Today we have Peter Powers on the show! Have you ever been in a family office and wanted to learn more about real estate investments? Whether you’re managing the family office or trying to get into a family office, Peter Powers is your go-to source. With his experience with working and managing a real estate portfolio within his father's family office, he knows how to leverage relationships for success. He established SP Venture Partners and now helps other family offices deploy their capital into sound real estate investments.

In this episode you will learn:

• that building relationships instills confidence
• to be curious about learning from all your experiences and your team members
• most family offices have a cash cow operating business

Table of Contents:

• Where To Listen To The Podcast
• The Power of Family Office Investments: Insights from Peter Powers
• The Evolution of a Family Office in the Real Estate Landscape
• Fostering Trust and Partnership
• Key Considerations for Family Office Investments
• The Importance of Due Diligence in Family Office Collaborations
• The Importance of Education in Family Office Investments
• Skin in the Game
• The Family Office Journey
• How To Reach Peter Powers

The Power of Family Office Investments: Insights from Peter Powers

Darin: Peter Powers gained knowledge by working and managing his father's family office real estate portfolio. He developed his skills by volunteering to work in six unpaid internships with other real estate-related companies. He's a big believer in delayed gratification and sacrificing early to receive the rewards later.

I actually reached out to Peter over LinkedIn. We have not spoken before. But I've been very interested in trying to understand the whole family office space and Peter has knowledge in that area so I reached out to him. And he was kind enough to agree to come on and share with the listeners. So with that, Peter, can you share a little bit about how many properties, how many units you're invested in, and what your role is? My understanding is you're both within a family office and also have your own investment firm.

Peter: Yes. Again, I appreciate you having me on. I always welcome fruitful conversations. So as you mentioned, I still am involved with my family's investment office, which is MPI Family Office. Still, watch over the asset management for our portfolio of real estate. We also own operating companies. But my day-to-day is focused on SP Venture Partners. SP Venture Partners is a real estate investment firm that focuses on making co-GP investments with seasoned operating partners across the country in multifamily and senior housing.

Unveiling Transparency and Growth

Peter: Really our creative approach is we provide these opportunities to family offices. To ultra-high-net-worth families, where we provide a higher level of transparency in reporting than you typically see from a real estate investment firm. So that allows them to feel more comfortable with the investments that they're making from the due diligence before they make the investment to the closing during the hold period. And that transparency leads to education, education leads to comfort, and then comfort leads to further investments.

SP Venture Partners is based out of Tampa Bay. As I mentioned, we make co-GP investments in senior housing and multifamily. We're seeing a little bit more opportunity in senior housing right now. Senior housing got beat up during covid. So we're under contract on three senior housing properties in the mid-Atlantic right now, and we have another dozen or so other properties in the pipeline. In terms of ownership, I watch over my family's real estate portfolio, which is right around a billion dollars, about 6,000 apartment units. A number of senior living facilities, a medical office, and some storage.

I own a percentage of a good portion of that. Prior to myself joining my family's investment office, I was helping lead acquisitions for a private equity firm in North Carolina, which was focused on multifamily. So I got a number of assets under my portfolio as a general partner while I was at that firm. So again, I am very much involved with my family's investment office. Keeping a pulse on the investments that we've made but my day-to-day is making co-GP investments with other family offices.

Youthful Ambition in the Family Office Realm

Darin: That's awesome. I'm probably more than double your age. I'm 53. You're a young guy. How did you get involved in this space? There's not a ton of young people in this space.

Peter: Yes. That's a great question. I just turned 27. I started young. So I grew up in a medical family my father is a surgeon. I was going to go down that path but decided not to. Just like any, I guess, high school or college student, I was very curious about what I wanted to do and I know that you got to have a why as to what you're going to do. You got to be excited about it. So as I was exploring that during college, I started doing internships across the country. Unpaid internships with different real estate groups.

A couple of different property management groups, a couple of different private equity groups, and then a brokerage group where I was up at school. Went to Florida State. I got a good grasp of the different components of real estate and the different capacities that I could be involved in. And I understood that being on the ownership side, learning not only how to buy and invest in these deals and add value. But also the real value because their businesses are the management of them. So I learned that from a young age.

I'd like to say that I did six three-month unpaid internships that really helped accelerate me a number of years ahead of a lot of my peers. And then I had the ability to make my first GP investment at the age of 22.

Inside the Diverse Landscape of Family Office

Peter: So I started young. I have closed on a billion plus dollars worth of assets across the country and it's just building up that deal flow, building up those relationships, and then staying hungry. Continuing to have these conversations. Being open to continuing to learn from other partners that I invest with, other family offices, and helping drive my future.

Darin: That's huge. I applaud you, I wish I had started in my 20s. I get asked that. If I'm a guest on a podcast they ask, what would you tell your 20-year-old self? Buy real estate. So there are two avenues. Let's focus on your family office first. So what is the mindset of the family office? I guess let's step back. What would you define as a family office in terms of assets under management or net worth or wherever? And then what is the mindset of a family office?

Peter: I can't speak with any family office because they're all different. Some families are more involved than others. You have multifamily offices where they really just outsource a lot of the services, a lot of the needs to some third-party multifamily office advisory firm.

Darin: I'm going to jump in right here for the listeners' benefit. When you say multifamily offices, this show is mainly on multifamily investments. What you're referring to though is a bunch of different family offices getting together.

Peter: Yes.

Darin: Multiple family offices rather than multifamily investments.

Peter: Correct.

Darin: I just wanted to differentiate between that.

The Evolution of a Family Office in the Real Estate Landscape

Peter: I'm happy you pointed that out. Exactly. And it gets confused a lot of times because we do a lot of real estate. So yes. So multiple families will combine. They're able to leverage the resources. Especially for some smaller families, it allows them to not necessarily have that administrative burden. It costs a lot. You want to hire a CIO it could be multiple hundreds of thousands of dollars, plus you're giving them a piece of the cake. Then you're hiring an analyst, then you're hiring various different asset managers.

So it can be very cost-intensive. So a lot of families will choose to do a multifamily office and sometimes there're larger ones. They just see the ability to get access to top CIOs, and top asset managers. So that makes sense for them. But my family's journey was as coming out of 2008. They saw that investing the normal route in stocks and bonds and going the traditional way didn't really work. And at the same time, they were getting beat up with their operating business with the onset of some legislation.

So they decided that the best move was to learn from some of the very wealthy families and learn what a family office was, and that's where it started. Then from there, they decided that building up our own family office. And doing extensive research and investment into operational real estate at a time when values were very depressed, was a great next chapter for my family. So over the years, my family has really built that up. I've seen similar stories with other families where there really was a pain point that caused them to pivot.

Strategies for Wealth Preservation and Growth

Peter: Going the traditional route didn't work for them. Once they got beat up, they decided to study what went wrong, and what other solutions are there, instead of just licking their wounds, hoping things would get better. So that's what I've seen with other families. That's what I've seen from my family. That's all I can speak to. But sometimes you'll see the ultra-wealthy families, the Elon Musk, the Jeff Bezos, they get to a point where they have billions and billions of dollars.

Managing their companies is very, very important. That's what they're good at. They need to bring people in-house to manage their money. When you have hundreds of billions or tens of billions of dollars, it shouldn't just be sitting there. It should be put into use, whether it be through treasuries or real estate or maybe even some stocks and bonds. So for them, it's very integral that they are able to maintain their wealth, especially if they want to take it and do philanthropy. They don't want it just to rot away with inflation.

Darin: Let me ask you this. Of the family offices that you've worked with, what percentage would you say fall under the camp of extremely knowledgeable in real estate versus maybe they built their wealth in some other avenue? They built a company and then they had a big exit and now they've got a bunch of capital that they have to figure out how to grow the wealth. Like you just said, Elon Musk, he's focused on building his businesses. He's got all this capital, he has somebody else manage it for him from a family office. So how would you say that is segmented?

The Confluence of Wealth and Expertise

Peter: Yes. I would say the majority of them. They have a big operating business that's a huge cash cow, which is beautiful. They either decide to sell that off and then formulate a family office. Or they hold onto that cash cow operating business, then formulate a family office that is making more long-term investments. So it's more about the preservation of wealth. They also want some income generation. But they already are getting a tremendous amount of cash flow from their operating business.

So depending on the size of that, they might want to just do it for diversification needs. Or they're looking to do it to provide some additional cashflow. So it really does depend. But in terms of the family offices I know, I would say the majority of them built their wealth through some other operational business. And then they decided to formulate a family office that invested in real estate. I do know a few though that were generated from real estate and then they've continued to make real estate investments or other private equity-related investments.

Darin: That's interesting though because I think that some people in the real estate world, let's just say a syndicator that hasn't worked with family offices. They're super, super wealthy, they're super, super sophisticated. But they may be sophisticated in a different industry and they may not really fully understand real estate. Multifamily or you're also in senior housing as well as you do, or as well as the syndicator does. And so that's, I think, an important point for people to understand.

Unlocking the Potential of Family Office

Peter: Yes. I think you're spot on with that, but you need to show that. It's not just look at me. Everyone wants a great track record, but show them what that track record means. You always have a few sour deals. What went wrong with those? Your home runs. How did you outperform on those? Really showing them a full case study of what went on with a number of deals. Providing that transparency, providing that education. That's what's important. And I think that's very much lacking.

There are a lot of groups out there that have done an extremely good job. And I actually had this conversation last week. I was with one of the biggest residential developers in the country, if not the biggest ever when it comes to apartments. And I had that conversation because they don't raise money from just family offices. They raise money from countries. They're going and doing these sovereign wealth funds. I had that conversation. I was like, "You guys have a 50-plus-year track record. You guys have produced tremendous returns, but you guys are on par with some of these big institutions."

He goes, "Exactly." I go, "But how are you to get groups to write not 100, not 200, but 500 $1 billion checks right into your guys' funds?" He goes, "Peter, it's relationships." He goes, "If you keep that good relationship with them, you provide that transparency, provide that education," he goes, "that's what gets you head and shoulders above the competition." Not just, oh, write me a check. I produce these returns. That's great.

Fostering Trust and Partnership

Peter: But they want to feel like they're involved. They want to feel like they understand what's going on. They don't want to feel like, okay, I just made money, but I made money, plus I learned how I made that money. That's a very important part of the equation that a lot of times is missing. So that's something that SP Venture Partners is now providing family offices, here's our due diligence. This is why this operating partner fits our criteria. This is why this deal fits our criteria. Here's our full due diligence deal room and then when we actually own the property, showing them the monthly reports.

This is where we had issues. This is where we're outperforming. A lot of them own businesses. They know that things do not go the way the business plan projected. They know there's going to be bumps down the road. But if you can show them what those bumps are, how you're finding solutions, and how you're able to stay on track or outperform, they appreciate that. They feel more comfortable. When they feel more comfortable they'll continue to invest with you.

Darin: Yes. That's huge. So relationships. Most syndicators are raising money through high-net-worth individuals. $50,000, $100,000, $200,000 a pop. Now family offices have the ability to write larger checks. But they're still built on relationships and built on trust and comfort and like you said, education and transparency. Obviously, you've seen it firsthand with your family, but then with your firm, you've built these relationships with different family offices. How do you build those relationships? How do you find these families and then how do you build the relationships?

The Power of Networking in the Family Office Realm

Peter: Finding, again, you'd be surprised that in most of the major and secondary cities across the country, there are always a number of very prominent families. This person knows this person. So a lot of times it's just organic. You get introduced or go to events. I go to a number of conferences and I meet interesting individuals. They connect us. It really is always out there, always being willing to learn, always making yourself open to introductions. That's how things happen. There's no set way of going about it.

You've just got to put that work in and continue to meet someone, don't let it go to waste. Continue to learn about them. Learn some of their pain points. How you could provide value. I was with a group last week and they were giving me an idea of what they did, and he's explaining some of the opportunities they were coming across. I was like, "Well, I know a pretty prominent family out of Tampa Bay that that's what they do."

"They write those type of checks and I'd love to make that introduction." That's how you get things done is you provide value first. It's a cliche. Provide value and you'll receive value. But if you do that, people like to work with people that are helping them. So they're more apt to send you opportunities and they're more apt to find a way to work with you where it's financially beneficial to you.

Breaking Barriers

Darin: Yes. That's huge. I think that it's a matter of first getting past the intimidation factor. You're providing a solution to someone's problem, to someone's pain. And it just happens to be that there's an extra digit or two. So being able to be confident in your ability to solve that pain point I think is probably crucial for you.

Peter: And I think one more thing. And this hasn't been proven, but especially being younger, between myself and my partner, and across deals. Just over the past six or seven years, we've invested over $125, $150 million of equity across deals. Most not being our family, the family office he came from. How do you do that? And we also have other families that invest alongside us. How do you go about doing that? You're younger. I have a family office on the other side of Florida that invests multiple million checks and he's 80 years old.

Well, why would he invest with me? I'm someone younger. Especially in first-generation family offices where they've had to build wealth, they can see that drive, they can see themselves in some of these younger entrepreneurs. They have a huge amount of respect. They know, okay, if I put my money behind him, he's putting everything on the line for this deal, he's going to make it work. There's going to be issues, but I'd rather get behind that horse than with some other maybe second or third-generation horse that just isn't necessarily as driven.

Tailored Deal Structures for a Family Office

Peter: So I think having that drive, having hunger. A lot of first-generation family offices, they're still being run by the wealth creator. They can see that value, they respect it, and that's who they want to be involved in because they can see themselves in you.

Darin: I love that because I totally buy in and believe that people that are successful, want to help the next guy come up. And if they can see something in you that reminds them of the challenges when they were getting started, they want to help you. So if you can solve their pain point and they can help you along your journey, that is something that's a huge win-win for the wealth creator for sure.

Peter: Yes. I've seen that.

Darin: So how do you typically structure deals? Let's go to SP Venture Partners. You say you co-GP on a lot of investments. How is that typically structured? One of the thoughts or one of the things I've heard from syndicators before is with the family office, each one is different. And each one has unique needs and they want to be treated special and different from the other LPs in the deal. And so they want different contract language and all that. So how do you structure deals?

Peter: Yes. I'll just run you through our process. One, it's we're investing in teams, investing in partners first. So we do co-GP investments with seasoned groups. So groups that have a track record. They have experience in specific areas. We have something called our non-negotiable.

Key Considerations for Family Office Investments

Peter: So one, what is their actual skin in the game? Are they signing on a loan where maybe there's some partial recourse? Are they putting actual money into the deal? What is their experience? Have they been through, not just market, but also debt cycles? We're starting to see that pop up for a number of groups right now, they don't really understand how debt can really affect you negatively. So what is their experience in market cycles and debt cycles? What is their team like?

When I was with my family full-time, we had an operator who did such a great job. But the patriarch, the founder, and the visionary for the company passed away during covid. That company changed drastically. So understanding who the team is, what the succession plan is, and how that machine works. A team is really a machine. Who's actually doing what is very important, transparency. How transparent are they? If I'm investing multiple millions of dollars with someone I want to be able to follow the money.

I want to be able to understand 100% what's going on. I don't want there to be a, "Oh, we don't provide that" No. That's not how this works. I invested a tremendous amount of money in you. It needs to be this way. So we speak with references to really validate that. And then it comes down to experience and the sense of if they build a name for themselves. Build experience in doing hotel conversions or value add apartments in the southeast, is that what this opportunity is? I don't want to, okay, that's why I've been doing, but we're doing a development in the Midwest now.

The Strategic Advantage of Family Office Co-GP Partnerships

Peter: I got to really see that you have a track record doing that specific strategy in that specific geographic region. So those are some of our non-negotiables. We look at that first and that's what helps dictate what the structure is. So what we'll typically do is we'll come in, and provide maybe 40 to 80% of the GP capital. Sometimes we'll put up deposits if need be. And then sometimes we'll assist in bringing an institutional limited partner. Sometimes we won't. The real benefit of having us is we have the dry powder, we have the capital to be a programmatic partner. Don't just look at this deal. Look at the next five or 10 deals. We'll be able to do that. We have the dry powder to do it.

So we're coming into an environment where there's going to be a lot of opportunities out there. There's some groups out there that the principals of the company are worth hundreds, if not billions of dollars. They have a lot of money. But if they're able to bring down their GP commitment, they're able to stay a little bit more liquid, a little bit more agile. And they won't have to pick and choose between the great opportunities that present themselves.

They can do more and more of them because they're not having to put as much money into those deals. So we see it as a huge opportunity for those general partners, those sponsors, to leverage their position, and financially engineer it. Then allow them to do more opportunities which is beneficial to us. Because I can be part of those future opportunities too that maybe they would not have done if we weren't a co-GP partner.

Leveraging Experience and Networks for Added Value

Darin: Yes. It's a win-win. You put more of your capital out and they can do more deals. So do you come in as just a regular LP or do you require different terms?

Peter: Yes. So financial terms, all dollars always sit on the limited partnership side, and then we take a share of the promotion as well. Your returns really end up being between what a limited partner gets and a general partner gets, but you still have the risk profile of the limited partner. That's where the beauty of it is. It's something that we're able to do that a lot of other co-GP groups out there don't have the ability or the experience to do.

I started in management. I know how to manage a lot of these multifamily properties. My partner and I have extensive experience from having families that are involved in the senior business. My parents are on the healthcare side, my business partner also his family were involved in the healthcare side with seniors. So we have a lot of experience that we could bring to the table. And we also have a very wide network. You have a group that maybe it's multifamily, they're having issues with collections.

You saw this during COVID. If you have another partner that you work with that maybe has a property nearby that maybe you're not involved in, but they have relationships in that city. Maybe they can help fast-track getting those rental collections. Maybe like, listen, this is the person you need to call. They'll help with giving you rental assistance. Little things like that are what allow us to add value to that deal and our partners recognize that.

Family Office Transparency and Value-Added Insights

Peter: And we also provide a level of transparency through our reporting that they a lot of times like to adopt and like to show it to the family offices or other institutional investors that invest with them. Because a lot of times, specifically in senior housing, it's an operational business. So you have some very high-level concepts, very high-level strategies that need to be implemented.

But if you can take those strategies and really break them down, put them in layman's terms. And show your investors that maybe aren't as involved in the day-to-day, they'll have a better idea of what's going on. They'll become educated and then they'll be able to make quicker decisions on future investment opportunities.

Darin: Yes. I like what you said. What you said is similar to differentiating, say venture funds from startups. There are some venture funds that they're just providing the capital and there are some venture funds that are going to not only provide the capital but also provide some direction. Maybe some introductions to some people can really help push their business along. So if you have experience in different parts of the country and with a large portfolio. Then you can see the learning lessons and be able to apply that and help your partners on different deals if they're struggling. That's fantastic.

Peter: Yes. You will be a real partner. I agree.

Darin: Yes. That's huge. So what are some of the learning lessons that you've had over the years working with different partners and how has that changed what you look for going forward?

The Importance of Due Diligence in Family Office Collaborations

Peter: Yes. Every day you should learn something, but some of the bigger lessons are really diving into it. Especially if you're looking to work with a partner you haven't done business with, maybe it's your first deal, really doing a lot of upfront due diligence. I get sent a lot of opportunities. Oh, here's an opportunity. Okay, that's great. I don't really know you yet. I haven't done my due diligence.

So I guess on both ends of this if it's an operator looking for a co-GP partner. Here are some case studies. Maybe here's an overview of our company. Here are a couple of references too. If you're upfront about that, that makes you even more transparent because you're willing to do it without having been asked for it. And then on the other side of that, if you are a co-GP partner coming into a deal, do not sacrifice that due diligence. It's very, very important. Really do your research. You'd be surprised.

I had a conversation with Sean, my partner, yesterday, and he was looking at an investment opportunity about a year or so ago. And it was a great opportunity and the business probably ended up turning out pretty solid. But he looked into who one of the general partners, one of the sponsors for the deal, had a pretty extensive criminal record.

Darin: That's a huge red flag.

Peter: Those are red flags. But the other two members of the family office he was with didn't notice that. But he just kept doing his research, kept doing his research. Do not sacrifice that because your first couple deals, they might end up being great with that group, but maybe that ends up biting them back down the road.

Exploring Family Office Investments Across the Country

Peter: So always look long term, always do that upfront due diligence. Don't rush it. There's no reason to rush it. There are enough opportunities, there's enough time. Think long-term. That has worked well for me. It's worked well for some of the mentors I've had that have been in business for 50-plus years. That's some of the advice I give people is, don't rush it. There is a long road ahead and real estate can help you build wealth long term. But building wealth fast, there's definitely some more risk there if you're rushing that.

Darin: Yes. So look, this is the first time that we've talked and you are a young guy, but what's evident is that you know the business. You talk about different questions and concerns and case studies and even though you're a young guy, you come across as knowing the business very well. So that's fantastic. Hey, what geography do you focus on? You said all across the country.

Peter: Yes. We invest pretty extensively across the country. So we have some assets in the mid-Atlantic, in the southeast down over to Texas. An area we're looking to expand in and I've been speaking with a number of different groups is the Midwest. I'm originally from Pittsburgh. My partner's from New York, so we grew up north, but I was a little bit more in the Midwest.

So I'd like to start investing, making some investments, long-term investments in specific areas. Some areas in Ohio. I've been looking into Arkansas. If you look into Bentonville, Fayetteville area. There are some opportunities there that you can buy on a better basis and there's more cash flow, which I think is very important.

Learning from Mentors and Pioneers in the Family Office Space

Peter: At the end of the day, cash flow is what gives you the cushion to weather these storms. So maybe your overall return maybe might not be as high. But if you're able to get that cash flow, you're able to work with a group where they have a lot of experience there. I think risk-adjusted returns matter. And I think you'll have a better risk-adjusted return if you're working with someone that is in that area, has experience in that area. It's a property already flowing so you've taken off a tremendous amount of risk.

Darin: What do you leverage in terms of mentors or advisors to further your knowledge?

Peter: Yes. It's funny. Unfortunately, Sam Zell passed away last week or a couple of days ago.

Darin: I never met him and it really bugged me to see him pass. He was definitely a leader in the space. The leader in the space.

Peter: I've had an opportunity to meet a number of that caliber that have really been pioneers, but you have two different mentors. You have mentors. And what I'm getting to is the ones that maybe you haven't gotten to meet, but they were very vocal. He had a tendency. This is why I think a lot of people like him. Is to take some of these high-level concepts, break them down, and make them a little bit more simple. He kept it simple. He's very, very unorthodox, that approach. But I think that's what I prefer and it's easier for people starting off or people to really understand it easier.

Mentors, Partnerships, and Finding Your Why in the Family Office Realm

Peter: But you have those types of mentors, you don't get to learn, but they put those videos out there and you get a great book that you can learn from. But then you have the mentors whom you actually spend time with. And I look at a lot of the operating partners, our sponsors I work with, as mentors. A lot of them have been in business for 20, 30, or 40 years. I could spend a couple of days with them. It makes me laugh because most people would probably pay a hundred-plus thousand dollars to do that.

I get to do it because I'm an investment partner with them. I get to ask them real questions and I get to actually invest with them. See how some of their strategies play out. See some of the solutions they come up with. So I've been able to build those up over the years. I've been very thankful. My family's made a lot of introductions for me and has really helped, especially initially giving me the path to a lot of these different groups. But it's hard work.

I think a lot of them really respected, especially early off, that I was willing to work there, but work hard for several months, not be paid a cent. You're really got to enjoy something if you're able to do that.

That's why I always tell people, you got to find your why. What are you doing? Maybe it's not real estate or maybe it is, but maybe it's a brokerage, or maybe it's some other capacity. So what is your why? How are you going to focus on that? So for me, there are three main factors I focus on.

The Importance of Education in Family Office Investments

Peter: One is the deal flow. Bringing in as many opportunities as possible. Two is building and maintaining relationships with family offices. And three is keeping an eye on our portfolio and then figuring out where I have an advantage and I know where I have an advantage. I've spent time in management, I've spent time working with big asset managers. Understanding some of their secrets where I can take a lot of these higher-level concepts and these bigger strategies, boil them down and be more transparent with the family offices I work with. Which provides them with education.

So that's really the advantage I provide. Our investments have produced substantial returns, but the real secret sauce, the added cherry on top is that transparency is the education that we're able to provide. So whether it be in person over conversations, or maybe it's a monthly webinar or maybe it's our quarterly investment memo, whatever it is. That all leads to them better understanding of, okay, that's where my money is, that's how I made money, or this is some of the issues I faced. I was looking at maybe doing another type of investment with some other group, but they're facing headwinds here.

Maybe I hold off on that. That education is going to allow them to make better decisions in the future. So that's something that SP Venture Partners provides to the family offices and ultra-high-net-worth families that invest with us. That is very much lacking. You'll see maybe a quarterly update or a quarterly memo and some of them are detailed. But they could be too detailed where you could just fall asleep reading them or maybe they're just very concise. It's too simple. Not really providing enough transparency, or enough education.

Building Trust and Access

Darin: I think also where that information is coming from matters. So if you've spent time with people and built the relationship through education. Through spending time with them and through talking about different case studies and then when they get information from you. They're more apt to one, read it and two, believe it, versus getting it through somebody that they don't have that connection with.

I could be wrong, but the value that you bring is not only the education and building the relationship, but it's also access to deal flow. Because they're wealthy, they may be able to get deal flow, but they don't trust a lot of it. So they're getting trusted deal flow from you. When you send them something. They know that you've already spent the time, you've already weeded out a bunch of deals that don't fit your criteria, and that your relationship is a bit on the line as well.

Peter: Yes. Providing that deal flow. I think you said it right. With the education, with that due diligence, making it simple where they can digest 99% of it within five, 10 minutes, and if they want to dive in deeper, they can. When we have an opportunity, I just usually give a few families a phone call and maybe I'll send out a few emails, but here's the opportunity, here's the real details of it.

Here's the story, here's the value we're going to add to it, and then here's how this sponsor or operating partner fits our criteria, our non-negotiable criteria. Here's how this investment opportunity fits our non-negotiable criteria. And this is why we're doing it.

The Value of Conservative Approach and Lasting Relationships in Family Office

Peter: And a lot of times we're coming out of the gates. Our estimated proforma returns probably aren't higher than 90% of these quick deals I get sent all the time and we get sent a lot of deals every week. But they know it's tried and true, and they know that on the investments that we've gone full cycle on, they've been able to substantially outperform. But that education with a conservative nature, I grew up in a conservative household and a lot of my mentors were very conservative.

They appreciate that and they like that. So when they see something, they know okay, this isn't just some pie-in-the-sky numbers. This is something that has really been stress tested. This is something where Peter and Sean, SP Venture Partners are going to be putting money in the deal. Maybe I'm not putting up as much money as them. But I'm putting up a substantial amount of my own capital, of Sean's own capital into these deals. So we're aligned. So they like that alignment, they like that education and they like that we continue to keep a relationship.

It's not just, oh yes, we're your best friend to raise the money and put the money in the deal. It's we're going to discuss it, walk you through it, hold your hand through the process, and then we're going to continue to maintain that relationship. Give you updates on it, and answer whatever questions you have. If you want to go up to their property together, walk through everything. We have the ability and we're open to doing that, which a lot of other groups just don't do.

Uncovering Track Records and Assessing Resilience

Peter: It's here's your quarterly. Maybe you get a check, maybe you don't, but there's not enough detail as to what's going on and how they're actually creating value.

Darin: Sure. You gave a little bit of information, but let's look at the syndicator profile. You mentioned track record. But what does the syndicator profile look like for somebody that you would work with and that you would recommend to other family offices? What I mean by that, is what size, how many deals, assets under management, that type of thing.

Peter: That's a great question. We get asked that a lot. The groups we work with, are ones that fit our non-negotiable criteria. So let's look at the track record. Let's start there. Where is their track record? What type of strategy? So if it's value-added, if it's in this specific geographical area, okay, that's one thing. We get a good understanding. Something we ask for is at least three full-cycle deals.

We also want to have an understanding of what happened with those deals. We also want to have an understanding of maybe a deal that you sold or a deal that you currently own that is underperforming. What's going on there? What are the reasons for its underperforming? Listen, we got too aggressive with the debt on it.

There are always stories. So asking that question's very important. A lot of times, oh no, we've done great. We've been very blessed. Knock on wood. If you've never had an issue then I'll probably most likely be your first issue. What is it? Murphy's Law. Whatever can happen, will happen.

Skin in the Game

Peter: So I want to understand. Because there are always issues. Give me an understanding of what went on and how you were able to overcome that issue or how you're currently overcoming it. So that's the track record. I say at least a handful of deals full cycle. And when I say deals I'm talking, if you're sending me a 200-unit apartment community, I don't want to just see three fourplexes you've done. You're building up. I respect that. But we want to see something that is very similar to the current deal that we're looking at. So that's the experience side.

And how well do they understand debt? Maybe they have someone they just brought on that's been there for a few years, that has 30 years of experience. Okay, now they're part of the team. Maybe they don't have a track record with that specific company, but if they've been there for a little bit and they're bringing other experience, we put the value there. So it just depends. And then we're going to look at what is their actual skin in the game.

What's the skin in the game of their actual company? We have a partner, who's spending a tremendous amount of money on his executive staff. Maybe he puts a little bit less in the deals, but I know he's paying that. That's skin in the game. He's willing to sign on some of these loans. They're favorable in the sense of the leverage isn't as high. They have favorable interest rates, and favorable prepay, but maybe there's a little bit, of 10, 25% recourse. That's skin in the game.

Evaluating Transparency and Alignment in Family Office Investments

Peter: You look at where is the skin in the game. We're open to figuring out where that is and then understanding whether are they transparent, speaking with the references, and seeing what the reporting package is. We have a sample reporting package that we need every month. We have a package that's a little bit more extensive, we need quarterly. Are they willing to provide that? If they're not, they're out. How does their team work together? If you're bringing someone in that has a lot of experience, are you actually giving them a say or do you just have them there to put on your slide deck?

I want to understand who the team is, who actually makes the decisions, and how that works. So once we figure out the non-negotiables, if they don't fit one of them, they're just not a fit for us. Maybe down the road, maybe in a couple of years, they fulfill all of them. Then we can move them to the next stage, which is going through who the references are, checking that off, and then we want to meet them face to face. There's a lot you learn me and people face to face.

So typically they'll come visit us in Tampa Bay, we'll sit down with them for half a day, have dinner with them, and then the next step is we'll go visit them. We'll go visit their team, we'll go visit their properties. And then from there we have a discussion internally if they're the right fit for us, and then we decide if we're going to move forward or not. If we are going to move forward, we're ready to do investments together. And we can typically do a number of investments pretty quickly with them.

The Vision and Passion Driving Family Office Investments

Peter: So we did it with one. We did I think eight investments in the course of a year, a year and a half. I think it was $25 plus million we put out. So it's sizeable chunks of money. Just again, the strategy checked out, and the team checked out. Again, we're going to have bumps in the road. We're having some bumps on some of those assets right now, but we're navigating our way through them and that's the course of business.

Darin: No. That's huge. I appreciate you walking through that process. Compared to, say, a high net-worth individual that's putting in less money, it's more upfront work, but then the relationship can really grow quickly afterward. It's kind of like if you do business with the government, it's tough getting in. But once you get in, you could end up getting the renewal contracts year after year after year, and it's hard for others to get in. So hey, you've done a lot and you're young man. What's the vision? Where do you go from here?

Peter: Yes. That's a great question and it goes back to what's your why. So I think it's important that you enjoy what you do. I don't think I'll ever get to a point, again, I'm young, where I'll ever retire. I love what I do. Maybe I'll step back in some respects. Bring in some key members. But I love what I do. I love going in and finding opportunities.

The Journey of a Passionate Family Office Investor

Peter: I love meeting the people I work with. We work alongside. You meet some that they're connected in this way or they've done this. You'll see my helmet at the back. I like racing cars for fun. So it'd be surprising how much of a common connection that is with a lot of different groups. Getting to know them, understanding their story, and really getting to know their background, that's enjoyable to me.

So I like building those relationships. I really like meeting these family offices and understanding their story. Some of them have very prominent companies. How they built those companies up. Maybe some of the headwinds they're facing now. Business is exciting to me. It's enjoyable. Because even if it's a different type of business, I might be able to take some of their strategies or some of the things mentioned to me and I'm able to implement it in my own business.

So for me, I enjoy what I do. So in terms of an ultimate vision, we're building up SP Venture Partners and our goal is to be one of the premier co-GP investment firms in the country. We're focused on senior housing and multifamily. Once we build those platforms up, we might start getting involved in some development of multifamily and senior housing. Something that I have a good bit of experience with is hospitality and hotels. So I think there's going to be an opportunity to start picking up some of these limited-service or extended-stay hotels across the country at discounts.

The Family Office Journey

Peter: That can be a great cash flow play. But our focus right now is multifamily, which is senior housing. But I do see ourselves maybe bringing some people in and then branching off into some of these other areas.

Darin: That's awesome. You talked about things that you talked about in the beginning in terms of curiosity and learning. And I love that. I love learning from each partner I work with. Sounds like that is something that's very important to you as well, curiosity and learning. And you get to learn from both sides. As you said, you get to learn from the wealth creators that had the operating business. How did they build that wealth? What was important? What was the key to their success?

And then you get to do the same thing with your partners on the real estate side. How did they scale? How did they grow? And how did they manage through different debt cycles and different economic cycles? All of that learning is, I don't know. You just can't put a dollar on it. It's just something that you come home and you're like, man, I don't know if I'll make any money off of learning this or not but I'm so glad I learned that. That's huge.

The other question I had, and you talked about it was you're focused on multifamily and senior housing now. Do you see yourself going into different, real estate has a lot of different buckets?

Exploring Diverse Real Estate Opportunities in the Family Office Realm

Darin: You can get into self-storage, you can get into RV parks, you can get into mobile home parks, you can get into hotels, you can get into resorts. There are a lot of different facets. It's all up to you. There's no real ceiling to it. It's where do you want to go with it? You answered that.

Peter: Because again, we're making co-GP investments. We could also get involved in different parts of the capital stack. Maybe we're coming in its preferred equity or I'm looking into some hard money type of deals right now. There are other ways of getting involved. And there are other spaces, especially in the past year that have just gotten more advantageous to be in. Because their returns have increased with interest rates and the risk profile is down compared to making it equity investments. So we keep a pulse on that. So we will pivot accordingly.

Sometimes maybe we'll come in. Our primary focus is co-GP but maybe we do come in as some type of preferred equity in the deal. Not a bad place to be right now. So be open to that, keep it, and continue that education. Hearing what other groups are doing in the market and then taking that and finding where there might be opportunities that probably are already in front of you. You just haven't explored them. But going down that path and potentially making some type of different investment. But it's in a space that you have experience in. So maybe it's in multi, maybe it's in senior, maybe it's in hospitality.

Nurturing Relationships and Building Wealth Through Family Office

Darin: I would imagine your parents are pretty proud. Not only proud of you as their son. Not only are you doing a good job managing their business, but you've created your own business to leverage the relationships with other family offices. Then you could take all that knowledge and then put it back into helping manage their real estate assets.

Peter: Funny. I stepped away from the family office and my family's investment office and focus on my firm. It's tough. They're building it up with them. It's very exciting. Very exciting to do that. We built up a very great portfolio together and they are happy. It's nice to know. Every opportunity that I do, I still present to my father, still bring it to my family, go over it with them, and give them advice on some of the investments that they're making.

Again, I'm always watching out for my family. Family is very important to me. My parents grew up probably some of the hardest working people I know. My father is, and my mom is. Came from really nothing in rural parts of Pennsylvania and have really built it up. Working hard, working smart, and continuing to learn. I look at my mother, she was on scholarship and valedictorian of a 700-person high school and just kept building it up. My father had to play college football in order to get into college and won a national championship. Just hard, hard work.

Connecting Opportunities

Peter: And then taking that, becoming a top medical student and building up a big healthcare business takes a lot of work. Especially doctors aren't typically business people. So you've got to really be able to, two different things there. So I really admire that. I think just growing up in that environment has helped me, and my siblings, really understand what it's like to work hard. And be able to make a name for yourself, I'm very thankful for that.

Darin: That's huge. So hey, if somebody wants to reach out to you, what's the best way for them to do that?

Peter: Yes. I think we'll put when we release this, my LinkedIn information and my email. So that's the best way to reach out to me. So if you look up Peter Powers on LinkedIn or our website we're updating right now, so if you look up spventurepartners.com, you'll be able to access my information or you could just email me. My email is PPowers@spventurepartners.com

Darin: Awesome, Peter. Well, I appreciate you coming on the show, and sharing. I think that you're a go-getter who's going to do great things and I look forward to watching that. Listeners, I hope that you enjoyed that one. Until next week, signing off.

How To Reach Peter Powers

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