091: Rewind - How He Built $256k Cash Flow in His Portfolio

00:00 - 00:30 | Pascal Wagner: 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. I think about figuring out where I want to be and learning just generally about these asset classes and then figuring out which fund manager I want to invest in to get the benefits of that asset class. That's what wealthy people do.
00:36 - 01:51 | Christopher Nelson: How did I learn how to manage my tech millions? I looked at what others were doing and I learned from them. In today's episode, we're actually going to replay episode number 42, which is cashflow mastery was the title of that episode. It still is with my friend, Pascal Wagner, where we learned from him how he went from, you know, a small amount of income in his portfolio to $256,000 a year. You'll hear his story that gave him a really big why, a big motivation to do it. And also he'll break down the strategies and the steps along the way to get there. I hope that you enjoy this episode so that you can understand and get some takeaways how somebody just like you, a technology professional, can go and build out serious income in their portfolio. Enjoy the episode. 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.

01:51 - 01:54 | Pascal Wagner: Thank you, Christopher. This is long overdue. I'm excited to be here with you.

01:55 - 02:22 | Christopher Nelson: It is, and 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?

02:24 - 05:08 | Pascal Wagner: Yeah, so I think it's interesting because I think VC or venture capital falls into the bucket of maybe private equity, and it's maybe just an earlier stage. And private equity, when I think of private equity, I think of investing in the middle class. You know, middle market companies that are still, you know, they're not in the 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, you know, R.I.P. Dad, you know. But I think all of a sudden, uh, in 2021, I became the man of the household. You know, my mom had never managed finances before. And she, you know, my, 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 re allocate it so that my mom can actually live a great retirement throughout the rest of her life. 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've been there but I – it didn't really click. 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 do 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. I had to figure out how to not pull my hair out and diversify the money across a bunch of different things. So I was in GoBundance and a men's mastermind group where all these people talk about having multiple streams of income and you hear about syndications and funds. 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.

05:08 - 06:05 | Christopher Nelson: Got it. And so reading that back, there was this family event. You realized 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.

06:06 - 07:53 | 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 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 don't have that much money. The way people – all you hear is like get into real estate, buy a home, 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 and you know 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 it's – 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 – 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 has 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.

07:54 - 09:34 | 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, right? 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 audits. 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.

09:36 - 11:45 | Pascal Wagner: There's – 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, right? And you can't – it's – you build wealth through – what is it? 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. you know, along with my dad passing away and needing to manage the money that my dad left my mom, I know 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, OK, 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 multifamily real estate is going to be one of the best asset classes to be in? I think figuring out where I want to be and learning just generally about these asset classes and then figuring out which fund manager I want to invest in to get the benefits of that asset class. That's what wealthy people do. And once you get it, it's a new skill. You need to learn that skill.

11:47 - 13:57 | Christopher Nelson: You do need to learn that skill. And it's really understanding macroeconomics. And one of the things that you teased out, there's a couple of things that I want to bring onto the table for conversation is 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% in real estate. And then the rest is sort of 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 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 that my 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 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've 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 . 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.

13:57 - 17:17 | Pascal Wagner: I hate to say it like you nailed it over and over here, but I was taught by one of my mentors, my client, uh, about, and I really had this at tech stars as well, right? Like having worked at an institutional venture capital fund, I learned a lot of things like the ways that professional people think about investing. And, you know, I'll just take the example of working at tech stars. You know, we, our thesis, I specifically was the manager, uh, manager for the follow on fund. So, uh, 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 like 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 cashflow. 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. I mean, for simple terms. Yes, and so every every dollar that I have I am 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, you know, until I've reached $250,000 in passive income for me. And then everything after that, I'm putting into, uh, 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 is super risky, I've got over $800,000 in crypto. And that's a super long-term risky investment. And then I have 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 it is 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 it 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, You know, 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. You know, 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?

17:20 - 18:44 | 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 it's also important to understand, I see so much marketing out there. And I know for us, because we are 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 and 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 and I want to live 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?

18:45 - 18:50 | Pascal Wagner: Yeah. At the beginning, you mentioned your 50-50 strategy. Dive more into that.

18:51 - 20:28 | 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, if 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 that 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 balance, as I start deploying somewhere else, I can then take the cash flow and I can start filling other gaps. So 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 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 the ATM investment where you're getting non-recaptured depreciation, which is a 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 growth side as well. Yeah, that's how I'm running it, baby.

20:30 - 21:10 | Pascal Wagner: My approach is very similar, right? I think just like you mentioned, you've got two buckets and it's like, okay, what am I looking to do? Something I hear pretty often is, hey, I have a huge tax bill. It's November or December. I need to invest in something that has depreciation. That is a very clear example of someone who 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 I think that's probably the most clear version of that that I hear, but I don't hear people be as concrete about other deals that come across their desk.

21:11 - 21:47 | Christopher Nelson: And part of it is, I think a lot of this, and I'd be curious what your experience is too, talking to a lot of technology employees, talking to a lot of investors. We focus so much. And I want to hear a little bit about your story of you got in and you founded some companies, had some exits as well. And at some point in our career, we focus so much on making the money. 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 where it's like, oh, snap. I got it. What do I do with it now? What was your experience like?

21:48 - 24:45 | Pascal Wagner: Oh, man, you know, I think I would probably say the Tesla was the most significant, you know, transformation that I've had. And it's fascinating because there is an amount of fear that fills your mind when 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. So I think it's interesting because I had an investor conversation last week where someone on the call was basically talking about, hey, I don't know how to do this, but 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 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. As much as you don't want to take on something new, it's scary. If you don't manage your money right, you could lose all your money. Most people who win the lottery, they don't have it within five years. It's because they don't have the skills built up yet. 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, but having been – 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 reaching the next level of wealth without developing that skill.

24:45 - 28:50 | Christopher Nelson: Wow. That was a really nice segment. First and foremost, you talked a little bit about your experience with sudden wealth syndrome. There is a technical syndrome for that. And I know that because my experience was on April 19, 2012, the day of my first IPO, a company called Splunk. Right in the middle, I had a, you know, on 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 and go, what, we made it, what's up, was flexing, thought it was so cool. She's pregnant at the time and she says, when can we buy the house? 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 went to the living room and I just sat down and I literally broke down and cried. I had this weight fall over me that said, I don't want to be the idiot that loses this. I have no idea. I knew we were in a six month lockout, but what do you do next? I had no idea. I literally worked up until that point in my life to get to that moment. And I didn't know. I knew. And so this is where I want to make sure. Yes, I do have a good understanding of finance and how finance works. I've been doing a lot of stock investing at that point. So I knew. But I didn't feel comfortable making 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, in 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? And 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, OK, 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, like 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. They're taking care of customers. Or I'm in mobile home parks. 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?

28:51 - 28:54 | Pascal Wagner: I'm not. I'm not. But I believe it's very real.

28:55 - 29:17 | 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.

29:17 - 31:19 | Pascal Wagner: I definitely resonated with that. I think, you know, 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. And so I, and you know, 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. Like you put all of your metrics on a piece of paper and you share it. Like literally you hand it over across the table and everyone's like looking at it 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 how many streams of income do you have? Are you 100 percent 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 you you don't it's also a lot scarier because the numbers are a lot bigger right like there are a couple more zeros afterwards and you know I feel like I I had the experience of working at Techstars where it's $150 million fund and there are a lot more zeros in these. And I'm dishing out 150K, 300K checks like every week, like candy, right? And so 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 or $100,000, I still sweat a little bit. Am I sending this to the right account? Is this the right idea? Am I making the right decision? I think there are a lot of things that go along with this sudden wealth syndrome.

31:20 - 32:33 | 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. Quick break. Is this episode hitting home? Are you learning and getting clarity in what you need to do next to transition from being a moneymaker to a money manager? This is exactly what the WealthOps Framework is meant for. So if you want to know more, go to managingtechmillions.com put in your email, you can get access to our free resources, our guides, and learn about upcoming events. You can also go to the YouTube channel, Managing Tech Millions, subscribe and hit the bell for when we have new videos, whether that's podcast videos or whether that's some of our how-to videos. Go and get your free resources because when you have that clarity, that's gonna give you confidence and that confidence is gonna give you commitment to take the action that you need. All right, let's get back to the episode.

32:34 - 33:40 | 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 X, Y, Z thing at multiple other companies and have seen, you know, 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 has a great record of doing that. 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 they learn? Who are their favorite operators? Why do they like them? What do they look out for? You need a mentor. Otherwise, you will fail.

33:41 - 35:26 | 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 this world of assets that we look at, let's take 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 going to 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 builds 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 the 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.

35:26 - 37:08 | Pascal Wagner: Yeah, I think you nailed it. I think a lot of what I talk about is mastering the skill set of deal flow because if you have 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 operators, like let's say you've decided like, okay, I'm looking for something that has some cashflow. I don't need that much right now. Um, but you know, it needs to spit off cashflow in the next two or three years. I'm okay doing, uh, getting into an apartment building where they need to renovate it a little bit. And you may know like one or two. And so you really just box yourself in into investing like, OK, these are the only opportunities that I have rather than saying, OK, this is what I'm looking for. I'm looking for something that will give me cash flow in a couple of years and I want to build up some equity in it. Like what are all – 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. I think a lot of investing is figuring out who you want to invest with because you're in these partnerships for 5 to 10 years oftentimes, right? And so finding people that you align with, who you are, I actually have 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.

37:09 - 38:25 | 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. 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 a 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.

38:26 - 41:14 | 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. And so, 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, you know, money management or allocation, you need to be listening to a lot of these. I'm constantly listening to these podcasts and understanding how different people think about it. And this 3% rule is like 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. And 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? Maybe if you're an attorney or you're a service-based kind of professional, then you might be comfortable taking more of those risks. There is no one size fits all, but I've definitely, yeah, I mean, I've heard that so often. I've heard that there's this character called Matt Onofrio who has taken a bunch of people's money that they took their entire savings and put them in there. And when you come across these deals, they do, They can sound really lucrative. And 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 5% for the next five years, you know, is some of the underwriting you would see in 2021 before the market tanked. And it's like, the normal rent assumption is 3%. Like I want someone who's projecting 2%, even though inflation's 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, OK, that makes sense. Like, I'm picking up what you're putting down.

41:16 - 42:06 | Christopher Nelson: Let's jam on that for a second. I love this thread that you're going down right here because I think that's incredible value. Let's go back and forth right now on what are some things that I'm not going to invest in, you're not going to invest in from the look and the feel. 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 a 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.

42:06 - 42:56 | Pascal Wagner: What's one for you, Pascal? Interesting. That's fascinating because I come from the venture capital world where that's the default way. You collect money and then they need to go out and find companies to invest in. Another – I want to jam on that for a second. I think – There's something that I – 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. Right. And so to me, that lowered the risk of investing in something like that. So, you know, I haven't made that note, but I'm not going to noodle on that one.

42:57 - 43:58 | Christopher Nelson: Well, well, because especially like I think especially on the real estate side, I think there's more risk. I do know people and my preferences on the VC side. I love doing seed investing. Like 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 to add value to them. But we spoke about this a little bit earlier where there's conservative parts of my portfolio. So I'm in index funds. So you could argue, OK, well, that's a blind fund. I'm betting on a market. I'm investing in a market, not the actual thing itself. But when I think about my higher risk side, I am definitely, I love direct investments and I love understanding more of what's going into there and what am I, I'm actually underwriting because then I can, you know, I just think I make, I'm going to make better decisions because sometimes, yeah, I just, I'm not a blind fun guy.

43:59 - 46:09 | Pascal Wagner: Yeah, no, I hear that. One, I think there's a nuance here, which is that I have different rules for different pockets of money. So as an example is when – for 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 cash flow in less than 12 months. To me, that was kind of like – 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 – what has their track – I only invest in vehicles where they've produced the outcome consistently over multiple down cycles. So if you look at what happened during COVID in March of – was it 2020 or – whatever COVID happened. And at that point, it's like, 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 it performs when shit goes sideways?

46:13 - 46:40 | 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 and understand how they're going to navigate. That is so, so, so important.

46:40 - 47:38 | 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 invested, 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, 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?

47:38 - 48:19 | Christopher Nelson: And the thing to let people know is they are out there. 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 to 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 they're doing a roll up of Burger Kings and Subways. And these guys have a track record of miles 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.

48:20 - 48:55 | 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 and 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, 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. 100%.

48:56 - 49:07 | Christopher Nelson: 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 have five quick questions for you. And I know you can answer them real quick. What's the worst career advice you've ever received?

49:08 - 50:32 | Pascal Wagner: Worst career advice I ever received? You know, there is a balance to move fast and break things. Very much being in the world of, you know, following Mark Zuckerberg. And when I got into the venture capital world and then you start managing a bunch of, you know, high ticket dollars, I had my My boss sat down with me at one point and mentioned, you know, like, 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, these one-way and two-way doors from Jeff Bezos. You know, is this 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? Mm, that's good. How do you keep learning? 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, training, courses, masterminds. Yep, the new stuff. What do you do to recharge? I like to go to the gym, and I like to kiteboard and play pickleball. Those are a couple of good ones.

50:33 - 50:41 | Christopher Nelson: Yeah. Are we going to play at any point? 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?

50:42 - 51:23 | Pascal Wagner: Oh, man. I think it's fascinating when you start to—when you're young, it feels like you don't have that many opportunities and 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 dedicate – if your goal is to grow equity in a startup, like you need to put down the bright-eyed and bushy-tailed thought and really think like does this company really have a real chance to become big? Otherwise, you're wasting your time and valuable equity that you could be earning.

51:24 - 51:36 | 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? By business.

51:37 - 51:38 | Pascal Wagner: By business.

51:38 - 51:38 | Christopher Nelson: Yeah.

51:39 - 52:19 | Pascal Wagner: By business. You know, I, I think now being in this world, I mentioned at the beginning, I have an active real estate portfolio and a, and now I have, you know, 50% of my income comes from the active portfolio and 50% comes from alternatives. Yep. And yeah, Now that I'm in this stage, I want to sell my active portfolio and move it all into passive things and free up that time. It is 100% like an additional thing on my mind. It's something that if I'm not putting my attention there, it can go sideways. How you become wealthy is leveraging other people's assets and time and expertise. It truly is. Wow.

52:21 - 52:31 | Christopher Nelson: 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.

52:31 - 52:54 | 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 a 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.

52:55 - 53:13 | 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.

53:14 - 53:17 | Pascal Wagner: Likewise, Christopher. Thank you for having me on. My pleasure.

53:18 - 54:27 | Christopher Nelson: Wow, what an episode. It was great to watch that again, because for me, it reminded me of this key takeaway that I learned in that conversation. Wealth is built through concentration. It is built and grown and managed through diversification. That is a core lesson. We also got to understand how through, you know, shared living and this active investments and also passive private equity, Pascal was able to diversify and create this massive cash flow stream. The key thing to understand is this happens a little differently from everyone. And so it's important that we keep learning. What were some of your takeaways? What are some of the questions that you have? You can go right now to the YouTube channel. You can put those questions down in the comment. We answer all of your questions. Or if you go to managingtechmillions.com, you subscribe to our email, hit reply on any email and we will make sure and answer that question as well. We're so excited that you're here and stay tuned for the next episode where we're going to actually give you different income bearing assets that you can leverage to fill your portfolio so that you can start having large income streams as well. Stick around for that one.