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Transcript:
00:00:05:18 – 00:00:32:17
Aaron Fragnito
All right, ladies and gentlemen, welcome back to the Passive Cash Flow podcast. I’m your host, Aaron Fragnito. And we have a very experienced registered investment advisor here, Ria Andre Sanders with ATL ALTs and Gramercy Park Wealth Advisors. Andre’s, I wanted to have you on the show here. I enjoyed speaking with you at the Facts Right event and get to know you there and, connecting with you a number of times since then.
00:00:32:23 – 00:00:39:18
Aaron Fragnito
You are, very, veteran here in the RA space. And I like what you have going on. How’s your day going, my friend?
00:00:39:20 – 00:01:04:01
Andres Sandate
Good. Aaron, it’s, it’s good to see you. And, glad to be here. You know, things are warming up in Atlanta. That’s where I’m based. You mentioned the name of the of the of the podcast ATL. Also, I, I, I and basement Lana really passionate and, active in the alternative investment business and also, leading up the growth of our Ria, which is called Gramercy Park Wealth Advisors.
00:01:04:01 – 00:01:36:07
Andres Sandate
So, yeah, we’re, we’re just around the corner from, from golf season. You know, I wear my master shirt, obviously, for for those people that are golfers, you know, the, the Masters is is here in Georgia, in Augusta, late spring. So, yeah, we’re excited, for, the conversation and looking forward to talking and seeing if we can help your listeners and guests understand opportunities and also and for sponsors and other people that are active in the channel, how they can, be more successful and penetrating the wealth channel and, raising capital and other things.
00:01:36:09 – 00:01:52:24
Aaron Fragnito
Yeah. You know what? I really enjoyed Andre’s about speaking with you and getting to know you over the last, eight months or so has been that you are, very knowledgeable in the space, but you’re also open to kind of talking to groups like mine that are breaking into it, learning more about it. You know, we’ve been around 11 years.
00:01:52:24 – 00:02:12:04
Aaron Fragnito
I’ve been raising capital with my cell phone and my laptop here for, you know, the over a decade and and doing just fine. But now we’re at a point we want to, break into the next level and realizing that, we are limited for, just going out, raising capital ourselves. And how do firms go out and raise tens of billions, hundreds of millions of dollars?
00:02:12:09 – 00:02:34:05
Aaron Fragnito
How is it done? How do they expand exponentially, like that? And as I’ve been learning more about the Ria space and the broker dealer space and fund administrators and so on, and getting affiliated with it, you’ve been a leading, source there for me to really understand it. So, you know, let’s say, for example, you’re a small real estate business, like like mine here you have a decent portfolio.
00:02:34:05 – 00:02:50:11
Aaron Fragnito
The infrastructure in place, but now you’re ready to break in to the next level. What do you what should you expect and what should you have prepared to kind of even get the attention of registered investment advisors and broker dealers? So they’re going to give you the time of day and potentially help you raise capital.
00:02:50:13 – 00:03:18:00
Andres Sandate
Aaron, I love this topic because I think there’s an opportunity in this conversation to, stop selling and start educating. I think that a lot of times when, sponsors are thinking about what I call moving outside of their friends and family or their their first ring network of, of capital sources, let’s just say you are a real estate syndicator and that’s your asset class.
00:03:18:00 – 00:03:54:06
Andres Sandate
And so you’re looking to expand your business and grow your business like most sponsors are. Where do you find the next source of growth? Where do you find this next capital? And really, where do you find the next partners for your venture, for your business? Right. And unfortunately, as I’ve been in the business, you know, not to pat myself on the back, but but just through many experiences and trial and error and in many different roles, what I’ve learned, probably like you on your journey, is that it’s hard to really get good information and it’s really hard to, to really, get educated.
00:03:54:06 – 00:04:17:04
Andres Sandate
Everybody wants you to pay them to, learn and get their advice and get their wisdom. And, and there’s no certainty that that’s going to actually lead to results. And so I was really glad that you invited me on. You’re, you know, podcast, to learn more about People’s Capital Group, but also to help, you know, provide some of that education out into the marketplace.
00:04:17:04 – 00:04:51:04
Andres Sandate
So, so let’s talk about it. Yeah. I think to simplify things and kind of to set up a framework for how a sponsor can, start to navigate raising more capital. And, and you mentioned several of the options, right? The independent broker dealer channel, the Ria market. I would also include the family office market. And let’s just also go ahead and add in, institutional investors, right, that, that, that are interested in deal flow and they’re interested in, what we call emerging managers.
00:04:51:04 – 00:05:18:18
Andres Sandate
Right. And under the radar niche, specialists. Right. So those are four very distinct, channels or four distinct types of capital. But all of them have one thing in common, and that they’re investing in private markets, in this case, alternatives. We won’t get too specific about any one deal or fund, but they’re all investing because they want to accomplish some common goals.
00:05:18:18 – 00:05:45:15
Andres Sandate
And those those would be pretty obvious to most of your listeners, right? Diversification, passive cash flow. Right. Exposure to, up and coming, opportunities in, in their region or backyard. Right. Like real estate developments, or redevelopments, depreciation benefits in the case of real estate, some tax benefits. So, so but they all have those same types of things in common.
00:05:45:15 – 00:06:07:12
Andres Sandate
Yes. When you get down to it, a single family office has a different mandate than a big institutional asset manager. But but what they all are trying to do is utilize private markets and utilize a third party manager to extract alpha from the marketplace that they are not going to get. They believe, through a passive index approach, right?
00:06:07:14 – 00:06:31:20
Andres Sandate
Otherwise, why wouldn’t you just go do everything in an ETF or an index. Right. And and the reality is, is you won’t you won’t see that. And so they’re going to look for other non correlated or lesser correlated assets. And often they’re going to start in things like real estate or real assets or tangible assets. And let’s let’s not call it anything other than what it is they’re trying to make money.
00:06:31:23 – 00:06:50:12
Andres Sandate
Right. And and diversification. And they’re you could dress it up. But the reality is is that order to make money and so that so so they will look for talent. They will look for a sponsor who has demonstrated, a number of things that we can talk about. At the end of the day, those four groups are all there to make money.
00:06:50:12 – 00:07:11:21
Andres Sandate
And so if you can demonstrate and importantly and we can talk about this, if you want to tell a story and, and express through that story, and demonstrate that your brand and your, your platform can, can be persistent, right. You’re going to get a lot of doors open for you. And that’s different than somebody you’re paying opening doors.
00:07:11:21 – 00:07:35:15
Andres Sandate
Right? Right. People are going to want to introduce you. Yeah. But that’s a lot to start. But I just like to encourage people to be optimistic about all these channels and all these opportunities, because it’s very easy to meet the wrong person who’s in a position to be influential and helpful, to say, pay me $10,000 or pay me $5,000 a month, and I’ll, I’ll show you the Promise Land.
00:07:35:15 – 00:07:40:03
Andres Sandate
And I just don’t think that’s the right approach. It’s never been the approach I’ve taken.
00:07:40:05 – 00:08:03:03
Aaron Fragnito
At People’s Capital Group. We help you invest in real estate, build your wealth by owning professionally managed apartment buildings in the northern new Jersey market. We want to show you how owning real estate is attainable, even for the busy professionals that don’t have the time or experience investing in real estate. Now, we only work with select people who are serious about building wealth.
00:08:03:07 – 00:08:27:03
Aaron Fragnito
So find out if you qualify at People’s Capital group.com. Yeah. Yeah, exactly. Yeah I, I do as I break into the space, I speak with more wholesalers and broker dealers and Rias it consultants. It does seem like there’s always another, person write a check to, you know, or at least asking for you to engage in some type of monthly agreement or something like that.
00:08:27:03 – 00:08:46:09
Aaron Fragnito
And, if they, you know, have them do promise the same thing, especially kind of the wholesaler space. And, not to say that, you know, a wholesaler isn’t worth the upfront cost, right? It can be. But, as someone who kind of has been eating what he kills for the last, you know, over a decade of raising capital.
00:08:46:09 – 00:09:14:13
Aaron Fragnito
And, you know, if I don’t raise the money, you know, we don’t close on the real estate. I don’t we don’t get the acquisition fee and so on. Right. So, it’s a it’s a performance based business, fundraising. I always felt like that should be where, where the conversation is. And I don’t mind paying a larger performance based fee, rather than a small, you know, upfront fee, but I, I understand why wholesalers need some upfront cash to get out there and kind of start moving the the pieces of the board and start making those introductions.
00:09:14:13 – 00:09:17:21
Aaron Fragnito
But it is a frustrating, yeah. And.
00:09:17:22 – 00:09:41:20
Andres Sandate
Yeah. Well, let’s yeah, let’s talk about some of the basics, like because I think, I think the most beneficial part of the conversation today in our time to those listening, around this particular topic, like if I’m a sponsor and or I’m active in this, this space of private markets and the individual deals, and I’m thinking about expanding my platform, I think what they really want to hear is, how do I raise money?
00:09:41:23 – 00:10:03:06
Andres Sandate
How do I raise more capital? But I do think that you have to have some table stakes in place, right? There have to be some basic things, and I want to get those out of the way so that we can get to the more fun stuff. Yeah. What are those things? Right. So there are a whole bunch of things that a sponsor is going to need to do, depending on where they want to go, raise the capital from.
00:10:03:06 – 00:10:33:09
Andres Sandate
I mentioned those four channels, individuals, family offices, wealth advisors or Rias and then institutions. Right. So each of those four are going to want something different. And so I think you as the sponsor have to really look inward, as you and I talked about before we started and really assess what do we want in terms of partners that are going to be in our fund, in our deal, in our, offering for in some cases, three, five, seven, ten plus years.
00:10:33:09 – 00:11:05:22
Andres Sandate
Right. And ideally, are those the partners we want to have long term or those are the partners that are going to get us to the next deal. And then we’re really looking to ultimately, if if you’re thinking about it from the GP perspective, you’re ultimately always trying to drive down your cost of capital, right? So if you are paying somebody a lot more of your promote and you’re giving away a lot more in the in the form of management fees and you’re having to, you know, provide a much bigger, you know, incentive like that’s less that you’re taking home as the GP.
00:11:05:22 – 00:11:38:24
Andres Sandate
And that’s why you’re working so hard. Right. So, so let’s, let’s, let’s be real. The first thing you got to do is be inward with your team and yourself around. What kind of partner do I want? You know, do I want to have individuals and they’re going to write me maybe smaller checks, 50,000 hundred thousand 200,000 or do I want to and and and do I want to have 80% of my capital stack be those types of investors, and then maybe 20% of my capital stack, you know, is going to be a combination of those other other groups that can write maybe half $1 million checks and institutions.
00:11:39:04 – 00:11:43:07
Andres Sandate
They might not even be interested if they can’t write a 5 or $10 million check.
00:11:43:12 – 00:11:45:03
Aaron Fragnito
So generally a lot more than that. Yeah, yeah.
00:11:45:03 – 00:12:11:01
Andres Sandate
And up. Right. Because they’ve raised so much capital. And so I think for the GP the table stakes are do that inward homework really get crystal clear. Again I can’t emphasize that enough. Great. Crystal clear on what you want. Like you have to have a business model that makes money. If you don’t have a business model that makes money, you’re just running, right, in quicksand.
00:12:11:01 – 00:12:36:00
Andres Sandate
So what that means is look at your overhead expenses. Look at what the cost is to run your business. Look at when you put a deal into that business model. What kind of returns? Worst case. Base case. Best case do you need in order to be a sustainable operation? When you start to then think about as you expand and what are the three things you’re going to spend your time on?
00:12:36:00 – 00:12:51:24
Andres Sandate
It’s it’s simple. It’s number one. You’re going to be focused on recruiting your team and building your team. And that doesn’t mean headcount. It may just mean strategic partnerships. It may mean you’re going to need to go get a bookkeeper. It may mean that you’re going to go get somebody to do underwriting. Right. But but it’s team building.
00:12:52:04 – 00:13:14:05
Andres Sandate
It’s it’s it’s growing as a leader to start to think about, I can’t do all of this myself or with my 1 or 2 partners. We now have to start to build a team. So that’s number one right? Number two is you’ve got to have some basic deal flow. You’ve got to have a basic track record. Yeah. So you can’t overlook right.
00:13:14:09 – 00:13:40:19
Andres Sandate
The importance of just continuing to put deals up on the board that make your LPs and obviously yourself money. Right. So the track record and then three is you’ve got to constantly be thinking about what we’re talking about next, which is the capital side of the business. Right. And you and those are the three things as a GP that’s building a syndicator, business platform or building a fund platform and getting out there beyond friends, family.
00:13:40:19 – 00:13:56:18
Andres Sandate
Those are the three things you’re going to spend your time on. And depending on which of those channels you decide you want to pursue, and maybe you’ll pursue multiple channels, there’s going to be table stakes that come into it, and you’re aware of those things. You know, you’ve got to have some basic books and records. You got to have some basic reporting capabilities.
00:13:56:24 – 00:14:34:21
Andres Sandate
A lot of this stuff can be done pretty, you know, cost effectively and efficiently. There’s all kinds of, platform now and tools and offshored that you can now do pretty cost effectively. Yeah. But one thing that you can’t do risk, consistently unless you’re out there building a daily is deal flow and capital. And so I’d love to, you know, spend time on that part of it, like more of the capital side, because I think that’s really where, you know, your listeners and, and maybe even, you know, for your, your platform as you’re thinking through these strategic decisions, it’s like, okay, we’ve done the work, we’ve got a profitable model we’ve put up,
00:14:34:23 – 00:14:46:23
Andres Sandate
we’ve put up a track record of good deals. Now we want to start to go out and pursue, you know, more LPs or bigger LPs or more strategic LPs and what are the things that we need to do.
00:14:47:00 – 00:15:10:09
Aaron Fragnito
Exactly. And what’s interesting is I find that different, sources of capital require different things, you know, as we talk to more institutional level investment, and institutional investors, they’re seeking audited financials where and they don’t really care about the third party, you know, reports where you go to an RA or a broker dealer. They’re going to say, oh, we need the third party report.
00:15:10:09 – 00:15:26:24
Aaron Fragnito
We don’t necessarily need audited financials, which doesn’t really quite make sense to me. I you know, all of the financials help, but it’s not as necessarily as the third party report. And then of course the family offices. So a lot of them don’t require either one. You know, it’s more of a relationship base. That track record has to be there.
00:15:26:24 – 00:15:50:16
Aaron Fragnito
But you’re absolutely right. If you don’t have the infrastructure, the track record. Good. Bookkeeping for your company. And, performance, you know, a show of performance through the years. Then it’s too soon for you to go out and try to break into this space. Also, liquidity. You need some cash, you know, probably a minimum $150,000 to go out and really get all these third party reports.
00:15:50:21 – 00:16:04:14
Aaron Fragnito
You know, if you need an audit that’s going to cost something as well, go to these events, go to these different conferences, sponsor these conferences. I mean, to speak at a lot of these conferences is $25,000, and that’s just to get on stage at one conference.
00:16:04:14 – 00:16:05:07
Andres Sandate
So it’s.
00:16:05:07 – 00:16:26:05
Aaron Fragnito
Crazy. You know, it makes a lot. And the fact write reports, you know, 22 grand for the, deal based report. That’s for one deal. And then it’s 32 grand for the sponsor base report. So that’s $55,000 right there for those two reports. You know, you include the flight in the hotel. You already just you dropped 80 grand just getting in front of one event.
00:16:26:05 – 00:16:44:18
Aaron Fragnito
You know, you better. You better crush that, presentation at that event, you know? So. And it takes multiple events to really get out there and get some traction. And then, of course, I want to spread, spread a little light here also on the different roles in the space because people might not understand. So, yeah, it’s defining them.
00:16:44:18 – 00:17:11:20
Aaron Fragnito
So what a wholesaler does is they go out and they essentially set up the meetings with family offices, with Rias, with broker dealers and then say, hey, you know, here’s a warm introduction to or even an institutional institutional group. Here’s, you know, these people, here’s a warm introduction. I have a relationship existing with them. And I’ll go out and I’ll set up a lunch with them or a webinar you can do to start presenting your investment opportunity to them and ideally, soliciting investment from them.
00:17:11:22 – 00:17:31:22
Aaron Fragnito
So that’s the wholesale they offer requires some type of upfront fee, which is usually on a monthly basis, to go out, travel to these places and set up those meetings with these warm introductions. The second thing is I’d say the Ria with the, registered investment advisor space. Now, we really like our eyes because they’re essentially managing other people’s capital.
00:17:31:22 – 00:17:38:16
Aaron Fragnito
And a good Ria could have 100 family offices in their network or, you know, 500 high net worth individuals.
00:17:38:16 – 00:17:40:03
Andres Sandate
And other Rias.
00:17:40:05 – 00:17:41:02
Aaron Fragnito
In other areas.
00:17:41:03 – 00:18:04:23
Andres Sandate
Right? I mean, they worked they probably worked at a number of other Rias, before they went out on their own. Or if they’re in a position of due diligence or research, add in Ria. Right. So they’re going to be what we call a gatekeeper. They’re going to be an important key contact. They may not own the firm, but they’re going to be, you know, the person that you you spend a lot of time with trying to, explain your deal, explain your offering, explain your fund.
00:18:04:23 – 00:18:24:17
Andres Sandate
And so, you have to also know the people that, you know, own the firm and or sit on the investment committee. Right. Those are critical pieces. But often that research due diligence, gatekeeper, is going to be essential, depending on the size of the firm. I want to go back to what you said about wholesalers, though, because, the terminology is important.
00:18:24:19 – 00:18:47:17
Aaron Fragnito
At people’s Capital Group, we help you invest in real estate, build your wealth by owning professionally managed apartment buildings in the northern new Jersey market. We want to show you how owning real estate is attainable, even for the busy professionals that don’t have the time or experience investing in real estate. Now we only work with select people who are serious about building wealth.
00:18:47:21 – 00:18:52:18
Aaron Fragnito
So find out if you qualify at People’s Capital group.com.
00:18:52:20 – 00:19:21:10
Andres Sandate
You know the so so now that we’re talking more of the capital side and we’re getting into the different channels, right. Like the beauty of the individual that’s accredited that can invest in, you know like a 560 offering. Right. So they meet minimum requirements for the SEC. They make $200,000 a year, minus the residents or if they’re a couple, you know, filing jointly $300,000 a year minus the residents, and the expectation that they’ll do that again, etc..
00:19:21:10 – 00:19:40:03
Andres Sandate
Those rules are probably going to evolve or my anticipation is we’re going to start to see under this current Trump administration, some modifications, but they haven’t yet. So the reality is, you got to find accredited individuals and they can’t just be accredited. They’ve got to be accredited and liquid. They’ve got to be in a position to actually invest.
00:19:40:05 – 00:20:02:00
Andres Sandate
So there’s a lot of capital out there of people that make enough money or have enough net worth and above. Right? But they don’t know the first thing about investing. And also why because their advisor has them in a bunch of Vanguard, you know, Blackrock, Invesco index funds to say nothing bad about those firms, right? It’s just that that’s the model.
00:20:02:00 – 00:20:28:09
Andres Sandate
They’re in there in ARIN mutual funds. They’re an index fund. So so you know, not all individuals are going to be the same. Right. So so there’s a lot more of them. There’s probably 1314 million accredited investors in the US. Right. And so you go on Instagram, you go on TikTok, you go on, you know, any platform these days and you type in, you know, private wealth or real estate or crypto, any a number of these alternatives or buzzwords.
00:20:28:09 – 00:20:47:20
Andres Sandate
And you’re going to get all these promoters who are out there talking about how you can make a bunch of money flipping real estate, buying crypto, you know, investing in this or that. And there are a lot of people that are looking for guidance on how do I invest in non stocks non bonds non mutual funds, non index funds.
00:20:47:22 – 00:21:08:13
Andres Sandate
Right. And it’s crazy that they’re going to social media to get education right. But they are because there’s there because there’s a shortage of it. And and again I’m a financial advisor I mean we’re a fiduciary right. We’re a duly registered broker dealer. And Ria and even we have a hard time finding clients who, you know, want our services, want our help.
00:21:08:13 – 00:21:28:23
Andres Sandate
But but there’s always this big disconnect. So individuals, there’s a lot of them out there. The good thing is they can make their own decisions. The hard thing is it’s very difficult to scale, meaning unless you have a big megaphone and a big media presence and a big marketing budget, like it’s very difficult to consistently get their attention and, you know, say what you will.
00:21:28:23 – 00:21:50:14
Andres Sandate
But individuals face life events. They don’t have to make an investment decision. Nobody’s paying them a salary every day to wake up and look for Aaron and the best real estate that they can find in northern new Jersey in the multifamily category, like it’s a I don’t say it’s a lifestyle choice, but very much factors are going to come into play.
00:21:50:17 – 00:22:18:06
Andres Sandate
So if you go after that capital, just understand that that time frame to raise it. The decision making process, the due diligence process may be super fast, but it also may be super slow. And you may end up spending a lot of money on pursuit costs. But you may not. You know, sometimes it’s like I said, and you know, this word of mouth, you know, so-and-so at the, you know, office tells so-and-so or somebody is an investment club with another.
00:22:18:06 – 00:22:44:04
Andres Sandate
So there’s so many aspects to the high net worth that makes sense. But when you get to a wholesaler, I think it’s important to explain what those guys do and what that services. A lot of times these wholesalers work for what’s called a managing broker dealer or a dealer manager, and sometimes they don’t. And that’s an important distinction, because if they’re not registered with Finra, then you have to be real, real careful about having somebody out there in the marketplace talking about you.
00:22:44:10 – 00:23:05:12
Andres Sandate
Right. And if it’s a solicitation and if they’re actually talking about a specific fund, now you’re in an area where you got to really tread carefully. Right? And I’m no lawyer and I’m no compliance expert, and I’m not here to give, legal counsel, but but I just always guide sponsors to think about doing their due diligence around who are you engaging now?
00:23:05:12 – 00:23:23:18
Andres Sandate
They could be a consultant, and they’re just making warm introductions. And they’re not talking specifically about an offering or about a fund. They’re not showing a prospectus. They’re not showing, a PM, for example, as we call it, like a private placement memorandum. They’re just making an introduction. Well, then you got to ask yourself, what else is out there, right?
00:23:23:18 – 00:23:52:00
Andres Sandate
Are there MDS, dealer managers that are actually Finra registered and they provide this as a service. And I would put those in more of that category of you’re going to get, a lot more of what you pay for, right? If they’ve got a track record, if they have experience, who who are their relationships, who, who can they connect you to and be willing to ask and do ask those questions up front and then understand, like what is a successful engagement for them look like?
00:23:52:00 – 00:24:19:21
Andres Sandate
Is it right making introductions and then you take it and running with it or is it. No, we’re actually going to bring you along on a road show. Oh yeah. We’re going to expect you to pay for it, but you’re going to go around and sit with these different folks. And then as you think about the Ras market, like the wholesaler is even still those the best wholesalers are still trying to figure out how to penetrate that channel, because the independent Ras is probably the fastest growing channel, of the four that I mentioned.
00:24:19:23 – 00:24:43:05
Andres Sandate
Right, right. I mean, there are millionaires being minted every day. There’s a lot more people retiring every day, like the baby boomer, generation. Yeah, but the fastest growing channel and the biggest transfer of wealth that we’re going to see in this country that’s going to take place over the next 20 years is is going to be significantly beneficial to the right Rias that are set up?
00:24:43:07 – 00:25:09:19
Andres Sandate
Yeah, the right way to guide clients and help clients to get in to alternatives, private markets. And that’s why we’re super excited because we see, our brethren, our fellow Rias that are doing it the right way. They’ve got due diligence processes, they’ve got relationships. They’re investing in getting to know sponsors like yourself. They’re attending trade shows and conferences, like you mentioned, the fact rights of the world.
00:25:09:19 – 00:25:44:08
Andres Sandate
And they’re really investing and trying to be leaders in that category. And I think that those are the types of groups, as we said, off air, to the extent that you can get to the ones that are still owning the decisions around investments, those are the types of firms that you really want to, hone in on. And then, yeah, we could talk about institutions, but but I’ll leave it there because I think the terminology is super critical once you get out there and understanding, like, what are we, asking these folks to do on our behalf, you know, are they in a position from a regulatory and compliance standpoint to even do that?
00:25:44:13 – 00:26:04:06
Andres Sandate
Yeah. And be above board in the doing of that. Right. Obviously, what are the economics that are involved? What are the terms? All of that type of stuff really matters. And then most importantly is going back to the beginning, like, does this align with our objectives as a platform? Does it help us to get where we want to be in a year, in five years and ten years?
00:26:04:06 – 00:26:15:19
Andres Sandate
Because obviously you know, all these relationships matter and all of them take a lot of time, right? Yeah, yeah. And so where you where you shoot your arrows, as they say, it really does matter.
00:26:15:21 – 00:26:40:02
Aaron Fragnito
And that’s the whole idea as a fundraiser to connect with broker dealers and Rias because they’ve already, worked those relationships for many years. And investment decisions are based on relationships. You know, that’s the bottom line. Most people will sacrifice a few points of return on investment for some, you know, an investment they know is, from a trusted source and, limits their risk as well.
00:26:40:02 – 00:26:41:14
Aaron Fragnito
So.
00:26:41:16 – 00:26:57:19
Andres Sandate
And that’s why I think it’s so important is to jump in, like to get down to brass tacks around. Okay, let’s say you do get that meeting like, this is really around you preparing as a sponsor, right. To go on the road or to be presented to these firms. And what do they want to see? Okay. Yeah.
00:26:57:19 – 00:27:19:05
Andres Sandate
So again, I have the utmost respect for all the due diligence firms out there. There’s a lot of them and they all do really, you know, noble work and good work. They’re trying to serve investors like us and our clients by doing, you know, legal reports, writing opinions on sponsors and on their offerings, groups like that that you mentioned earlier in the podcast.
00:27:19:07 – 00:27:43:11
Andres Sandate
But I think it’s really important to to explain and help people to, to understand, like when you when you are looking at a manager and a sponsor for the first time, like, what are the things that you’re going to be looking for, right from our perspective as allocators, as investors. And so how can you as a sponsor listening or as somebody that’s trying to take a sponsor out into this channel?
00:27:43:17 – 00:28:15:10
Andres Sandate
How can you stand out? Like what do you need to do? Again, assuming all this sort of table stakes is in place, the black offices set up the you know, everything’s good, you’ve got good deal flow. The track record is tight now, what is the story? What is the brand? Right. And so those things I think one of the, the least, glamorous parts of this, but the most critical is, is the data that you actually can demonstrate with data.
00:28:15:12 – 00:28:39:20
Andres Sandate
Yeah. That your story makes sense, that your track record makes sense. Right. And and and not to, you know, take, and I’ll use a, a bad term but a lazy approach, right, to people’s, due diligence process. By saying just, you know, look at our data room, it’s got our deck, it’s got our offering docs. Right.
00:28:39:22 – 00:29:13:13
Andres Sandate
It’s got, you know, some financial reports and it’s got every deal like that we’ve ever done. Right. But what, what I think the, the better approach is to really think about that other partner, that future LP on the other side, whether they’re an analyst or they’re the owner of the family office or the RIAA, or a potential asset manager, like institutional like, sure, go to the highest standard possible in terms of the numbers, the questions, the information.
00:29:13:15 – 00:29:30:19
Andres Sandate
Yeah. And and and fill in at that standard. And then, you know, if you do it at that standard then think about telling a story through all of that information, all that data, that track record that an individual who doesn’t do this for a living, could understand.
00:29:30:24 – 00:29:52:02
Aaron Fragnito
Right? Right. Well, as they say, facts tell, stories sell. Right. And yeah, whether we are managing a multibillion dollar fund or an Ria with a couple hundred million, under their belt there and AUM or, you know, broker dealer that’s going out and hitting the phones and calling up client by client, accredited investor by accredited investor. It’s the story.
00:29:52:02 – 00:29:53:04
Aaron Fragnito
At the end of the day, the.
00:29:53:04 – 00:30:16:17
Andres Sandate
Story is so critical and it’s got to be compelling. And so you’ve really got to have a narrative right. And I encourage sponsors and folks that are going out in the market trying to open doors and raise capital. I’d really encourage them to think about writing literally. I know it’s not something we do a lot anymore. Writing the narrative of the, of the of the firm or the GP and then writing the narrative of the actual investment.
00:30:16:20 – 00:30:38:10
Andres Sandate
Right. Like why we’re doing this. I know that, the idea of writing monthly and quarterly letters is still, you know, something folks do. But writing a narrative in like a longer form, like a two pager and then trying to really simplify it down, to the salient points that somebody, you know, that doesn’t know you would really, investigate.
00:30:38:10 – 00:30:45:10
Andres Sandate
And there’s some things over the course of my career that I’ve really picked up from other folks, but I think there are important, which is.
00:30:45:12 – 00:31:08:10
Aaron Fragnito
At People’s Capital Group, we help you invest in real estate, build your wealth by owning professionally managed apartment buildings in the northern new Jersey market. We want to show you how owning real estate is attainable, even for the busy professionals that don’t have the time or experience investing in real estate. Now, we only work with select people who are serious about building wealth.
00:31:08:14 – 00:31:13:21
Aaron Fragnito
So find out if you qualify at People’s Capital group.com.
00:31:13:23 – 00:31:37:05
Andres Sandate
Take a deal out to the market as a way to start that conversation and introduction. Right. You can be a blind pool and that’s okay. And you can have aspirations to one day have a commingled fund, right? As we call it. But take a live deal. Yeah, that is investable today. And have it fully baked in the sense of you have fully underwritten it.
00:31:37:08 – 00:31:58:24
Andres Sandate
You’ve pretty much lined all your if you’re a real estate sponsor like your debt financing is, is is teed up. You’ve got a lot of the equity spoken for. You’re obviously contributing a meaningful amount of capital. But but have all of that in place and then take this live deal out. And even if you get no, you’re showing something that I think is important and that’s something that’s actionable.
00:31:59:01 – 00:32:06:09
Andres Sandate
Yeah. Right. Right. And people get something people to decide on. Right. Because time kills deals, right?
00:32:06:09 – 00:32:26:13
Aaron Fragnito
Right. And you know what it is? Everyone’s a deal junkie in this business. You know, like if that’s the thing, you know, you talk to some of the most successful fund raisers. They say, have a deal ready. You know, people love a deal, right? Here’s here’s the address. Here’s the strategy. Here’s the timeline. Here’s the target returns. You know, people need to understand that that that visual there that example.
00:32:26:19 – 00:32:46:03
Aaron Fragnito
And it’s all about having a good deal. You know, they say some fund raisers say, oh, have a good deal. The money will come. That’s not true. It’s a combination of having relationships in place of track record your ducks in a row and a good deal, and then the money will come. It is a process there. But man, at the end of the day, we’re all deal junkies.
00:32:46:03 – 00:33:04:22
Aaron Fragnito
We all love a good deal. And it’s also. And the Art of sale is, scarcity, right? Timeline, fleeting time. Like when you have a deal and you say, we’re closing on this in 90 days, investments have to be in by 60. Oh, now we’re moving. Now we have timelines. You know, the thing about a blind fund is, oh, it’s going to be open for a year.
00:33:05:00 – 00:33:21:21
Aaron Fragnito
You could do it now. You could wait for us to close on something to that. And it’s just open ended, you know, unless you’re like Blackrock and you fill that thing up and it’s going to close out, you know, you know it, then you know smaller firms getting started. You know, have a deal. Make it your best darn deal you’ve ever found or something close to it.
00:33:21:21 – 00:33:41:09
Aaron Fragnito
And get it out there. Present it in the right way, backed up by your, track record and your story as well. But also have the capital ready to put behind it, you know, and understand that blueprint, you know, managing broker dealer, what roles they do. Do you want a managing broker that goes out and sells your product or just kind of facilitates the capital fund administrator?
00:33:41:09 – 00:33:42:18
Aaron Fragnito
We didn’t even touch much on that.
00:33:42:18 – 00:33:45:03
Andres Sandate
Yeah. There’s so many other parties that are going to be involved.
00:33:45:03 – 00:34:08:07
Aaron Fragnito
So fund administrator over kind of fund administrator, managing broker dealer kind of overlap in a lot of ways. Do you need both? Maybe you do, maybe you don’t. And then of course institutional level capital. What are their requirements going to be? You know, if someone’s writing a check for 80, 90% of your capital stack, they’re going to have some say in the terms of it where if someone’s writing a check for 100 grand, then you’re really calling the shots there and the structure of your fund.
00:34:08:07 – 00:34:28:10
Aaron Fragnito
So but there’s pros and cons to both. Andrés, I do have to get on actually to speaking with an accredited investor as I write, raise a lot of capital over here working with accredited investors and high net worth individuals. And we’re also in touch with institutional level and family offices. And of course, all right, so we’ve, we have a lot of contacts there.
00:34:28:10 – 00:34:35:01
Aaron Fragnito
I think you’re talking to the wholesaler, the managing broker dealer, and everything above right here. The so as we.
00:34:35:01 – 00:34:47:13
Andres Sandate
Sometimes you have to do it all and, and I appreciate you having me on. Aaron. I understand, like I said, the three most important things are going to be building your organization, doing deals and raising capital. So yeah, I completely get it.
00:34:47:17 – 00:34:52:09
Aaron Fragnito
Absolutely. How can people get in touch with you and learn more about, yeah.
00:34:52:11 – 00:35:17:10
Andres Sandate
Yeah. Well, I mean, I, I have, I have a podcast myself. So that podcast is Atlas, where I provide education and, and have guests on, to talk about alternatives and private markets. So that is Andres and yes, at ATL alts.com and we have a website atlas.com. You can find me out on all the social media under Atlas and also on LinkedIn.
00:35:17:15 – 00:35:30:24
Andres Sandate
And then Ria is called Gramercy Park Wealth Advisors. So the website is G.P. Wealth advisors.com. And love to connect with folks and see if I can be helpful and help them on their alts, and private markets journey.
00:35:31:01 – 00:35:52:06
Aaron Fragnito
Awesome. So yes, to our listeners here, definitely connect with Andre’s, take a listen to his podcast, ATL ops. He’s got a lot of great sponsors on there and, great investment tips as well. And, if you don’t have an Ria, then check out Gramercy Park Wealth Advisors. You know, it’s important to have an Aria, in your corner, bringing investment opportunities, allocating some wealth to them.
00:35:52:06 – 00:36:10:14
Aaron Fragnito
And, you know, I, I think, Andre’s is really a stand up guy here, so I’ve enjoyed getting to know you, Andre’s and, I think you’d be a great, fit for a lot of our listeners here. So to our listeners, if you’re enjoying our content and the value we’re aiming to bring you here with the Passive Cash Flow podcast, be sure to share it.
00:36:10:14 – 00:36:35:22
Aaron Fragnito
You know, share it with any friends and family, coworkers in your network that need to learn more about how to build that passive income and passive wealth. As you see, we have all types of guests on here, not always, real estate related, but usually somehow traces back to real estate, of course. And of course, here, people’s Capital Group, we focus on, acquiring assets throughout northern new Jersey and helping people build and preserve their wealth through northern new Jersey apartment buildings.
00:36:35:22 – 00:36:42:23
Aaron Fragnito
So, always a pleasure, Andreas, to connect here and, one more time. How can they connect with you there?
00:36:43:00 – 00:37:08:23
Andres Sandate
Yeah. Thanks, Aaron. So it’s Andre’s and Ari’s at ATL alts.com, and, GG Wealth Advisors is just GG Wealth advisors.com again. Look forward to connecting with you again, Aaron. And congrats on all the things, that you’re having success with the People’s Capital Group and, with the podcast and, all the, you know, investors that you’re helping, generate passive cash flow.
00:37:09:00 – 00:37:12:06
Aaron Fragnito
Thank you, my friend. Absolutely. Same to you. We’ll talk shortly. All right.
00:37:12:08 – 00:43:23:01
Andres Sandate
Take care.
00:43:23:03 – 00:43:46:01
Aaron Fragnito
At People’s Capital Group, we help you invest in real estate. Build your wealth by owning professionally managed apartment buildings in the northern new Jersey market. We want to show you how owning real estate is attainable. Even for the busy professionals that don’t have the time or experience investing in real estate. Now, we only work with select people who are serious about building wealth.
00:43:46:05 – 00:43:50:04
Aaron Fragnito
So find out if you qualify at People’s Capital group.com.
