Episode 305

Lowering the Bar of Entry to Syndication Investing with TJ Lokboj

Tj Lokboj is an entrepreneur, investor, and innovator. Being a first-generation immigrant from the Marshall Islands, Tj and his family settled in the US in 1995 and he learned from an early age, the importance of hard work and sacrifice. At 22, Tj started his first company, which was a fashion technology company that he eventually sold. He was able to take the proceeds and purchase his first small multi-family investment in Utah Valley. Since then, Tj has acquired large multi-family properties as a sponsor and serves as a managing partner for Holdfolio, focusing on growth and acquisitions. Outside of work, Tj loves to read and spend time with his family.

Holdfolio was founded on the principle of creating profitable partnerships. We believe individuals need to earn above-average returns, and the best way to accomplish this is by partnering with full-time real estate investors. We have excelled at creating an environment to facilitate this type of wealth creation. Holdfolio only profits from real estate if our investors do the same. Our business model allows for the highest degree of aligned interests possible, as we enable investors to purchase ownership in income-producing real estate properties that we own.

Our strategies consist of earning great returns without speculation. This means that we don’t need the real estate market to appreciate rapidly in order to realize above-average returns. The income-producing properties we purchase generate income month after month and will perform during all parts of the real estate cycle. We focus on long-term wealth while positioning our Company to thrive in all market conditions.

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"You can invest 10,000 hours and become an expert or learn from those who have already made that investment." - JD

Transcript

Announcer 0:00

Welcome to the REI mastermind network, where host Jack hos gathers amazing stories from leaders in real estate investing. In each episode, our guests will tell you what they're doing that works, what they've tried that failed. And best of all, you'll learn actionable steps to take your real estate investing to the next level. Now, here's Jack with another value packed episode.

Jack Hoss 0:26

We have TJ Lockboj on the call with us with fold folio. He's one of the managing partners there. And this is kind of a new, unique platform we're going to be chatting about today. And it's it's going to lead into syndication. But I really appreciate your time. TJ, thanks for being here. If you would like more information about and follow along, head over to hold folio.com I'll make sure to have that link in the show notes. But, TJ, is there any other place that somebody might reach out if they'd like to after the show?

TJ Lockboj 0:57

Absolutely. First of all, thanks, Jack for having me on. And anyone can reach out through my email Tj at hold folio comm or find me on my social media links on LinkedIn or Instagram. So

Jack Hoss 1:12

yeah, no, I appreciate you being on the show. And, you know, we you mentioned before we hit record that hold folio is kind of a kind of a newer concept for you. Why don't we start there? Like, how did this come about?

TJ Lockboj 1:27

ur firm has been around since:

Jack Hoss 5:43

Sure. So just to clarify, then, are you are you as a syndicator, then investing in other syndications?

TJ Lockboj 5:50

Yep, that's right. Yeah. Yeah, syndications and funds as well. So you know, we've done quite a number of these since we started, year to date, we've acquired or invested in seven of these partnership deals. And interestingly enough, all of these deals have all come through off market opportunities. And this is the power of leveraging, you know, some of these strategic partners who've had who, first of all, we have a pretty strict criteria and who we partner with, we work with folks that have a long track record, strong track record, long history of operating as a firm. And so some of these folks have relationships with, you know, brokers and boots on ground for up to 20 to 40 plus years. And so, you know, we're partnering with these folks, and giving access to their deals, not only to us, but our investors. And so, to answer your question, yep, that's, that's exactly the model. And, as I mentioned, year to date seven acquisitions this year with these partners, and that spanned across different market markets. And and we've actually opened up different asset classes, as well, such as senior sr 55. Plus community, senior community are active living communities, hotels, as well as new development. Historically, we've really just focused on existing multifamily acquisitions. But we've we've seen a lot of really interesting, unique opportunities that provided really strong risk adjusted return for us and our investors. And so this, this has been a really great, you know, pivot for us. And and, and so yeah, I hope that answers your question, John, Jack, that was kind of a long way.

Jack Hoss 7:43

Yeah, you know, it's interesting, especially this model. So you mentioned that it takes you have quite a bit of a pretty detailed vetting process, can you cover a little bit of like, what do you go through in order to decide what syndications that your team is going to invest in?

TJ Lockboj 8:03

sfully accomplish that. Since:

Jack Hoss:

sure, so when you're going into these joint syndications, then how, how much of the holdings is your company? Like how big of a piece? Do you typically try to secure? Is that even something do you consider?

TJ Lockboj:

Yeah, you know, we, we are, at this point, really operating as a large G LP structure. So coming in as a single entity, along with our investors going in and making these investments, so very low maintenance on that side, which is something that's quite attractive to these sponsors, we place our own capital in every single deal, which is creates that, you know, strong alignment with our investors as well. And there's not really a target as far as you know, what we look to acquire in in the cap table. But we ensure that these sponsors have a, you know, you know, pretty decent amount of capital that they invest in as well, so that the alignment is there. And so, yeah, to answer your question, there's not really a, you know, GP position as well. And in most of these cases, there, there are times where we would consider it and have done it before. But But yeah, we, you know, our goal is to find the very best deals that we could, you know, have exposure to in our portfolio as well as our investors. And so, the the model that we're operating that right now doesn't require a certain, you know, equity stake in the overall cap table.

Jack Hoss:

Sure. Well, just remind everybody head over to hold folio.com for some more information. I think there's quite a few resources there to tap into as well. So definitely worth checking out. So, you know, with this, you know, I'm curious as to how, you know, you mentioned the progress progression associated with the business that you started off with single family homes and when moved in multifamily and now syndications. How did you personally get into real estate?

TJ Lockboj:

Yeah, absolutely. So I got into real estate. You know, while I was in my, my, my career, I originally started in tech, doing sales and marketing. And, you know, while I was doing that, on my on the day to day job side, I was acquiring real estate on the side. My first deal was actually a small multifamily. So I started in the multifamily space, but and, you know, a lot lower scale. It was a four unit here in Utah. And I house hack that, you know, that's how I got started, I House House House hack that for unit about, you know, it was a few years back, but after a year of house hacking, I then moved on to the next and the second deal that I did, as an investment was a 30 unit project out of New Mexico, and that was one that I syndicated with a partner so we're able to acquire that and after that we you know, just started that then then I eventually got into hold folio as a partner. So there's there's kind of a backstory behind that, but my partner Jacob Blackett, who's who founded hold folio, we also own a software company called syndication Pro. And so syndication pros the fastest growing capital manage or investor management software today, we serve over 600 firms that are syndicators, fund managers, private equity. We're serving those firms as well. And interestingly enough, we all use the same software hold folio, these other firms, we subscribe to syndication Pro. And so that's kind of how I got started started in the small multifamily space. And then we started doing single family with hold folio, and then eventually, you know, we just felt like it made a lot more sense scale scalability wise to do multifamily in our local markets. And then eventually, we pivoted to the fund of funds model.

Jack Hoss:

Sure. So you know, you mentioned that a lot of the syndications that you're investing in our, our they're kind of diversified, you're even going into senior living. What are some of the other things that the syndications that you've been open to?

TJ Lockboj:

Yeah, right. Now we're very interested in the store itself storage as well. You know, from a cash flow and kind of a product that serves, you know, more longer term holds, that's something that we're very intrigued about right now, as well. And recently, we took a survey with our investors, we have, you know, over 4000 investors in our database who a lot of which have been active since 2014. You know, we did a recent survey and storage units is something that everyone's very interested in, so So are we so we're currently trying to engage with partners in the storage unit space, who have been in it for a long time. And folks that we feel are reputable and ones that we're could potentially partner with. So that's definitely on the list. I would say. Aside from that, you know, there there are some other assets that interest us as well, such as build to rent development communities as well. These are things that as you know, a lot of private equity firms are looking at and acquiring these these types of projects. But this is something that we're we're just getting into and kind of looking looking at kind of keeping keeping our eye on but not actively kind of investing in today. So in the near future, I think storage units will be something that we will start adding into our portfolio. Sure.

Jack Hoss:

So you know, with this being syndication that that's reviewing the to invest in syndications. Can you cover a few of the additional benefits there I mean, regarding like what what other benefits would an investor see in just just that return?

TJ Lockboj:

Yeah, so with syndications, with with hold folio, like I mentioned, kind of the biggest edge that we have is the strategic partners. And so historically, if you were to invest with a lot of our partners, you're looking to cut, you know, cheque sizes of half a million dollars and more. Whereas when we're investing as a group and when you're investing through hole folio, our minimum investment is literally 12 $20,000. So it really opens up and eliminates that you know, barrier to entry for a lot of investors who want to gain exposure to multifamily. Another thing is with syndications you know, you're you have more flexibility on the you know the investment. So a lot of the deals that we do are private private deals, private placement deals. So for our investors, they're able to look at our financials, look at kind of our offer memorandums and all the documents they need for their due diligence to make a decision. And they don't need to necessarily tie up their money into a fund where with the syndications you're able to have more flexibility on what you're investing in. And so that's another huge benefit. And then another huge part is it's completely passive. And you're not liable to a lot of the debt, the risk that comes with the debt as well. So, for me, if you're working individual that's making really good income and you're looking to increase cash flow and you know, gain exposure to real estate syndications is one of the best ways that you could do that. For us, you get get to do it at a low minimum. And also, you it's completely passive. So our returns have been really strong, annually since 2014. And so I would recommend anyone going checking out our website and learning more, they can schedule a call with me, our Investor Relations Manager, and we'd love to see how we could add value.

Jack Hoss:

Sure, well, let's cover a few of the risks. What are some of the down gonna be put you on the spot and make you go a little transparent there? What are some of the risks or some of the things that a traditional investor might enjoy? That you might not receive in a syndication?

TJ Lockboj:

I'd say the biggest I wouldn't say this is risk, but it could be depending on opportunity cost would be, you know, real estate in general is is illiquid investment. So, when you're investing in syndications, you know your capital is tied up until there is a liquidation. event, whether it's a sale or refinance, and so for those who are looking to place capital into a fund or syndication, just be aware that this is something that is illiquid as opposed to, you know, having cash in the bank or or investing in the market, right where you can just sell it and, and in your out, you get your money back. This is not, this is not something that they could do with syndications. And as well as the control aspect, you know, you're you're generally coming in as a limited partner. And so you don't have really any voting rights or say as to how the operations is being managed. This is another thing to be aware of it, you know, depending on whether there's an individual that really, really loves control, or wants, and desires control in their investments. This is not something that is possible within, you know, a syndication so. Yeah. And so that, I would say that that's kind of another risk. Another big risk as well, I would say the, when you're investing in a syndication or a fun that the number one risk is, who you're doing business with, in my opinion. So really vetting out, you know, who these people are, what their track record is, you know, what their experience, you know, how they are penciling out their deals, if they're conservative in their underwriting, these are all questions that you want to ask yourself and ensure that you know, that they're, they're not novices to the business. And so that that right there, I believe, is probably the most important part when you're trying to mitigate your risk. And this is why we go through such an extensive process of vetting out the partners that we do business with as well.

Jack Hoss:

Sure. Well, my we're getting close to the end here. But before we do before we wrap things up, I have a couple more questions for you. One of them is that if somebody is interested in a syndication, or their list of questions that you think they should probably ask to do their own bidding.

TJ Lockboj:

Yeah, I would say definitely, that the track record piece is really important. It's it's extremely important. Understanding how to look at the numbers is also important as a as a limited partner, you want to make sure that you're verifying the financials, making sure things are conservative as well. And then, you know, if they have references, you know, if there's folks that they could, you know, hand you off, to talk to a lot of the times, you know, yeah, that's, that's something that's not too much to ask for. But it goes a long way, especially if you're going to be deploying a large amount of capital with with a syndication, you know, a sponsor another important pieces, you know, how much capital is being invested by the sponsors? Well, you want that alignment piece baked in there. So that those are three that really come to mind that are extremely important and that we look at ourselves. So. So yeah.

Jack Hoss:

Yeah, no, I think that one that last one of there is a particular interest because more times than not I found, you know, it's almost like dealing with property managers, your your interests sometimes aren't aligned. And and it's best to establish that in that relationship right up

TJ Lockboj:

front. Absolutely. You're, you're you You hit the nail on the head there, Jack, you're absolutely right.

Jack Hoss:

So well, just one more time to remind everybody hold folio.com to reach out to TJ and his team and see what they're up to and how they could possibly help you invest in syndications. But before I let you go, TJ, is there a question you wished I would have asked you here today?

TJ Lockboj:

Hmm. That's a great question. Nothing really comes to mind Jack. Yeah, nothing really comes to mind. You've done a great job, man.

Jack Hoss:

I appreciate that. I appreciate that. You've given us the time and some insight here. This is this is a new model. This is is particularly interesting. You really have found a way to lower that bar for for some of those investors who might have been you know, excluded in in traditional syndication. So this is really a neat project to see.

TJ Lockboj:

Yeah, we're very excited about it. And looking forward to adding value to our Investors and to new folks who who, you know, reach out. So I appreciate you having me on. Hopefully, we could add value to your viewers who are interested in learning more about how we operate and how we add value. So thank you again, Jack. This has been wonderful.

Jack Hoss:

Yeah, you bet. And I hope you'll come back sometime. Maybe we can talk a little bit more about your software platform. That's always of interest as well.

TJ Lockboj:

Sure, absolutely. Yeah, this is a day and age where especially with, you know, new syndicators, or even investors, we're really trying to make it. So this is something that is so accessible to everyone. So that we're providing the very best experience to investors, as well as, you know, automating a lot of the workflows for sponsors. In the past, acquiring software was just, you know, you're sacrificing an arm and a leg, and we've really lowered that barrier of entry. So I guess the theme for us, for Jacob and us, for Jacob and i is, where are all the opportunities that we can cut cost and move our industry forward? So,

Jack Hoss:

no, that's understandable. It's, as you were mentioning earlier, the margins are getting thinner and thinner, and you got to make them up somewhere. Yep, that's exactly right. So Well, again, TJ, this was great conversation. I hope you'll come back again sometime and thanks for your time.

TJ Lockboj:

Thank you, sir. Appreciate it, Jack.

Announcer:

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