042: Cash Flow Portfolio Mastery:  Crafting a $256k Per Year Strategy

00:00 - 01:00 | Pascal Wagner:
You build wealth through concentration and you preserve wealth through diversification. And at some point, your net worth grows to a point. I had this scenario where I invested $100,000 in Tesla 10 years ago. And if you know anything about what's happened to Tesla stock, it's gone to the moon and it turned into over $1.5 million for me. And along with my dad passing away and needing to manage the money that my dad left my mom, I now all of a sudden had this huge amount of capital where it was like, it's way too risky for me to have it all sitting in this one asset that's super volatile. And so, okay, what's the next thing that I need to focus on? The skill is the wealthy people that have a lot of money What they're doing is they're focused on finding the best fund managers in whatever asset class or strategy that they believe in.

01:00 - 02:52 | Christopher Nelson:

Welcome the podcast for financially focused technology employees. Are you working for equity? Do you have questions on how your career and money work together? Then welcome. Every week we discuss strategies and tactics for how to grow your career, build wealth, and reach your financial and lifestyle goals. Welcome to TechCruise and Money Talk. I'm your host, Christopher Nelson. Welcome back for another week where we're going to be focusing on income investing. We're going to be talking with a good friend of mine, Pascal Wagner, who he himself transitioned from being a venture capital investor running a large investment fund for venture, for tech stars, And now he's helping accredited investors invest in passive income producing real estate. It's a very similar journey to my own. I think you can learn a lot from our conversation. We're going to get into the conversation right now, but I do have an ask. Before we get started, if you haven't, if you really enjoy this podcast, please go and leave us a review on Apple, Spotify, or on our website, wherever you listen. Reviews help get the word out there and help other technology employees understand there's a place where we talk about career and money and how it all works together. Thank you so much for that. Let's go talk with Pascal. Welcome to Tech Careers in Money Talk. I'm excited to introduce everybody today to Pascal Wegner. Pascal Wegner is a serial entrepreneur and founder, having founded and run several startup companies himself. At one point, he found himself managing a tech star fund and raising capital for venture investments. He has now built a solid portfolio as a limited partner and today helps accredited investors get into cash flowing private equity in real estate. Welcome to the show, Pascal.

02:53 - 02:57 | Pascal Wagner:

Thank you, Christopher. This is long overdue. I'm excited to be here with you.

02:57 - 03:26 | Christopher Nelson:

It is. And I get really I get really excited when I talk to people that have a similar background and think in the same ways. And so I want to just get right to the heart of it, which is what was your inciting incident or what was the moment when you said, I really enjoy venture. I love technology, but to unlock my lifestyle and to do different things, I got to pivot to private equity.

03:26 - 06:06 | Pascal Wagner:

Yeah. So, you know, I think it's interesting because I think VC or venture capital falls into the bucket of, of maybe private equity and it's maybe just earlier stage and, and private equity. When I think of private equity, I think of, you know, investing in middle, you know, middle market companies that are still, you know, they're not early stage, but they're growing, but I was working at Techstars and I had the unfortunate event where my dad passed away from old age. He was 80, lived a great life, RIP dad. All of a sudden, in 2021, I became the man of the household. You know, my mom had never managed finances before. And she, you know, my dad took care of everything. And so all of a sudden, I was there trying to figure out, okay, we're closing all the bank accounts, closing all the credit cards. How do we convert, you know, different things into cash? And how do we reallocate it so that my mom can actually live a great retirement throughout the rest of her life? And having been exposed to venture capital and having worked at a fund, I think I vaguely understood parts of this space that Techstars goes out and raises money from big institutional players and $10-$15-$50 million checks at a time. And those – and then they go and deploy that as experts in the startup field and having all the access and the knowledge and the relationships. And so this idea of being able to invest with other people in a certain asset class, I'd been there but I – it didn't really click. But when this moment happened, I needed to figure out how to provide my mom an income and the only way I really knew how to do that was through co-living. I buy single family homes and I rent them by the room. I have a portfolio of 12 of those in Atlanta. I've been doing that for over a decade and that's how I originally got started in real estate at the age of 24. And now I had to figure out how do I not pull my hair out and diversify the money across a bunch of different things. And so I was in GoBundance and a men's mastermind group where all these people talk about is having multiple streams of income and you hear about syndications and funds. And so that's when I surrounded myself with people that were already making money and investing in these things to learn how to do it appropriately.

06:07 - 07:05 | Christopher Nelson:

got it. And so reading that back, there was this family event, you realize that you needed income, you had experience with real estate. And in seeing how that worked, then it was this pivot that said, how do I do this, scale it a bit more and start and even get a, let me get a stronger foundation and scale from there. Because at some point, you also realize that You wanted to do more on the limited partner side than you did on the general partner side. And this is an important topic for people to understand because there is a lot of noise out there that says, come take my education. learn how to become a general partner, and you'll become financially independent. When you and I both know running different real estate businesses, you can quickly find yourself into a not even just a full-time job, but something that dominates your life.

07:06 - 08:54 | Pascal Wagner:

Christopher, this is something that has been a big lightbulb moment to me now that I am going everywhere and shouting from the rooftops because, you know, this this notion of what got you here won't get you there. When you're younger and you're not an accredited investor and you know, you don't have that much money. The way people, all you hear is like, get into real estate, buy a home, you know, rent it out, cash flow. And you think that the only way to really get into these assets is that you have to go out and do it yourself. And there's been this proliferation of these different companies like Fundrise and Yieldstreet and Realty Mogul that have started to spring up where you can now go invest with other people. And that's, I think, slowly starting to become more and more visible in the norm. But, you know, I think only going down these paths of buying real estate and managing it yourself, not only Is it, like you said, another full-time job? But you just realize how much – it takes so much time, and I would be much better served focusing on where I make the most money and investing it with experts who are an expert in their field. Then for me to go restart the wheel and learn a new asset from scratch that, you know, like I need to go through all the pain. I need to lose the money. I need to make all the mistakes for my first several years. And I'm never going to be as good as the person who's been doing this for the last. you know, 20 years who's had all the mistakes, who's, you know, had all the issues come up and would be way better at deploying my money than me. And then all I need to do is collect a tax form at the end of the year.

08:54 - 10:36 | Christopher Nelson:

And you nailed it because what happens, and this is what I see too, and this is what people need to understand. This is how I like to break it down. Pascal is when you're young, So there's three ways. Let's just talk about it right now. You build wealth through ownership in either cash producing assets or in growth assets. That's it. That's really how you build wealth in scale. We all got this or the people who read Robert Kiyosaki, Rich Dad, Poor Dad. You can get those assets three ways. You can Build it, which is what you're talking about. When you're younger, you have more time so you can go and you can work and you can hustle and you can build that equity because you have more time. And then the second way that most people don't know about that I advocate for is you can also trade your time and talent for equity, which is what I did as I positioned myself as somebody who could help companies get through SOX audit. So I worked for a lot of companies and helped take, and I chose three companies to work for that went through IPO. That's how I got a lot of my equity. But then once you have more money than time, then you have to learn to buy equity. And this is where you transitioned, I transitioned, where now my main focus is not How do I get more GP opportunities? But how do I actually find better, limited partner opportunities where, to your point, I'm spending my time up front, I'm vetting the operators, I'm vetting the business plan, I'm investigating the asset class, making sure I understand it, and I'm deploying capital and I get the result of their hard work.

10:38 - 12:35 | Pascal Wagner:

You've nailed it, right? So once you start accumulating some sort of wealth, whether it's half a million dollars or you become accredited and you finally have the opportunities now, you can't become an expert in everything. You build wealth through concentration and you preserve wealth through diversification. And at some point, your net worth grows to a point. I had this scenario where I invested $100,000 in Tesla 10 years ago. And if you know anything about what's happened to Tesla stock, it's gone to the moon and it turned into over $1.5 million for me. And along with my dad passing away and needing to manage the money that my dad left my mom, I now all of a sudden had this huge amount of capital where it was like, it's way too risky for me to have it all sitting in this one asset that's super volatile. And so, okay, what's the next thing that I need to focus on? The skill is the wealthy people that have a lot of money, what they're doing is they're focused on finding the best fund managers in whatever asset class or strategy that they believe in. So to me, at least the way I look at the world right now is, okay, over the next 10 years, Where do I want to be invested? Do I think oil and gas is going to still be popping? Do I think, you know, multifamily real estate is going to be one of the best asset classes to be in? You know, I think figuring out where do I want to be and learning just generally about these asset classes and then figuring out which fund manager do I want to invest in to get the benefits of that asset class? That's what the wealthy people do. It's a new skill. You need to learn that skill.

12:35 - 14:42 | Christopher Nelson:

You do need to learn that skill and it's really understanding macroeconomics. One of the things that you teased out, there's a couple of things that I want to bring onto the table for conversation. They're studying the ultra-wealthy. And I actually move that needle up at the ultra-wealthy. And one of the things that I talk a lot about and advocate people do is I go and I'm not a member of Tiger 21, but I study everything they do. I read their newsletters. I look at their asset allocation report. And when you look at their asset allocation report, you're going to find they're probably around 24% in traditional equities, They're going to have another 25% in private equity. Those could be private equity funds, direct ownership of business, and they're going to have 25% real estate, and then the rest is going to be in others. Some are very low risk, some are very high risk. But understanding that portfolio and essentially having a thesis Because it's important. And I'm curious, like, for me, I look at my portfolio as my multi generational business. That's ultimately how I view it is I'm creating a multi generational business, that I'm standing up, I'm creating a playbook that I'm passing off to that my, you know, wife is a part of that my sons are going to be a part of and then moving forward, this is going to be an asset. And so when you think about that, Pascal, it's like, number one, I've given it an intention. And I've actually, our name for it that we don't share publicly is a family name that has some phenomenal history behind it as well. And then we've given it a thesis and every asset has a job. Then the other thing is you got to go out and you do have to spend some time. And honestly, I think this is the fun part. This is where I get to meet people like you is, hey, let's go talk about debt funds. Let's understand what's going on in the world of oil and gas and lets you and I have, what are you learning? What are you understanding? But I think those three things of the portfolio, thinking of a portfolio, studying the ultra wealthy, and then also studying asset classes are fundamental in building this thing out.

14:44 - 17:54 | Pascal Wagner:

I hate to say it like you nailed it over and over here, but I was taught by one of my mentors, Mike Klein, and I really had this at Techstars as well. Having worked at an institutional venture capital fund, I learned a lot of the ways that professional people think about investing. And, you know, I'll just take the example of working at Techstars. You know, we, our thesis, I specifically was the manager for the follow on fund. So the chief investment officer kind of made the overall strategy and the thesis. And then my job was to go make it happen. And so I was looking at deals, pulling deals in, evaluating them, and saying, yep, we're going to commit and invest $150,000 or $300,000 into that deal. And the thesis for that fund was, we're going to invest in the top 20% of portfolio companies within the Techstars network. And that's the thesis, right? And so I think every bit of capital that you have needs to have a thesis. You mentioned to me before this call that you have this 50-50 strategy. A lot of people talk about the barbell approach. You have some in equities and some in cash flow. There are three things that you can do with your money. You can have the equity grow as fast as possible, you can get tax benefits, or you can get cash flow. And with every investment, you either get one or a mixture of all three. So as an example, with real estate, you get appreciation from the property, you get cash flow from the rent, and you get the tax benefits, right? But if you invest in crypto, for example, it's only equity growth. And so every dollar that I have, I'm also thinking, what is my overall goal? For me, my goal has been, I'm putting all of my money into cash flowing investments until I've reached my nut, until I've reached $250,000 in passive income for me. And then everything after that, I'm putting into, equity growth. And I'm doing kind of like an 80-20. So I mostly invest in cash flowing things. And then the other part I have in super risky, you know, I've got over $800,000 in crypto. And like, that's a super long term, risky investment. And then I have, you know, the other part is The cash flow allows me to live this lifestyle where I can focus on building my next business. And so figuring out what is it that you want out of your money. A lot of people just see a deal come across their desk and then they get FOMO. And then they may invest with it. They didn't even really think about, like, what am I trying to make this money do for me? A lot of people say, hey, I want a lot of passive income. And here they are with, like, half a million dollars in the stock market, and they're trying to do this side hustle and get passive income so they can leave their job. It's not very clear. It's not a clear plan of, like, what are they trying to do? What are they trying to get out of their money?

17:57 - 19:20 | Christopher Nelson:

I haven't had a chance to talk with somebody like this in a while where you have just created, that is the key argument of why you need to have a thesis for your portfolio before you go invest. And, and it's also important to understand, you know, I see, you know, so much marketing out there. And I know for us, because we are, you know, in a lot of real estate and other cash flowing investments, you see, deal after deal come across your desk, but my filter, is my portfolio thesis in where I have capital to allocate. If it doesn't fit that filter, then okay, keep moving on to the next one. And I may look at something and I may have a conversation and say, well, next time I have capital to deploy in that particular sector of my portfolio, like I want to have a conversation with that person. And ultimately, my journey started the same way, too, where I realized that if I could take the tech equity that I created through these IPOs and I could convert it into replacing my paycheck, then you're right. I can now live the life I want from a vocation perspective. I want to work a portfolio lifestyle. I want to be a creator. I want to have my fingers in real estate. I want to create a media and education business. Just because those are the things that bring me joy. And with a good portfolio, you can do that, right?

19:20 - 19:25 | Pascal Wagner:

Yeah. At the beginning, you mentioned like your 50-50 strategy. Dive more into that.

19:26 - 21:02 | Christopher Nelson:

Well, so the 50-50 strategy, and I did a whole podcast episode and wrote this up, but I want to get your insight into this too, is I see it as I want to have a portfolio that's 50% growth, 50% income. And then on both sides of those growth and income, I have a quadrant that's low risk and I have a quadrant that's high risk. And it's a variant of the 60-40, and I moved it to 50-50, just arguably it's just easier to manage. But it also, I think it works very well because for me, if I need more cash flow, I know, okay, I'm probably going to go into the medium to high risk category, and I'm going to be looking to deploy things that can give me more cash flow now. But then as it gets out of As it starts getting out of balance as I start deploying somewhere else, I can then take the cash flow and I can start filling other gaps. I'm essentially, you know, and then, you know, the thing that I think is interesting that you mentioned that underlies it is then I literally have, you know, this 50% that I also look at to be very tax efficient as well, because I want to make sure that all of my income has some level of tax efficiency, whether that's, you know, the ATM investment, where you're getting non recaptured depreciation, which is a nice, you know, nice depreciation ticket underneath that. But then that helps balance out any type of capital gains that you're going to be getting from the gross side as well. That's how I'm running it, baby.

21:02 - 21:44 | Pascal Wagner:

My approach is very similar. I think just like you mentioned, you've got two buckets and It's like, OK, what am I looking to do? You know, something I hear pretty often is, hey, I have a huge tax bill. You know, it's it's November or December. I need to invest in something that has depreciation. Like that is a very clear example of someone has an investment thesis. They've got money and they need to figure out how to lower their taxes. And so they're looking for vehicles. And so, you know, I think that's probably the the most clear version of that that I hear. But I don't I don't hear people be as concrete about, you know, other deals that come across their desk.

21:44 - 22:20 | Christopher Nelson:

And part of it is, I think a lot of this and I'd be curious what your experiences to, you know, talking to a lot of technology employees, talking to a lot of investors. We focus so much And I know, and I want to hear a little bit about your story of, you know, you got in and you had some, you founded some companies, had some exits as well. And at some point in our career, we focus so much on making the money, you know, we want to build that equity, or we want to trade for that equity, we get it. And then I know for myself, I had this moment was like, Oh, snap, I got it. What do I do with it now? What was your experience like?

22:22 - 25:03 | Pascal Wagner:

I would probably say that Tesla was the most significant transformation that I've had. And it's fascinating because there is an amount of fear that fills your mind. First off, I had all of my – pretty much most of my net worth was tied up in this one stock, right? And that stock is also pretty volatile along with the stock market just being volatile, right? And I think it's crazy to see your account go up and down by $150,000. And that's like maybe 5 or 10% of your net worth. And you see how much it's gone up and you're like, I don't know if this is sustainable. It's interesting because I had an investor conversation last week, where someone on the call was basically talking about, hey, I just want to, I don't know how to do this. But like, I also don't really want to put in the work to learn. And it's this quote of what got you here won't get you there. I think, you know, learning how to manage money is a skill. And it is a skill that at least I feel like I sucked at at the beginning, right? Like you need to learn how to balance a budget. You need to learn how to deal with cash flow coming in and having accounts payable and accounts receivable. And a lot of what I, I've really subscribed to this mindset of trying to say no to more and more opportunities and to focus my time and rein in my time. But that is one of those skills that I think is just a requirement as you grow up and as you become wealthier, that as much as you don't want to take on something new or, you know, it's scary. I mean, like, you know, if you don't manage your money right, you could lose all your money. You know, most people who win the lottery, they don't have it within five years. And it's because they don't have the skills built up yet. And so I think that was one of the biggest transformations is just How do I surround myself with people that are investing in things that don't take up my time? And the default way you could say is the stock market. Having made a bunch of money in the stock market and also being in real estate, I have an affinity towards real estate. It's something I know. It's something I understand really well. And learning the skill of allocating capital, I think, is just – there's no way around

25:04 - 29:11 | Christopher Nelson:

Reaching the next level of wealth without developing that skill Wow that was that was a really nice segment First and foremost you talked a little bit about your experience with sudden wealth syndrome right that there is a technical syndrome for that and I know that because my experience was on a April 19, 2012, the day of my first IPO, a company called Splunk. Right in the middle, I had a, you know, in that day, we had a multiple seven-figure payday, like that. It happened literally like that. So then there was this euphoria, there was this party, and then I got home that night and I asked my wife, or I showed my wife, what I did is I spun around, I showed her the Schwab account, I go, what, we made it, what's up, was flexing, you know, thought it was so cool. She's pregnant at the time and she says, when can we buy the house? Like, when can we get some of that money and buy the house? And I said, Hey, go back to sleep. And I went back in the next room and I went to the living room and I just sat down and I literally broke down a cry. Like I had this weight fall over me that said, I don't want to be the idiot that loses this. I have no idea. Like I knew we were in a six month lockout, but I what do you do next? I had no idea. Like I literally worked up until that point in my life to get to that moment. And I didn't know, you know, I knew, you know, and so this is where I want to make sure like, yes, I do have a good understanding of finance and how finance work. I've been doing a lot of stock investing at that point. So I knew, but I didn't feel comfortable to make the moves at that next level. And that created anxiety, created depression. And for the next six months, we had 90% of our wealth going up and the stock would fluctuate 10%, 20% and it was absolutely brutal. However, those periods of time, they train you. And we went out, and we got fee-only financial advisors to get advice, to get a plan that they didn't have any interior motive to sell us anything. We could just go get education. We could get advice. We synced up with a tax person. Because in my mind, I had this vision of, OK, there's really two steps. there's first and foremost is how do I most effectively get this equity to cash? In my mind, I just envision that cash suitcase. I want to get it from here to cash, paying the least amount of taxes. Then I can sit on the cash and then I can figure out, okay, how do I want to invest it? And I want to make sure that I'm doing each move because I think there also is, and I'd be curious if you felt like sometimes when you do have this large payday, at the beginning anyway, I had this feeling, I got to make moves on the street. I got to get this money working. And when in reality, it's like, no, slow down, take each step at a time to predict the outcome. And so I wanted to share that out of what you said. The other thing that I think is so important for people to understand is that money management is a skill. And if you enjoy it and you're listening to this podcast, you're in the right place because I absolutely love it. And this is where I know I'm sitting across from somebody who enjoys this as well, too. And we can geek out on this stuff all day long. But I am excited to be the manager of my portfolio for as long as the days I have left on this planet and pass on that joy to my son. Because when you learn how to do this, I think it takes some of the best of our experiences that we had before, like relationships, you get to meet people that love building great apartment complexes and taking care of tenants, right? They're taking care of customers or I'm in mobile home parks, I'm working with where We're working with hardworking families where we want to give them a place to live and save money. That's a good thing. And all other types of things, too. It brings me a ton of joy. But I'm curious. Two questions I have for you. Are you aware of Sudden Wealth Syndrome, the psychological syndrome?

29:11 - 29:15 | Pascal Wagner:

I'm not. I'm not. But I believe it's very real.

29:15 - 29:37 | Christopher Nelson:

Oh, yeah. You felt it, man. For sure. Yeah. Well, yeah, because I had to look that up, too, because I just thought, you know, and this is the thing, I think that also messes with everyone. And because Sudden Wealth Syndrome makes you feel isolated. And it does, because at some point, when you're moving up, you don't know who your peers are, you don't know who you can trust and have conversations with.

29:39 - 31:34 | Pascal Wagner:

I definitely resonated with that. I think I was fortunate enough to be in this men's mastermind group called GoBundance and to be in that group, you have to have a million net worth or more. One of the core pillars is transparency. So literally we're there and you come up with this thing called a one sheet where you have how much you made last year, what you spent last year, what you invested last year, what your net worth is, what you want your net worth to be this year, what your projections are. You put all of your metrics on a piece of paper and you share it. You hand it over across the table and everyone's looking at it and asking you questions. And so there I had people that I could I mean, I really call them like my mentors. They showed me the way, right? I mean, in that group, a lot of people talk about like, how many streams of income do you have? Are you a hundred percenter is what they call it. Like what percentage of your expenses are covered by passive income? And so this was a very much trained in me but it yeah without that I I would have been lost right I mean it it's also a lot scarier because the numbers are a lot bigger. I feel like I had the experience of working at Techstars where it's a $150 million fund and there are a lot more zeros in these. I'm dishing out 150K, 300K checks every week like candy. It did change the dynamic for me, but I can tell you even now still every time I make an investment and I'm about to wire $50,000 or $100,000 that You know, I still sweat a little bit. Like, am I sending this to the right account? Is this the right idea? Like, am I making the right decision? So I think there are a lot of things that go along with this sudden wealth syndrome.

31:34 - 32:05 | Christopher Nelson:

There are. And the one thing that you teased out that I think is so important is that when you have either education or you have a peer group, it can reduce those symptoms and the things that you actually feel, because you can actually, you know, somewhere where you can go get feedback, you can get advice, and you can get understanding. And sometimes just having somebody understand what you're going through and empathize can relieve a lot of pressure.

32:06 - 33:10 | Pascal Wagner:

Well, I think that's like one of the skills that I really leaned into is anything that I'm trying to do, go find someone who's already done it. And don't try and reinvent the wheel, just do what they do, you know, or learn from their mistakes. You know, when you hire an employee, I mean, I guess it depends on the type of employee you're hiring. But, you know, if you're hiring for an executive level position, you're looking for someone who's already done XYZ thing at multiple other companies and have seen great results and you're hiring them to come into your organization to produce the same type of result. When I'm investing, I want to invest in an operator who's already done XYZ for the last 10 years. And it has a great record of doing that. Like, I'm not going to go reinvent the wheel. When I was trying to learn how to invest, where to invest, I went to the people who had a ton of money in different funds and syndications, asking them, what did they learn? Who are their favorite operators? Why do they like them? Why do you know what do they look out for? You need a mentor, otherwise you will fail.

33:10 - 34:59 | Christopher Nelson:

You need a mentor. You need a community. You need somewhere. Because I always say that you need to go find the astronauts, not the astronomers, right? Because it is important to understand that out there, especially now in this world, there's going to be people that position themselves as operators where they really are leveraging somebody else's expertise. And go find the astronaut. Go find the person who's been there, who's done that, who has that healthy scar tissue. and also aligns with your principles. And I say this because in these world of assets that we look at, let's think multifamily for example, there are operators that are doing core and core plus assets, meaning that they're buying newer buildings that don't need a lot of rehab, and they're being very picky with their deals because they want to find something that's gonna cash flow. for a long period of time. That, for example, is something that aligns with a nice conservative cash flowing portion of my portfolio, very tax-efficient, getting some good cash flow, conservatively underwritten long-term debt. There's also people that are doing value-add, which is almost a scaled fix and flip. that may be getting less cash flow, maybe have more risk in the operations. There's also people that are doing ground-up build that are going to, again, be more of that equity side of your portfolio and they're going to be long-term growth. You need to decide which operators align with your thesis of your portfolio and then go and get to know them and then ask who their friends are, ask who they work with. because that's what's going to allow you to truly start expanding the full reach of your deal flow in your portfolio.

34:59 - 36:38 | Pascal Wagner:

Yeah, I think you nailed it. I think A lot of what I talk about is having mastering the skill set of deal flow. Because if you have deal flow, like if you only have a couple different people that you know, you know, like if you only know two different multifamily operator, like let's say you've decided like, okay, I'm looking for something that has some cash flow. I don't need that much right now. But you know, it needs to spit off cash flow in the next two or three years. I'm okay doing a getting into an apartment building where they need to renovate it a little bit. And you may know like one or two. And, and so you really just box yourself in into investing of like, okay, these are the only opportunities that I have, rather than saying, Okay, this is what I'm looking for. I'm looking for something that will give me cash flow in a couple years, and I want to build up some equity in it. Like, What are all the who are all the different players? Let me make a list of 50 of them and then figure out which ones I like. I mean, there are a lot of douchebags, you know, that, you know, I think a lot of investing is is figuring out who you want to invest with, because you're going to you're in these partnerships for five to 10 years, oftentimes. Right. And so finding people that you align with, who you I actually have this This thought process, it's like I would feel comfortable presenting that manager to anyone I know. I feel proud to introduce them. And if I don't, that's the wrong place to be putting my money.

36:39 - 37:58 | Christopher Nelson:

I think little tests like that are so important because really, this business is all around selecting the operators. It truly is. And you need to find people that you really want to work with. And you want to try to find people that are also going to be your partners. Don't take the word partner lightly. In fact, take it very seriously. and spend time on that. I also think people do get myopic. I heard recently there's been a lot of conversations around some of these larger multifamily failures, especially in Houston. There is one that lost a ton of equity and I was reading a story about it and it mentioned one investor who was, you know, tech guy as ourselves and he had put the majority of his retirement savings, like a million bucks in this thing, lost it all. And it goes back to what you said earlier, concentration when you build the equity, that's understandable. But diversification and diversification of operators, of asset classes, of geographies is very, very important. And don't sleep on that.

38:00 - 40:45 | Pascal Wagner:

Yeah, I have a rule or let's say I'm not there right now. The most I have is 8% of my net worth with an operator. And my goal this year is I want to have everything under 3% is my goal. So I'm trying to reallocate. It's mostly in debt funds that I'm trying to reallocate. You know, it's like, what type of exploit? There are all these things you need to think about, right? And if you don't know about money management or allocation, you know, you need to be listening to a lot of these. I'm constantly listening to these podcasts and, and understanding how do different people think about it. And, you know, 3% rules, like a a tip I picked up somewhere and I was like, that makes a lot of sense. I'm going to put that in my tool belt. I think it's about collecting a lot of these little nuggets and for you to decide what aligns with you. Investing is so personal. Do you want to invest in green stuff? Do you want to be super concentrated? Do you have a huge amount of cash coming in each month? you know, maybe if you're an attorney or you're, I don't know, service, you know, service based kind of professional, then you, you might be comfortable taking more of those risks. You know, there is no one size fits all. But I've definitely Yeah, I mean, I've heard that so often. I've heard that with, you know, there's this character called Matt Onofrio who has taken a bunch of people's money that, you know, they took their entire savings and put them in there. And, you know, when you come across these deals, they do, you know, they can sound really lucrative. And, you know, I think The thing that I do to try and prevent things like that happening to me is I have a small circle of people that also do these types of investments. And any deal that I'm looking at, I say I will write down why I like it and why I don't. And then I'll share it with them and then get their perspectives. Right. Like the more perspectives you can get on a deal. Oh, hey, this looks, you know, their rent assumptions look insane. They're saying five percent for the next five years, you know, is some of the underwriting you would see in twenty twenty one before the market tanked. And it's like that's normal. Rent assumption is three percent. Like I want someone who's projecting two percent, even though inflation is going up. you know, because that's not going to last forever. Or, you know, these are all just tidbits I would hear from other people. And it's like, okay, that makes sense. Like, I'm picking up what you're putting down.

40:45 - 41:38 | Christopher Nelson:

Well, let's jam up. So let's jam on that for a second. Like, I love this. I love this thread that you're going down right here. Because I think that's, that's incredible value is, I want to just let's go back and forth right now on what are some, what are some things that I'm not going to investment invest in, you're not going to invest in from the look in the field. So for example, I am not going to invest in a blind fund. A blind fund is where somebody says, I'm collecting $50 million and then I'm going to deploy it in X asset. I'm not going to do that. That's too high risk for me, even if the operators have a phenomenal pedigree. That is not something that I like because I want to be able to see the asset, underwrite the asset myself and look at it, especially from a real estate perspective. What's what's one for you, Pascal?

41:38 - 42:23 | Pascal Wagner:

Interesting, that's, you know, it's fascinating, because I come from the venture capital world where that's all that's the that's the default way, you know, you collect money, and then then they need to go out and find companies to invest in. Another, I want to I want to jam on that for a second. I think, yeah, go, go, go. Yeah, do you want to? It's not necessarily a rule that I don't do, but when I came across the ATM investment that I think we're both in, what I thought was really fascinating at the time that I invested was that it was an existing portfolio that I could buy into. And so to me, that lowered the risk of investing in something like that. So I haven't made that note, but I'm going to a noodle on that one.

42:23 - 43:22 | Christopher Nelson:

That's a good one. I think especially on the real estate side, I think there's more risk. I do know people and my preference is on the VC side. I love doing seed investing. That's really where my heart is. If I'm going to go high risk, high reward, I have some investments right now. I know the founders. I check in on them. We jam together. I try and add value to them. We spoke about this a little bit earlier where there's conservative parts of my portfolio, so I'm in index funds, right? So you could argue, OK, well, that's a blind fund, right? I'm betting a market, right? I'm investing in a market, right? Not the actual thing itself. But when I think about my higher risk side, I love direct investments and I love understanding more of what's going into there and what I'm actually underwriting because then I just think I'm going to make better decisions because sometimes I'm not a blind fun guy.

43:22 - 45:29 | Pascal Wagner:

Yeah, no, I hear that. One, you know, I think there's a nuance here, which is I have different rules for different pockets of money. So as an example, is the portion of capital that I was allocating for my mom to provide her consistent income is that one, it had to produce monthly income, not quarterly, not annually. had to produce it monthly. And so because I'm trying to align my mom on, you know, she has this much coming in every month and this much going out every month. Like I didn't want to deal with the burden of, you know, getting money in quarterly and then watching it go down. And then, you know, I don't know, it just felt better for me. And then I was looking for investments that produced cashflow in less than 12 months. To me, that was kind of like, you know, the longer that you wait to produce cash flow or that you expect to receive cash flow, I believe the riskier it is to me. And then the other one that I have really honed in on is what has their track? I only invest in vehicles where they've produced the outcome consistently over multiple down cycles. So, you know, if you look at, you know, what happened during COVID, you know, in March of – was it 2020 or – whatever COVID happened. And at that point, it's like how did – I'm in this DLP capital lending fund. That's one of the funds that I promote. that I'm invested in and I allow other people to invest with me in. And the reason why I love it is you go look at their track record, you look at them in 2015, you look at them in 2018, you look at them during COVID in 2020, and they have had consistent returns throughout multiple down cycles. What are you investing in? You are not investing for the best case scenario. You're investing for how does it perform when shit goes sideways.

45:32 - 46:01 | Christopher Nelson:

100%. Oh, man. And that's so good. And I do think that I have, I mean, and that was one of the other things I was going to say is I am not, I'm not taking any long shots in portions of my portfolio, especially the real estate side and the income side, experience matters and having people who have produced the same result over and over again, people who have operated through down cycles. And I can see clear evidence of that in understand how they're going to navigate. That is so, so, so important.

46:02 - 46:58 | Pascal Wagner:

Yeah, and look, I think, you know, the thing I keep talking about or think about is, you know, Who would you rather invest with? I want to invest with someone who has an unfair competitive advantage. This is something I picked up from Matt King, who manages David Osborne's $150 million family office. And it's, it's exactly that. Like, I want to be invest, you know, do I want to invest with the guy who's, you know, doing his second or third oil well? Or do I want to invest with the guy who's, you know, been, he grew up on the oil fields and he's like a fourth generation oil person and they know every single person in the community and have all the connections and they know the government. You want to invest with people who have an unfair competitive advantage. If you're not doing that, why are you investing in the deal?

46:58 - 47:40 | Christopher Nelson:

Right. And the thing to let people know is they are out there. This is this is the work. And this, to me, is the fun work that you get to do in building the portfolio because you get to reach out, you get a network with people like Pascal, you get to meet people like this. I mean, I just came back. And I did a tour, I invested in a QSR fund, which is quick service restaurants. And these are, they're doing a roll up of Burger Kings and Subways. And these guys have a track record of mile long, these guys are restaurant guys. And I went out, you know, saw the restaurants, you know, was shaking hands with employees, we went out, you know, broke bread together. And it was it was absolutely fabulous. And I literally had a blast.

47:42 - 48:15 | Pascal Wagner:

And look, I think for people like you and I, we love to do these things. And I understand that there is a segment of people who they've just got other priorities in life. They have other things going on. Right. And so I think for those those people, I mean, I meet them all the time. Right. They're my friends. It's about aligning yourself with people like us, if you want to get into this space, that you align with how they think about investing. And other than doing the research yourself, I think that's the other shortcut.

48:15 - 48:28 | Christopher Nelson:

Yeah, 100%. Well, hey, man, I know we're getting to the top of the hour. I know you're going to turn into a pumpkin. I've got to fire around. I got five quick questions for you, and I know you can answer them real quick. What's the worst career advice you've ever received?

48:28 - 49:18 | Pascal Wagner:

Worst career advice I ever received? There is a balance to move fast and break things, very much being in the world of following Mark Zuckerberg. When I got into the venture capital world and then you start managing a bunch of high ticket dollars, I had my boss sit down with me at one point and mention You know, like I'm always, I'm always the first person to go, you know, take action. I'm an action taker. And since this conversation, it's been like, okay, you know, there are, you know, this one way and two way doors from, from Jeff Bezos. Right. You know, is this a, a way that you can return back from or not? And like, let's think strategically before we sink all this effort in, is this the right direction? That's good.

49:18 - 49:19 | Christopher Nelson:

How do you keep learning?

49:20 - 49:42 | Pascal Wagner:

talking to people who've done better than me in what I'm trying to get better at. Right now, I'm trying to get better at sales. I'm listening to some Grant Cardone sales training. I listen to a lot of podcasts on investing, on different asset classes, how high net worth people think about investing. I mean, it's the assortment books, podcasts, trainings, courses, masterminds.

49:42 - 49:46 | Christopher Nelson:

Yep, the new stuff. What do you do to recharge?

49:46 - 49:52 | Pascal Wagner:

I like to go to the gym, and I like to kiteboard and play pickleball.

49:52 - 49:54 | Christopher Nelson:

Those are a couple good ones.

49:54 - 49:56 | Pascal Wagner:

Yeah. Are we going to play at any point?

49:56 - 50:04 | Christopher Nelson:

Let's go, man. I'm in for pickleball whenever you're ready, baby. What's advice you'd give your younger self working in tech?

50:04 - 50:40 | Pascal Wagner:

Oh, man. When you're young, it feels like you don't have that many opportunities and, and, you know, you're just, you have an opportunity to come along and it sounds like a great fit. But the same thing that we're talking about here about like choosing the right operators, if you're going to go dedicated, if your goal is to grow equity in a startup, like you need to, you need to put down the bright eyed and bushy tail, you know, thought and really think like, does this company really have a real chance to become big? You know, because otherwise you're wasting your time and valuable equity that you could be earning.

50:40 - 50:49 | Christopher Nelson:

Yep. And I say that you need to think like an investor with your time and talent. I mean, that's it. Underwrite that bad dog. What's the worst money or investing advice you've ever received?

50:49 - 51:26 | Pascal Wagner:

Buy a business. Buy a business. Yeah. Buy a business. I mentioned at the beginning, I have an active real estate portfolio. And now I have 50% of my income comes from the active portfolio, and 50% comes from alternatives. Yep. And, you know, now that I'm in this stage, I want to sell my active portfolio and move it all into to passive things and free up that time. It is 100 percent like an additional thing on my mind. It's something that, you know, if I'm not putting my attention there, it can go sideways. Really just leveraging how you become wealthy is leveraging other people's assets and time and expertise. It truly is.

51:26 - 51:38 | Christopher Nelson:

Wow. Oh, Boom. That was a gem right there, man. You just ended strong. Hey, how can people find out more about you? Because you have your own podcast. You've got your own platform. Tell us about it.

51:38 - 52:01 | Pascal Wagner:

Yep. So you can go to gregercashflow.io and join our email list. We educate you all about alternative investments, kind of all the things I wish I knew when I first started. I provide deal flow of all the deals I come across. I'm most active on LinkedIn. So find me at Pascal Wagner. And I'd say those are the two best places.

52:01 - 52:20 | Christopher Nelson:

And I'm going to put both of those links in the show note. And thank you so much, Pascal. I have a feeling that at some point we're going to do another piece of content or something cool for the group here. But I can't thank you enough. It's been great to have this conversation and look forward to more in the future.

52:20 - 52:23 | Pascal Wagner:

Likewise, Christopher. Thank you for having me on.

52:23 - 52:45 | Christopher Nelson:

My pleasure. Thanks so much for joining us today. I hope that you enjoyed that conversation. And I would just ask you to do one thing. Please leave us a review. We need your reviews here on this podcast. Reviews help us grow. So if you could take the time, give us a five-star review. Let us know what you liked about the show. We'd greatly appreciate it. Thank you so much.