WS1188: Alternative Assets of Syndication with Isaac Bennett

EPISODE 1188

00:00:00.0

David Robinson (DR): This is your daily real estate syndication show. I’m your host, David Robinson. Today, our guest is Isaac Bennett. Isaac, welcome to the show. I appreciate you coming in.

0:00:09.0 

Isaac Bennett (IB): Thanks so much, David. It’s a pleasure to be here.

0:00:11.1 

DR: So Isaac is the founder of YouAre: A people brand. He has an extensive background in international real estate, equity, and alternative asset investments. He loves baseball, music, and spending time with his wife, Blake. I believe in just sort of preparing for our interview today, that you have sort of a unique way of building your business and a unique model. And so I’m interested in diving into that. Maybe we can start out the show by you just giving us a little bit more background about yourself, and then also break down for us your business and what you guys do.

0:00:47.2 

IB: I’m happy to do that. Yeah, so really my entire background has been in sales, kind of executive sales leadership. I actually didn’t attend college right out of high school, I got into a sales position and had been doing that 10o%. So I spent about 16 years in corporate America, and my last gig would have been a vice president of sales for mid-sized manufacturing and mining company.

So my entire career was in that, but I’ve always invested, David, and it’s always really been my passion to put deals together and to invest in real estate and other alternative assets. So really just this year, earlier this year, 2021, I should say, I’m not used to the calendar having flipped yet, my wife and I really decided that we needed to pursue the passions that were on our heart and really put it all under one umbrella. That umbrella ended up being the company that you mentioned, YouAre.

And the background on that, I think is kind of fun. So what I found is that we really didn’t have a desire to go into business just for the sake of building our own little kingdom. We really wanted to help impact the world, and help light other people’s entrepreneurial spirits on fire. So we started YouAre as a project that would hold each of the different businesses that we already ran under it.

The foundation of that name, David, came from, I found I was always trying to exhort people by saying YouAre. So I might say to my five-year-old niece Collins that “you are beautiful,” or my 10-year-old nephew, I’d say, “Crossley, you are awesome at baseball.” And that really was what the name is that I found I was always saying it. So each of our agencies is a suffix to that prefix, and there’s five agencies under that brand. One of them being missional in its pursuit. So that’s kind of the foundation of YouAre.

0:02:21.5 

DR: Love it. What are the challenges and opportunities in structuring a brand with multiple businesses underneath that brand?

0:02:31.0

IS: The challenge is, absolutely, clarity and approaching the market with clarity. I think it’s really interesting because, you know, in our day-to-day lives, we operate with a number of different companies that are this way. Even if you look at the transition that Facebook just made. They have so many businesses that are under Facebook, their transition to Meta seemed kind of obvious, right? Because Meta owns Facebook, WhatsApp, Instagram, etcetera. 

So actually, this type of idea is everywhere. Virgin is another example of that. You got Virgin Records and Virgin Mobile, Virgin Airlines. And so, I think that the premise here is building a brand that is symbiotic in nature and can create a fly will effect. But when you’re just starting, everyone says, “Well, we don’t know what you do.”

The reality is, is that it takes a little bit more than three seconds to explain that there are multiple businesses under this brand. That is definitely the challenge that we see most.

0:03:24.4 

DR: And so maybe just break down for us the different businesses under the YouAre brand and what they focus on?

0:03:31.1 

IB: Thank you for asking that. I really appreciate it. The first one is, YouAre well. And I have a long journey with mental health and depression. And that’s maybe a conversation for another time. But health and wellness are near and dear to my heart, very much so. So YouAre Well is the first one.

And then YouAre home is my wife’s realty business. And we also, of course, our investments run through our realty business as well in many cases. So we have YouAre Well, YouAre Home, then we have YouAre Secure which is in partnership with Intrusion, which is a cyber security agency. We believe that your health and wellness must extend online as well, and we just think the world is short on cyber security solutions that actually work.

Well, Home, Security, and then we have YouAre abundant, which is probably mostly the topic of today, and that is the business that I run, the agency that I run. And it is focused on alternative assets of syndication. And then finally, the fifth agency is YouAre Good, which is purely philanthropic and missional in nature. And we donate 20% of our net income may be similar to Life Bridge’s except 20, not 50, to missional charities that are near and dear to our hearts.

0:04:33.5 

DR: And do you have a particular charity that you focused on to date or anything that sort of stands out as a priority for you?

0:04:41.0 

IB: Yeah, I would say there’s a particular priority. And one of them is a missionary in Northern India and she will be our first focus with what she is building over there. And she’s got a pretty special ministry that I’d be happy to link in the show notes.

0:04:53.9 

DR: Well, let’s shift our focus to, YouAre Abundant, the syndication investment company that you are focused on personally. Tell us a little bit about YouAre abundant and what you guys focus on there.

0:05:05.7 

IB: Yeah, I think that our mission there is to bring people together to do deals they probably wouldn’t do themselves. And we have done a lot of different things in our investing life. Things like resort property investing overseas, which is something that most people don’t do and it’s a little bit off the reservation but I actually believe in many ways that come with less risk than some of the things that people are investing in real estate, state-side. That’s maybe a unique one.

We’re pretty involved with music royalties, which I think is a really interesting asset class. It is extremely passive. I kinda joke with people who talk about real estate as passive income, ’cause I think it’s the opposite. But music royalties, it’d be an example of that. 

We love mobile home parks, we’ve invested in some mobile home parks with investors. We also like certain sections, oil and gas, more looks and shovel side where we can provide opportunities to people with significant tax benefits and access to the oil and gas industry without actually wild cutting or something of that nature.

0:06:02.3 

DR: So resort property, music royalties, mobile home parks, oil and gas, anything else that you guys focus on or have invested in?

0:06:09.7 

IB: Yeah, absolutely, certainly significantly in real estate, both buying and selling. And just, for instance, I guess it’s kind of bread and butter to say that, and maybe everyone in syndicates real estate, so I don’t talk about it too much. But very close to contract on a 93-unit mixed-use building, 15,000 square feet of commercial space as well in a mixed-use. That’s a historic tax credit deal. It’s a very complicated deal. There are some phenomenal financial metrics and that kind of deal, and that’s a deal that we’ve syndicated or coming in as the GP as well. So yeah, definitely real estate. I shouldn’t leave that out.

0:06:40.4

DR: Well, you did throw the mobile home parks in there, but yeah. Okay, well, the first thought that comes to my mind, and I’d love to sort of get your opinion and your guidance for other listeners that may be exploring structuring your business in this type of fashion is a wide variety. Right? 

And I think there’s a lot of individuals that would argue that “Hey, narrowing your focus is going to allow you to become an expert in that space, garner trust from your investor network because you are highly focused.” Yet you’ve decided to go very broad, not only in the multiple companies that you’re working on managing but also in the asset classes and asset types that you’re focused on.

Maybe shed some light for us in regard to your investing thesis and mindset around that.

0:07:24.5 

IB: That’s a salient question. And I think that what we found is that we probably aren’t operators. And I say that kind of tongue-in-cheek because we’ve done probably 25 deals that we’re the GP or the primary syndicators and technically are operating. 

So it took me a little while to figure that out, but when I talk about these different asset classes that we’re doing, I think it’s important for the audience to recognize that we’re actually structuring our business around the idea of doing one thing and doing it well. And that’s managing investors and raising money for A-plus operators.

There’s another deal that we’re working on where we’re syndicating, we’re partnering with an A-plus operator on 772 units of multifamily from that standpoint, we’re only focusing on the investor and we’re only focusing on doing due diligence and we feel like a significant value add that we can offer is doing due diligence on a number of different asset classes we have experienced in. We sit around all day, 50, 60 hours a week doing nothing but new diligence. And I think that’s where our value-add comes in. 

That and just partnering with fantastic operators, so we pick the best of the best operators, and then we point our investors towards those operators and try to negotiate them preferred terms to what the operators are even offering their individual investors. So I think that’s where focus comes in for us is really right now, we do one thing, which is raising money and managing investors.

0:08:44.1 

DR: Thanks for that clarity. And makes a lot of sense. And so from a very tactical structural perspective, ’cause I think there’s a lot of listeners are like, “Man, that sounds very interesting. I’m curious how he structures that, is that through a fund-of-fund model, is it a special purpose vehicle?”

Maybe describe for us what an investor could expect if they were working with you and how that relationship with operators and other markets and other asset classes were.

0:09:07.8 

IB: Yeah, I’ll be honest, David, that’s a great question. And it varies. For instance, on the deal that I just mentioned, we are bringing our own fund to that deal and we are acting as a co-GP for that operator. There are some very specific SEC rules that you have to follow in regards to this. In this case, we are a partner, we’re a GP.

So we’re bringing our own fund to our own investor fund. And the reason that it makes sense for investors to participate in our fund in that manner is they’re getting a preferred deal over what if they took their own 200 grand to the operator. They’re getting a preferred deal as to what they would be with him directly. And that’s their incentive to work with us, right. And hopefully, because we’re fun to work that we manage it well.

So that particular one is a typical 506 fund. But we’ve done a number of different, just multi-member LLCs. And I think in the future, we will probably set up a blind pool. I think we need a little bit more substantive cohesive group before we do that, ’cause we probably don’t wanna do that maybe less than 10 million or something.

0:10:03.3 

DR: Moving forward, what do you guys see on the horizon for you moving forward into this new year? 

0:10:10.8 

IB: Yeah, we have big goals. No doubt about it. It’s still a relatively young business, even though we’ve been investing for a really long time. I think what we’re looking at is making sure that in each of these asset classes that we like, we have one or maybe two operators that we have met our criteria and we feel are truly A-plus operators. And establishing those relationships where we sit with them in a GP position, and then we are providing just unbelievable value to our investors.

So I really believe that the equities markets right now are a death trap for almost everyone. People should be focused on changing their mindset from infinite liquidity to durability of assets and permitted assets and assets that provide cash flow in a tax advantage. And really start thinking about generational investments instead of yellowing Game Stop calls or whatever people are doing these days. So we’re focused on just putting out there the virtues of the private placement, just really how we do due diligence for investors.

0:11:08.4 

DR: Let’s talk then about your specialty, which is attracting investors and attracting very high-level operators and bringing them together. Maybe let’s start with the operators first, what could you share with our audience that would be helpful to them in seeking out operators that they may want to partner with?

0:11:27.1 

IB: Yeah, I think there’s a really easy answer here, and that answer is like a track record and look for exits and everything else. And I don’t wanna minimize those things because they are important. But, I actually have a few nits to pick with the idea that exits are important. Because I think the very best operators often sell way less frequently than most, and I think there is a serious discipline towards the idea of thinking about generational assets rather than turning and burning to pay LPs back. 

And I think that we have the most symbiotic thoughts with operators who you selling as an opportunity, not as a strategy, and with investors who are extremely patient with their capital and they’re buying it for the discounted cash flow streams that they’re getting, and that’s the value that’s actually, in the business that’s actually the value being created is that discount ECA flow model, so selling is not necessarily wrong, but I think business models that focus on it might not actually maximize the assets under their management. So if your original question was, what are you looking for in operators?

I think that’s it. I think it’s symbiotic thinking of capital being a permanent thing and being irreplaceable. We live in a world where we view capital as very replaceable, and I think that we are looking for operators to view it as totally irreplaceable.

0:12:46.0

DR: Any strategies, tips, tactics that you’ve employed or deployed to connect with operators that match that criteria and foster that relationship, and ultimately put a business relationship together? Anything that you might be able to share that would be helpful for the listeners that are trying to accomplish that in their own business?

0:13:05.9 

IB: Yeah, I think it’s very important to sit down with them face-to-face. And it’s a little harder to do in today’s day and age, but I think that you can learn a lot about a person by spending a few hours with them several different times and you can really see the true sides and talk to their employees and understand how they’re treated and what the culture of that company is, and whether or not they have moral and ethical values as you might, and how they treat their tenants and all these other things. And really just thoroughly read through the communications that these operators may have with investors or tenants or clients, whatever it may be. And just understand whether or not these are people that have values as you have, whatever those values may be.

And so, I think that personal connection and really knowing your operator is what I would suggest. Thoroughly vetting and understanding the quality of people that they are.

0:13:53.2 

DR: Great advice. Well, let’s shift gears slightly, and let’s talk about the other aspect of your business. And that’s attracting investors to your investing thesis, model, services, etcetera. What’s your strategy as far as that’s concerned? 

0:14:08.4 

IB: You know what, right now, it has been primarily word of mouth, David. And this is an area where we really need to improve, to be honest. We feel like our operator network, just from the nature of how much we’ve done over the years and how many people we’ve run into. We feel really good about our operator network, our Investor Network is still growing and it’s growing pretty fast.

But we’re coming to people and saying things like, We’re gonna connect you with the very best operator on a deal where you really like. And I should probably back up when we’re choosing operators, we’re not doing blindly on faith that they’ll have good deals. We choose our favorite operators, and then we chose our favorite deals from those operators, we’re not a yes every time, by any stretch of the imagination. 

So, we are coming to people and saying, “These are the terms, this is what we’re offering, this is sort of the alpha that we’re generating for you above what you could even get directly from them, and this is why we like that deal.” So, our strategy from that standpoint has been primarily word of mouth. Certainly in 2022, one of our major goals is to ramp up our marketing efforts to really show people the service that we’re bringing them.

I should note that we don’t charge fees. And I probably shouldn’t say that in public, because I reserve the right to change on a specific deal if we need to. But we’re not charging fees because we come in with our operators as a GP. We’re taking the risk in the deal and putting our skin in the game, and that’s how we’re compensated rather than through compensation for managing our investor network.

So when we say We additional Alpha for our investors, we mean that very seriously, there’s nothing coming off the top. And so I think that is a huge portion of the value add that is very different from most fund-to-fund models, is that we are negotiating on the behalf of our investors and we’re not charging them anything for that fee. So it’s truly a service that says our skin is in the game on these individual projects as a GP, and we’re going to get you better terms than you could get on your own without any fees.

So again, reserve the right to change on a specific deal if we have to, but that is really what we intend on doing.

0:15:55.4 

DR: And is the operator themselves, are they collecting fees off the top?

0:16:00.0

IB: In most cases, and there are multiple partners, they all do it differently. That’s the interesting thing about this business, it seems like every deal is structured a little bit differently, as you’re well familiar with.

0:16:08.4 

DR: But typically you’re going to have a GP charge an acquisition fee of some variety?

0:16:13.0

IB: I think the very best operators charged fair fees. And you actually want that as an LP. You don’t want a piece can thing on fees and then running out of money with the market turns a little bit because they’re not charging management fees or whatever.

I encouraged the idea of a good operator charging fees for sure, but we’ve just made the decision not to do that because we think we can provide extra value for our investors and still be compensated fairly on the GP side for that.

0:16:39.8 

DR: Isaac, this has been a great conversation. I think you have a visionary business model. You have a lot of areas that you’d like to focus on and underneath the YouAre brand with You are well, you are home, you are secure, you are abundant, which is the syndication business that we’ve discussed mainly today, and you are good. Tell us a little bit about what you see for the brand itself moving forward, do you see yourself really narrowing the businesses that are under that brand, expanding those, trying to focus on that underneath, what’s the plan for the brand?

0:17:13.9 

IB: Actually, I think it’s the opposite of narrowing. We view this as a platform brand. And the idea is that we would partner with other entrepreneurs who maybe didn’t have the back office or the financial backing to start other businesses, but have passion.

We’re a brand to light the entrepreneurial passions on fire for entrepreneurs. So we view YouAre as a holding company that wants to come along and partner with other people. And an example of that is YouAre Well. We have a director of that that is passionate about health and wellness, and she runs that really, really well. She’s doing a great job. And I think that like these other companies, whether it’s made or version that we’re talking about, we view this as a platform that could really have as many agencies under it as possible. 

I think we’re very eyes wide open about the idea that not every idea is gonna work. We’ll certainly have failures in there and that’s okay. We want this to be a place where people can come and with lower risk than they would on their own. They can try an idea that fits under the YouAre ethos.

0:18:15.1 

DR: Well, I wanna start winding down here, got a few final questions for you. The first is what’s a habit, a daily habit that you’ve developed that has contributed to your success? 

0:18:24.0

IB: I mentioned earlier, I think I’ve had a long history with mental health, and rare is the first one I would say is a daily habit that if I lapse in it, it’s amazing how quickly my life goes downhill, and so that is a significant one. I try to stay very healthy. It’s funny because I’ve actually been sick this last week and haven’t worked out for a week. 

But in general, certainly working out as a daily habit, that just puts me in the right frame of mind to get going. And then from there, it’s really just about staying all organized. And I’m a huge goals maker, I have a checklist every single day that I put some really stupid stuff on their David, just to make sure that I get on a roll, checking stuff off. I make sure I have my one or two things that are really important, and then a bunch of other stuff that just gets me in the habit of checking things off. So yeah, those are a few of the habits

0:19:08.4 

DR: And just from a very practical perspective, when you’re putting together your list, do you use a particular app or a technology or a spreadsheet? How do you do that? How do you organize it? 

0:19:17.2 

IB: I do. It’s this folder that I have that I take a pen and scratch a bunch of notes on and put checkboxes next to. It’s really, really, I mean, the technology just blows my mind away. You know, I’ve tried so many things in that regard and found that dumping something onto a paper with the pen is the most effective thing for me. It is as shameful as it is for me to admit that that’s the best way for me to get things done.

0:19:37.6 

DR: Well, I think this has been a great conversation, thank you for sharing with us a little bit about your background and your journey, and also this unique business model of starting with a brand that is at the top and building out businesses that you’re passionate about underneath and really going wide on this rather than staying very narrow and focused on a particular aspect or asset type. I love your strategy. 

What’s the best way for our listeners to connect with you, learn more about what you have going on in the future? 

0:20:04.0

IB: I’d be happy to email Isaac, I-S-A-A-C at A-People-brand dot com. Just like our website, apeoplebrand.com, which is our slogan. Yeah, any time they wanna connect with me, that’s totally fine. And if you wanna put my phone number in the show notes as well, that’s also totally fine.

0:20:20.4 

DR: We’ll have that info in the show notes. Again, Isaac, thank you for coming on. Thank you for sharing with our listeners today, and we look forward to connecting with you again down the road.

[END OF INTERVIEW]

[OUTRO]

0:20:30.0 

Whitney Sewell: Thank you for being a loyal listener of the real estate syndication show. Please subscribe and like the show. Share it with your friends so we can help them as well. Don’t forget, go to www.LifeBridgeCapital.com, where you can sign up and start investing in real estate today. Have a blessed day!

[END]