Kent Ritter

Today’s Ritter On Real Estate Guest is Lisa Hylton. Lisa is the founder of Lisahylton.com and real estate investment company that provides opportunities for entrepreneurs and business owners to invest in tax-efficient real estate investments.

Lisa is also the host of The Level Up REI podcast which airs every Tuesday and the first Thursday of each month for Conversations with Passive Investors. Lisa Hylton is a CPA with approximately 10 years of audit experience from PwC and 4 ½ years as a controller on private equity real estate funds at a Los Angeles Investment Firm, Ares Management.  Her current mission is to provide podcast episodes and investment opportunities for entrepreneurs and business owners to level up their businesses and real estate investing to build long-term wealth and financial freedom.

Show Notes:

• Growing up in a property management family.
• Buying her first home in her early 20’s.
• Learning the value of a property management company.
• Taking a private equity job auditing and controlling funds.
• What is Syndication and how it looks at a fund level.
• How the fund model works.
• Determining if passive investing is for you.
• How to determine investment strategy when investing in syndication deals.
• Setting realistic expectations.
• How investors should look at their deals. -Lisa’s checklist.
• The importance of investing for cashflow and appreciation.
• Decreasing execution risk.
• The waterfall structure or a syndication deal.
• Red flags to look for when investing in a syndication deal.
• How funds and investors are compensated.
• Recession-proof investing tips.

Books mentioned: 

The 42 Week Year by Bryan Moran and Michael Lennington

Contact Lisa:

Instagram: @lisahyl, @thelevelupREI

Facebook: https://www.facebook.com/lisa.hylton.92

The Level Up REI Podcast Group: https://www.facebook.com/groups/787834775013292/

Linkedin: https://www.linkedin.com/in/lisa-hylton-0b992815/

Twitter: https://twitter.com/LisaHylton16

Check out her Passive Investing Made Easy video and blog series and Investing Passively in the US video and blog series at www.lisahylton.com and on her Youtube page called Lisa Hylton.

TRANSCRIPT: 

[0:00:00.0] LH:

So the first thing I like to look at when I see a deal come to me is one, where’s this deal located? Because the location helps me to determine Okay, is this in a market that I know has strong fundamentals, population growth, job growth, business, business friendly, landlord friendly. Those are four things that for me are very important.

[0:00:20:0]

Welcome to read around real estate, the show about how to passively invest like a pro. On each episode, I interview real estate experts who give their top investing advice, strategies and tools, they break down the insights into practical steps to avoid the pitfalls and make better investments. I want to help you passively invest like, this is veteran real estate. I’m your host, Kent Ritter.

[0:00:45.0] KR:

Hello fellow investors. Welcome to another episode of “Ritter On Real Estate” where we teach you how to passively invest like a pro. Today, my guest is Lisa Hilton and she’s the host of the level up REI podcast and the founder of Lisa hilton.com. It’s a real estate investment firm that was created for entrepreneurs by entrepreneurs to build passive income and wealth to tax efficient real estate investments. When she’s not buying real estate, you can find her hiking paddleboarding, practicing yoga, taking evening walks, swimming, traveling, embarking on wine country getaways, and try a new adventure. So sounds like you got all kinds of stuff going on.

[0:01:24.0] LH:

Yeah. Thank you for having me. I appreciate it.

[0:01:27.0] KR:

Yeah, absolutely. We’re excited to dig in and get into some detail. But before we do that, why don’t you just tell the listeners a little bit about yourself and how you got to be where you are today?

[0:01:39.0] LH:

Yeah. So I am originally from the Cayman Islands. I grew up in Grand Cayman, my father was a contractor built 14 apartment units. So as a child, I was exposed to property management at an early age. And my parents still own those properties today. My father, however, when I was in middle school, was diagnosed with a brain tumor. By time I got to college, he passed away. So because he built those apartment units, they provided my family, the investment vehicle to continue to generate cash flow. During that time, my mom was a stay at home mom, and he was a sole breadwinner. So as I said, we still have those today. From there, I bought my first place in my early 20s. And yeah, I bought it because I loved it, but learned a lot of lessons on, you know, buying for making sure the numbers work as well, as you know, making sure you think about property management because I lived in Cayman for the first year with that property. And then every year after that I did not live in Cayman. And that property did not cash flow. So I ended up floating the property for a total of six years before ultimately selling it after getting $1,000 bill. So at that point, I said, You know what, no more real estate and I say the universe has a sense of humor. Because a year or so later, I ended up taking a job working as a controller on private equity real estate funds after auditing funds for over a decade with PwC. So I take took this role, a friend of mine who was just leaving, as I was starting said to me, you know, it’ll take you six months to figure out what you’re doing and six months to determine whether you like it, and in those six second six months, I realize you know what, I can do this work, but I’m not going to stay here forever. So I need to think about what my next chapter is. And that’s sort of what brought me here. So yeah,

[0:03:37.0] KR:

Very cool. Well, yeah, sounds like a lot of lessons learned on that first investment. And then you carried that forward into, you know, so you’re auditing other people’s funds. And then then you went on the other side. And we’re Comptroller of the fund, right. So we’re kind of the person behind the money there.

[0:03:57.0] LH:

That’s right, preparing all the reports to send out to investors running all the calcs putting together all the financials, so that investors know how their money is doing. So yeah.

[0:04:10.0] KR:

Very cool. great experience. So now, what are you working on?

[0:04:17.0] LH:

Yeah, so these days since then, you know, these days, as you announced in my intro, my business lisa Hilton calm focused on primarily multifamily investments. However, my long term goal is recession resistant real estate, so multifamily being the first one, but then focused also on other recession resistant real estate asset classes, such as self storage, and a few others, being able to provide opportunities for investors to invest in these types of real estate and leveraging my fun to experience you know, 14 and a half years taking care of funds in all different dimensions to be able to create opportunities using that fund experience to then create funds that enable investors to get exposure to maybe even multiple asset classes in one particular vehicle. So, yeah, that’s what I’m working on these days. So yeah,

[0:05:15.0] KR:

Yeah, really interesting. So. So, you know, we talk a lot about investing on the show different types of investments. As we were talking beforehand, though, I realized, you know, we haven’t, we haven’t circled back kind of the basics in a while now that we’re 50. So episodes in. And so why don’t you just tell tell folks when we talk about syndication, you know, tell them? What are we talking about? And then, and then put the fun twist on it and tell us how it looks different? In a fund model?

[0:05:50.0] LH:

Yeah, sure. So real estate syndications is an opportunity to leverage the experience expertise and capital of people to buy deals that are larger than one individual could buy on their own. And how that looks like in simplicity is thinking about like a 600 unit apartment building. That could be, you know, sold for like, I don’t know, 50 million. So one investor might not have 50 million, but you know, you have leverage the experience of the sponsor team, the GP team, who, you know, finds the $50 million dollar 600 unit apartment building, you also then have a team member that’s responsible for asset managing it, and looking over the property manager. And then you have, you know, your Investor Relations folks who are working with investors, education, being able to talk to them about the deal. And then you have, you know, one of also you have investors themselves who are bringing capital to the deal to, you know, in return leverage, from your experience as a general operator, to then be able to get exposure to real estate while they’re continuing to work in their primary jobs. So that, for me is the best example that I could give. And then yeah, putting a twist on it for the fund. Which is great, because, typically the way so real estate syndication, similar to the funds, however, with a fund, you could have just one asset, most of the time, it’s not one, it’s usually two or three. And usually you have with the funds, specifically, I then enables an investor to get diversification, because now you might now be exposed to a variety of different assets, or maybe even a variety of different asset types, as well. So that’s what attracts people to the fund model in terms of that, but we can go in deeper in terms of some of the pros and cons as well, to the extent that you want to. So yeah,

[0:08:00.0] KR:

Yeah, no, that’s, that’s really helpful. I think it’s a good overview and great for people to understand. And, and there’s a couple different ways to go about it. Right. Yes. So. So before that, before they decide if it’s a single asset they want to invest in if it’s a fund, how do you? How does one determine that, that even passive investing is the right thing for them?

[0:08:26.0] LH:

Yeah, great question. Great question. I think a couple things that I think people need to think about, I think the first one is control. Like how much control do you want to have over your assets, and over what you’ve invested in, some people want to be able to determine Oh, when to sell when to refi. You know, some people want to determine how the remodel is done on the asset. And if you’re that type of person, then passively investing in real estate might not be a good fit for you. However, keep in mind that like when you invest in the stock market, like an index funds, or you’re investing in Apple, you’re also passively investing there as well, because you don’t have a say in how Apple runs their business. You just the benefit is that you can sell the stock. And that’s where you can control However, when you invest in a real estate syndication, you don’t get your you don’t really have the flexibility to just sell your equity stake in that real estate syndication. So you’re pretty much locked in for the duration of you know, the period that you’re in that particular investment. So I think one control. The second thing that I think is also important for for someone who’s thinking about this is just sort of understanding Okay, when what are the returns on these Real Estate syndications and does this align with what I want for my investment strategy right now, you might have. And the reason I say that is because there’s a lot of ways you can invest to earn money. Some people realize you know what, they want to get a big win. And if they want a big win, they might decide that you know what I want to do crypto, and crypto they invest today and like, you know, a week from now, they’ve doubled their money or whatever, right. Whereas in real estate, like, I think it’s very important to level set expectations to understand that, it’s going to take a little while for that money to grow and for your investment to grow. But it’s a little bit more stable. And in exchange for that stability. These are the types of returns you’re going to ultimately get, it’s not going to be as drastic as in one month or whatever. You’re doubling your money. And I think those are the two key things that there are other things that I think as someone who’s thinking about whether they should invest in a real estate syndication or not. It’s like, Okay, well, how much level of control do you want? And then secondly, is like, what do you want your money to do for you? Are you on this aggressive investing strategy, then maybe real estate syndications is not necessarily the right fit. But if you’re someone who’s like, okay, I want my money to grow, and I’m okay with it growing over a period of time, then real estate syndications is a really good fit for you.

[0:11:38.0] KR:

Yeah, I think those are two great points. And the other thing I would bring up is just the the risk of it all right, because it’s a very different risk profile to invest in real estate, especially, like value add real estate, where it’s cash flowing business that’s been there for a number of years, versus something like crypto, right, which is extremely volatile and can go up and down overnight. I mean, it just, you may knock it out of the park. And and you may not you may lose, right versus real estate, it’s very much a steadier play. And by no means are the returns something that should be should be kind of scoffed at, I mean, great returns typically being the stock market. But just I think that risk adjusted p seven and understanding what’s the likelihood that I hit that big, homerun or Grand Slam, right, versus what’s the likelihood that that I hit the returns that are expected on my real estate deal? I think there’s just very different risk profiles, right?

[0:12:38.0] LH:

Yes. 100%? Very, that’s a good point.

[0:12:43.0] KR:

Yeah, awesome. And I think Yeah, the control is a big thing could like control also time commitment, right? Like I always think about, you know, there, I think it sounds maybe sexy to people, like the real estate syndication, kind of run, run things on your own. But I think when it comes down to, like, you’ve got to be really passionate about this stuff, right? Like, you really have to like it, because it’s a lot of time, it’s a lot of work. And if it’s, if it’s something that you’re just kind of interested in to make money, it’s probably not the best fit. It’s probably not like a good like trade off of, you know, time to write to reward, you know what I mean, unless you really love it, because it’s just, no, that’s a lot to get into, I guess. But, yeah, I think those are great tips. So when you’re looking at, when you’re looking at a deal, and you’re evaluating whether or not it’s a good investment, you know, what are the some of the things that you’re looking at? And how should investors be looking at these deals?

[0:13:48.0] LH:

Yeah, great question. So I really think that people need to get clear on what they want first, before they start looking at deals. And sometimes you need to look at deals in order to get color. Because you got to take action to know sometimes what it is that you want. And sometimes what you don’t want, for me as I can speak for my personal self. So like I am an investor that likes a good mix of cash flow and appreciation. I’m not really interested in a purely appreciation deal. And then I’m not also interested in a purely cash flow deal. And to break that down a little bit. So then as a result, that helps me determine what is a good deal for me. And what’s a good deal for me might not be a good deal for the next person, because they might want more appreciation. They might be looking for cash flow, they might be looking for tax benefits. So that’s why it’s so important to first get clear about what you want. Now, once you’re clear on that, the next part of it in terms of a good deal, I think on Understanding the risks and key assumptions that are being made in this particular deal. So the first thing I like to look at when I see a deal come to me is one, where is this deal located? Because the location helps me to determine, okay, is this in a market that I know has strong fundamentals, population growth, job growth, business, business friendly, landlord friendly, those are four things that, for me are very important. Because in the face of COVID, that COVID has shown the importance of those kinds of things. Because that enables you to have a business that will continue to sustain even in the face of a pandemic. So that’s the first thing that I look at. The second thing I look at is, what is the business plan? What do they plan to do here? So I read to understand, are they planning on increasing rents? And if so, what is that rent increase strategy? Is it 3% a year to 0%? The first year, I want to understand what the assumptions they’re making in terms of how they’re planning on increasing rents. And then sometimes that business plan could be Oh, you know, this property has been mismanaged. So the expenses are high, we plan to go in and like, you know, Institute ways in which they can decrease expenses, maybe putting in a different kind of water system, or whatever billing back for certain types of bills, etc, etc. There’s a variety of different things, but understanding what the business plan is understanding, okay, this is what’s going on, this is what they’re saying. And then sort of taking a step back and say, is this reasonable? So for me, it’s like, maybe googling that city and sort of seeing, you know, what is apart? How are apartments doing in that city? And sometimes you can just google and see, oh, there’s new businesses moving in, and, you know, that kind of stuff. And that helps us support. Okay. It was sort of make sense why, you know, that is going the why that’s true. I’ll even just look at apartments calm or just like other things like that. Zillow, that kind of stuff, like I rent, so I know what it’s like to look for a place. So I could just look and see, okay, I can see in my area, what the rents go for, it’s not really that hard. And then I would do the same thing for the property and sort of see, okay, does that make sense based on what they’ve put in the package in terms of their, their comps, because many people will put their comps in the package? And from that, I want to see, okay, is this operator doing some the business plan that they’re planning on executing and the asset class that they’re working in? Is this what they do? Is this their bread and butter, because that helps to decrease execution risk. Because they have then been able to do this before they know what they’re doing, as opposed to, they’ve not done this before. And we’re doing this for the first time. So for me, at least, that’s some of the things that I think are like very key when people are looking to sort of, you know, be able to determine whether, okay, is this deal a good deal? And then, are the things that are the key assumptions? Do they sort of make sense? And then to sort of go from there?

[0:18:33.0] KR:

Yeah, no, that was great. That was a very thorough rundown of some, some good due diligence. And I hope that the folks are taking that away as as a checklist on things you should do as you start looking at deals, right, because I don’t know that every investor goes a lot that level of detail, but I love hearing that. And, you know, I liked how you you start with the market, right? You start with the market, and you get down into the deal. How’s it currently performing? Based on that? What are all the assumptions? Right? And I love how you said like, are they reasonable? Because that is the key, like, are these assumptions reasonable? And how do you know? Well, based on, like you said, looking around, what are other rents at right, like, Where is this property in relation to others? So I think that’s great. And then, and then you kind of went into track record, right around execution risk, like how many times have they done this before? And I’ll actually love that term execution risk. I wrote that down. And because it is a real thing, right? It’s just the first time you do something, it’s almost softer than the second, third, fourth time, right? You get better as you go. And so absolutely, I think that’s a great way to approach looking at a deal. So I appreciate you breaking that down for us. So I want to switch gears a little bit because I think you have a really unique perspective in this your background as an auditor, your background being inside these funds, right.What are Maybe what are some of the things that people should look out for? Are there things you learned, like from the inside or from your auditing experience? That could be red flags for folks or just things to maybe that they need to understand even that they might typically not?

[0:20:18.0] LH:

Yeah, you know, one thing that I would say comes up a lot is that understanding, you know, how this deal is going to pay out cash flow. And even institutional investors get tripped up with this. So like, for instance, you invest in a fund that’s developing a development fund, and you don’t realize that, wow, this fund is not going to cash like this investment is not going to cash flow. And like sort of understanding upfront that the nature of that investment is that it’s going to be a longer hole with a pop at the end, and that there will be no cash flow during the whole period. And then sort of knowing Okay, this is what I signed up for, when I decided to invest in this kinds of deal. I think that’s one of the things that is out there that people don’t always think about, like when they, when they see these deals, because a lot of those deals have really high returns, those are the ones that are like 25%, and maybe even 3x your money, because it’s a development project. So they’re, you know, there’s a lot of potential potential to provide lots of return. So that’s the first thing I would say. The second thing I would say is, you know, the way in which the waterfall structure is done on ideal, I think for me, I think I have maybe, because I see a lot of deals, but I do see a lot of deals where like, you know, GP, the split, is like, instead of it being 8020 80%, to LPs 20%, to GPS, I’ll see like an 80%, to GPS and 20%, to LPs. And people presenting deals to me that are this way. And it’s makes me sad, because I know that they’re going to be investors out there who don’t know that they could put their money somewhere else where they’re getting an 8020 split, and a better return than what this person is offering them. So that kind of stuff makes me sad when I see that because, like, I just makes me sad, because I know that it’s possible to be able to invest that same 50k 100k or whatever, somewhere else and just get a better return. So getting educated about the returns is like really important. The other thing that I would tell I would say for investors is, I think that sometimes people don’t do enough research on, like, maybe the operators themselves, like understanding, you know, who like how these people communicate. And then you’re now already in the deal. And you realize, oh, like they don’t do quarterly reporting. They don’t send out any p&l or anything of that nature. And I think that sometimes, like, you know, like, knowing that kind of stuff can help you. Also on the other side of that many times people don’t even know that they should be getting that or even how to review that. So for instance, I was in a deal in 2019, that was in Atlanta, I purchased in this, they purchase it in the summer. And that deal was giving out quarterly financials and quarterly updates. So I could see in 2020, that that deal. they analyze were negative. So it was no surprise to me that once 2021 came around, they were getting ready to sell they sold the property. So a couple of things that I learned from that experience is the benefit of one investing in a really good market. Because even though the asset itself was a Class C asset, and the combination of not being able to execute on the business plan, which was a lot of renovations, was the plan. And then secondly, dealing with a lot of tenants who were unable to pay both of those things affected returns and the inability to perform the asset the way they wanted to perform it to run it. So as a result, they saw that the writing was on the wall and sold the asset. So you know, being working with operators who are aligned with you and who believe in preservation of capital because some operators would have just kept the asset and try to turn it around.You know, go deeper into the hole, but also being investing in a really good market because they were able to sell the asset for 30% gain. So not only giving investors back their money, but also with some gains. So it’s like things like that, that is important for investors to think about, when looking at these kinds of deals is like understanding, are the operators sort of in line with you. And those kind of returns those kind of waterfalls, to me, illustrates that their incentives are aligned with with the investors.

[0:25:37.0] KR:

Gotcha. Yeah, I mean, those are, you’re kind of hitting on the, just the dynamics of the deal structure, right, which is critical to understand. And it probably is something that people may feel, you know, may feel funny asking about may feel like they should, they should already know it. Right. And I think like, what we’re saying here is, make sure you’re asking those questions like those are not stupid questions. Those are, those are questions that need to be asked. You need to absolutely understand the waterfall structure and how cash flow gets paid. And when when it gets paid. Right. And, and I’ve never seen a deal like that 80% split to the sponsors. But that’s just seems kind of predatory. It seems like they’re just trying, they’re just hoping somebody doesn’t see which side of the gap and the LP are on. So God, I haven’t seen one of those.

[0:26:32.0] LH:

One more thing I’ll also say is, um, deals where they are relying on a refi, in order to make the returns   work, in my opinion, are also red flags. Because that you can’t guarantee in this current economy and the current marketplace, you can’t guarantee that a year from now the interest rates are still going to be at the levels they are at. So it’s possible that they could be higher a year from now when you’re ready to refinance?

[0:27:06.0] KR:

Yeah, I 100% agree with you. And I see that all the time. And I saw a deal where they were refining the three reifies in the whole period underwritten. And that’s extreme, but but I agree with you that like you can’t guarantee that you shouldn’t base your underwriting, that you’re going to be able to refi Yeah. because like you said, you never know if you can great, right? That should be part of the plan. It shouldn’t be the only plan, right? If it makes sense based on the market dynamics. Sure. Right. You’d be foolish not to, but it shouldn’t be the only plan. And it can’t be what you’re when you’re basing all your returns off of.Right,

[0:27:46.0] LH:

Correct.

[0:27:47.0] KR:

Yeah,I think those are awesome things that you brought up. The other thing you mentioned was communication, right? And just how does communication work? What reports are you going to get? When are you going to get them? I mean, those are critical things to ask because we those, that’s one of the things, and this is from my own experience, passive investing as well. That really varies from sponsor to sponsor is like, how do they communicate? When do they communicate? And what do they communicate? And it just, it’s vastly different. So it’s really important to asset.

[0:28:20.0] LH:

Yeah, very important. And I think that’s a way in which sponsors can differentiate themselves is being able to, you know, communicate consistently to investors, because then that helps investors to know that that increases your ability to have repeat investors in your deals.

[0:28:42.0] KR:

Yeah, 100% 100%. Agree. So you mentioned that earlier, you were talking about like recession proof, and you actually have this term like winterizing your investment. I thought that Yeah. And, you know, so what do you mean? I guess what does that mean? Tell us what that means? Is it a style? Is it certain things you’re investing in? I mean, how are you? winterizing your investments?

[0:29:07.0] LH:

Yeah, you know, for a passive investor, specifically, when you’re thinking about deploying your capital, you know, you might have half a million dollars that you want to deploy. And you might be thinking, How do I, how do I deploy this capital in the way in which it’s not going to be affected by recessions? When it’s deployed, I think a couple things. One, you want to diversify. So that’s where you want to get educated about all the different ways, especially if you want to invest it all. In real estate, you want to diversify across the different asset classes. And that could mean different asset classes in multifamily itself. So like maybe having a portion of it in like a minus deal, a b plus b, b minus C, because Each of those asset classes are going to have a different return profile, because each of them is going to have a different risk, seeing the more risky but also the potential for the highest return. Or you could be dealing with a Class B asset that has deep value add, which could give you high returns. But because it’s a deep value add, it comes with higher risk. So I would say that’s one of the that’s one of the ways you can winter rise slash recession proof your portfolio is by even if you’re investing real estate is diversifying it across the different asset classes. And then number two is like also looking at different operators. Also looking at different markets, like not just investing all in the same market will then put you in a position where you then need to build relationships with different operators. So that’s where people like myself who decide to take the fun model come in, because I’m out there building relationships with different operators that are located in different states and are doing different asset classes. So then investors can then leverage experiences of these individuals to then get access to those kinds of deals without having to then invest 50k in every single deal. So yeah,

[0:31:27.0] KR:

Gotcha No, that’s great advice, right, diversify, diversify, and everything. I mean, I think that’s, that’s the best strategy to to limit your risk. Right. Yeah. To enter preserve capital. You know, so I think a lot of good advice there. Yeah. I’m curious in the fund model. You know, you’re you’re putting the fund together, you’re doing a lot of work, right, as you described and bring investors in, and then you’re working with several sponsors, perhaps to, to invest in their deals. But how is the fund compensated? or How are you compensated? How is the structure? Because like, we there’s the deal structure? There’s the deal, cash flow, and, and potential returns right, from the from the sale? But then how does that flow through to the fund? And how is the fund compensated? And how does it flow through to the investors?

[0:32:22.0] LH:

Great question. So typically, by coming to a sponsor with by, so when the funnel funds, one of the benefits of the funnel, one structure is you’re able to provide one large check to a deal, typically. So by being able to provide a large check to the deal, you are able to typically negotiate better terms for that larger check. Because it takes a lot of stress and pressure off of the person who is acquiring the asset to find all of this capital, in one sum, they’re getting a $5 million dollar check, that could be substantially all of their capital or a good portion of the capital that they need to raise. In exchange for doing that, they might decide that you could negotiate with them to, you know, get better terms, what that looks like is, instead of an eight or 6%, preferred return, maybe you’re getting seven or 8% preferred return, because you’re bringing a larger amount, which as I said before, the benefits doing that. It could be that you negotiate, you know, a low fees. And all of this stuff is not unique to this industry. I mean, like just you know, real estate syndications, this is also prevalent at the institutional level as well, you will have large companies that will bring in large amounts of investor money into the fund. And in exchange for doing that they pay less management fees they get, they pay less in all different types of fees that they could even charge fees. If you’re a broker dealer, you could even charge fees for bringing money into a deal. And I’m not a broker dealer, so I do not do that. But yeah, like you then can create your fund that then enables you to then get those better terms. By getting those better terms. When that money comes in. That’s how the fund manager can then ultimately get compensated, because you could still keep an 8% preferred, you could still have a 6% preferred return. So investors could have the same economics as they went directly. Now they’re getting exposure to a variety of different asset classes, or maybe just fall into different investments. But at the end of the day, you’re able to negotiate better terms so that at the end of the day, you are then able to get compensated for putting that deal together. So that’s how it can be done. The other way it can be done is You don’t get any preferred terms from, you know the operator, but you decided to do just a 95 split out your fund. And that’s something that we did on the 2019 fund that I created, like we didn’t, we brought half a million to a deal, we didn’t get any better terms. But we did have to decrease the returns for our investors. So instead of getting a 25% IRR, they got a 20% IRR, because it was a 95, five split at our level. So and they would not have had access to that investment otherwise, so buy them because it was a 506 B. So by them, you know, by us preventing that deal to them, even though the returns were slightly lower than them going directly with the operator. Number one, they couldn’t go with the operator. And number two is still was a better deal than, you know, going somewhere else. So yeah.

[0:36:03.0] KR:

Gotcha. Gotcha. Very interesting. I think it’s a it’s a great model for folks that want to focus on, on creating vessel relationships and and raising capital. Very interesting. Yeah. Well, Lisa, it’s been a pleasure to have you on before I let you go, though, I want to take you through our keys to success around this four questions I want to ask you. The first one is, and this is right up your alley. It’s if you were, if if an investor can only ask the deal sponsor one question, what is that one question they should ask.

[0:36:45.0] LH:

Wow, that one’s really hard. Um, Mmm hmm. I think I think the question I think that they should ask is, how have you handled a deal that hasn’t gotten? Well?

[0:37:09.0] KR:

Yeah, really good. See you if you have too many questions up there. Just take a while to get through the encyclopedia. Now that that’s a great one, I think, yeah, you’re hitting on right. track record their communication? How do they handle pressure? How do they handle when things don’t go? Well? And how honest and upfront? Are they? Right? Yeah, you can hit it on a lot of different things. Yeah. I think that’s a great one. What are you most proud of in your career?

[0:37:36.0] LH:

I would say I’m most proud of the decision to build a business now. The courage to take this risk, and to be willing to deal with whatever happens as a result of this journey.

[0:37:55.0] KR:

That’s awesome. Yeah, it’s not an easy thing to do. Right? leap of faith. So congratulations on doing that. What is a book that everyone should read?

[0:38:06.0] LH:

I would say I would recommend the 12 Week year, the 12 Week year. Why? Because that book, regardless of what you’re doing in your life, can help you to achieve so much. There’s the saying that says that people underestimate how much they can do in like, a year, but like, overestimate how much they can do in like six months or a month. And it’s so true, like, and that book helps you to really focus down on the things that are really important in a short period of time and gain a lot of momentum and cover a ton of ground.

[0:38:53.0] KR:

Awesome, very powerful. And then lastly, what is your number one key to success?

[0:39:01.0] LH:

Not giving up. Be flexible on how things manifest, but be clear and focused on the overall vision.

[0:39:15.0] KR:

Yeah, you know, I asked that question everybody on the show, and there’s been definitely a common theme of perseverance never give up. And I think that just, it’s critical when you’re an entrepreneur, right? And when you’re you have your own business, you’re gonna get knocked down, you got to get back up. And it’s all about the highest of the highest highs and the lowest lows, you know, but it’s, but it’s exciting. It’s exciting along the way, but Oh, yeah, yeah, that never give up. That’s right. Awesome. So Lisa, if folks want to learn more about what you’re doing, how can they get ahold of you?

[0:39:51.0] LH:

Yeah, totally. The best place to get a hold of me is Lisa hilton.com. One Stop Shop everything. My podcast is there. blogs their videos all anything way to contact me to learn about investing alongside me is there and I do have a freebie for your show. So that’s  . So quick ebook on you know real estate syndications and how they work. So yeah,

[0:40:23.0] KR:

Very cool. Awesome, thanks. We’ll we’ll make sure that’s in the show notes so folks can get access to that. Appreciate you offering it.

[0:40:29.0] LH:

Thank you.

[0:40:30.0] KR:

Very good Elisa, have a great rest of the day and hope to talk to you again soon.

[0:40:36.0] LH:

Awesome.

KR

Thanks for listening to another great episode of  “Ritter On Real Estate” . Hit the subscribe button and make sure you don’t miss out on the content that will make you a better investor. Also visit Kent ritter.com for articles, videos and tools curated just for passive investors from next time. This is Kent Ritter with Ritter on real estate. Go out and invest like a pro.