Episode Transcript
[00:00:00] Speaker A: Foreign.
[00:00:13] Speaker B: What'S up Victors? Welcome to this week's Victory Show. If this is the first time you join us, I'm Travis Cody, bestselling author of 16 books, and I've had the privilege of helping hundreds of business consultants, founders and entrepreneurs write and publish their own best selling book as well. During that journey, I've discovered a really fascinating pattern. A lot of businesses hit a revenue plateau, usually around about a million bucks a year, and they struggle to break through it. So on this show, I sit down with some of the world's most successful CEOs, leaders and business owners to uncover the strategies that they use to overcome those revenue plateaus and scale their business to new heights. And more importantly, how you can do the same. So get ready for some deep insights and actionable takeaways you can implement in your life and business starting today. And today I'm super excited to introduce a guest who has been mastered the art of turning overlooked opportunities into major wins. Benjamin Spiegel is a seasoned special situations investor with a knack for identifying hidden value in commercial real estate, corporate credit and private equity. Over the past decade, he successfully managed and deployed over $500 million in capital, proving time and again that the right strategy can transform undervalued assets into powerhouse investments. And we're going to get into that story because it's awesome as a as the founding general partner of Redwood Capital, Benjamin leads investment strategy and business development, making waves in the industry by restructuring businesses, acquiring distressed assets and delivering impressive returns. And his track record speaks for itself. Whether it's revitalizing companies emerging from bankruptcy or driving high value exits, he knows how to create real, measurable growth. Before launching Redwood Capital, Benjamin honed his skills at top firms like DG Capital, Cedarview Capital and Barclays, where he consistently delivered results and outpaced the market. And he also serves on advisory boards for REITs and startups, helping guide the next generation of high growth ventures. So get ready for an insightful conversation on smart investment, smart investing, strategic decision making and how to spot opportunities others. Ms. Benjamin, thanks for being here today. I've been waiting for this one. Because you have such a fan, you have such a fantastic journey of where you started and where you've gotten to. So let's get into that. Let's go back to the early days of your career. Let's walk the audience through when you got out of college and was starting where, where you ended up and what you were doing.
[00:02:25] Speaker A: Yeah, so I landed a job at Barclays Capital, which is an investment bank I served a unique role in that I was structuring very bespoke credit instruments to ultra high net worth individuals that owned major companies or sports franchises. So I really act as an intermediary between the wealth management platform and the investment bank.
Really trying. That's where I got my, I honed my skills in, in terms of just simple underwriting of comp analyzing companies and that's really where I was able to see, start seeing what successful companies had in common. What, what the real themes were that created profitability and more importantly sustained profitability. So I was, I did that at Barclays for almost two years at the, at that point I was fortunate enough to get a job on what's called the buy side working for hedge funds. I moved to a firm called Cedar View Capital where they invested primarily in only, only private companies but their debt instruments, leveraged loans or high yield bonds. Whether it was a private equity firm buying a new company, what's called an lbo or they were doing an add on acquisition or something called a dividend recap which is where they would refinance their existing debt with a larger facility and pay themselves the distribution. So was there for another couple of years and really honed my skills even more in terms and that's really where I started to realize the value of relationships, how important relationships are in almost any business but especially when you're dealing with illiquid assets and that don't trade electronically, they trade over. You trade by appointment. And starting to realize that how important getting that first call was in terms of being able to generate opportunities. And then my career went on further.
I, I, I extra I grew even more from what you could call vanilla, more vanilla investing to more special situations which is another word for bankruptcies and restructurings, stressed and distressed situations. Loan to own which where we would buy.
[00:04:41] Speaker B: So the, the technical term for that was special situations. Yes, I love that. But what a good way. When you're like so if I'm an investor and you're going like hey we're going to go buy this company that's in bankruptcy, I might go, I don't know. When you're like hey, we got this amazing special situation, suddenly it sounds so positive. I'm like yeah, I went in on the special deal. I like the phrase vanilla investing. You should write that. That's your first book right there. The Secrets of Vanilla Investing. So you mentioned in your first couple of years working with Barclays that's when you really started to see what it was that made businesses profitable and More importantly, what kept them profitable? So can you share two or three things that as an analyst that you could look at a business right away and know whether or not that they were going to continue being profitable or, and at the same time, like were the things you could look at a company that seemed like it was doing really good, but then you, it would go, oh man, you know, in two years this company is going to be in trouble because of X, Y, Z.
[00:05:33] Speaker A: I'd say it really comes down to two things. One, being some type of recurring revenue source doesn't have to be a software as a service, contractual revenue, but it has to have some type of reason to exist. Is there a reason to exist? And then also I would say kind of moat around it is the business what kind of like what, what competitive differentiators that this business have that make it special? Why and why would, why would somebody choose this business or this business, products or services over someone else? And a lot of times it's, it's not always what you think.
It could be just a company spending an excessive amount on advertising to just get the eyeballs to get people to their, their business or their goods or service rather than the actual quality being better. So it's really every business that I saw had some type of niche and I, the businesses that I was coming across were already at a point that had generated some level of stability.
But we're still. Thing is I, I, so I have no experience really investing in public companies. Any company I've ever advertised was always private. I enjoy that a lot better because with a public company everyone and their mother can look at their financials and see what's going on. And that's why I truly believe that really the, the only investment opportunity, of course it's important to have some allocation to public equities or index funds. But I truly believe that the only real outsized returns on a, on a long term basis are made in private investing.
[00:07:18] Speaker B: You know what's interesting is probably eight or nine interviews ago I was speaking to somebody who was running his own hedge fund and his prediction was that over the next 10 years he said that we're going to the rise of really huge private companies was going to explode. And he said you were going to see fewer and fewer IPO CEOs and fewer and fewer even some of the bigger public companies were eventually going to go private. And he said that was kind of the wave of the future where business was going. So it's interesting that you're also saying that. So when you got into distress and you started working in special situations.
Were there things that surprised you about I guess, that particular niche of investing?
[00:07:55] Speaker A: Yeah, I mean basically when you get to this level, that type of investing, where to even be a participant, you have to be what's considered a quib or a qualified institutional buyer. Which basically means at any given time you're managing no less than 100 million in liquid assets. You think that most people are going to be pretty smart and to and to get a competitive advantage is going to be very difficult. But for example, a lot of situation I like to bring up is the. The bowling alley. The largest bowling alley chain in the United States. AMF Bowling. Or now it's called Bull Marmf or they have a name, Bolero. You know, I'm sure most people watching this podcast have, have seen them from one place to another. I think there's about 650 of them throughout the country. So this opportunity came across my desk. There was the second this the at the time it was just AMF Bowling. It hadn't merged with Balmore, but it was in bankruptcy for the second time in the last 10 years and no one really wanted to touch this thing with a 10 foot pole.
[00:09:01] Speaker B: How many locations did they have at that point?
[00:09:03] Speaker A: I think 3, 50. And basically there was a plan that was starting to get put together to our ideas were murmuring about Baltimore and am this, this boutiques much smaller bowling alley called Baltimore. At the time they had eight or nine centers. One was in the East Village in Manhattan, one was in Times Square and they had about six or seven others across the east coast that had a much more niche strategy which was like really high end customer focused and also adding in lots of ancillary offerings. Whether it was hangout space, really nice bars, TVs, making it a gathering that had bowling, but that not being the sole and dead all people, it was.
[00:09:46] Speaker B: A social space that just happened to have bowling attached to it.
[00:09:49] Speaker A: Exactly. So what ended up happening was this company as I was able to work with the plan of reorganization to have Balmore and AMF merge while, while AMF was in bankruptcy and have Balmore, the CEO of that company take over the combined company upon emergence from bankruptcy. And it's, it's, it's very difficult to put a plan of reorganization together and to get it passed by the creditor committees and take it through bankruptcy. But on the other end, even once it emerged from bankruptcy and we're trying to secure the exit financing just because Bolling had a stigma like there's no, there's no money.
[00:10:29] Speaker B: I was going to say as investor I don't think of a high end investment of being a nationwide bowling chain.
[00:10:34] Speaker A: Exactly. It's a good example because a lot of times the best investment opportunities are disguised or they're diamonds in the rough. They don't necessarily look good at first glance. If they did like a company like let's say Nvidia, like the AI leader obviously people have done very well in that but it's, it's that it's considered, that's considered a sexy investment. These, these opportunities that I'm. I've made my money in over the years are the utter opposite or the most unsexy investments you can imagine. They do not look attractive from the surface. People are not drawn to them. If anything they overlook them or they're misunderstood or there's a stigma. And there were so many little levers to pull to, to really bring this company to glory. For example every bowling alley, every AMF was opening at 8 or 9am in the morning catering to like the old lady league selecting they would want to come in at 9am and ball but then they would sit vacant for four hours until the next you know until anyone would even show up and then they wouldn't even get even. They wouldn't really get busy till four and really nobody. When this company emerged from bankruptcy it was doing about 65 million in EBITDA which is earnings before interest taxes, depreciation or amortization which is just a proxy for profitability revenue minus expenses. But nobody realized that if they just start they stopped opening at 8am every day and they opened at 12 or 1pm that was it. They were able to debt with double their earnings.
[00:12:06] Speaker B: Just that's crazy. Just by changing opening five hours later you now have double profit or earnings.
[00:12:11] Speaker A: Exactly.
[00:12:12] Speaker B: So when you were looking at to do it as a deal is that what you. Is that one of the things you uncovered is you were like why are these guys opening at 8am if we just opened at 1 we would and is that what made that then for you go this is actually a really good investment because people aren't seeing like what their actual problem is here.
[00:12:27] Speaker A: And then there was also there were a myriad of other problems. There was leakage every the bartenders were stealing or they're pouring their body overpowering. Well overpouring. Nothing's measured. Nothing.
And just a ton of bloated expenses. Tons of inefficiencies. Too much, too many people on the payroll just and really not negotiating favorable tax Treatment with the, with the municipalities that the locations were in. And there was just so much room for incremental expansion just on, that's just on the margin side. And but then on top of that we started realizing if, if we could implement a strategic capital expenditure plan and get and really identify the top maybe 15 to 20 locations in the, the highest, the highest median income MSAs that had the most potential for growth. You know, if we put 2, 3, 4, 5 into these centers, what could we do with them? What, what would our return on an investment be? And it became ab clear that the returns on invested capital for those capital expenditure programs were just enormous. And long story short, the company wanted to emerge from bankruptcy. We were bought the debt and then we were also buying the equity. What's called the post reorg private equity in the secondary market. You can't go online and find this stuff. It's, it's traded over Bloomberg terminals and it trades by appointment on the phone. But we were able to get in at about, about a price of $5 a share. And roughly four years later we were bought out by a private equity firm called Antero's Group for the equivalent of about $82 a share.
[00:14:09] Speaker B: That's just a bit slight bit of an increase. Was at that point was that in your career? Is that one of your biggest deals?
[00:14:15] Speaker A: It is, it was, yeah it was, it was what was one of those deals that don't come around that often.
[00:14:22] Speaker B: So did anyone at any time come to you and being like Ben, that was a genius. No one else saw this deal but you did or where they were just like here's your, here's your commission check and good job.
[00:14:31] Speaker A: Well, I mean I was, did not do this alone. There was. Credit Suisse was highly involved. They provided the majority of the exit financing. There was another private equity firm, huge called Cerberus. They played a huge role as well also on the bringing, helping bring in Tom Shannon who was the CEO and working out all of the compensation agreements. Because another thing is incentivization is every everything. And having skin in the game is also very important. A lot of people and especially in real estate, they, with their property managers, they just, they look at them, they want to pay them as little as possible and want them to do the.
[00:15:09] Speaker B: Spectrum as possible and they want five star treatment.
[00:15:12] Speaker A: Exactly. And that's just not how the world works. That's why even private companies that are owned by private equity firms are owned by more sophisticated individuals. You, you'll often, you'll see that they have stock Options, even though it's a private company, you're able to implement stock option plans even more. So I'm a firm believer of what's called esop, employee employee stock option plans. Because I just believe that any amount of potential profit or even ownership of the company, of course it's non control that you're giving up. If your employees wake up every day and they actually, and they, they know that they have, even if it's the most minute sliver, if they feel that they have a piece of ownership of a company, their whole attitude about their job and their work ethic is going to be dramatically different.
[00:16:06] Speaker B: Yeah. Yep. So that's interesting. You know, so I live in Las Vegas and we really have, we've seen the, as a lot of the resorts and the casinos have become part of big conglomerates, we've seen them trying to like essentially nickel and dime people one. And one of the things they did, which was really interesting is that in 2020 they use that as an excuse to get rid of all of their concierges. And if you've ever seen movies from like, you know, the 80s and the 90s, like some of these resorts, there's that, that high end concierge that can make magic happen and that is it that, that they're, they're guys that have spent their entire career here and they got rid of all of them. You can't find a concierge really now. And what's interesting is, is if you look at 2020 and you look at the reviews of these resorts, like the reviews have been just slowly going down and the reviews are getting worse and worse and worse even for like really big places like Bellagio and Caesar palace. And their marketing team are going. Well, it's because we got a younger crowd and they don't understand and whatever. And like the big thing is, is like it's just hard to find help anymore. And so it's interesting, like you were saying, right, that here they are now, they're like they want to pay the least amount of money and charge the highest bit of price and then they kind of are like complaining of like, why are people leaving us such bad reviews?
[00:17:12] Speaker A: That, that is not exclusive to just the, you know, the, the, the hotel and casino, the gaming industry, Vegas, I mean, that's everywhere. I mean even in like the RV park space. Yeah. But you know, you see, you see it, you know, you just, you see companies coming in, doubling, doubling rent and not making any upgrades to the service or the, or the product. The reviews are getting so Bad for some of these parks that they're having to change their name for the third. Third time in three years.
[00:17:43] Speaker B: Wow. That's their solution. We'll just rename ourselves someone something else and hopefully no one will figure it out.
[00:17:49] Speaker A: Well, they're trying to get away from the bad reviews, new website, you know, but it's not always that simple as, you know.
[00:17:55] Speaker B: Wow. All right, so what point then? So with the exit of the bowling alleys, was that sort of your, the, like the launching point for you to say, you know what, I'm going to now go off and form my own company and start doing this on my own? Or what was that process like?
[00:18:09] Speaker A: So, you know, that was early on. I think I was 24 at the time when I was able to.
[00:18:16] Speaker B: That was a good deal to pull off in your early 20s?
[00:18:18] Speaker A: Yeah, I stayed around for another couple of years and around that. But about that time around those years, I always wanted to, I knew about buddies that were investing in real estate and so I was always. I made a rule that I would take half my bonus money every year and buy a small building in, you know, the outskirts of Manhattan or New York City, you know, in the Bronx or right outside of the Bronx, more workforce, housing. So I did that, bought one or two buildings a year for the, for the next five or six years. And when I was given an opportunity to buy a much larger portfolio through what's called a non performing loan sale, and that's really when I had my breaking point and I had to make a decision. Do I continue doing what I'm doing now in my cushy Park Avenue hedge fund job or, you know, where I'm, where essentially I am still working for the man. You know, I'm, I'm, I mean I'm, I'm a W2, I'm an, I'm a trader and an analyst, you know, I'm getting compensated well. But you know, on that Baltmore deal, I mean I made out well, but my boss, that I was on my knees begging to do it, made 100x what I did. So, you know, that's real. When I made the decision that it was time to make a leap of faith and trust myself and go off and buy that portfolio and do this full time.
[00:19:34] Speaker B: What was that first year like leaving the cushy job to being, being, being the guy in charge of everything.
[00:19:40] Speaker A: I mean, it was a big ego check, A big check on the ego. I went from, like I said, working at a hedge fund, a cushy hedge fund knocking on doors and not, not so nice areas of town. I'll say.
Even though I had a property manager, I was still heavily involved. You know, I really had to roll up my sleeves.
And more importantly though, the best lesson that it taught me was just, it was the ego check and just coming back down to earth. Even though, even though I knew I was doing the right thing. Sometimes in these big cities, especially when you're in a small group of people, it's easy to kind of get complacent and just to you know, kind of go off and forget who you are.
So I want to emphasize that it was, it was, it was, that was one of the best kind of lessons that doing the buying this portfolio and then restructuring it and then selling it. And the only reason why I bought it was because I owned other buildings there. I knew the in place rents were, let's say a thousand a month. And I knew that through the section a government program they would pay me 1600amonth for the same exact apartment. So it wasn't rocket science. I like to keep things very simple really. The only variable was how long will it take me to get the existing tenants out, renovate the apartments to Section 8 standards and then get the new tenants in. We were able to exit that portfolio about a year, almost about two years after I bought it for a significant profit. And that's when I formally started Redwood Capital.
[00:21:17] Speaker B: Wow. And so what's the goal for Redwood now? Now that you're here, you're down the road, like what are you focused? Well and you know, I know part of it's the RVs, but where did you start? And as you've, as you've built your company, how is your sort of philosophy evolved?
[00:21:29] Speaker A: Usually when you're working at a hedge fund, you have a strict sector spoke focus, your metals and mining, you're in gaming. I was always a generalist and that I am much more of what's called a bottoms up analyst in that I'm cash flow based. I always factor big macro what's going on, the big macro, the interest rate, environment, currency rates, national debt. But I am an analyst that really tries to find investments that will perform regardless of broader economic conditions. I'm not holding my, holding my breath when the Fed is reporting what rates are doing or unemployment comes out. My investments need to be in a place where I'm able to buy them at such a discount and I have a very, very simple restructuring plan that I know it's going to work regardless of what happens on these broader economic Conditions and so, so when you were.
[00:22:31] Speaker B: In the hedge fund, did people look at you and think you were a little weird because you were a generalist?
[00:22:35] Speaker A: No, because there's a. I'd say most. Most. Even though most hedge funds analysts are sector specific. There are. It has become, it has become a little bit more normal to be a generalist. And, and that's really what I bring to redwood in that He. Even though our is real estate, we will selectively invest really in any type of situation where we feel we have an exorbitant competitive advantage over the other market participants. Whether that's inside information. Because don't forget in the, in the private markets there's no such thing as inside information like another, another, another bonus. So I will not, I will not invest. Something's like for example if the listeners like if something's listed online anywhere on LoopNet prexy firm opinion is. It's almost. It's not worth buying. It's just that. That's truly how I believe in that at least for me because I need to be able to offer my investors at least a 20 to 25% annualized return with very little risk. And you cannot do that buying things that everyone else in the world is able to see. You have to have some type of competitive advantage on the sourcing side to be able to buy it all like off market it.
[00:23:57] Speaker B: I love that that there, there's the title for your second book, Never Invest without Insider Information. That's going to be a bestseller. Because people be like what you're like. This is why the private market's the best.
[00:24:06] Speaker A: And you know, it's really crazy because I was actually, I was on the phone with a prospective investor out of Kansas yesterday and there's just, there is so much capital just sitting around because a lot of individuals and business owners, they believe that they're under the assumpt the false assumption that they need millions upon millions of dollars to invest in these things.
You don't be what's called an accredited investor. Which is the, which is guideline for what you need to be to invest in a. In one of these types of deals or my deals. You need to show a W2. You need to show income of only, only over 200,000 a year for the past three years. Wow.
[00:24:46] Speaker B: That's an accredited investor.
[00:24:48] Speaker A: Yes. And that's why a lot of people including myself believe there's trillions of dollars just on the sideline that people have in cash or they just have in index funds or bond funds. And because they don't even think that they would be able or had to have or even really nowhere to look to start investing in these higher yielding, more risk, more, more attractive risk adjusted return situations. But the reality is there is, that's why blackrock, Blackstone, all these big companies, they're putting together programs now to start making a big push to educate individuals that there are these opportun and you don't have to be worth millions of dollars to benefit from the, from, from these unique opportunities.
[00:25:37] Speaker B: Wow, that's fantastic. All right, so before we had had the call, you were talking about one of the things that's the most exciting part of your business right now, which was RV parks. But it wasn't just RV parks, was luxury RV parks. So how and when did that come onto your radar? And let's talk a little bit about the RV industry because I think most people, myself included and we had the conversation right there is, there's very much sort of a like a cliche view of what you think of as an RV park and how that is changing now. So that's the first off. Let's start like when did RV parks as an investment first pop up on your radar?
[00:26:10] Speaker A: Yeah, so back in 2021 I started investing in mobile home parks which are different from RV parks. They're actually, they're not mobile homes. I mean they can be moved, but they're never really actually moved. They're the physical structure. They're not on wheels. RV parks is where they're on wheels. People can drive them in and out. Yeah, dumb. I got, I started an invest. New York passed. New York State, you know, passed some pretty arduous laws around the time that I sold this portfolio. And it really kind of scared me into realizing I needed to diversify both from a geographic perspective into more business friendly or red states.
[00:26:51] Speaker B: Were the, were the laws around specifically real estate?
[00:26:53] Speaker A: So I mean I'll put was they. New York State came out and said that any apartment building that was six or more apartments that was built before 1979 is now officially considered rent stabilized. And now we the state are in control of how much you can increase the rent.
[00:27:14] Speaker B: Ouch. Yeah. When I lived in la, there was one. It was really interesting because you know, most people think of LA as like it's one city, but it's actually a conglomeration of like 12. Right. And I think two of the cities had rent control. And one of those cities happened to be right on the beach. And I remember in the building because I, I actually managed an apartment building for about five years and we ocean view and there was, there was, I just remember the guy because he was such a personality. He, he was, he was essentially the equivalent of Hulk Hogan, but in Italy. So he was an Italian wrestler from the 70s, hugely famous back then. And the reason I'm bringing it up is because he had a two bedroom apartment that he had been, he had moved in in 1974 and he never moved. He was, he was paying his rent was I think 500amonth.
[00:27:58] Speaker A: Well, why would he move?
[00:27:59] Speaker B: And right. And then like, you know, my, my, my apartment which was a one bedroom was 2,400amonth. And when I, when I moved, they put it back on the market at 3, 500amonth. And so this guy, you know, everybody's paying four or five, 6,000amonth for their apartments and he was 500amonth because it was re stabilized. Right. I think they were like, his thing was like he could go up 3%, spent a year and over, you know, 40 years, he went from whatever it was to 500amonth. You know when, when you're owning the building and you're going the apartment right next door, I'm getting 3, 500amonth and I can't raise this guy's rent or I can't get him out. Like yeah, that's painful.
[00:28:31] Speaker A: It's even more painful for the people that were just buying buildings. I mean basically it's, it's, it's caused the major New York lending banks to go bankrupt or to have to sell.
[00:28:42] Speaker B: Wow.
[00:28:42] Speaker A: And most recently the most recent kind of, of sale of loans backed by these rent stabilized properties was to can or Fitzgerald at somewhere at like 60 cents on the dollar.
[00:28:55] Speaker B: So I just want to like to show how big of a deal this was like for you. Like you were looking at the building and you're going, okay, I can get everybody out. And I know like the, the market rate of rents is this amount. So over a year I can get to this point. So you're basing all of your projections and cash flow off of that and you buy the building in New York, York changes the law and now all of your numbers are out the window because you can't, you can, can't do what you thought you were going to do.
[00:29:17] Speaker A: And then on top of it there's, it's, it's a borderline unconstitutional in my opinion. I believe it's the taking of private property. Do you really own a deed? If you can't control what you, if you can't control what you Want to charge for something or what, what the service is. But so that scared me into moving it to the Sun Belt. You know, that's where more growth was in general. Even though I'm not a macro guy, I believed that finding discounted investment opportun opportunities in areas that were experiencing more robust growth was a good plan.
[00:29:48] Speaker B: It's like Nashville.
[00:29:51] Speaker A: Yeah. More and more the Gulf coast also. But given my kind of contrarian thinking, I wanted to go to what's called secondary and tertiary markets. So not necessarily areas that were already popular, but maybe areas like that were on their way or in the early stages of becoming primary markets, as they're called. And so I bought some mobile home parks in and out, in and out around North South Carolina. And that's really when I first got. Because there's an overlap in the brokerage community between mobile home and rv, that's when I first got interested in the RV park space. And since then, I've really spent the past almost three years doing a exhaustive, borderline obsessive, deep dive into every minute aspect of this industry.
And I really have never found one that has excited, excited me as much as this one.
[00:30:46] Speaker B: Wow.
[00:30:47] Speaker A: I mean, just to kind of like what we were talking about the other day, I mean, so you got, just to rattle off some figures, you got about 13 million owning RV households in the United States. About one and a half million of those live in their RVs full time every year.
[00:31:01] Speaker B: About 10% lives full time. That's, that's amazing.
[00:31:05] Speaker A: And then every year about four or five hundred thousand new ones are sold. And post Covid, the average age of a buyer has dropped to the mid-30s.
[00:31:13] Speaker B: And that that was also the thing to me is just shocking.
My assumption still is that, oh, Most people are 65 and they're retired and they sell their house and then they use that to travel. But 35, I'm assuming a lot of that has to do with the digital remote work and digital nomads and a lot of, you know, people being able now to, as long as you've got a starlink right, you can work anywhere.
[00:31:32] Speaker A: And on top of that, I feel like there's been a confident, there's been a structural shift in American core society in that for the baby boomers, it was really all about just getting married and buying that single family home and then you reach that level of attainment that society accepted or you're an adult now. And I really believe, especially post Covid, that has been just completely shattered in that millennials could care less about either getting married or buying a home. I mean, it's also, I mean, just given the affordability, the houses are expensive, interest rates are expensive. Most millennials are choosing to, as I say, put their equity on wheels and buy an R.
Be able to be mobile and go ever wherever they want, whenever they want and really operate under more of you only live once mentality. And why be tied down to a certain town or a certain house?
[00:32:34] Speaker B: Yeah. Are you, are you familiar with Grant Cardone?
[00:32:36] Speaker A: Yes.
[00:32:36] Speaker B: He said something one time I thought was really interesting because he was getting some grief online because, you know, he likes to flex his, his big portfolio and everything. And, and somebody was like, dude, you don't even own your own house. Like you're renting, renting. And he, and he said, the quote that made stuck with me is he said, own what you rent and rent where you live. And he's like, because when you rent with your live, you're never tied to anything. So if something happens, you need to walk away. Like, you can just walk away. Or like his point, he's like, he was in LA for a while and he's like, I want to be in Miami. And he just moved. And he's like, I wasn't tied to my own house because I was renting. And I, I thought it was an interesting statement for somebody at his level.
[00:33:09] Speaker A: I mean, listen, I'm a firm believer I'd rather pay 20 grand a month in rent than pay to own my home and pay 10 grand in a mortgage. Because think about it, I mean, if you buy a house, let's say just, just to be, simply buy $2 million house, you put 500 grand down, you take a million and a half mortgage out.
That $500,000 is pretty much, unless it's, you're in a very specific areas I would consider dead money. It's just, it's, it's debt. And it's also, people think it's safe. It's, it's at risk if, if there's any kind of downturn in the market, as opposed to taking that 5, renting and taking that 500 and investing in a real estate deal where you can make 2x every four or five years and then do what's called a 1031 transaction, roll into another deal and not pay any taxes and just do that perpetually and have that 500,000 be worth 5 million in 20 or 30 years.
[00:34:08] Speaker B: Schwarzenegger talked about that's how he got started in real estate. In his biography. He said, you know, all my friends are saving to buy a house. And he's like, I saved up the same amount of money and I bought a. For an apartment building that had four units and I lived in one and rented three, and that covered the mortgage. And in a year somebody offered me double what I paid. So he sold it and he's like, and then I bought an apartment building with 12. And then two years later he sold that and bought an apartment building at 36. And then, you know, 15 years later, he owned half of Main street in Santa Monica.
[00:34:36] Speaker A: I mean, that, that the 1031 strategy is how the uber ultra wealthy are able to transfer money generation after generation without paying a dollar in taxes. Because let's say you take that 500,000 by the time you're 90, let's say it's worth 25, 30 million and you haven't paid a dime in taxes. When you pass away and your kids inherit, the tax basis resets to the market. So it's, it's a, it's one of the most widely used wealth transference mechanisms.
[00:35:10] Speaker B: I love it and. All right, so let's get back. Let's get to like, let's get back to our. Just not rv, but the luxury RV space. When did that come on? So you started looking at mobile homes and then RVs. And when did luxury come into that? Because that was to me was completely a new thing that I had never heard of before.
[00:35:25] Speaker A: The luxury.
It's pretty interesting because the word luxury. So luxury community, luxury rv, the bar is very low in the RV space for what's luxury? I mean, you saw that. You saw the rendering, the 3D view, you know, that maybe you could post after. But to give people and a good. Because a visual. It's very important to see a visual. But you know, basically I realized that there was this gaping, this large gap in the market for luxury rv, what I like to call communities because the RV parks that I'm investing in are not.
They're not. They're not on the beach usually, or they're not next to Disney World. They're in areas right up there close to a major, A major city. But it's usually they're not in the. The. They're not on the beach. Not u. Uber, uber expensive land. My. What I am doing is creating like what I would like a good way to kind of put it in and out is like luxury town home communities with all the amenities of what a town, a new town, luxury townhome community would have, but without the actual town.
[00:36:36] Speaker B: A gym, a pool, a Hot tub.
[00:36:38] Speaker A: A playground, pickleball court, the dog walk, the works, and control controlled entry safety. I, I mean it's crazy. 75% of RV parks, you can't even make an online, a reservation online. You got to physically pick up the phone and try to call them. It's the most inefficient.
[00:37:00] Speaker B: It's an antiquated industry still.
[00:37:02] Speaker A: Absolutely. And the reason that is, is 85% of RV parks are owned by single operator mom and pop owners. And a lot of times they don't have the wherewithal or the resources to, to invest back into their facilities to bring them to the level that it's not even what's considered an amenity in my opinion. Now it's a necessity, such as WI fi and cell service. Those are necessities.
And that's it just, it's not happening. So why are you, so why, why.
[00:37:39] Speaker B: Are you now like kind of doubling down on the expansion of the luxury RV space? Where do you think that's going over the next five to ten years? Years.
[00:37:46] Speaker A: Yeah. So I told you. So you have, I told you about the supply side, but on the demand side, you only have about 8 or 900,000 RV privately owned RV pads throughout the entire United States.
[00:37:57] Speaker B: 12. For 12 million. Yeah, for 13 million RVs. And there's only 900,000 spots.
[00:38:01] Speaker A: And remember, one and a half million live in their RVs full time. So there's not even enough RV pads for people that live in their RVs full time.
[00:38:10] Speaker B: Wow. Wow.
[00:38:11] Speaker A: Yeah. And like I said, the average age of these RV parks, there's about 16 of them throughout the United States and the average operating 10 years, about 40 years. So they're old. And like I said before, 85% are mom and pop operated. And there's just so many inefficiencies that if you're able to source and be able to create mechanisms for continual sourcing, to be able to build up what's called a deal pipeline of these smaller, what I like to say, lower middle market RV parks and enhance that them through amenities and better service and ultimately consolidate all of them together. But I mean by consolidate, bring them under one umbrella organization and benefit from economies of scale and then also AI like putting a chatbot on your website to be able to walk a prospective renter through everything about the asking questions about the rent, the fees, the location, how do I move all the way through making the reservation?
Just think about the margin and that's one less camp worker you need. And It's, I've seen $100 million plus asset owners in the RV space whose logos look like their two year old son drew them.
It's, it's, there's so much inefficiency. And also why I love it is because it's very difficult to deploy a large amount of capital at one time. The, the sweet spot, as I like to say in the law, is between like the three to $10 million range. All these institutions come in and they, okay, well the minimum deal size I can do is 20 million. That doesn't really exist. And if you're buying a $20 million E asset, it's already, there's not much value left to add. It's like a very wealthy family office buying it, you know, for current yield and then, you know, just holding it forever. But that's not what I do. And so that, that's, that keeps institutional capital at bay. So when you have a confluence of the 85% mom and pop own institutional capital not coming in, and then this gaping supply demand imbalance that's growing and growing and compounding annually, it just creates the perfect storm. If you're able to identify, even on top of that, specific geographies that are experiencing tremendous growth, but nobody's really talking about.
[00:40:35] Speaker B: I love it. That is awesome. Yeah, I'm like so excited about the luxury RV space moving forward.
It's so exciting to me. Look, you've been super generous with your time today. Before we leave, I got a few questions I like to ask everybody. So I have three final questions and, and then we'll, we'll call it a day. If you could go back in time and give your younger self one piece of advice, what would it be and why?
[00:40:56] Speaker A: It would be a little bit more patient. Be frugal and be humble. Sometimes when you have success at a young age, it gets to your head and you think that you really can't do any wrong.
But it's real, this business. It's, it's not necessarily about your performance. It's about staying power, it's about longevity. And it would really just be more frugal.
Always consider the time value money. You're gonna buy 10,000, you're gonna spend 10,000 on a Rolex. Now what could that $10,000 be worth 10 years from now? You know, so that's the way I like to think now.
[00:41:31] Speaker B: That's what I was laughing because I worked in Hollywood for 15 years. And if there's one place where people get insane egos, it's when they're 19 or 20 and they have a movie or a TV show pop and suddenly, you know, they're making a few million dollars a year to do it. And they. Everybody starts taking themselves most of the time overly too seriously and they actually believe that the hype. And most of them. That's why most of them flame out in spectacular fashion too. Right. Because they don't have any humility.
[00:41:55] Speaker A: All right, so what?
Not saving. Saving. They're not investing. They're. They're.
[00:41:59] Speaker B: And that's the other part. Yeah. They're burning through it. So what belief or mindset shift has had the biggest impact on your success and your happiness?
[00:42:06] Speaker A: I've. So it's real. A couple years I just, I started to like, really try to make things very simple. Have so many people pulling me in so many different directions. I started living by the mindset. What. How can I. What. What is the best thing I could do for my me, my. My family right now? And I don't have any kids. My wife. So how can I be the best husband to my wife? And I incorporate that into every decision I make in terms of when I think about doing a deal. Would my wife be happy I'm doing this or would she not be happy? I mean, obviously there's a little bit, you know, she. Her risk profile, you know, within reason. Really before that, I. I started looking at everything in not a black but in more of those terms of would this make my wife proud or not.
That mentality, I implemented that probably about two, two and a half years ago.
And that's how I live my life these days. Has really made.
Made me much happier, has made things simpler, has made us a better, you know, happy wife, happy life.
It basically we go. We have a phenomenal relate and just if things aren't good at home, it's very diffic difficult to keep them good anywhere else. So I wanted to really. You really have to have your house in order. So really just kind of having like using that as like a sniff test, you know, in my life into, you know, how I. How I run my business and how I. How I talk to other people, how I spend my time. I think that that was. That's been pretty impactful.
[00:43:40] Speaker B: Yeah, that's pretty fantastic. Last question is, what's the best investment you've ever made in yourself?
[00:43:45] Speaker A: In myself. So not necessarily monetarily, it.
[00:43:48] Speaker B: Nope. I'm bringing the good questions today.
[00:43:51] Speaker A: So I would say. I'd say the best investment I've ever made in myself is forcing me, no matter what, forcing myself to work out at least three or four days a week. Three minimum. Shoot for four to five. Because if I'm not not working out and exercising my body, everything else falls apart. I can't. I'm not sleeping. I'm not eating properly. I need to get to the gym three to four days a week and have a really routine.
[00:44:15] Speaker B: It's remarkable to me how many people I've come across, myself included. It's like, man, I'm having a really hard time sleeping. And then like, you know, do you exercise? I'm too busy to exercise. And then even if it's just an hour of walking a day, like just how that simple.
[00:44:28] Speaker A: 20 minutes. 20 minutes, yeah.
[00:44:30] Speaker B: Like how what that, what that does shift on. On everything. So, Ben, thank you so much for your time being here. I really appreciate it. For those of you watching the show, this interview is going to become part of a book project that I am working on called From Vision to Victory.
If you ever thought about writing your own book or you've got a lot of experience or expertise in your field and you would like to turn that into a book of your own, just hit the description below. I'll have a conversation with you. It's what I call a path to publishing call. We'll help you figure out what your best steps are to get there. Thanks everybody for being here. And Ben, thank you so much.
[00:44:59] Speaker A: Hey, Travis, thanks so much for having me. I really appreciate.
