Forged In Fire
Hosted by Nate Pharmer-Eden and Cole Farrell, Forged In Fire is where real entrepreneurship meets raw, unfiltered stories. This isn’t your typical business podcast—we skip the fluff and dive straight into the heat of what it really takes to build, run, and grow a business. From late-night doubts to game-changing wins, we explore the trials, setbacks, and breakthroughs that entrepreneurs experience at every stage of their journey.
Whether you’re a seasoned business owner navigating new challenges or someone with a burning desire to launch your first venture, this podcast offers powerful insights and practical lessons for everyone. No sugarcoating—just honest conversations about what it takes to forge success through the fire.
Get ready to be inspired, learn from real-world struggles, and gain the tools you need to make your entrepreneurial dreams a reality. This is your front-row seat to the highs, lows, and everything in between. Are you ready to step into the fire? 🔥
Forged In Fire
Episode 41: Matt Burk's 30 Years in Real Estate Capital
What does it really take to thrive for three decades in real estate investment? Matt Burk, founder and CEO of VeraVest, pulls back the curtain on his remarkable journey from desperate entrepreneur to seasoned fund manager in this candid conversation that every investor needs to hear.
Starting with just $10,000 borrowed at a staggering 21% interest rate in the early 1990s, Matt transformed necessity into opportunity when he lost his job during the S&L crisis. With refreshing honesty, he recounts his evolution from mortgage broker to fund manager, revealing the strategic pivots that kept him not just surviving but thriving through multiple economic cycles.
The most powerful moments come when Matt addresses the weight of managing other people's money. Despite decades of success, recent market volatility has created challenges, and he speaks with raw emotion about the gut-wrenching experience of losing investor capital. This vulnerability offers a rare glimpse into the personal toll of entrepreneurship that business school simply doesn't prepare you for.
Matt's expertise shines when discussing fund structures, explaining why matching your vehicle to your asset model is critical for success. His breakdown of mortgage pool funds versus direct acquisition funds delivers practical wisdom for anyone considering the leap from deal-by-deal syndication to pooled investments. He cautions that this transition is typically much more difficult than anticipated, as investors in pooled funds are investing more in the manager's credibility than in specific properties.
Now focused on providing fund advisory and administration services through VeraVest, Matt offers valuable insights for emerging fund managers looking to scale their operations. Whether you're a seasoned real estate professional or just starting your investment journey, this episode delivers battle-tested wisdom about resourcefulness, adaptability, and stewardship that only comes from decades in the trenches.
Connect with Matt on LinkedIn or email him at mattburk@verivest.com to learn how his team can support your investment fund journey. Your capital deserves experienced guidance.
Forget what you've heard. Forged in Fire is where real entrepreneurs come to share the untold truths of success the late nights, the crushing setbacks, the moments that change everything. No fluff, just fire, ready to step into the heat and unlock what it really takes to build a business. This is where legends are made.
Speaker 2:Welcome back, ladies and gentlemen, to another exciting episode of Forged in Fire. I'm your co-host, nate Farmreeden. As always, let me introduce my counterpart, cole. How we doing brother.
Speaker 3:Nate. What's going on, man? How are you?
Speaker 2:Dude, I know this is probably like podcasting 101, like rule of thumb never do this because it's supposed to be evergreen. But, holy shit, it feels like forever since we've been in here, dude, so it's just great to be back.
Speaker 3:It has. It's been a bit, and you know we go through ebbs and flows depending on what happens in life, and so now we're back in the stage getting these recorded and it's nice. It's always fun going through this stuff, and so when there's a period of like kind of slowing down, I feel like it's too quiet, a little too simple.
Speaker 2:Dude, I love it. Man. How was your weekend? Dude, fill us in. How are you doing Like it's the first time I've seen you outside of like painter's clothes? So what's happening?
Speaker 3:Dude, if you saw me on the streets the last couple weeks you'd think I'm some homeless guy like begging for money. It's been a reno and there's a few key reasons I'm doing reno that I'm not going to get into right now, but anyways, it's just good, it's exciting to be back. So I don't know, Life's fine, Life's good. But here we are. Your weekend good.
Speaker 2:Dude, I love it, man. It was a holiday weekend and it just flew by. I thought I was getting out of the office early, friday didn't happen, things were on fire, and then all of a sudden, monday happened, and now here we are. So I have no idea what happened over the weekend, but I think it was good, so I'll just take it.
Speaker 3:I love it. Well, look, we'll see if we get into any of that. So, without further ado, I'm excited to go into this episode. Actually, wait further ado, hold on. We ask one favor of all you guys, and it's the same thing I ask you every single episode. It's the only thing that we're ever going to to do us this big thing, which is leave us a review. Hopefully it'll take you a couple seconds and we don't really care if you make it terrible and you hate us or if you put something nice on there nice to be better, but that's what helps us grow, that's what helps us educate others, that's what helps us find more time and energy to do more and better podcasts and find more and better guests. So, if you guys can, please, just wherever you're listening to this, leave us a review. That would help us tremendously.
Speaker 2:I love it. I love it, dude, and I'm so excited for today's episode. Man, we're going to be joined by Matt Burke. He is the CEO and founder of Verifest, which is he's got an extensive background 30 plus years in the real estate industry, handles anything from funding to all types of stuff. Man in capital markets. So, without further ado, matt, how about you come on stage, because you can definitely talk way more about this than I can? So what's going on, brother?
Speaker 4:Hey, Nate, Nicole, thanks guys for having me. Man, I appreciate it. It's good to be here.
Speaker 2:Of course, dude Our pleasure man. So please tell us a little bit about yourself. What got you here? What brought you here?
Speaker 4:Yeah, well, I've got a long background in the real estate space, much of it in private lending, so did a lot of hard money real estate loans over a long period of time. That kind of led me into the pooled investment fund space. I've run a bunch of funds over the last 20 years and that led me after the Great Recession to do a lot of work helping other people set up their own funds and then ultimately doing a lot of back office support work for for those operating those funds. So long-time real estate guy, fund manager, fund advisor, fund administrator, you know deep, deep experience in the fund space in the real estate world.
Speaker 3:I love it, just to start. Then you're into, like the lending and the fund aspect. Why lending, why funds, why not any other kind of aspect? And is it a thing with finance, is it a thing with structure? Tell me more about, just kind of like the initial, what drew you to that.
Speaker 4:To be honest, cole, I mean I was a young man in my twenties and I didn't really know what I wanted to do, and so it's like a lot of guys, I just kind of happened into a certain space and I found that I liked it, I enjoyed it. I started off in consumer finance. We did some real estate loans, a lot of like home equity lines of credit. That led me to understanding real estate valuation and I felt like, hey, this is, this is something I enjoy, I understand, I think I could be good at it. That kind of led me into the mortgage business and eventually the company I was working for I moved from California to Oregon start a branch.
Speaker 4:They shut down in the early 90s uh, snl crisis and I found myself out of a job at age 27. And like any sort of self-respecting entrepreneur, I said, well, I'll start my own business. So I wouldn't say there was a master plan going in. Obviously a lot of time has gone by since then. I've learned a great deal and I certainly haven't limited it to strictly lending. I've done a lot of things on the loan side, on the equity side, on the fund side, the advisory side. So you know, it's kind of one thing leads to another. You build upon your expertise over time and you know if you can deliver value to other people, then you know you kind of gravitate in that direction.
Speaker 2:Dude, I love it, man, you hit the nail right on the head and I want to dive in just a little bit deeper. So, early nineties, going into 2000s, young man, age 27,. When this happens, you lose the job and you decide hey, you know what? I'm an entrepreneur, I can figure this shit out myself. What was that like? How old was the struggles? What's some of the tribulations? Talk from that point. And then it was like trying to grow your company, because clearly you survived a lot and endured a ton and you guys are still thriving. So talk to me a little bit about any of those kind of horror stories and or pain points.
Speaker 4:Yeah well, I think you know, in the beginning I didn't again, I didn't have a master plan to start a business. I think I had thought that someday maybe I might want to do that. But I moved from California to Oregon, kind of sight unseen. It was a promotion for me at the time, and when the SNL crisis the FDIC or the FSLIC at that point which a lot of people won't even remember what that is now, but it's the FDIC equivalent for savings and loans back in the day they forced the company to shut down all the offices except for a couple, and so I was out of a job.
Speaker 4:So it was either go back to California a year after moving to Oregon or figure out, go to work for somebody else or, you know, I could start my own thing. So I, literally I didn't have any money and didn't really come from money. I borrowed $10,000 from American General Finance Company at 21% interest and I was capitalized. Man, I was in business, you know, and so and we just you know I took it from there and tons of stuff have happened since then, man, and you know lots of lessons learned, but in the beginning it's some of it is just a leap of faith.
Speaker 3:I love that there's so many different things I want to dive into more deep on challenges and I know Nate's going to go there too but first, one of the other things that just like I was thinking in my head is you started from someone that didn't come from anything crazy, you didn't come from Uber, wealth or anything like that and now at this point, you're managing a lot of money different aspects, whether it's your own money, other people's money, loans, whatever it is. People get weird with money, and, especially when you're managing it and you have control of it, some people just can't handle it, whether it's a responsibility or the fear or just the pressure, and so I'm curious do you, or have you, ever had any kind of weird thoughts or feelings like, wow, this is a lot, or this is nerve wracking or anything like that? Or are you one of those people that's just like I'm good, don't care, it's fine?
Speaker 4:No, man, I mean, that's a great question, cole, and I tell you I'll be very candid. You know, after 30 years of doing this I'm I'm kind of at the point where I don't really want to do that anymore, and some of it is I've. You know, I had 30 years of pretty close to impeccable track record. You know, the last two or three years coming out of, you know, interest rates at historic lows. We invested in some deals that, with the benefit of hindsight, I wish I hadn't have invested in and of course that has caused both me personally and some of my investors to lose money. And losing money on behalf of other people is incredibly painful. To your point, man. I mean, you know you don't get into it ever with that idea and it's very scary and you take it, and you know good managers take it very, very seriously, take it very, very seriously.
Speaker 4:I think that in today's world things are as unpredictable as they've ever been in 30 years that I've been doing it. You know, with changes in markets and artificial intelligence, with the political environment, like all the things that are going on make it harder, as hard as it's ever been, to really, really understand and manage people's money. You got to be very, very careful. So it's absolutely been to really really understand, manage people's money. You got to be very, very careful, so it's absolutely not for the faint of heart. Um, you gotta, you gotta really know what you're doing. You gotta really pay attention. And even if you do all of that, you can still make mistakes right. And it's gut-wrenching when you have to tell people that that you've made mistakes and lost money for them. So, um, fortunately I I've had a lot more successes than failures, but the last couple of years have been very challenging.
Speaker 2:Dude, I got to appreciate the fact that you're willing to open up, the fact that you're willing to, you know, sort of dive in a bit and tell us about those pain points. And what was it like? Interesting question, but bear with me. What was it like being 27 in a brand new state trying to get feet off the ground? 21% interest, like hey shit, we're gonna get this going. I've got it. How were you able to establish credibility One, how were you able to establish relationships? Because, just like anything especially real estate related, it's all relationship based. But how you were able to build up that clientele being in a brand new spot?
Speaker 4:yeah, it was a. You know these were different times, for sure, guys. I mean, you didn't have the internet, you didn't have email, you didn't have, you barely had cell phones, um, so it was just a different time and place in terms of how you did it. A lot of it was done with networking people. You knew we used a lot of old school tactics.
Speaker 4:Early on I started off brokering loans to more institutional groups. So this is the early days of the kind of subprime stuff that was coming along that ended up causing a lot of what happened in 2007, eight, nine, the great recession, and you could see it kind of building up, but we brokered I'll call it B and C paper to larger institutions that were buying that paper up at that point in time and eventually I got strictly into doing deals with private investors. Some of it was I ran into certain investors that we would pay off with some of those loans you know, and I had access to periodicals. That here's what we did. Man, this is. You guys will love this story.
Speaker 4:So there was something called the Daily Journal of Commerce back in the day. That would scour kind of public records, you know, and every time you record a trust deed on a piece of property, right? It lists who the lender is and who the borrower is and it lists the beneficiary of the trust deed. So every day the Daily Journal of Commerce would publish all of the yesterday's trust deeds in there and it would say who's the beneficiary Bank of America, wells Fargo and every now and then it would be Joe Smith. Know Joe Smith, right? It was like, okay, well, joe Smith's a beneficiary of a trust deed.
Speaker 4:All right, that guy either made a loan or he carried some paper or he did something, right. So we would figure out that person. And of course you couldn't just Google him, figure out who he was, so you'd have to skip, trace, you know, go into, like, try to work backwards and figure out where that guy lived and send him a mailer or try to dig up his phone number and give him a call. But we literally would find people that were beneficiaries of trustees and then we would target them and we would send mailers and say, hey, are you interested in learning more about private lending? So I would say it was an old school, pre-internet way of doing basically what you know guys, like you are doing on LinkedIn and other social media in today's world.
Speaker 2:I love it. I love it, I love it. Go rookie mistakes. I see it Damn it Fucking likes on.
Speaker 3:You know, I'm like it's going on a spiel over here and then it yells at me All right, real quick.
Speaker 3:I was gonna say I love that and I think what's really cool, and one of the things that you mentioned is that this is like what separates people that are successful and that make it much further than people that don't, and it's not just like one of those things that you know, hey, I just did this thing and it worked out. It's like you found this unique thing that worked for you and then you played it very intelligently, you worked it to your advantage and then, since it did work, you kept running with it. There's a million things that everybody does today, but not all of it works. And you found the thing that did work and then you ran with it. And I think most businesses from what we hear from people on here, what we see, everybody finds this like one thing that just seems to work for them and their business and then it helps them skyrocket. And it sounds like there's many others, but that definitely seems like it was one of the things that helped you progress.
Speaker 4:Yeah, and then we would, you know, we would reach out to those people. And then we essentially became a mortgage broker that we'd find the borrower that needed the money, and a lot of it was small commercial stuff, because you couldn't you know, commercial property you can't finance with Freddie and Fannie. It's all done with banks, and the banks aren't going to make a loan to somebody with a credit problem or an income problem or a tax problem, you know, or a divorce problem or whatever a business partner problem. So we would that's where we started placing that capital and we would literally somebody needed 200 grand. We'd find somebody with 200 grand, we'd make the connection, we draft all the docs using our lawyers. And then and then we started keeping a spread right. So now you, they will do the servicing for you, We'll collect the payment, We'll pass it through and write it at 12. You know, you get 11, we keep one.
Speaker 4:And we started building up a servicing portfolio. Eventually, matching them up one at a time became inefficient. That's when we decided, all right, well, why don't we look at doing it in a pooled fund format? And that's when we started our first mortgage pool fund. This is 1999, 2000.
Speaker 4:Went to a lawyer, had him draft the documents and then became a fund manager and then did it in a fund, and then did a second fund, a third fund, and we leveraged the fund with Wells Fargo a $50 million line of credit and then the Great Recession came and I had to wind the fund down. And then other people were coming to me saying hey, Matt, I know you know a lot about running a fund. I'm thinking about setting up a fund. What do you think about this? What do you think about that? So we started doing advisory work, helping other guys set up their own fund, and so it's just been a progression of things over the years that that you know, kind of one has led to the other and uh, but you know, such is the life of an entrepreneur nate, before you say anything, you're gonna say something.
Speaker 3:I have a final question to that, and that is when you started, you had that initial chunk of change and then you said, like you said, you started taking a spread. How did you manage those first couple of years where a lot of people have difficulty, where they're trying to pull some money out to pay themselves, to survive, to live, but they also need their business to survive and they also need to reinvest and grow the business? So how did you manage that and like how much did you take? And I'm not looking for numbers, but did you have a percentage or a rule of thumb or just what do those first couple years look like, as you're starting to earn money and trying to build the business?
Speaker 4:yeah, I mean there was no percentage. It was like you ate what you you killed, right, so it it was. I took whatever I could take, that I needed to pay the rent. And you know, like I said, you said I didn't come from Uber wealth. Dude, I didn't even come from wealth, I didn't come. I mean I came I had no money at all. I mean my parents were able to put me through school, which I greatly appreciate, you know, but beyond that, it was just hey, man, you ate what you killed.
Speaker 4:So you know we would charge the points. I quickly figured out that when you're in the lending business, the points, you know you get them, but it's a one-time shot. You know you're as good as your last month. So if you don't close a whole bunch of new deals the next month, you don't make anything. That's where the servicing spread. And you know, building up a portfolio, us started to give us, cole, some recurring revenue. That then made it a little easier, right, because then you had the points and the recurring revenue and then, as it got a little bit bigger, you also keep your overhead low. We had hardly any space, didn't have many people, didn't have a lot. I mean, there was not a lot of software or other stuff back then, so the overhead was pretty small and then our expenses were not super high. So we were able to make ends meet early on. And then you know, you just build it from there.
Speaker 2:Matt, so many gems have just been dropped. So for anybody that's listening, pause, rewind, play this whole thing back. Like this has been phenomenal thus far and I'm excited to keep going. But, Matt, what you're talking about and what you're describing is amazing, and it's one of those kinds of stories that stands the test of time to where your ability to be able to pivot and just adapt is phenomenal. Dude, Hats off to you to be able to see that, read the room and be like okay, things aren't working this way. This is what we're lacking. We're just going to move over this direction and continue to grow business. One question I have and I'm sure listeners are going to have this as well You've said so many different we's and us's. Where did that come from? How did that go? Because from the time that you moved, it seemed like you were just a one person shop. And then the growth and the expansion. Talk a little bit about what that looked like from maybe the first couple of hires to where that looks like today.
Speaker 4:Yeah, it's also been a journey. Day one, when I started the company here's my I made my very first mistake, I the two. When I moved up to Oregon, I was the branch manager. I hired two other guys to come on as assistant managers. You know, we became pretty tight. It was a small shop right, it was the three of us and a processor and then when the company went under and we decided to, or were shut down and retrenched, you know, we decided to start the shop. The three of us went in, a third, a third, a third. So, and quickly, the first guy, his brother, went and started a shop and he ended up leaving. So then it was 50, 50. And then the other guy ended up leaving and then it was me 100. So I owned the company for a while a third, then a half, then then full, and for probably 10 years I had the company by myself. I then sold uh, 50 of it.
Speaker 4:Another mistake, don't don't go 50, 50 um to a person who wrote me a good size check to buy half the company, and he was. The idea was, at that point we had already been on our fourth fund. We had had about 75 million in asset center management. We were trying to grow. I brought him on as a partner to kind of handle the back office and let me do the front end and the sales and the financing and so forth. You know the originations and the asset management.
Speaker 4:January 1, 2008, he wrote me a nice check and February 15, he got diagnosed with stage four cancer at age 41. And he died 22 months later. So I went from 100% to 50-50 again. Then he died and then after he died, I had to raise capital and I bought out his widow and then I was back to 100%. So yeah, and then since then man, I've bought.
Speaker 4:I've brought in other partners. I've sold them pieces of the business. I found that as I got smarter and more experienced and more war wounds over time I brought other people in at smaller percentages that I didn't just give, but I sold a portion of the company. In many cases I carried back that sale so that they didn't necessarily have to come in with a lot of cash, but they were truly bought in right. They were true partners of the company. So I've had today I have three partners. I've had as many as five or six at different points in time. I also have outside shareholders in the company who've bought in at different points in time. So yeah, it's been a journey man.
Speaker 3:That's so cool. So I want to ask about risk as well. So, and you can take this in the early days and maybe it's kind of the progression, but as you're underwriting, whether it's loans, and you're pairing these people together or whether it's, I guess, whatever piece, you want to take it. But how are you looking at risk? And you know, I guess it depends because you're matching these people up initially or in most cases. So are there certain things or guidelines that you're following, like person A or company A needs these couple things and we just match and we run, or are there some other things that you also consider that you take into account, or what does that look like?
Speaker 4:Yeah, and I would say, to be perfectly clear at this point, the VeraVest fund services. At this point we are not an investment manager, we are a service provider. So we do advisory work and back office service providers for other managers who do take the risk. So it's a lot like you know, we sell the picks and shovels right to the people that want to go in and go mine for gold. That said, you know I've done that business for many years and so I think at different points in time and for different types of deals, you look at risk differently. And in the hard money business, where it's capital preservation and income stream and so forth, you know you're really looking at it. You know can the borrower repay and how are they going to repay? Can they pay off? How are they going to pay off? And if they can't, what collateral do you have to go after? If you know to get your money back and and that's a that's a business where you expect to have very few losses and you know to to really be able to recover most or all of your capital and get all of your income stream most of the time.
Speaker 4:The equity business is a different story, right, and then there's all manner of different types of levels of risk that you're taking, from very core, where you expect something similar to an income stream from a note, all the way up to really heavy value add or opportunistic, where you expect extremely high returns, but you're also taking a great deal of risk, especially if the property is being leveraged. So I think it depends on the type of asset that you're doing, the fund that you're doing, the investor base that you have, et cetera, and, of course, risk is a lot easier to assess in hindsight. It's easy to see now that when interest rates were super low and you took on variable rate debt, that's a risky proposition. When the capital markets freeze up, you find yourself exposed very quickly. So you got to be very careful.
Speaker 4:I think there can be a lot of crossover in terms of the type of risk that people take with different managers and different investors. That always isn't perfectly clear. So I just think you need to really be paying attention to what's the investor base. What type of vehicle do you have? Is it debt? Is it equity? Is it pref equity? Is it mezz? You know what? Just where are you at in the capital stack?
Speaker 2:I love that this might be kind of like a mixed bank kind of question, but what does like your target avatar look like now, especially if you're the one out there selling the pickaxes and everybody else out there doing the mining who's it that you want to try to work with? Is it residential, commercial? And what does that process look like now?
Speaker 4:Yeah, our clients these days are I would call them small, emerging, new and middle market fund managers is our ideal target. A lot of those are either private lenders, who are doing deals one at a time and making the leap to a pooled investment fund, or syndicators that are syndicating individual deals but reaching the point of scale where they want to do it in a more pooled format multiple assets, multiple deals and a fund, as opposed to do it in a more pooled format. Multiple assets, multiple deals, right and a fund, as opposed to one deal at a time. So I'd call it sub. Somebody starting from scratch all the way up to a few hundred million dollars in fund size is kind of our ideal target. I'll give you guys an example.
Speaker 4:I talked to a group this morning. They're launching a mortgage pool fund. The guy was a tech entrepreneur, sold his business, wants to get into real estate. They're launching a mortgage pool fund. The guy was a tech entrepreneur, sold his business, wants to get into real estate. He's assembled a really good team. He has the ability to raise capital, but he's never run a fund before. So he's hired a lawyer, he's setting up the fund documents et cetera. He's got some initial seed investors that want to come in.
Speaker 4:He could use some help in terms of making sure that they're structuring the fund properly in terms of how you, what you know, what are the fees, what are the splits, what are the investor base? How are you going to structure it? Is it evergreen? Is it open-ended, closed-ended? If so, why? What are the waterfalls? All of these considerations, you know we help them make that decision and then ideally, guys, it's somebody who can grow, because on the admin side, you know we want somebody to be able to get to 50 million, a hundred million to 300 million. You know we don't really target funds that are raising money from institutional investors that are, you know, billions of dollars. I mean there's lots of more institutional looking admins than us. I mean I call us a boutique admin targeting the small to middle market real estate, gp, sponsor space, syndicators, private lenders that want to grow a pooled investment fund.
Speaker 3:That's awesome. So let me ask you a follow up question that and I want to answer selfishly. So I'm sure you've seen a lot of different structures and, all over the place, all these different people, all these different structures. So part one is do you have a favorite and I mean favorites in just from your experience something that you go like this is what I think is the best structure to run with? And then part two is going to be what is your experience between equity and debt? And I'm asking this part selfishly, like I would love to start a debt fund for a variety of reasons. I'm just curious if you've had good, bad or indifferent experience with that reasons. I'm just curious if you've had good, bad or indifferent experience with that.
Speaker 4:Yeah To the second question. Cole, let me ask a question in response to the question. When you say and I find that people use terminology all the time that you need to be really clear when you say debt fund, do you mean the fund is investing in debt, that the assets of the fund or debt fund and the investors are coming into the fund as debt investors.
Speaker 3:Yeah, great question, so they would be investors. Investors are coming into the fund as debt investors. Yeah, great question, so they would be investors to be coming into the fund as debt investors, not investing?
Speaker 4:in debt.
Speaker 4:Okay, then I would say that can be. It depends on the asset type. It can be very dangerous to do it that way for a variety of reasons, because if you're investing in equity, you need to need to. This is a great example of how matching the structure of the vehicle is super important to match with the asset model and the investor base. Right, because debt is a contractual obligation to pay, right? So if the investors come in as debt, you owe them x, whatever the interest rate is, whatever the maturity date is, etc. Regardless of what happens on the assets.
Speaker 4:So if you're investing in equity and, oh, the market's not that good, you can't sell it. The value of the property's down. You have capital that you need to put back into it because you had occupancy problems or a tenant issue or expense problem, or the roof blew out or whatever, right. And now, all of a sudden, you've got debt that's due to those investors, right, and you don't have the money to come in. How are you going to get that money to pay those debt investors? So you need to be very careful that you match the structure of the fund to the asset model and that you don't find yourself in a mismatch with the ability to actually honor those debt obligations.
Speaker 3:So to paint a picture of that and actually honor those debt obligations, so to paint a picture of that, and I feel like this would be an obvious example. But I once spoke with someone that wanted to set up a fund to do this and they wanted to do it in flips and obviously that can work, all's good, whatever. But I could see that problem happening where I feel like that model and that structure seem very dangerous, where so many things can go wrong on a flip. It's not income producing and I'm just pulling one random thing out of the hat, but would that be like a good thing to demonstrate what you're saying is? Those two things might not match up very well.
Speaker 4:Yeah, they might not. And I, like, we've set up funds and I have this is the kind of conversation I have with managers who hire us as on an advisory capacity and they say, hey, I want to do fix and flips and I want to put a little money in his debt. Okay, well, do you? Here's how, here's you can, and legally you can do that. You can docs, draft docs and all that, but do you really want to do that? Here are some of the potential implications of doing that.
Speaker 4:Right, because if those, if those flips, aren't selling fast enough or for enough money, but you have a maturity date coming up with an underlying investor and they won't extend like now, you're in contractual default.
Speaker 4:You know, with with that investor, which now you can raise new money and in a fund, right, you can have a new investor comes in and that money can be used to pay off the old investor and that's how a fund works, right.
Speaker 4:So, but you need, I find that, people, that if you haven't, until you've actually run a fund, it's really hard to fully comprehend all of the downstream realities that you're going to find yourself dealing with, and I feel like that's a big part of our value prop. I would say this man that flips usually if there is one that flips can work okay, because if you have enough of them going on at one point and you don't over lever it, and maybe you even have a hybrid fund where you take in some money in equity and some in debt, so you're not fully levered one-to-one right and you have enough of those flips going on, you don't need all of them to be selling at one time, you just need and you stagger the maturity dates on the underlying fund with the investors. It can be managed well, but you need to be conscientious about what you're getting yourself into and what needs to be managed.
Speaker 3:I like that, so give me an example like a good match then. Is it something that's income producing with debt that works really well, or what would be a good pair up?
Speaker 4:Yeah, I mean I would say mortgage pool funds, where the assets that you're making with the money from the fund is debt on real estate. Those are conducive to open-ended net asset value. Evergreen funds, where you're raising money on an ongoing basis. Even then you can have underlying debt coming into the fund. But even there you have to be careful because the borrower may not always pay off on time. They need an need, an extension, or they're just you know. So you got to match it up properly. Closed ended funds are better generally for direct acquisition of property. So whether it's commercial, residential, industrial, office, retail, multifamily, mobile home, parks, the storage, whatever, oftentimes if you're buying that type of stuff, a closed ended vehicle with a capital call structure is generally a better structure.
Speaker 3:It's amazing.
Speaker 2:Going back into coal's First question, first part to it, and then I'm going to tie my question onto it. So now, especially like this academy, what kind of funds are you seeing that are working pretty successfully? What's a good typical model that somebody should look for? And then, going off and piggybacking off what Cole was saying, somebody that has not yet done a fund orchestrated a fund, put one together. What advice would you be able to give and what should we look out for?
Speaker 4:Yeah, on the first question, I'm seeing a lot of private credit funds, so a lot of debt, where the assets that the fund is going to be investing into is debt, but they're generally bringing in the money as equity, not debt. It behaves very much like a like a debt investment for the investors, but by matching it as equity, you're not required right. They're getting a K-1 instead of a 1099, right, which is partly a downside from an investor perspective, but at the end of the day, it behaves much more like a debt investment. I see a lot of that going on right now. Nate, in the market where it's at today, I'm seeing fewer direct ownership of real estate funds, although that's starting to come back, I think, as people are starting to see, you know, the distress hasn't fully hit. It's hit but not fully hit. People are hanging on to properties and trying to get out from you know and look, I empathize with that because you know I'm in that boat on some of them, um, but I think there's more and more of those are also coming down the pipe to buy assets that are going to be coming on the market here in the next year or two, three.
Speaker 4:On the real estate side we do a little bit in the private equity and private credit, non-real estate stuff, but I'd say almost historically we're very, very focused on real estate, asset-based investing.
Speaker 4:As to advice that I'd give a new fund manager I mean I think that depends on what they've done to date I'd say, at the very least, don't even think about it unless and until you've done some number of individual deals or syndicated a certain amount of deals so you understand the whole process of buying property, managing other people's money, et cetera. But once you reach a certain size and scale and frequency of buying property, managing other people's money, et cetera. But once you reach a certain size and scale and frequency of deal volume, then it can make sense. I think that the transition from raising money one deal at a time to a pooled fund format is much more difficult than most people think. So I'd say really have a pretty good idea of where the money's going to come from and don't think that just because you set up idea of where the money's going to come from and don't think that just because you set up a fund, that it's just going to show up because it doesn't Wait.
Speaker 3:Matt, if it's a good deal, the money always comes right.
Speaker 4:If you just pull out a thin air like that, it's always right in front of you.
Speaker 4:Yeah, well, I'd say that there is some truth to that, that if you have really you're and you know you're a good steward of other people's money and you know what you're doing, then money will show up for good deals. But a pooled fund, especially, you know, in a blind pool, the investor doesn't know which specific deals they're investing in. Right, when you do it on a syndicated basis, they know, at least they know. Yeah, I'm relying on cole or nate or whoever right to do the management of it, but I'm investing in this property right in a fund. It says we're going to invest in a box that looks like this it's, you know, multi-family in the southeast, you know on garden style, class bc in this era, and so forth, but they don't know which properties exactly. So the the um, the bar is higher for a pooled investment fund because the investor is investing more in the credibility of the manager than they are in just that specific property I didn't think of it like that and it's funny because we say that in jest, because we make fun of unfortunately.
Speaker 3:But just a lot of people get into capital raising for the first time and they're like we're going to go buy this thing, we're going to raise all these millions of dollars, you know everybody's going to come in, and we're like it doesn't work like that. Even on something that's a little more simple. And it's funny now that Nate and I talked to first-time Razors, we're like, hey, you know just slow down. Exactly so, Nate. You had a question. You think it's time?
Speaker 2:Oh my gosh. This whole interview has been amazing. I've had way too many laughs. I keep muting myself. This has been hilarious, but I think Matt might be ready. I don't know. What do you think?
Speaker 3:I think he's ready. Matt, here's what happens. No, go ahead, nate, you're ready, I cut you off.
Speaker 2:You're good, you're good, you're good. So what Cole is going to say? What I'm going to say here is we ask everybody these six questions. We want you to answer as succinctly as possible, or long-winded, our possible or long-winded. Our goal is to not have a rebuttal or make any kind of comment after we ask. We fail every single time. So be prepared for us to fail, but we're at least going to give it the old college try.
Speaker 3:Sounds good. All right, here we go. First question what separates top performing entrepreneurs or investors from the rest of the crowd?
Speaker 2:Resourcefulness. I'm so close to failing, okay.
Speaker 4:What is the daily habit that's contributed to your success? Early on, it was journaling, writing down thoughts, goals, ambitions, et cetera, and really, really, really taking that seriously, I would say reading, personal development, continuous learning, probably more than anything else.
Speaker 3:Love it. What is a piece of advice that you'd give to yourself if you were starting again?
Speaker 4:Probably I would try to not give myself too much advice because if I did I maybe would have never even tried it in the first place. So I'd say, you know, go for it. You know, look, more than anything, treat people right. You know, have a set of values that you adhere to and don't compromise those values.
Speaker 2:So good, so good. What is your favorite business book?
Speaker 4:The first one that comes to mind is a book called let's Get Real or let's Not Play by a guy named Mahan Khalsa, which is it's focused on consultative selling, but it's really a book on just how to deal with people in a way that I feel is as good it's as well articulated as any piece of work that I've ever encountered. So I got a lot of books I've read and you can see a lot of them on my bookshelf back there. But I'd say let's get real or let's not play.
Speaker 3:What is your favorite part of owning your business?
Speaker 4:of owning your business yeah well, yeah, I've owned it a long time, so I think still is delivering value to people who you know. Where I know I can really make a difference in delivering that value. I think that's probably the most enjoyable part.
Speaker 2:What is something new that you've implemented in your business that's helped drive your success?
Speaker 4:You know, lately I mean more and more use, as often as I can, of AI. I mean in trying to do things that you know, being at the forefront of that as much as I can. I know that it's changing rapidly Workflow, jobs, companies, entire industries and I wouldn't say, nate, that it's necessarily had a giant impact yet. But I think, being conscious of it, there's a couple of bottlenecks in the fund administration world that I believe are going to be solved by AI. So I'm trying as hard as I can to be one of the people that really is the first to be able to do that, because it's a huge bottleneck and it's basically data migration is very hard, is very hard. Switching administrators or moving from one to the other is incredibly difficult because of just the amount of data that you have to import and and get accurate and get absolutely accurate. I think AI is going to make a big mark in that space. Haven't done it yet, but working on it.
Speaker 3:He survives, yeah, yeah.
Speaker 4:No, no, and yeah, it's well, it's well. And look, I mean even just and I thought you meant just surviving 30 years in business, is that by itself is an achievement it's funny, you know, someone's been in business 35 or 40 when we say what's your favorite part, you're like, uh, I don't like.
Speaker 3:it's just, it was so funny I that, and it's just awesome that you've been in this so long and that you've done so well. It's so cool. I mean, just dialing back and hearing your stories. Starting young, going into finance and mortgages be a pivotal moment where you said let's go into this and you started your own business and you went through all these challenges. But going through hard money stuff and then going into mortgages, doing funds, managing major funds and kind of going through all that and then eventually getting new advisory, helping others and just kind of continuing on. It's such a cool journey. And there's 10,000 other questions that I want to ask you, so we're gonna have to have a call another time. But, um, two last questions for you. One, any final advice? And two, where can people find you?
Speaker 4:Yeah, I think the main thing is you know if you're gonna, if you're gonna, manage other people's money, take it very seriously. Um, no, you know if. If you get to a point where that money is compromised, that's an incredibly difficult thing just mentally and a conversation that you have to have with people. I mean it happens. It's part of business, it's part of investing. But just be very well aware of that. Be a good steward of other people's money as best you possibly can money as best you possibly can. If you're going to set up a fund, you know, be thoughtful about how and why you do that and try to do it right in the beginning. And you know, self-servingly right. We can help people with that. And you can reach me on. Linkedin is a good spot. I'm pretty active there. Or you can email me at mattburk B-U-R-K, at verivescom or you can email me at mattburk B-U-R-K at verivescom.
Speaker 2:Love it, matt. This has been amazing, truly an honor, a pleasure and a privilege of ours. Everybody that's out there that's listening, reach out to Matt. He's clearly a fountain of tons of knowledge. He's been through a lot, seen a lot, has seemed like all the answers. Hit him up, get to know him. So, Matt, without further ado, man, we appreciate you so much for coming through. Again, our house is your house. So once everything decides to whatever your next endeavor is going to be, you had mentioned it's kind of alluded to hey, you got, you got something else coming down the pipeline. You got some other ideas happening. Hit us up. We'll learn a little bit more about what you got cooking. If you're out there driving around, get home safely. And until next time, guys, we'll see you on the next episode of Forged in Fire.
Speaker 1:Take care everybody, thanks for tuning in to another episode of Forged in Fire. If you enjoyed today's raw, unfiltered stories, don't forget to like, subscribe and leave us a review. Your feedback helps us bring more real-world insights to entrepreneurs like you. Be sure to join us next time for even more lessons, struggles and breakthroughs on the road to success. Keep forging ahead.