
00:06:11.786 --> 00:06:12.745
So that's, it's been fun.
00:06:13.346 --> 00:06:14.185
And it's pretty funny.
00:06:14.185 --> 00:06:18.745
I mean, it's, it's crazy to see how much of a wave is just taking over with, uh, the pickleball.
00:06:18.865 --> 00:06:20.365
I saw article, oh, it's crazy.
00:06:20.636 --> 00:06:30.805
I was a Wall Street Journal or something where they're converting, uh, this is a local, here in Kansas City, they're converting all these empty Sears buildings that have just been defunct now into indoor pickleball.
00:06:31.961 --> 00:06:32.920
That's great idea.
00:06:32.920 --> 00:06:35.711
You know, don't min money too min don't, don't MIT money.
00:06:35.711 --> 00:06:39.911
And it's just this big empty warehouse, you know, that's, no one's using it, but it's in a great location.
00:06:39.915 --> 00:06:42.071
And so it's ma makes sense.
00:06:42.071 --> 00:06:44.771
But it's, it's just funny to see how, uh, much is Colin.
00:06:44.771 --> 00:06:45.071
That's cool.
00:06:45.971 --> 00:06:46.420
That's cool.
00:06:46.511 --> 00:06:47.350
That's good stuff.
00:06:47.355 --> 00:06:50.980
Well, I'll have to discover my inner pickleball.
00:06:51.250 --> 00:06:55.451
One of these days I was, I was always a baseball, basketball guy.
00:06:55.451 --> 00:07:00.665
But, um, I did some racquetball and stuff like that, but hey, pickleball is all the rage.
00:07:00.665 --> 00:07:01.836
So I guess we'll have to get with it.
00:07:01.985 --> 00:07:02.466
There we go.
00:07:02.466 --> 00:07:06.425
So, um, so let's kind of dive in.
00:07:06.576 --> 00:07:22.115
Uh, if you don't mind, man, you know, I, I set up the alternative investment space, but before we kind of dig into some of those details, just kind of, you know, I'm kind of curious, um, how has, how has the company, I mean, how has Aspen Funds even launched?
00:07:22.146 --> 00:07:24.636
Tell me a little bit about why or how, how it came to be.
00:07:25.690 --> 00:07:27.341
Yeah, so it started 10 years ago.
00:07:27.346 --> 00:07:28.930
I joined about five years ago.
00:07:29.081 --> 00:07:36.430
Um, and so the company was, was formed actually one of the founders is, is my father, um, uh, which is pretty, been pretty fun.
00:07:36.790 --> 00:07:38.750
And his partner, they really saw an opportunity.
00:07:39.641 --> 00:07:45.490
Kind of post the great financial crisis, um, of investing in, uh, distressed mortgages, right?
00:07:45.490 --> 00:07:47.951
So obviously there, there's a lot of those back in the day.
00:07:48.490 --> 00:07:54.310
Um, but one of the unique things is that you can pick these up for very, very deep discounts, uh, relative to what's owed.
00:07:54.701 --> 00:08:07.221
And then you can work with borrowers, help'em stay in their homes, work out new, you know, modifications of of their terms, help them get back on track and, um, Actually do good and, and make, make some good money along the way.
00:08:07.221 --> 00:08:09.471
And so it started that 10 years ago.
00:08:09.471 --> 00:08:13.521
The initial thought was, Hey, this is a good time to get in.
00:08:13.521 --> 00:08:14.571
This is a good opportunity.
00:08:14.661 --> 00:08:25.915
Um, you know, timing is a big deal as we can get into down the road of, of investing And, um, Initial thought was, Hey, let's just do one fun, friends and family, make a little bit of money and move on.
00:08:26.636 --> 00:08:34.196
But really started growing kind of with this space and over the past 10 years have become one of the bigger players in this, uh, niche.
00:08:34.375 --> 00:08:43.255
And, uh, You know, now have, I think 3,500 mortgages in all 50 states, um, that we, you know, service and, uh, help our borrowers.
00:08:43.285 --> 00:08:45.895
And, uh, you know, and that business continues to go on.
00:08:45.895 --> 00:08:49.735
We have legacy funds, um, that, that continue to operate.
00:08:49.826 --> 00:08:52.005
Uh, just great, great track record there.
00:08:53.201 --> 00:08:56.921
And, um, still doing good with our, with our borrower.
00:08:56.921 --> 00:09:06.671
So one of our, our fun things we'd love to do with that is, uh, you know, tout the, the number of foreclosures we have, which is less than 2%, um, of all these workouts, ending foreclosure.
00:09:06.671 --> 00:09:07.360
And so it's been.
00:09:07.860 --> 00:09:13.530
Uh, we got an amazing team and, uh, a pretty cool model to still help people out, uh, while uh, making money.
00:09:13.530 --> 00:09:14.880
So been doing that.
00:09:14.880 --> 00:09:22.081
But that really launched us several years ago into kind of, um, broadening our approach in al the alternative investment space.
00:09:22.086 --> 00:09:32.520
Cuz really the original vision for Aspen was we wanna be kind of the premier provider of alternative investments, um, for the, you know, retail or accredited investors.
00:09:32.520 --> 00:09:35.191
And so, you know, we could talk more about, you know, why.
00:09:35.846 --> 00:09:41.066
Alternatives make sense and why you're probably hearing more about them now than you ever have.
00:09:41.125 --> 00:09:52.166
Uh, it's actually because of some recent regulatory changes about 10 years ago that kind of completely changed the game to allow access, uh, for the average individual to kind of get to participate in these types of things.
00:09:52.171 --> 00:09:55.046
And so it really kind of expanded approach.
00:09:55.046 --> 00:09:56.666
We've now, you know, since invested in.
00:09:57.341 --> 00:10:06.100
Um, you know, over 300 million of real estate, across multi-family, um, industrial storage, retail, uh, oil and gas.
00:10:06.100 --> 00:10:18.701
And so we've, we've really expanded in our, um, our goal is the same, is to help, uh, you know, accredited investors, individuals invest like the ultra wealthy and diversify out of just stocks and bonds.
00:10:18.791 --> 00:10:24.671
Um, cause what we ultimately discovered and when we, you know, we have a podcast like I mentioned earlier, called Invest like a Billionaire.
00:10:25.510 --> 00:10:31.660
And part of our, our thesis, uh, from the research that we, you know, did early on was.
00:10:32.051 --> 00:10:40.211
The ultra wealthy, you know, the billionaires of the world, the family offices, the pensions, endowments, you know, all these, you know, Yale Endowment you probably have heard about, right?
00:10:40.211 --> 00:10:49.350
If they're ultra success in investing, they've been investing very heavily in alternative investments, in private alternative investments for decades.
00:10:49.941 --> 00:10:50.711
Many, many decades.
00:10:50.900 --> 00:10:51.191
Yeah.
00:10:51.250 --> 00:10:58.120
Um, and they've been investing very differently than the average, you know, high net worth individual, which is mostly stocks, bonds, mutual funds, right?
00:10:58.841 --> 00:11:12.280
Not, not to, you know, say those are bad at all, but there's, there's um, you know, uh, some real wisdom in creating a diversification outside of just the public markets, into the private markets, into multiple asset classes within the private markets.
00:11:12.400 --> 00:11:25.240
Cuz many of these investors, the groups I just mentioned, the billionaires, family offices, et cetera, They are generally allocated, even now to this day, upwards of 50% plus of their total portfolios into these types of deals.
00:11:25.270 --> 00:11:33.721
You know, real estate, venture capital, private equity, hedge funds, and so it makes up a very big part of the portfolio or the average investor individual.
00:11:34.811 --> 00:11:44.591
Maybe 5%, you know, uh, in alternatives now, alternatives, quote, quote unquote, because most people think they're, they're invested in real estate when they're invested in REITs.
00:11:44.951 --> 00:11:48.370
And I'll make a very strong argument that REITs are not real estate.
00:11:48.490 --> 00:11:53.150
Uh, it's, um, you know, it has some ownership, real estate ownership in there, but yeah.
00:11:53.150 --> 00:11:55.030
Yeah, it's, it's very, very different.
00:11:55.630 --> 00:11:58.691
So that, that's kind of our thesis and we're seeing a huge trend to that.
00:11:59.471 --> 00:12:20.291
So, you know, our, our listeners are, you know, typically the guys and gals that are about to retire are, are already into retirement and you know, they kind of built a nest egg for many of them, at least the ones that we get to talk to and help is they built that nest egg by just ploting money away, sticking it in that 401k for the last 30 years.
00:12:20.291 --> 00:12:27.520
And they wake up one day and they got a million, 2 million, 3 million, 4 million plus sitting in an ira and they did it all through the stock market.
00:12:27.520 --> 00:12:28.421
Mm-hmm.
00:12:29.321 --> 00:12:35.260
Very seldom do we find people that really embrace this alternative investment space.
00:12:35.260 --> 00:12:42.520
But I'm the guy with just enough lack of hair and gray hair that I remember why they, most people didn't do that.
00:12:42.520 --> 00:12:46.510
It was, it was really the wild, wild West back in the seventies and eighties.
00:12:46.541 --> 00:12:48.100
You know, I remember the.
00:12:48.671 --> 00:12:49.990
They were just tax deals.
00:12:49.990 --> 00:12:58.721
You know, the, the cattle deals, the livestock deals, the oil and gas deals that had absolutely no economic value other than the tax benefits.
00:12:59.350 --> 00:13:04.480
And then of course, the eighties and the nineties hit and a lot of those things washed out.
00:13:04.485 --> 00:13:11.066
I think people just got really afraid of it, but, That's really not what's available now, right?
00:13:11.186 --> 00:13:11.666
I mean, yeah.
00:13:11.725 --> 00:13:15.806
The types of things that you offer and that other people in your space offer.
00:13:16.285 --> 00:13:33.475
It's really, it really, it seems to me like this space has really grown up and it has, I'm sure there's still some bad players, but for the most part, there really are some, some good things that can be, that can happen when you open your mind to doing things a little different than.
00:13:33.730 --> 00:13:35.650
What's comfortable or what's convenient.
00:13:35.650 --> 00:14:02.831
So, um, I've got my own answers, but, um, from your view, I mean, if you were 65, 70 years old and you had a couple million bucks sitting out in an IRA and some other money outside of other places, knowing what, you know, what are just one or two of the main reasons why you would be looking at putting some of the asset classes that you just mentioned into your portfolio?
00:14:03.596 --> 00:14:05.125
Um, why would you do that?
00:14:05.216 --> 00:14:07.225
Why, why would somebody want to wanna do that?
00:14:08.365 --> 00:14:08.725
Yeah.
00:14:08.725 --> 00:14:08.995
Great.
00:14:08.995 --> 00:14:09.775
Great question.
00:14:09.775 --> 00:14:11.035
Great observations.
00:14:11.096 --> 00:14:21.355
Um, and I think what's really changed, um, is not necessarily that these deals are, are all of a sudden now being done these, you know, better quality deals, you know?
00:14:21.355 --> 00:14:21.356
Yeah.
00:14:21.361 --> 00:14:22.885
Better access, better transparency.
00:14:23.706 --> 00:14:26.245
But it was, they were being done more in a vacuum.
00:14:26.275 --> 00:14:26.485
Right?
00:14:26.485 --> 00:14:29.245
They were mostly being done with big institutional investors.
00:14:30.296 --> 00:14:37.885
And in 2012 there was something called the Jobs Act, um, which kind of flew under the radar, but it basically changed the game.
00:14:38.155 --> 00:14:42.475
I, I think this was a revolutionary change from, uh, before this, this, this act.
00:14:43.240 --> 00:14:53.260
You had to have what's called a preexisting and a substantive relationship with an operator, a provider of these investment, uh, vehicles to even have the opportunity to see them.
00:14:53.441 --> 00:14:53.740
Right?
00:14:53.740 --> 00:14:56.561
And so most of these were traded through broker dealers.
00:14:56.650 --> 00:15:05.410
And when you, whenever you kind of go into the traditional financial plumbing system, right, the legacy system broker, et cetera, It's very high fees.
00:15:05.441 --> 00:15:07.750
There's just a lot of crap is being sold.
00:15:07.750 --> 00:15:08.921
Cause it's all commission based.
00:15:08.941 --> 00:15:09.230
Yeah.
00:15:09.370 --> 00:15:13.660
And so it, it kind of attracts, to your point, some of the wild west, some of the cowboy operators.
00:15:14.051 --> 00:15:30.461
But in 2012 the regulations changed to where these sponsors could directly market too, the individuals and be able to share openly about the things that they're doing, uh, without the worry of, um, these kind of a previous regulations.
00:15:30.461 --> 00:15:32.260
So there's still some rules you have to kind of be aware of.
00:15:32.816 --> 00:15:38.725
But that's, you know, if you go on Facebook or you know, wherever you're probably, you know, you have a decent net worth.
00:15:38.725 --> 00:15:42.115
You've probably seen some ads for different multi-family deals or whatever, right?
00:15:42.115 --> 00:15:43.495
So you're seeing a lot more of it.
00:15:43.495 --> 00:15:45.956
And because, uh, because of these change, it's allowed access.
00:15:45.956 --> 00:15:49.956
So obviously that doesn't necessarily mean all the bad actors are gone, right?
00:15:50.186 --> 00:15:53.245
You still gotta, you know, understand how these deals work.
00:15:53.245 --> 00:16:07.721
You gotta learn how to do some due diligence, um, and, and all that, but, The access has changed and, and since then, the amount of, of capital and retail capital has come into the market has been really extraordinary.
00:16:07.721 --> 00:16:13.120
And the projections from this point on are, you know, pretty one, one direction just going up and to the right, right?
00:16:13.120 --> 00:16:16.890
Because it's, it's got a lot of attractive benefits relative to just stocks and bonds.
00:16:17.380 --> 00:16:21.490
Um, and, you know, advisors and there's several surveys that I could.
00:16:21.995 --> 00:16:23.285
Reference, we have a whole podcast.
00:16:23.285 --> 00:16:36.336
Our, I think our first podcast episode, uh, references a lot of these studies, um, where, you know, most advisors are wanting to increase allocations to, uh, alternatives for their clients because one, you generally get better returns.
00:16:36.515 --> 00:16:39.186
Um, and two, you get true diversification.
00:16:39.635 --> 00:16:47.346
What, what has kind of come to happen over the past probably a decade, I would say in the public markets is correlations.
00:16:48.130 --> 00:16:51.370
Are approaching zero right Across all, or not approaching one, sorry.
00:16:51.400 --> 00:16:53.291
Of all asset classes, meaning Explain?
00:16:53.380 --> 00:16:53.980
Explain, yeah.
00:16:53.980 --> 00:17:05.351
Explain what that means to, yeah, so, so the, the traditional idea, you know, modern portfolio theory is if you have, you know, a good blend of stocks and bonds, um, you know, generally those trade in an inverse way.
00:17:05.351 --> 00:17:10.300
So if stocks are up, bonds are down, if, you know, bonds are up, stocks are down, and so you kind of create some balance.
00:17:10.300 --> 00:17:13.780
You create some mitigation, so you reduce kind of your variance of return.
00:17:14.361 --> 00:17:18.921
And if you have a little bit more stocks relative to bonds, you're gonna get a little bit more upside in growth.
00:17:18.921 --> 00:17:21.621
So you can kind of keep that, that average growing.
00:17:21.621 --> 00:17:21.861
Right.
00:17:22.250 --> 00:17:28.391
Well, last year, 2022 was the, the worst performance of the 60 40 portfolio in the past 100 years.
00:17:28.760 --> 00:17:29.030
Right.
00:17:29.125 --> 00:17:41.365
Because, uh, not only did the stock market suffer from some of the interest rate increases, but uh, you know, if you understand basic math, Interest rates going up, impacts, values negatively in bonds.
00:17:41.365 --> 00:17:44.665
So bonds had a terrible year because interest rates were going up, right?
00:17:44.665 --> 00:17:46.316
Driving down the value of bonds.
00:17:46.316 --> 00:17:55.496
And so there's the, you know, what was supposed to be this kind of risk mitigation from a diversification standpoint, uh, both went the negative direction.
00:17:55.596 --> 00:17:58.046
And that's what's happened even, even with REITs, right?
00:17:58.076 --> 00:18:01.135
Oh, I'm gonna get some diversification by going into REITs and sure.
00:18:01.135 --> 00:18:12.266
They all have different drivers of what's, you know, You know, driving the demand, but in the public market, so much of what drives performance and drives, uh, price, uh, discovery is sentiment, right?
00:18:12.266 --> 00:18:13.945
What is, what is the sentiment of the market?
00:18:13.951 --> 00:18:15.476
How does, what's the FNA do next?
00:18:15.476 --> 00:18:15.655
Right?
00:18:15.661 --> 00:18:16.855
It's very reactionary.
00:18:16.855 --> 00:18:22.855
And so everything is kind of in this vacuum and, and, you know, going off of trading off the headlines.
00:18:22.855 --> 00:18:25.645
And so the more that that happens, the more these.
00:18:26.395 --> 00:18:31.105
Different asset classes trade more similarly and reducing diversification.
00:18:31.111 --> 00:18:37.705
So it's a little aside in diversification, but in the private markets, these are not, you know, traded on any exchanges.
00:18:37.705 --> 00:18:48.236
And so, you know, if the Fed does something different, this, you know, tomorrow than they did yesterday, it's not gonna change the pricing of the asset you're going into.
00:18:48.236 --> 00:18:48.385
Right?
00:18:48.385 --> 00:19:02.306
If you're buying a multi-family apartment building in a good market with some, you know, positive population growth, positive rent growth, And you have direct ownership into that asset, you can drive a lot of value even outside of the external factors going on.
00:19:02.306 --> 00:19:02.516
Right?
00:19:02.516 --> 00:19:13.405
There's, there's things you can control and, uh, and have a lot more impact on that and re reduction of, of your, uh, variance of return, which is kind of the traditional measure of risk.
00:19:13.705 --> 00:19:13.996
Yeah.
00:19:14.385 --> 00:19:14.675
Yeah.
00:19:14.905 --> 00:19:18.655
And, and so, you know, you don't have the yo-yo.
00:19:19.195 --> 00:19:23.816
On your statement every month where you get, you know, it's, you're not riding the rollercoaster, so to speak.
00:19:23.816 --> 00:19:33.445
Certainly the values change and there certainly are risks in anything that you invest in, but to avoid that volatility, um, to me is huge.
00:19:33.445 --> 00:19:39.026
And to get into an investment strategy that allows you to participate in.
00:19:39.641 --> 00:19:48.161
Totally different components than what is the expected future value of this company's cash flow streams in the future is, is pretty huge.
00:19:48.520 --> 00:19:59.830
Um, let's define, I've been out, I've been away from the definitions for long enough because I haven't done the actual investment management work for now six or seven years.
00:19:59.836 --> 00:20:01.451
But so what are the thresholds?
00:20:01.451 --> 00:20:05.500
Now we're talking to people that have to be accredited investors.
00:20:05.500 --> 00:20:05.830
Right?
00:20:06.221 --> 00:20:14.520
So just, just real quickly, Before I get into some, some meat, I want to cover what is an accredited investor in today's definition.
00:20:15.296 --> 00:20:15.865
Yeah, great.
00:20:15.865 --> 00:20:16.615
Great question.
00:20:16.645 --> 00:20:24.986
Um, so if you haven't heard that term accredited investor, a lot of people think, oh, I have to go get some certification or some kind of test I have to pass to become accredited.
00:20:25.496 --> 00:20:29.875
Um, and it's, it's not that, it's basically you are or you're not based on your financial position.
00:20:29.875 --> 00:20:31.976
So there's, there's two ways to qualify.
00:20:31.980 --> 00:20:33.026
One is by income.
00:20:33.030 --> 00:20:46.076
So if you're a single income earner and you make over$200,000 for the past two years, Um, or if you're a joint income earner, uh, and making over$300,000 over the past two years and expect to make the same going forward, then you're accredited.
00:20:46.135 --> 00:20:52.465
Or if you have a net worth, uh, of greater than$1 million excluding your personal residence, um, then you're accredited.
00:20:52.471 --> 00:20:59.786
So the kind of folks you're talking about, you know, have the IRAs of, you know, two, three, 4 million, they're pretty comfortably gonna be be accredited.
00:20:59.786 --> 00:20:59.996
Yep.
00:21:00.536 --> 00:21:00.806
Yeah.
00:21:00.806 --> 00:21:18.746
And so as a, just a quick, um, commercial if you will, I'm a huge proponent of alternative strategies, but I'm even a bigger proponent of owning these alternative strategies in an, in a Roth IRA instead of in a regular ira.
00:21:19.195 --> 00:21:19.405
Yes.
00:21:19.411 --> 00:21:34.306
Um, Because of the potential in the demonstrated historical performance can, can be significantly higher than what I would say the average person's experience is with a typical investment advisor and investment management program.
00:21:35.026 --> 00:21:46.125
Um, you i'll, I, I can put it in the show notes, but if you'll go out to our website at craig weir, w e a r.com, um, you can download the books that we've got.
00:21:46.425 --> 00:21:54.101
Um, And the first book I wrote about the whole subject of why would you even wanna do Roth conversions is there and you can download it for free.
00:21:54.520 --> 00:22:03.671
And then the second one I wrote, which is The Five Biggest Mistakes, which is really Roth conversion secrets that kind of gets into the mechanics of it and all that stuff is available there.
00:22:03.675 --> 00:22:09.520
So all this stuff that we're talking about, it's great from a return standpoint, but man, you just.
00:22:10.030 --> 00:22:16.631
You put a multiplier on your benefits when you get it to where those benefits are forever gonna be tax free.
00:22:16.661 --> 00:22:18.971
And that's kind of what we talked about on your podcast.
00:22:19.300 --> 00:22:20.510
So, alright.
00:22:20.800 --> 00:22:32.786
So you know, a lot of the people are kind of, They, they probably got the same, you know, white goatee that I've got and, you know, the, the, the flowing hair is gone.
00:22:33.355 --> 00:22:42.806
Um, they remember the days of the shysters and the slick stories and the high fees and all those kinds of things.
00:22:43.675 --> 00:22:52.151
Um, As Ben's explained that that's, there certainly are bad players and you need, as he said, you need to do some due diligence.
00:22:52.151 --> 00:22:54.131
But that was the Wild West.
00:22:54.161 --> 00:23:03.401
Now, now everybody's kind of wearing jeans and flip flops, and it's a lot much more relaxed environment, but you still need to know what are the questions you need to ask, right?
00:23:03.671 --> 00:23:03.760
Mm-hmm.
00:23:04.000 --> 00:23:13.601
So you're gonna get this memorandum and this prospectus, and they're, they're written by attorneys so that we all stay totally confused and they still charge our a thousand dollars an hour type of thing.
00:23:14.421 --> 00:23:30.351
But what are the, what are just, what are the, what are the primary things that's, that you would go, if you went to your, if you had, if you had a big brother who knew nothing about this space and he said, what questions should I ask?
00:23:31.250 --> 00:23:42.141
What would you tell the listeners are the really the main two or three primary questions that are the most important thing before you get into the minutia of the details of the due diligence?
00:23:43.211 --> 00:23:44.861
Yeah, no, a absolutely.
00:23:45.431 --> 00:23:54.250
And you know, I wanna be clear too, you know, the, there is a lot of concern from investors because the private markets are largely unregulated, right?
00:23:54.256 --> 00:23:57.851
So there's exemptions from regulation, which is create this private market.
00:23:57.851 --> 00:24:01.481
And part of the reason that there's still, you know, you have to be a credit.
00:24:01.510 --> 00:24:05.830
So you have to have some financial wherewithal to be able to invest generally in these, these deals.
00:24:06.280 --> 00:24:10.391
And the idea is, hey, there potentially can be some risk here.
00:24:10.391 --> 00:24:11.891
And you, you gotta.
00:24:12.625 --> 00:24:23.185
At least have some sophistication to be able to understand what you're investing in so that you know, uh, you're, it's not someone that has a hundred thousand dollars to their name and they put it all in one deal or Bitcoin or whatever.
00:24:23.191 --> 00:24:23.276
Right.
00:24:23.276 --> 00:24:24.385
It goes, go, goes bad.
00:24:24.385 --> 00:24:24.596
Right?
00:24:24.986 --> 00:24:27.026
So, you know, I, I wanna be clear there.
00:24:27.030 --> 00:24:36.836
And, and, and the reason I wanna emphasize that is my biggest thing, why I always tell people is, the best thing you can do is.
00:24:37.300 --> 00:24:38.681
Get the education yourself, right?
00:24:38.681 --> 00:24:40.871
Learn about these types of deals.
00:24:40.871 --> 00:24:43.451
And I think it's even broader than just private alternatives.
00:24:43.840 --> 00:24:52.060
What I'm really seeing a trend of, um, which is really, really positive, I believe, is people are taking more ownership of their money, right?
00:24:52.060 --> 00:24:55.931
And, and traditionally the system has been, Hey, I'm gonna go make as much money as I can.
00:24:55.931 --> 00:24:59.471
I'm gonna step as much as I can into the 401k, get the match, set it, and forget it.
00:24:59.471 --> 00:25:00.401
Never think about it.
00:25:00.941 --> 00:25:05.230
But what people don't realize, and we talked about this a little bit on your podcast already when you had come on our podcast.
00:25:06.310 --> 00:25:11.861
You know, people work so hard to make their money, but then they spend no time maximizing what they've earned.
00:25:11.861 --> 00:25:12.070
Right?
00:25:12.070 --> 00:25:17.560
They're not making their money work for them and they just stick it into these mutual funds, but they don't really know what, what it's in, right?
00:25:17.560 --> 00:25:20.050
They don't really know what are the fees in and those kind of things.
00:25:20.381 --> 00:25:25.300
And so it's, it's not even just alternative, I think it's just a general approach of being more active.
00:25:25.300 --> 00:25:31.901
And so I'm, I'm seeing a lot more, I call it, you know, DIY investors where I say, I want to, I wanna take a little more ownership of my finances.
00:25:31.901 --> 00:25:37.076
Cause when you do that, Regardless of what you invest in, you're gonna have way better performance, right?
00:25:37.080 --> 00:25:41.185
You're gonna be able to identify the traffic, you're gonna be identify the things that are the red flags, right?
00:25:41.185 --> 00:25:42.715
And things that you wanna be aware of.
00:25:43.286 --> 00:25:51.796
Um, and so I say all that to say, and if you're just kind of getting started here, the best thing you can do is start really slow and really small, right?
00:25:52.256 --> 00:25:57.205
And so, um, the best way to do reduce risk is just reduce how much you're investing initially.
00:25:57.566 --> 00:25:59.125
Um, and just start.
00:25:59.621 --> 00:26:03.536
Building a track record, you know, uh, with, with, with some sponsors.
00:26:03.596 --> 00:26:06.205
Um, but even before you kind of get to that point, there's a lot of things you can do.
00:26:06.895 --> 00:26:09.865
Um, and I like to think of, of a few things, right?
00:26:09.871 --> 00:26:14.665
If you're investing money, imagine you're going to a horse race, right?
00:26:14.665 --> 00:26:18.477
And you've kind of got these, these three components of, of a deal.
00:26:18.865 --> 00:26:23.185
So there's, uh, the racetrack, there's the horse, and there's the jockey, right?
00:26:23.185 --> 00:26:24.655
So I like to think about these separately.
00:26:24.655 --> 00:26:28.316
So your racetrack is, What's the asset class they're investing in?
00:26:28.316 --> 00:26:30.326
Is this a multi-family apartment deal?
00:26:30.326 --> 00:26:31.915
Is this a self-storage investment?
00:26:31.915 --> 00:26:34.316
Is this, you know, land entitlements?
00:26:34.320 --> 00:26:36.596
Or is this oil and gas indication, right?
00:26:36.836 --> 00:26:41.155
What is the, the track that this, that this horse and jockey are on?
00:26:41.695 --> 00:26:47.576
And do I believe in the long-term, you know, sustainability, positive trends, the story of that, right?
00:26:47.935 --> 00:26:48.086
Yeah.
00:26:48.086 --> 00:26:48.596
Of the story.
00:26:48.596 --> 00:26:48.836
Right.
00:26:48.836 --> 00:26:59.306
So there's, I'm gonna have a very different feeling about investing in, you know, uh, Urban office than I am gonna be in, you know, suburban multi-family residential housing or something.
00:26:59.310 --> 00:26:59.455
Right.
00:26:59.455 --> 00:27:01.256
Those, those two very, very different things.
00:27:01.256 --> 00:27:06.506
You gotta understand what are the long-term trends supporting or not supporting these, these assets.
00:27:06.836 --> 00:27:07.976
The second is the horse.
00:27:08.395 --> 00:27:10.885
So the horse is the actual investment itself.
00:27:10.885 --> 00:27:12.056
What's the strategy?
00:27:12.461 --> 00:27:12.790
Right.
00:27:12.790 --> 00:27:14.500
What's the vehicle they're gonna do it with?
00:27:14.500 --> 00:27:16.330
Is this a development deal?
00:27:16.361 --> 00:27:19.601
Is this, they're gonna build this from the ground up and lease it up and sell it?
00:27:20.050 --> 00:27:24.671
Is this gonna be gonna buy an old, you know, class B apartment in a good area?
00:27:24.671 --> 00:27:27.161
They're gonna renovate it and lease it up at higher rates.
00:27:27.280 --> 00:27:29.260
This, you know, kind of value add deal.
00:27:29.770 --> 00:27:31.090
Um, is this in a good market?
00:27:31.191 --> 00:27:32.951
Is this in a growing market?
00:27:32.951 --> 00:27:35.441
Is this in a, you know, diminishing market?
00:27:35.770 --> 00:27:36.911
Um, right.
00:27:36.911 --> 00:27:39.385
And so, That, that's kind of the other piece of this.
00:27:39.385 --> 00:27:40.586
You gotta look at the big asset class.
00:27:40.586 --> 00:27:42.895
You're gonna look at the market and the deal itself.
00:27:43.526 --> 00:27:48.596
And then, uh, arguably the most important piece of this whole equation is the jockey.
00:27:48.685 --> 00:27:48.986
Right?
00:27:48.986 --> 00:27:53.155
And the jockey is who's the one driving the deal?
00:27:53.161 --> 00:27:53.935
Who's the one Yeah.
00:27:53.996 --> 00:27:56.846
That is making this deal happen, putting all the pieces together.
00:27:56.851 --> 00:27:58.705
What's their track record?
00:27:59.066 --> 00:28:00.236
How many deals have they done?
00:28:00.266 --> 00:28:00.506
Right?
00:28:00.506 --> 00:28:02.635
How, what's, what's been historical performance?
00:28:03.385 --> 00:28:04.945
Um, what are the backgrounds of.
00:28:05.395 --> 00:28:07.826
Of the sponsors, do they have any gray hairs, right?
00:28:07.826 --> 00:28:13.556
Or are they just kind of young, young bucks kind of getting started in, you know, trying out a new, a new strategy, right?
00:28:13.556 --> 00:28:17.846
So there, there's a lot of things you can just basic smell test, right?
00:28:17.846 --> 00:28:17.846
Yeah.
00:28:18.026 --> 00:28:27.056
Of you can, but, but think thinking about it in that way, breaking it down the different components and then, you know, if, uh, something jumps out, dig into that a little bit more, right?
00:28:27.056 --> 00:28:29.516
And, and if something doesn't make sense, you don't feel comfortable with it.
00:28:30.340 --> 00:28:31.691
Don't move on right there.
00:28:31.691 --> 00:28:39.760
There's a lot of deals out, there's a lot of things to, to look at, but that's the most simple way I've, I've kind of been able to describe, just to start and, and try to break it down.
00:28:39.760 --> 00:28:43.540
Like that's good and specific due diligence I can get into, but that, those are the good places to start.
00:28:43.546 --> 00:28:44.211
Yeah, that's good.
00:28:44.560 --> 00:28:44.861
Yeah.
00:28:45.010 --> 00:28:50.171
I don't think you want, you know, uncle Vinny who decided, man, there's some money in this apartment complex down here.
00:28:50.171 --> 00:28:50.500
Let's go.
00:28:50.671 --> 00:28:53.681
Uh, Hit up all the relatives and let's go in and do it.
00:28:53.681 --> 00:28:57.010
I, I don't know anything about it, but man, uncle Benny's smart.
00:28:57.010 --> 00:28:58.060
He can figure it out.
00:28:58.721 --> 00:29:01.030
That maybe is not where I wanna put my money.
00:29:01.030 --> 00:29:01.361
Right.
00:29:01.901 --> 00:29:02.260
Right.
00:29:02.711 --> 00:29:11.621
And the other thing too that was important to me back in the day is, and even now when I look at different things, um, I like to look at how is the sponsor compensated?
00:29:12.080 --> 00:29:12.300
Yes.
00:29:12.401 --> 00:29:13.840
What is their motivation?
00:29:13.931 --> 00:29:14.290
Right?
00:29:14.290 --> 00:29:14.530
Yes.
00:29:14.530 --> 00:29:20.260
Is their motivation just to make sure you stay on the hook, that where they can get management fees forever or.
00:29:20.846 --> 00:29:24.566
Do they, are they rewarded for, for, for great performance?
00:29:24.715 --> 00:29:31.165
And, you know, as long as I get my part as an investor, I don't, I don't really care.
00:29:31.195 --> 00:29:34.826
I, you know, what the sponsor gets, what I care about is me.
00:29:35.395 --> 00:29:42.625
So to, to focus too much on the fee aspect without looking at the track record of what have they been able to do in the past.
00:29:43.556 --> 00:29:45.205
I don't think that makes a lot of sense.
00:29:45.205 --> 00:30:00.115
And you, I know a lot of people get stuck on fees of any kind, and I do to it in certain instances, but what you really have to focus on, on anything is is it gonna give me what I need and what I want at a reasonable value to me.
00:30:00.516 --> 00:30:15.526
So, um, and I'm, I'm kind of jumping into a couple different areas here, but my primary, kind of the primary point is, You know, if I were looking at an Aspen Funds deal, I'm gonna, I, I want to figure out are they really truly a partner in this with me?
00:30:16.435 --> 00:30:22.016
Um, or are they just somebody to that's gonna hit my account and get their fees every single year?
00:30:22.016 --> 00:30:22.346
Right.
00:30:23.006 --> 00:30:31.256
And from what I've gathered from the stuff that I've looked at, you guys really have a really unique approach or a very equitable approach to that, in my opinion.
00:30:31.556 --> 00:30:39.715
So that kind of wants me to launch into kind of, so we can keep track of, keep some track of our time and what we're doing here.
00:30:40.165 --> 00:30:52.280
Um, Gimme the, gimme the pitch of, you know, why Aspen Funds, what makes, what makes Aspen Funds unique from the 20 other people that as soon as I click on an ad, I get to see their stuff too.
00:30:53.510 --> 00:30:54.530
Yeah, absolutely.
00:30:54.530 --> 00:30:56.871
I mean, you kind of hit a lot, lot of it.
00:30:56.871 --> 00:30:58.911
It's, I think, alignment of interest, right?
00:30:59.090 --> 00:31:07.851
So part of our kind of pitch, if you will, is we as owners invest in every single deal that we bring to our investors.
00:31:08.090 --> 00:31:10.490
Um, and we sometimes invest to nice.
00:31:11.111 --> 00:31:20.050
Nice chunk of the overall equity we're raising, um, on the same terms, on the same fee structure, everything as as our investors, right?
00:31:20.050 --> 00:31:22.211
Because how better do we align interest than.
00:31:22.961 --> 00:31:24.431
We're putting our own money in there.
00:31:24.580 --> 00:31:26.830
Um, and cuz we believe in the deal, right?
00:31:26.830 --> 00:31:33.520
And so our, our whole goal is we're not gonna bring anything to our investors that we would not, you know, excitedly put our own money in.
00:31:33.611 --> 00:31:36.701
And I think that's like the ultimate lit litmus test, right?
00:31:37.211 --> 00:31:38.060
So, yeah, that's right.
00:31:38.181 --> 00:31:41.260
I, I think, I think that that in of itself is, is a pretty big differentiator.
00:31:41.681 --> 00:31:43.931
Um, I think we got a tenure track record.
00:31:44.020 --> 00:31:46.361
Uh, we've been investing for a long time.
00:31:46.391 --> 00:31:47.830
We're a very, very diverse.
00:31:48.090 --> 00:31:51.090
Backgrounds of our principles who have four, four principles.
00:31:51.240 --> 00:31:57.270
Um, been investing, you know, combined over a hundred years and investing in lots of different asset classes.
00:31:57.276 --> 00:32:04.111
And we've seen the ups and the downs and, um, you know, we're, we're, uh, we're trying to do right.
00:32:04.141 --> 00:32:12.361
And we have a lot of investors that work with us and, and most of our investors invest more with us over time, so it's usually a pretty good indicator that they like what they're, what they're seeing.
00:32:12.361 --> 00:32:12.681
So, yeah.
00:32:13.080 --> 00:32:16.621
Yeah, I think it's a lot of things, you know, and I'd kind of even make another comment too.
00:32:17.455 --> 00:32:26.635
You're going back to, to the fees and, you know, just the, the more you kind of get into the space and understand, you know, what, what's the market rate for this fee?
00:32:26.635 --> 00:32:29.455
What's, you know, what's normal, right.
00:32:29.461 --> 00:32:30.086
Versus what's.
00:32:30.671 --> 00:32:39.191
You know, out outside of kind of normal range, and you can get a pretty good sense of a, a sponsor from, like, there's these things called ppms, private placement memorandums.
00:32:39.191 --> 00:32:43.000
Very simple or very similar to a prospectus for a stock right as you go.
00:32:43.000 --> 00:32:47.530
First thing I do, I go straight to the fee section and the, and the waterfall section.
00:32:47.530 --> 00:32:52.480
Because, because the, these two things show you exactly who gets paid and what priority.
00:32:53.096 --> 00:32:56.786
And what are the, what are the splits between investors and the sponsors?
00:32:56.786 --> 00:33:00.266
And then what are the fees that they're taking and when do they take them and how are they taking them?
00:33:00.715 --> 00:33:00.955
Right?
00:33:00.955 --> 00:33:08.816
Because tho those things, right, they're gonna be the most indicative of anything else in the deal, aside from you gotta believe, believe in the deal, believe in the strategy, believe in all that.
00:33:08.816 --> 00:33:10.286
But it'll tell you a lot.
00:33:10.405 --> 00:33:11.246
It'll tell you a lot.
00:33:11.306 --> 00:33:15.415
And, uh, um, to, to your point, it's, it's important to, to know that.
00:33:16.105 --> 00:33:19.135
Um, so yeah, I, I think one other point I I'd make too.
00:33:19.135 --> 00:33:26.306
I think as you kind of get into this, and obviously we're not financial advisors, I'm not giving any advice, uh, so I gotta throw that caveat out there.
00:33:26.306 --> 00:33:33.796
But, you know, I, I, what I, what I've seen a lot of people do is I kind of call it the, uh, you know, sock drawer of investments, right?
00:33:33.796 --> 00:33:36.625
They kind of, they hear about Uncle Benny's deal and they throw.
00:33:37.105 --> 00:33:38.395
You know, some money into that one.
00:33:38.395 --> 00:33:44.215
They see another deal on a Facebook ad and they're like, I'll throw some into that one, and then they're just getting referrals left and right.
00:33:44.215 --> 00:33:45.026
I'm just gonna throw these deals.
00:33:45.625 --> 00:33:51.445
Eventually they have this kind of hodgepodge of investments that they didn't really, they kind of looked at a little bit, but.
00:33:52.256 --> 00:33:57.296
Ultimately, they're now getting, you know, these, these tax forms and they don't even know what they're doing.
00:33:57.296 --> 00:33:58.165
How are they doing?
00:33:58.171 --> 00:33:59.635
What's the strategy behind it?
00:33:59.726 --> 00:33:59.965
Right?
00:33:59.965 --> 00:34:01.675
And it's just this kind of random assortment of deals.
00:34:01.675 --> 00:34:07.165
But what's so important, as with anything, is you gotta understand what are your goals first as an investor.
00:34:07.165 --> 00:34:07.286
Right?
00:34:07.290 --> 00:34:12.266
Are you looking for like passive income, like a current income stream, right?
00:34:12.686 --> 00:34:23.951
Um, are you looking to, you know, multiply the net worth and then within your portfolio, what kind of, you know, uh, Portfolio allocations do you want to have to these different buckets, right?
00:34:23.951 --> 00:34:35.471
So you gotta, you gotta think through that first and you gotta go and invest with a strategy, um, in the investments you do because a lot of times, you know, someone can do this kind of sock sock drawer investing approach and.
00:34:36.295 --> 00:34:43.585
Uh, they'll look back and, oh, I just did like 10 multifamily deals and they're all in Texas and they're all, you know, class B value ads.
00:34:43.916 --> 00:34:45.175
I thought I was getting diversification.
00:34:45.175 --> 00:34:48.146
You're probably not that diversified as well as you think, right?
00:34:48.146 --> 00:34:52.976
Because you don't have, you know, some other asset classes, some other sponsors, some other markets.
00:34:52.976 --> 00:34:58.255
So you can really, uh, be pretty selective, um, as you kind of build this over time.
00:34:58.255 --> 00:35:00.416
But again, you want to have a good strategy.
00:35:00.416 --> 00:35:01.166
So for example, we have.
00:35:01.690 --> 00:35:04.210
You know, uh, a debt fund, it pays a current income stream.
00:35:04.215 --> 00:35:06.371
We pay 9% every month.
00:35:06.431 --> 00:35:07.630
Uh, it's excess annualized.
00:35:07.990 --> 00:35:10.271
Um, and been doing that for 10 years.
00:35:10.271 --> 00:35:13.661
And it's just bread and butter, vanilla income, right?
00:35:13.661 --> 00:35:18.610
But some people need income, especially if they're retired and they, they want to live off, live off the, the net worth.
00:35:19.090 --> 00:35:22.826
Um, and then other people, They don't need income and they wanna kind of maximize growth.
00:35:22.826 --> 00:35:23.876
We have development projects.
00:35:23.876 --> 00:35:28.585
You can kind of come into a development project and get some pretty big IRRs if everything goes well, right?
00:35:28.585 --> 00:35:37.965
So there, there's just, you gotta understand what you're doing, what kind of risk you're taking, what are your ultimate goals, and, uh, use that as you're kind of going through this whole learning process.
00:35:41.065 --> 00:36:01.505
So I think one of the things that needs to be said before we shut down it here is we need to point out that, you know, one of the things that people really like about the stock market investing is that if they wanna pull their money and they, they wanna go buy something, uh, they make a phone call or they get online and they crank it out and you know, it shows up by wire.
00:36:02.291 --> 00:36:02.800
And their deal.
00:36:02.800 --> 00:36:13.570
That's because they're dealing with a marketable security that has a well-defined active market that's, in my opinion, controlled by, you know, a lot of different rules and a lot of different players.
00:36:14.201 --> 00:36:32.920
But man, when we go out and we buy, um, several class B apartment complexes and we throw'em into a bucket and a sponsor offers them to us, It's difficult to go get$50,000 out of a 25 million deal instantly.
00:36:32.920 --> 00:36:33.311
Right?
00:36:33.340 --> 00:36:43.001
So there's this, there's a liquidity issue that is, that exists inside of some of these that also needs to be part of your decision of how much you put in.
00:36:43.001 --> 00:36:48.221
And you need to look at where you're, when you need money, how often you need money, that kind of thing.
00:36:48.820 --> 00:36:52.481
So you're the, the deals that you put together are.
00:36:52.871 --> 00:37:13.030
Talk just generally about, you know, if, if I were, let's say I had a hundred thousand dollars of my million that I wanted to do a baby step, um, if it wasn't in the debt fund type of thing, am I, am I locking money up for 15 years, like if I were in an annuity or am I looking at a, a lot shorter timeframe than that?
00:37:13.030 --> 00:37:13.420
Ben?
00:37:14.320 --> 00:37:15.940
Yeah, so, so every deal is different.
00:37:15.940 --> 00:37:19.150
Again, you gotta understand what's your goals is, is it liquidity?
00:37:19.240 --> 00:37:22.960
Um, then that's gonna change the types of deals you invest in.
00:37:22.960 --> 00:37:28.990
So our, our debt fund, for example, we have a one year lockup period, and then, you know, full liquidity thereafter.
00:37:29.081 --> 00:37:34.780
Uh, it's not instantaneous, but it's, uh, within 90 days generally is, is what we target and we've always been able to hit that.
00:37:35.260 --> 00:37:36.760
Um, so you have some liquidity.
00:37:37.061 --> 00:37:37.240
Right.
00:37:37.271 --> 00:37:43.780
Um, uh, and, and that, that type of an investment, it's an evergreen funds, was kind of always going and put money in, take money out as you need.
00:37:44.260 --> 00:37:52.300
Um, and are there other deals, like we have oil and gas, uh, investments that we've done, and those are 10 year deals, and you're not getting any money out of it, right?
00:37:52.300 --> 00:37:58.360
Other than the cashflow coming from it because, you know, these are hard assets and we're reinvesting back into more drilling, et cetera, et cetera.
00:37:58.360 --> 00:38:05.670
So it's every strategy's different and again, That's probably the biggest knock that alternatives get, right?
00:38:05.791 --> 00:38:06.661
Well, they're not liquid.
00:38:07.141 --> 00:38:10.621
Um, and there's definitely some merit to that, right?
00:38:10.891 --> 00:38:12.061
Liquidity is important.
00:38:12.210 --> 00:38:15.811
Liquidity is, is you have to manage liquidity as a, as an investor.
00:38:16.380 --> 00:38:19.780
But what's interesting that we actually did this, uh, episode on our podcast, one of the first ones.
00:38:20.786 --> 00:38:24.445
Where we looked into some studies that was done by a, by, by a Bain company.
00:38:24.445 --> 00:38:29.996
It's a big consulting firm on, um, investment strategy and, uh, liquidity.
00:38:30.146 --> 00:38:30.445
Right.
00:38:30.451 --> 00:38:38.800
And what they, what they found was, Most investors, even through downturns, overestimate their need for liquidity, right?
00:38:38.800 --> 00:38:42.940
So meaning that they think they need more liquidity than they actually need.
00:38:43.601 --> 00:38:49.690
Um, and if that's a preventive, preventative thing from keeping you investing these things, then you gotta, you gotta think about that, right?
00:38:49.690 --> 00:38:51.391
Because cuz here's a really concrete example.
00:38:51.940 --> 00:38:53.831
So you talk about investing in Class B apartments.
00:38:54.851 --> 00:38:57.311
Well, you can go, well, I'm just gonna go invest in some REITs.
00:38:57.641 --> 00:39:00.880
Uh, cause I'm gonna have, I can have liquidity, but I'm still investing in apartments.
00:39:01.210 --> 00:39:02.530
Well check this out.
00:39:02.561 --> 00:39:06.431
So there's a metric called price to book ratio, right?
00:39:06.431 --> 00:39:07.780
You've probably heard of price to earnings.
00:39:07.780 --> 00:39:10.300
It's basically the price you're paying for a dollar of, of earnings.
00:39:11.246 --> 00:39:15.865
Um, annually, well, price to book is a similar ratio, but it's, it's great for real estate.
00:39:15.865 --> 00:39:18.746
So it's what, what's the price you're paying relative to the book?
00:39:18.746 --> 00:39:21.536
Value of the assets, right?
00:39:21.596 --> 00:39:21.686
Mm-hmm.
00:39:21.865 --> 00:39:25.615
So if you invest into a syndication or a fund, that's a direct private investment.
00:39:26.186 --> 00:39:31.346
Your price to book is generally gonna be pretty close to one, maybe a little bit less than long as you have some little bit about upfront fees.
00:39:31.346 --> 00:39:36.746
But say it's, you know, pretty close to, to one, um, that's really good, right?
00:39:36.746 --> 00:39:38.846
Most of your dollar is investing in the asset.
00:39:39.190 --> 00:39:45.280
Well, the average price to book of reit, and this has changed over time, but you know, pretty, pretty consistently.
00:39:45.280 --> 00:39:47.440
It's about five x.
00:39:47.891 --> 00:39:55.240
So that means that you're, if you put$5 into a reit, only$1 of that is actually going into the asset.
00:39:55.240 --> 00:39:55.601
The rest is.
00:39:56.351 --> 00:39:59.831
Goodwill and premium, and you could call that liquidity premium, right?
00:39:59.831 --> 00:40:06.101
So that's, that's the, the premium you're paying, uh, to get liquidity to that asset cost.
00:40:06.521 --> 00:40:11.771
I would argue that liquidity is probably not, that it's not worth that much, right?
00:40:11.771 --> 00:40:16.751
It's not worth, uh, only getting 20%, uh, you know, value, uh, in, into assets.
00:40:16.751 --> 00:40:19.271
So it's something that I think about liquidity's important.
00:40:19.481 --> 00:40:24.061
You know, I'm not saying put all your eggs into the private market, you know that that's definitely.
00:40:24.806 --> 00:40:29.036
If you do that, you gotta be really, you gotta know what you're doing and manage liquidity and manage lines of credit and other things.
00:40:29.666 --> 00:40:40.945
Um, but you don't want that to be a, uh, deterrent from investing in private alternatives because one, you're paying a lot more for liquidity than you probably should be.
00:40:40.945 --> 00:40:43.465
And two, you probably don't need as much liquidity as you think you do.
00:40:44.485 --> 00:40:44.815
Yeah.
00:40:45.235 --> 00:40:50.695
Well, you know, a lot of the people that we deal with, I've kind of coined the term IRA millionaire and they're.
00:40:52.076 --> 00:41:03.956
Other than the obvious, most of the people that we work for are folks that, generally speaking, are probably never gonna touch very much of their IRA over their lifetime.
00:41:04.735 --> 00:41:08.277
And so they're, but they're so used to being able to go get it.
00:41:09.715 --> 00:41:16.585
That they maybe would say, oh, I'm not gonna lock money up for three or four or five or 10 years because if I need it, I, I want it.
00:41:16.585 --> 00:41:36.175
And then like, to your point, in reality, you're probably, you're probably gonna die with more money than you have today, and there's some per percentage of that portfolio that the world would really have to change for you, for you to need that portion of that portfolio, whether it's 10%, 20%, 50%, 60%, whatever.
00:41:37.346 --> 00:41:46.766
So of course that's, that's our bailiwick, is putting together that comprehensive financial plan so that you can make better investment choices of what you're doing.
00:41:47.275 --> 00:41:50.726
We don't invest people's money, Ben, we don't manage it.
00:41:50.726 --> 00:41:53.425
We don't send them to investment advisors.
00:41:53.425 --> 00:41:56.425
We don't do any of that, but we help with the construct of.
00:41:57.126 --> 00:42:04.315
A structure of what that should look like and help them to understand the parameters that are necessary and that, that they need to make things work.
00:42:05.155 --> 00:42:08.635
Um, and I, you know, we, we love that part of it.
00:42:08.635 --> 00:42:16.916
And, and the, the tax planning portion of what we do is our intent to help them really make sure that they're able to maximize.
00:42:17.260 --> 00:42:28.210
At last half of life where they're not just feeling the pressure of Uncle Sam every April and all these huge required minimum distributions that come out.
00:42:28.931 --> 00:42:33.161
But, um, I, I, man, I really dig what you guys are doing.
00:42:33.221 --> 00:42:37.811
Tell me, um, what, how do, how can people connect with you?
00:42:37.815 --> 00:42:38.871
Gimme two or three ways.
00:42:40.045 --> 00:42:50.096
That people can connect, or if it's simpler than two or three, just how do they, how do they find out more about Aspen funds and try to be able to connect to ask some really specific questions for them.
00:42:51.340 --> 00:42:51.670
Yeah.
00:42:51.670 --> 00:42:51.940
Yeah.
00:42:51.940 --> 00:42:58.601
So probably the simplest way is, uh, you know, if you just wanna get more general education, our podcast Invest like a billionaire.
00:42:58.661 --> 00:43:01.030
Um, it's the billionaire podcast.com.
00:43:01.481 --> 00:43:04.061
Uh, we had you on the show, so you kinda listen to that episode.
00:43:04.065 --> 00:43:05.800
It was, it was a great, great episode.
00:43:05.800 --> 00:43:09.320
But our whole, our whole point of that show is just education around alternative investing, right?
00:43:09.610 --> 00:43:13.840
It's just, just breaking down and demystifying a lot of the things that go on there.
00:43:13.931 --> 00:43:23.596
Um, and then, yeah, if you really wanna learn more about the investment strategies themselves, uh, Aspen Funds, uh, US is the, the best place to go find out about it.
00:43:23.596 --> 00:43:32.476
And you can download, you know, a myriad of our eBooks and, um, other free content we put out there and schedule a call with our team.
00:43:32.715 --> 00:43:34.096
Um, if that makes sense.
00:43:34.096 --> 00:43:34.726
So, yeah.
00:43:35.266 --> 00:43:35.536
Cool.
00:43:35.865 --> 00:43:37.335
So they don't have to go.
00:43:38.155 --> 00:43:42.596
To their, to an investment advisor to, to work with you.
00:43:42.626 --> 00:43:47.726
They don't, um, they don't have to go through Fidelity or Schwab to connect with you.
00:43:47.726 --> 00:43:55.255
They can have a conversation and um, you can help them with a lot of the mechanics of how do we actually get that in my IRA or my Roth or whatever.
00:43:55.286 --> 00:43:56.606
Your team can do that for them.
00:43:56.606 --> 00:43:56.606
Right.
00:43:56.612 --> 00:43:56.965
Exactly.
00:43:57.536 --> 00:43:57.686
Yep.
00:43:57.896 --> 00:43:58.255
Absolutely.
00:43:59.096 --> 00:44:06.956
So is there anything else that I, that maybe we, that I, I didn't ask as a good, um, host that I should have asked?
00:44:07.525 --> 00:44:11.365
To get the point across that this is really a pretty cool space people need to check out.
00:44:12.146 --> 00:44:13.556
No, I, I think we hit it all.
00:44:13.556 --> 00:44:17.365
I think we hit that and more so I, I feel like we hit good, the, the big stuff.
00:44:17.365 --> 00:44:24.025
And I think, you know, the, the big thing I would just say is, like I said earlier, Really take an ownership mindset over your money.
00:44:24.025 --> 00:44:27.085
You work, you work so hard to accumulate this money.
00:44:27.655 --> 00:44:33.896
You know, don't just turn a blind eye or just blindly trust someone else to, to have your best interest at heart, right?
00:44:33.900 --> 00:44:35.425
Because no one's gonna care about it.
00:44:35.695 --> 00:44:36.956
You're on Nest Day more than you.
00:44:37.045 --> 00:44:40.686
And, um, it's not even just the investing side, but e everything about it, right?
00:44:41.036 --> 00:44:42.925
You gotta take ownership of it.
00:44:43.280 --> 00:44:50.150
You know, dive in, figure, figure things out, start to learn and you'd, you'd be shocked at this stuff is not that complicated.
00:44:50.150 --> 00:44:53.240
The whole system is set up to make you feel like you, you can't figure it out.
00:44:53.240 --> 00:44:54.201
You don't know what you're doing.
00:44:54.201 --> 00:44:54.920
You need help.
00:44:55.311 --> 00:44:56.661
It's really not that complicated.
00:44:56.721 --> 00:44:57.021
Right.
00:44:57.021 --> 00:45:04.221
It's some common sense, a little bit of curiosity, asking good questions and just, you know, experience just.
00:45:04.400 --> 00:45:10.760
Starting to read, read these things, you know, get on these email, uh, start talking with, with these different firms and just start doing it.
00:45:10.820 --> 00:45:11.121
Right.
00:45:11.121 --> 00:45:20.090
It's, uh, you just rip the bandaid off and start, start, start diving in cuz it's, you're really, um, there, there's some, some really good goal on the other end of the, of the, the side here.
00:45:20.210 --> 00:45:20.391
Yeah.
00:45:20.721 --> 00:45:20.960
Cool.
00:45:21.130 --> 00:45:29.780
Well I've listened to several of your, uh, podcast episodes up till leading up to me being on there just so I can get a feel of the vibe and what you guys really.
00:45:30.311 --> 00:45:33.911
Do and I highly recommend that you guys get out there and listen to one or two of'em.
00:45:33.911 --> 00:45:43.331
Subscribe to their podcast and if you haven't, click the button, subscribe to this one so that you can be right on the cutting edge of the stuff that we bring to you as well.
00:45:44.081 --> 00:45:45.851
So Ben, thanks a lot bud.
00:45:46.001 --> 00:45:53.231
I appreciate you being here and um, man, looking forward to maybe another time we can hang out and share some good information with folks.
00:45:54.041 --> 00:45:54.550
Sounds good.
00:45:54.550 --> 00:45:55.240
Thanks so much, Craig.
00:45:55.960 --> 00:45:56.351
You bet.
