104. Think Differently to Maximize Your Return with Logan Freeman

PILF 104 | Riches In Niches


Uncertain times can cause fear for investors, but it also presents opportunities for those willing to dive into the niches. In this episode,  Logan Freeman, the Co-Founder of  FTW Investments, joins Jim Pfeifer to discuss how to thrive in the current market: by focusing on asset classes that will thrive in any market. He also dives into mentorship and leveraging the learning curve to help move forward and grow. Plus, Logan shares why he shifted from multi-family to other asset classes. Learn more great insights by tuning in to this conversation!

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Think Differently to Maximize Your Return with Logan Freeman

I’m excited to have Logan Freeman with us. He is the Cofounder and Chief Development Officer at FTW Investments, a firm focused on helping investors build wealth through selective private investments. He did a Lunch & Learn for us in October 2022 on Recession Resistant Asset Classes, which was fantastic. We will get into some of that. The way we like to start, Logan, is if you could tell us a little bit about your financial journey. How did you get into real estate? How did you get into operations? Give us the whole story there.

Thank you for having me on. Let’s go back to the beginning when I was 14 years old in Jefferson City, Missouri. I grew up middle class. My mom working two jobs and working very hard. I always saw her struggling to put food on the table and always wondering where the next dollar was going to come from. When I was 14, I was a big guy. I was an athlete. I went and got a job. What job can a 14-year-old get? In the Midwest, you can bale hay and wash dishes. I found two jobs, baling hay on the weekends when it wasn’t raining, and starting as a helper at a catering business. I started to make some money. $5.15 an hour was the minimum wage back in 2004, believe it or not.

I entered high school where I got my first personal finance class. You guys can probably imagine who it was. It was Dave Ramsey. I learned budgeting, the envelope system, saving, and all the different things. I don’t bash Dave Ramsey because his entree leadership and his business is applicable to a lot of people probably not tuning to this show, but it is applicable to a lot of folks.

What it did, it gave me the idea of saving dollars to reinvest at a later time. I loved that class. When I was fifteen, I started my first Roth IRA, had to have my mom cosign on it. I was so excited about that becoming my nest day. Fast forward, I’m a collegiate athlete. I play football at the Division II University of Central Missouri. Go Mules.

I got picked up as an undrafted free agent with the Oakland Raiders. That didn’t work out, so I went back to school and finished my Master’s program. When I did, I had a big transformation. I had to get a job because I no longer had a scholarship. I was working full-time and going to school full-time. I also had a big physical transformation. I was 335 pounds at the NFL combine. I lost 120 pounds in 6 months.

People that I hadn’t seen for 6 months saw me and literally walked past me, even though I went to school with them for 4 years prior. No joke. It was wild. I figured out how to apply the same goal mechanisms that I had for athletics to my health. I had an hour drive to this job. I turned my car to the classroom on wheels. I started to listen to John Lee Dumas when podcasts were pretty new.

I read Lewis Howes’ The School of Greatness. Guess what? Robert Kiyosaki showed up, Rich Dad Poor Dad and all of these different things. I started to ask my teachers in my Master’s program, “Why are you not teaching me this? Why are you not speaking about this?” One of my marketing teachers was Seth Godin. It was The Power of Habit by Charles Duhigg. There are all of these cool ideas that I had never heard of.

That started my journey on personal and professional development. I moved to Kansas City. I’ll step back. I went through a big transformation as well as life event. I lost my father to his battle with drugs and alcohol during this same period of time. You can imagine, 24-year-old, lost 120 pounds, no longer an athlete, trying to move to Kansas City, but then loses his dad. There was all of this stuff going on.

I had some mentors in my life that said, “You got a decision to make right now. That decision is going to dictate how your life goes.” That was very instrumental for me. I started to have these mentors mentee me. One of them was a successful investor, and he kept talking about passive income and all this stuff. About that same time, I read Rich Dad Poor Dad and was like, “You’re my rich dad. Here you are in the flesh.”

Not only was I reading these ideas that were complete at the theoretical level, I was seeing them being applied effectively out there in the real world. Merging those two got me interested. I still remember I had a pontoon down at the Lake of the Ozarks that I sold a long time ago. I took my buddy out and my sister. I drove around all those million-dollar mansions and I said, “One day, I’m going to be able to get one of those. Here’s how.” I laid out this crazy idea of all this stuff I was going to do in real estate.

I moved to Kansas City. I was the youngest Franchise Consultant that Jimmy John’s ever hired. I had 25 stores in 4 different markets. I did that job for a year and hit a glass ceiling. I said, “What’s next?” They said, “You’re the youngest guy in the company. You got to put your time in.” Weeks later, I was gone. I was at a startup company with three people doing sales.

I was doing everything as a startup. I was learning, but had the opportunity to be paid what I was worth. That was an incredible opportunity. I was there for about three years. I moved up to another sales role, and then, fifteen months into that sales role, fired. I was like, “Six-figure sales job, that’s big for a Jefferson City boy in Kansas City, no expenses, all the stuff, just newly married, no job.”

I had read 600 to 700 books at this point. A lot of them were all around business and personal and professional development. My wife goes, “Logan, check your email when you get home.” I did. I checked my email, got my cardboard box of books, brought them off my desk, and I went home. She had already started what is now the holding company for over 1,400 multifamily units and about $150 million in real estate.

She said, “I’m going to support you with whatever you decide to do.” I didn’t just get started buying my own real estate. I got started as a practitioner. I was a Head of Acquisitions for a $50 million fund based in Kansas City. They had a simple model. It was a syndication model where they raised the fund up front. They bought single-family homes for cash seven days, and then they would renovate them.

We did a huge core vests portfolio refinance. We were the sixth group in the country to do that when that product came out. Whenever it was completed, I had to ask them, “Where did the money come from?” That’s when they said, “It was a syndication.” I said, “I would like to do that, but on larger properties, multifamily and commercial.”

That is what got me into purchasing larger assets. I started to do so with my own funds. I did 165 single-family homes in a year. I was a very successful broker on multifamily and triple net lease shopping centers. I had a little bit of money but ran out of experience and knowledge and money very quickly. I sat back down with a successful real estate mentor of mine here in Kansas City.

I said, “What am I missing? What am I doing? How did you do this?” They said, “You really need to break down all of the functions of a real estate business. Find what you are good at, and find partners and/or solve for the rest.” That took another 15 or 16 months to do that introspective process, but then go find the right individuals to partner with.

Back in late 2019, that’s when we found each other, my business partners and what is now FTW Investments, which is a private equity company based out of Kansas City, Missouri. We are vertically integrated. We are mostly the operators on all of these projects. We have about 28 employees now and continuing to grow the portfolio. That’s my journey. That was a 9-minute explanation, but a lot happened in that 9 minutes in my life. I’m happy to dive into anything that you think is beneficial.

That’s amazing. There’s so much there. It’s fantastic that you’ve been able to go through all these steps. You seem like you found where you want to end up. You found your niche as an operator. I want to go back to when you were in college the second time, the MBA program. What were you studying and what were they teaching?

It seems like they weren’t teaching you the financial freedom stuff. They don’t teach a lot of that stuff in high school, college, or even in MBA how to get into real estate. It’s all stock market stuff. What were you concentrating on for the MBA? Can you talk a little bit about what they were teaching you and what you think they should have been teaching you?

It’s one of the topics that I rarely speak on, but very passionate about. I was learning statistical analysis, regression analysis, and accounting, even though I wasn’t an accountant. I had a general concentration as a Master’s in Business Administration. In my focus, I took every marketing class that I possibly could because it had sales involved in it.

I couldn’t grasp what business is in my MBA. How do you get going in this industry? What skills do you need? For me, it always came back to marketing, sales, and communication. I figured that accounting and finance, you could find smart people that are good at that thing. Communicating, changing, and influencing somebody from one aspect of their life and helping them change to something else. That got me interested.

Thinking differently about life in general got me interested. I see Angela Duckworth’s Grit book on your shelf, which is one of my top books. Frankly, one of FTW’s core values is “Be gritty.” That’s passion and perseverance. To me, that was what was missing in my MBA program. They were setting us up to know how to do what calculators knew how to do and how CPAs knew how to do.

I didn’t grasp, “What am I going to go get hired for? It’d be an analyst or something like that. That’s not of interest to me. I am interested in creating or manufacturing opportunity out of thin air.” I gravitated more towards sales. They were just getting ready to start an entrepreneurship focus in that MBA program, and I missed it. That would’ve been what I would’ve concentrated on.

When I look at what was been successful in my MBA program were books like Stephen Covey’s, The 7 Habits of Highly Effective People, Charles Duhigg’s The Power of Habit, and Seth Godin’s, Purple Cow. Those types of concepts and ideas that I got in one class blossomed into a lifelong passion of understanding how individuals make decisions and what moves them to make a decision.

We are in the business in real estate for people to think differently. What is taught in school is the Dave Ramsey’s. it’s all of stock market and all that. That’s not bad, but when you get into a business where you’re creating value, it’s difficult to get people to think differently unless you understand those concepts and how they’re going to make decisions. A lot of individuals would benefit from understanding psychology, how people make decisions, and then how to effectively communicate ideas in a way that people can grasp. You can be super intellectual, and be able to talk at a very high level. That’s going to wash right over many people’s heads.

[bctt tweet=”We are in the real estate business for people to think differently.” username=””]

I’ve been in the business now for many years. Even when I start talking about cap rates or cash-on-cash return on investment with people that aren’t in the industry, they start to look at me and say, “You used seven acronyms in a span of two minutes. Can you step back and explain that to me?” I read this in a book saying, “If you can’t explain it to a third grader, then you’re talking too much of a high level.” That depends on who your audience is.

At the end of the day, a lot of the individuals that I end up having conversations with are getting used to looking at these types of investments. You got to break these things down. They are complex ideas when you start to get into waterfalls and how everything works. You have to make it rudimentary and able for somebody to understand. A confused mind always says no. If you confuse somebody, you’re done. You have to be able to slow down. That’s a lost skill in sales, communication, and relationship-building. In our business, I look at every new opportunity and/or problem solving solution. It has been tied to somebody.

[bctt tweet=”A confused mind always says no. If you confuse somebody, you’re done.” username=””]

An opportunity doesn’t waiver out there in thin air. They’re always attached to somebody. That means having a strong network. If you’re in school or thinking about going back to an MBA, I would highly recommend looking at Tim Ferriss Real-World MBA class. I’m pretty sure it’s free now. He dissected much better than I do in any way the skills and how he evaluates. He’s an early investor in a lot of these companies, but Real-World MBA type of stuff. There’s a big thick book called The Real-World MBA. That was extremely beneficial for me to grasp these business concepts as well.

You said it couple of times differently. That’s one of our taglines here. If you’re in the alternative investment space, by definition, you’re already thinking differently. You’re getting out of Wall Street and the conventional personal finance and getting into community personal finance, which is using your community to help you become a better investor in alternatives. I love how you say that. You mentioned mentors. How did you get your mentors and why? What do you use your mentors for? Do you still have mentors?

Mentors are extremely important and they’re very busy, typically, unless they are lifestyle designed type of individuals, which is very helpful as well. Mentors have been able to take my learning curve and exponentially increase it through leverage. if I go read a book, I’m still going to go out and take action. I’m probably going to take some action that I learned out of a book, but I’m still going to have to learn.

Through mentors, I can explain conversations and challenges that I’m going through. They can say, “Many years ago, Logan, I did this and I experienced something similar to that. Here’s what the outcome was.” That alone helps me shorten the learning curve. You have to be very careful with mentors because there’s a lot of structured mentors out there.

That’s not what I typically look for. I look for somebody who is living the life on my four core values, my faith, my family, my fitness, and my future. If I can see that they’re living a life, from the outside looking in, that they have those core things taken care of, that’s somebody I’m interested in. Just because somebody has a billionaire status doesn’t mean that’s a mentor that I’m interested in speaking with.

If they don’t have an awesome faith life or family life and fitness is all off, that means they went deep on one thing and neglected everything else. I’m looking from a holistic standpoint, trying to find somebody that can bring all aspects. It’s easy for guys like myself to get super focused on 1 goal and 1 thing and forget everything else. When directed the right way, that can be extremely beneficial. When it’s not, you can also create a lot of drag in your life. That’s one.

The second is a structured mentor type of group that I like to be a part of. I love masterminds. I love getting involved with other people, and I love doing it in person. I have joined a structured CEO’s group here in Kansas City called Acumen. It’s a faith-based group. They are CEOs of $250 million companies and $5 million companies, growing companies and guys who are stepping down from the CEO position and working on transition plans. I get to bring all of my challenges and issues and have conversations with them in a room structured every single month. I love that because that helps me shorten that learning curve.

How did I find them? That’s the hard part. I’m a master networker. I make it my job to tell everybody what we’re working on and meet a lot of people on a regular basis. When you identify somebody who can be a potential mentor, you have to find ways to add value to them first without asking for anything. My whole approach was, “I’m going to ask questions and I appreciate that.” I ask all those questions. I’m taking notes. I take a lot of notes. That’s really important if you’re meeting somebody. You can take notes and still have a good conversation with somebody. I’m a living prodigy of that. I take a ton of notes so I don’t forget things.

I go back and I review those notes a day later. I let it sit for a day, and then I go, “Who can I connect to this individual with? What is one thread that I heard?” It’s a simple acronym, OSA. I make an Observation, I Share a story, and then I Ask a question. I’m finding interests, but I’m also finding ways that I can add value. I love to gift books. I love to write in the books so they can’t just turn around and sell them.

I love to send those books to those individuals with a thank you card. I’d love to follow up with an email. I love to make connections. I’m taking one person and connecting them to another one. I love to invite people to different events that I’m interested in. I give a lot of gifts to these mentors. One time, I remember somebody grasped onto that and said, “I just finished the book that you got me.”

I said, “Let’s have a follow up meeting and talk about the book.” We had a discussion about that. That has grown into the first JV partnership this very successful real estate investor has done over the last many years. It was a meeting like that. Always looking for ways to add value before you are asking for something is extremely important.

You might be able to meet a mentor 3 or 4 times before you figure out if there’s a way that that person can add value. After you’ve built that relationship, you structure your own challenges and mentorship guidelines. You create a rubric and you email this rubric and say, “John, here are the four things that I’m struggling with or challenges that I’m seeing. Would you be willing to meet with me on a monthly or quarterly basis to talk through these things and share some of the experiences that you’ve gone through?”

You can’t do that from day one without building that relationship first. You can’t do it too fast. Add value. Make sure that you’re taking notes. Show that you took notes. Always point out something that you learned from that mentor. They will grasp back onto you and pour into you for free, which can be one of the most amazing benefits of this industry. Many people are willing to do that. I’ve done it with a lot of individuals myself.

That’s great stuff on mentors because a lot of people are looking for someone to help them or want a mentor. You walk around saying, “Who wants to mentor me?” You’re going to struggle, but the process you put in place makes a lot of sense to me. I want to switch now because this has been fantastic, a lot of mindset stuff. I want to go into your business.

You did a Lunch & Learn for Left Field Investors in October 2022 about Recession Resistant Asset Classes. Without redoing a whole Lunch & Learn, if people want to view that, it’s on the Left Field Investor YouTube channel. I highly recommend it. What are those asset classes and why are they recession resistant, which we may need in the near future?

As we evaluate the real estate market as a whole, and especially other property types and sectors outside of multifamily, we’ve noticed other supply and demand imbalances that we like to key in on. Here’s the hard part about this. Typically, the best time to purchase certain asset types that maybe aren’t highly educated or marketed is also the most difficult period of time to find partners for.

You see a lot of headlines out there. Let’s take retail for example. Retail is dying and all the eCommerce is going to take over the world. Let’s step back and realize that in 2022, 85% of all retail sales happened in brick and mortar. eCommerce dropped from 16.4% of web penetration down to 14.4%. We’re back to pre-COVID level.

The areas where we’re especially interested in is neighborhood, office, and shopping center. As well as flex industrial properties. That’s very unique in the sense that there’s not that many of these flex industrial properties. It’s because of the onshoring that has happened with manufacturing and folks trying to control their supply chain.

Each of those is compelling to us at this time because I’ve got data and anecdotal evidence to support that on a physical supply and demand side. We have stronger physical demand than is largely believed to exist standing against a flattening supply. On the capital market side, these properties are trading at spreads above their historical cap rates.

This is simply going back to Sam Zell’s book, Am I Being Too Subtle? and reviewing his investment thesis. What that means is that these properties are performing better physically than the market believes. Yet the capital markets due to some foundational misunderstanding about those properties is not highly demanding them bringing asset prices to historical lows.

PILF 104 | Riches In Niches
Am I Being Too Subtle?: Straight Talk From a Business Rebel

If you believe that capital demand for those assets are going to come back, once those assets have a longer time to prove their resilience and necessity in the physical marketplace as we do, then now is the time to acquire those properties at a discounted price and position ourselves to sell back into a higher capital demand, thus a higher priced market.

Recession resistant. You’re going to hear the tagline that, “Everybody needs a roof over their head,” and that is true. One thing that you have to always be keeping an eye on is what is the supply that’s coming online? Can people continue to pay the rents that are needed for these properties? That’s on the multifamily side. I’m not going to get into a debate about where and how and all of those things.

There’s a lot of opportunities out there in the multifamily sector. When I see multifamily properties in early 2022, trading below a 5 cap, maybe a 4.5 cap in Kansas City, Missouri. That is an interesting perspective to have. When you look at the tenure treasury and where cap rates are, that’s a very tight spread right now.

It’s very difficult for people to say, “I’m going to go buy a 4.5 cap multifamily property when I can buy a tenure treasury with very little to no risk for that same return.” That being said, there are tax benefits and all of those things. When I look at recession resistant, I’m looking for, “Where are the trends going that were pre-COVID, that COVID exacerbated and new trends that have happened and stuck around?”

Let’s take office for example. Office is not something that I’m very interested in investing at because it’s going to take 2 to 3 years for businesses to figure out what it’s going to take for them to get people back into the office. When unemployment is at a historical low at 3.7% and we still have 10 million job openings, that’s going to stick around for a little bit. Workers still have the power in that. Office maybe not so interesting to me. Many people would agree with that.

Neighborhood retail is interesting because you have to break down inside of retail. You’ve got big box retail, you have grocery anchored retail, you have suburban neighborhood retail. You have all these different subset of investments that are good work on the margins. There’s a very specific type. My favorite saying from Russell Gray, The Real Estate Guys podcast is, “The riches are in the niches.” You have to understand what those niches are. We can look at historical data and go back to 2008, 2009, 2010, and see how certain property performed.

[bctt tweet=”The riches are in the niches.” username=””]

If you look at industrial, the demand for industrial is much higher now than it was during that recession. That’s not an apple-to-apple assessment. You have to look at the macro trends that we’re seeing right now. eCommerce is difficult because it takes logistics space and a lot of people to move that product. People are starting to believe that they can find better deals in stores and they want to get out into stores and shop.

What asset class supports that? Neighborhood retail shopping centers do. Maybe not big regional malls. I have seen some exciting redevelopments of regional malls where they’re taking the malls and they’re able to drive up and go to some big box like Barnes & Noble or something on that side. That’s the driver in, and then you go into the mall.

Largely speaking, malls are going to have to be repurposed in a big way, depending on the geographic location. Self-storage is of interest to us. It always has been. It always will be, but that has been a very competitive market and frankly, I believe it’s been supplied heavily over the last few years. That’s one that we’re not pushing on.

Where our thesis is right now for Recession Resistant Asset Classes is, “Where are the asset classes that we feel comfortable operating in, that we have a competitive advantage on, that other people maybe overlooking, thus, they’re priced better? ” For example, we have a neighborhood retail shopping center we’re working on right now that just appraised for $350,000 more than what we’re under contract for.

That is because of what I explained on the capital market side. I think about recession, and I’ve done a lot of reading on this, and you can find thoughts on both sides of the story. There are some serious markers economically that we need to be keeping an eye on that I’m watching very closely. I have a couple of resources, Peter Linneman with the Linneman Associates and Richard Duncan with Macro Watch. Hunter Thompson’s podcast is phenomenal. He has a lot of those guys on and interviews them. So does Willy Walker with Walker & Dunlop. It is a great one. They have these best of the best individuals coming on, disseminating their information. I highly recommend those resources on that front.

For us and for investors going into 2023, it’s important to understand the cap stack on your properties. Frankly, one thing that we did very well early on was long-term fixed rate debt on all of our deals. We will continue to do so. Here’s why. A mentor came to me and said, “Logan, you never want to be in a position where you have to sell something. When you have to sell is going to be the worst time that you can sell.”

PILF 104 | Riches In Niches
Riches In Niches: It’s important to understand the cap stack on your properties.

There’s a lot of situations with cap stacks that have floating rate debt that we’re keeping an eye on that may need to be recapitalized. If you’re a passive investor looking at deals, I would say, “What’s the intrinsic value of the cashflow? What is the current cashflow? What are the assumptions being made on future cashflow?”

Going under contract on a multifamily property at a 5 cap, and hoping that you can sell at a 3 cap is a risky proposition right now. Where can you get basis? When you go back to Sam Zell, they call him The Grave Dancer because he bought stuff and still buys stuff at a very low price. Maybe not anymore with the cost of capital that he’s got but early on when he was raising capital, he was buying stuff at a discount. Making sure you have a margin of safety is important. Where are we focused at? I still love Class B multifamily, Midwest. We’re focused on that front. We’ll continue to do those projects.

Neighborhood retail shopping centers that have traffic counts, 25,000 to 50,000 per day that you can’t build next to and they’re surrounded by residential communities that can support that shopping center that have some value add either through the cosmetic upgrades or operational efficiency. Flex industrial properties and buildings that have spaces under 100,000 square feet that have maybe some office component but also have the ability to have their warehouse in the back end is a great space to be in.

Self-storage is an awesome space if you can find those opportunities. I’m finding they’re is fragmented on the smaller scale, but still a lot of opportunities there. Mobile home communities have always been of interest to us. One thing that’s always kept us from going into that is the operational side of mobile home communities. We are not set up and there aren’t that many third parties that you can tap into and say, “I’m going to fire this property manager and put this one on.” There’s not that many out there. Those typically are smaller opportunities as well.

When I look at that, I think about macro, where our fund’s going to be, where people are going to work, where people are going to live, where are people going to shop, and where I want to be placing investor capital. Our capital is in places that they’re going to continue to go to. The data supports over the last few years. After the influx of capital, everything went wonky. Essential businesses is where I want to put our investor and our capital at.

Those are some of the things that I’d be thinking about going into a recession. When we get into the multifamily space, I would say this. Class A is an interesting place to be at because I see Kansas City and everything that’s being built. I frankly wonder who’s moving to all of these class A buildings downtown, but they continue to build them and they continue to be full.

One thing I’m tracking closely is, “What is the unemployment rate? What is the labor shortage? What are the immigration laws that we’re going to see in the next 12 to 24 months?” Something that I don’t think a lot of people talk about is our immigration policy. If we have all these jobs available for individuals, but nobody’s willing to go work with them, some immigration policy is going to change and as the United States of America have the ability to turn on a dime and get a lot of influx of people wanting to move here.

That is something that Linneman and some of these other smarter guys talk about a lot. I have recently started to understand. These things are long-term holds. We are out of the flip game. For the last several years, buying a deal, letting it ride, and not do anything to it, and then selling it for 200 basis points lower, that’s over. We are in the game of adding value and making sure that the intrinsic value of the cashflows. You’ve discounted those correctly and you can operate through a hard time.

My word for 2023 is Nassim Taleb’s book, Antifragile. My theme is antifragility. I keep hearing, “Stay alive until ’25.” I don’t agree with it. We can thrive in CRE in ’23. How about that? I stole that from Rod Santomassimo. There’s always opportunities. As passive investors, you got to tighten up your due diligence process with the operators, the intrinsic values of the cash flows, and margin of safety with the basis. I’ll leave it at that because I’ve talked for a long period of time.

PILF 104 | Riches In Niches
Antifragile: Things That Gain from Disorder (Incerto)

What is “Stay alive in ’25?” I haven’t heard of that.

“Stay alive in ’25,” is at Sam Zell’s book, Am I Being Too Subtle? Back in ’93, it was “Stay alive until ’95.” There were some things going on in the commercial real estate market at that point where people were trying to stay alive and not go under. Stay on the field. I’ve started to see some folks on LinkedIn and other places posts, “It’s 2023. We got to stay alive until ’25.”

That’s a mantra of, “If you didn’t do the best deals the last few years, you’re going to try to stay alive the next few years.” I look at that. Maybe that’s the case for some individuals, but that’s not the mentality that we ever have. The hard part about right now is that operators are starting to see a dislocation in two fronts.

One, the bid ask gap between sellers and buyers. We all see that property price index is down 13% year over year. We’re back to pre-COVID levels on a commercial property index level. What’s different? interest rates went up 425 basis points. That’s different and potentially recession is different. As an operator, these periods of times where all of the easy money, easy capital, and easy deals go away is typically when the best deals are had.

Here’s what I mean. Let’s take it back to April of 2020. The world is going bonkers. Nobody knows what’s happening with, with COVID-19. Property price index drops from 146 to 121 from April to October. Our firm bought 1,000 multifamily units in that period of time. It was very difficult to get investors comfortable to find debt for all these properties.

PILF 104 | Riches In Niches
Riches In Niches: As an operator, these periods of time where all of the easy money, easy capital, and easy deals go away are typically when the best deals are had.

April of 2020 to October of 2020, property prices were dipping. Remember the National Multifamily Housing Council’s tracker that they had on how many people are paying rent? Everybody was looking at that on a daily basis. That was a good time to be purchasing. We had this weird influx of declining price value. Increasing cap rates, but also we started to see debts start to come available. When those two influxes, some good deals happen. That period of time was short. Here’s the only way that operators were able to capitalize on that. They were still underwriting, building relationships, finding investors, and communicating. That was the only way that they were able to capitalize on those opportunities.

We’re in that period of time right now where buyers and sellers are starting to try to figure each other out. Investors and sponsors are trying to figure each other out on what is the new return threshold or what is real estate going to be able to offer with these higher interest rates. That’s causing dislocation. If you don’t stay in the game, stay on the field, and underwrite 3,000 deals like we did in 2022, you are going to be looking through the rearview mirror and not the windshield. You’re going to be looking at Yardi and CoStar and all the things that have happened. Instead of being active out there, finding those opportunities for your investors, for your firms.

Even though it’s difficult, it’s frustrating, it’s upsetting, you can’t make deals, but you get 1 or 2. We did 5 in 2022. I’m very excited about those 5, but they were 5 out of 3,000. I don’t know what the percentage is there, but it’s very low. We’re in that same period of time. If you stop now and you stop looking into real estate, you’re going to miss some of the best opportunities that will come.

Once the capital starts to flow back in, once people feel better about interest rates, once all those things happen, all of the capital’s going to flood back in. Howard Marks’ mantra of the seven most deadly words in investments which is, “Too much money chasing too few deals,” is going to come right back. It’s this weird dichotomy of, “The best time to do deals is the hardest time and the hardest time to do deals is the best time.”

Anyways, those are my thoughts on that. Sam Zell said it best, “When everybody’s going left, you got to look right.” Buffett said something similar, “When everybody is zigging, you got to zag.” That’s not easy to do, but you got to zag the right way and you got to zag in the most conservative best way possible. Stopping what you’re doing, changing your investment thesis just because other people is not the way to do so in my opinion

That makes sense to me. I wanted to talk to you across the time here. I want to make sure I get this in. How does an investor get comfortable with an operator who is new to an asset class like you guys are fairly new to retail or a firm who hasn’t been around since 2010 or 2012? A lot of people want the experience. It’s difficult for an investor.

I want that experience, but also, I don’t want to miss out on somebody new who has new ideas, and who’s doing something. Just because they haven’t been doing it for twenty years doesn’t mean they’re any worse. How do you navigate that as an operator when you’re talking to your investors, getting into a new asset class, or being relatively new as far as experience?

There are two parts here. Let’s go with the experience part first. This is more of the intangible relationship type of touchy-feely, not quantitative, more qualitative piece of this. This is the more difficult part. There are some great resources out there. Joe Fairless’ book is a big thick book on real estate syndication.

In that book, there are about 50 or 60 questions that he recommends new investors ask their sponsors. I have been on countless calls with investors that have that list, and they are asking me for them verbatim. I took it on myself the liberty to fill those questions out for investors before we have our call. That’s one. It’s just, “Let’s get the data. Let’s see that.”

If it’s a hard pass because of that or they’re not willing to share or answer those questions, probably a hard pass because it’s probably not the right fit. If you get over that hump, then it’s, “What are the expectations that you have as an investor versus what we can provide as a sponsor?” I have come to the conclusion that there are enough groups out there available for people to invest with.

[bctt tweet=”There are enough groups out there available for people to invest with.” username=””]

Each group operates a little bit differently. You need to have the expectation set up clearly. Do I need monthly communication, weekly communication, or daily communication? What do I need from a tax standpoint? When do I need my K-1s to be in? What’s the communication protocol when I have a question? Is that question being answered? It’s all of these things.

I have new investors that have expectations that are much higher than somebody who’s in 30 syndications that has been in the game for quite some time. They get it. It’s a longer term hold. They understand there are ups and downs, all of that stuff. They’re widely different. Typically, the more sophisticated investor who’s in more syndications has more realistic expectations than somebody just starting off in this world.

Frankly, there are firms out there that have many more IR folks than we do here that can get daily communication. They have weekly webinars that you can engage with, and that’s fantastic. We do not have the ability to do that because we are running our company as profitable and lien as possible. We have 28 employees, but not all of them are dedicated to investor relations.

Having the expectations of, “What do I need for this experience to feel good for me?” is important. The middle market manager spot is typically where you’re going to find some of the better multifamily deals or investments. Somebody came across something, or they ran it down. They may not have the most robust investor management software with reports and all of these different things, but they have enough.

That might be okay for somebody because they’re getting what they believe to be a better deal. You have somebody that maybe came from CrowdStreet. They’re investing directly with sponsors, and they have engaged with this awesome, incredible, beautiful tech platform that they can log into. They can see all of their distributions. They have their capital accounts. Everything is perfect.

They have a dedicated customer service team. That’s what they want to make it feel comfortable because they can chat bot somebody and get a response in two minutes. That’s a different expectation. For passive investors, if it’s a new sponsor or a new group that doesn’t have 15, 20, or 25 years’ worth of track record, make sure you have leased your non-negotiables ready.

These are my non-negotiables. If you can’t meet them, even if it’s the best deal in the world, you should not accept the investor’s funds and that investor should not invest with you. I have told many people that because we are always getting better. We are always learning in this business. We have some of the better deals that I’ve seen out there.

If you need the best, most robust CrowdStreet type of experience, that’s not FTW. That’s CrowdStreet. That’s RealtyMogul. That’s all of those different groups. You’re going to get a different type of investment in that as well. I’ve had a lot of those conversations with individuals and I think that’s set. Honestly, there’s been a lot of those investors that have found us through a Google search that have invested through CrowdStreet or something like that, and I’ve explained this to them.

At the beginning of the conversation, they’re like, “It’s probably not the right fit for me.” At the end, they’re like, “Let’s just stay in touch.” They stay on the list. We have webinars and they get to know me. The bigger the firm, typically, the harder to get to the principles. What we have been able to do is remove that communication threshold.

My investors know how to get ahold of me. They have my cell phone number. We text pictures of kids back and forth, all of that stuff. Again, different type of experience than origin investments or something like that. Not one is better than the other. It’s just a different experience. Have your non-negotiables ready. Understand what is going to make it feel like a good experience for you.

If that sponsor isn’t willing to answer those questions or you don’t like the answers to those questions, move on to the next one. That was the first piece. The second piece is asset classes. There are a lot of ways to go around this. There are some individuals, specifically West Coast investors, that have a really hard time investing into retail, in general.

They’re typically tech investors, they buy things offline, and they believe eCommerce is taking over the world. I’m not going to convince that person. The person that I’m going to have influence on is somebody that said, “I’m heavily allocated to multifamily. I’m interested in triple net leases and more stable income type of opportunities. I believe people are going to continue to shop, and I like that thesis, but I’m not quite sure. What value can you add to a shopping center?”

That is somebody that I can walk through the process of, “Here’s how we redeveloped this one. Here’s how we carved off the pad site, sold it back, and returned all of the equity or a lot of the equity back into the deal.” Those are the types of things that work in those scenarios. You have to be open to it. I would say there are two levels to do it.

One is on a macro level. Go to Marcus & Millichap. Look at their reports. Look at ULI’s reports. Look at all the big brokerage firm reports. They put out trends reports. There are some awesome trends reports that you can look. You go into the micro level. Retail in Los Angeles is a lot different than retail in Overland Park, Kansas. You have to look at those two different things.

You develop a thesis around one thing from a macro level, then you find it on a micro level that you feel good from a geographic location. Those demographics and/or demand drivers that you feel comfortable with are the starting point on these different asset classes. It’s not just retail. Industrial is the same thing.

Multifamily properties are twelve-month leases. On retail and industrial, we have 3, 5, and 7-year leases. That impacts the business plan and what you can do to add value to these different properties. I always go back to the graph of, “Here’s the core plus value add and opportunistic asset classes. Here are the risk and reward profiles.”

I use that a lot to explain where our asset classes and the projects are on that spectrum to try to educate some of our investors. We’ve done a lot of deep dives in regards to the data. I’ve got an awesome, “Is retail dead?” webinar presentation that I have recorded multiple times. We’ve got plenty of data around all of that.

Understanding that data from your perspective and then thinking about it from a trend standpoint and then looking at the geographic locations that you’re interested in. That is the place that you start with on the asset types and the different classes that are available to you. It’s harder though on assets outside of multifamily. There is so much more education available for multifamily than there is maybe for car washes or mobile home parks. Mobile home parks have taken off, but car washes or shopping centers or something like that.

The last question I always ask is, what’s a great podcast that you listened to? You already mentioned a couple, but if you want to repeat those or mention some other ones, that’d be great.

I am real big right now on my physical and mental health. One that I am loving is the Huberman Lab. Andrew Huberman is a neuroscientist at Stanford. He got me doing cold plunges every single day in my backyard. I’m obsessed with things that I can take from a science standpoint that’s backed by empirical evidence in studies and then implement them in regards to what I do on a regular basis to try to become a better version of myself.

Huberman Lab is one that I’m absolutely loving right now outside of the real estate ones that I’ve already talked through. If you’ll allow me, I’ll teach you guys something from the Huberman Lab. It’s called the physiological sigh. Right now, I’ve talked a lot, I’m out of breath, and all these different things. If you’re ever feeling anxiety or feeling like an elevated heart rate, you do the physiological sigh.

It’s two breaths in through the nose, and then a long exhale through the mouth. Do that 2 to 3 times. My heart rate goes from 85 to 70. It’s an incredible thing that you can do throughout the day that allows you to reduce that heart rate, become more serene, have lower stress levels, and better heart rate variability. There’s an actionable tip from the podcast.

I listened to him, too, but I’ve turned it off lately because even though I listen to my podcasts at two times speed, his podcasts are so long that I can’t get through it. That’s the only thing stopping me.

Most of his YouTube clips, they snip them up and I just grab those YouTube clips. If I like it, I go listen to the two-hour thing for sure.

If the audience want to get in touch with you, what’s the best to do that?

I’m active on LinkedIn every single day minus Sunday. That is my day of rest. Logan Freeman, Mr. Kansas City on LinkedIn. I post there daily. FTWInvestmentsLLC.com is our website. A lot of these resources and things I’ve talked about are all on there. I have a blog that I think people will find a lot of value in as well.

Thank you so much, Logan, for being on the show. It was a pleasure.

Thanks for having me.

There’s a lot of great content in there. Logan has a lot of thoughtful things to say. A lot of people say, “Think differently,” like he did. It’s one of the taglines of the show. “Think differently.” We do that. Logan, he says, “Think differently,” and also, he seems to do it. That’s why he’s shifting from multifamily into some of the other asset classes.

It’s because he’s thinking differently than other people and that leads him to different places. A lot of times, that’s the kind of people you want to hook onto, the ones that are thinking differently. He had a few good zingers in there. “A confused mind always says no.” I’ve heard that before. When you think about that, what he’s saying is if you’re trying to communicate something to people, they’re going to say no unless you can explain it to them.

In the world of alternative investing where everybody still has a lot of learning to do, that hit me. That makes a lot of sense. He was talking about mentors and how people are always looking for mentors and you have to add value without asking for anything. You’re going to get something in return. When you do, you leverage the learning curve. That’s the whole point of having a mentor. You’re leveraging their knowledge and using it for your own. That’s just awesome.

Unfortunately, this isn’t video, so you didn’t get to see it, but when he was talking about doing hard things, he was talking about the hard part is to do this, and he smiled. That hit me because I’m thinking, “When things get difficult, this is the guy you want to do something with.”

He relishes getting through the hard stuff because he knows that other people aren’t going to do that. That’s where you gain advantages. “The riches are in the niches,” as he said that Russell Gray said. That’s true, but also you got to jump in there and the niches are where you got to work harder, you got to do more stuff because not everyone’s doing it.

When you run into a guy who smiles when he says the hard part, that makes me think, “He relishes this and that might be a guy worth doing some business with.” The other thing he was talking about, you got a zag when everybody else zigs or you zig when everybody zags, the Warren Buffett saying but what Logan said at the end was, “You got to zag the right way.” If you’re zagging when everybody else is zigging, that’s great. That means you’re doing something different than the crowd, but you got to make sure that you’re zagging in the right way.

I love that. That is the coolest little saying. You got to make sure that you zag the right way. I don’t think I can put that as the title of the show, but that might be the theme for 2023 for me. I’m going to zag, but I’m going to zag the right way. That was fantastic. Thank you to Logan. We’re going to be keeping our eye on him and FTW as they go through the year. That’s it for this time. We’ll see you next time.


Important Links


About Logan Freeman

PILF 104 | Riches In NichesLogan Freeman brings over 5 years of real estate experience to the team starting his real estate career with a single-family rental portfolio where he executed over $50MM in acquisitions. From there, Logan moved to Clemons Real Estate where he was the leading salesperson year over year as he created, lead, and executed a unique strategy for representing Buyers in 1031 transactions.

Logan oversees the Investor Relations and Marketing Divisions at FTW Investments and contributes heavily to its project sourcing and capital raising efforts. Logan leads XchangeCRE, an affiliate of the firm that assists 1031 exchange investors in identifying replacement properties and other tax-advantaged reinvestment strategies including TIC investments with FTW Investments. Logan leverages his people skills and transaction background to drive new acquisitions, capital raising, and investor relations. Logan is a voting member of the firm’s investment committee.

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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