Steven Pesavento, Principal at Von Finch Capital, shares his journey in real estate, emphasizing mindset, financial strategy, and self-investment. We explore current market opportunities in multifamily real estate and private credit amidst economic shifts.
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Transcription
Introduction to Investor Mindset
Steven Pesavento: I’ll share just one more that really comes into this philosophy of thinking like an investor. And one of them that I think is really important is that investors know their numbers. That doesn’t mean that they have to be the best analyst. They have to be able to underwrite every single deal. Although those things are valuable and important, depending on your role.
When you know your numbers, your balance sheet, how much money you have, how much money you owe, your net worth. You know how much money you make every single month. You know how much money you spend. You also connect it to a larger vision of what you’re actually going after in your life.
And what is the purpose behind investing? The person who’s investing 1. 6 million at 8 percent to make 10, 000 a month, that person is thinking, okay, it costs me 10, 000 a month to live a basic life for that person. So they want to know that they’ve got that covered. So their purpose behind investing is clear.
Because they know their numbers.
Welcome to the Podcast
Ben Fraser: Welcome back to another episode of the Invest Like a Billionaire podcast. I’m your host, Ben Fraser today, joined by an awesome guest. Super excited to have Steven Pesavento on the show.
Guest Introduction: Steven Pesavento
Ben Fraser: I’ve known Steven more in passing for the past few years. I have a lot of respect for him, from far and super excited too.
Bring him on the show to share his wisdom. He runs a very successful podcast called The Investor Mindset Show, and he’s also a principal at VonFinch Capital.
This is the Invest Like a Billionaire podcast, where we uncover the alternative investments and strategies that billionaires use to grow wealth.
The tools and tactics you’ll learn from this podcast will make you a better investor and help you build legacy wealth. Join us as we dive into the world of alternative investments, uncover strategies of the ultra wealthy.
Steven, thanks so much for coming on the show, man.
Steven Pesavento: Ben super excited to be here. Thanks for having me.
Ben Fraser: Yeah. For those that may not be super familiar with you, give a little bit of your background and what you do with your podcast and education for investors.
Steven Pesavento: Yeah.
Steven’s Background and Journey
Steven Pesavento: So a little bit about me growing up in Minnesota, blue collar background.
A lot of challenges and struggles, just like a lot of people out there. And that’s what really drove me down the entrepreneurial path. I started out in management consulting, and went to high tech or high growth tech startups. And then got into real estate, flipped over 200 houses in two and a half years.
Started with no money and found some amazing investors and great partner to work with, built that company up, excited, moved into the multifamily space and collectively, I’ve personally purchased over $250 million of real estate and me and my partner, the Von Finch platform, have bought over $550 million of multifamily, so been able to build a nice platform.
We focus on opportunistic value add type investing, so we’re looking to buy deeply discounted multifamily across the Midwest and the western region of the US and we’ve done quite well with it.
Ben Fraser: Awesome, man. I’m excited to get into a lot more of the strategy stuff on investing here later.
The Importance of Mindset in Investing
Ben Fraser: But before we do that, I did want to spend some time talking about mindset, right?
Your whole show is. Call the investor mindset and talk a little bit about your journey and the importance of that, how that’s influenced your growth, your strategy, everything.
Steven Pesavento: I think it’s fascinating. The world of podcasting is an incredible space. I made the decision to start the show back in late 2018 after being in bigger pockets and always wanting to do a podcast, but never feeling like, Oh, that’s something that I could do.
And the investor mindset was just a personal obsession. I love personal development. I love learning about how to think differently and how our thoughts and beliefs directly lead to the actions we take and therefore the outcomes we experience. And so when I created the show, I was amazed that it really took off.
Millions of downloads top of the chart for many years, doesn’t quite have the reach it did as so many other podcasts are out there today, but it’s been a fun journey. So really the backing of the show is all about this idea of how to think like an investor. Like how do these super successful entrepreneurs and investors think?
What’s different about them? And how does that allow you, if you think like they do, set you up to be able to have success? And I can say personally, coming from where I came from, there was a huge lack. We were on food stamps, single mom working, in hospitality, not a lot of money going around, but I still lived a good life.
But that challenge led me to wanting to find a way out of it. And so I got obsessed with learning how other people think and through the show, I’ve been able to learn a ton and be able to share that with a lot of people.
Ben Fraser: Yeah. I love that. On our show, Invest Like a Billionaire where. We’re trying to implement the strategies, the things that the ultra wealthy are doing, and replicate those in our own lives and investing.
But what I’ve found so much of the time is it’s, you can have all the strategies and all the tactics, but so much of the time, the limitation is the mindset, right? A lot of people don’t talk about that enough because That usually is the limiting factor for most people in their growth and feeling like they can take control over their financial future and feeling like they can make good quality decisions. And
Steven Pesavento: It’s funny because the funny thing about that is we all want to learn the tactic, right? We want to learn, how do we do it? That’s the biggest question I get. When I meet with young people who are looking to get into the game or want to make a change in their life. And what’s so funny about that is I was the same way.
I wanted to know how and one of my friends who’s now one of my best friends, decades later, but I remember I was sitting in his office. He has been an entrepreneur since he was 16 years old, and never had a real job. Had a lot of success along the way. And I was working in a career and I asked him, I said, Hey how do you do it?
How do you go and build a business? And his answer made me mad because I was like, he’s not sharing the secrets. There’s gotta be a secret. And what he said to me was, if you want to be an entrepreneur. Then you have to be an entrepreneur. If you want to build a business, you have to build a business. And it, at the time I was upset about it, but when I reflect on it from a meta perspective, what he’s really saying is you have to step into that.
You have to be that identity. You have to go out and do it. And so what’s so fascinating is we all want to learn the tactics, but the tactics are worthless. If we don’t have the belief system, that’s going to make us put those things into action. And so what I found is people don’t love the idea of thinking about mindset, but it’s the core of everything that we do.
And so once you start thinking like an investor, when you start thinking like an entrepreneur, when you start thinking like an owner, when you come into those perspectives and you take on that identity, it really allows you to go and implement those tactics. So the person I am today, I’m so grateful. I am nowhere.
At all, the same person I was when I was 17, 18, 25, 30, I continue to evolve and it’s because of experience. Those experiences turn into wisdom that you can then go and reimplement and use those tactics and strategies, but it really all comes down to how we think, and so you have to understand what are those ways those successful families are thinking, what’s different about them.
Where are they in their life? And how do those things apply to you depending on where you’re at? Because their strategy is going to be different from yours. If you’re in a growth strategy, if you’re in a place where you need to grow your wealth, you need to create that wealth. You’re going to be different from the billionaire family who’s all focused on preservation.
And they want to make sure that the third and fourth generations get the money. And so they don’t want to lose it. So they’re going to have a different approach, but you can still learn from that no matter where you’re at and apply the things properly that align for you.
Ben Fraser: Yeah. I love that you’re focused on that.
I feel like in our day and age of social media and, Catchy headlines of the five secrets of x or here’s the three step process to get all you want in life it Diminishes, you know everything to a few simple secrets or steps or things that you know This person knows the secret that I don’t know and if I just do this then i’ll get that but to me like I always go back to those stories we all hear of The lottery winners, right?
They were very dirt poor. They got all this money, but the money doesn’t solve the problems. And in fact, it amplifies them usually. And most of the time they didn’t write back up where they were, right? Because they didn’t have the capacity. They didn’t have the mindset. They didn’t have the experience and the wisdom to know how to steward it.
How to be able to achieve that level. It was just given to them as an anomaly. And As investors, as those trying to build wealth and build legacy It’s sometimes not so sexy. It’s the simple thing that your friend shares with you, right? Where it’s really a matter of doing it and learning and growing along the way and trying to take as much as you can out of each experience to become a better person, to become, to have more capacity, to grow in different ways.
And share some of the, what are some of the nuggets that. You’ve learned along the way, either from your own experience or from doing the podcast and things that have helped you as an investor get from where you were to where you are now.
Steven Pesavento: Yeah.
Philosophies of Thinking Like an Investor
Steven Pesavento: So let me just share maybe a couple, two, three, four, five.
Of these like philosophies of how to think like an investor. And I’ll share a couple of stories along the way as well. What I’m going to share is not profound. You’re going to hear it. You’re going to think, Hey, I’ve heard that before, but what I want to challenge you as a listener is to hear the idea and ask yourself, how can I implement it even better?
How can I adopt that belief even deeper? And what does that mean to embody this belief? Because even me telling you these things. I focus on them on a regular basis, but there’s always more room for growth. So if we come in from that perspective, that’s going to help. And, the first one is investors invest in themselves, right?
It sounds simple. You’re listening to the show. This is an investment of your time. You’re looking for an answer. And one is going to be presented to you. And so when you are an investor, you’re investing yourself because you’re going to get the biggest ROI. So if I focus on myself, I focus on mindset.
I focus on showing how I can be the best husband, how it can be the best father, how it can be the best CEO, how it can be the best investor. And I’m looking for ways how I can do that. I want to invest the time, effort, energy and money into myself so I can get that ROI back. And the second piece is that ROI is everywhere.
ROI is not just dollars and cents. Now when I’m looking at an investment deal as an operator and fund manager, And investment manager, I’m looking at the return because that is the purpose and the outcome of making that particular capital investment. I’m looking to create a return in ROI. Those dollars and cents are what matter.
The outcome behind the dollars and cents is where the real secret is. Because when somebody drops a million dollars into my fund or drops a million dollars into a promissory note, they’re looking for a specific outcome. They’re looking for a hundred thousand dollars a year in consistent cash flow.
But what is it gonna do for you? What is that a hundred thousand gonna do? It’s gonna enable you to maybe quit your job. It’s gonna enable you to have a line of defense so you can go and do even more fun things. It’s gonna give you security for your family. So if you look beyond the dollars, what does it really drive you?
But the other side, when you think like an investor in every part of your life, is a really cool thing. Is that ROI everywhere? And when I say that, what I mean is we’re investing time right now. We’re doing this show. I’m sharing some lessons. You’re hearing about me. I’m making an investment out into the world.
I’m sharing lessons, things that I’ve come across or discovered, and now you’re going to receive it. So I’m making a deposit. Into the social bank of the world. People are going to hear this and they’re going to get something back. Now, am I going to directly benefit from that? Hard to say.
Oftentimes it is going to circulate in the world and more people are going to be thinking like this. But every time you go out to dinner with a few friends, what are you doing? You’re investing your time in that relationship. You’re creating political capital. You’re creating relationship capital, and you’re going to receive something back.
Whether that’s the ability to call on that person to help you in a time of need, whether it’s that feeling of love and connection, whether it’s your ability to help somebody else through something, there is an ROI there. So the key thing when you’re thinking like an investor is you have to invest in yourself, but most importantly, it all comes down to ROI.
And that doesn’t mean it’s always a tit for tat. That doesn’t mean you got a ledger and you’re thinking, Hey, I went and did this thing for this person. I need to get something back. It’s you’re going out there knowing that. There’s returns on everything that you do, whether it’s money, time, relationships, any of it.
And you want to make those investments because they’re going to pay off in the long run.
Ben Fraser: Yeah, I love that. To me, it speaks of an abundance mindset, a give first mindset, right? Like the people that I’ve seen that exemplify that well, where they’re always giving value with no expectation of return, like it all comes back.
Like they’re always, there is no shortage of opportunity and of relationships and it’s. Also, a lot more fun, right to live with an abundance mindset than a scarcity mindset where you’re concerned about who’s going to take my little pile of what I have right and protect that.
And, for me, in my career, I can definitely hear what you’re saying and see different points of where I’ve made these bigger leaps. It’s from. Stepping into something that I haven’t been doing before and putting myself out there, but then also relying on other people, trying to add value wherever I can, and then being surprised when it actually works out.
And it’s cool. Cause it’s, you push yourself in these different ways that you maybe don’t. You haven’t done it before, so it feels impossible, but then you make that leap. It’s Oh, that actually, that wasn’t that difficult. And it gives you that confidence to keep moving forward.
And I love the, one of the idioms that I always come back to is just always adding value. And it doesn’t always have to be in real estate. That can be such a cliche thing, right? We’re adding value to the property. We’re increasing NOI, but. Just adding value to relationships, adding value to my marriage, adding value to the people I run across it, the coffee shop line and all the different things where it’s, going with that abundance that gives first mindset is.
One, it’s a fun way to live and two, it actually, people that do that are usually the most successful people.
Steven Pesavento: But it’s incredible how it really does work. Like I’ve got a great example of a great friend and business partner, right? We invested time to meet for coffee. We talked, we shared, I shared the things that I could add value to his life in business.
He shared things that could add to my life in business. And five years later, we’ve been business partners for many years. He’s built an incredible platform. I’ve built an incredible platform because of that relationship, that political capital, my firm got an opportunity to do something that no one else has the ability to do, and he has the ability to get value and benefit from that.
And it’s fascinating how this stuff works. You’re just depositing investments in the bank in everything that you do. And when you recognize that you appreciate it from this place, if I’m making an investment, I’m putting in my time, effort, and energy. I’m answering that question. I’m taking this phone call.
I’m checking in on this person. I’m out there in the world making investments every day because of the investor mindset. I run into people who are extremely successful and they tell me they’re not investors. And I’m like, you’re building a business that’s making a hundred million dollars a year.
You’re making an investment. You’re investing in your people. You’re investing in the business. You’re looking at it from this perspective. There’s so much there. And so when people can adopt this idea that they’re already an investor, it puts them so much closer to the start line because they’re far beyond it.
Already. They recognize they’ve already done these things in the past. It’s going to be easier to go and do it. So I’ll share just one more of these basic things that really come into this philosophy of thinking like an investor. Sure. And one of them. What I think is really important is that investors know their numbers.
That doesn’t mean that they have to be the best analyst. They have to be able to underwrite every single deal. Although those things are valuable and important depending on your role in your investment portfolio. But when you know your numbers, your balance sheet, how much money you have, how much money you owe, your net worth.
How much money you make every single month, how much money you spend. And most importantly, because of those things, you also connect it to a larger vision of what you’re actually going after in your life and what is the purpose behind investing. So like that example I brought up earlier with the person who’s investing, 1.
6 million at 8 percent to make 10, 000 a month, that person is thinking, okay. It costs me, 10, 000 a month to live a basic life for that person. So they want to know that they’ve got that coverage.
Ben Fraser: Deals and doing the value add strategy, right?
Understanding Value Add Strategy
Ben Fraser: This is something that people have become very Aware of. A lot of people invested in multifamily value add over the past few years, but now we’re seeing a lot of deals, maybe not working.
And so the question might be is it, was that ever really a real strategy? Is that kind of made up where, there’s a lot of deals not working now, so this must all be bad. So talk a little bit about where you’re seeing opportunity and just the kind of philosophy of value add maybe in general.
Steven Pesavento: Yeah you asked me the question, is value add an opportunistic real estate dead for multifamily and the answer is it’s definitely not the answer is that it is for a lot of people strategies because and I’ll tell you a little bit of a story here that kind of leads in and then I’ll share what I’m seeing in the market, but when you’re investing, you’re playing a game and there’s a set of rules.
On how to play that game. And when you play a game you play to win. Like you play to have fun and you play to enjoy the process, but you’re playing to win. And so what happens in the game of investing is that the rules aren’t necessarily clear on how to win the game. Like the strategy of how to win isn’t always clear, but once you figure out a strategy and you start running with it, you start having wins, you start seeing success and you think, Hey, this is the strategy to win.
That’s the key. That you’re going to see if you’re an investor out in the world. You’re looking at different deals. Hey, did these people, were they winning before? Are they going to keep winning in the future? The answer to that question, are they going to keep winning in the future is how quickly and how adaptable are they when the rules of the game change and how are they looking to find what that next strategy is?
So a good example in this market today and over the last five years is that the game of Real estate was low interest financing and we were in a consistent low interest environment and there was consistent growth happening. That consistent growth means somebody could buy something today and in five years it’s going to be worth more money as long as they just operate it and they don’t do anything special they were going to win.
And so that’s a great game to be playing. And a lot of people were playing it and a lot of people won, but when the rate game changed, when the Fed decided to go from an environment of essentially 0 percent rates, and they told us just a quarter before, we’re not going to raise rates. We can’t afford to do it.
It’s the economy’s in too bad of a place while they decided to raise them, 500%, five and a half percent interest rates at the fed level. What did that do to the game? It changed the rules. It changed the rules because the old strategy of the rule of if I buy something today, it’s going to be worth more tomorrow and it’s going to continue to grow in value over time isn’t true anymore or wasn’t true for the last two years because we just went through a major downturn in the commercial real estate, multifamily values went down by 30 to 40%.
What does that mean? It means for all the people who are playing the game in 2021 and 2022, they just got kicked in the face. The value of those properties went down dramatically. And if they weren’t ready for it, and they weren’t able to execute perfectly, and perfectly, everything had to go exactly right.
Those assets are going to be worth less money than they put into them if they were going to sell in the last six months. And so that’s where A lot of those people with multifamily value are dead. It’s dead because they’re playing on the old rules and they were playing on the old game board and they bought assets at the top of the market.
And now we’re at the bottom of the market where I see the biggest opportunity is.
Opportunities in the Current Market
Steven Pesavento: When the Fed change rates, we changed the game we were playing. And I was fortunate to have the experience of coming up, flipping houses, being a scrappy entrepreneur, not being, a Harvard real estate professional coming from that world and always living in one space.
I looked at it and said where is the opportunity today? And so we were buying two, 300 unit multifamily buildings. We’re executing value add in house. In house construction in house property management and those assets are worth what we bought for them, two years later Meaning we just increased the noi by 40 And those properties are now net even now Fortunately, you don’t have to sell them and so you don’t lose money in real estate if you Don’t have to sell at the wrong time.
And so we’re fortunate we’re in a good position there. Now there’s some challenges in the portfolio. Don’t get me wrong. Anything bought right before fed raised rates were bought at the very worst time. Where the biggest opportunity we’ve seen over the last two years since the Fed raised rates was looking, where is everyone else not investing?
And so for us in particular. I’ll tell you where we’re looking in just a second, but I’ll finish with this thought. The interesting thing about value add and opportunistic investing is you can buy value add no matter what the market is doing. You can buy it when the market is going up by 10 percent a year and you can buy it when the market is going down by 10 percent a year and you can make money doing that.
Because if you buy a building that’s worth 10 million today and the market is going down 10 percent a year, you If I buy that building for 5 million at the end of the year, it’s worth 9 million. So there’s still profit there. There’s still potential. There’s still an opportunity. Even if I held it for another two years, it went down by 10 percent.
Right. 10 percent a year. Now it’s worth a little less than 7 million. So I bought it for five. It’s worth a little less than seven. I held it for three years. I’m still in the money. So the key thing about value add investing, the reason the old game doesn’t work today is because those people are banking on growth and they’re buying on current value and they were hoping for appreciation and they were getting it in the past.
But. In today’s game, you want to go to the table and you want to buy it for well below what it’s currently worth in appraise for what it currently would sell for today. And then you want to have a really good strategy for adding value and upgrading the property. And so for us in particular, the advantage we have is my partner runs a construction company.
We have all in house construction people. We subcontract some things out, but we’re getting The cheapest labor that does incredibly good quality work because we manage it tightly. And we really dig to define that labor. A lot of it’s Latin labor, a lot of people who are super dedicated to what we do, but because we can get construction done at 30 to 50 percent below anybody else in the market, we know we can win.
And then when we pair that with buying a building 20, 30, even 40 percent below what it’s worth today, when you pair those two things together, even if the market was to go down 10 percent a year, which it’s not, you’re coming out the other end with an incredible profit. And so if you’re setting yourself up for success from the beginning and you’re buying it right and you’re operating it right.
And you’re, you have the flexibility, you have cash in the bank and you have fixed rate debt and you don’t have to pay prepayment penalties. You can exit at the perfect time. And so what we did in the market over the last two years was we shifted from buying buildings that were 30, 40, 50 million. And we started buying 10 million buildings, 15 million buildings, 5 million buildings.
And we bought those because of the institutions. The Black Rocks and the West Coast firms and the East Coast firms can’t afford to open the offer memorandum on a building that’s below 25, 30 million. And there was just essentially no competition because the mom and pops couldn’t get debt, they didn’t have balance sheet money, they couldn’t get deals done, and so they couldn’t buy it.
And the institutions can buy it. So there’s a huge opportunity. And so the key is tomorrow’s strategy is going to have to change as it continues. The world continues to change, but if you’re buying stuff well below what it’s currently worth and you could legitimately turn around and sell it for more money the day you bought it, you’re going to be in a good position and then you gotta make sure you operate right.
And so that’s what we’ve been seeing in the multifamily world. And that’s what we do.
Ben Fraser: Love it. What else do you see? You talked about credit. What are you guys doing on the credit side?
Private Credit Strategies
Steven Pesavento: On the credit side, we use private credit for a very unique opportunity. So for us, when we’re out in the market and we’re buying these buildings A 15 million building in Des Moines, Iowa is 200 to 300 units.
A 15 million building in Denver is 80 to a hundred units, right? So for us, it’s not about unit size, although it does take way more work for us to do smaller buildings. And frankly, it’s not a good scalable model, but it’s super profitable. Like net return at the deal level, post fees, pre carry. Okay. On 25 exits is like a 56 IRR on this strategy.
And so there’s a lot of money to be made when you go into the sectors that other people just can’t compete in on the private credit side. What’s been really a huge advantage for us is because we have a big private credit book, we have a bunch of investors who have money. That is invested with us and they’re getting a six, eight, 10 percent current pay return.
They’re getting paid every single month. That money is sitting on the balance sheet so we can use it whenever we need it. And so the advantage it’s given us is that when we’re going out and we’re buying that 10 million building, we can close on it in 10, 15, 20, 30 days. We do our inspection, we don’t have to wait around for somebody else to give us permission to close.
And because of that, There’s a huge benefit, a huge savings, a huge advantage to the seller. And so we really use that as backup capital for closing deals in first position, often sometimes in a mezz position, but we’ve been able to get deals closed and then we turn around and refinance that capital out quickly.
And it’s allowed us to close deals. Would have taken 90 days to get a lender on board back during that period where things were really tough. And so that’s been our biggest advantage with private credit is we use it in the strategy that we’re already focused on. And it’s just another tool in the tool belt to get a deal done.
And to be able to get big savings. And then if equity is coming into that deal, they know, Hey, we’re closing it with a first position loan from the balance sheet, here’s the cost, here’s the plan to refinance, here’s the worst case if it doesn’t refinance, but here’s the advantage of what we built, like the extra savings.
And so people love that. And it’s been a big advantage for us.
Ben Fraser: It’s awesome. Yeah, giving you the ability to move quicker in the market a lot of times can be the make or break for getting a good deal. Steven, it’s been really fun to, to chat with you and love, love your thoughts and the mindset stuff.
And obviously been navigating a lot of the changes and I love how you frame that, the rules of the game shifted, right? So the game you’re playing has to be different. And, I would argue that the. The rules that people were playing the game of the last few years were never really a sustainable game.
Yeah, I think it’s important to understand, what is the strategy and what is driving the returns and the growth, right? If it’s just market appreciation, then. You shouldn’t probably be investing in private equity for that, because there’s a lot of downsides just to get market returns.
But if you are truly finding an itch and an opportunity that other people aren’t doing, and you can do that and operate in a well, then that’s where you create the outsized returns.
Steven Pesavento: Yeah, I couldn’t agree more. And I think it’s a unique world because, because we were investing in the Midwest, it is fairly stable.
It doesn’t see massive appreciation. It doesn’t see massive depreciation. And so like rent growth is still positive in the Midwest and most of the markets we operate in. And yet in the Southeast rent growth is negative. Things are potentially overbuilt market to market. And there’s something to really be said.
You got to know where you’re at, what you’re looking for. What is the advantage for years? Denver was a place where we doubled money quickly. We’d cycle through these buildings. We’re not going to hold them for more than 18 to 36 months, but if we want cash flow and yield, we’re going to park it in the Midwest.
And because of that, and because there’s so many people who don’t operate well. There’s a big opportunity for cleaning up other people’s messes. And what I would say is, even if you invested in 2021, 2022, it, no, actually, because if you invest in 2021, 2022, you must be investing right now.
Like it’s a huge mistake for those people who’ve been sitting on the sidelines for the last two years, because they were hurt or they really, they didn’t like the outcome of some of their investments or they’re worried about a loss. You got to be investing at the bottom of the market.
If you invest at the top of the market so that you can have a total net average return. Cause like I have a couple of deals that were bought in 2022 or the end of 2021 that are, were bought at the absolute top of the market. One asset in particular, we executed perfectly. It’s worth exactly what we have into it with maybe a 8% return, but again, we increased NOI by 45%.
We decreased expenses by 50%, like we operated that thing. Better than I operated most assets. The market wouldn’t tell you that it was done perfectly unless you compare it to everyone else. And so fortunately we don’t have to sell. We’re just going to hold it and wait out the storm. But there’s other deals that people are in where they’re maybe looking at a loss.
Maybe it’s 20%, maybe it’s 50%, maybe it’s a hundred percent. Maybe they’re going to get foreclosed on. And we sure hope that doesn’t happen to anybody. But the answer is if you’re pumping money into the system at that time, you have to invest today because when there’s blood in the streets, that’s the time to buy, especially when it’s your own blood.
Ben Fraser: Turn that into a little clip there.
No, I think you’re exactly right. I think let’s talk about it. Somebody else the other day, and he said that the concept of dollar cost averaging into private equity is lost a lot of people where it’s pretty common if you’re investing in public markets, where if you’re investing in all times of the market, you smooth out your returns and you get the market return versus, the challenge of 21, 22.
That’s when so much liquidity was pumped in the system. So everyone had cash. So it was easy just to throw money and excess money into deals. But I agree a hundred percent. You need to continue to invest in not only different deals, different markets, different asset classes, but at different points of the cycle, because it’s going to help smooth out your return, your portfolio.
And You can’t always know when the top is and when the bottom is right. When you’re buying a 22, you don’t know that’s the top.
Steven Pesavento: Yeah.
Ben Fraser: And maybe we’re not at the bottom yet, but it sure feels like we’re close. So I’m trying to be.
Steven Pesavento: Calling the bottom since I got into real estate in 2015, every year they’ve been calling it. Or sorry, the top. So you never know until it’s passed.
Ben Fraser: Exactly. Exactly. But. We, it has been corrected. So we know it’s not the top right now. So you should absolutely be buying if you have opportunities in good markets. And we’re seeing the exact same thing, right? We’re a lot of people’s messes that are just hitting the market.
What one deal we’re closing on in a few months, the current owner, they bought it, about 30 percent higher than where we’re, buying it. And they’ve put over 3 million of CapEx and amenities and unit renovations. And. We’re assuming a Fannie Mae loan at 2. 9 percent interest rate.
They just have to get out to finish their fund. And it’s like the last asset of their fund. I’m like, I’ll buy that all day long. Crazy good basis. And those deals are starting to pop up all over the place. And I think the next 12, 18 months are going to be, big buying spree for those that have the right, opportunistic lens.
Closing Thoughts and Contact Information
Ben Fraser: So Steven, what’s the best way for folks to get ahold of you or learn more about your podcast, your private equity group?
Steven Pesavento: Yeah. https://www.vonfinch.com/ to learn more about the private equity group. You can go to https://www.vonfinch.com/. If you want to learn more about the investor mindset, it’s on every podcast, YouTube, every platform you can think of.
You can just search The Investor Mindset Show and you can tune in.
Ben Fraser: Great. Awesome. Thanks for coming on, man.
Steven Pesavento: Appreciate you.
Ben Fraser: This is the Invest Like a Billionaire podcast, where we uncover the alternative investments and strategies that billionaires use to grow wealth. The tools and tactics you’ll learn from this podcast will make you a better investor and help you build legacy wealth.
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