103. Long-Term Holds For Infinite Returns With Elaine Stageberg

PILF 103 | Passive Investment


Are you interested in holding an asset for the long term and achieving infinite returns? Then this episode is for you! Jim Pfeifer sits down with Elaine Stageberg to discuss everything from how to vet an operator, property management, and the proper mindset for success. Elaine also shares the inspiration, progress, and purpose of Black Swan Real Estate as a company that helps investors grow their wealth through investing passively in real estate. Tune in now to start building the path toward a life of prosperity!

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Long-Term Holds For Infinite Returns With Elaine Stageberg

I’m pleased to be joined by Elaine Stageberg. She is a psychiatrist, a mother of four, and the owner of Black Swan Real Estate. She owns and manages a portfolio of over $250 million in assets under management. Welcome to the show.

Thank you so much for the opportunity to be here. I’m excited.

I am too. The first thing we always do is we want to hear about your journey. How did you get into real estate? Once you got into real estate, you started with single-family homes. How did you then grow into multifamily, and now you are a syndicator? Can you talk about your story?

I consider my journey into real estate as one of the greatest blessings of my life and an unexpected part of my life. I’m a psychiatrist. Early on, I made the decision to go to medical school and residency and everything that career path entails. My husband was a career technologist. We both had lovely careers with high-income, potential high prestige, and everything you can hope for in a typical American career.

Early in our twenties, even before we met each other, we both sought out mentors who we perceived to be doing well with their lives and asked them, “What had worked well for you?” I had the great fortune of working as a nanny for a family who looked like they were making their wealth from running a medical clinic. When I asked them, “How have you created your wealth?” They told me, “Real estate.”

Completely separate from me before we had ever met, my husband was doing some minor IT consultancy for people on the side. He would help people manage their emails and passwords of lawyers and accountants. He would ask them, “How have you created your wealth?” One might think, “They are an attorney or an accountant. They are making money from those professions.” They would tell him, “I’m taking the money I’m making as a lawyer or whatever the profession is, and shunting it into a rental portfolio.” He and I met, and we shared those experiences. We said, “That is interesting.” We both have had these experiences looking at people that we admire and respect that are further along in their lives. There is this real estate thing that continues to come up.

When we got married, we both owned our own homes. We moved into his home and we decided to rent out my home. Even with the background of those folks who were further ahead of us, and I knew that we wanted to do real estate, I will admit that at that time, I was afraid of doing rental real estate. I wanted to sell that house.

We had gotten married. I had left my career so I could start medical school. I was hoping a baby would come along. This was in 2011 when the economy was terrible. There was a lot of fear and uncertainty. I thought, “This is the worst time for us to start real estate investing.” I was focused on risk, loss and debt. I’m glad that my husband, Nick, convinced me to hold that home and rent it out. That started our journey. I was able to see that we had great renters in that home. We were getting a little bit of cashflow. The mortgage was getting paid down every month. The property value was improving as the economy improved over those years.

We then decided to set aside fear and concern for the loss, and become real estate investors. I count that first property as being an accidental landlord. We saved up as much money as we could. We bought a home that was a VA foreclosure. It had been vacant for nine years. Any assumptions you can make about the status of the property or hearing those couple of pieces of data are probably true. We hired professionals for things like the plumbing, the roof, the windows, the HVAC, and things that we needed licenses and permits for. We did most of that renovation ourselves with sweat equity. We put a lot of the renovations on credit cards.

A lot of the sweat equity we did because we couldn’t afford to hire handy people, painters and those sorts of things. When I talk about it, my knees hurt thinking about laying the tile for weeks, and my back hurts thinking about painting that entire house. It was so much fun. I’m glad that we did the labor ourselves because we saw with our own eyes the value creation. We saw one minute this was a house that had been abandoned for nine years. A month later, it was a house that a family with three children moved into. The neighbors were stopping by all the time and thanking us for getting the boards off the windows, putting a roof on the house, and doing everything to make it so that they had a nice neighborhood to live in. That was when we got bit by the real estate bug.

Every deal we have ever done to date has been a BRRRR business model. We acquire with cash and renovate with cash, rent it, refinance and repeat. I call it an equity snowball. To get to where we are now from those humble beginnings, we shunted all of our excess cash from our earnings into real estate. We believed that if we chose to live lean for a number of years, that would have a fantastic payoff in the future. Luckily, now I’m getting to live in that future.

We decided to funnel all of our profits from our real estate back into more real estate. We never took profit from any of our investments for about ten years. We started working with passive investors. First, we did joint ventures. My husband got a real estate license. We created a property management company. We started doing our private equity funds. One thing led to another. Today, we both run our company full-time. We are vertically integrated. We raise our own capital. We acquire our own deals. We do our own renovations. We have a property management company. We get to do this full-time every single day.

We get to work together, which is a lot of fun. There has a lot of challenges as well. It is an interesting life. If you had asked me twelve years ago when I was choosing to go to a medical school and Nick was building his career in technology if I would one day be a full-time real estate investor, I could never have imagined that. Now, we get to spend our time serving passive investors and sharing this business model with as many people as possible.

You started out similar to me as an accidental landlord when we couldn’t sell our house in 2008. If you would have asked me then if I would be in full-time real estate, I would have thought you are crazy because I hated being a landlord. What happens is you recognize what being a landlord can result in. You might not like the landlording part, but the cash and what it does to your finance is pretty amazing.

Going from being a doctor to full-time in real estate, there are a few other people who have made that journey as well. That is always interesting to me. One thing that stuck out about your story is how did you know or get the courage as a nanny to have a conversation with the people you worked for about their wealth.

Sometimes people are so afraid to say, “I see that you have built up some wealth here. How did you get there?” Most people assume it is their W-2, but you and your husband both peel back the layers. Most wealthy people didn’t get there from a W-2. They got there by owning a business or real estate. That is a roundabout way of me asking how did you figure out, “This is the question I need to ask?

That’s an excellent question. Not only does it apply to that particular situation when I was asking the family that I worked for, but I think it applies to who I am now. I want to get to $1 billion in assets under management. How do I do that? I find people who are there and I ask them good high-quality questions. Humans are driven to want to help other humans. It is up to us to come from a place of curiosity, lack of judgment and service. I was like, “I would love to have the opportunity to ask you a few questions. Here is how it could impact my life. Is there anything I could do for you to thank you for your time?” For most people, it is not like, “I need you to pay me for my time.” People want to help other people. People want to pass on their legacy.

One of the biggest things that I have learned as an entrepreneur comes from curiosity. I take that right from Gary Keller. We hold our real estate license at Keller Williams. I love the culture here. Gary is an amazing visionary and a real estate leader. He has a lot of pithy phrases and things that he says about entrepreneurship. One of them comes from curiosity. When we do that with ourselves and ask ourselves, “Why do I feel this way? Why do I want to make this decision? Why do I not want to make this decision?” Certainly with others, “What has the success been in your life? What have the hardships been? If you could give yourself a piece of advice from 10 or 20 years ago, what would you say to yourself?” Being genuinely curious, staying out of judgment, thanking people for their time, offering value where you can, and remembering that it is all part of that loop.

At times, we are going to people who are further in the journey than us and ask them, “What does the path look like up ahead?” We are with our peers, we’re saying, “What are you seeing day to day now?” At times, we are the ones reaching back to people who are a little further behind us in the journey and saying, “Come along. Here is a path you can take. Here is a tip I can give you.” In that journey, we are all on it together. The more we can remember that we’re on that journey together, the better off we all are.

You mentioned a few things in there that lead me to believe that you still use a little bit of your psychiatry degree. One of the other questions that people always want to know is, what is the best way to vet a sponsor? My question is, how would you recommend someone vet an operator? Do you use your background in psychiatry to help with vetting partners, not just a sponsor but maybe other partners and people that you work with?

Psychiatry is a personality. It is a training that becomes a part of someone. I never envisioned that I would have a career outside of medicine. As I was choosing my specialty in medicine, I asked myself, “What is something that will serve me outside of medicine?” I’m probably not going to operate on nights and weekends in my spare time if I become an internal medicine doctor. Those are people that take care of the heart, lungs and kidneys. That is valuable information, but it mostly deals with medications at the pharmacy.

[bctt tweet=”Psychiatry is a personality. It’s a training that becomes a part of someone.” via=”no”]

Psychiatry is something that you carry with you all day, every day. There are a lot of medications as well. The difference between a psychiatrist and a psychologist is that a psychiatrist can prescribe medications, but a lot of psychiatry is about mindset, thinking and helping people make sense of their story. I supplemented that in the coaching world. I took what I learned professionally and amplified it with mindset work from the greats like Tony Robbins. We are in his Platinum Partnership and go to an event almost every month. Other great programs and courses are out there and great thought leaders. It is a way of thinking.

To get to your question on how to vet a sponsor, I have a qualitative way of thinking about that. It is relationship based, which probably comes from my background in psychiatry. Someone can underwrite a deal. They can look at rents, comps, purchase prices, interest rates, and all of those things. That would be betting on the horse. Someone can vet the sponsor or better, the operator if they are able to work with someone that is an operator directly, and that is betting on the jockey.

That is the way to go of asking oneself, “Is this a person who will fight for my capital? Is this a person who will make good decisions on my behalf?” In every deal, there is always trouble. That is part of real estate investing. That is where the value comes from. Is this a person that will make good decisions under pressure and will weather those storms?

Someone can make a spreadsheet saying anything they want with cap rates and interest rates. Even bumping rent $10 or $20 per unit can change things on a proforma but asking oneself, “Is this an operator who will steward my capital as though it is their own?” Building that relationship, I’m big on meeting people face-to-face. We have an in-person event once a year where people can come and meet us, tour our assets, get to know us, and get to build that relationship. In that analogy of does one bet on the horse or does one bet on the jockey, people should focus 95% of their efforts on betting on the jockey.

I agree with that. You need to make sure the person or company that you are dealing with is top-notch and get comfortable with them because any deals that they bring you, you can assume at least that they are thought it through. You are dealing with a quality person. They are not going to bring you a crappy deal. I think that is great. You also mentioned that you do your own property management. I do want to get into your fund because it is very different. Can you talk first about why you decided to do your own property management? When I was an active investor, I hired property managers. All but one of them was horrible.

I think you answered the question for me there.

That might be why, but I know that property management is a thankless and difficult job. You answered the question, why did you do it? Probably because you couldn’t find anybody else to do it. How do you integrate that into everything else? How do you become the property manager that you would want a third-party property manager to be?

Way back in the beginning, we decided to self-manage. That was an easy stepping stone because that was the first property I had lived in. It was also a relatively new house. It was about three years old. It was easy to make the decision to self-manage that property. In that first big renovation project, we decided to keep self-managing. We liked self-managing because we are big believers in an ownership mentality. We would steward that asset the best because we are the owners of that asset. A $25 rent bump doesn’t matter much to a property manager, but that could be an eighth of our cashflow. If our cashflow is $200 per month, that extra $25 is an extra eighth of cashflow per month.

PILF 103 | Passive Investment
Passive Investment: Black Swan Real Estate really likes self-managing. They believe in an ownership mentality that they would steward that asset the best because they are its owners.


When we got to about 25 properties, that is when it became very challenging for us to self-manage our properties. There was always a maintenance ticket, a property that needed to be turned over, and all of the things that go into that. We had to make a tough decision. Do we hire third-party property management or do we create our own property management company? All that entails with hiring employees, training them, and making sure we are in compliance with Fair Housing and the Department of Commerce. It is different for every state, but there is certainly a lot of regulation around a property management company.

We are big believers that operations are everything. Operations are where almost all of the value is created. The best person to do the operations is the owner. We created our own property management company. My husband got a real estate license. We are brokered by Keller Williams. We are able to have our property management company here. That allowed us to scale because we were able to offer third-party property management, and we had a different model for that.

We no longer offer third-party property management, but when we did, we only did third-party property management of homes that we helped that investor acquire and renovate because we have a consistent product. All of our homes are pet friendly, with no carpet, the same light fixtures and doorknobs, paint schemes, and upgraded bathrooms and kitchens. As our leasing team is leasing them, or let’s say someone looks at a certain house, and maybe the person doesn’t like the layout of the bedrooms. We can say, “We have these other five options. They are the same. They are just in different neighborhoods and different sizes.”

That is what allowed us to scale single-family. We have about 400 single-family homes that we own or manage. People will say, “Single-family is not scalable.” That is not true if you come at it from an operations perspective. We run our single-family home portfolio as though it is an apartment community that just happens to be spread out, so all of the same fixtures and everything that I mentioned. That also allowed us to have great projections as we moved into our joint ventures and our private equity fund offerings because we are the asset manager and the property manager. We do our own construction.

When we say things like, “We anticipate that this renovation might be $15,000 per unit or the rental rate might be $1,250 per unit,” it is because we are talking directly to our construction managers and leasing team. We have trained our property management team with that ownership mentality. They understand how critical it is for that last $25 in rent, managing that maintenance ticket the most efficient way, or providing a level of customer service that decreases vacancy and increases renewal rates.

That 5% of all of our profits from our private equity funds from our stake, not from our limited partners, goes to a profit share to our property management company. We want them to have the feeling when they walk into a building, “I own a piece of this. I’m going to make sure that I have a smile on my face for that lease showing I’m going to pick up that piece of trash. I’m going to do that maintenance ticket after 5:00 on a Friday afternoon because it is the right thing to do.” It is all about that ownership mentality. One of our seven core values at Black Swan Real Estate is extreme ownership. The vertical integration of property management is a big part of that.

I want to dig into your fund now. From what I understand, you have some single-family homes and some multifamily in there. That is unusual. There aren’t a whole lot of syndicators that are dealing with single-family homes and certainly not mixed with multifamily, at least not that I have seen. Can you talk about what is in the fund and why you have those two similar but different asset classes in there?

We have Black Swan Real Estate Fund 1 and Black Swan Real Estate Fund 2. Both of those are closed now for new capital. They both have single-family homes and large multifamily as well. Our overall portfolio is about a third of a billion in assets under management, and about a thousand units. We like single-family because they are easy to acquire and renovate. They are little money machines. We can work with local regional banks to do a cashout refi quickly to speed up the velocity of capital. As we are doing larger-scale renovations on large apartment buildings, that is a slower-moving target. We have these money machines on the side churning the capital while we are doing the larger renovations.

Our funds are different from a typical model in that they are all predicated on a BRRRR business model. We have never sold a single asset that we have ever acquired. We have no fees whatsoever in our private equity funds. One hundred percent of all of our profits go back to our investors until they are completely repaid. It could be years before we, as GPs, have any profit from our funds.

PILF 103 | Passive Investment
Passive Investment: Black Swan Real Estate never sold a single asset that they have acquired. They have no fees whatsoever in their private equity funds. 100% of their profits go back to investors until they’re repaid in full.


After our limited partners are completely repaid and they have all of their capital back, they stay in the deal indefinitely. There is no capital event that gets our partners out of the deal. We think that if partners are in the deal during the risky part of that renovation phase, they should stay in the deal forever. That creates an infinite rate of return. It is an indefinite hold. We tell people to plan for a 20 to 25-year hold period on our funds. It is based on our age and lifespan. Ideally, we hold those funds as long as possible because we are enjoying an infinite rate of return together.

There is also a significant tax advantage because there is no sale and no depreciation recapture. We do all of that through deep value add. We love that BRRRR business model through a cashout refi and through re-levering the assets as they age. Some of the original assets we have for 10 or 12 years now. We are on the 3rd or 4th generation of cashout refi. We can look at a single piece of property and remember that bucket of capital paid for that property. We refied it out and used that capital to buy the next property and that next property. We have taken that business model and applied it to our private equity funds.

Investors love it because it creates true passive income for decades. It creates true generational wealth. It is not just a 3 or 5-year vehicle for wealth creation. It is a decades-long vehicle for wealth creation. There are huge tax advantages because all cashout refi proceeds are completely tax neutral to the IRS. There is no depreciation recapture.

Our big goal in the private equity world is to have a small impact on private equity to change private equity with no fees. Our limited partners are placed well ahead of us in their interests. One hundred percent of the capital is going back to our partners before we get any splits. We are making it an investor-focused model. I take that straight from the Mayo Clinic, where I trained as a psychiatrist. Mayo’s model is the needs of the patient come first. When you are steeped in that culture for years, as we were creating our private equity funds, it was apparent to me the needs of the investor come first, and everything else will work itself out.

PILF 103 | Passive Investment
Passive Investment: The big goal now of Black Swan Real Estate is to have even just a small impact on private equity to change private equity into no fees.


We have a different model that sometimes can be a little hard for people to wrap their heads around. “What do you mean by no fees?” Our property management company generates fees, and that pays for our salaries, our staff, and everything else. We don’t need to take fees at the asset management level. “What do you mean by an indefinite hold? I don’t want my money locked up forever.” You have all your capital back. You have $0 left in the fund. You stay in it on indefinite hold.

Once it clicked for people, there is this moment where I can see it in their eyes. If I’m with them in person, I can hear it in their voice over the phone where it clicks. They were like, “This is interesting.” I wish other operators had a model like this. It is our hope that other operators will listen and steal our business model, and more properties will be held because there is that ownership mentality that comes when you hold and steward an asset for a long time.

I want to dig into the part about the sponsor fees because I did look at your website. You have 10% at closing and a 10% property management fee. Can you talk about how those relate? You have a different model. If I’m looking at your model compared to somebody else’s who is doing the normal private equity where there is sharing, prep and all that, how do I compare yours?

Your PM fee is a little bit higher than a normal one, and that is fine. The 10% at closing, what is that and how does that factor? What I’m trying to figure out is if I was looking at your deal and somebody else’s, and they are standard and you are not, and let’s say the property’s return is the same amount, what are the net LP returns? Have you done that comparison? Can you talk also about those other fees there?

There is no fee at closing. I’m curious about what you are seeing there. We are vertically integrated. Nick is a licensed real estate agent. If he represents us in the transaction, he may collect a broker fee. That might be what you are referring to there. That is only if he represents us. It is a fee that would go to any of the buyer brokers. It is all about vertical integration and control. We love that he is able to negotiate for us. He is the decision maker. If that happens and he is able to collect a buyer broker fee, then that happens.

On the property management side, our pricing model is transparent. It looks like it is higher than a typical property management fee, but that is because it is an all-in model. We collect 10% of the gross rent collected and nothing else. A typical property management model might be 3%, 5% or maybe 6% on the high side. They also pass through salaries, health insurance, mileage, cell phones, copy machines, paper, and all of those expenses.

In general, when we look at seller proformas compared to our post-closing proformas, we are generally reducing property management by at least 30% and often 50%. If you think about it from a wealth-generating perspective, every dollar that we generate in our property management company goes to pay salaries and all of the things that we need to be able to operate a property management company to run our assets. For every dollar that we reduce, that’s NOI of that building. If we assume that the cap rate is 5%, that is a 20X multiple that we are removing in value. We are incentivized to keep the NOI of the buildings as high as possible so that we can get to a cash-out refi and an indefinite hold period, and have that infinite rate of return.

We do everything we can to run our property management company as lean as possible to keep the assets as well capitalized as possible. We keep the NOI high to keep their value high. We tend to decrease property management expenses considerably compared to seller proformas. I hope I addressed that question about if Nick is able to represent us as a buyer broker, he would collect a commission, but there is no 10% fee at closing. I want to be clear about that. That is a big deviation from our business model. I don’t want anyone to leave with that idea.

I’m not trying to plant anything in anybody’s head or play the gotcha game. I was looking at your website for the frequently asked questions. The last thing it says is about your fees. It says, “In addition, we collect 10% at closing to cover costs.” That is what I was referencing.

I will have to take a look at that and see what that is. There is no fee at closing.

I’m not trying to cause trouble here. I want to understand because it is such a different model from what everybody else is doing. You needed a great job of explaining that. It would seem to me that if you had a property and the exact same property was with another operator, the LP returns might look a little bit better on yours because of the fee structure and the things you do. That is what I was hoping to get at. That makes sense to me.

Elaine and I talked after recording, and it was a typo on her website. I can confirm that there is no 10% closing fee as she said. It was a typo on the website. Back to the show.

I want to switch and talk about the markets you are in because you are not in the market that everybody is in, which is something that I like. You are also in three markets that don’t have much to do with each other, Rochester, Minnesota, Oklahoma City, and Tacoma, Washington. You are living in Rochester. I get that, but I don’t get the other two. Could you talk about why Rochester and also why you’re in Oklahoma City and Tacoma?

Oklahoma City is the easy one. That is where Nick and I lived when we first rented out the home I lived in and the rental property that we had there. We have a couple of single-family homes in Oklahoma City, but we are not active in Oklahoma City. Rochester, Minnesota is where we live and operate. We love Rochester because, exactly as you mentioned, it is not a market that is saturated with other people who are buying and renovating assets. It is a blue ocean if you are familiar with the Blue Ocean Strategy.

We also love Rochester because it is consistently rated one of the best places to live in the country, going back to the early ‘90s. It has a great culture and basis. Mayo Clinic is a huge strong employer here, IBM and other employers. To understand Rochester, one has to understand the Destination Medical Center or the DMC initiative. You can find their website, DMC.mn. It is a fantastic exposition of public-private partnerships.

It is the largest ever public-private partnership in the state of Minnesota and the largest per capita spending on infrastructure anywhere in the country. That is seeking to grow the population of Rochester and grow the employment base for Mayo Clinic so that Rochester can be the destination medical center of the world, bringing in tons of jobs in biotech, technology itself and startups. Anything that is related to healthcare and well-being, Rochester is the hub for that in the whole country and the whole world. Mayo Clinic has consistently rated the best hospital in the entire world. It is a special place and culture.

Because of that, real estate values are strong. We are still able to get cashflow and buy buildings that are old enough to allow for significant renovations, which is part of our value-add strategy. We are able to have a market appreciation as well. It is this blend of the perfect metrics to have success all along the different parts of the value chain of any given transaction.

Tacoma is similar. Tacoma is to Seattle, as Rochester is to Minneapolis. It is a smaller town connected to a great major metro area. It is not an area where there are a lot of investors or a lot of capital flowing into that area from real estate investors. Tacoma is undergoing a major revitalization. In the ’80s and even the ’90s, it was a blue-collar industrial town associated with pollution. Dirty and gritty are the words that locals will use there. That has changed over the last few decades as the EPA has cleaned up Puget Sound. There has been redevelopment there. There is a $1 billion real estate development in Ruston Point right on Puget Sound, about a mile or so from two of our communities there in Tacoma.

Tacoma is an opportunity for us to buy class C and class D-plus assets that have been neglected for decades through this low period in Tacoma’s history and renovate them into the Tacoma of today which is a vibrant place to live. People who live there and commute to Seattle or with remote work live there because it is less congested and expensive. There is more to do outside of Seattle proper. That is why we love Tacoma.

Coincidentally, they are both on the 44th North Parallel. That is a complete coincidence, and I didn’t know about that until we had been investing in Tacoma for several years. That was a nod from the universe. These cities belong together, which is quite extraordinary. If you think about it, Rochester is a pretty small town. It would hit the 44th North Parallel. What are the chances of that? You will notice that we are in a small number of markets. It is just Rochester and Tacoma. Oklahoma City is more of a legacy because that is where we live. We are not actively doing projects there.

We are big believers in becoming experts in our communities by having a large market share, knowing every single street, knowing all of the players in that market, and being thought of by brokers and other sellers as the people that are buying. We’re being thought of by residents that are living there as the place to go for wanting a place to live. We have a much smaller footprint in Tacoma than we do in Rochester, but we are building our footprint there in Tacoma. We are big believers in having a small area of expertise that we can dominate rather than having a few investments and a number of markets, but we are never an expert in any of those markets.

When an investor is looking at your fund and it got single-family and multifamily in it, how do you analyze and figure out, is this the right investment for me? What is the split in the typical fund? I know you have two, and they are both closed now. How many single-family and multifamily do you have?

Each fund varies considerably. If anyone has ever read 7 Habits of Highly Effective People by Stephen Covey, he talks about big rocks and little rocks. He is talking about that in terms of time management or priorities. That is a great analogy for how we fill our funds. Stephen says, “If you have a jar and you have a handful of big rocks and a handful of pebbles, if you put your pebbles in first, you might not be able to fit your big rocks in. They are not going to fit in and they are going to come out over the top of the jar. If you put your big rocks in and spill the pebbles on top, these pebbles fill into the bottom of the jar and all of the little cracks and crevices.” That is how we build our private equity funds.

First, we do all of the large multifamily acquisitions. That also helps in getting lending with banks. If there are a lot of single families, banks get a little overwhelmed with the balance sheets and everything. It is much easier for them to assess when there is a small number of large multifamily projects in any given fund.

As those large multifamilies stabilize, we then fill in the pebbles with single-family homes. Going back earlier in the conversation, they are little money machines. They are ways to place capital very quickly. We can go from seeing a property to closing on it in seven days. We can renovate it in another two weeks. We can have the capital out in 30 days after that. From finding a property, placing the capital, and getting the capital out, it can be as little as 8 or 12 weeks. That helps to speed up the overall velocity of capital. Fund 1 has about 40 single-family homes. Fund 2 doesn’t have any single-family homes yet, but I anticipate it will probably have maybe 100 or so by the time we spend all the capital in Fund 2.

One of the things that weren’t a part of this question but an important part of our business model that came up as I was describing is all of our debt is with local and regional banks. We haven’t worked with institutional players at all, debt funds, Fannie and Freddie. We believe in relationship-based banking. All of our debt is fixed-rate debt. We sign full recourse. That is something Nick and I do. None of our partners signs recourse, but we sign recourse so we can get a better interest rate and better terms. It is all from local and regional banks, where there is a real partnership. They are invested in the community the same way we are.

It is much more collaborative. We are able to get better interest rates, better terms, and lower origination. It is all of the levers in debt, but it is different. Most people with a portfolio of our size are not working with regional banks. Maybe they did many years ago, but they left that behind. We have continued to find ways to keep growing our relationships with regional banks even as we have scaled the portfolio.

I brought that up because I was thinking about underwriting. That is why we put the single-family homes in last because it would be quite overwhelming for them to underwrite the fund as a whole. It is much easier if we say, “There are five apartment buildings in this fund,” versus, “There are five apartment buildings and 75 single-family homes.” We save those until the end and go with that Stephen Covey model of putting the big rocks in first.

I was going to ask about the debt. Everything you guys are doing is similar to what the industry does, but you tweak it a little bit to make it your own. You’re not having the fees, you are vertically integrated, you start your own property management, and how you do the debt is interesting. I like the idea of focusing on a couple of markets because that show you get the expertise. You are not competing against everyone in Dallas and Phoenix. I’m sure there is competition in those markets, but maybe it is less than in the typical market. Is that correct?


The last question I always ask is, what is a great podcast that you listen to? You can give us a couple if you want.

The one that comes to mind is The Real Estate Espresso by Victor Menasce. I listen to that almost every day. I highly recommend it to anyone. It is quick. It is 5 or 6 minutes. It is different from what we have put together here where it is conversational and we are both going back and forth. I don’t know if he scripts it or not. I don’t know what kind of his style is, but it sounds intentional.

He starts with a sentence and an exposition. He gives a few pieces of data to support that. He does a conclusion. He does that with complex deep topics. He is not just skimming the surface. He is getting deep into Fed policy, interest rates, market share, and all of the important things that are happening both at the microeconomic and macroeconomic levels. He is a skilled operator himself. He puts together amazing deals.

The thing that I love about it is it can be hard for any of us to find hours to dedicate to our personal growth. I highly recommend that everyone do that and prioritize personal growth first above everything else in life. We know that is hard. Victor’s podcast is 5 or 6 minutes. Even for 5 or 6 minutes a day listening to that for a few weeks, someone will have a much deeper understanding of real estate investing.

[bctt tweet=”It can be hard for someone to find hours to dedicate to achieving personal growth.” via=”no”]

That’s a great recommendation. I listen to everything on that double time, so it only takes me two and a half minutes.

Some of his podcasts are so good. I will listen to them 4 or 5 times. I’m spending the same amount of time listening to a longer-form podcast like this one. They are intense. He packed into a few sentences that, on that 3rd or 4th time through, it finally clicked. I’m like, “That is the message he is trying to get across here.

I used to listen to that. Somehow, I got a new podcast player and that dropped off. I will add that back to my list. What is the way people can get in touch with you if they want to connect? What’s the best way?

Our website is MeetBlackSwan.com. That has a link to our calendars, newsletter, Facebook group, and lots of different ways to get in touch with us. We also have a monthly live Zoom call that we do with our audience where we teach on a particular topic. We are doing commercial lending to teach people how to scale their portfolios with commercial lending. We love to give, serve and teach. We do that once a month. We have our Facebook group. That is a great way to stay in touch. We keep our calendars available. If anyone wants to block a time with either my husband or me, they can find our calendars there.

Thank you so much. This has been interesting. I appreciate your time.

Thank you so much.

That was an interesting conversation with Elaine. I like some of the mindset stuff that she talked about. You set aside fear and you got to get started. You hear that all over BiggerPockets, take action, for active real estate investors. It is the same for passive real estate investors. You have to deal with your fear, understand and dig in. If you are tuning in to this show and others, you are getting the education you need. Once you have done that, at some point, you just have to get started.

Her view on mentors and things like that is humans want to help humans. Don’t be afraid to ask somebody, “I noticed you are doing well. You seem to be financially free.” Ask them, “How did you get there? It doesn’t seem you can get there by having a good W-2.” Those questions are good ones to ask. You just have to have the courage to ask them in a tactful way.

Their model is the BRRRR model, which is buy, rehab, rent, refinance, repeat. The point of it is it is an equity snowball. You get that going. She said they refied some of the properties 3 and 4 times. That means you are getting that capital back and back, and you are into infinite returns. I love that model. The other thing that she mentioned, and we are trying to not just focus on this but understand this, is that there is always trouble ahead in every deal. You are going to have hiccups in every deal. A lot of deals that we may have invested in the last couple of years, the debt and interest rates are causing problems.

That is part of real estate. The deals we are getting into now, there are going to be problems with those deals. That is why we concentrate on the operator and find the top quality operator so that they can deal with those problems. You are not going to have a bunch of investments in real estate or anything, and not have obstacles, problems and troubles to overcome. It is constructive to have somebody who acknowledges that right out of the gates to say, “We are going to do our best, but there are going to be problems. When they happen, we are going to tackle them.” I love that attitude.

It is a unique business model they have. The infinite rate of returns and the sharing of profits with the property manager. Even though it is vertically integrated, the property manager and their employees, knowing the better job they do, they are going to get an actual share in the profits of the business. That is brilliant. It is fine to operate differently. It works for them. It is a unique model. It is something to keep track of. We will do that and keep an eye on them. If they have a new fund, we will evaluate that and see if we want to take the leap. That is it for this time. We will see you next time in the left field.


Important Links


About Elaine Stageberg

PILF 103 | Passive InvestmentElaine Stageberg, MD, MHA is a psychiatrist, mother of 4, & Owner of Black Swan Real Estate. She owns & manages a portfolio of over $250 million in assets under management. Through real estate investing, she reached financial freedom in her 30s and now helps others to do the same; Black Swan has delivered exceptional returns to hundreds of passive investors through their unique investor-focused private equity funds which enjoy no sponsor fees whatsoever, 100% return of capital to investors before any splits, and long-term returns and tax advantages, all coupled with socially conscious investing and at least 5% of profits donated to charity. Connect with her at meetblackswan.com.



Our sponsor, Tribevest provides the easiest way to form, fund, and manage your Investor Tribe with people you know, like, and trust. Tribevest is the Investor Tribe management platform of choice for Jim Pfeifer and the Left Field Investors’ Community.

Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.

Chris Franckhauser

Vice President of Strategy & Growth, Advisory Partner

Chris Franckhauser, Vice President of Strategy & Growth, Advisory Partner for Left Field Investors, has been involved in real estate since 2008. He started with one single-family fix and flip, and he was hooked. He then scaled, completing five more over a brief period. While he enjoyed the journey and the financial tailwinds that came with each completed project, being an active investor with a W2 at the time, became too much to manage with a young and growing family. Seeing this was not easily scalable or sustainable long term, he searched for alternative ideas on where to invest. He explored other passive income streams but kept coming back to his two passions; real estate and time with his family. He discovered syndications after reconnecting with a former colleague and LFI Founder. He joined Left Field Investors in 2023 and has quickly immersed himself into the community and as a key member of our team.  

Chris earned a B.S. from The Ohio State University. After years in healthcare technology and medical devices, from startups to Fortune 15 companies, Chris shifted his efforts to consulting and owning a small apparel business when he is not working with LFI (Left Field Investors) or on his personal passive investments. A few years ago, Chris and his family left the cold life in Ohio for lake life in the Carolinas. Chris lives in Tega Cay, South Carolina with his wife and two kids. In his free time, he enjoys exploring all the things the Carolinas offer, from the beaches to the mountains and everywhere in between, volunteering at the school, coaching his kids’ sports teams and cheering on the Buckeyes from afar.  

Chris knows investing is a team sport. Being a strategic thinker and analytical by nature, the ability to collaborate with like-minded individuals in the Left Field Community and other communities is invaluable.  

Jim Pfeifer

President, Chief Executive Officer, Founder

Jim Pfeifer is one of the founders of Left Field Investors and the host of the Passive Investing from Left Field podcast. Left Field Investors is a group dedicated to educating and assisting like-minded investors negotiate the nuances of the passive investing landscape and world of syndications. Jim is a former financial advisor who became frustrated with the one-path-fits-all approach of the standard financial services industry. Jim now concentrates on investing in real assets that produce cash flow and is committed to sharing his knowledge with others who are interested in learning a different way to grow wealth.

Jim not only advises and helps people get started in passive real estate syndications, he also invests alongside them in small groups to allow for diversification among multiple investments and syndication sponsors. Jim believes the most important factor in a successful syndication is finding a sponsor that he knows, likes and trusts.

He has invested in over 100 passive syndications including apartments, mobile homes, self-storage, private lending and notes, ATM’s, commercial and industrial triple net leases, assisted living facilities and international coffee farms and cacao producers. Jim is constantly looking for new investment ideas that match his philosophy of real assets producing cash flow as well as looking for new sponsors with whom he can build quality, long-term relationships. Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Chad Ackerman

Chief Operating Officer, Founder

Chad is the Founder & Chief Operating Officer of Left Field Investors and the host of the LFI Spotlight podcast. Chad was in banking most of his career with a focus on data analytics, but in March of 2023 he left his W2 to become LFI’s second full time employee.

Chad always had a passion for real estate, so his analytics skills translated well into the deal analyzer side of the business. Through his training, education and networking Chad was able to align his passive investing to compliment his involvement with LFI while allowing him to grow his wealth and take steps towards financial freedom. He has appreciated the help he’s received from others along his journey which is why he is excited to host the LFI Spotlight podcast and share the experience of other investors and industry experts to assist those that are looking for education for their own journey.

Chad has a Bachelor’s Degree in Business with a Minor in Real Estate from the University of Cincinnati. He is working to educate his two teenagers in the passive investing world. In his spare time he likes to golf, kayak, and check out the local brewery scene.

Ryan Steig

Chief Financial Officer, Founder

Ryan Stieg started down the path of passive investing like many of us did, after he picked up a little purple book called Rich Dad, Poor Dad. The problem was that he did that in college and didn’t take action to start investing passively until many years later when that itch to invest passively crept back up.

Ryan became an accidental landlord after moving from Phoenix back to Montana in 2007, a rental he kept until 2016 when he started investing more intentionally. Since 2016, Ryan has focused (or should we say lack thereof) on all different kinds of investing, always returning to real estate and business as his mainstay. Ryan has a small portfolio of one-to-three-unit rentals across four different markets in the US. He has also invested in over fifty real estate syndication investments individually or with an investment group or tribe. Working to diversify in multiple asset classes, Ryan invests in multi-family, note funds, NNN industrial, retail, office, self-storage, online businesses, start-ups, and several other asset classes that further cement his self-diagnosis of “shiny object syndrome”.

However, with all of those reaches over the years, Ryan still believes in the long-term success and tenets of passive, cash-flow-focused investing with proven syndicators and shared knowledge in investing.

When he’s not working with LFI or on his personal passive investments, he recently opened a new Club Pilates franchise studio after an insurance career. Outside of that, he can be found with his wife watching whatever sport one of their two boys is involved in during that particular season.

Steve Suh

Chief Content Officer, Founder

Steve Suh, one of the founders of Left Field Investors and its Chief Content Officer, has been involved with real estate and alternative assets since 2005. Like many, he saw his net worth plummet during the two major stock market crashes in the early 2000s. Since then, he vowed to find other ways to invest his money. Reading Rich Dad, Poor Dad gave Steve the impetus to learn about real estate investing. He first became a landlord after purchasing his office condo. He then invested passively as a limited partner in oil and gas drilling syndications but quickly learned the importance of scrutinizing sponsors when he stopped getting returns after only a few months. Steve came back to real estate by buying a few small residential rentals. Seeing that this was not easily scalable, he searched for alternative ideas. After listening to hundreds of podcasts and attending numerous real estate investing meetings, he determined that passively investing in real estate syndications was the best avenue to get great, risk-adjusted returns. He has invested in dozens of syndications involving apartment buildings, self-storage facilities, resort properties, ATMs, Bitcoin mining funds, car washes, a coffee farm, and even a Broadway show.

When Steve is not vetting commercial real estate syndications in the evenings, he is stomping out eye diseases and improving vision during the day as an ophthalmologist. He enjoys playing in his tennis and pickleball leagues and rooting for his Buckeyes and Steelers football teams. In the past several years, he took up running and has completed three full marathons, including the New York City Marathon. He is always on a quest to find great pizza, BBQ brisket, and bourbon. He enjoys traveling with his wife and their three adult kids. They usually go on a medical mission trip once a year to southern Mexico to provide eye surgeries and glasses to the residents. Steve has enjoyed being a part of Left Field Investors to help others learn about the merits of passive, real asset investments.

Sean Donnelly

Chief Culture Officer, Founder

Sean holds a W2 job in the finance sector and began his real estate investing journey shortly after earning his MBA. Unfortunately, it could not have begun at a worse time … anyone remember 2007 … but even the recession provided worthy lessons. Sean stayed in the game continuing to find his place, progressing from flipping to owning single and multi-family rentals to now funding opportunities through syndications. While Sean is still heavily invested in the equities market and holds a small portfolio of rentals, he strongly believes passive investing is the best way to offset the cyclical nature of traditional investment vehicles as well as avoid the headaches of direct property ownership. Through consistent cash flow, long term yield and available tax benefits, the diversification offered with passive investing brings a welcomed balance to an otherwise turbulent investing scheme. What Sean likes most about the syndication space is that the investment opportunities are not “one size fits all” and the community of investors genuinely want to help.

He earned a B.S. in Finance from Iowa State University in 1995 and a MBA from Otterbein University in 2007. Sean has lived in eight states but has called Ohio home for the last 20+.  When not attending his children’s various school/sporting events, Sean can be found running, golfing, shooting or fly-fishing.

Patrick Wills

Chief Information Officer, Advisory Partner

An active real estate investor since 2017, Patrick Wills’ investing journey began like many others – after reading the “purple book” by Robert Kiyosaki. Patrick started with single family rentals, and while they performed well, he quickly realized their inability to scale efficiently while remaining passive. He discovered syndications via podcasts and local meetups and never looked back. He joined Left Field Investors in 2022 as a member and has quickly become an integral part of the team as Vice President of Technology.

An I.T. Systems Engineer by trade, he experienced the limitations of traditional Wall Street investing firsthand in his career and knew there had to be a better way to truly have financial freedom.

Unfortunately, that better way is inaccessible to those who need it most. His mission is to make alternative investments accessible to everyone who seeks to take control of their financial future and to pursue their passions in life.

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