Litan Yahav is the co-founder of Vyzer, a digital-first, holistic solution that helps investors track, monitor, and gain insights into where their money is going and how to best maximize its potential. In this episode, he discusses his passion for investing in real estate syndications as a limited partner, what inspired him to create Vyzer, and how operators he’s invested with have earned his trust.
Litan Yahav | Real Estate Background
- Co-founder of Vyzer, a digital-first, holistic solution that helps investors track, monitor, and gain insights into where their money is going and how to best maximize its potential.
- Portfolio:
- LP of 2,000+ doors
- Based in: Israel
- Say hi to him at:
- Greatest Lesson(s):
- 1. It’s all a matter of finding people you can trust.
- 2. Educate yourself on what questions to ask to vet potential GPs.
- 3. Put yourself alongside as many like-minded people as possible.
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TRANSCRIPT
Slocomb Reed: Best Ever listeners, welcome to the best real estate investing advice ever show. I'm Slocomb Reed, and I'm here with Litan Yahaz. Litan is joining us from Israel, just north of Tel Aviv. He's a co-founder of Visor. Vyzer is a virtual family office that helps people with complex investments to control and plan their wealth. He's also a limited partner who has invested in over 30 syndications with 10 operators. Litan, can you start us off with a little more about your background and what you're currently focused on?
Litan Yahaz: Yeah. First of all, I'm really excited to be here. Thanks for having me on the show.
Slocomb Reed: Great to have you.
Litan Yahaz: So quick background about me... So I'm 40 years old, married, I have three kids; born in the States, moved to Israel when I was nine years old, and served in the military here, in the Navy, for six years. Went to school, started a startup, very weird industry, about 12 years ago, which went well; it wasn't a very weird industry, we did 3D imagery for diamonds, hardware, software... Crazy experience, but it went well. Sold that back in 2015, made some money... Didn't make tens of millions of dollars, but made enough. And back then, when we got this money, at that point bunch of advisors, wealth managers reached out and offered to manage it, and me and my co-founder decided we're just gonna do this on our own...
I was really attracted to real estate, and the cool thing in Israel is that every second person here does real estate abroad, in the US or in Europe... So everyone knows a guy, and knows a guy that knows a guy... And we just started meet with friends of ours and friends of friends, and at some point someone talked to us about single-family homes in Ohio, like a suburb of Cleveland, and it sounded good for us, and we just bought two single-family homes. That was our first investment. And then I can dive in from there how we reached the rest of it... But that was sort of our first dip in the water investing in real estate. Specifically, that was a bad experience, but that's where it began.
Slocomb Reed: If I can ask, Litan - I am from Ohio, and I have family in Cleveland. What part of Cleveland was that?
Litan Yahaz: One of the homes was in Maple Heights, and the other one was in Euclid.
Slocomb Reed: What made that a bad experience?
Litan Yahaz: Let me put it this way - so we were looking to be passive investors. We've never seen any property we've invested in, we've only seen pictures and spreadsheets. So these two properties that we bought, each of them was like $60,000; we had a property management company there. These were renovated properties, basically a full turnkey... And from the get-go, we had bad tenants in both. And every other day, our property management company would give us a call, "Hey, there's damage in this... So there's a letter from the municipality about that... And a tree fell here" and just like endless... And I think it's a combination of bad luck, and also not understanding the circumstances and what is involved in investing and owning single-family rental properties for us. So expectations weren't really met for us.
And the thing is, during that period we also did a few investments as LPs, as a limited partner, in real estate syndications. So doing these two things at the same time - they were totally hectic properties, not performing as expected, requiring a lot of work, headache... It was hard for us. And with about the same amount of money, in (I don't remember) two or three syndications, performing a lot better, not doing anything... Why do I want to do this, and not that? ...as long as I want to maintain passive... And so from that point on we decided only to invest in syndications. And we only managed to get rid of these properties a year ago. We lost money on them.
And [unintelligible 00:04:57.23] for us with this early-stage tipping point, right? It's like, a few months in, understanding what our goal is, and our goal is to be passive. And to be passive - obviously, it's a spectrum, right? You can be totally passive in real estate and just invest in like tradable REITs. We wanted the more exposure to risk and more return in cash flow, and so that's why we went into syndications. And that's what we've been doing ever since, for the past seven years, in the US and in Europe; multifamily type deals, ground-up development, storage units, and other stuff as well... And just over the years, it's been going well, and at some point, we encountered issues. And these are good problems to have, but when you have a lot of these investments, in addition to everything else we're invested in, like crypto, and startups, and public markets, our spreadsheets just became insane for us, because we wanted to maintain passive. It's like, alright, we're passive investors, but we're actively managing all this information, and documents coming in, and bank accounts, and cash coming in and out... It's hard for us, and we said, "We don't want this." We couldn't find any one at a reasonable price to do it for us. Everyone wants to tens of thousands, or even hundreds of thousands of dollars a year to do it for us... And we said, "Screw that, let's just build ourselves a piece of software to automate as much as possible."
Slocomb Reed: And that became Visor?
Litan Yahaz: Well, that was for us. We built that for us. And then bunch of friends wanted it as well, and "Well, there might be a ton of people like us out there", and that's why we decided to build Visor.
Slocomb Reed: Okay, that makes sense. So I want to get back to the real estate in a moment, but Vyzer came as a result of all of the different investments you had in different asset classes, primarily a lot outside of real estate, it sounds like, and the need to be able to more efficiently organize your investment portfolio, yes?
Litan Yahaz: I'll give you a simple example. So you invest $100,000 into a syndication, and then you're supposed to get some sort of annual cash flow distributed every quarter. And then that's a five, seven years, that's supposed to be an exit. That's like a simple type of deal in real estate syndication, like a multifamily value-add type deal. And when you invest in one of those, it's easy. But imagine - I'll get an email from an operator at the end of the quarter saying "Alright, this quarter you're gonna get $4,000." And again, I'm emphasizing, these are good problems to have, but I don't even remember how much I invested. Are we on track? Is $4,000 what I was supposed to receive? And even if I do remember, two weeks later, when the money appears in my bank account, I'm not gonna remember what it's related to. Now, imagine having 10-15 of those at every given time. It's like, I want to be passive. So we built this platform so I can forward those emails to the platform and automatically it updates the asset. When a bank transaction comes into my bank account, because it's linked to Visor, Vyzer will automatically track that transaction and link it to the investment. So I don't have to do anything; Vyzer does it for me. That's just real estate. Imagine everything else, like all the cash flow... Anyway, so that's a really good use case example for what led us to build it.
Slocomb Reed: Gotcha. Litan, how many different investments do you have going, and how many of them are in real estate?
Litan Yahaz: So a line item in my spreadsheet could be a real estate investment, it can be shares in a startup, it can be public stocks, bonds, retirement accounts, bank accounts... I have 10 different bank accounts. So a car -- so at every given time I have about 50 different line items, and out of that, real estate is probably 15 to 20. So it's - -again, I want to emphasize, these are good problems to have... But again, it's like one of those things where, at some point, the spreadsheet breaks, and you lose data, you lose information, you might even lose track of your money and forget stuff... I've spoken with people that literally forget investments they've done. They'll only remember a few years later when there's an exit, which is really stupid if you ask me.
Slocomb Reed: That's a dream I sometimes have... I wake up and I'm like, "Oh man, what about that property that I needed to remove the tree from before it fell [unintelligible 00:08:54.29] Oh, that was just a dream. That was not real.
Litan Yahaz: [laughs] Right.
Slocomb Reed: But I get what you're saying. All of my investments are in real estate. I'm an active owner-operator. To that end, Litan, I want to ask, for someone with as diversified an investing portfolio as you have... You said you're in crypto, you're in bonds and some other things... What role is investing in real estate syndication as a limited partner playing within your global investing strategy?
Litan Yahaz: First of all, real estate is the vast majority of my portfolio from a cash perspective. I love real estate. I love the passiveness, and the cash flow and the appreciation, and the tax benefits that real estate has, especially as a passive investor, as an LP investor, for me at least. So for me, it's all about that passive cash flow. That's the role that real estate plays. And there's an aspect of real estate that is underrated, and that's the fact that it's illiquid for me is an advantage; because the other liquid stuff - there's risk for me by making stupid decisions, stupid emotional decisions. When I can click a button to sell because I woke up one morning scared out of the markets - that's too easy.
Now, obviously, liquidity means something, right? But I think at this point, especially in this period of time, the illiquid stuff for me is also valuable, because it basically protects me from making bad emotional decisions. It's crazy, I don't gain anything because I'm an LP, but I love LP investing so much; I tried to convince everyone else around me, "Why do you do anything else and just not invest in LP? How can you justify --" You make 14% 18% IRR on these multifamily type deals investments. I'm imagining zero involvement. Now, the next step is to actively do it. But the amount of effort that goes into it - people don't understand how active it is. And the return has to be exponentially bigger if the effort is bigger; and people just underestimate that as well. So for me, it's all about that. I hope that makes sense.
Break: [00:10:55.20] to [00:12:01.08]
Slocomb Reed: All the high-achieving people that I know have a hustle, something that they're doing actively, that requires passion, takes their time, makes them lose sleep; they put a lot more of themselves into it than non-high-achieving people put into their career. And to your point, this is a daily commercial real estate investing podcast, with a sophisticated audience, too. A lot of the people we bring onto this show start out as passive investors and then go active because they see what's available, and they turn that into their hustle. It sounds like what became your hustle was not only better organizing and making more efficient your own investment portfolio and your ability to track it, but also making that available to other people with similarly complex investment portfolios. Am I headed in the right direction?
Litan Yahaz: It's hard for me to consider it a hustle. My passion is solving inefficiency problems with technology. So that's what I strive to do. Even my previous company was out of that; I had no connections to the diamond industry whatsoever, but we identified the crazy way diamonds were traded around the world and said, "Well, that doesn't make any sense. Let's fix that with technology." Same thing we're doing now; it doesn't make any sense to manage the way we did, so we solved it with technology.
So I don't know if I consider it a hustle. I have this passion for solving problems with technology, and I know what I'm good at, and I know what I don't know, and I prefer to trust people who know what they're doing in a full-time job; people like you - if you actively do real estate, I'm never going to know real estate as well as you do. But I know to identify people I can trust. I know how to identify people with experience. And I just give them money to make me more money.
So I know what I'm good at. It's mind-boggling for me when I think -- when you see when you talk to LP investors that have an aspiration to become a GP, when you already tasted the passiveness of not doing anything and getting all that money just sent to you, and then you want to do active stuff, I was like, "Whoa... Okay, good luck with that." But I get the wealth creation mindset, because you have the potential to make a lot more money if you become active; it's just a lot more time goes into it as well.
Slocomb Reed: Litan, give yourself some credit. You know enough about real estate to be able to get a 14% to 18% return on your money over time, without having to put too much work into it. And I think you're saying that that's what's attracted to you to investing passively, right?
Litan Yahaz: Exactly.
Slocomb Reed: As a passive investor that's done over 30 deals with 10 different operators, and doing it all from Israel, I believe, without ever needing to set foot in the United States to invest in real estate here, specific to identifying operators and identifying investment opportunities, what have been your biggest struggles?
Litan Yahaz: This might sound cliché, but the biggest struggle is finding those people you can trust. So here it was just investing with people I know, like good friends of mine, or good friends of theirs... And that sort of creates that level of trust, that these people will not screw you over. The market might fail, but they're not gonna screw you over. That really for me was key. I ended up joining this mastermind group in the US called Gobundance, just to join these like-minded people where trust and integrity are really high valued. So that was like one of the main motivators for me to join that, so I can find those type of people. And I invested with them as well, a few guys in the group as well.
So I think that's the number one... Obviously, it's a lesson, but for us, from the get-go, that was most important for us. So there's that... And there are a bunch of other sub-lessons and things that sort of we've learned as we move forward, investing in these sort of deals. A lot of questions that should be asked, that we'd learned during these deals which of those questions to ask. Even to understand the person who's sitting in front of you, what is their position in this deal? Are they the operator, the funder, the capital raiser, the co-GP? There's a bunch of different aspects that we didn't even know existed before, and it's really important to know who you're talking with. And I can dive into more, but those are, I think, the top two that we always look into when we invest with someone.
Slocomb Reed: Trust is critical in everything, isn't it?
Litan Yahaz: So much... Again, because we do not have the expertise to even vet deals. I'll look at a deal, [unintelligible 00:16:14.08] it's a good or bad deal; I'll look to see if the numbers are good and match my strategy, and it's an operator that I trust, I'll invest. I'm not going to go "Look, is this the best market to invest in?" I don't know. Are the rents they're taking into account - do they match with what the market conditions are, where they're looking at? I don't know, I'm not going to go and even check that, because as long as I trust this operator, the numbers just have to match my strategy and that's it. So trust is everything.
Slocomb Reed: Litan, let me start by saying that I am not a syndicator looking to build my list of LPs when I ask this, but I will say, as a real estate professional who does joint ventures, I bring in partners on deals where they're the money partner, and I'm the expertise partner - I'm not expecting people I invest with to understand the numbers as well as I do, frankly. What you're saying there makes sense.
That said, and recognizing that you focus on your strengths and keep your expertise within your passion, which - you put it better than me, but solving inefficiencies with technology. I know a lot of operators who are trustworthy, who are looking to bring on LPs like you, the people who are not going to get an analysis paralysis and nitpick all the little numbers on the spreadsheet, who are trustworthy and looking to work off of trust and deliver a return... Litan, how have the operators you've invested with earn your trust?
Litan Yahaz: That's a great question. So obviously, I know people that have invested with that operator before; that really helps from the get-go vet that operator, because if these are, again, either friends of mine, or people I value their opinion, and they've invested with this operator, that's going to give them a lot of credit for that specific operator. It obviously goes without saying, but it's very hard to find those references that are not coming from the operator himself. So when that doesn't exist for me, it's very, very hard to invest with an operator.
One of the things I've seen that a lot of other LPs do, and I have not done yet, it's listen to a lot of podcasts, accumulate a lot of knowledge from all these different groups, and see which operators come up multiple times in these different groups, and then get that feeling of trust because they've heard the name of that operator from multiple sources, and that helps them make the decision to invest with.
Slocomb Reed: Trust is a much more emotional than rational process, isn't it?
Litan Yahaz: 100%. It is.
Slocomb Reed: Tell us more about your decision to join Gobundance. There are a lot of mentorship mastermind programs. Gobundance, to my knowledge, is not real estate focused, but then again, neither are you. When did you join and why did you choose, among the many options, to join Gobundance?
Litan Yahaz: So I wasn't looking for these groups, but I was looking to enhance my knowledge and connections... And I just had a random conversation with a guy on Facebook about investing in syndications. And during this conversation, because we're sort of trying to together brainstorm "How do we find good operators?" and then he told me "Well, listen, I'm thinking of joining this mastermind group called Gobundance, where there's a bunch of really successful people who have been investing in real estate, who have high levels of integrity and trust." He's joining that group to connect with those type of people. I didn't research anything else, so I didn't check what else is out there. I just said -- this is trust and intuition, I guess, but our conversation kicked off really well. It sounded like he was like in the right direction, and I said "Let's check it out", and I ended up joining. And it's also a lot of luck, I guess, because I really did find a group of awesome people. I might have found a group of awesome people in different groups. I'm not saying this is the best group. I don't know. I never went and researched the mastermind ecosystem of real estate investing. It ended up to be a good decision for me.
Slocomb Reed: Awesome. Well, Litan, are you ready for our Best Ever lightning round?
Litan Yahaz: I am.
Slocomb Reed: Great. What is the best ever book you've recently read?
Litan Yahaz: I think "Never split the difference" by Chris Voss.
Slocomb Reed: He's coming out with a new, more real estate-focused book here soon. It might be out by the time this episode airs.
Litan Yahaz: That's awesome.
Slocomb Reed: What is your best ever way to give back?
Litan Yahaz: So I love helping early-stage entrepreneurs, founders, aspiring LP investors just understand what questions they should ask, how to vet sponsors, deal flow, stuff like that. It feels to me like giving back the best way I can, from my experience.
Slocomb Reed: Thus far specific to your passive real estate investing, Litan, what is the biggest mistake you've made, and the best ever lesson that has resulted from it?
Litan Yahaz: The biggest mistake was the active investing for me, but I'm gonna put that aside. That's for me, at least. For the passive side, it's hard to say... [unintelligible 00:21:08.15] there haven't been many mistakes, but the biggest mistake was around refinance events. And one deal a year and a half in, there was a refinance event where we received 70% of our capital back without notification; no one told us, we just got money into our bank account... Which is good, to some extent, but on the other side, now I have money laying around and I have to find something to do with it. It was supposed to generate cash flow, but because I didn't ask before investing what happens in the event of a refinance, I didn't know the answer... Because each operator has a different way of structuring deals in terms of what happened [unintelligible 00:21:46.09] how does that affect the cash flow, and all that... Which is fine. There's no right or wrong, but the question needs to be asked. But since then, I always ask an operator "What happens if there's a refinance event? What happens to our cash flow? What happens to the split, to the hurdles? What happens?" And so that was a mistake, that we didn't ask them, and we do ask every time now.
Slocomb Reed: What is your best ever advice?
Litan Yahaz: I think once you define your strategy, for me, it's passive/active, and make sure your investment decisions match strategy you choose; for me, that was a key.
Slocomb Reed: Last question, Litan - where can people get in touch with you?
Litan Yahaz: You can either reach out to me at my email, litan [at] vyzer.co. That's our platform. Or on Twitter, @litanyahaz, or on Facebook, Litan Yahaz, or LinkedIn, Litan Yahaz.
Slocomb Reed: Those links are in the show notes for our Best Ever listeners. And, Best Ever listeners, thank you for tuning into this episode. If you've gained value from our conversation with Litan about finding efficiencies in complex investing strategies, please do subscribe to our show. Leave us a five-star review and share this with a friend who you know will gain value from this conversation with Litan. Thank you, and have a best ever day.
Litan Yahaz: Thanks a lot.
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