27 February 2023

In this week’s episode, Patrick Donley (@jpatrickdonley) talks with Matt Lasky about his path to commercial real estate success. They do a deep dive into what the early years of being in the commercial real estate brokerage business is like, how much a new broker can expect to make over a career, what it takes to succeed in the business, why Matt focuses on medical office buildings, and much more!

Matt brings over a decade of experience in commercial real estate investing, leasing, finance, and portfolio/asset management to his role as Managing Partner at Equity Velocity Funds. His experience includes over $1 Billion in transaction volume in 42 states as a principal or advisor in healthcare and retail. 

Matt has been a recipient of numerous industry awards for production and being an influencer in healthcare and retail real estate. He continues to speak regularly as a guest at universities, especially Miami University where he graduated cum laude with a B.S. in finance.



  • Why Matt chose a career in commercial real estate instead of a more traditional finance path.
  • What the first year was like in the commercial brokerage industry.
  • How a younger person can add value to senior partners.
  • How much a CRE broker can expect to make in their first few years in the business.
  • Why he focuses on medical office buildings.
  • What happened in one of his worst deals and how he dealt with it.
  • How he would recommend someone scale a commercial brokerage business.
  • What asset class he is not working in, but keeps thinking about.
  • And much, much more!


Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Matt Lasky: If you’re straight out of school, we say, hey, assume no dollars your first year, second year, things start to click and you start to catch your friends in their salary. Third year you’re at their salary in a little bit or more, and then fourth year they’re wondering like what they did wrong and what you did right?

[00:00:15] Matt Lasky: And then kind of the sky’s the limit.

[00:00:20] Patrick Donley: Hey everybody. In this week’s episode, I got to sit down and talk with Matt Lasky about his journey in the commercial real estate industry. We did a deep dive into what the early years of being in the commercial brokerage business is like, how much a new broker can expect to make over the course of a career, what it takes to succeed in the business , why Matt focuses on medical office buildings and other asset classes he thinks have great potential.

[00:00:42] Patrick Donley: Matt brings over a decade of experience in commercial real estate investing, leasing, finance, and portfolio and asset management to his role as managing partner at Equity Velocity Funds. His experience includes over 1 billion in transaction volume in 42 states as a principal or advisor in healthcare and retail.

[00:01:00] Patrick Donley: This was a really fun conversation for me as both Matt and I live in the same city and went to the same university. If you’ve ever wanted to know more about what the commercial real estate industry is like and how to succeed in it, you’re definitely going to want to check out this episode. And so without further delay, let’s jump into this week’s episode with Matt Lasky.

[00:01:22] Intro: You are listening to Real Estate 101 by The Investor’s Podcast Network, where your hosts Robert Leonard and Patrick Donley, interview successful investors from various real estate investing niches to help educate you on your real estate investing journey.

[00:01:45] Patrick Donley: Welcome to the Real Estate 101 Podcast. I’m your host Patrick Donley, and with me today is a gentleman I’m really excited to have on, Matt Lasky. Matt, welcome to the show.

[00:01:54] Matt Lasky: Thanks, Patrick. Happy to be here.

[00:01:57] Patrick Donley: As we talked a little bit before the show started, you are in sunny Arizona and we both live in Columbus, but tell us you’re in Scottsdale.

[00:02:06] Matt Lasky: Yep. Chasing the sun.

[00:02:08] Patrick Donley: Nice. And getting to golf today and having a good time.

[00:02:11] Matt Lasky: Yeah. We have no shortage of golf and can’t do that where we’re at, getting pictures of snow, so it’s nice to be out here.

[00:02:18] Patrick Donley: Yeah. As I mentioned, we’re getting snow now. I’m a little jealous. I gotta say I love Arizona. But I want to kind of start off chronologically, and I want to thank you first for your time joining us today.

[00:02:29] Patrick Donley: I wanted to hear a little bit about younger Matt, and I know you grew up in Chicago, and I believe your mom had a condo that she rented out, which gave you your first taste of, let’s say, passive income of real estate. And I also read that in your professional life, I don’t think you’ve ever had a salary, and I wanted to hear just what childhood influences, could be your mom, could be other people affected your decision to get involved in commercial real estate and become a real estate entrepreneur.

[00:02:55] Matt Lasky: The short story is my mom owned a condo in downtown Chicago, which was the first place she ever bought, and she never sold it. So when I was born as a kid, the family lived there a little bit, and then kinda like everybody else moved out to the suburbs for school, but she kept the condo and kept getting rent checks, and I thought it was the coolest thing.

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[00:03:12] Matt Lasky: Maybe as a child, so competitive athlete, grew up always trying to work hard, but also smarter, not harder. So you can imagine just having a chuck show up every month seemed great. And you mentioned passive, and I was like, oh, this is, this is a phenomenal way to make a living. And knowing what I know now, it’s very not passive and it’s a highly active industry, but that was kind of the, the first appeal.

[00:03:33] Matt Lasky: And I think we’ll get into it, but a little bit as a finance major, there was something about the tangibility to real estate. You know, being able to drive by it, touch it, feel it. That always kind of appealed to me rather than like a stock where you own a business but you don’t have influence and you don’t necessarily get to be active and touch it and see it every day.

[00:03:51] Patrick Donley: Does your mom still own that condo and has she continued to invest in real?

[00:03:56] Matt Lasky: Yeah, so that was really the family’s only real estate investment. My mom unfortunately passed away a handful of years ago, but it is the condo is still in the family. We do still own it, but if we are having this interview a couple months later, there’s an offer to actually purchase the whole building and converted to apartments and rehab the whole thing.

[00:04:15] Matt Lasky: So we may be selling after, call it, I don’t know, 37 or eight.

[00:04:21] Patrick Donley: As we talked earlier, we’ve got a lot in common. We both studied finance at Miami of Ohio, both live in Columbus. When I was at Miami, there was really a big push for finance majors to work at investment banks or maybe go like the corporate finance route, like working for Proctor and Gamble.

[00:04:35] Patrick Donley: You ended up working at Marcus & Millichap in Chicago as a as a broker. How’d you decide to end up working there and tell us about what that first year in the brokerage business was like?

[00:04:46] Matt Lasky: Graduated at a time, basically during the tail end of the GFC. So real estate was kind of flipped on its head.

[00:04:53] Matt Lasky: Miami hadn’t changed. I worked pretty hard there to have good grades, graduated with honors, and the fact I wasn’t going into investment banking or consulting was maybe a point of contention with the school at the time. Realized, I guess work ethic has always been something that my parents instilled in me.

[00:05:09] Matt Lasky: And so I figure, try to find something I love and work hard, which means call it 80 to a hundred hours a week out of school. And I was like, if I’m going to do it, I’d rather bet on myself and the upside there and try to capture some of that. And was fortunate to be in a position. Could kinda live at home, which isn’t glamorous, but it keeps costs low.

[00:05:29] Matt Lasky: So there, you know, is a broker where you’re not making any money that it’s a lot less scary to do it coming out of school if you can than call it when you have a wife and kids and a family to support. Figured there was no better time than now, so jumped in year one. Lot of database and cold calling. I had an interesting situation where, you know, a lot of kids in Miami would graduate and then go travel or take some time off.

[00:05:51] Matt Lasky: I actually did my onboarding, Marcus training my second semester of senior year, and then day one I graduated on a, you know, a Friday and started in the office on a Monday and like through their training program, knew it was what I wanted to do, hit the ground running and hitting the ground. Means call it 50 to a hundred cold calls a day.

[00:06:10] Matt Lasky: Monday through Friday and a lot of Saturdays. And then, you know, data basing and trying to build that, call it potential prospect pipeline in nongo hours. So like golden hours in real estate are, Hey, when do you think you can get ahold of people? And that as a agent, you’re segregating that by like time zone and type of group, right?

[00:06:27] Matt Lasky: Like, so you’re professionals that are doing this all day. The institu. You’re probably calling them during the day. If it’s a private owner, you know, on the West Coast, then you need to learn that. You can’t call them at 8:00 AM central time because they’re not awake. And I learned that the hard way.

[00:06:42] Matt Lasky: Multiple times you would start to build kinda lists of people to call at certain times and then it’s just call it a traditional sales process from there.

[00:06:51] Patrick Donley: Did you have a finance professor at Miami that encouraged you to get into real estate or how did that. That’s a little bit of an interesting story.

[00:06:59] Matt Lasky: So I always, I don’t know, had this desire to like provide and make money and still trying to figure out where that came from. because I was raised well and we didn’t go like needing things, but just always had this drive to be a little entrepreneurial. And my dad owned a couple businesses, so maybe just growing up in the house of an entrepreneur and he did both that and corporate life.

[00:07:20] Matt Lasky: So kind of got to see the ebbs and flows of. When I was in school, I looked at the Forbes list and of richest people and I was looking and I’m like, okay, there’s a lot of like tycoons of industry. I don’t think we’re going to have like another, call it Industrial Revolution, at least not in my time. There are a lot of tech people not that great at that.

[00:07:39] Matt Lasky: And then there were real estate people, so I’m like, all right, we’ll, we’ll gravitate toward that. And by the way, a lot of those people own real estate. It was just something that was tangentially close to finance, right? because there is like real estate, finance and financial skills have played a large role in I think some of the success I’ve had in commercial real estate.

[00:07:56] Matt Lasky: But you know, it’s kind of this kind of maybe dark corner of finance that’s a little bit different than traditional finance.

[00:08:03] Patrick Donley: I had a similar experience. I used to love looking at those Forbes lists and just reading about each individual. And you’re right, I mean, there’s so many that they made their fortune in real estate and it’s probably a good decision you made.

[00:08:13] Patrick Donley: So I wanted to hear more about any advice you had for just surviving that first year in business. I think for so many people getting started in commercial real estate, that first year is brutal. Talk to us about advice you have on surviving that first year, and then also like how can a younger person add value to senior partner?

[00:08:30] Matt Lasky: I think it starts even before you begin your first year. It’s a little bit like there’s a common adage in real estate. You hire the attorney, not the firm. I would say you gotta work with the mentor, the person, not the firm. It really starts with, hey, who is going to take me under their wing and help me? And that might not be financially, but really just giving their time to help teach you the business.

[00:08:53] Matt Lasky: I mean, there’s a, it’s a high attrition business for brokerage at the start, and a lot of the people who are great at it realize that the one factor they have is time. Right. And so time is money. And that’s how like all top brokers are thinking. And it doesn’t mean they won’t help young guys out, but they’re careful with their time.

[00:09:10] Matt Lasky: So differentiating yourself, but also making sure that you’re set up to succeed because there’s great training and some of that’ll be probably a hybrid corporate, but also that you’re paired with somebody who’s going to really help show you the ropes. And that can be a. There’s big shops that are great at that, and there’s small shops that are great at that, but just because you’re at a big brand name, if you’re on a bad team or the senior people in the office aren’t going to give you the time, then go with a small shop starting there.

[00:09:38] Matt Lasky: No, it’s really making their life easier. So depending on the side of the business you get into, you know, there’s going to be things that aren’t the optimal use of their time, right? So if you’re on a really prolific landlord rep team, which means you’re leasing out, call it office, retail, industrial. It’s probably not the best use of the senior people’s time to go do showings.

[00:09:58] Matt Lasky: It might be for the right client and you have to learn how to do it, but you can start to pick up experience and scraps and take, call it, work off their plate for them to go do the highest and best use of their time, which is probably to procure bigger deals and more business and then still fulfill the current business they have.

[00:10:15] Patrick Donley: In your experience at Marcus & Millichap, did you have a great mentor that first year that took you under his wing and showed you the rules.

[00:10:22] Matt Lasky: Yeah, so I got to choose and maybe a little uncommon for the industry was a her and she had been a top producer and then slowed down a little bit for kind of work-life balance and family style.

[00:10:33] Matt Lasky: But her and I really clicked and it was clear that even though she wasn’t the top retail agent at the time, there’s another high producing team, she seemed more invested in like teaching the business and giving back and paying it. So kind of gravitated toward her and immensely valuable and hey, here’s how you conduct meetings.

[00:10:50] Matt Lasky: Or like, you know, the Marcus Way is, pound the phones and get meetings. And I still think that that’s been an invaluable skill and helped me immensely. But she’s also like, Hey, there’s other ways to like in touch with people and it’s like called email and mail and that there’s more than one way to skin a cat.

[00:11:05] Patrick Donley: Yeah. It’s so invaluable to have someone like that who’s willing to take the time to spend with you. And you said you were, you were making what, 50 to a hundred cold calls a day?

[00:11:14] Matt Lasky: Is that. Yeah. On average. And there are a couple awards like that Marcus and some other organizations have, like for Pacesetter, rookie of the Year, et cetera, that at the time it was like you had to average 250 calls a week for, I don’t know, however many months.

[00:11:29] Matt Lasky: So I did that call it every week and, and then some. And you know, it was at that point it’s like more is more, right? So, you know, if you make an extra a hundred calls, that’s really going to benefit. Call it Matt Lass. So there’s a lot of incentive there. Also, the office would by name post the number of cold calls every week everyone made.

[00:11:47] Matt Lasky: And if you were a new guy there and you didn’t have a lot of calls, that was very frowned upon in a public way.

[00:11:52] Patrick Donley: Moses Kagan, who I know you’re friends with on real estate, Twitter had a post recently where he suggested somebody should do like 50 to a hundred interviews with commercial real estate people and interview them just like we were doing.

[00:12:05] Patrick Donley: Asked them about how they got into the business, what drew them to commercial real estate, what made them successful, and then also asking about their income. So I kind of wanted to go through that a little bit. This may be the first. Who knows? We’ll maybe put out a book here. You’ll be the start. I wanted to ask, how much can a beginning broker expect to make in their first year in.

[00:12:25] Matt Lasky: We tell everyone expect to make no money the first year, and there’s a bifurcation I’d draw between if you’re going into like investment sales versus some sort of leasing or a hybrid of brook both. So investment sales has, you know, one of the biggest upside potentials just based on deal size, but it’s also the longest lead time.

[00:12:45] Matt Lasky: Of a sale, because let’s just say, you know, you get a listing, takes a month to prepare it, then you market it for two to four weeks. If you’re good, then it’s still a few months to close. And that’s starting from contact and like the person saying, Hey, I want a list. So that’s a longer like lead cycle leasing brokers.

[00:13:02] Matt Lasky: Kinda going back to what I talked about earlier. If you’re on a team, you probably can get cutting with some small deals earlier, but there’s a handful of agents, you know, I’d say that have turned the corner and now senior in this industry. And yeah, this was 10 to 20 years ago, but we all made between call it like zero and $30,000.

[00:13:19] Matt Lasky: Our first. And from there, it’s kind of like if you’re straight out of school, we say, Hey, assume no dollar’s your first year, second year, things start to click and you start to catch your friends in their salary. Third year you’re at their salary in a little bit or more. And then fourth year they’re wondering like what they did wrong and what you did right?

[00:13:38] Matt Lasky: And then kind of dis sky’s the limit. And people have done it quicker. Some of that depends on like where you’re at in the market cycle and what you’re doing. You know, I’ve seen people have that like Meteor York success by middle or early of year two. But then there’s also been people who have kind of plateaued on just, all right, for, call it handfuls of years.

[00:13:57] Patrick Donley: So for a young person who wanted to be Matt in five to 10 years, what are some steps that they could be taking or should take some daily habits or things that you do that have been the key to your success?

[00:14:07] Matt Lasky: I think a lot of that is just be prepared to work hard and now there’s a inability to work smarter and harder.

[00:14:14] Matt Lasky: But when I first got in the business, I didn’t know what smarter was cause I had to learn the harder you work earlier on, you get to speed up that learning cycle. Partner with great team or partners. And I would also say like, do it genuinely because you’re interested and love it. Or think you may love it.

[00:14:31] Matt Lasky: I truly do love the industry and like the money can be great, but it’d be a big difference of kinda constant rejection. If you didn’t actually like what you do and you were just chasing dollars, actually trying to have a passion for it and the money will follow because you need to do the right thing. And we’ve taken haircuts on a number of things cause.

[00:14:50] Matt Lasky: It’s the right thing to do for a client or deal and it’s easy to do now, but it wasn’t early on. And you have to realize that like real estate’s the long game. It’s not a get rich quick scheme, right? So the fruits of your labor really come from years five, 10 and beyond. And because relationships, the knowledge compound, going to know the expectation of it can be a very like rewarding, fulfill career.

[00:15:13] Matt Lasky: But it’s going to take a while. And the first few years are going to be a wild grind. And then some of it is kind of what you want out of the, kinda out of the industry. So I have a great team and a great business partner, but 10 years ago when we started working together, it was just us. On the brokerage side, now there’s a team of six and growing that fulfill that same business.

[00:15:35] Matt Lasky: And the pivot between being, call it a player, which is like a producer in the industry and doing well for you or you and a partner to now running a team of six, you become a player coach and a lot less of the, the day-to-day is deals for us, it’s a lot more of strategy, team building and you know, we are basically at that point running your own business within a.

[00:15:57] Patrick Donley: So you mentioned it’s, it can’t be the money that motivates you. What is it that motivates you to do the daily grind now?

[00:16:03] Matt Lasky: I don’t know. I just, I like it. It energizes me and I’m I guess personality wise too, I’d highlight to everyone. Like, so I’m mildly extroverted, like there’s a ton of introverts that killed in this industry.

[00:16:13] Matt Lasky: Like my business partner is very introverted and he’s an incredible sales. And to do well in this, it doesn’t mean you’re like the life of every party. There’s a lot of ways to go about this. You just have to find what works for you. I think some of it’s like the thrill of the deal. I mean our, our favorite thing to do is win new business and then fulfill it better than the last guy.

[00:16:34] Matt Lasky: And so I think it’s the competitive drive of just, I guess, winning assignments. And we have this philosophical debate. I asked my partner, I’m like, are you more of a love to win, hate to lose guy? And ironically, we’re, we both hate to. So the winds, you know, can be small, but it’s really just that we hate to.

[00:16:51] Matt Lasky: So the competitive nature and then, I don’t know, it’s fun and it’s entrepreneurial. So like right now our brokerage business is focused on location-based healthcare companies nationally. So we’re doing a lot of like their portfolio management and expansion as outsourced real estate department. But we could wake up tomorrow and be like, Hey, we want to get an industrial, or we want to get into the multi-family.

[00:17:11] Matt Lasky: Like it’d be a really bad idea, but no one could stop us. So there’s a intellectual itch you can continue to scratch by kind of building your own business in an entrepreneurial.

[00:17:21] Patrick Donley: I thought it was interesting, the introvert extrovert point that you made at t I P, the Investors podcast, our company, we actually have to take the Myers-Briggs test before getting hired on.

[00:17:30] Patrick Donley: And I think it’s a great thing for somebody, everybody to know their type. But to your point, introverts are often make some really great salespeople. They know how to listen. They’re present for people. It’s a good point you make. And I’d encourage if people don’t know their Myers-Briggs type to check it out, our whole team does it.

[00:17:47] Matt Lasky: Oh, really?

[00:17:48] Patrick Donley: So what are you, what’s your type?

[00:17:49] Matt Lasky: I am an ENTJ.

[00:17:52] Patrick Donley: ENTJ. Very cool. I want to jump back, we’re back to Chicago. It sounded like you had a girlfriend at the time who’s now your wife, and she took a job in Columbus, which brought you to Columbus. You started with a company called Ohio Equities, and then you took a position where you’re currently at at equity.

[00:18:08] Patrick Donley: Tell us about equity and how your previous roles, both at Marcus and Milit and Ohio equities prepared you for your current role that you’re doing.

[00:18:17] Matt Lasky: Marcus & Millichap super foundational and call it traditional sales and learning to sell and had, I guess, a reputation for it’s tough place to work, but if you can do it, the it being call it constant sales calls, then you can build a phenomenal career and tough place to work.

[00:18:34] Matt Lasky: Meaning it is just, the business is hard. They’re not going to hold your hand or baby you. They’re going to be like that fatherly figure that you may not love to hear in the moment, but it’s, they’re going to tell you what you need to hear, not what you want to hear. And I think that’s invaluable. When I started at Marcus, I called a ton of owners who were like, I’d love to sell, but I need to lease up some space that is a daily occurrence for me.

[00:18:57] Matt Lasky: And some of that was driven by, you know, the conditions of retailers going under in the recession. So I was focused on retail investment sales. And when I relocated to Columbus, I was like, shh, man. One then game was always to like own or be a part of investing in real estate. And so leases drive the value of a building and I’m like, okay, a lot of these guys have leasing needs.

[00:19:19] Matt Lasky: Like we can refer ’em out. I might as well learn how to do this if the end game is to own real estate. And it’s driven by leases. So I started to interview with shops that weren’t just investment sales and also had leasing arms and components. Had I interviewed around Columbus at like a bunch of the regionals and then the people at National Flags and ended up at Ohio Equities, which is NAI’s affiliate.

[00:19:41] Matt Lasky: They’re maybe still the largest property management company in central Ohio, if not one of the couple with a big focus on office and industrial, and there was just, Like a great cultural fit. And I learned a lot at Marcus about, call it in that year there about the right questions to ask and what I was seeking in terms of like mentorship for the next step in the industry.

[00:19:59] Matt Lasky: So the kind of Venn diagram overlap of ability to lease some investment sales. And I was able to bring them some investment like sales and more advanced underwriting capabilities from my time at Marcus where I underwrite, you know, like a billion dollars worth of. With the ability paired with the right team, Ohio equities was just like a great kind of cultural fit and opportunity from my research.

[00:20:23] Patrick Donley: It sounds like you’re wearing two hats with equity right now. Can you talk about those two different roles that you’re playing?

[00:20:29] Matt Lasky: Yeah, I did a little bit of everything when I was at Ohio Equities. It was a lot of leasing, like industrial and office, tenant rep, little bit of landlord, little bit of investment sales, and most of the people in this industry that produced at a high level succeed by specialization.

[00:20:45] Matt Lasky: And so it was clear that like needed to specialize in something eventually. And equity had reached out and they’re kind of calling cards in. Our two core competencies have been healthcare and retail, and I’m like, oh, this healthcare thing’s pretty interesting. I don’t think it’s going anywhere. As the like baby boomers and you know, the proverbial green wave keeps getting older.

[00:21:05] Matt Lasky: There’s just, there’s a lot more demand and you can’t like fight demographics, so maybe I should look into this healthcare things. Started talking to them and they ended up recruiting me over and it was really me going to a team to just focus straight on healthcare and that. I was like, you know what?

[00:21:21] Matt Lasky: I’m going to give this healthcare thing a try, I believe. It’s a different niche and like the, the practitioners in the space who are like masters, it’s a little bit different than general office and there’s more to it than just, Hey, does this medical space work? So I was like, Hey, you’re really, really building expertise to be a true advisor here on the medical side.

[00:21:40] Matt Lasky: And so that is what originally drew me over to equity.

[00:21:43] Patrick Donley: I wanted to hear what an average day looks like for you. I saw a tweet that you did and you kind of posted out your, what you do hour by hour. Can you go into average day for you lately?

[00:21:53] Matt Lasky: There is no such thing as average for me, but it really breaks down around a few core competencies.

[00:21:59] Matt Lasky: BI development. So I still do a lot of biz dev for our brokerage team. So on the advisory side, that’s location-based, multi-site healthcare uses. And then I do a lot of the acquisition work for our investment platform. So that’s originating acquisition opportu. A lot of my day is focused around those two.

[00:22:20] Matt Lasky: I’m definitely like a front end revenue type guy, so that’s two of the best ways to spend my time a little bit more lately. So I do help oversee like our portfolio management, which might be a little different than asset management, but some of the bigger strategic decisions around anchor tenant renewals, debt and equity capitalization on projects, Sal refi type analysis.

[00:22:43] Matt Lasky: You know, I helped to. And that it’s a capital intensive business. So I’m not the primary lead on this, but working with equity partners, so our investors, you know, help originating some of those relationships. And we started to really grow into like a registered investment advisor and family office platforms kind of quasi to actually institutional investors.

[00:23:04] Matt Lasky: And that’s kind of where my business partner and I are maybe best suited to talk because as finance guys, we get to talk a lot, a lot about risk adjusted returns, not just. One of my grinding gears is what’s the return?

[00:23:17] Patrick Donley: Explain that a little bit for people that don’t understand the differentiation.

[00:23:21] Matt Lasky: A lot of people will commonly ask what’s the return?

[00:23:24] Matt Lasky: And there’s nothing wrong with that. But the way we focus on it is, and it’s a little bit arbitrary, but it’s like, what’s the return for the risk that we’re taking? And I frequently tell people some of my favorite deals, we hit like a 13% annualized return because we underwrote it. All of the risks that we thought could happen, like did and we mitigated them.

[00:23:44] Matt Lasky: Or if things went basically exactly according to. I get excited when in our investment memos there’s always a page of here’s what we think risk factors are, here’s how we think we can overcome them. I’m excited when we nail those because you can control the process, not the outcome. And we’ve done deals where the IRRs are 30, 40, 50% and we’re going two or three times our money in a couple of years.

[00:24:05] Matt Lasky: And those are phenomenal too. Just like those. But it really, what we don’t like to do is lose. Company has a 37 year history and a couple billion in transactions, and we’ve never lost investor capital. And the reason for that is focusing on the risk adjusted returns, not just how much we can make it.

[00:24:22] Matt Lasky: Really, we’re maniacal about it and we start with the call it left tail, if you will, which means how do we lose, not how do we win? And then the winning tends to take care of itself over.

[00:24:33] Patrick Donley: Yeah, I’ve had so many interviews that people say first look at the downside. What’s, as you say, the left tail, like what’s the downside?

[00:24:39] Patrick Donley: What’s the worst case scenario that can happen here? And then if you can live with that, then the upside takes care of itself. I wanted to talk a little more about advice and ideas that you had for someone who, outside of directly having a job in commercial real estate, what are some other ways that you’d advise people to learn about the industry?

[00:24:57] Patrick Donley: It could be books or maybe your favorite conferences, a podcast, anything like that, that you would recommend.

[00:25:03] Matt Lasky: Twitter has been a wild resource and there’s this seemingly endless corner of Twitter of commercial real estate and also residential real estate practitioners where you can learn a ton and get ingrained.

[00:25:15] Matt Lasky: And it’s I’d say generally positive community and where people are willing to help and give back and, you know, depending on what your interest is. I think there’s some decent books out there. I ha I don’t have any that have like impacted me, but there’s a ton of book lists like floating around Twitter and that answer’s going to be different if you want to learn industrial leasing versus residential property management, right?

[00:25:34] Matt Lasky: There’s just different niches. But Twitter’s been a great resource from a commercial real estate practitioner standpoint. Like if you want to be an investor, you mentioned them earlier, but Moses Kagan’s reconvene conference is like, that’s a must if you want to like start to get into that world. I can’t imagine a better, more concentrated group of people that are investors in a broad sense of the way.

[00:25:56] Matt Lasky: So there’s other great industry events, like if you want to be in multi-family, you want to be in retail. Where it’s just focused on the people that own and operate those assets. But Moses’ kinda overarching hodgepodge is you’re a professional real estate investor and of all walks of life and everybody does it a little bit differently, but I would say that would be, you know, an incredible place.

[00:26:17] Matt Lasky: Did you happen to go to that this year? I did not. I’m hyping it up, but I’ve not attended yet and there was a, a last minute scheduling conflict that I couldn’t get out of. But you have no, on a personal level, you know, a number of the speakers and attendees and feel comfortable kind of vouching for it based on everybody’s experience.

[00:26:38] Patrick Donley: Yeah. I’m trying to get many of those speakers that spoke at reconvene on as as guests, but a lot of people have mentioned reconvene as their favorite conference. By far. I mean, the hands down, it’s like their favorite.

[00:26:50] Matt Lasky: ICSs of the world. They’re the national multi-family stuff. They’re great. They’re just, if you’re exploring, that gives you one sliver of the world.

[00:26:59] Matt Lasky: Whereas I think Moses’s gives a much broader one. And the talks are around real things like building a business and where you’re at like a day in the life. Whereas if you go to like ICSC for retail, phenomenal conference, but it’s all deal making. Like there’s not people up there talking. Hey, here’s like what I actually do.

[00:27:19] Matt Lasky: They’re like trying to build and grow their business, like they’re working in the business, not working on the business and talking about it.

[00:27:25] Patrick Donley: Yeah, it seemed like a great format too. It’s just, it’s almost like a podcast. He’s got one guest up there and it’s either him or somebody super knowledgeable, just interviewing somebody else who’s also super knowledgeable, just sitting down and rapping about what they do.

[00:27:37] Patrick Donley: So it’s really cool. Any other thoughts? You said not many books. Any other things that you’d recommend.

[00:27:44] Matt Lasky: A couple websites like Globe Street’s a good one. I’m a national real estate investor. That just transformed into like wealth management. Real estate is a pretty good one. And then I’d say another podcast that I like that is in the original days, mostly focused on real estate and still has some real estate is Chris Powers the Four podcast.

[00:28:04] Matt Lasky: Has a lot of good interviews with real estate people as.

[00:28:08] Patrick Donley: I like the fort quite a bit. I like Chris Powers a lot. He was a guest a couple months ago, but he bring, and you were a guest. He brings on some really great people and good interviews on, on his podcast. Also mentioned that you did a tweet recently, I think about, you kind of segmented it on different follows and I, I thought that was really a useful list for commercial real estate.

[00:28:29] Matt Lasky: Who are some of the guys that you mentioned? Oh man. I mean, there’s a ton of ’em, so I guess it Gimme your top. You’re going to get in trouble here. I like strip mall guy. Sorry. I gotta be careful not to dox him. I like Chris Powers and I think probably Richard Ferdeck. Who’s big time, I mean it’s short term rentals, but at a scale of, I would call that a, you know, he’s a commercial real estate practitioner in my mind, like a high end hospitality.

[00:28:58] Matt Lasky: And those three are just largely driven by investment themes I like. I guess so. So everyone else out there, it doesn’t mean I don’t love you, it just means that their investment strategies speak closer to my heart cause it’s closer to what we do. But I think those three are great.

[00:29:12] Patrick Donley: I hate to put you on the spot like that, but those are three great names.

[00:29:15] Patrick Donley: In your own portfolio, do you do anything like Richard is doing or any of the other guys? Do you, can you talk about your own personal portfolio?

[00:29:23] Matt Lasky: Starts with, I co-invest in every deal we invest in. So I’m in all our funds, and then we syndicate deals on the side, and if I’m involved then I’m investing. And so for us, that is medical office buildings and small retail strip centers with a service oriented focus.

[00:29:42] Matt Lasky: So outside of that, really not trying to do things that as a GP I’m not trying to do things that we don’t know. So I would like invest with any of the guys I just mentioned if I wanted to go into that space, like I would give them money rather than, and pay them rather than try to figure it out ourselves.

[00:29:59] Matt Lasky: And so heavy real estate focus. I’m a, I don’t know, a sucker for income. And that’s another wild thing. Like when I first got in the business, we had a bunch of investors that are like, Hey, what’s the yield? Like, where’s my return? And like, it’s a value add project. There’s no cash flow. The return’s still going to be huge.

[00:30:16] Matt Lasky: And we did that, right? We would go, there’s a couple projects we went like. Two or two and a half times our money, but there were no distributions for the first few years as we were leasing up and repositioning projects. And now that I’m have a lot more skin in the game as I’ve been able to accumulate capital, I love the regular distribution check.

[00:30:32] Matt Lasky: So I’m like totally one of those guys. I used to judge being like, Hey, I really like this cashflow thing, even if the returns lower right. Which doesn’t make sense. It just, it feels good to get quarterly distribu. So I’ve invested in, yeah, I guess a lot of bar stuff and then an lp. And a few other things from a real estate standpoint.

[00:30:50] Patrick Donley: You mentioned strip mall guy. Can you talk a little bit about the value add strip malls that you’re doing? What, what does one of those look like?

[00:30:57] Matt Lasky: We do stuff, I mean, pretty similar to him. One of the things I love about retail is only so many like main and main traffic corners, and retail to me is maybe one of the most quantifiable parts of the.

[00:31:11] Matt Lasky: You know that like if you’re close to the main corner and you have a strip center with, call it X number of square feet vacant, you can do a void analysis of, hey, who’s in the market, who’s not there, and who should be there? Because retailers site selection kind of strategy is programmatic, right?

[00:31:28] Matt Lasky: Starbucks doesn’t just randomly choose a site. Walgreens doesn’t randomly choose a. All the regional and national guys have pretty defined criteria of what they’re looking for, so you can see who’s not there and try to bring them there. Like if you own a strip center without a pizza shop or any sort of nail spa, there’s a pretty good chance you can get a pizza shop or nail spa in your strip center.

[00:31:48] Matt Lasky: So I, I like the ability to kind of quantify that. And in retail jargon, that’s called like your merchandising mix or your tenant mix, right? So you lay out the whole market, what other tenants are there, who’s not there, or who’s there in like, kind of smaller amounts. So if there’s only one pizza franchise and there’s no dominoes and it’s a big populated market, you can be pretty sure you can attract somebody like.

[00:32:12] Matt Lasky: And that the relationships in retail scale nationally better than most other asset classes, right? We own stuff in Texas, we own stuff in Florida, we own stuff in Ohio, and it might be different real estate people at a company, but you can kind of have one conversation with a group about multiple things.

[00:32:28] Matt Lasky: So it’s it’s a business that can be a little bit more quantified and scaled. And then sometimes the ownership there is just a little bit more fragmented at that side. You’re usually dealing with like mom and pop ownerships, other entrepreneurs, not groups who like run substantial asset management platforms and have a lot of resources.

[00:32:47] Matt Lasky: Something that could be great for them, could still have upside for us. And there’s a lot of like win-win situations.

[00:32:53] Patrick Donley: What’s the average purchase price on one of the strip malls?

[00:32:56] Matt Lasky: We’re pretty small. I would say between like three and $10 million. We kinda, eight or nine years ago coined the term the Amazon test.

[00:33:06] Matt Lasky: And that toss is just things that could have disruption from e-commerce. So we we’re like scared of what we would call like a junior box in retail. So that starts to get like eight to 10,000 to 20 or 30,000 square feet where you, you have to have one tented in there. We don’t like those, so it kinda limits the size of a strip mall just for what we want.

[00:33:25] Matt Lasky: because we want to be able to have like service-oriented tenants, which means you can’t do it online or restaurants, nail salons. And then healthcare’s going in there more and more like dental, urgent care, PT, fitness. And the other thing we like about retail is the land scarce and the supply coming out of oh eight has been limited at best.

[00:33:45] Matt Lasky: So there’s just, there’s not a lot of supply of it. They’re not making any more land in great locations. Now, great locations can change, but kind of the corner of main and main if it stays that the land and what’s there is already there. You’re not competing with as much new supply and with where construction pricing is gone.

[00:34:02] Matt Lasky: There’s a lot of stuff to be bought. Call it below replacement cost, which is dangerous. That doesn’t make it a great investment, but it definitely can help protect your downside. If you can offer a similar product, call it cheaper than somebody can go build it.

[00:34:16] Patrick Donley: Sam Zell, who is a developer, I’m sure you’re familiar with Sam Zell, Chicago guy also.

[00:34:21] Patrick Donley: I think that was one of his tenants was like, buy below replacement cost, whatever you do. And what are some of the value add that you’re doing to the strip malls once you buy them and it’s below replacement cost, you’re getting into some fix up there.

[00:34:33] Matt Lasky: Yeah, so Onet, we believe strongly in tenant interviews.

[00:34:37] Matt Lasky: I mean, we’re talking to our tenants or potential tenants, I guess formally during the due diligence process. And a lot of that is us asking them, Hey, what can be fixed here? Like, what would you love to. Almost always, there’s a conversation about the parking lot, so like low hanging fruit. A lot of times we buy it and we retrip or reseal or redo the parking lot in some capacity and just freshening that up goes a long way.

[00:35:00] Matt Lasky: Sometimes it’s just power washing in the center because it’s neglected. Other times it’s painting the whole center. You know, proof leaks are like a non-starter, right? So making sure they’re roots in good shape. But a lot of times it’s the simple things. And then being a really hands-on asset manager and trying to buy things where we think rents have just been below market because owner was okay with the status.

[00:35:20] Matt Lasky: Wow. And us kind of increasing those over time. In conjunction with running what we would call like a class A center, and not all our stuff would be classified as Class A, but listening to the tenants, making sure that there’s no deferred maintenance and that they can put a good foot forward business wise, and you know, then hopefully you can push rent up a couple bucks a foot over time.

[00:35:40] Patrick Donley: You mentioned the purchase price was around three to 10 million. I read something like, that’s a good niche because it’s too small. For the bigger hedge funds that are just not, it’s not a market they’re interested in. Like you said, there’s a lot of fragmentation and maybe some asymmetric opportunities that you can pick up.

[00:35:55] Patrick Donley: Is that what you’re finding?

[00:35:57] Matt Lasky: Yeah, on both that and the healthcare side too, you know, our, we’ve largely wanted to be in our minds, maybe some of the more sophisticated people from a capital standpoint, but not competing against the big boys. That’s a little bit of that work smarter, not hard earned. You have to do more deals to hit the same scale, but there’s some inefficiencies and you know, we have an ability now, and I think a track record to come forward and say, Hey, we’re different than maybe some of the.

[00:36:23] Matt Lasky: People looking at this dealer competing on it. We’re not like a small group that accompanies 150 people nationwide through a handful of offices. If we say, we’re going to do this, we’re going to be able to do it. We vetted it on the front end and just try to bring what we call like institutional execution to maybe a more entrepreneurial and fragmented market.

[00:36:42] Patrick Donley: I wanted to hear more too about the medical office building. You mentioned a little bit about it, but talk further why you’re attracted to M O B and what are some of the complexities with it that make it different than some of the other asset classes?

[00:36:55] Matt Lasky: That’s really our bread and butter, so call it 70 or 80% of our portfolio right now, which is, call it roughly five, 600 million of assets under management.

[00:37:03] Matt Lasky: Depending on where you value some of our midstream development is, is medical. And we really grew that, call it coming out of oh eight, we would call it close to a 50 50 shop, retail to healthcare going into oh eight. And then as retail just dried off and medical continued to grow and really explode out of the G ffc, we’ve continued to grow that platform.

[00:37:25] Matt Lasky: And so now with the benefit of hindsight, we’ve got call it two economic hiccups recently in call it the GFC and covid, where we have data out medical and for kind of everyone’s perspective, we ended 2020 with like 96% of our rent collected. On the healthcare side and you’re never at a hundred, you always have some default.

[00:37:46] Matt Lasky: So I mean, it was basically a normal year and it wasn’t normal. Going through it, it, you know, we had some hiccups and people were late, but we didn’t like forgive rent or defer rent. We like truly pretty much collected 96% of our rent by the end of the year. Which is great, and we have a say in that it’s easy for a dentist to outearn a problem than a retailer.

[00:38:07] Matt Lasky: Like every retailer wants to solve more. That doesn’t mean it can happen, but you know, dentists work like RGA four days a week. If they need to pay more money, there tends to be some more demand and they just work an extra day. So the margins in healthcare are better. The stickiness. So like the tenant investment in space.

[00:38:25] Matt Lasky: You know, everyone these days is spending like probably one to $200 a square foot on their interior at a minimum in a medical office space. Moving is a lot more cost prohibitive once you invest that type of capital in the space and you have patients coming too. So there’s a little bit of a retail feel to just even your traditional medical thing in that patients and customers get in the flow of coming to see you wherever you.

[00:38:50] Matt Lasky: They get used to that location plus your investment in the space. People just renew at a higher rate and the default rate on tenants is lower. You don’t hear about as many medical practices going out of business and it’s countercyclical to the recession. So most of what we buy has, call it primary care allergists.

[00:39:08] Matt Lasky: Orthopedics, be in areas where there’s private insurance. One, the customers aren’t necessarily paying. And two, most of our tenants don’t have optional like elective surgery. So we don’t have a lot of like plastic surgeon exposure, but we do have a lot of your primary care doctor who you’re going to go see, or your dentist who you’re going to go see.

[00:39:29] Matt Lasky: So just their business is maybe a little bit more predictable just based on the human condition and doesn’t, you know, you’re not going to not go see your dentist in a recession, most likely. You know, assuming you’re still employed or have some insurance, you’re probably still going to go to your dentist or your primary care.

[00:39:46] Matt Lasky: And so that makes kind of tenancy and thus rent more predictable. We always tell tenants like, I don’t want to partner in your business, but I do want to understand it. And we are your partner, whereby if you don’t succeed, we don’t succeed. Like, I don’t want you to go out of business or have to re tenant and I want you to do as well as you can.

[00:40:02] Matt Lasky: Our life is a landlord, it’s easier. And that’s, you know, a little bit more, less volatile, I would say the healthcare side relative to.

[00:40:11] Patrick Donley: In my research, you wrote a tweet. You were talking about what a limited partner should ask a general partner in considering a deal, and I wanted to ask you, , those questions that you wrote about.

[00:40:23] Patrick Donley: So as a gp, what are some of your worst deals that you’ve had? What happened? How’d you respond, and how did you inform the investors as the thing blew up or the mistakes?

[00:40:34] Matt Lasky: We’ve been fortunate. We’ve had some misses. I wouldn’t call blowups, but we won report quarterly. And two, if it’s like something very material, we might send out like a special memo.

[00:40:45] Matt Lasky: So we believe like transparency is key. We’re not trying to sit on bad news and like, and we’re also not trying to make things. Call it overly rosy, like stuff goes wrong. We try to talk about that on the front end. So even our kind of front end meetings with investors, we’re like, look, we think we do this generally pretty well.

[00:41:02] Matt Lasky: We have a lot of experience throughout the years as a team, but stuff is still going to happen. And we’re going to try to respond to the best that we can. But like we call that earning our fee, like we’re going to make fees and hopefully profit is going to be the majority of that. But like, we’re going to charge money to work hard because as soon as we close on an asset and we have a great investment memo and package, that’s like, that’s the moment it’s wrong and stuff’s going to happen.

[00:41:26] Matt Lasky: That’s outside of our control. So we try to have a really great process, but then life comes at you and we have to. Far worst deal in recent history, and this is actually in our pitch decks, you know, going to transparency. We show, Hey, here’s what a great deal looks like. Also, here’s our worst one. And what we did, and we bought a building that was mostly vacant and we had a surgery center tenant in tow.

[00:41:51] Matt Lasky: And surgery center tenants are very expensive to build out. This acquired call it seven or eight years ago, and they were still putting, call it like 300 plus dollars a square foot into the interior to convert the building to like a fully, you know, function, modern A S C, which is surgery center. For those of you out there, And our biggest mistake was we funded most of his TI with our dollars.

[00:42:15] Matt Lasky: So ti being tenant improvements. Yeah, so tenant improvement money is like common for a landlord to give to a tenant. And in this case I, throughout that like 300 number, and I forget where the exact numbers were, but let’s just say we covered most of that. So we gave this guy $300 a square foot to remodel a space to build out into a surgery setter.

[00:42:35] Matt Lasky: And we did, you know, a big credit. Financial analysis on it. You know, guy had a handful of millions of dollars, liquid private plane, race, car that he took around with his plane. So like very successful doctor. And we start to go down the path and all of a sudden he gets hit with a tax issue, lean from the i r s.

[00:42:55] Matt Lasky: And as a landlord you can have a lot of. You’re above a lot of creditors, but you’re, we’ll never be above the i r s and he, he had done a bad poet. He thought it was a safe tax deal. He got really bad advice and he owed a lot of money, like a very substantial portion of millions in back taxes. And he was just, you know, he kinda walked away from this project as a result of that.

[00:43:17] Matt Lasky: And so we got left with a huge bases holding a bag on, you know, an asset that didn’t have negative or positive cash flow. And we are conservative as a group. So like when we do development, it’s pre-leased development, usually 50% plus. And it has a positive carry, which means that our income exceeds the debt.

[00:43:36] Matt Lasky: So like we still have to lease it up to complete the project, but we’re, it’s not a race against the clock to where we’re writing checks every month to cover the. Well here we did. Founder of the company stepped in, wrote a bunch of checks to carry the mortgage team. Got on it super hard, fast forwards today, have a best in class pediatric surgery center operator back in the space.

[00:43:59] Matt Lasky: When we bought the building, it was like 13 or 14% lease. It was going to get to like 70 or 80 with the surgery center in. We’ve since leased up the rest of the space. So we’re at a true 100% return or 100% lease with a lot of lease term and a good surgery center operator. We we haven’t sold it yet, but we think we’ll break, call it a one two or 1 1 2 to maybe one three equity multiple, which means for every dollar you gave us will give you.

[00:44:29] Matt Lasky: A dollar 20 to a dollar 30 back and that’s over, call it eight years. So like we missed the proforma bat. It’s not a like that’s a low single digit return because it’s from an i r R standpoint because it’s all going to be at the end. Like there’s been very few distributions, if any. I think maybe we made our first one, like last quarter.

[00:44:47] Matt Lasky: Seven or eight years into the asset working through all these issues. And we had to like rejigger the deck, capital stack and, you know, make loans from, call it the company or the principal’s pockets to float the asset. But we’ll come out ahead. And, and it’s been terrible, huge, like loss of time and brain damage.

[00:45:04] Matt Lasky: But unfortunately, like that’s what you have to do when things go wrong. And we’re just happy that there’s a mildly positive return, even though. A categorical failure internally, and we definitely learned some lessons about that and that maybe some structures to approve upon in the future. But at the end of the day, you know, making a little bit of money is still better than losing money.

[00:45:25] Patrick Donley: What could you have done differently once you had gotten into it?

[00:45:28] Matt Lasky: Once we got into it, I think we did about all we could, but going into it, I think we would’ve structured the deal with the tenant a little bit differently. And we’ve started to throw around a saying of, I’m investing in the real estate. I don’t want to be your partner in the business.

[00:45:45] Matt Lasky: And if you turn Kia Tenant’s ti to me, you’re really partnering in their business for a lot of it, for real estate returns. And we don’t like that. You know, from a risk adjusted stand. You know my upside and I kill it on a building as a 20% i r r, and you can compound and you know, you have 40% margins because you run a surgery center.

[00:46:04] Matt Lasky: But I’m footing the bill for your biggest expense, which is building that out. You know, we just, we don’t like that. So there’s a couple things structurally, or you could still give that amount of ti potentially, but pay it out differently and make them forward, fund it, and then earn it out over time. Or collateralize it with like lines of credit from a bank or other assets, they have to not get left holding the bag, or you just pair down your TI contribution.

[00:46:29] Matt Lasky: Some combination of basically not just saying, Hey, we’re doing this deal for you and we’re going to give you all the money. And it’s not that secure. Or like, it’s easier for you to walk and it’s gotta be a court battle, right? And nobody ever wins in court. I mean, it’s, it’s horrible. And so trying to get as far out in front of that in a structure whereby, like if you had a non-vocal letter of credit from a bank, which he probably could have gotten given his cash balance.

[00:46:54] Matt Lasky: Then all of a sudden that sweeps in and you’ve got your TI money out, which would’ve dramatically changed the course of this investment. Really just remembering we’re real estate investors first, and as much as we want to get deals done, not giving an amount of ti to where we feel like we’re invested in their business and they have limited skin in the game relative to us.

[00:47:13] Patrick Donley: And the key point is communicating with investors as things are going wrong. Yeah. You did that quarterly. Is that?

[00:47:19] Matt Lasky: Yep. On all our assets we give quarterly updates and that’s you know, a narrative of performance. And then like leasing momentum, capax, where we see issues. Fortunately, a lot’s gone right.

[00:47:30] Matt Lasky: Also, what’s going well? Not hiding the bad. And as soon as that tenant started to default, there was communication about it. As soon as we found out the default was driven by, you know, the IRS coming at ’em, then there was a lot of communication about it and like very, I guess, regular updates around that.

[00:47:46] Matt Lasky: And our updates aren’t just, we try to be solution oriented. So it’s not just that, hey, something went wrong, it’s, you know, the MO is, Hey, this is going wrong. Here’s what our plan is to do about it, or here’s our action steps to try to fix the.

[00:47:59] Patrick Donley: I wanted to switch gears a little bit and the next question I wanted to ask you was, how are you investing in underwriting deals with how low cap rates are at the moment?

[00:48:09] Matt Lasky: Our investment philosophy is usually like secondary and tertiary growth markets. We’re not competing for stuff in like the Boston, New York City, LA, San Fran, Miami of the world. Everything we’ve bought even recently, we’ve had positive debt carry. So what that means is that adding leverage doesn’t dilute your cash on cash return.

[00:48:31] Matt Lasky: You know, it enhances that. So we’ve still been able to buy stuff with at least like 150 basis points spread of going in cap rate to debt. So that means if we’ve bought a deal at a seven cap, or that’s going to be five. I don’t think we can necessarily do that today, but we have a couple, we’re going to be closing on a 20 some million dollar portfolio, and our debt quotes are in the, like, call it five, seven to six range.

[00:48:55] Matt Lasky: And so that’s workable to have positive leverage. And if we can’t get it and there’s not a huge value add component, we just, we won’t do the deal. Happy to say in 2022, I think we were by far a net seller. We definitely sold more assets than we acquired on a dollar basis. I’m not quite sure where that shakes out, but we sold a lot because we thought these, we would never buy ’em at these prices.

[00:49:17] Matt Lasky: And you know, it’s time to let ’em go because the business plan is, Has been implemented. And then no matter the economic environment, we’ve pretty much always underwritten cap rate expansion. And so what that means is if we’re going in cap rate to seven, we’re going to proforma exiting at a cap rate above that.

[00:49:34] Matt Lasky: And depending on the asset location and business plan, that amount will vary. Sometimes it’s, you know, 50 basis points over a few years, so a seven and a half gap exit, or other times it’s like an eight if it’s more tertiary. That’s kept us out of some trouble because between performing that and some debt pay down, a lot has to go wrong in the world to miss or get in trouble.

[00:49:57] Matt Lasky: And we tell everyone, we think we’re pretty good in the capital markets. We think we understand. But we have no control. Nobody on this podcast, unless you get some fed speakers or whatnot, is going to have control over interest rates increasing at a unprecedented and historic rate in 2022. So we just try to capitalize things conservatively.

[00:50:17] Matt Lasky: We don’t float a lot of debt, and if we float the debt, we have a rate cap and we try not to have maturity issues so that we can work through things and just not be a forced seller. A lot. A lot of it for us just comes down. Being able to sell when we want to and not when a bank or a partner says, Hey, you need to fire sale this.

[00:50:36] Patrick Donley: As a GP, how are your incentives aligned with your investors?

[00:50:41] Matt Lasky: We’re co-investing in all our deals. If there’s any guarantees, like for debt, the, it’s only the, the GP or us taking on a personal guarantee. So on bigger deals, we can get away with no personal guarantees and on others like smaller deals.

[00:50:58] Matt Lasky: Whereas bank debt, a lot of times there’s a personal guarantee given by, you know, some of the partners here. If there is non-recourse debt available, it’s usually 20 basis points or more and more expensive. So that like interest savings goes kind of back to the investors first. And you know, there’s a big deck guarantee.

[00:51:15] Matt Lasky: So you know, if there’s sleepless nights and there’s non-conservative structures, we’re definitely eating our own cooking with the the guarantee side of things. And then structurally, our deals all have some sort of pre, usually six to 8% preferred return that’s cumulative, but non compounding, and then return of capital to investors.

[00:51:35] Matt Lasky: If you know the investors aren’t getting, call it roughly a six to 8% return annually, and that’s not on a time weighted basis, then we don’t hit any sort of promote or profit participation. So the investors are going to, you know, get that floor and their capital back before we start to share in profits, which we think is the most kind of investor friendly way to split cash flows and sale or gains on sales from asset.

[00:51:59] Patrick Donley: I think it’s pretty similar how Warren Buffet structured his original partner. I wanted to talk capital. I have Eric Weatherholtz on recently and he tweeted that money loves winners and that capital being the lifeblood of real estate seeks out those who know how to multiply it. So for someone wanting to be a GP or just getting started, what are your thoughts on how to raise capital?

[00:52:17] Matt Lasky: And then also find LPs that are aligned with you. One, Eric’s great, or you know, resident developer and taco aficionado and patio offic. I would say in as an investor, it’s maybe, you know, not too dissimilar from some of the same brokerage advice in that like you need to build a track record or be at a firm who has one and, and or a partner who has one.

[00:52:41] Matt Lasky: And I would say like we’ve seen some guys come in and they’re like, Hey, I’ve got this great deal. Like I need money. And then you start to talk through. And there’s, you know, there’s a lot that goes into the back office of being a good gp. So like behind just sourcing deals and cents and dollars. The, the platform, the asset management report and file taxes and like our funds are audited.

[00:53:00] Matt Lasky: So that’s a whole different level of compliance. But there’s a lot of back office stuff that goes into that, and you’ll start to talk about, Hey, if we’re going to partner on this, this is what it looks like from our end. And they inevitably end up wanting more of the deal. And it’s like, well, if you don’t have the capital to do it, I think we’re going to bring a lot of value.

[00:53:17] Matt Lasky: But I would say having an abundance mindset to get some of those reps in and build the track record like you don’t need to. Or, you know, try to ride off into the sunset on your first deal or first few deals. Like having that long-term mentality of like, Hey, I’m going to be doing this for the next decades, and that capital is the lifeblood of the business.

[00:53:36] Matt Lasky: The, you know, at the end of the day, like average check sizes in the low six figures, you know, that’s an immense amount of trust from a lot of people to give you 200, 500 million at a time, and mostly individuals. Like being cognizant of what your real ask is, and the trust of this is people’s hard-earned money, like you’re a steward of their capital.

[00:53:56] Matt Lasky: You need to take that very seriously. And that that trust isn’t built overnight. And so if you’re going to have a partner who has built that trust that like it takes maybe one bad deal or a couple bad deals to ruin a life’s worth of work, and when viewed through that lens, treat capital very well, and maybe partner with people who have treated capital well and then listen to ’em when they say, Hey, this is like what’s fair that your empire of investors wasn’t built in a day.

[00:54:21] Matt Lasky: So I just. That takes time and relationships compound and everybody loves good investment. The best thing you can do is knock it out of the park for someone on their first deal, and then they’re going to be your biggest advocate. They’re going to tell all their friends and it just, it compounds over time. But it’s one of those that may happen slowly and then all at once.

[00:54:40] Matt Lasky: But it starts by being a really good investor in gp, being transparent and doing good deals. Not trying to win off any one deal, but knowing that over the course of time, if you consistently do the right thing, you can have a very good livelihood.

[00:54:54] Patrick Donley: As we wrap up here, I wanted to ask you, what asset class are you not involved in, but you keep thinking about?

[00:55:01] Matt Lasky: It’s gotta be like contractor garages and flex. So I know I gave a shout out to Chris earlier, it’s maybe not too dissimilar from some of the things in retail. The cost to reproduce that and build it is such that there’s just very limited supply constraint or supply coming online. And if you overlay that with trying to get that zoned in a city plus cost, it’s just, it’s a huge uphill battle and it is kind of, Maybe not quite the backbone of the economy, but there’s a lot of small business that has to operate out of that and they’re not making a lot more of that.

[00:55:35] Matt Lasky: And we have needs for like those trades and like hard businesses that work out of there. So I just think it’s got very favorable kinda tailwinds and that the cost basis for what a lot of them are from like a rent stand. Two, with where the world is today, inflation wise, that the rents maybe have not caught up with like today’s reality of construction pricing, inability to like create new supply for that.

[00:56:01] Patrick Donley: That’s one of the dangers of my job. I get exposed to so many different ideas that it can be dangerous.

[00:56:07] Matt Lasky: I think we’ve done well as a group trying to stay focused and we’re all maybe shiny penny guys at heart, but some of our. Hasn’t necessarily been what we’ve done, but what we haven’t done in trying to not chase the shiny pennies.

[00:56:20] Matt Lasky: So doing your job would be intellectually stimulating and probably very challenging because I’d have a lot of late nights going down rabbit holes.

[00:56:27] Patrick Donley: I interviewed a guy recently, James Nelson. He’s coming out with a book called The Insider’s Edge to Real Estate Investing, but that was his key point. His key piece of advice was find a niche stick to it and get really, really good at it.

[00:56:39] Patrick Donley: So it sounds like you guys have done. And I just wanted to thank you for your time today. For our listeners that want to reach out to you or maybe learn more about you, what’s the best way for them to do that?

[00:56:49] Matt Lasky: Yeah, so two ways. I’d say Twitter is a good one and it helps you kind of see how I think. And that’s Matt Lasky, or email is at

[00:57:00] Patrick Donley: All right. Thanks Matt. This has been great. I appreciate your time today.

[00:57:03] Matt Lasky: Yeah, thank you. Appreciate you having me.

[00:57:05] Patrick Donley: Okay folks, that’s all I had for today’s episode. I hope you enjoyed the show and I’ll see you back here real soon.

[00:57:12] Outro: Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday, we teach you about Bitcoin, and every Saturday, we study billionaires and the financial markets. To access our show notes, transcripts, or courses, go to

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