[00:03:22] Patrick Donley: Were you homeschooled or were you in schools all around the world? 

[00:03:26] Levi Benkert: I was homeschooled almost the whole time. Went to school, a couple of different, I think I did a year in fourth grade and then couple times I would go for a little bit, but you know, I think 80% of it was homeschooled. And then when I was 15, I tested out, basically got my GED and decided I was done and didn’t go to college at all.

[00:03:45] Levi Benkert: Just literally started diving into business right away. 

[00:03:49] Patrick Donley: That’s amazing. So as a kid, were you always interested in business? Did you do any kind of ventures preneur when you were young? 

[00:03:56] Levi Benkert: I did. I kind of always had different projects. I learned how to weld when I was really young and would build furniture and sold furniture.

[00:04:02] Levi Benkert: And when I was 16 I went and got a job at a mattress store delivering mattresses and just kinda dove in as early as I could. 

[00:04:12] Patrick Donley: That’s awesome. So, you tested out a, you got your GED. Why did you decide not to go to university? 

[00:04:19] Levi Benkert: In hindsight, I wish I had, I think there’s something that, my wife and I have four kids and we always tell our kids, I think there’s a kind of formative years of your life that are a good opportunity to learn.

[00:04:29] Levi Benkert: Not necessarily just what the school is teaching you in terms of academics and kind of preparing you for a job, but it’s also just social dynamics and being on your own. And we dove in and certainly, no, I don’t look at it as regrets because I’m thankful for the kids we had and my wife and I got married real young and are still happily married.

[00:04:48] Levi Benkert: She’s amazing. 23 years later. But we both say we wish we’d kind given it more time and had more time kind of to do what our, you know, we have two in college now and are watching them [00:05:00] go through this really fantastic time of life that we just kinda skipped right over and dove in. Where 

[00:05:05] Patrick Donley: did you meet her?

[00:05:06] Patrick Donley: You, because you got married what, at 18 and she was a little bit older, right? She was 

[00:05:10] Levi Benkert: 21. She was 21. I was 18. We met at summer camp, actually. . Okay, nice. We were both camp counselors and got to know each other and married and then on just after our first anniversary, our son was born our first. 

[00:05:25] Patrick Donley: Very cool.

[00:05:26] Patrick Donley: So when you guys got married, what were you doing work-wise? 

[00:05:30] Levi Benkert: First job was building rock climbing walls as a welder and so would kind of travel around and one of the first projects that was coming, I mean these were long, you know, it was like a seven month, eight month long project. First one was in Sacramento and so we actually moved there for that job and kind of dove in right from there and actually ended up staying in Sacramento for 10 years.

[00:05:53] Patrick Donley: Did you ever climb at Mission Cliffs in San Francisco? 

[00:05:57] Levi Benkert: I did. So actually I helped build Mission Cliffs and [00:06:00] the, the one in Sacramento that we build, that I moved to Sacramento to build was actually in the same company that built Mission Cliffs, built the one in Sacramento too. That’s 

[00:06:09] Patrick Donley: amazing. I lived off and on for three years in San Francisco and, and climbed a little bit at Mission 

[00:06:14] Levi Benkert: Cliffs.

[00:06:15] Levi Benkert: Okay. Yeah. That was literally the first one that I’ve started working on. And then one of the big projects that we did was the one in Berkeley, which was also at the same company, did it, which was an enormous, enormous project over there. That one took almost a year. 

[00:06:30] Patrick Donley: That’s really cool. And so you were doing the, you were doing the welding or you were doing all of it?

[00:06:35] Levi Benkert: All of it. It was my brother’s company that was building ’em and I was pretty young at the time and was working for him and we were building rock climbing wall. So 

[00:06:43] Patrick Donley: what was your fir like after you got married? What was your first entrepreneurial venture? Was it, I know you guys bought a home and, and fixed it.

[00:06:51] Levi Benkert: We started a coffee shop that ended up starting having two locations and sold that. So we did that for about a year and a half, but the first [00:07:00] one literally rented, I remember it was $900 a month for a old bookstore that was just a total mat. And I went in and cleaned it up and actually built out the whole kitchen for the, you know, whole counters and kitchen and everything that needed to be there, and it didn’t have a bathroom and put a bathroom in to convert this old bookstore into a coffee shop.

[00:07:20] Levi Benkert: It’s still, it’s funny, it’s on 21st and End Street in Sacramento. It’s still open. And so literally, I, I did all of that work myself. I did learn how to do the plumbing and electrical and everything. I mean, it took way longer than I wanted it too. But I think we ended up spending $20,000, most of which we’d borrowed from a friend’s parents in order to get that bill, but opened it and it was profitable from the first month.

[00:07:43] Levi Benkert: From the first month actually it was profitable and kind of built this thing up from scratch and felt like this was a fun way to do it. Meanwhile, after it got going, I started flipping houses on the side because we’d done real well on our first house. That really wasn’t intended to be a flip, but we bought it and [00:08:00] put some work into it and figured out how much it was worth and sold it in.

[00:08:03] Levi Benkert: What year would that have been? That was 2000. Yeah. 

[00:08:06] Patrick Donley: Bought in 2000. And then you were doing the work on the flip as well, you 

[00:08:11] Levi Benkert: and your wife, right? Yeah, I was doing everything. Yeah. And she was doing all the design stuff when I was doing all the, you know, everything from drywall to plumbing and electrical and scares me to think how little I knew and how, I mean, gosh, I hope the people who own those houses now aren’t still finding things in the walls that I just didn’t know what I was doing.

[00:08:29] Levi Benkert: Was it a live 

[00:08:30] Patrick Donley: and flip done where you guys were living in it as you were fixing. 

[00:08:33] Levi Benkert: At first, we did a few of those where we would move in. Some of them we only lived in for a couple of months, but then started doing several. Sometimes we’d do three or four at a time and did not live in them. And 

[00:08:45] Patrick Donley: how did that first like bite of the real estate bug, how did that happen for you?

[00:08:49] Patrick Donley: What got you interested in real estate 

[00:08:51] Levi Benkert: to begin with? We walked into, so I, I need to reach out to him again. I know he’s still out there. There’s a real estate agent named Brian McMartin. We were [00:09:00] living in an apartment and had seen this, it was a real estate office down the road. I remember my wife and I just walked into his office and he happened to be sitting there and was like, come on in, sit down.

[00:09:10] Levi Benkert: You know, we’re like, Hey, we want to buy a house. He’s like, how much money do you have saved up? And we’re like $2,000. And so he found an F HHA program, this thing called the Nehemiah Fund, that would loan you part of your down payment and have it as a recorded deed. If you did sell it within a certain time, it would be, you know, you’d have to pay it back.

[00:09:30] Levi Benkert: And he literally just, he handed me, I remember he handed me the book, the Richest Man in Babylon, and said, read this. I’m going to help you buy your first house. Let’s do it. And I ended up working with him on, I mean, I don’t know, we probably did 20 transactions together over the years, and he was just fantastic.

[00:09:44] Levi Benkert: Taught me that. That’s funny. We’d still use this even on some of our industrial deals. He taught me this trick to write a, a letter with your offer. So he is like, everybody else is just going to be submitting offers and taking it by the numbers. And he would write this heartfelt, [00:10:00] just tear jerker of a letter of why this family needs this property.

[00:10:05] Levi Benkert: And would sit down and we’d go through this thing together and then he’d be like, we’re sending it. And I guarantee you they’re going to accept our offer. And I mean, several times we got properties for lower than the other offers that were submitted cause of these letters he would write. And I, I still do it today.

[00:10:20] Levi Benkert: I love it. . It’s a great tool. 

[00:10:22] Patrick Donley: That’s amazing. Matt is a good story. And so you use it like for an industrial property, people you can pull on their heartstrings with a great letter. 

[00:10:30] Levi Benkert: Yeah, I mean, it’s obviously a little bit less emotional, but we’re trying to make us stand out, so we talk about deals that we’ve closed recently, capital that we’ve got available to do it, how this one’s just right up our alley, what we’ve, you know, how, what differentiates us.

[00:10:44] Levi Benkert: I mean, I feel like every offer comes with a story and the offer doesn’t adequately tell that story, and so you’d, it’s on you. He only says it’s on you as the buyer to tell that story, and you have to kind of get outside color outside the lines a bit in order to communicate that. 

[00:10:59] Patrick Donley: That’s [00:11:00] great. I really love that.

[00:11:01] Patrick Donley: You mentioned the Richest Man in Babylon. Was that a pretty formative book for you? 

[00:11:05] Levi Benkert: Oh yeah. I still quote it. I, I’ve read it a couple of times between like 18 and 21. Just a fantastic book. 

[00:11:13] Patrick Donley: Did you have some other real estate related books that also kind of fired you up? I 

[00:11:18] Levi Benkert: remember the, so I read the, of course the Rich Dad Orad, and then they, he did another one that was part of that same series called the Cash Flow Quadrant.

[00:11:27] Levi Benkert: That’s my favorite one. It’s so good. Yeah. Yeah, it was, I mean it’s frustrating because he’s gone on to become something that’s totally different than what he started as and it’s hard to kind of associate with him at all. But I mean, the fact of the matter is, is it was a really good book and it, having grown up in a family that was not necessarily focused on being entrepreneurial, we were able to kind of think outside the box.

[00:11:49] Levi Benkert: This helped me kind of reorient towards like, oh, there’s actually a kind of a whole different way of thinking here that can help you. It’s a shortcut. It’s, you know, you don’t necessarily have to [00:12:00] sit behind a desk in a corporate office in order to get somewhere. 

[00:12:03] Patrick Donley: Yeah. I think Sean Sweeney had that same light bulb moment.

[00:12:06] Patrick Donley: He was considering law school and Red Rich Dad, poor dad, and he, he, I think he dropped his application to law school and you know, started pursuing real estate at that point. Yeah, I mean, it’s kind of a book that’s often mentioned on the show here. So, richest Man in Babylon, cash Flow, rich Dad, poor Dad, anything else that was part of your real estate education early on?

[00:12:25] Patrick Donley: Kind of 

[00:12:25] Levi Benkert: early on, man, I’ve read a lot of just textbook. I mean, I would even buy college textbooks and read them about accounting practices and all sorts of, you know, my wife makes fun of me cause I, I always have like the most boring stack of book I still do today, sitting next to the bed to read. But I feel like I’ve just always, it’s one thing that I, not going to college, I, I kind of just realized I’m going to have to learn this stuff on my own.

[00:12:50] Levi Benkert: And so I’ve been, I’ve. I don’t know, tens of thousand thousands of books, I get exaggerating the number here, but thousands of books over the last 25 years that have [00:13:00] really helped shape and form kind of strategy and how to do things. And it’s funny because I, I don’t necessarily always agree and a lot of times you’ll find a book that I just wear Redwood recently who not.

[00:13:10] Levi Benkert: How that started out. Fantastic. It’s, it’s out there. I mean everybody’s talking about it. It’s kinda one of these like big business books started out fantastic. I actually really enjoyed the intro. It was a terrible book, poorly written, just the stupidest, recycled ideas throughout it. But, but intro and the concept, like they just should have, it’s a book as many are, it’s a book that should have been a blog post and they turned it into a whole thing just so they could try to get a bunch of consulting income off of the consulting group that they’ve built out of it.

[00:13:38] Levi Benkert: But I actually enjoy books even if I don’t agree with them. Cause it still gets me to think about how variation of ideas and approaches are out there. And some of them work and some of ’em don’t. 

[00:13:50] Patrick Donley: Did you do some other things for your real estate education? Did you take some classes at, I thought maybe like at M i t or something 

[00:13:56] Levi Benkert: that you did?

[00:13:58] Levi Benkert: Yeah, I’ve done a course at m I [00:14:00] t. I’ve done a bunch of different things over the years. Was that 

[00:14:03] Patrick Donley: finance related? What 

[00:14:04] Levi Benkert: was that class that you took? That was a, a financial modeling, commercial real estate financial modeling course. I would suggest that to anybody. It’s a, I can’t remember how long. It’s like a six month long, you know, it’s a semester basically course that they do ob, it’s, it’s virtual and they open it up to people who are not attending m i t.

[00:14:23] Levi Benkert: That one is fantastic. 

[00:14:25] Patrick Donley: And I think a lot of their stuff is free, isn’t 

it? 

[00:14:28] Levi Benkert: That one’s not, some of their stuff is that one. I mean, you’re basically just fully enrolling as a student and so I can’t remember how much it is. It’s $2,000 I think. Very much worth it. 

[00:14:39] Patrick Donley: So you did, you did the coffee shop, you did a second coffee shop.

[00:14:42] Patrick Donley: What was that exit like? Why did you decide to leave that 

[00:14:46] Levi Benkert: venture? I did not li it was not the right business for me. I realized I making a lot more money on real estate yet having to get up at 4:00 AM and make sure the coffee shop was open. It was my first employees and I still, [00:15:00] still remember mismanaging them and I would kind of make up rules around people.

[00:15:06] Levi Benkert: I, I just had no idea what it was doing. I mean, I think it was 19 when it opened, so, you know, I would kind of make up rules around incompetencies and keep people for too long and let people go erratically. You know, thinking back it’s like, wow, I, I dunno how that whole thing worked out as well as it did.

[00:15:19] Levi Benkert: because it was a, a fantastic business and we ended up selling it and that, you know, we had an exit after only owning it for 18 months. Sold it to somebody that was going to run a business there and that worked out good. Yeah, it’s kind of interesting to think back . I would do it very differently. Na, good lessons.

[00:15:35] Levi Benkert: Yeah. But 

[00:15:35] Patrick Donley: I’m sure it was some great lessons on managing people and, and hiring people and, and all of that. How did you scale the, the, you were fixing and flipping homes? How did that scale up? Talk to us about that. 

[00:15:46] Levi Benkert: Started to find, you know, I remember I had a tile guy, a power washing guy, an electrician, you know, I would start to realize like, oh, hey, I, the first ones I could do on my own.

[00:15:56] Levi Benkert: And then I started to do more complex projects and realized, like, [00:16:00] I mean, I remember I had a an H V A C guy that would put an H V A C. Many of the houses I was buying were in Midtown Sacramento, built in early 19 hundreds. You know, these were almost a hundred year old houses. They had no air conditioning.

[00:16:13] Levi Benkert: A lot of times it was, you know, lead pipes that needed to be torn out. I had an air conditioning guy that for like $2,600 would put in a central AC system and a whole system in the house and would come in and do it in an afternoon like him. And he had a couple of junior apprentice guides that would work with him.

[00:16:31] Levi Benkert: And so I, I kind of started to realize like, hey, there’s leverage to be had. You’re arguably adding 10 or $15,000 of the value of a house by having H V C, and you’re spending $3,000 on doing it. These flips, I would try to get that timeline just shorter and shorter. And eventually it was, I mean, it was like five weeks from start to finish, sometimes down to the studs got in that much time.

[00:16:54] Levi Benkert: At the time, building departments weren’t, as, you know, they weren’t watching. And so I, I would never get permits on these things. I [00:17:00] would just go in, clean ’em up, get ’em done, go out. And then there was one that was really life changing. So found a house on five acres of land in West Sacramento. So just on the, across the river from Sacramento.

[00:17:14] Levi Benkert: It was actually really near the river house, was the most expensive listing that had ever gone up in the West Sacramento markets. It was like $880,000. But I figured out that the land was worth a lot more than that, and so bought the house. We actually moved into it. It was really funny. I mean, this was six, 7,000 square feet or something.

[00:17:33] Levi Benkert: Just a monster house that some doctor had built for him and his family had we moved in there and had, actually our second daughter had just been born before we, no, no, no. My wife was pregnant with her when we were there. Yeah, that’s right. So we had one kid we’re living in, that’s just massive house with pool and that was just everything.

[00:17:52] Levi Benkert: It was incredible. And then we sold, so we lived in there for 15 months, split the land into the lots, sold the three lots off [00:18:00] individually, and then sold the house, paid eight 80, sold the lots for 850, and then sold the house for literally within a thousand dollars of what we’d pay for the house. In 15 months.

[00:18:11] Levi Benkert: We made over $800,000. And was that life 

[00:18:15] Patrick Donley: changing at that point 

[00:18:16] Levi Benkert: for you? Oh, absolutely. Yeah. I mean, I was doing these flips and making 30, 40, $50,000 at a time, but also spending a lot of time on it. So it wasn’t, I mean, we were doing well through that and had done decently well through the exit of the coffee shop as well.

[00:18:30] Levi Benkert: But it was always like, how long is this going to last? We still don’t really know what we’re doing. And then this was, this was the one that was like, okay, we actually created something here. Did 

[00:18:39] Patrick Donley: you feel that way? Like you didn’t know, like, I’m kind of making this up as I go along. I’m just learning as I go.

[00:18:44] Patrick Donley: Was that part 

[00:18:45] Levi Benkert: of it? Oh, yeah, completely. I mean, it didn’t have a team didn’t necessarily understand. I don’t know. I, I think at the time I probably had a little bit more hubris and thought I knew more than actually did. But there was still an element of, we’ll see how this, how long this goes. But [00:19:00] sold that one.

[00:19:00] Levi Benkert: And then really the, the, the money was somewhat life changing, but the biggest life change was realizing that I could develop land. And actually it was a lot more profitable. The value that you create, you know, I mean, I, all I did, I, I sold that house and it to the neighbors. It looked like we just moved in for 15 months and then left.

[00:19:18] Levi Benkert: They didn’t know what had happened. because I didn’t actually go do any site work or anything. I literally just took one parcel and created four parcels and then sold three separate parcel numbers that now existed to buyers that were going to build houses that they, they did, the houses are there now, and then sold the house.

[00:19:35] Levi Benkert: And so from the kind of neighborhood perspective, it doesn’t look like, you know, from the visual side of this, not look like we did anything, but there’s a lot of value created. And so then actually in that neighborhood, I just started buying up everything that I could. There was a six acre parcel right across, just almost across the street, down the road that was vacant, bought that, subdivided it into 31 lots.

[00:19:58] Levi Benkert: Paid [00:20:00] 500,000 for it and then sold those lots for a hundred thousand dollars each. Sold it for 3.1 million, owned it for nine months, rolled down, you know, and then just kind of kept hopping around. And so started to kind of scale in terms of how big we were doing this and hired a team and started doing a lot more of these.

[00:20:15] Levi Benkert: So we would buy vacant land or land sometimes would have a mobile home park on it or something that we’d pay to move the residents out and we’re going to buy out their leases and subdivide that land. And at first just sell off vacant land. And then over time kind of got greedy and said, Hey, we’re selling this to home builders.

[00:20:34] Levi Benkert: Why don’t we be a home builder? So I actually bought a home building company, it’s a very small shop, but brought that whole team on and we started then building houses on the properties instead of selling ’em. The spot was you go vertically integrated, you can do everything and have a lot more profit out of it.

[00:20:50] Levi Benkert: Timing was terrible. Bought that home builder in 2006. Had 400, I don’t know, 400 and something lots that we were, had a, [00:21:00] actually at one point got an offer to sell all of at just this. I mean it was like 42 million or something, could have walked away with a significant windfall there, turned it down and said, Hey, we’re building every one of these lots ourselves.

[00:21:13] Levi Benkert: And started to build them first houses were towards the end of 2007. I think we had 12 or 15 houses or something completed in 2008, and then the banks just said, stop. This is Northern California, which was one of the worst hit through the 2008 financial crisis. And banks were just completely done lending.

[00:21:31] Levi Benkert: I mean, they were not, they weren’t even thinking about letting us continue to build these properties. And so without construction financing, you can’t build houses. Even though we were selling and we had some in inventory and had sold some and proven the, that they were profitable. The banks won’t land.

[00:21:46] Levi Benkert: The banks won’t land. You just can’t do it. Did you have a partner 

[00:21:49] Patrick Donley: at this point or were you doing this completely on your own? I 

[00:21:53] Levi Benkert: had a couple of key employees who were part, I brought them on and had given them part [00:22:00] ownership, but it was me for the most part. 

[00:22:02] Patrick Donley: And you were, how old would you have been at this point?

[00:22:05] Patrick Donley: 27. 27, okay. So pretty young. How were you doing the funding? Was it, was the funding coming initially from those early windfalls of sub-dividing that first property or, 

[00:22:15] Levi Benkert: yeah, and, and a big network of private equity investors and banks and had that at that point, not done any, when I say private equity, I mean like individuals, high network individuals who were backing what we were doing, but not no private equity funds or anything.

[00:22:32] Levi Benkert: You know, nothing institutional at that point would later figure out how to do that, but it at that point had not. 

[00:22:38] Patrick Donley: Well, how did you figure it out from the private side? How did you approach individual investors that wanted to invest with you? What was your, did you write ’em a letter and tell ’em what you were up to and.

[00:22:49] Levi Benkert: Yeah, I mean, started with kind of friends and family and then that quickly expanded from there because we were able to go full cycle on several deals and prove that it was profitable. I mean, in hindsight, [00:23:00] cheap death is a potent drug that everybody got drunk on or high on, I guess in 2006, 5, 6, 7, 8. Hard stop at the end of 2008.

[00:23:09] Levi Benkert: I mean, we, you know, we had Washington Mutual and, and these other lenders basically just, you know, countrywide lending money to people who were not good borrowers on properties that were not good properties, and that just kind of created this compounding effect where, where values could run wild, not too dissimilar to what’s happened in the last couple of years.

[00:23:29] Levi Benkert: I mean, the, the Covid response was in hindsight, and I think the Fed has finally, you know, figured this out was far too much, far too quickly, and created a run up in values that should have been a red flag sign a long time ago. Thankfully it’s, we’re not experiencing that 2008 level in a depression of pricing.

[00:23:50] Levi Benkert: We certainly are having some, but it’s nothing like it was back then. It’s never a good idea to throw cheap debt into the market at large volumes. 

[00:23:59] Patrick Donley: I want to get [00:24:00] into that in, in a little bit about your market views about what’s going on right now, but I, I first kind of wanted to ask you a little bit more about the home building.

[00:24:07] Patrick Donley: You were super entrepreneurial. You had done the coffee shop, two of them. Why did you decide not to start your own, just your own home building business? because you, you’d done the fix and flips. How did you decide to just acquire a home builder rather than start your own? Basically, 

[00:24:21] Levi Benkert: Micah Baginski, who was the one who’d been running his own business, doing that work, was fantastic at it.

[00:24:27] Levi Benkert: And it’s funny, he and I are still good friends and just texted with him a couple days ago. He still lives in Sacramento. I had realized that I wasn’t the expert at anything, but I could kind of play the orchestra and let everybody know where we were going and I knew I needed expertise and Micah was undoubtedly that and became very quickly a, a full partner in the business because he was fantastic at that.

[00:24:48] Levi Benkert: So I needed and always still do, needed good people around me because I, you know, I thrive on being the dumbest guy in the room. Do you 

[00:24:56] Patrick Donley: kind of view yourself more as a, a vision guy? Like you’re the guy that’s creating the vision [00:25:00] of where the direction is headed and then trying to find good people to implement 

[00:25:03] Levi Benkert: that?

[00:25:04] Levi Benkert: It’s funny, we’re just now working on implementing the Eeo s system and they’re, you know, the entrepreneur op operating system, which is that traction book, and they have this whole distinction in there they talk about, of like the visionary and the integrator. And I’m not, I’m not a good integrator, but I actually don’t fully buy into that, that there’s just kind of two totally separate people.

[00:25:25] Levi Benkert: I’ve learned that, that I have to slow down. I have to be a part of the integration of ideas. Otherwise, the, the, the two kind of ideas and dreaming slips from reality and reality goes quite differently. And so I’m, I enjoy my role, which is kind of a balance of both. And then lean on just an incredible team of integrators who put these ideas into practice and, and make sure that it happened and were not making mistakes along the way.

[00:25:52] Levi Benkert: So 

[00:25:52] Patrick Donley: that book was called Traction? 

[00:25:54] Levi Benkert: Traction, yeah. Yeah. And do you remember the author of that, Gino Wickman? That’s [00:26:00] who, it’s, that’s right. Yeah. 

[00:26:01] Patrick Donley: I remember ordering it years ago. I never got around a, I don’t think I read a little bit. 

[00:26:06] Levi Benkert: It’s good. It’s funny, we joke, it’s like a whole cult around it cause they’re, you know, it’s the EOS entrepreneurial operating system, which there are many out there.

[00:26:14] Levi Benkert: And at the end of the day, every business either has to create their own, which is incredibly difficult or pick one off the shelf. This is undoubtedly one of the best tried and true operating systems that a business can use to make sure that things aren’t falling through the cracks. Decisions are made quickly and efficiently and that you, you’re tracking kind of where you’re headed and why you want to, why you want to get there.

[00:26:38] Levi Benkert: It’s good stuff. And 

[00:26:39] Patrick Donley: it’s not strictly for just real estate entrepreneurs, it’s for any, any business, correct? 

[00:26:44] Levi Benkert: Absolutely. Yeah. I mean, I know of small power washing companies that use e o s and huge software businesses that are doing a hundred million a year in revenue that use E os. 

[00:26:55] Patrick Donley: And what were the two distinctions you made?

[00:26:57] Patrick Donley: One was a integrator and the other was [00:27:00] 

[00:27:00] Levi Benkert: integrator in the visionary is kind of how they describe it. and I think they probably, in my opinion, they oversimplify it. They kind of say that it’s impossible for someone to be both and you could pretend for a little while and yeah, you know, but you’re really just not, you’re one or the other.

[00:27:15] Levi Benkert: I, I read an article the other day that said that in terms of founders, four to one ratio of people who identify as visionaries instead of integrators. And so then integrators are just this like really scarce resource that, you know, is hard to find or doesn’t exist out there. My argument is, is that everybody needs to be an integrator.

[00:27:35] Levi Benkert: You gotta be the grownup and do what needs to be done. But then also I think the, it’s probably true, very few great integrators are also visionaries. A lot of times they, you know, the engineer of the business can’t really think five years down the road very well and dream about where they want to go.

[00:27:52] Levi Benkert: And so maybe that on that side it’s true, but yeah, it’s fascinating stuff to think about. I’ll have to check 

[00:27:57] Patrick Donley: it out. I’ve got it on my bookshelf here. I I just [00:28:00] haven’t, it’s just been collecting dust recently, but now that you’ve mentioned it, I’m going to, I’m going to pull it out. Totally worth it. I’ll pull it out for sure.

[00:28:06] Patrick Donley: So the music stopped around 2007, 2008. What happened with those 400 lots? How did you unwind that? 

[00:28:13] Levi Benkert: Incredibly painful, lot of money was lost. I am forever grateful for the equity investors, who by and large rallied around me. One guy in particular, who is still actually one of our biggest investors today, he’s my, you know, if we’ve got a deal that needs to close real quick and I need a million dollars, I’ll call him up.

[00:28:33] Levi Benkert: And he, he and his wife travel everywhere now. He’ll wire the money and be like, it will document this thing later. Totally trust you. It’s fine. He lost several million in my projects back then and immediately just switched into mentor mode and was like, Hey, how are you doing? I knew multiple people who committed suicide in the market, who, you know, were operators that I had had lunch with and met and, you know, were, we were doing deals together.

[00:28:58] Levi Benkert: And this was just [00:29:00] once in a generation. Hopefully we don’t have a, a again in our generation and a tragedy that hit. And I just am incredibly thankful for the people who stepped up and said, Hey, it’s more than money here. What can we do? How do we, how do we work through this? And they helped me figure out how to negotiate with banks and, you know, for the most part, just negotiated short sales and almost always was just a total wipe out to equity investors, which is frustrating and tragic.

[00:29:25] Levi Benkert: What do you 

[00:29:26] Patrick Donley: attribute their response to? Like, why, because a lot of investors were obviously furious, you know, you’d be furious at how thing, you know, losing a couple million dollars. What do you attribute their response to towards you? That’s not to say 

[00:29:40] Levi Benkert: there weren’t, I mean there were some people that had put money in that, you know, put $50,000 in and it was a total wipe hemorrhage, pissed, I mean, rightfully so, and some of whom I just never heard from again.

[00:29:51] Levi Benkert: It’s like, you know, we’re done. This is terrible and it’s all on you. And I’m sitting here trying to explain what’s what happened and why it happened and how it all went. I don’t know. I’d like [00:30:00] to say it was something that I did and I, we certainly, me and the team were extremely conscientious about overcommunicating everything, and from day one, and I still do this today, all accounts are open books.

[00:30:14] Levi Benkert: Anybody who wants to see what we’re doing, happy to come and look, come in, we’ll sit down, we’ll give you, you know, here’s the QuickBooks file. You can go dive in Just over. Communication is key, but I don’t think, I don’t want to take credit for it. Cause these are just some incredibly good people that caring and had been through it themselves and said, Hey, we are smart enough to know when the bank stopped lending and you’ve got debts on a, on a building or on a property that has no income, there is no kind of magic that could make that undo.

[00:30:43] Levi Benkert: And I always point to, I had an offer from it as an international group wanted to buy our whole portfolio. I sold them one property only and not the rest. And it was one that I just kind of didn’t love and didn’t want to develop their offer in. And this was like early [00:31:00] 2008. Their offer came through.

[00:31:01] Levi Benkert: It was at a value that would’ve put my total debt on my portfolio at 63%. I would’ve walked away with 37% of the total value. And this was a, you know, 400 plus lot portfolio that was selling, I can’t remember exact number. It was around $140,000 per lot. So it was an, an enormous offer. And this, this group was buying other things and would’ve taken the whole thing down and we could have just walked away.

[00:31:28] Levi Benkert: And, you know, so there’s, there’s my kinda extrapolation from that is we had a really safe loan to value ratio. We were not over levered. We just didn’t see, and I’m not trying to blame innocence. I mean, I think now I probably have a much more attuned year to the tracks in terms of what’s going on in interest rate markets and have even safer deals set up.

[00:31:48] Levi Benkert: But it was devastating and I knew of very few people that weren’t a total wipe out in that specific market 

[00:31:54] Patrick Donley: we were in. What other lessons or takeaways inform how you now operate Harbor Capital [00:32:00] from that, the lessons that you picked up in 2008, how do you do things today that affected you 

[00:32:05] Levi Benkert: back then? I mean one of them has continued to overcommunicate.

[00:32:09] Levi Benkert: I kind of had a hunch that that was a good idea and, and probably didn’t do even as much as I do today. We send out monthly updates, we share the bad news first. We’re constantly talking about kind of where the properties are at and what’s what, you know, what could go wrong and what we’re seeing in the market and where we missed it.

[00:32:25] Levi Benkert: Just be completely op, open, honest, and transparent. The other thing is just massive reserve funds. We bought a 10 million vacant building recently, just because we know the, you know, we’ve done it at a fantastic price. It’s far below what it’s intrinsic value is, but it’s vacant and so we had to go lease it and we put year, multiple years of reserves aside.

[00:32:47] Levi Benkert: We’re just extremely cautious and careful and I just kind of don’t take the risks that I feel like at the time I might have thought were okay and now it’s just like, hey, we actually, the future is completely [00:33:00] unknowable. Nobody’s predictions are correct despite this revisionist history in us. You know, going back and elevating Michael Bur and saying he knew exactly what was coming.

[00:33:10] Levi Benkert: He was a very, very, very rare person. In 2008, every developer, every real estate person that I knew was talking about how we were in the, you know, fourth inning of a, of the game. And we had a lot of time left. And this, you know, this wasn’t going to stop. It wasn’t readily apparent and obvious that things were going to change and certainly not to the degree that they did as quickly as 

[00:33:33] Patrick Donley: they did.

[00:33:34] Patrick Donley: Yeah, exactly. Do you see any, any similarities today to what happened back in 2008? The concern you debt got 

[00:33:43] Levi Benkert: too cheap, too fast and so did quantitative easing kind of alongside it. Put a lot of money into the market that shouldn’t be there, and we’re going to have to pay the price for it. I’m one of the few that thinks the Fed is actually doing the best they can.

[00:33:59] Levi Benkert: Now [00:34:00] I think they got us into this problem, but I also think that pandemic was such an unknown and to overreact was better than to Underreact. If you had sat down in March of 2020 and looked at the kind of expected outcomes as good as things got 12, 24 months later wouldn’t even have made your any economist top 10 lists of the most likely scenarios of how we’re going to come out of this.

[00:34:25] Levi Benkert: It just was wildly good for everybody, but it also was too good and I think we need to pay the price for it now. And I also think that they, you know, they’ve gotta get inflation under control. I question anybody who thinks they know what’s coming next. So I don’t know what’s ha going to happen in real estate I housing and whatnot, but I do know that those who are really cautious and do really safe deals or tend to come out on top, 

[00:34:48] Patrick Donley: So I wanted to, to jump next, after 2008, you took a little bit of a breather and regrouped talk to us about what happened next.

[00:34:56] Patrick Donley: This is a pretty interesting part of your story. I find 

[00:34:59] Levi Benkert: I said [00:35:00] this earlier, bears repeating. I, I married extremely well. My wife’s kind of looked at me and looked at those disaster that had unfolded in our life. I mean, I was a, an emotional wreck. My business partner, one of the kind of high up business, one of the high up employees who we really was a partner in the business.

[00:35:19] Levi Benkert: Good friend of mine had to lay him off couple of weeks after, actually four days after I laid him off, went into the hospital with a liver failure and died. I mean, it was just, he knew he had some liver problem but didn’t know how bad it was. And it was hard not to look at that and be like, Hey, the stress of the situation that I created, put this on him.

[00:35:39] Levi Benkert: And you know, that was just gut wrenching. Within a few weeks of that, my brother committed suicide. And had, you know, totally unrelated, just said, struggled with drugs for years and it kind of got to, it came to a head at that point. And so it was just this like deep, dark time in life. And my wife was like, let’s go do something different.[00:36:00] 

[00:36:00] Levi Benkert: Let’s go reset. And we were, you know, I remember talking about, maybe it was for six months or a year, but we moved to Ethiopia to basically go, we’d heard of a situation where there was some kids that needed an orphanage created around them. And so we launched a 5 0 1 Cun in the us, moved to Ethiopia, thinking this’ll be a side adventure thing that we’ll do for a little while.

[00:36:22] Levi Benkert: GoTo, it’s still running today. It’s a massive organization with a couple hundred kids. In two different, two different cities in Ethiopia. We’re not, as of about a year and a half ago, we’re not involved anymore. Handed it over to a new director, but just fantastic. We got this thing all, all up and running.

[00:36:38] Levi Benkert: Really challenging season. It was a tough thing to take on, but proud of the work that we did. But we ended up staying there for six years. Our oldest was eight and our youngest was two at the time we moved there. So we had three kids and then we ended up adopting a force while we were there and so our, we didn’t move back until our oldest was going into high school.

[00:36:59] Patrick Donley: Wow. And so [00:37:00] the nonprofit was, you were, were you pairing up orphan kids with widows? Was that the kind of the premise of it? Yeah, exactly. 

[00:37:07] Levi Benkert: So basically working in the local of communities, there were many widows who’d husbands had passed away. And unfortunately culturally in Ethiopia you’re kind of shunned.

[00:37:16] Levi Benkert: Like it’s like you, you just, it’s over if your husband dies. And so we were able to basically take them, put them through a training program, and then put them in a house with five or six children who we’d taken from the government orphanage, which was just a terrible situation. I mean, that government orphanage would, they’d scoot two bunk beds together and sleep five kids across the top and five kids across the bottom.

[00:37:38] Levi Benkert: I mean, it was just a heartless place. And so we were able to take those kids out of there and put them in what closely resembled a family. And it’s neat to see, I mean now several of the kids have graduated from college already. We’ve got a doctor and an engineer and like it’s really neat to see that it actually works.

[00:37:54] Levi Benkert: It’s a system that works. 

[00:37:55] Patrick Donley: That’s amazing. So you got back to your missionary roots. Was that something that you’d been [00:38:00] wanting to do when you were back in the States? Were you like, I want to get back to. 

[00:38:03] Levi Benkert: No, no, it’s certainly not I, it’s something that my wife always wanted to do and she was fantastic at it throughout the, gosh, 10 years I guess, that we ran that organization.

[00:38:14] Levi Benkert: Cause we ran it. So we were there for six and then ran it for another war. After moving back to the US throughout that 10 years, I mean I raised six milli, five or 6 million or the project both operating costs and built buildings and, you know what I mean? Just a whole thing. We were paying for college and everything for all the kids.

[00:38:31] Levi Benkert: It’s a somewhat similar skillset to doing real estate, but also just not me and not my, you know. So my wife did most of that and was fantastic 

[00:38:42] Patrick Donley: at it. But you also started, what, three or four different businesses while you were in Ethiopia? Separate from the nonprofit. 

[00:38:49] Levi Benkert: Yeah, so I was pretty much exclusively focused on the nonprofit stuff for the first two years, but then the last four years that we were there, I started several different businesses in [00:39:00] Ethiopia that are still going.

[00:39:01] Levi Benkert: Actually sold my shares out in 2019 with those businesses. But yeah, it was, we were the largest beef producer in Northern Africa. Had a, a 3000 acre beef feedlot operation where we were growing our own corn, and had at the peak had 3000 employees there. And so, yeah, started that from scratch. Literally like went to the, the Prime Minister and got him to, to give me land to build that on.

[00:39:26] Levi Benkert: Started a real estate development business there, builds apartments for the US government and all over Africa. So when I left that on a, a significant pipeline of properties under development, these were, you know, hundred to hundred and 50 million apartment buildings that we would build at lease. As soon as they were done, they would be leased to the US government for staff housing.

[00:39:47] Levi Benkert: So were you 

[00:39:48] Patrick Donley: partnering with business people in Ethiopia? Were you partnering with, it sounds like the US military was a benefactor. Like talk to us about that. How, how was it doing business in Ethiopia? I’ve gotta [00:40:00] believe it was complex and a lot of hurdles. I always felt 

[00:40:03] Levi Benkert: like I was born a hundred years too late.

[00:40:06] Levi Benkert: I have went through this season of life where I was reading like books about Rockefeller and Vanderbilt and just fascinated with kind of how things were Ethiopia at the time and, and lesser, lesser. So today it’s developing so quickly, but it was cowboy country. You could make the rules and which is a good and bad.

[00:40:26] Levi Benkert: It allows for developing things really relatively quickly, kind of scaling quickly. Cause they, they, they basically just hadn’t seen this before and we’re happy to, to be a part of. And it was fun to literally just go, I had never met the Prime Minister, but knew we needed his sign off in order to get that piece of land that I had found that the government owned.

[00:40:46] Levi Benkert: And I, I went and showed up every day for weeks at the little Guardhouse outside the Prime Minister’s house and would just wait there with a presentation and then the guards would just laugh at me. You know, I, I barely spoke to any Amharic and they [00:41:00] barely spoke any English. And, and every time I’d leave with a new, an updated letter, I would update the presentation.

[00:41:05] Levi Benkert: And, you know, here, here it’s again, here it’s again, finally there’s a stack of these on his desk at the Prime Minister. Told them when I showed up, let him in. I want to talk to this guy. You know, that would never happen here. You also wouldn’t need the Prime Minister’s signature in order to start a business in America either.

[00:41:20] Levi Benkert: But, you know, it’s kind of an interesting place. That said, I feel like I’m doing business on in easy mode now here back in Texas. It’s a lot simpler to get stuff done here. I bet. So you became 

[00:41:31] Patrick Donley: the largest beef producer in Ethiopia, is that 

[00:41:34] Levi Benkert: right? Yeah, in Northern ad, so there was one beef feedlot in South Africa that was bigger than us in all of Africa, but we, yeah, we were a massive operation.

[00:41:43] Levi Benkert: That’s incredible 

[00:41:44] Patrick Donley: that, 

[00:41:44] Levi Benkert: I love this. I love it. Yeah. Raised money from the Norwegian government was one of our big investors. Bunch of different private equity funds, all these kind of E S G focused funds. I mean, that was a, I can’t remember exact numbers, but I think we raised 55, between [00:42:00] 55 and 60 million to get that up and running and off the ground.

[00:42:04] Patrick Donley: Did your experience in 2008, were you shell-shocked at all? Were you leery of starting another venture or were you just like, I’m going to do this, this is like what I’m made to do? What, what was your thought process? 

[00:42:14] Levi Benkert: It took a few years, but really doing that nonprofit and also spending that time just connecting as a family.

[00:42:21] Levi Benkert: And I mean, some of our kids’ best memories are time as a family that we spent, we literally lived in a house that was, that had mud walls. In Ethiopia, our water would be off for weeks at a time and we had to, you know, figure out a store water and the electricity was very rarely on. And I mean, it was just a complete, you know, shock to the system and I think helped me get back to like, okay, I do want to build big things and I do know what I’m doing here.

[00:42:47] Levi Benkert: But yeah, it was c it was certainly tough and I kind of went into it slowly at first. Before, before scaling, 

[00:42:54] Patrick Donley: you mentioned some of the biographies you were reading. Which one was your favorite? I read Titan a few years ago, the [00:43:00] Rockefeller Ron Chernow book, which was amazing. 

[00:43:03] Levi Benkert: I love Titan. Yeah, that one was really, really good.

[00:43:06] Levi Benkert: The Corns Vanderbilt one is good and I’m blanking on some of these others. Yeah, Titan was one of my favorite though. I loved that book. I saw 

[00:43:14] Patrick Donley: an interview that you did another podcast and you were, you had, it was your bookshelves were in the background and like the front, the top row was all biographies.

[00:43:22] Patrick Donley: I could tell it was like Titan and I think there was a Richard Branson one shoe dog, the Phil Knight. Which I’m excited to see that movie, the Phil Knight 

[00:43:30] Levi Benkert: air. I know. Isn’t that looks really fun. 

[00:43:32] Patrick Donley: Yeah. Yeah. Very cool. Very cool. How was it coming back from Ethiopia? Was that a like reverse culture shock for you guys?

[00:43:40] Levi Benkert: Yeah, it was. It’s funny, our kids acclimated moving there partly just because they were young, moving back. I mean, it took a couple of years to adjust. It was hard for my wife and I and it was hard on the kids. I mean, they felt like they were aliens coming into, I mean, we put ’em all in a small private school.

[00:43:59] Levi Benkert: Four of ’em went [00:44:00] to the same school and they would come home at the end of the day. And I mean, I, it was tears. There was always somebody who was having a like existential crisis cause they felt so much like an outsider. That was a really tough transition. That took a long time. 

[00:44:14] Patrick Donley: Yeah, I can imagine. I lived a couple years in, in Vietnam and had the same experience coming back.

[00:44:19] Patrick Donley: The acclimation acclimating, there was no problem. But coming back was like, I don’t know if I belong here anymore. 

[00:44:24] Levi Benkert: Yeah, people who kind of were friends, you just don’t have that ability to connect in the same way that you did. It’s, it’s interesting. Definitely. So let’s 

[00:44:33] Patrick Donley: get into Harbor Capital. You, you’re back in the States after six years in Ethiopia.

[00:44:37] Patrick Donley: At what point do you start Harbor Capital and how did that come about? Why did you decide, you moved to Texas? Talk to us about how all of that unfolded. Yeah, so moved to 

[00:44:47] Levi Benkert: Texas because businesses that had started in Ethiopia was with a, a partner and he lived here. And so basically we decided this was going to be, you know, global headquarters for that business.

[00:44:58] Levi Benkert: And so, you know, we loved it. It’s [00:45:00] been a great, Austin is a good place to raise kids. It’s a great spot. And our two of our oldest two are in college and they’re staying here. They’re going to UT Austin right down the road here. So basically sold that business. Pandemic hit was trying to kind of figure out what had researched a bunch of different businesses.

[00:45:17] Levi Benkert: I’d been an LT investor in deals before and had a good friend of mine, Jake, that lives in Boulder. That’s very similar. He runs a very similar legacy Capital Partners. It’s called a very similar business to Harvard Capital. Much more, he’s kind of much more diverse. He does apartments and hotels and some industrial, and I, at one point, actually, he brought me on that as a consultant for a little while.

[00:45:38] Levi Benkert: They kind of helped with some HR things and get some structure and put some vision together for the business. And looking at it, I, I remember telling him like, this is a brilliant business, but there’s one part of this that’s very smart and that’s these industrial deals. Triple net leases, properties that you get to own and just, there’s not a lot of work to do with them.

[00:45:56] Levi Benkert: That’s where I wanted to be. And so I basically [00:46:00] started Harvard Capital in early 2021, did several deals by myself, kind of just using my own capitals and not raising money, and then started slowly to bring in, bring in money from outside LPs. And so we work now with, we’ve got 1400 LPs on our list for credited investors.

[00:46:18] Levi Benkert: We have just over, I think it’s like 1.1 million square feet of industrial properties that we own. So this is all since 2021. We scaled pretty quickly about 135 million of value across the portfolio. For the most part, buy and hold. We’ve gone full cycle on a couple deals, but that’s not our, that’s not our preferred strategy.

[00:46:37] Levi Benkert: So we buy Class B industrial in couple of markets that we know well. So San Antonio and Houston, we’ve got an eye on Austin in the DFW area, but those markets, just the economics don’t make sense as much as San Antonio and Houston do. We’re looking for runway and places where we can do extremely safe deals, put together massive reserve funds, just make [00:47:00] sure, make sure that no matter what happens here, we’re 

[00:47:02] Patrick Donley: in a good spot.

[00:47:04] Patrick Donley: What’s an ideal acquisition look 

[00:47:05] Levi Benkert: like for you? We’ve made a lot of money buying vacant properties and basically negotiating the heck out of the purchase so that we know we’re getting the best deal possible. And then leasing, you know, being patient and leasing it to Best is for, and we’re negotiating one right now that I’m really excited about.

[00:47:22] Levi Benkert: Where best is when we can lease to a publicly treated company on a long-term stable lease. We add significant value by doing that. And then just do you know, relatively light tenant improvements. Sometimes we just give them a tenant improvement budget. We’re like, here’s a hundred thousand dollars. You can do what you want to the property.

[00:47:41] Levi Benkert: You know, a hundred thousand dollars, maybe a free rent or something. That’s for the most part our bread and butter. We do multi-tenant and single-tenant properties and so both seem to work well. Do you prefer a single tenant? I do. From a simplicity standpoint, you kind of have this big push where you go get it full and negotiate and [00:48:00] then you sit and, and we have one building we bought at the end of 2021, sat vacant for seven weeks and then leased it to a government entity and they just actually, I have not been in the property since at they’re 17 months or something into their lease.

[00:48:15] Levi Benkert: They take care of it and they pay us rent. And we’re at a fantastic cap rate where if you buy something stabilized, you might buy at a, today might be a seven cap. We’re Austin able to stabilize at a 10 by just taking that initial lease up risk. And if you know, I mean, we always joke, we’re an inch wide and a mile deep into the markets.

[00:48:33] Levi Benkert: We know, we, we don’t know. You know, somebody asks me about a, what do you think about this hotel investment? It’s right in your neighborhood. I’m like, I have no idea. I don’t, I don’t know, you know, should you buy this Starbucks? Maybe. I don’t know. It’s a good deal. I don’t know. But if you want to talk about some, you know, vacant building in our neighborhood and it’s an industrial building, I, we know everything there is to know about these buildings.

[00:48:54] Levi Benkert: You know, very, very little do we buy, very rarely do we buy an asset that we didn’t already know [00:49:00] about for some reason or another. We’re always just kind of tracking what’s out there in the market. 

[00:49:04] Patrick Donley: 2021, you started how, and you’ve got what, 135 million roughly of, of real estate. How did you manage that and scale that kind of growth?

[00:49:15] Patrick Donley: How did you manage that kind of growth so quickly? 

[00:49:18] Levi Benkert: Family office connections really helps a lot of, kind of super high net worth a hundred, 200, 300 million connections that have trust and here’s what I know how to do and trust the vision just over communicating and then you end up with word of mouth.

[00:49:33] Levi Benkert: And so, I mean, I think right now we have about five times as much equity capital available as we do deal flow. And that’s, you know, just this very basic formula that gets you there of, of doing what we say we’re going to do. We always under promise and over-deliver in every possible way that we can. We avoid capital calls like they’re the plague.

[00:49:54] Levi Benkert: You know, and over capitalize deals right from the front and you end up with, [00:50:00] I mean, it’s funny, we had an investor recently that did $50,000 into three of our deals and then, you know, was. We’d done call, I’d done calls with him, asked him a little bit about his work and you know, he talked a little bit about it, but I did not understand that there was a lot more money there and that he was really just trying this out and the third one and we had deal come out up just last million.

[00:50:23] Levi Benkert: The next one’s 

[00:50:25] Patrick Donley: is fun. And his initial investments were what, 50 or so thousand you said? Yeah, 

[00:50:31] Levi Benkert: $50,000 into three deals and then 10 million. 

[00:50:35] Patrick Donley: You speak really highly of your team on, on Twitter. How have you gone about like finding and attracting top people? I don’t think 

[00:50:42] Levi Benkert: there’s a science to it. We have a fantastic team, but we’ve also had to let some people go.

[00:50:48] Levi Benkert: That just didn’t end up being a fit. And sometimes we’ve had to let people go because the business changed so quickly and they were great for where we were and not great for where we’re headed. I always, Michael [00:51:00] Gurley and I talk about this, have talked about it a few different times that like whenever someone says the business is a family, it’s a red flag because it’s not a family.

[00:51:07] Levi Benkert: Like you can’t fire your family, but you can fire a team member who’s not taking the team to where it needs to go. That said, man, we have landed with this core team of people now who are just the best of the best and I really believe we can scale the next five years with this core team and that’s just fantastic and I love it.

[00:51:29] Levi Benkert: Yeah, it’s been really fun. How do 

[00:51:31] Patrick Donley: you align your, are you investing in each deal? Like are you, are your incentives aligned with the LPs? 

[00:51:38] Levi Benkert: Yeah, we always put money into every deal that we do and as much as possible. Boston, that’s 10% of the capital that’s raised comes from Harbor Capital. And yeah, we try to make sure that we’re, we’re aligned as much as we can be.

[00:51:51] Levi Benkert: I don’t know if you know much about 

[00:51:53] Patrick Donley: our podcast, the Investors podcast, but we started with, it was called We Study Billionaires and you know, studying Warren Buffett

[00:52:00] and Charlie Munger. And I saw you mention that Howard Marx, who’s a pretty famous value investor, is now getting in involved in Texas industrial real estate.

[00:52:08] Patrick Donley: You tweeted about 

[00:52:09] Levi Benkert: that. Yeah, to the ban of my existence. I mean, literally we’re in contract on an, on an asset right now that we found off market and we always go, do you know kind who are our neighbors? And go figure it out. And there’s a mirror asset that’s not directly across the street, but a little bit down.

[00:52:25] Levi Benkert: You can see it from our property that was closed in December of this last year. And was Howard Mark’s, you know, Oak Tree Capital buying, it’s a, it’s a little scary because on one hand it’s a validation of our thesis and it’s great, but man, the amount of capital that they can put to work is just staggering.

[00:52:44] Patrick Donley: Absolutely. I wanted to switch here and talk about your short-term rental that you built and the tiny house also are those are on the same property, is that right? Can you tell us about that 

[00:52:54] Levi Benkert: same property? Yeah, and that’s been my wife’s kind of fun project that she’s done. We [00:53:00] bought almost two years ago now a property in Wimberley, which is about 40 minutes outside of Austin.

[00:53:05] Levi Benkert: Cute little town that’s got a downtown with the river that runs through there and restaurants and stuff Like. It’s a great, you know, if you’re in Austin and you want to get out, like this is really the closest little vacation town outside of town here. We bought in, gosh, I can’t remember what year it was, I think it was, anyway, two years ago.

[00:53:23] Levi Benkert: Just about two years ago. So yeah, 21 bought a, a house that really needed a lot of work and it took us a year to rebuttle it. My wife is her little passion project that she has on the side, and we’ve got this contractor that him and his two sons are, work out there all the time, completely remodeled the house, put a swimming pool in, and then put that on Airbnb.

[00:53:43] Levi Benkert: And it’s done extremely well. I mean, it’s constantly full and price ranges from like 600 to $2,000 a night and it’s, so it’s on 10 acres and then it’s weird. So it’s kind of a hill and the, there’s a quarter mile driveway that goes up. We basically put a second driveway in and are now working on [00:54:00] this tiny house, which has been a fun little side project here.

[00:54:03] Levi Benkert: It should be done, I don’t know, it’s been six weeks away from being done for the last 10 weeks. So we’ll see if it really is six weeks away from being done, but it’s getting pretty close. 

[00:54:12] Patrick Donley: And that’ll be a separate rental from the, the main house. 

[00:54:15] Levi Benkert: Completely separate. So the, the main house sleeps 11. So the main I, you know, the idea there is it’s kind of families or girls getaway, a guys trip or whatever this is, is only, you know, it has one king size bed.

[00:54:27] Levi Benkert: That’s it. And so really this is competing with like the high end hotels in Austin. It’s on the side of a mountain. So there’s this beautiful view and say tiny house. I don’t know that it exactly qualifies, it’s like 650 square feet, but it’s a, you know, kitchen, living room, dining room, kind of all in one, and then a bedroom with a bathroom.

[00:54:47] Levi Benkert: but everything is just high end, really well done. And then outside the bed, outside the bedroom, there’s a, like a porch here, a covered porch area that has, there’s a bed out there that’s like, you can [00:55:00] go, you know, a lounge day bed kind of thing. And then an outdoor shower. And an outdoor bathtub out there.

[00:55:05] Levi Benkert: And then the whole, you know, the whole thing opens to the valley, but then there’s a curtain you could close there, and then a, a door out the back that goes to a little swimming pool out in the back. So we really kind of went high end with it. The thesis is, is we should be able to rent it for like $700 a night and fill it up, but we’ll see.

[00:55:21] Patrick Donley: That’s really great. And who designed it? Didn’t you hire somebody from w where were they from? 

[00:55:27] Levi Benkert: From Ukraine. So found on Upwork, a Ukrainian architect that had fled Ukraine and was living in, I think in Georgia and basically just trying to get work online. She was fantastic architect. That has worked really well.

[00:55:42] Levi Benkert: And so, yeah, literally my wife and I would just sketch out ideas and send them over and then would get these just beautiful renderings back and we’re moving things around and stuff. But as we went, it’s fun. Not all states are like this, but in Texas, if you’re outside of an incorporated city, you need a development permit that says you’re going to build something there.

[00:55:59] Levi Benkert: But you [00:56:00] don’t need a building permit. You don’t need something that actually, like no one reviews building codes whatsoever. So I’ve got a fantastic contractor, so everything is safe and done really well, but you know, no one’s out there kind of making you put in, you know, handicapped ramps and different things.

[00:56:16] Levi Benkert: Are you on a septic system or had had put a new one in, which is quite expensive. That was more than I had budgeted for, but , it’s worth 

[00:56:23] Patrick Donley: it. Do you have more plans to do more of these or is this a one-time deal and you’re 

[00:56:27] Levi Benkert: done? I don’t know. I not on that property. This maxes out kind of what you can do there, but certainly would love to keep doing it.

[00:56:36] Levi Benkert: I don’t know. I’ve got my eye on the neighboring parcel there. That’s vacant. Let’s see if I can buy that. It’s hard because we’ve got this just wonderful contractor that I completely trust and does such good work. I don’t want to see him go work for somebody else. So , we might just, we might just do another one.

[00:56:52] Patrick Donley: Do you get up there often? Are you pretty involved in managing it or is it mostly your wife? 

[00:56:57] Levi Benkert: One of us is out there at [00:57:00] least twice a month, but not super often. We get techs, we’re on like a group chat with the contractor, Antonio, he’ll send us picture leave. This morning he was sending us the back splash tile, like, is this how you want it late or is it, you know, is it the other way?

[00:57:11] Levi Benkert: And so 

[00:57:13] Patrick Donley: I want to wrap up here. Leva, I’ve got a ton more questions here that we didn’t even get to at all, but I will want to do this quickfire round if you’re up for it. No, let’s do it. So number one question is, will Grant Cardone go bankrupt in the next three years? I’ve 

[00:57:27] Levi Benkert: often wondered this man, that fee system, the way he’s got stuff set up, I’ve look, I’ve reviewed a couple of his deal and there is one clear winner and it’s him and I just can’t believe that people are funding that madness.

[00:57:41] Levi Benkert: Will he go bankrupt? I doubt it because I do think he’s done well. I kind of siloed maybe some of the projects will be a total loss. He’s overpaid for a lot from the numbers I’ve seen. Maybe there will be some total loss projects, but I think he’s built a very efficient fee machine that he’s hardly in the real estate business.

[00:57:58] Levi Benkert: He’s more in the, you know, in the [00:58:00] fee business and people don’t quite understand that’s the value of the platform that he has and the money that he can generate off of how many people just blindly follow what he’s doing is amazing. Not quite the, the rapid fire answer, but that’s my long answer. What’s 

[00:58:14] Patrick Donley: What’s your most gifted book?

[00:58:16] Levi Benkert: Most gifted book? Essentialism. Super, super good book. I need to go read it again. I’ve read it twice and I need to go back and do it again. Just this idea that you can basically focus on the things that really matter and are really important and just allow other things to like, I’m just not going to do that.

[00:58:31] Levi Benkert: Like just the art of saying, no, not interesting, doesn’t get me where I want to go. So no, I’m not going to do that. 

[00:58:37] Patrick Donley: Yeah, I saw that on your bookshelf. I thought that was one of ’em. because you had a, you had a slew of essentialism and there was another, another stack of books that I couldn’t tell what the book was, but 

[00:58:47] Levi Benkert: you probably saw it.

[00:58:48] Levi Benkert: So The Essentialism, there’s a bunch of those up there. I wrote a book in 2012. And I have a bunch of ’em on my shelf. That’s funny. I didn’t even think of that. I’m sure you could see that up there. Cause there’s a bunch of them. It’s a gr, it’s a green book. Not the book [00:59:00] I would write today. I feel like I was a very different person at the time.

[00:59:02] Levi Benkert: But that book was about the kinda journey that our family went through in Ethiopia moving there and like what that was like to just kind of go move out in the middle of nowhere and start an orphanage and the struggles of local governments and working with local people and learning a culture and not knowing the language and stuff.

[00:59:20] Levi Benkert: Is it available on 

[00:59:21] Patrick Donley: Amazon? 

[00:59:22] Levi Benkert: It’s on Amazon, yeah. What’s it called? It’s called No Greater Love. Again, I just, not the book I would write today. So , I don’t really recommend it. It was funny. It actually did really well. At first it was on the Amazon top best sellers for memoirs and it was like one in three, like the kindling regular version.

[00:59:43] Levi Benkert: For like two and a half months. I mean this thing was selling like crazy, like it sold like 15,000 copies or something in the first, and then Amazon changed their algorithm and literally the next day I checked and it wasn’t even in the top 100 anymore. It was just gone and sales just went like completely drop.

[00:59:58] Levi Benkert: Yeah. It’s amazing how, [01:00:00] how much it’ll drop. 

[01:00:01] Patrick Donley: I saw on YouTube there’s like a maybe a reading of it. Was that a chapter or there’s something on there? No Greater love that is. 

[01:00:09] Levi Benkert: Yeah, so there was, the publisher that we worked with did get a company that basically did a audiobook version, so it’s on Audible too.

[01:00:17] Patrick Donley: I wanted to hear this one from you. What’s a startup idea that you know would crush it, but you’ve never got around to launching it? 

[01:00:23] Levi Benkert: This is a tough one, man. I don’t know. It’s funny. I actually score really low on the like creativity. I’m not like my wife has a lot more, she has a whole bunch of ideas that she’s always got going.

[01:00:36] Levi Benkert: I’m much more like, here’s how I can hear somebody else’s idea and figure out how to actually make, turn that into action. And I have a very low like threshold for like what go time is, and it’s it go time. I can go make it work. I do think there’s a lot of potential in doing secondary LP transactions and creating some sort of platform where [01:01:00] LPs basically who’ve invested in private equity deals of real estate deals could go and say, Hey, I want out of this thing.

[01:01:06] Levi Benkert: Does anyone want to buy it? Here’s all the updates, here’s all the financials. Here’s everything that we’ve gotten so far. Does anyone want to buy my position? I need some money. I, you know, it often happens that, you know, people are kinda, they have a bunch of cash and they invest and then later it’s like, oh my gosh, now something changed in life.

[01:01:22] Levi Benkert: My wife died and I needed cash out. 

[01:01:24] Patrick Donley: And that platform, a platform like that doesn’t exist right now? 

[01:01:28] Levi Benkert: Not that I have found. I mean obviously it’s just full of deeper. I get into it. It’s like, I don’t know if videocon could exist. It’s full of issues because when you don’t have direct access to the GP to tell you exactly how things are going, most GPS would be like, that’s not my job.

[01:01:43] Levi Benkert: I’m not going to facilitate this whole thing for you. There’s questions, there’s to kind of, maybe the deal’s done really bad or maybe it’s done well, it’s tough to understand. 

[01:01:51] Patrick Donley: I think you had an idea that I’d liked it was like buying land outside of like a major city, I don’t know, 60 miles out and just sitting on it.

[01:01:59] Patrick Donley: An [01:02:00] RV concierge, you know, clean the RVs, like storm ’em 60 miles out, drive ’em into the city when the people are ready for ’em. 

[01:02:07] Levi Benkert: Yeah, that one’s just, we were looking at these kind of industrial outdoor storage and seeing what people are paying for RVs, storage close into town and how much cheaper land is way out.

[01:02:18] Levi Benkert: And you have somewhere like Austin where, you know, Austin and San Antonio are only an hour apart from each other, both massive cities. And you could literally just get some land that’s dirt cheap, really, really cheap, right in the middle and do something like that. I, yeah. Not the business for me though.

[01:02:33] Patrick Donley: Not part of the essentialism. That’s right. That’s right. Un essential. Last one here, what does success mean to you? 

[01:02:40] Levi Benkert: Man, that has changed a lot over the years. I have been just endlessly driven for forever, as long as I can remember. And over time I’ve started to kind of, you know, I mean, it’s weird. Kids are getting older.

[01:02:52] Levi Benkert: My youngest is 13, two of them are gone, you know, in college already. And I look back and I don’t remember much of the kind of business successes and millions of dollars and I’ve had in the bank from deals that have gone right, or ones that have failed. But more the, you know, time that I was able to spend with my family and the kind of successes that they’re having in life.

[01:03:13] Levi Benkert: Certainly much, much more important. And I don’t want to kind of die and ha and then then, or you know, get on my deathbed and then realize I wish I had spent more time there. 

[01:03:23] Patrick Donley: So you’ve got two in college and two still at home? 

[01:03:26] Levi Benkert: Two at home. Yep. 16 year old and a 13 year old. So only one non-driver left in the house. So

[01:03:33] Patrick Donley: And is that the one that play, you’ve got one that plays chess, I saw? 

[01:03:36] Levi Benkert: Yeah. Our youngest 13 year old plays chess and just loves it. Yeah, we, her and I were playing a whole bunch of games back to back last night. 

[01:03:44] Patrick Donley: Cool. Levi, this has been really fun. I really appreciate you taking the time to talk with us today.

[01:03:49] Patrick Donley: Really enjoyed hearing more about you. So many great adventures. I’d love to maybe have you back on, because there’s literally half the questions I didn’t even get to. So for our listeners that wanted to get in touch with you or learn more about you, what’s the best way for them to do that? 

[01:04:01] Levi Benkert: Twitter. @Levijameshere it’s my Twitter handle.

[01:04:05] Levi Benkert: Harbor capital is harborcap.com. We’ve got a place where you can sign up to start seeing our deal flow on there. Get to know us and we can get to know you. Yeah, I spend time on Twitter weirdly, even though it’s kind of a strange place. 

[01:04:19] Patrick Donley: It’s a love-hate relationship. 

[01:04:21] Levi Benkert: It is, absolutely. 

[01:04:23] Patrick Donley: Levi, this is great.

[01:04:24] Patrick Donley: Thank you so much. I really appreciate it. 

[01:04:26] Levi Benkert: Yeah, thank you. 

[01:04:28] 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. 

[01:04:34] 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.

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