WSO Podcast | E151: Real Estate Private Equity from a Non-Target
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In this episode, John shares his path from a non-target university to his current job in real estate private equity in south Florida. Learn how he was able to land his first internship in M&A, how he managed to transition an internship role into a full-time offer from a family office post-graduation and what he did when he was fired 3 months later. Listen to hear what saved John countless times when his career could have taken a very different turn for the worse.
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WSO Podcast (Episode 151) Transcript:
Patrick (CEO of WSO): [00:00:06] Hello and welcome. I'm Patrick Curtis, your host and chief monkey, and this is the Wall Street Oasis podcast. Join me! As I talked to some of the community's most successful and inspirational members to gain valuable insight into different career paths and life in general. Let's get to it. In this episode, John shares his path from a non-target university to his current job in real estate private equity in South Florida. Learn how he was able to land his first internship in M&A, how he managed to transition an internship role into a full time offer for a family office post-graduation in what he did when he was fired three months later. Listen to hear what saved John countless times when his career could have taken a very different turn for the worse. Enjoy. All right, John, welcome to the Wall Street podcast.
John: [00:00:59] Yeah, thanks for having me, Patrick.
Patrick (CEO of WSO): [00:01:01] To be awesome, if you could just give the listeners a short summary of your bio. Yeah, sure. So originally
John: [00:01:09] From Connecticut went to school down in South Florida, a school called Lynn University at first started out not really having any clue of finance or anything. There's not it's not a finance school. But luckily, I had a couple of friends that were interested in business and all that, and we slowly started to kind of progress into that. Started in Investment Club together, turned it into an investment fund, Competed in some finance competitions and eventually, you know, kind of had a mentor who hired me at a family office, you know, who kind of told me when investment banking was so it wasn't until I had really graduated that I knew what really the world of finance looked like. So my first job out of school, as I was saying, is was that a family office learned about banking and from there, you know, found my way into it. I was hired at a boutique bank in South Florida, Where I worked on natural resources transactions, a equity and debt and other advisory work. Kind of like the buy side more, you know, from my days of the family office and eventually, like many others, Tried to progress back that way and ended up at Blue Ridge Capital, where I'm doing real estate private equity.
Patrick (CEO of WSO): [00:02:25] Awesome, let's start all the way back at. You said you're from Connecticut, why did you end up at school all the way down in Florida? And Lin and Lin in particular, and what was the thought process was like family pushing you to go there? What situations? My parents wanted
John: [00:02:40] An early retirement, so they said, You know, we want a family down there now. So you go down there, well, we'll come down soon. No, you know, I had a bunch of friends from my area in Connecticut go to school down at this university and others nearby. So I didn't feel like it was that far of a jump in those couple of plane ride. You know, it really didn't feel that far for me. So I did have some family ties down here, had grandparents who had a condo down here. So I'd been down here, so close. But I didn't pick the school for merit. You know, this school I went to, it was a very fun school social.
Patrick (CEO of WSO): [00:03:20] Yeah. What was your thought process in high school kind of leading up to what school you would go to? Just like was there, you said, like you didn't even know what investment banking was, but was there some kind of idea of like finance because I saw you majored in investment management stuff? So was its family in the business at all? Was it, you know?
John: [00:03:35] No. My dad's an architect and project manager for renovations, home renovations, and my mom owns a printing and mailing company so very far from finance. No one in my family is professional services, more teachers than lawyers in the family. So, you know, for me, like, you know, Business was really I saw it through an entrepreneurial lens like both my parents were business owners, my grandfather's business owner, like uncles or business owners, like all small businesses. And so that's really the lens I had growing up. But you know, as far as why
Patrick (CEO of WSO): [00:04:06] Did you want to be like your own business owner or eventually were you thinking
John: [00:04:10] I have an imprinted in my head that, you know, one day I need to be my own boss? So, you know, I'll figure out how that works, but you know the investments you never really lost, I guess hero to somebody.
Patrick (CEO of WSO): [00:04:20] So your parents are kind of like doing their own thing. They're like, Why don't you go down to Florida? You had a couple friends, family, friends who had gone to Lynn. And so you're down there, you're having a great time, obviously, but is there like at what point where you like, Hey, I need to get an internship or what? You said you had a mentor or was that later on after you graduated? Like, when did you get this mentor? That kind of started?
John: [00:04:42] Yeah. So, you know, the mentor I got was really at once. I had my first internship or second internship technically, but like first real internship.
Patrick (CEO of WSO): [00:04:52] Let's talk about that. Like summer freshman summer. What happened?
John: [00:04:55] Oh, freshman summer. I was coaching sailing and like, I was living on a boat. And, you know, anyways, I was having more fun than I did that for a couple of summers, actually. So, you know, it wasn't, you know, I didn't know that there were such things as like in like an internship, you know, between your freshman and sophomore or sophomore junior year. It didn't occur to me until I was a junior in college that I needed like an internship experience. My first like interview that I pursued was for Northwestern Mutual. I want it to be. I want it to be an investment. I don't know. It just said struck me. I'd followed stocks in the past and watch jim Cramer and all that. But, you know, so I I applied to Northwestern Mutual. I got a job offer and I talked to like four people and they're like, Yeah, we're not buying insurance from you, though we like you. So I didn't go that route very quickly. You know, For my personality, people recommended that I didn't do it. So, you know, I actually there was a professor at the school whose family owned it.
Patrick (CEO of WSO): [00:06:02] There's a lot of people who kind of end up in that route in the Northwestern Mutual kind of umbrella where they're selling end up selling insurance to their own family or like cut co in the sand because they don't know what to do. What else to do? Tell me about like, How did you get away from it? Because it looks like you did get some sort of relevant internship. Was that your junior year? Yeah.
John: [00:06:22] So how did
Patrick (CEO of WSO): [00:06:23] You land that? Like, how is that even possible without knowing? Because it was it was in some M&A on it.
John: [00:06:29] So did you? Yeah, yeah, exactly. So, you know, by that point, I passed on Northwestern. I started an investment club and had talked to a couple of people in finance and all that and kind of build my relationships on the faculty of the school more. And one of the professors there, his parents or his dad, was the founder of this firm. And, you know, just vis a vis the networking, there was a, you know, a local partner that I could get some time with, and I would say it wasn't necessarily like a full blown internship. It was more like apprenticeship, you know, like, you know, I work directly with, you know, a partner at the firm and did whatever. And he kind of just spent more time mentoring me than I spelled and helping him. So it was like,
Patrick (CEO of WSO): [00:07:13] Did you actually do any modeling or any valuation or any sort of work at all?
John: [00:07:18] Like, no, not really. I mean, his idea of valuations was, yeah, it's 10 times EBITDA. That was the entire his entire thing. He just, you know, it's, you know, he'd look at a number he'd say, here's the three, 10, 11 or 12 times even thought, I don't care what anything else, you know, so. And he was very back of the envelope with everything, and it worked for him. He was involved in some very, very major deals and that I was really hands on with any of it. And I did a little bit of help with finding buyers for things, but not necessarily modeling or working on the full pitch or
Patrick (CEO of WSO): [00:07:53] Pursuit. Ok, so because you got this, you kind of it sounds like you were naturally starting to network already with like your professors and stuff like that. Was that something that had been taught to you or like who told you had to start doing this stuff or was just the natural thing that occurred to you?
John: [00:08:07] I, the finance professor at the school, is really cool. I'm still friends with them and engaged and getting married, and he's coming to the wedding. Yeah, so I'm like friends with him and like, he was probably one of the better professors at the school. And so I just kind of clung around to him, you know, for a bit. And so, you know, you just hang around people who have a mind for something you want to do and you learn. So I don't know how to say it. Other than that, I like being around the set people.
Patrick (CEO of WSO): [00:08:34] So you're kind of approaching. You did that summer internship. We'll call it internships in quotes, but you did some work, but he was more mentoring you.That's great yeah. And it sounds like it was. Kind of during the school year, too.
John: [00:08:45] It was, yeah, so it was a part time thing and I was, you know, president of an investment club and doing my whole thing was, I did, you know I had had enough fun already and it was more time. It was time you're getting nervous, like, how am I going to pay for whatever when you go? But I didn't know. I still didn't know I wanted to be an investments in like, it's funny thinking back like Northwestern. Like, no idea what people in finance did like even at this time. Like even at that internship, it still, it took me like another year and a half before I really understood what investment banking was or what sales and trading was, or what researcher
Patrick (CEO of WSO): [00:09:20] Do you think? It's just a maturity thing. There's so many people like that in college who are like, Yeah, yeah, yeah.
John: [00:09:25] I mean, I even think there's.
Patrick (CEO of WSO): [00:09:29] So even finance majors like I feel like half the time, they're just like, oh, yeah, yeah, I got it, I got it, but they really don't have it. They really actually don't know the difference.
John: [00:09:37] Yeah, well, I think there's, you know, your target schools where people are, you know, kind of definitely, you know, surrounded by that. And then I mean, like my school and there's more schools like mine and more candidates like me than the other way around. And we had, I mean, the finance professor I was alluding to, you know, he was just an incredibly wealthy individual from family businesses, successful family businesses, and he was investing his own portfolio. And he got a PhD in econ or something, and that made him a teacher. So, you know, he was giving more life, you know, like, Hey, here's how I manage my portfolio. You know, like, here's what I do. You know, yada yada. But he didn't break down my career track banking, private equity,
Patrick (CEO of WSO): [00:10:18] And you didn't. You didn't have Wall Street Oasis yet, or had you found it yet?
John: [00:10:21] And Wall Street Oasis came after I graduated.
Patrick (CEO of WSO): [00:10:25] Ok, so you are kind of. You have that internship, which is great, it just makes your president, the president. You founded that club. You have an M&A internship on your so. Pretty good. Pretty good. Start here. So you're approaching graduation and what's going on through your head like, I don't have a job. What are you out?
John: [00:10:45] Yeah. Well, I didn't realize it on this day.
Patrick (CEO of WSO): [00:10:49] Are you partying on the side a little bit still in your senior year or hope?
John: [00:10:52] No, I was taking extra semester classes. I added like a minor and we start. We actually turned the investment club into a fund. We raised money and like, got it from the school. And so that was me and my partner in the program. So, you know, we were really buckling down and working harder than ever. But so I didn't realize how, first of all, good an M&A internship look, you know, but it ended up being that I went to a career fair where there was no finance job, not even Northwestern Mutual for this one. And I walked up, I'm just talking to all the people at the booths and whatever. And one of them was, you know, a company that was owned by a family office that I had known in the area. It's called Mark Capital, and I didn't know the term family office back then, but I thought it was just the private equity firm from my eyes, you know, in the private investment firm. And so I said, hey, like, you know, they had the capital. Hey, is there any jobs at Market Capital, at the company that was sitting there actually advertising? And they said no. And I pushed through it and I said, Can I talk to somebody? Talk to me after a couple of days? I got in touch with the principal investor from the family office, and he asked me if he happened.
Patrick (CEO of WSO): [00:12:08] Let's rewind, because that's really interesting. I did a little bit of echo, I don't know if that's the me, but basically I'm curious to hear when you say they said, no, there's no job in Bell Capital when you say you push through. Why? Why did you push on that specific instance? Because you knew it was like they were. They were putting money to work
John: [00:12:27] And you're like, No, because it was the only opportunity. Like, I'm sure you had a job offer for a school that doesn't place people in finance or investments. And yeah, this is as close as it could be. And they said, no, and I said, Are you sure? No. I said, Can I talk to somebody from? And they said, OK. And after a couple of emails back and forth, it turned out the guy was the principal was from my area in Connecticut. And not that we knew anybody in similar. But he said he saw the internship experience, which was internship. And, you know, just local and I'm from his area. You want to come work part time, you know, like, we got you 20 hours here. Yeah, I'll do whatever, whatever it takes.
Patrick (CEO of WSO): [00:13:10] So you've got a part time job as you graduated.
John: [00:13:13] That was still while I was working. So it's working 20 hours running the starting, starting up and running the investment fund and school. So.
Patrick (CEO of WSO): [00:13:24] Also for the Mark Bell Capital, it was running the fund. So when you say running up a fund? Tell me a little bit about that. So what do you mean?
John: [00:13:31] That was the student managed investment fund to raise some monies. And we actually it's unfortunate we didn't get to make any trades because we were too busy kind of setting things up and the money sitting there and students are doing stuff with it now, but not my, not my generation.
Patrick (CEO of WSO): [00:13:46] So as you're kind of approaching, so you have this other internship now? Private equity analyst Well, yeah. So when did you graduate and what was it? The one was the transition where you just went straight through.
John: [00:13:57] So I in turn, from January to September, this is January to May as an intern, and then I recruited at other. I use that experience and kind of like try and recruit other places. And the guy who I worked for there, who ended up being like a mentor to me, he said, go recruit, go interview, get the experience and bring an offer and maybe get a founder, you know, from elsewhere or you get an offer from us. If I did, then they offered me. And so I worked for a couple of months as a full time analyst at that point. Do you mind sharing the pay
Patrick (CEO of WSO): [00:14:30] Or like, what were you getting before you graduated, then after like from intern to full time? Was it OK, pay like twenty?
John: [00:14:36] I was like ten bucks, 10 bucks an hour and then 40 like low 40s.And it was so short I didn't collect the bonus.
Patrick (CEO of WSO): [00:14:46] So tell me why it was so short from a few months. Just full tired. You know, just through the summer, it's it looked like full time.
John: [00:14:52] Yeah. So we invested in a product. They had done a private equity investment, and families are different from real private equity funds. You have family constraints and things. And they hired a lot of people and they ended up needing to be kind of a downsizing internally. Know they kept running the business successfully after. But at that point they didn't foresee the need to do more private investing and neither have an analyst on staff. So, you know, I was there was no other junior people. It was the principal investor and the family member who ran it.
Patrick (CEO of WSO): [00:15:30] And so you were the only one let go or was the principal investor guy like, go to? No, he wasn't.
John: [00:15:36] And he actually it was, you know, kind of like a partner. So, you know, he was
Patrick (CEO of WSO): [00:15:40] That's kind of it's kind of tough because did you have another offer to go somewhere else when you graduated? No. So that's the thing. I mean, I got hired and I've done my. Yeah, it was really sad. I mean, for me. But you know, to be honest, I look back and it's actually one of the best experiences that could have happened to me. I mean, I had saved a couple companies from a
John: [00:16:02] Job, even though it wasn't a thousand or whatever, you know, New York banking salaries. I saved a bit of money, soI was comfortable. What is forty
Patrick (CEO of WSO): [00:16:10] Dollars an hour come out to be based on full time or what you're working
John: [00:16:12] Forty thousand a year or
Patrick (CEO of WSO): [00:16:14] Forty thousand a year? Ok? Got it. Okay. So yeah, it was something that you put a little bit of money away over the summer as you were working there. And then as once you hear you're, you're not going to have a job. You know what, whatever three or four months in, what do you start doing? What's your first thing when they tell you, Hey,
John: [00:16:31] There was no two weeks or anything, so it was unemployed that done. It was like. So it wasn't there was no warning because I wasn't the only person. There was a couple of people from some of the portfolio companies. Um, but essentially. You know, what I did from there was I did call everybody in South Florida who worked in finance, so like, how'd you get that list? That was actually a Wall Street Oasis list. I believe it was forwarded to me from somebody. Maybe it wasn't Wall Street, but it was a list from a provider, you know, in the
Patrick (CEO of WSO): [00:17:07] Oh, I know there's a thread called like summer internships by region or something. It's a long thread and they have different regions to like. Florida was probably one of them or like Boca Raton or like it
John: [00:17:17] Was, it was. And so I tried reaching out, you know, LinkedIn. I went on Google Maps and like search like investments, Fort Lauderdale, because like people don't list stuff the same way down here. And so like you look on the map and see like, oh, like, here's this firm that didn't show up, so call them. But it turns out, you know, like you, you can do a lot of the networking. But speaking to people multiple times are having a close relationship with somebody I think is far more important. Mm hmm. And that's what turned out helping me kind of recover, I guess you could say, for unemployment. So that's what saved me. You know, I wasn't that long. Yeah. So for me, what ended up happening? Yeah, so, you know, for me, like having a close relationship with somebody, you know, turned out far better than calling the results I got from calling, you know, hundreds of people. So there was a couple of people I spoke to more than once and followed up with a couple of times within the span of a couple of weeks. And that's really actually how I had my success. Um, there was an investment bank, you know, kind of local to me. It was one of the first things I hit on my reach out and I reached out at four or five people some directors, a VP and the analysts and people in different divisions. And one guy got back to me. It turns out it was like this guy was like, my girlfriend's sister's friend, Deontay or boyfriend, I don't know. Anyways, it was a relationship to the grapevine. And so we ended up like speaking like a couple of times, like two or three times. And, you know, over six, seven weeks when I was, you know, employed, unemployed, I talked to him three times, which stand up for networking, I think is quite a quite a lot. I think, you know, I think about it, you know, usually speak to someone like once a month to once every two months or months or whatever. So I stay on top of him. And it's essentially what happened was he said to me, Hey, I'm quitting this Friday. They need another analyst and they don't know it yet. You want the job. And I said, of course. And so I came in. He gave them two day notice that day. He found me to replace him because I talked and I said, I want this, I want this. And he had like, If I didn't keep following with him, like, I don't know that I would have gotten it. And I'm like, Why?
Patrick (CEO of WSO): [00:19:44] Why did you know to be so aggressive? What made you so comfortable being that aggressive? Because you feel like he was working in one of the few places that was like an actual banking job down there? Yeah, it's like, what did you worry about? Like burning bridges? Why weren't you like networking with people up in New York?
John: [00:20:01] Yeah. So I was trying to start a life down here. You know, I had a girlfriend, and to be honest, you know, like, I didn't come from like this, like whole finance background, like kind of falling in, falling to me, I guess you could say. So it's not like I knew that this M&A internship was that great. Or, you know, working in a family office was like, all that like to me. I had a job in investing and I had a lot of fun. And so to me, it wasn't. I didn't make the connection at that point that I could go recruit in New York, even like. And you just you just said, Hey, I want to see,
Patrick (CEO of WSO): [00:20:34] Yeah, I'm going to keep looking for a job around here because that's where you want to be. And that's the reality of it. You didn't think, Hey, let me go, open up my options. It probably would have been your next step if you had kept striking out.
John: [00:20:45] No. So I actually was going to give up the search. And so, you know, part of the reason why I was so aggressive with people and I don't want to say I was aggressive because I thought it was a nice person, but like it was aggressive in the sense. But I had a I had a timetable. I had only saved up so much money. And so it's at that same time as I was reaching out to him. I was actually starting because I had almost two months and I had to have a job. And so. I was starting to schedule interviews for like financial planning analysis. It's not that that's a bad thing, you know, but like it wasn't the target. I gave myself two months to hit and I was doing practicing modeling, you know? You know, I was really gearing up to try and be in some kind of high finance job of some sort. You know, practicing interviews. The networking stuff. And so I was starting to interview at other places I interviewed as a pricing analyst, you know which is actually kind of cool, but like not what I wanted, like a bunch of different things. And so it just turned out to be that these guys needed somebody, Somebody you knew was leaving.
Patrick (CEO of WSO): [00:21:51] And how did you keep how did you keep? How did you keep following up with this person and make it seem like you had had just talked to them two weeks before? How did you keep bringing up new things? Was it that he wasn't being responsive to every time? And so you would just lob in another email every two weeks? Or was it, hey, let's get on another call? Like, didn't you feel like after the second call or third call? Wasn't he like, That's enough, man. Like, I already told you everything. Or did he kind of start giving you hints? So I had.
John: [00:22:20] I had the first call and it was nice, and he said, yeah, just follow up, and so I just followed up and I think I think the second email he went back and forth said, Hey, man, I'm busy, I can't talk right now or something. And then the third I said, I said, Hey, can we talk? And he said, Sure. Or maybe that was even that point. I think it was a text. I sent him a text that said, Hey, like, you're around to talk, you know, I want to just see if there's anything that's opened up or whatever. And and it just called me or whatever and was like, Hey, like, this is what's happening. Yeah. So it was pretty cool, you know? So how did he? How did he
Patrick (CEO of WSO): [00:22:53] Sell you to that? He like, Hey, I give you two days notice and I have, but I have a guy for you.
John: [00:22:59] To be honest, I mean, there was, you know, it wasn't it's not the most attractive and attractive opportunity. You know, there was I had to started out as an intern again, you know, so they were very much on. This this firm was very much more about like getting to know you over a little period of time before giving you a full time offer, you know, Like I didn't have an opportunity to, You know, intern with them over a summer or anything. So like it was very hard to gear that up quickly. So I actually worked as an unpaid intern for 30 days. So I
Patrick (CEO of WSO): [00:23:35] Basically had your bank account was at zero basically by the end of the 30
John: [00:23:38] Days. Well, I told them basically this was what I told them. I said, I'm happy because they said, You're going to be an intern. I said, OK, but what is my salary? And they said zero. And so I said, OK, I can do that for a month. I have for a month. Like, if you don't like me, I'm gone. I'll go find something else to do and it won't work. So it's, you know, to get in and I was fine doing that. As I said, I saved up
enough to stay kind of skate through, but it was close. Did you? I was recruiting at the same time, too. So like, I actually had other things going at the same time. So if that had fallen through, there were a couple of things were actually just as interesting, not actually banking, but other real estate investment things. So.
Patrick (CEO of WSO): [00:24:22] So anyway, so tell me a little bit about the actual the actual just like one month, 30 days thing. How did you was it long hours? Were you just how did you make a good impression? Because obviously they extended you the full time offer and you ended up there for almost two years. So tell me how that how did you kind of approach those 30 days? It's just like getting super early. Stay super late. Ask for work. What did you do? What was the attitude? It was one hundred percent that I was.
John: [00:24:46] It was a firm where there wasn't a lot of middle, so there wasn't a at that point, there was no other associate. You had a couple like VP directors and MDS. And I made myself like Full Frontal to the most senior people and the people local who were called decision makers. This was a privately owned company. So it's not like it was widely held with a number of partners. There's one owner, really, and he had bankers that he really liked and had good relationships with, and those people were in his ear and he became friends with them, I guess, you know, are not friends outside, but like, you became close and you made yourself aware. So there was partly that, and then I also came up with some creative ideas on how to improve the current business they hadn't been doing. They had been doing quarterly industry reports for one of the divisions that they covered, you know, one of the coverage groups, but not financial resources, which is where I cut staff. And so I said, Hey, let's start doing these. And so I set the whole quarterly report up, and this was in the first 30 days I set the quarterly report up. I mean, there was a lot of Capital IQ, plug ins, whatnot. You know, I. I tried to improve the business, and I think that went a long way. Well, so then they give you
Patrick (CEO of WSO): [00:26:05] An offer, is it in the similar salary range, 50 K, 60 K,
a little under a little under?
John: [00:26:11] We live in Florida, it's Florida. No, I get it. We yeah.
Patrick (CEO of WSO): [00:26:16] Okay. So you're just happy. You have a job. You can pay the bills at this point. So happy. And so at this point, you're like, I got a job. I'm happy. What's your thought process as you kind of extend, you get to your first year. Are you thinking by side, I got to get back. I want to do be more an investor when what is real estate pique your interest? Tell me kind of how things progress through those two years.
John: [00:26:38] Yeah. So the first year was just learning. I learned how to be really proficient in modeling. Naturally, both I did do a little bit outside of natural resources, but
Predominantly what I did was, you know, oil and gas mining and some transportation like marine shipping. So I became incredibly proficient in modeling like three statements and just understanding financials, you know, certifications and all that. And I think I tried to learn the industry lingo a lot. And so I terminologies and be really like, understand. and so like, I actually after four or five six months, I got involved with a lot of client calls, client meetings, and by the end of the first year I could, they actually were able to leave me in the room with clients and I could like. Understand their business models, and when they said, you know, certain things like BOE equivalent or You know, how many wells we're going to drill this year or this land package, you know this spacing, I could understand it all and have a conversation around it. And so it being this was a very small firm of just 40 people, and the banking staff is probably 15. So being at the small firm, I got a lot of really high level exposure, which for me, progress progressed. My career very, very fast. Not necessarily monetarily, but, you know, from a skill level and just being able to sit in front of a senior person.
Patrick (CEO of WSO): [00:28:06] Super valuable experience for somebody who's only been on the job for a year to be left alone with the client like that, tell me, were the bonuses like tiny or the like five thousand, you know, two thousand dollars for like a thing or like whether no,
John: [00:28:19] It was tiny. I mean, by comparison to what your viewers expect, it's yeah, it's OK. So who's giving it? They were very happy to be giving it to me.
Patrick (CEO of WSO): [00:28:28] Yeah, so but you didn't expect that because, you know, you're in a very low cost of living area. It's like you're learning, you're happy with the job. So why? Why even jump? Why not just stay on? It sounds like you're kind of filling in a nice middle, middle management
Patrick (CEO of WSO): [00:28:41] Role you could have been promoted to associate or whatever. Yeah. So for me, I think what happened was, I think I started getting
John: [00:28:49] Too much skill too quickly and kind of bit me in the blood. And so like not to say that I'm like, I was like the most senior person in the room, but like the end of the first year, I was like sitting around the table when we're talking about like strategy and like, what do we want to achieve for the year and like setting goals for our staff? And I think we've got six months into the year and like we were getting about three or four months in at this point. And like, I didn't see any progress. I wasn't like, we weren't adding like tons of new clients, you know, like we had our old clients and we weren't really. And it was like, we want to do IPO. We want to do these different things. And we didn't. I didn't necessarily see some steps going there. And so I felt like I was as an analyst or whatever. You know, I was doing a lot of heavy lifting, far beyond what an analyst should be doing and should be sitting back, listening, learning as you were like
Patrick (CEO of WSO): [00:29:36] Trying to drive the whole business forward, like you realize you're like, no one's actually taking the reins here.
John: [00:29:41] Yeah, it was a bit of that. So I mean, there are certain directors would obviously do a good job of clients. They'd identify certain business, but it wasn't like a real. Uh, a lot of push and we're in small and micro-cap companies, so, you know, a lot of ground to cover, so it's very hard to know if you're covering good clients or bad clients, but you have your time. You can't double yourself as a director. So it's hard. Yeah. So anyway, the business, you know, for me, I learned quite a bit about, But just business in general from being in there and try to grow something, grow a platform. So I did see it slow, and for me, I wanted to find something that was growing and also to be being a principal investor. I think that to me meant a lot and the kind of control your destiny a lot more, I think being an active, being an active investor.
Patrick (CEO of WSO): [00:30:35] So as that first year, you were learning a lot, that's that second year it sounds like you were kind of getting a little bit of. Um, an itch to kind of move, move to your next thing, so how did you approach that kind of that search now from a position of more strength, ideally not unemployed this time around? How did you approach it? Was it just more LinkedIn just start opening up the same kind of conversations? Or did you kind of slow play it longer waiting for the right opportunity? Did you have to move about like the interviews you did? Were there any like crash and burns? Or did you like where you were getting multiple offers? But what is the what was that all like?
John: [00:31:11] Yeah. So for me, actually, I wanted to stay in South Florida. I was kind of doing this in parallel with studying for the CFA, which I was taking level one at the time and at work, and so I really didn't have that much time. I didn't dedicate a lot of time to outreach. I did actually a lot of like LinkedIn applications and like someone half assed it, you know? And then I worked with a lot of recruiters without going into the names, you know, a couple of them. I think they rank, you know, in Tier two and three and none of the elites elite, but some good recruiters. I like the people I worked with. And so they put some jobs, you know, typical private equity. My resume didn't get a lot of hits on those just simply because, you know, I didn't have a corporate.I was doing natural Resources model going and there's no oil wells or gold mines down in South Florida, really. So you know, that didn't necessarily hit. That was the first stop I really tried to make a push into traditional PE, and that wasn't going to be a it seemed like
Patrick (CEO of WSO): [00:32:19] I'm sure they kept trying to throw a Houston jobs at you.
John: [00:32:23] I did get to so I did interview. I did interview outside, like outside of Florida. I didn't want to leave, but I did take a couple of interviews with some other middle market banks BMO Baird, A couple others. Those progressed. I ended up, you know, kind of passing on them because I got through a couple of stages and I really said, You know, I'm really not going to leave, I'm going to stay here, but what am I doing? So anyways, It was good to know that I could get through some interviews. But for me, it wasn't where I wanted. There was a couple of really, well,
Patrick (CEO of WSO): [00:32:56] You really love South Florida.
John: [00:32:59] Everyone's going to be living here soon until we're underwater. You know, it's going to be the can be like Atlantis here. You're going to see all of these, like very stern look skyscrapers nd like, you know, related group skyscraper scrapers down here, and it's all going to be underwater. You know, No, Ford is great. But so yeah, I for me, I want to stay down. I ended up interviewing a couple of real estate groups, a couple of direct lenders, you know, like credit funds called like that. Um, the credit funds I got through a couple of rounds of interviews, and it was kind of at the same time as a couple of the real estate and interviews, and one of them was from I ended up accepting the offer. You know, everybody had ind of tests, you know, at some point know there. I think I went through two or three rounds. I did like for the company, went up hiring me. I did like a I did like a modeling test. It was like a two hour long time test. And then I did like a whole presentation, so I
Patrick (CEO of WSO): [00:34:00] Do our modeling. What were you doing in that, like building a restatement statement model? Like they give you a case and you had to just build up projections in different scenarios and stuff?
John: [00:34:07] No, this was actually very interesting. Once they gave you like parts of the financials and they gave you parts of information and like, you would have to fill in everything she had to know a little bit about. And this was like real estate, like a real estate deal, not necessarily a read. So you had to know parts of real estate. You had to know financials, like there was like things on, you know, tax liabilities and like stuff like that. There was things on occupancy and there's things on like NY and cap rates and different valuations and knowing if something is intrinsically like under overvalued like. So like,
Patrick (CEO of WSO): [00:34:46] I need to get that. I need to get that case study from you. If you still have it, I'll pay you for it. For our modeling course. That sounds awesome because we're uh, we have a bunch of cases already in there, but that's that one sounds pretty cool because it's like a mix. It's like a puzzle, almost.
John: [00:35:02] Yeah, it's a really good one.
Patrick (CEO of WSO): [00:35:04] So we could change, we could change it and hide it if they're willing to share or change the name. So it's not.
John: [00:35:10] Yeah, we can. We can discuss. But. So yeah, that that was the first step of the second step was a they gave me a public company, a public right, and I had to build like an investment thesis around it and figure out, you know, what would it be a good opportunity to invest in? One of the one of the principles of the firm I work for was head of acquisitions at a shopping center that would own minority pieces of company. So they would go buy like 20 or 40 percent of this company, 20 40 percent of that company. And so like but in the public market, so to say. And so like, You know, it was kind of through that lens he gave me said, you know, let me know if you think it would be worth us taking a look at doing a minority investment in this company. And so I gave them my analysis and ended up being like somewhat in the ballpark. It wasn't perfect. I guess it was better than whoever else was interviewing because I got the job. But yeah,
Patrick (CEO of WSO): [00:36:08] Tell me a little bit more about that. So you're saying he was asking you if the if a minority owned like looking at other REITs, like what do you mean, buying them up public and
John: [00:36:17] The like? You raise a fund, right? And we're investing in different things. You can buy direct property or you could buy like a lot of real estate investors did this year, which was buy stocks and companies or buy their own publicly owned stock, whatever. But, you know, so he was saying like, we would go raise money for private equity style money to go buy a piece of the public equity of rate. And so this was a multifamily on apartment rate, and it was basically saying, Ok, like, You know, is it worth taking ownership in this business? Like, is this business today fairly valued? Or is it? Is it undervalued, overvalued? And to be honest, at that point, I really didn't have enough like, you know, workings of like net asset value to really grasp it. I did like the whole thing on comps and like on a comp basis, it worked like, You know, like, I spread the comps. You can say so. But like that, a couple like traditional banking valuation methods, I learned it seemed fairly valued and it seemed like an interesting investment opportunity compared to its peers. And so, you know, I pitched it on that basis and like, I missed the point. They're like on a net asset, but like what the real estate was worth versus what the what there was valued at in the public markets. It was like undervalued and like, we should buy it all day long, something like that. That was really what he was looking for.
Patrick (CEO of WSO): [00:37:50] Interesting, so you still got the job, tell me how you know you've been there for now. Almost in your third year, so did you and you got promoted, so tell me things are obviously going well? Yeah. You know, real estate, private equity. How should the listeners think about that or your job specifically? Is it a is a typical private equity fund where there's you guys are serving as the GP, the general partner and there's limited partners who've you guys have raised an actual fund?
John: [00:38:21] Yep. So we I'd say to listeners, there's two types of real estate private equity firms out there, really, you need to think about and there's operator funds and then you have like real private equity funds where you're actually the allocator. And so, you know, different groups have different things like you think about, like Gray Star, for example, you know, someone's probably everyone's living in one of their apartments, if you don't, you know. So, you know, they have an internal acquisitions team. All they do is buy a multifamily essentially, you know, and so they have private funds that that's all they do. And so you could technically be in a real estate private equity arm of grey star and B, you have your internal operations. All that and there's more what we do, which is invest with other operators or partner with other operators. And so we don't actually have an internal operating capacity. We don't do our own property management, which is like the key thing in real estate is like, you know, do you do your own property management or do you outsource it or how does that work? Do third party? Do you have them invest with you? But you know, we always partner with and with an experienced operator that invests a lot of money and all the deals that we do. So we know they have skin in the game and that's the side. And so I think it's very interesting. You know, our firm does a lot of equity. We we've also like that investments. And so, you know, when you're on this side of private equity, things can be a lot. I think maybe a little bit more interesting when you're an acquisitions rule within an operator like gray store, all you're going to do is look in multifamily and most likely, it's only going to be in three or four cities. And so you're going to get to know the cities really well and you know which hotels are great there. But when you're on kind of my side of the aisle, I think you get to see a lot of different asset classes. So, you know, thus far in my career, I've underwritten and looked at deals and pretty much every type of real estate in most states across the country of many different property ages and different parts of the capital stack. And so to me, it's very interesting like. It always keeps me going. I've heard people burn out from the typical acquisition job where you're just looking at one thing. You know, there was a girl who was at the same school as me who worked in a really prominent real estate private equity fund name won't name it, but you know, she was an acquisitions person within one real estate property type. And she just couldn't do it anymore. She said, I have to move out, I need to move into a whole different. I know we want to do real estate anymore because this is like I'm intellectually stimulated by new things and this is not that stimulating. It's the same thing every time.
Patrick (CEO of WSO): [00:41:02] Interesting, yeah. It's a really good point, do you feel like with the do you feel like with your time there has the learning curve start to flatten out? And it sounds like since you're given the optionality of being able to look up and down the capital stack, there's that which is interesting in all the different deal structures, but there's also you have a lot to learn there. But then also learning all the different asset classes. On top of all that, there's just a lot of different combinations and everything which makes it kind of interesting every day, I guess.
John: [00:41:31] It's very interesting. I think I have a good sense. I may not be as deep as that acquisition person. Like if I underwrote a deal in multifamily deal in Charlotte, North Carolina, I don't think I would get anywhere near as close to the final purchase price as the acquisitions person from our partner group that really just knows that market. You know, they're going to be a lot more dialed in there. I'm going to be able to understand their underwriting pretty well. And I mean, am I going to be that close? We're talking about a couple of hundred thousand, maybe, You know, dollars off, which at the end of the day, I mean, that's who wins and loses. But. I, as far as a breath goes, you know, going across the country, being able to look at different things. You know, I think especially being junior in my career, still, I think gives you that optionality. And also also when you look at a deal and it's like, Hey, this one pencils out to 10 and it's an office deal in Atlanta, and it's like, Hey, here's a multifamily deal in Charlotte Pencil for 12 like gives you an idea of what's going on in the world and what your peers are thinking. And I don't know. So for me, I've enjoyed it a lot.
Patrick (CEO of WSO): [00:42:38] How about pay that has improved a lot here?
John: [00:42:41] Yeah. Again, the buy side, you know, when you're at a growing, you had a growing firm, a small growing firm, you know, we're a couple of employees here of what, smaller as a firm from the last company with that. But as far as like trajectory goes, I think it's pretty solid.
Patrick (CEO of WSO): [00:42:58] Do you mind share that base or range or anything like that or bonus is a bonus
John: [00:43:02] In all in cash, it's low hundreds, a hundred plus a little round there. But you know, again, being at a small firm, there's not a lot of mouths to feed. And so I actually have a fair amount of promote or shared interest. So, you know, for me, it's
Patrick (CEO of WSO): [00:43:17] The listeners how you're able to calculate what that might actually be worth. The promoter, the carried interest, because I know some people get confused with that.do you have a certain way to think about it? Are you are you assuming like the funds under management, assets under management? Double in a certain amount of time or the fun doubles, rather you return a two x a one point five X, how are you thinking about that in terms of how you calculate your promoter, Carey?
John: [00:43:40] Yeah. So I the way I think about it is we have a fun target, you know, and I'm privy to that, you know, we're targeting 12 to 13 percent gross. And so this is on specifically one of our funds. We have many funds, but you know, for example, I have a piece of one fund and so, you know, I know what the target is. I know what those deals are looking like. I'm involved in them to some extent. And so I build a model that goes out seven and 10 years because that's the range of the funds was either seven or 10.And I run the waterfall, right? You know what the net proceeds to the GDPR through the promote or the carried interest. And then I apply my percentage and I take an NPV on that. And, you know, compare that with what that would be to a cash company. And typically, it's been pretty interesting. Do you mind sharing what your
Patrick (CEO of WSO): [00:44:32] Your carry is for different funds or like what because as an analyst or an associate is that new? Or they gave they gave you that promote right after right as an analyst? And then was it more like, Hey, you get it if you stay kind of thing? Or is it like, It's there a four year itch? It's a paid out as you as it comes in kind of thing. And if you're around, you get it.
John: [00:44:51] Yeah, so it's not. So it's this I got it as my first year as an analyst, I got more this year and it is on a vesting schedule, a four year vesting schedule, which, you know, for me, I mean, you know, so the first year, I'm halfway vested this year, I'm a quarter vested. And you know, so each year, you know, more and more vests and so you know. I know. I think if I stay longer, I'll get more into it. But I basically, you know, I've gotten a quarter point. The overall promotion, so, You know, this is a seven year vehicle and just straight lining that assuming it doesn't even grow, you know that quarter point, you know, after seven years, you know, guess it to be a nice number. And this is in one vehicle. And so, you know, we're in the process of doing a couple of vehicles. And so you get a quarter point in like three or four different things and you get a quarter point for every year in those and
Patrick (CEO of WSO): [00:45:51] And eventually it gets to half a point and then they give you a full point or a couple
John: [00:45:54] Of points. I mean, that that would be that'd be pretty great. But yeah, you know, I've seen a lot of assumptions, you know, optimistic assumptions in my day and in a lot of those will not work out. So I mean, I'm going to underwrite it, you know, as you could say, in a conservative manner and I'll say, Oh, look, I do it, I do it. And I also do a kind of a downside case on the front. And I stress the our exit cap rates are our exit values. You could say the terminal value and in our deals and our funds and say, OK, like, say, we were targeting a 12, but we actually had a nine or hurdle is an eight. What is that like? One percent actually give us, you know, how much do I make? And like, that's a pretty sad number, but it's still something, you know, but you know, you roll the dice and that's why I'm in the business. I mean, I I've always allowed to invest in the funds I did, you know, and I'll continue to. I think that's a great thing that I have access to. It's like kind of like a bond investment. You know, if you will find the real estate we buy so too risky,
Patrick (CEO of WSO): [00:46:56] I don't think there's some sort of preferred return associated with that or whatever.
John: [00:47:00] No, that's I'm a typical LP in the fund, too. Ok. Ok. So.
Patrick (CEO of WSO): [00:47:05] You know, looking back at this, you kind of had a you had a kind of a what I'll call like a false start coming out of school with the getting fired pretty quickly of no fault of your own and kind of just barely kind of scratching your way into ivy and then the transition to the buy side to real estate, private equity.
throughout all of that, even though it's only about five or four or five years out of school, they looking back at all that so far, what would you say is kind of. Ban Ki, or is it just kind of just as things come, you just try your best like LinkedIn. What's been the most useful tool and what's been the most useful kind of hack, looking back?
John: [00:47:44] I think it's a combination I'll give you two or three things. One, I think is always try and be, you know, at your firm or wherever you are in front of the most senior people and try and learn the most, you know. So whether that's learning the technical skills so that you can pick up any model and do anything with it, that's Important. But also learning that the soft skills which are in finance probably even more important, Picking up those soft
Skills around very senior people is incredibly important. And to be honest, if you're in investment banking, you're working at a great shop, You're in front of probably the most
talented, soft skill people in the world. So, you know, you have no shortage of, you know, if you can get the exposure, get it and say, you know, that's one, you know, and that will progress you personally, too. as far as like getting out there meeting people, you know, LinkedIn is fantastic. And in all honesty, I feel that a number of, you know, just people out reaching to me, the person who I who actually filled my spot at the investment bank, I did the same thing as you hired me. I got a guy from Minnesota who would work for free. He flew from Minnesota. To this investment bank work there, and now he's in New York City, the Middle Market Bank, and he's doing great. So, you know, I think, you know, being on LinkedIn as a giver and the provider or as a giver and a taker, I think is important being part of the community like helping people but also being out there and getting help. Whether it's thinking about jobs or school, I was considering a master's degree and I reached out to four people at the desired schools and those people told me what I needed to know about the program. But you don't get on the website. So the networking is always important. And I think, you know, the last thing is being a genuine person, you know, just having good character traits about you, hardworking show up first leave lacks those kind of things sit well with people. And so, you know, building yourself as a character, as a rule player in an organization will take you places. And when you're sitting in the interview, I think it'll kind of vault you above others. So.
Patrick (CEO of WSO): [00:49:48] Right? I love it. What we can end it there? John, thanks so much for sharing your wisdom and all your advice for the young listeners here. And if anyone wants to get a mentor session, John is available as part of our Wall Street mentors, so check them out.
John: [00:50:03] Thank you. Hey, yeah, thanks, man.
Patrick (CEO of WSO): [00:50:06] Thanks to you, my listeners at Wall Street Oasis. If you have any suggestions whatsoever, please don't hesitate to send them my way. Patrick at Wall Street Oasis and till next time.
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