How to Raise Millions: Insider Secrets from a $750M Real Estate Fund CEO

"RAISE CAPITAL LIKE A LEGEND: https://offer.fundraisecapital.co/free-ebook/"

Are you curious how top investors build powerful networks and close big deals? Well, listen up, because this episode goes beyond spreadsheets and cash flow and gets right to the heart of what actually works, all this and more coming right now. 

Subscribe on YouTube:
https://www.youtube.com/channel/UCTOe79EXLDsROQ0z3YLnu1QQ

Connect with Ryan Miller:
Linkedin: https://www.linkedin.com/in/rcmiller1/
Instagram: https://www.instagram.com/makingbillionspodcast/
Twitter: https://twitter.com/_MakingBillons
Website: https://making-billions.com/

[THE GUEST]: John Azar is the founder and managing partner at Peak 15 Capital, a private equity firm specializing in equity and debt across various commercial real estate classes.

[THE HOST]: Ryan Miller is an Angel investor, former VP of Finance, CFO of an insurance company, and the founder of Fund Raise Capital,  https://www.fundraisecapital.co where his strategies helped emerging fund managers and deal syndicators to report raising over $1B following his strategies.

Transcript

Ryan Miller  

My name is Ryan Miller, and for the past 15 years, I've helped hundreds of people to raise millions of dollars for their funds and for their startups. If you're serious about raising money, launching your business or taking your life to the next level, this show will give you the answers so that you too can enjoy your pursuit of Making Billions. Let's get into it.

Ryan Miller  

Are you curious how top investors build powerful networks and close big deals? Well, listen up, because this episode goes beyond spreadsheets and cash flow and gets right to the heart of what actually works, all this and more coming right now. Here we go. 

Ryan Miller  

John, welcome to the show man.

John Azar  

Thanks so much for Ryan, it was, it's, it's so good to be here. I, I'm a huge fan of the show and and now I have my, my first favorite thing was, was, was Canadian maple syrup. Now I have, I have a second favorite thing, Ryan as my second favorite thing that comes from Canada. So I love it, thank you so much for having me on. 

Ryan Miller  

You're welcome, and it's good to have you, buddy. I've been a big fan of you as well for a long time and I'm glad we're able to put things together. Your firm Peak 15 is named after the highest summit in Everest, for all our listeners who are climbing their own capital raising mountain, what's the first step that they must take to even get on the trail, and what separates those who make it to the top versus those who quit halfway?

John Azar  

Yeah, that's, that's a, that's a great question, man. I mean, it's the thing that separates, very simply, overall, the finger separates the those who make it to the top and those who don't make it to the top are, is obviously who they build around them in their network. Because it starts at the very basic of building your network. Working, working, you're working that network, building your, your sort of, your family that becomes really, truly, somewhat, you know, you interact with your with your work people a lot more sometimes than your family do. At least, that's how I view our company, our company. We all of us, you know, the partners, stakeholders in the company. We really treat each other like family, and that's that's really important, but you know what it comes down to it is you got to have the right makeup to get you to the top. And, and, and you have to always have a critical examination of of of your every step of the way, your infrastructure, your procedures, and I say every step of the way, because sometimes you know what gets you from point A to point B is not necessarily the same thing as you from point B to point C. So it's, it's, you have to always have a rigorous examination of of what am I doing, what do I have in place, what procedures I have, what what infrastructure I have, and also the partners that I have and and the stakeholders in the company. And as you continue to sort of examine that and continue to work and develop your business, those are going to become different and more important, and some of them are going to be less important. Some are going to be more important but I would say that the network is really, really, really huge in terms of building, building your building your company.

Ryan Miller  

Yeah, you know. And I love that, especially when you're just starting out. I think it really starts, if it's not obvious for people listening, start with wherever you're standing. Understand, universities, colleges, networks around you, lawyers, lenders, past investors and really start building a list. So what I like to call quadruple at friends, family, fools and followers and so starting there, it's just people that you have somewhat of a rapport with. And just ask around and say, you know, I am an investor, looking for deals, looking for capital, whatever that is, really start getting the word out through your network. And surprisingly, a lot of people start to send you a lot of those referrals. 

John Azar  

That's right, yeah, and a lot of times, you know, I, the one surprising sometimes thing that will happen is that you will, you will start to get referrals, and people will connect you that they're not normally labeled under those type of connections. You know, for instance, lenders, or for us at least like we get referrals from lenders, we get referrals from brokers, we get referrals from bankers, we get referrals from other investors, obviously. So your network is, is the knowledge and the people that you need to connect with are there. You just need to know who, who in your network knows who that you can that will benefit, essentially, the growth of the business on the trajectory of where you're going. So always, never be afraid to talk to your network and see who can lead you to what, because, because those connections are really, really important.

Ryan Miller  

Yeah, brilliant man couldn't agree more. Your network, everybody that's in your network, people that you can get referrals from, I absolutely love it. Now, for someone listening who wants to break into commercial real estate investing, what would you say is the very first practical move that you would tell them to make?

John Azar  

If they're looking to break into commercial real estate? I mean, the first thing they have to do is obviously get, get to learn the basics. If they have not started learning the basics yet, if they're, especially if they're younger folks starting out, you know, work, go surround yourself, either through a working for someone, for a company, or yourself. Maybe, you know, get mentors or coaches that could help you develop your core understandings of things, because there are a lot of industries that you know you can maybe learn on the job. Real estate is definitely one, but, but, but at the same time, if you want people to take you seriously, you gotta, you gotta know the very basics. You gotta know the basics of analysis, you gotta know the basics of underwriting. You gotta be able to discern a spreadsheet and be able to look at the assumptions and look at the spreadsheet and know that, hey, this looks good, or this doesn't look good, or these numbers, yeah, it makes sense. What is an IRR? What is, what is cash on cash? What is, you know, how do you determine whether you know you have, you can have multiples of EBITDA, what does that mean? So go and work for someone who you at least can give you a core understanding of those. And if we're for a lot of young folks that I thought I speak great and coach and mentor, I always tell them, like, listen, go to work for a bank. Go to work for a lender, go and work for a broker. Lenders and brokers are really, really great places to start, because they look at a ton of deals all the time and look and they look at them critically so and the plus that you'll get by working for a lender or broker is that you get to do a lot of spreadsheeting, even with brokers, because they have to underwrite a deal, they're all on themselves. They have to go out physically to the to a deal, do some showings. So you know, a broker will not only be able to get you on the on the give you a core level of understanding from a financial standpoint, but you also are going to be out there in the field. You got to do the crap jobs first, obviously, when you start out as you know, whether it's a broker or lender or a bank, just like anything else you gotta you can be thrown in some corner like a mushroom and crunch numbers, but that's fine. You'll end up walking away with a core understanding of a lot of the most important part of this industry, which is understanding the numbers and the deal and the underwriting.

Ryan Miller  

I remember a phrase, and I follow it implicitly. I think it was Steve Jobs, but I could be off on that. And it was something to the tune that if you can't explain it simply, you don't understand it. And so the understanding of the basics, especially if you're going out and you're asking investors to do to invest in you, or whatever it is, partner with you, CO-GP with you. They want to know, do you understand it and if you do, my gage is not the level of the big college words that you use. It's how well you can distill simple and easy to understand attributes about your deal in a very simple way. So I think that's really important to have people who understand it. When you started Peak 15, what system or strategy did you put in place in the early days that still pays dividends to you today. 

John Azar  

A couple of things we put in early days. The early days we put in we and this is still an ethos for us to this day, and it will always be an ethos for us. The main ethos for us is people, first deal second, that's always been in place from the beginning, from day one, and it's still with us, and it will always be with us, because people behind the deal matters so much more than the deal itself. And because of our business, we invest with people. And we invest in people, because when we invest in a deal, our fund invests as a CO-GP fund, so we provide liquidity to sponsors and developers out there who are looking to have liquidity either on the GP side or the LP side. So for us, the people aspect of the deal is Uber important, because at the end of the day, I can, I can make a bad deal turn around with it, with a good partner, but, but a bad partner will make a really good deal go sideways really quick. So, so that's really something that's been with us for from day one, and part of our ethos and today, the other thing that we've done, that we that we still do today, is we have a really good understanding of the asset type that we're investing in. So we would never invest in an asset type that we don't have an understanding of their entry, the exit, the assumptions, the revenue drivers, the the profit drivers. You know, how is this going to look in five years,who's going to buy it? 

John Azar  

I'll give you an example, for instance. I mean, we have, we have a pretty diversified portfolio in our fund, including car washes. We invest in car washes as well in our portfolio. And before we invested in car washes in our portfolio, we spent about six months really, really understanding the car wash industry. We visited one of the top two franchises of car washings in the United States. We understood the technology behind it, we understood the revenue drivers, the cost drivers. We understood what does it means to value those, those those locations, and it's about because it's valued differently than what you would a multifamily deal or an industrial deal or a sole storage deal. So that understanding is very, very important to us before we even entertain taking on an acquisition and that's also still with us today that we do.

Ryan Miller  

You know, one of the areas that you and I really connected on is we're both very energy people, and you mentioned that that's important to you as well. And I remember us knocking it out with a framework that I use, which is the UVE framework. I call it, right, umpires, vampires and empires. 

John Azar  

That's right, I love that framework.

Ryan Miller  

Yeah, and, and it's, it's, it's more of take it in the current state. You don't always know. When you first meet someone, maybe they're an empire builder or an umpire who's just going to keep you in line and keep your crazy train from going off the tracks, or maybe they're a vampire, but either way, sometimes, if you've ever you've had big goals, but you just don't have the energy to do it, and that's not a great state to be in. And so surrounding yourself to your point, surrounding yourself with people who have that energy, who are also empire builders, or they just want to help in you and your empire building that really helps, it elevates the conversation, and then avoiding the vampires. And a lot of those are self-inflicted habits, your own energy, that things that you do or don't do. And so really understanding that energy really hits home to what you're talking about, which is we put people first. We put a lot of thought and a lot of care into the people, not only with who we partner with, but our investors and everyone in between. Would you agree?

John Azar  

Yeah, and absolutely. And I am PI, and I empower the people that are with us on board to always trust their gut. I mean, you know, because that's important. That goes to what you're saying about energy and energy of people and and how we feel because, and that's why it's very important for us to win before we finally execute a deal for one of the partners, one of the senior members of the team, to actually have met someone in person, that person that we're going to be doing to deal with, to actually met them in person, shake hands. And to whether it's me, it doesn't always have to be me, obviously, but, but any, any, any of the guys that are with us, that is the one thing I always ask them, did you meet this person in person? Did you have a personal meeting? Did you shake hands? You know, what did you think of them? How did you like that? Again, that's really important, and that's because, because, listen, you're going to be married to that person or that company for the foreseeable 3, 4, 5, 6 years, 7 years, that you're in them for that deal. And whether it takes a one year or takes five years, you're going to be in the trenches with this, with this, with this person, or these people you might want to at least like them on a personal level. If you're going to be interacting with them, exchanging financials, asking them tough questions, they're going to be asking tough questions of you. And it goes both ways, like so why would I, you know, I've gone too far in life to do business with people I don't like. And that's really the bottom line.

Ryan Miller  

Yeah, something about, I mean, I don't know about you, but soon as you cross 40, I swear there's just something where you say, I just want to work on great deals with cool people. So I think you keep you keep your circle tight man, I love it, and that's great advice, man. Now on a lot of what you do from what I've seen, is the CO-GP model, and many of our investors may not understand that CO-GP model. Can you break it down step by step? How does it actually work? Why, and just help us understand why it's such a powerful entry point for your investors?

John Azar  

Yeah, absolutely. Yeah. We so our model, we've distinguished ourselves from day one and I left. We had my previous company before Peak 15 Capital was an owner operator, so we basically were the syndicator, the sole syndicator, the sole owner operator on the ground. Now my our company, Peak 15 Capital. We supply capital to what I used to do to folks that I was, that I was before launching Peak 15 Capital. So what we do now is we partner with those best in class sponsors, operators, developers, and we bring to the table liquidity solution in the form of their GP capital. Because a lot of times, GP capital is constraint, especially as the deals get bigger. If you're, you know, as soon as you cross the threshold of, you know, 10 million, 15, 20 million, that becomes onerous for some, some some sponsors or owner operators to bring to the table as their skin in the game. And that skin in the game part is what we really where we're really shining with us, where we love to come in with them and share that burden with them and provide the liquidity for that GP stack. 

John Azar  

But we also the positive thing about dealing with us is that from day one, and we still have that, we have a capital markets arm to the company that deals with institutional investors. Only institutional investors and sub institutional and family offices. We always bring those programmatic investors with us to the deals, and they co-invest with us as LPS or silent LPS or whatever, or JV sometimes. But so what that means is that we could end up really providing the entire liquidity solutions on the capital stack for sponsors and developers when they come to us, because we can provide help on the GP liquidity or the GP economics and on the LP economics as well, all under sort of one roof. And also what they get with us is they get, obviously, the experience and if we need to step in and help them with something, because of our background, because we've done the we've done the owner operations. We've done, you know, large scale deals we, you know, we've done anything from water contaminated deals to to really small multifamily deals and really crappy areas. So you know. So we've done the turnaround, we've done the bills, we've done the conversions so they get a partner who is able to give them step in and help them if they need to, on the operation side. So that's really the value proposition we come across with.

Ryan Miller  

You know, you told me a story about a family office in Colorado, and how that story relates to getting a strong and experienced team that creates confidence from your lenders. Wonder if you can expand a little bit on that story.

John Azar  

Yeah, sure, absolutely, because it's not as and I think I mentioned that because we were talking before. It was an example of that we were not always needed just for the money. So people like to work with us, not just because the money, not just because we have the money. Sometimes, sometimes it's not about that at all, sometimes it's just about the experience. Sometimes it's about needing more firepower on the balance sheet side, or, or, or the S Leo side, the schedule of real estate owned side, whatever it might be, so sometimes it's not about the money. A bad example that you just mentioned is was, it was a family office that wanted to work with us on some multifamily assets. And they were not short of money, they had plenty of money. The money was not the issue there, they had money for, for, for, for their GP side. They had money from the LP side, you know, they just did not have the experience of operating or buying or syndicating multifamily assets. So they came to us because they wanted to work with us on that piece. We, what we brought to the table for them was, was experience, and not only underwriting effectively and operating was, was, but, but also, you know, just on the ground knowledge of multifamily assets across the nation. So, so that's a, that's a great example right there of how people can work with us. Also, that does not just relegate them to money.

Ryan Miller  

Awesome. So, so you get the capital stacks at maybe 10 to 20% of the deal size, get a strong, experienced team on both sides of plugging those gaps. And then I would venture to say, but I don't want to put words in your mouth, then the next step is you create an SPV and agree to the percentages, is that right?

John Azar  

That's right, that's right, yeah, typically, that's a typical, ideal process would be we after we have a meeting of the minds after we agree on percentages, structure, whatever, obviously we will the first, the first part of the equation. We extend it. We extend the term sheet, usually to soft term sheet. And what that means is that it's a term sheet via email. We essentially extended our what we think our terms could be, could look like for that deal, because we don't want to burn, burn, burn the legal costs. When, when you know, if we send them that soft term sheet via email and they come back to us say, oh, enough. Wait a minute, forget it, I don't want to, I don't want to cut you into this that. So if we can't agree via the soft term sheets, and we're not going to move to the hard term sheets first. So that's why we do it that way. So it's usually the soft term sheets and then if, if we, if the agreement continue, we move on to a hard term sheet, and then from that we move on to essentially starting to execute on the deal. And what that looks like is the we have to put in an operating agreement together, and that becomes the sort of the marriage contract between us and the operating agreement. 

Ryan Miller  

All right, well, happy marriage to you. You've done this a few times, and you've been wildly successful man, so I love it. 

John Azar  

Appreciate it.

Ryan Miller  

And, yeah, absolutely, man and you know, one thing I've noticed is you've raised millions, right? You're at 750 million now, and I feel like you're just getting started, brother. So you've raised millions across multiple deals, what's the exact process you use to approach and just win over investors and walk us through as if you're teaching a playbook? 

John Azar  

We take the same approach with even our investors. I mean, again, we put people first. Relationship aspect very, very, very important to us. The one lesson that I will tell you that I've always employed for years, that have always worked, and it will continue to work for us and we and again, we build that with our people as well today is start developing relationships when you don't need them. Don't start developing a relationship on the spot when you need something, when you need that relationship. So, you know, don't knock on doors and say, hey, man, I got something to sell you. Yeah, that's, that's usually, that's not, that's the opposite of what we do. You know, what the way we approach it is, we knock on doors, whether it's retail investors, because, you know, with our fund, retail investors, high net worth, credit investor, invest in our fund, or institutional investors that also invest with us. So the way that we do it is that, hey, let's meet, let's here's what we're about, here's what we here's what we've done, here's what we've been, here's where we're going, here's here's the sort of the process that we take. We would love to get to know you, and we'd love to just you know for you to get to know us. And we want to know your process and what you've done before, in the case of an individual retail investors. Hey, let me tell me a little bit about your experience, what have you invested in before you know what, what is, what is a bad experience that you have? What did you not like about your investment, previous investment? What did you like the most about your previous investments? And in the case of institutional investors, very similar questions like, Where, where have you invested in, what kind of real obviously, there's a lot more institutional investors, because you got to learn their geography, and they got geography, and they got to learn your their check size preferences, and you got to learn their, you know, what their what their return parameters are, and expectations of that. So, so you got to go into the technical details, obviously, getting to know all that. But at the end of the day, you also got to get to know, like, what do they, what do they, how do they like dealing with folks like us, and what exchange. That they had before, that that were fruitful and successful, and what experience that they had that were not fruitful and successful. Because that tells me what is important to them. Because that's really, at the end of day, what I'm trying to get to, and that's what you that would be the only way to build a relationship is if you know what's important to that person, to that to that stakeholder across the across the room, because then you can approach them from a relationship standpoint, you can't approach someone when you don't know what's important to them and try to sell them on your fund or idea or syndication or deal or whatever it is that you're trying to. All you're doing is just selling without even knowing what the other side looks like or what they want and what they value the most. So that would be probably the biggest advice, I would say. 

Ryan Miller  

And I love that, you know, one of the things that I've found, and I'd love to get your take on it. So when I'm fortunate enough to teach people from my community at Fundraise Capital, we talk about raising capital, and one thing that I advise is to create a story bank. When you're pitching the investors, how importance do stories come into your effort?

John Azar  

Oh, gosh, here's an important I mean, you know, half of life is stories, and that's what, that's how half of relationships are story. In fact, I would say more than half the relationships are stories, I mean, we communicate with stories. We affect deals with, with stories, so and those stories have different relevance in different situations, obviously. So if you're, if you're communicating with someone and an investor, whether it's a retail investors or institutional investors, the way that you have start to build connections is through those stories, through those those commonalities, you know, you get to find out what, what are the, what are the common threads running through my experience and your experience, that that would make us work together really well. And make no mistake, there's always going to be, if you're trying to go after a mutual goal, you will always be able to find some kind of stories that will be synergistic between the two of you. And as soon as you start uncovering those, the relationship will zoom sky high, because, because then that, because then you look at each other in a completely different way. Then it goes, the relationship goes from transactional to a relationship, not just a transaction. So, and that's the main difference.

Ryan Miller  

That's right, man. And I always say, you know, high finance, the world that we live in, it's more about trust and transactions and if you ask for the transaction before the trust, you're probably going to get neither. But if you build the trust and then go for the transaction, you'll probably get both. So make sure that we keep the main thing, the main thing, which is, if you want to get good at raising capital, if you want to get good at doing deals, make sure a big part, or a ritual, almost, is that you are focused on making sure that you are trustworthy. Your team is trustworthy, your deals are trustworthy, your compliance, everything is to say you're in good hands. Anything else you can add to that?

John Azar  

Yeah, no, I would say just be vigilant of your of your in the thing that you should be vigilant about is your reputation also, I mean, it takes years, years to build a good reputation and a brand, specifically a brand, and it only takes about 25 seconds to destroy that. I mean, you know, it really does. It's, it's, it's just, just be mindful of your decision and mindful of your reputation, because that's at the end of the day, brother, that's all we have. I mean, you know, we when, when, when we exit this world. People are not going to say, oh, that dude had, you know, seven 50 million in AUM, you know, they're going to say he's a good guy, or even he was, he was a great guy, he's a good friend. He was a good family guy, he was a good father. He's good, you know, good brother, good good whatever, good husband, good sister, good wife. Those are, those are the kind of reputational nomenclature that you want to be associated with you, as opposed to, yeah, I know this guy he puts out money that tells you nothing, that tells you nothing about that individual.

Ryan Miller  

Absolutely man and reputation risk, not only because we're talking about from our perspective, which is completely relevant, for sure, but another thing that I found out a little bit later, as I, well, I was still new when I figured this out, is people also look at you as a potential, what is doing a deal with John or with Ryan? What's my reputational risk if, if I invest into their deals, right, how are they that's where do, due diligence comes in. And so we really want to make sure that not only focusing on things where you can be trusted by your investors, but also internally, is this a place that drives integrity? And it reminds me of I was a young guy in college, and I heard a, it was a speech by Warren Buffet, and I think he took over, I could be totally off, right, the internet will keep me honest, and please do but I think it was something like Salomon Brothers, or something like that, where he said, this was like 20 years ago, so, but he said, if, if you lose some money, I'll be understanding, but if you lose an ounce of integrity for the firm I will be ruthless. And so I think he really shot a flare in the sky to say, hey, like this is how we do things now. And he understood that this is a game of trust and finance is just how you monetize it.

John Azar  

Absolutely, absolutely it is. It is absolutely a game of trust and reputation. And. Integrity, because, and you try, we try to do that across the board with everybody we deal with, from investors, institutional partners to whatever we're, you know, we tell everybody we're an open book, like, you know, we're transparent. We want to have, you know, it comes through with our financial authority, comes through with our communications. There are different layers that, that, that you can, you can structure your your company to project that and you, again, you project that by your by your operations, by how you communicate, by how you send out your financials, by how you send out your newsletters, by what you tell your investors, the ability of your investors to get a hold of you or not get a hold of you. I mean, that's, that's, that's really, that's an important aspect. I mean, that's people sometimes, you know, don't think about as that as much if you're, if you're invested in the thinking of you in terms of, you know, yeah, this guy in the high production sits there and, I know, and makes decisions and collects money, you know, and I can never get a hold of him. Yes, that's not, that's not a good feeling, because, to me, $100,000 investor is just as important as $100 million investor, because that $100,000 is meaningful to them, very meaningful to them and I operate the same way in life in general. You know, I am, I'm a huge fan of people, no matter what they are and what their position on life is. And I, and I'm a believer that you can learn from everyone around you and without judgment. You know, I good lessons and bad lessons, obviously, but, but without judgment. So, when I meet someone who is, you know, who shows me early on that they're very judgy just because of somebody's position in life or something. That's what tells me that that's not, we don't have the right value match, right there.

Ryan Miller  

Yeah, that's right. And one thing I learned about that because I use that same metric as well, being judgmental and being curious is almost the same state, except for one thing, whether someone's open or closed, I found that judgmental myself in the early days, it's a very closed way of doing business. Instead flipping it to curiosity, all you got to do is open your mind. And so when you find those genuinely curious, people like you said, who aren't necessarily judgmental. What you're finding is people who are open minded and much easier to work with them. Obviously, we work with wonderful people, we've never had a bad partner in our life. 

John Azar  

So yeah, I wish. I wish that was the case. I wish I could say we've never had a bad partner in our life.

Ryan Miller  

Yeah, well.

John Azar  

But, that's not, unfortunately, not the case. But it's not that goes to show you that it's not a foolproof formula. You know, no matter how much you try, no matter how much you've got to put some safeguards in place. This is business man, I mean, at the end of the day, sometimes, sometimes things are gonna go sideways. Sometimes you're gonna have to, you know, you're gonna have to roll up your sleeve and do some work. But it is what it is but at least you're, you're, you're doing the best you can to offset that in the beginning. So, so yeah, I 100% agree.

Ryan Miller  

I love that man. And you know, when we first met, I remember you talking about at Peak 15 in the early days, you focused heavily on the southeast and the Sun Belt. So I know you're much broader than that, but if I'm a new investor just trying to pick up my first market, what decision framework would you teach me to use?

John Azar  

Well, you have to come up with what your value proposition is going to be, if you're, if you're an operator, if you're going to operate in the space. So that means that, hey, find a niche that you can start out with, that you get really good at, and then you can start to expand from that. So if you are, for instance, if you're a builder, like, great, like, why don't you, why don't you build more, or try to expand that into maybe, like, built to rent communities or or build to sell communities, and then get to know everything you can possibly know about that, that particular subset of the of the assets, you know, what are the value drivers? What are the expenses? What are the cost drivers? What are the you know, what are the underwriting parameters, what are the assumptions that you need to have and start to sort of catalog your on your build your own catalog and on what you need to do to be really, really a great Jedi Master in that particular asset type or subset. 

John Azar  

Because once you start building that knowledge set in that capacity, then, then you can start to be, to be scaled, then you can start to scale up, because, because establishing yourself in one area, especially in commercial real estate, it's going to be translatable, to some extent, to other other asset types. But you can't, from the beginning, start out saying, Well, I'm going to do everything to everybody, and I'm going to, I'm going to have all asset types, and, you know, I'm going to go out there and buy everything I can buy. Well, you know, investors or partners gonna look at it like, well, really, did you do all these asset types before? Like, what have you done before, you know, so, so capitalize on your strengths. That's what you're doing. You're not, you're not, don't you're not limiting yourself because sometimes people hear this and saying, Well, I don't want to limit myself. You're not limiting yourself. You're actually doing the opposite, you're empowering yourself to be more strong when you do have that capability fully developed, it's like a muscle. When you have the muscle fully developed, then you can start working on other muscles to develop, and then you start working on other things, and then you and what you bring to the table is, is, is reliance and knowledge that will carry you through, even when you change asset types. So I'll start with that. I'll start honing, honing your skills on learning one asset type at a time, and then kind of build from that. 

John Azar  

And then, and then, obviously, put together the right team for you, depending on where you are in your sort of in your journey. Because you're gonna, you're gonna hit different inflection points as you grow your company. And as I said in the beginning, what got you from point A to point B is not probably the same thing that's going to get you from point B to point C and so on and so forth. And why get you what got you eventually to point C is probably not going to same thing that gets you to point D. So people sometimes think of this as like, well, I've done it right before. I've built these 10 homes, I'm sure I can build 1000 and do it, do it the same way. You probably can't, you know, same, same thing with apartments, you know? Oh, I've, I've, you know, I owned and operated 3-400 units, 500 units. I'm sure it's the same thing if I go to 5000. No, it's not, trust me, it's not, you know, it's you're gonna, you're gonna, you're gonna need a whole different knowledge set and infrastructure and procedure to get you to that, to that next inflection point. So, so you have to be, you just have to be aware of that, if you look at that, but start small, and you don't have to start big and start small, but just make sure you hone in your skills and the right way.

Ryan Miller  

Awesome, man. You know, we talked a lot about working with people, picking the right people, story banks, and it's really just this element of person to person, communication and connecting, and partners are a big part of that. And I'm curious, what would you say is your blueprint for choosing the right partners, whether it's CO-GP, an operator or even a capital partner?

John Azar  

There has to be, there has to be. Obviously, it goes back to what I said earlier, when you do your early homework and diligence on a on a partner, and you, and you build a relationship first, then you have, then you start to have choices on on what, and then you may, either mentally or physically, start to catalog your partners or your potential partners, and think, okay, so I can I have this deal. I think this person would be better suited for this deal. And you start to kind of show them different deals. Obviously you're not, this industry is so timing, return profile and liquidity constraint this whole industry is you have to hit someone, meaning timing. You have to hit someone at the right time when they have the right liquidity and they're paying attention to the right asset type at that particular time. You could, you could, you could go to an institutional investor and present them a multifamily deal today, and they could turn you down. That doesn't mean that they've turned you down forever. That means today they just have, they don't have the capacity or the or the allocation to do to for that multi step particular multifamily deal, or even multifamily. Maybe six months from now, or 10 months from now, or a year from now, or two years from now, their investment mandates change. Our investment mandates change, change tremendously from the time we first launched, you know, so and it always happens, investment mandates change. They're, you know, they're they're not, they're not, they're not, they're not just, they're not rigid, they're dynamic. And that's what people want to you want to invest in. You want to partner up with people who have those kind of kind of dynamic approach to investing into the real estate, because those are the people going to, hopefully, at some point or another, be good partners with you and for you. It, because if you're not dynamic yourself, that means you are probably going to be missing out on a lot of things. So if you are, for instance, it's okay to just be in multifamily, for instance, but for you to say I'm only going to look at value add multifamily. I'm not gonna look at anything else but value add multifamily, and I'm gonna stick to that until the cows come home. So okay, that's fine but what if there are no value add multifamily products out there, or projects that are worth pursuing? What if there are a class multifamily or what if there are ground up development multi families in major cities? Are you, you know, so if you're don't open yourself up to try to see, at least entertain, what would be potentially, other other factors that could invest your investment thesis or investment mandate, you can potentially miss out on a lot of returns and a lot of growth.

Ryan Miller  

Yeah, brilliant. You know, one thing that I've found, and I'd love to get your take on it, is one of the biggest hindrance of any business is ego. I'm just curious, from your experience and your perspective, how have you mitigated that? What have you seen walk me through a little bit of how ego has played out on maybe both positive and negative in doing deals.

John Azar  

Yeah, yeah, no, absolutely. And listen, nobody's above that. That word ego, because we, no matter how you know, how pious you think you are, or how down to earth you think you are, you have ego of some sort or another, you know. So I, you know you're even, even, probably, you know, Mother Teresa, probably had ego. So it's not, we're not above it, we're human, it's just a human condition. However, there are differences between those who would let ego drive their decisions and those who can have the power internally to to set their ego aside and say, yeah, you know what? That's that that is. That's just not the way I should look at things, or maybe there's a different way or different approach to look at that, or maybe there's a different way to look at the deal, maybe I or the bottom line is, I don't know everything. I don't know what I don't know or I don't know enough about this deal to really make a, you know, an ego central decision about this, this deal with this person or this relationship. So I, if you know, from our perspective, the ways have been with those who are, who have that ability. Who have the ability to kind of set that aside and think more critically and more pragmatically on whether it's a dealer relationship, and say, you know what, I could be wrong. I could have a different approach to looking at this. Let me, let me look at this in a different way and see if it makes sense. Those are going to be the most successful people, not just in this business and life in general. I mean, that's that's actually, that's actually a life skill. That's not even a business skill. It's got nothing to do with my business or private equity or a that's a life skill. If you can't look at yourself critically and think I could possibly not know enough information about this, maybe there's a different way to look at this. If you don't have that ability, it's it you're you are becoming your own hindrance and your own worst enemy, because there are so many different ways to look at things and so many angles. And if you are too egotistical to even admit that there are, there are different ways, in different ways to look at things, then you're missing out, and you're missing out, and you're going to probably be a hindrance to yourself and other people.

Ryan Miller  

I love that, man you know, one of the best mitigation strategies that I've been able to find is right back to what we were talking about earlier, is building those trusting relationships, both with partners, internal partners, external partners, investors and that underscores the importance of investor relations. I see you all out there, investor, the IR team man, you're doing a good job, but building those trusting relationships is a great mitigation tool. And that the interesting thing that I found, John there is, there is an interesting phenomenon called the Dunning Kruger effect. I think you'll find this interesting about ego, and how making decisions based on ego, you really bring up a good point. And the Dunning Kruger effect. It's an interesting phenomenon that, I don't think they said it this way, but I will, is, the less you know, the cockier you are. And so that would probably explain me in high school, all courage and no brains, yeah, so a lot of heart, but not a lot between the years. And, you know, I've been fortunate enough to, throughout my career, work with people who are younger than me or more experienced than me, and I recall, I won't say who, but I recall helping out a company, and they were much younger, in their late 20s, and they had the fire, right, they were really good. And what I found was there was a lot of stumbling over their own shoes, and it got them in trouble. I mean, it got them in big trouble with the courts and federal agencies. And the whole time, I was like, guys, you can't do that and I just knew I could feel it. I was, I was that old guy that was just peeing on the parade. And I was like, oh, this is so uncomfortable. And I didn't want to do it, but I also didn't want them to get into any trouble legally, right? And so what I found was, back to your point, the Dunning Kruger effect basically says, like I said, the less you know the cockier you are, but the more you know, kind of the more reserved you get. And so that would explain a little bit as you get seasoned, we'll say and and it's definitely salt and pepper seasoning, if you look at my beard. But the more seasoned you get, I think you realize that a lot of things can be complex sometimes, and maybe just calm the ego a little bit. Make sure you explore, be open, right, be curious, not judgmental, and be open and not so cocky. And you might learn something instead of this being this kind of useful idiot that I've heard that term thrown around, so the Dunning Kruger effect is phenomenal and just, just make sure you know where you are on that scale.

John Azar  

No, I agree on the percent. I think something to add to your point about the experience. I think to me, the more experience and more knowledgeable you get, at least for me, the more you realize that there are a lot of things you don't know. So it's ironic, because you would think, the more you build up your experience, and the more you seasoned, you become, and you have, you know, years and decades under your wing. You're like, oh yeah, you know, you're you're not, you know, top shit now but that's not the case. Ironically, it's the opposite. It's like, you realize, my gosh, there's so many things in this world that I don't know. I don't know about, and there are so many different business theses that I don't know about. There are so many different structures I don't know about. So that humbles you, ironically, as you build up your knowledge base, and it makes you curious, again, goes to your point earlier about curiosity. If you have that curiosity sense in you, you want to know about someone else's viewpoint, hence you reduce your ego. So it's, it's funny how that works. It's like you know, the more you realize what you don't know, the more it makes you humble, and the more it makes you not have as much ego, because you truly want to learn, and you become a student in your craft forever. I call myself an internal student in my craft because I'm always learning every single day I'll learn something new. So, that, to me, is very valuable.

Ryan Miller  

Brilliant man. Now my before we wrap things up, just final question. So once you've closed the deal, right, it's enough to start a deal, but closing a deal is where we're, where it's at, but once you've closed that deal, how do you actually create value? Walk me through step by step, what are some of those operational levers that you pull?

John Azar  

Yeah, I mean, once you close a deal in a pragmatic way, you really, then you move to really making your investment theses work. So you got to ensure, so closing the deals is 50% of the way. The other 50% is actually making sure that however you underwrote this deal and your investment theses are actually executed for the next year, six months, two years, five years, whatever it is that you're going to have. So in order for that thesis to work and you're and especially even underwriting, you got to make sure that everybody in involved in the deal understands that thesis and understands what your what your shared goals and parameters are, because if you're operating in a silo, and you have your set of goals, and your goal, I got these things. I got, you know, I got to go, and I'm gonna, I'm gonna have to achieve 20% IRR, and you don't share that with anybody. Or if you have, you know, like my business plan is to, you know, convert 50% of this asset into something else. And if you don't share that, and your partners will be, and you go six months down the road without sharing any of that, your partners might be, or your operator or your operations people, or your promising management people, they're like, well, we didn't know that. We didn't know that's what you're shooting for. 

John Azar  

What we do to mitigate a lot of that is, we want to make sure everybody's on the same page from day one, even even before, right after we close on a deal, right after we take over an asset or a property, or we take over, you know, we come into a development deal, from a ground up development deal, from site planning and all that kind of stuff. We want to make sure everybody from property managers to engineers to architects to investors to lenders. They all know what our plan is, because the more that they'll know what you what your plan is, the more they're they're going to be empowered to make it work and to and to get you to that, to deliverables that are on your plan, you know, and multifamily, for instance, like, you know, when we do a multifamily deal, an apartment complex deal, that's that's not ground up, that's a stabilized multi family deal. We want to make sure that the property management that's involved in that, in that deal, knows our underwriting, knows what we're really underwriting, what the standard that we're expecting, the value that we're expecting to extract out of that deal for the next two to three to five years. Because once they know what our expectations of returns are, they're going to have to now figure out how to structure their own operations and management of that deal to deliver those popular charts. You know, if I go to them and say I'm only expecting 5% returns for the next couple of years, it's going to tell them one thing. If I voted them to say I'm expecting 25% returns for the next couple of years, I guarantee you they're going to operate with a completely different lens than if you tell them that I'm expecting 5% returns on this deal. So they're going to have to figure then, then they get then they go back themselves and say, well, well, you know, John is expecting this. Let's figure out how to make sure that we're all on the same page, and we're all working playing in the sandbox to make sure that we all deliver those type of results. So, so, so that's really the very, very important thing that we do post after we close on a deal, and after we kind of absorb a deal. 

John Azar  

And then the second thing we do is we and that's something we've had originally thought about, even before we acquired meal, even before we were bidding on a deal, or as we're entertaining going into contract on that deal, is, is what is that going to look like in five years? What is that deal going to look like in five years? And who is going to be the next target, potential buyer of that deal, whether it's three years, five years down the road, what do they look like? What do they feel like? What are they going to want out of this deal? What kind of value are going to want, they going to want to extract onto that deal? And then you work your way backward and say, okay, so if we want to deliver that type of product in five years or three years, and attract that type of the buyer or that top of an acquisition in three years or five years. What do we need to do to today to make it get there in three years or five years? So so that really will direct your your business plan and your operations of that property or that asset to deliver the type of results you want to that buyer to see in three to five years, whether it's rehab, whether it's, you know, raising rents, whether it's whether it's management, fixing management issues, whether it's whatever it might be, you got to start working on those bases to make to make sure that you delivered that expectation to that to that potential buyer, or that potential exit.

Ryan Miller  

I love that man. So before we wrap things up, is there anything else you'd like our fans to know? Maybe ways to reach out to you if they want to learn more about you or Peak 15 anything at all.

John Azar  

Yeah, man. I mean, they can reach out to us via our website peak15cap.com, peak as in mountain peak 15 cap as in capital C, A, P .com, they can email me directly, azar@peak15cap.com. We are, you know, we're always looking to partner with great, great folks. We're always looking to expand our coverage and expand our relationships where, you know, we're alive and kicking in this, in this, in this period where maybe a lot of people are not. And the reason we are is because we have such amazing partners and amazing network that are continuously bringing us deals and keep keeping our pipeline full and our people busy, and also we are dynamic in the way that we approach our acquisitions. That's a word I used earlier, meaning that we're constantly shifting and making sure that we are hitting the right parameters to deliver that alpha that we promised our investors that we could deliver. So, yeah, I'd love to kind of work with folks out there and also I'm out there just as a, as a, if you don't mind me doing a shameless plug where we're actually in September, October, we're launching, which is by probably by the time this podcast is out. We are launching an educational platform, also for new people that are coming into hopefully to come in and learn multifamily from anything from the acquisition to disposition and to capital raising. So look even look out on that and that will be launched you can learn on that from our website as well.

Ryan Miller  

Brilliant man. So just to summarize everything John and I spoke about, check your ego at the door. Be sure you're open and curious over just being closed and judgmental if you want to be good at making deals and making good decisions. Second was, remember to focus on trust before transactions and third, closing CO-GP deals comes down to solid structure, trusted partners and a substantial amount of capital, which is just a reflection of the trust you've built and cultivated in this industry. You do these things, and you too will be well on your way in your pursuit of Making Billions.

Ryan Miller  

Wow, what a show, I hope you enjoyed this episode as much as I did. Now if you haven't done so already, be sure to leave a comment and review on new ideas and guests you want me to bring on for future episodes. Plus, why don't you head over to YouTube and see extra takes while you get to know our guests even better, and make sure to come back for our next episode, where we dive even deeper into the people, the process and the perspectives of both investors and founders. Until then, my friends, stay hungry, focus on your goals and keep grinding towards your dream of Making Billions.