Alex is a returning guest from episode JF2021. Alex is a managing partner at Seacoast Financial Planning and a partner with Lexdan Real Estate. In this episode, he shares seven deadly signs to say no in business, a deal, or a partnership to make sure you avoid headaches.
Alex Talcott Real Estate Background:
- Managing Partner Seacoast Financial Planning
- Partner with Lexdan Real Estate
- Teaches finance and business law at the University of New Hampshire business school
- Previously shared his Best Ever Advice in episode 1923
- Based in Durham, NH
- Say hi to him at lexdanre@gmail.com
Best Ever Tweet:
“Don’t say yes to every $50k that you have in the door and say yippie. Talk yourself out of business from time to time to be one of the good guys. ” – Alex Talcott
TRANSCRIPTION
Theo Hicks: Hello Best Ever listeners, and welcome to the best real estate investing advice ever show. I’m your host today, Theo Hicks. Today we are speaking with Alex Talcott. Alex, how are you doing today?
Alex Talcott: I’m doing great. I’m on the campus of University of New Hampshire’s business school. We’re at peak fall foliage, being in a better place, talking to a better person. How are you doing, Theo?
Theo Hicks: I’m doing great, I appreciate that. I was just talking to my mom today about the fact that I love Florida, so I don’t get to see the seasonal transitions, and I miss the colorful trees, so I’m kind of jealous.
Alex Talcott: Oh, you’ve gotta come up. The numbers aren’t great for cash-flowing value-add real estate up here so much. So it would be a pure vacation; you probably wouldn’t be able to write it off as a business trip.
Theo Hicks: I’m sure you’ll find a way. But Alex is a repeat guest; if you haven’t done so already, make sure you check out his previous episode, which is 1923. You’ll actually hear me interview Alex, so I get to interview him again.
Today is Sunday, so we’ll be doing Skillset Sunday, and we’re going to talk about the seven deadly signs that you should say no. So we’re gonna knock out as many of those seven deadly signs in detail as possible, but we will list all of those. Before we get into that, Alex’s background – he is the managing partner of Seacoast Financial Planning, as well as a partner with Lexdan Real Estate.
As he mentioned in his intro, he teaches finance and business law at the University of New Hampshire Business School. As I mentioned, he previously shared his best ever advice on episode 1923. Based in Durham, New Hampshire, and you can say hi to him at LexdanRE [at] gmail.com.
Alex, before we get into these seven deadly signs, could you quickly share with us your background and what you’re focused on now?
Alex Talcott: Yeah, absolutely. I started out as financial services attorney; I’m now on the proactive producing financial planning side of things. I have a private real estate investment partnership that focuses on single-family cash-flowing properties in the South, and then we’re also limited partners on a variety of different apartment syndicates, including one in Jacksonville, Florida, with Ashcroft Capital, that I look forward to actually visiting this winter.
I spend an awful lot of time in my teaching, and spending time with the family… It all started for me in education, actually, as a religion major in college up here in New Hampshire. As somebody who’s always studied religious studies, and ethics and everything, I wanted to have a little fun and do these seven deadly signs, as opposed to seven deadly sins… Signs that you should say no, because – another religious reference point – Moses got folks out of Egipt, but not into the Promised Land, and for a lot of investors and entrepreneurs saying yes is what gets you out of Egypt, saying no is what gets you the Promised Land. That’s an insight that was shared with me by Dan Sullivan, a strategic coach. So I was glad to prepare this list for you.
Theo Hicks: I’m looking forward to hearing it. So these are the seven deadly signs you should say no… You should say no to a deal, to hiring someone, to working with a potential vendor… In general, whenever there’s a decision to be made, here are the signs that you should say no. First, let’s go through quickly just a list of seven, and then we’ll jump back into the list to go over some of these in more detail.
Alex Talcott: Yeah. Number one, a question that I had with somebody who was soliciting me for a hedge fund investment – how much do you know about finance and investment? Not to be modest about my background, but the person clearly hadn’t even googled me or checked me out on LinkedIn. There was zero preparation. This was a representative of a pretty small up-and-coming organization. So anything that glaringly, off the bat says that you have done zero to prepare is a disrespectful thing.
Number two, low asset under management with too big a minimum. So people who are getting in way over their heads, kind of swinging for the fences too soon.. Or people with a straight face who have big minimums, but just straight up poor cash-on-cash returns that they’re even advertising. Sometimes the numbers are just blatantly bad.
Number three – basic mispronouncing of words… Straight up using a term wrong, or just saying the word wrong more than once or twice, that it’s not a slip, but it’s clear that you have superficial knowledge; you haven’t really talked this through with anyone who’s called you out on it.
Number four – referring to a real estate market as up and coming, or “the next…” without any data to substantiate it.
Number five – a lack of quantitative evidence that more things are happening, or more things are good to come, or “Is Texas over?”, or are you really gabbling in that past returns as an indicator of future success, sort of a thing.
Number six – just not sharing a periodic reminder or disclosure that the one thing that you’re doing on your webinar, or the one thing that’s the basis of your business – if that’s the one thing that you have to sell somebody, then you are not that prospect investor’s fiduciary. You’re certainly not their fiduciary financial advisor, so… We’ve gotta remind people that if we have one opportunity that we’re presenting them with, it might not be for all people, at all the times.
Number seven – a tired recitation of qualifications that are just very average. Is “very average” an oxymoron? I don’t know. The marketing major from a not-so-great school, or [unintelligible [00:06:35].19] that winds up with a sociology major with a 3.2… You might be a wonderful person, capable of great things, but… I don’t know about you, but for my health and my wealth, anyone new I’m bringing into my situation has to be excellent. So those are my seven.
Theo Hicks: Can you go over number six? I’m kind of confused of what that means. Do you mind just going over that one in a bit more detail?
Alex Talcott: Absolutely. Now, who needs more small print, who needs more disclosures? The notion of hitting people with voluminous pages, ostensibly in the consumer’s interest, but how many of us do or can read through all that stuff…? [unintelligible [00:07:12].03] by quantity, but I’ve just run into a lot of situations where I’ve seen people who are in real estate investing, or wealth management, and unfortunately they say the quick yes to the easy sale. I don’t know how many people I find who might be in a pretty good asset situation, but actually income-qualified for a Roth IRA. There are just certain tax advantages that you should be going for.
Sometimes people skip, I find, to real estate or accredited syndication investing before they own some other basics. So for me, real estate is awesome, it’s not a cure-all, and I really think it’s important for people to have somebody who they’re working with to help them out with emergency funds, and cash reserves, finding dual purpose dollar opportunities by way of a Roth IRA if eligible… I don’t t think people should be making their entire path to financial freedom as one that is being mapped out by way of real estate.
Theo Hicks: Okay, so this is basically saying that if you find someone who’s saying that– if you find someone who says that real estate is gonna cure all of your problems… Is that what you mean? Or not including disclosures about… Sorry, I’m still kind of confused about what this one means.
Alex Talcott: It’s a big one. It’s probably, of the seven, the one that is just not like a quick thing. It really comes down to ethics, and deciding what is in your best interest. Because increasingly, the fiduciary standard in wealth management, one that the Department of Labor has been working through for a few years, the Securities and Exchange Commission has been focusing on it more… They kind of picked up the slack at looking at not just for qualified retirement plans, how about for the entirety of investor relations that a series six or seven financial advisor would have with a person… What does it mean to be on the same side of the table as somebody who they’re working with? What does it mean to do something in another’s best interest? That’s a very high bar, because what people do we encounter in society who are required or expected to act in our best interest? …when we order a sandwich at a shop, and we ask for Mayo on it. They don’t take a look at our girth and evaluate whether that’s appropriate for us or not…
But you put certain levels of trust with different individuals and different professionals, and I have observed some real estate investors for whom their investor relations representative with a turnkey operator, for example, might be in fact the only person who’s remotely a financial professional who they’re talking to. They might be do-it-yourselfers with TurboTax for their tax returns, they may have an app on their phone, they may not have a financial advisor who is retained to give them best-interest advice…
So I think it’s really important for people who are representing real estate investment opportunities, even if they’re not required by law to hold themselves up to a fiduciary standard, to recognize that the people who they’re working with might be using them or thinking of them as a really important resource for their wealth.
Theo Hicks: Okay, I understand that now. That’s definitely a big one. The other one that kind of jumped out to me – number seven, you said “Someone going over their qualifications, and those qualifications are pretty mediocre. Like, I had a 2.7 in college, and I went to this specific university and got a degree in finance, but as you mentioned, that university isn’t a well-known, respectable college… So is that something that if they have that low GPA – just using this example – they didn’t go to a prestigious university… Is the issue them talking about that and thinking that that’s something that makes them qualified the issue? …or is just them having a low GPA, not going to a prestigious university the issue?
Alex Talcott: I’ll go with both. I might have also called number seven “The first five minutes of a webinar”, where you have sometimes a team of 2-3 folks who are introducing themselves… And what it seems to me is that what people are most getting across is not even that they’re credentialed, but just that they’re normal… And part of the way that maybe they show their ethics is that they’re relatable.
So when somebody says that they live in a suburb and they have two kids, I’m like “I don’t know, I’m not familiar with that area. Is that an impressive suburb that you’re living in? Should you live in the town over? Should you have three kids, or four kids, or one kid? What’s the right number?” So I’m not trying to be hyper-critical or even an elitist, quite the contrary.
My students who I’ve thought at a state school, and I also teach at a community college – oftentimes I help them take a look at their resumes that they’re putting forward towards internships and job opportunities, and I’m showing them that “Hey, if you’ve worked at Applebee’s for four years, that might actually be an impressive credential”, because the millennial generation has the reputation of being flaky.
But if a place has kept you gainfully employed for four years, you must show up on time and have other high character. So that actually might even be something where if you tell me how many covers you take care of a night as somebody who hasn’t worked in the service industry… I don’t know, any number that you show me is gonna be like “Wow, you juggled a few balls in the air.” That can be rather impressive.
So I guess a part of what I’m saying there is not just giving the filler credentials. People wanna be relatable and seem like a normal guy/gal. I guess that’s kind of cool… But I would personally much rather have an uneven representation of “Hey, here’s what makes me really great. Here’s the role that I play on this complementary piece. Here’s the thing that I do, that nobody else does or can do.”
Theo Hicks: Exactly.
Alex Talcott: There’s one group, for example, that I like, where one guy is like “Yeah, I’m really into drones. So when we check out apartments, I’ve got the model 659er, and I fly her over here.” So this guy is taking a level of visual documentation of properties that they’re scoping out. That really stands out to me. So for that guy, I don’t need to hear all the generic stuff, I just need to hear the really wonderful stuff that gives me an impression that this is not just one of the many teams right now. Because we’re in a position right now where — I don’t know about you, but my inbox is full with deals. Deals are still being found, even in markets that are hot and have been hot for a long time.
So the ones you should say yes to, the ones you should say no to on the basis of your jockey not your horse – well, let’s find out the unique and interesting things about the various jockeys that are out there.
Theo Hicks: That makes sense. So it’s more about knowing what qualifications, what characteristics, what experience you had that are important, as opposed to just saying things that you think other people wanna hear.
Alex Talcott: Yeah, because I’ve heard a lot of people say “I’m a marketing major, so…” and he trails off; they don’t finish the sentence, sort of a thing. And it’s almost like “So what?” So at this point, there are a lot of credentials that are for the buying. If you want it, not only can you go out and get it in society, but oftentimes the government will subsidize your ability to go do it, whether or not it’s a great choice. So kind of showing what you did given an opportunity, showing that you did that was different or new or excellent, is really something that I think should come across wherever possible, anytime you’re presenting yourself. “Here’s what I know, here’s what I really know, here’s what I enjoy doing, here’s what I do in a way that other folks aren’t doing… So just trust me, and don’t even bother listening to those other webinars or checking out those other emails, because you know that we’re gonna take ownership of this thing in this way.”
Theo Hicks: The other one that I really liked was — number four was referring to real estate markets that are up and coming without having any data, and number five was lack of evidence that more things are good to come. I think number four is something that I see more; someone’s trying to present a deal to you in a market, and then you ask them why the market is really good, and it’s kind of just generic slogans, as opposed to specific data. Having an engineering background, I really like diving into the data on these things, creating crazy Excel tables and things like that.
Alex Talcott: Yeah, it’s like, how do we know that [unintelligible [00:14:45].28] because you could tell the story of one new company moving to town and bringing this many jobs or what have you, but there’s a lot that are coming or going. And even if you’re saying a number, sometimes it reeks of qualitative evidence, more than something that’s quantitative of firm.
Theo Hicks: And what about number two, low asset under management, with a big minimum? Can you go into more detail on that one?
Alex Talcott: Oh, yeah. I had somebody start a hedge fund, and out of his basement sort of thing, with $400,000 in assets under management… And going for a minimum from 25k — “We’re gonna be raising it to 100k.” And I asked “How with a straight face are you gonna ask somebody for 100k when you’re managing 400k?” I almost can’t even put into words why those are inappropriate or crazy in terms of what that would incentivize or what that would evidence the person not being ready for prime time, or what have you… But sometimes those numbers are totally out of whack.
But on the other end of the spectrum, I had a conversation with somebody with a fund in Southern California recently, who has a million dollar minimums, and is just showing super low percentage cash-on-cash return. This isn’t a matter of conservative under-promising, over-delivering, it’s just… I cannot imagine tying up that amount of money for that kind of lowered expectation. It’s just unbelievable.
So there’s certain deals to say no to because there are a lot of great deals out there, a lot of great numbers, a lot of great projects and a lot of great people out there. So it just kind of tells us — so much of the capital for so many of the deals right now are coming from the Coast of California, it’s where I am here in the North-East, and just how deep those pockets are in some places, such that the luxury of not going after great returns because people are overly-passive passive investors…
I’m actually working on registering a trademark right now for an approach and a process known as aggressive passive investing… Because usually you have this notion of aggressive investors, who are HGTV flipping… And that’s not me, I can’t swing a hammer… But I’m not so passive about my investments that I rely on just one or two relationships and then send them my and my partners’ money when we have a bit of extra scraps saved up. We’ve found that we’re able to go to markets, to invest time in getting to know people, and not be cutting into our returns in that silly manner of, you know, hop on a plane and go visit Apple headquarters to make sure they’re still open if you hold them directly or indirectly in your 401K. For us budget travelers, we can hop on a [unintelligible [00:16:58].18] stay in a Holiday Inn, and get to see great properties and get to know great people. So we’re carving out a pretty interesting space; we’re very aggressive about finding those passive investments to say yes to.
So as vigorous I am about saying no to the bad deals and the not-great people, I am investing some time and some capital in finding when to say yes. As an attorney by trade, too many of my attorney friends are all nervous Nellies and are all about no. I’m the kind of attorney who likes to get to yes.
Theo Hicks: Alright, Alex, we’ve gone over most of these… Pick one last one you wanna go over before we close out.
Alex Talcott: I don’t know if I have a favorite that I’m like “Oh my god, I can’t believe this didn’t pique Theo’s interest on the next level…” But okay, I’ll be a snob on the basic mispronunciation of words, because this is something that really does transcend real estate. I’ve seen a presidential candidate endorse his very good friend, and he says [unintelligible [00:17:48].17] And I’ve seen people talk about their great affections for some town, and they mispronounce the name of the town. Ah, man, that’s brutal. That just shows that people haven’t thought through the idea all that much and they haven’t talk about it with other folks, nobody has called them out on not really knowing what they’re talking about… I just think that as a Malcolm Gladwell thin-slicer, that’s one of those things where I’m like “Oh, that’s evidence that other details might not be being owned here.”
Theo Hicks: Yeah, a lack of attention to detail, for sure, with that one.
Alex Talcott: Yeah. The most basic details, that are like, “Oooh, what’s going on here…?”
Theo Hicks: Alright, Alex, I really appreciate you coming on the show and going over these seven deadly signs that you should say no. For all of these you went over examples, so I’m just gonna go over the titles. One was zero preparation, two was having low assets under management, but having some sort large minimum that’s out of proportion to the assets they have under management, three was basic mispronunciation of words, four was referring to a real estate market or referring to something as up-and-coming, the next big thing, without having any data to back that up, five was lack of evidence that more good things are to come… Number six, which I’m still kind of confused on, but I’m gonna go back and listen to this, that we actually talked about… It’s basically just not having a high standard.
Alex Talcott: Yeah, exactly. Don’t say yes to every 50k that you have in the door and say “Yippie!” Talk yourself out of business from time to time to be one of the good guys.
Theo Hicks: And then lastly, number seven was someone’s going over qualifications that are very average. You’ve called it “The first five minutes of the webinar”, where they just tell you how normal they are, rather than going over the qualifications, the parts of their background that make them unique for this particular opportunity.
Again, Alex, I really appreciate it. Where can people learn more about you, contact you? Where do you wanna send people?
Alex Talcott: AlexTalcott.com redirects to my financial planning page. AlexTalcott.com will get you to Seacoast Financial Planning, and then we have a new email inbox for real estate conversations. We’re not seeking outside investors or soliciting in any manner, but we enjoy getting to know good folks who we might invest in, and that’s lexdanre [at] gmail.com, if you have something interesting I’d like to learn about.
Theo Hicks: Perfect. And Best Ever listeners, before you email him, make sure you do not fall for one of these seven deadly signs… Especially number one.
Alex Talcott: Thank you. And guess what, Theo, I’m saved by the bell. Do you hear that?
Theo Hicks: Yeah, I hear that. There you go. Alex, I appreciate you taking the time today. Best Ever listeners, thanks for tuning in. Have a best ever day, and we’ll talk to you soon.
