Key Takeaways
- Investors can reduce unnecessary risk by seeking experienced operators, audited financials, and meaningful sponsor contributions.
- Authentic relationships and a strong reputation can create access to capital and opportunities that aggressive pitching cannot.
- Financial freedom requires disciplined decisions, patient relationship building, and the courage to reject attractive deals that fail proper scrutiny.
The REI Agent with Salvatore Buscemi
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The Opportunity Hidden Inside an Unexpected Detour
Some careers begin with a carefully designed plan. Others begin when the original plan collapses and reveals a better path.
When Salvatore Buscemi joined Mattias Clymer on The REI Agent Podcast, he shared a journey that began far away from family offices, private credit, industrial properties, and institutional investing.
Buscemi originally intended to enter medicine. He studied as a pre-med student, worked alongside a surgeon, and appeared to be moving toward medical school.
Then one unforgettable moment changed everything. While working in a hospital cadaver room and holding a femur, he passed out and had to be revived with smelling salts. It became painfully clear that medicine might not be his calling.
What looked like an embarrassing failure eventually became a life-changing redirection. The surgeon Buscemi had worked for respected his discipline, work ethic, and character. Instead of judging him, the surgeon introduced him to a brother who had recently made partner at Goldman Sachs.
That relationship opened a door Buscemi could never have predicted.
“It is a strong lesson on reputation and good networking.”
His story offers a powerful reminder that sincere effort is rarely wasted. A person may discover that the original destination is wrong, but the reputation built along the way can still create extraordinary opportunities.
Reputation Becomes Capital Before Money Ever Arrives
The Work People Remember
Buscemi did not knowingly network his way into Goldman Sachs. He simply worked hard, treated his responsibilities seriously, and left a strong impression on someone who could later recommend him.
That distinction matters. Strategic relationships are valuable, but relationships built only for personal gain are usually easy to recognize. Buscemi’s connection was different because it began with contribution rather than extraction.
The surgeon remembered the student who showed up, completed the work, and gave his full effort. That reputation became a form of capital. It traveled into another room before Buscemi ever entered it.
Years later, the same principle became central to his approach to investment partnerships. Whether someone is seeking employment, attracting clients, raising capital, or building a company, credibility often arrives before the opportunity.
Skills That Travel Across Industries
Buscemi eventually moved from Goldman Sachs into institutional distressed credit platforms and family office investing. His work expanded beyond property into private companies and other alternative investments.
Although the assets changed, the foundational skills remained remarkably consistent. He continued to evaluate people, understand risk, structure opportunities, communicate value, and build trust with sophisticated investors.
That is encouraging for agents and entrepreneurs who feel confined by their current roles. Skills developed through sales, negotiation, client service, and property transactions can become valuable in private investing, capital formation, and business ownership.
A career does not have to remain trapped inside its original job description. When someone develops judgment, credibility, and the ability to build relationships, those strengths can travel almost anywhere.
The Three Rules That Can Eliminate Most Bad Deals
Buscemi has watched multiple market cycles expose inexperienced operators. During strong markets, confidence can be mistaken for competence. When borrowing costs rise, expenses increase, or projected exits disappear, weak assumptions become impossible to hide.
To protect capital, he presented three demanding rules that can help investors eliminate a large percentage of questionable opportunities.
Rule One: Avoid First-Time Operators
Buscemi wants operators who have survived more than one difficult market cycle. Experience during prosperous years is not enough. He looks for professionals who have already dealt with financial pressure, shifting credit markets, operational problems, and unexpected losses.
His standard is not perfection. It is tested judgment.
An experienced operator has usually built the relationships needed to solve problems quickly. That person has learned which expenses are commonly underestimated, how lenders behave when conditions tighten, and how investor communication must be handled when a plan changes.
“I want to see that they have laid in a pool of their own sweat before.”
Experience cannot prevent every problem, but it can determine whether a problem becomes manageable or catastrophic.
Rule Two: Demand Audited Financials
A compelling presentation is not evidence. Neither is a confident personality, a luxury lifestyle, a large social media following, or an impressive projected return.
Buscemi wants the numbers verified.
“Your track record is so good, where is the audit?”
Audited financials force an operator’s claims to face independent scrutiny. They help investors determine whether previous results actually occurred as presented and whether the operator has built the financial discipline required to manage other people’s capital.
The broader lesson reaches beyond investing. When the stakes are high, documentation should carry more weight than presentation.
Rule Three: Measure the Operator’s Conviction
The third rule concerns the operator’s own contribution. Buscemi examines how much personal capital the sponsor is placing into the opportunity.
A small contribution may be created by rolling fees into the transaction. A larger contribution demonstrates that the operator has meaningful exposure to the same outcome as the investors.
Buscemi described 10 percent as thoughtful and anything greater as a stronger sign of conviction. In one partnership he discussed, the operating family contributed 40 percent of the equity while Buscemi’s group provided the remaining 60 percent.
Alignment changes behavior. When an operator has substantial capital at risk, decisions are less likely to be driven solely by fees, appearances, or the need to complete another transaction.
Why Industrial Property Earned His Attention
Professional Tenants and Essential Demand
Buscemi expressed a strong preference for industrial property because it can serve established companies with essential business needs. Instead of managing several individual households, an investor may participate in a facility occupied by professional credit tenants.
He contrasted the challenges of multiple residential tenants with the potential stability of companies that provide tools, equipment, logistics, manufacturing, air conditioning, or other essential services.
The appeal is not simply that industrial property sounds sophisticated. It is that the right facility, purchased or developed at the right basis, can meet enduring demand while reducing some of the emotional and operational complications associated with residential ownership.
The Importance of Buying at the Right Basis
No asset class is automatically safe. Buscemi repeatedly returned to the importance of entering a transaction correctly and partnering with people who understand the asset.
A strong property purchased at an inflated price can still become a weak investment. A promising development led by an inexperienced operator can still fail. The opportunity must be evaluated alongside its cost, financing, sponsorship, tenants, market demand, and execution team.
His discussion of industrial property was therefore not a promise of effortless returns. It was a lesson in disciplined selection.
Understanding IRR Through the Judgment of Time
Buscemi also offered a memorable explanation of internal rate of return, commonly known as IRR. A multiple alone does not reveal the complete performance of an investment because time matters.
“IRR is the return as a function under the judgment of time.”
An investment that multiplies capital over three years produces a very different result from one that produces the same multiple over 20 years. Both may appear successful when viewed only through the final dollar amount, but the speed of the return dramatically changes its value.
This is why investors must look beyond a projected headline return. The timing, risk, liquidity, assumptions, and opportunity cost all belong in the evaluation.
A Partnership Is a Financial Marriage
One of Buscemi’s most important warnings concerned the people behind the deal. Investors sometimes become so focused on the property that they fail to study the partnership controlling it.
The money is not simply sitting inside a building. It is committed to a legal and operational structure managed by human beings. Those people will make decisions, communicate with lenders, manage expenses, respond to setbacks, and potentially request additional capital.
“When investing in these deals, the partners are married.”
A partnership can last for years. During that period, market conditions may change, refinancing may become difficult, construction expenses may rise, or the original business plan may fail.
That is why trust cannot be treated as a decorative quality. It is part of the investment itself.
The Capital Call Nobody Wants
Buscemi explained that inexperienced operators frequently fail to include enough capital for unexpected expenses. When the budget breaks, they may return to investors with a capital call.
An investor who has already committed money may then be asked to contribute another $100,000 or face dilution. The original passive investment can suddenly become a much larger and more stressful obligation.
Capital calls are not always evidence of misconduct, but they can reveal weak underwriting, insufficient reserves, unrealistic projections, or an operator who did not fully understand the deal.
This is why due diligence must happen before the excitement of an opportunity becomes emotional commitment.
The Hidden Second Rule of the Business
Always Be Raising Capital
The traditional rule is location, location, location. Buscemi offered another rule that he believes deserves equal attention.
“The second rule is always be raising capital.”
He was not suggesting that professionals should constantly ask people for money. He was describing a long-term process of building credibility, knowledge, community, and relationships before a deal appears.
Capital raising begins when someone proves dependable. It grows when that person shares useful information, introduces good people, hosts thoughtful conversations, and demonstrates sound judgment without demanding an immediate transaction.
By the time an opportunity arrives, the relationship should already exist.
Learn Beside an Experienced Operator
For someone who wants to enter the private investment world, Buscemi recommended helping an established operator raise capital before attempting to become an owner-operator.
That position allows an aspiring professional to observe the process, study the questions investors ask, understand legal and financial structures, and learn how experienced teams evaluate opportunities.
It can become a practical education in finance, communication, underwriting, and investor psychology. More importantly, it reduces the temptation to learn through mistakes made with someone else’s life savings.
Why Authentic Relationships Still Beat Automation
Buscemi and Mattias agreed that business has become increasingly transactional. Automated messages, mass pitches, artificial personalization, and constant digital noise have made genuine human connection more valuable.
Technology can improve efficiency, but it cannot replace earned trust. Investors are unlikely to commit meaningful capital to someone simply because that person sent an attractive presentation.
“People are not going to give someone their money until they give that person their time first.”
That statement captures the central message of the entire conversation. Time creates familiarity. Familiarity creates understanding. Understanding gives trust a chance to grow.
Community Before the Transaction
After moving to Miami, Buscemi created a WhatsApp community called the 305 Intelligentsia. Family office contacts and other members of his network could gather informally for happy hour in Brickell.
The purpose was not to force an immediate investment. It was to create a setting where relationships could deepen naturally.
That approach stands in sharp contrast to sending an unsolicited investment deck and immediately asking for a check. A community gives people repeated opportunities to observe character, competence, and consistency.
“Attention is the new oil, and interactivity is the new currency.”
In a world filled with automated communication, the person who remembers a birthday, makes a sincere introduction, shares useful knowledge, or brings people together can become unforgettable.
Technology Should Make People More Human
Mattias connected this philosophy to The REI Agent CRM, which is designed to help professionals remember meaningful details about the people in their networks. A birthday reminder, a note about someone’s children, or a record of a previous conversation can help technology support authentic connection.
The goal is not to automate friendship. It is to prevent busy professionals from forgetting the details that matter.
Used properly, technology can make a person more attentive. Used poorly, it can make every interaction feel artificial.
Knowledge Creates Authority Before the Pitch
Buscemi warned against leading every conversation with a spreadsheet. Numbers are necessary, but numbers alone rarely make someone memorable or trustworthy.
A professional becomes more valuable by understanding multiple asset classes, market cycles, financing structures, cap rates, investor concerns, and the risks hidden beneath optimistic projections.
Education changes the quality of the conversation. Instead of sounding like someone desperate to complete a transaction, the professional begins to sound like a reliable source of insight.
Buscemi encouraged listeners to learn about the major commercial property categories, including multifamily, retail, office, and industrial. Broader knowledge helps professionals avoid becoming trapped inside whichever asset class is currently receiving the most attention.
Build a Simple Investor Intelligence System
Buscemi also recommended maintaining a database of relationships. Even a simple spreadsheet can record a person’s name, email address, phone number, investment history, and preferred opportunities.
The purpose is not to reduce people to data. It is to communicate more thoughtfully.
A professional who understands an investor’s experience and interests can avoid sending irrelevant opportunities. That respect protects the relationship and improves the likelihood of a meaningful future partnership.
The Books That Shape a More Disciplined Investor
When Mattias asked for a foundational business book, Buscemi recommended Ogilvy on Advertising by David Ogilvy. He praised its lessons on marketing, organizational leadership, client relationships, and business communication.
Buscemi also discussed his own book, Investing Legacy: How the 0.001% Invest. The book explores his journey through Goldman Sachs and the family office world while examining how sophisticated investors think about wealth, access, and private opportunities.
One of the book’s central ideas is that investors are not interchangeable. Different people have different experiences, beliefs, risk tolerances, and preferred assets. A person deeply committed to cryptocurrency may have little interest in an industrial property, while a conservative investor may strongly prefer income-producing physical assets.
Effective capital raising begins by understanding the person rather than attempting to force every person into the same opportunity.
True Wealth Is Built Long Before the Deal Closes
The Final Lesson in Courage, Credibility, and Connection
Salvatore Buscemi’s journey began with an uncomfortable realization in a hospital basement. The career he expected to pursue disappeared, but the discipline and reputation he had already built carried him toward an entirely different future.
That pattern continued throughout his career. The strongest opportunities did not come from flashy presentations or aggressive pitches. They came from experience, alignment, knowledge, and relationships built over time.
For agents, investors, and entrepreneurs, the message is both challenging and hopeful. Wealth is not created only through finding a profitable asset. It is created by becoming the kind of person others trust with opportunity, responsibility, and capital.
The next major breakthrough may begin with a deal, but it may also begin with a conversation, a thoughtful introduction, a remembered birthday, or a reputation for doing excellent work when no reward is guaranteed.
“Build authentic relationships with people.”
That principle is simple, but it is not easy. It requires patience in a culture obsessed with speed. It requires generosity in a marketplace filled with transactions. It requires character before compensation.
When trust becomes the foundation, capital is no longer the first thing being raised. Reputation rises first. Relationships rise next. Knowledge, access, and opportunity can then follow.
That is how a person builds more than a portfolio. That is how a person builds a legacy.
Stay tuned for more inspiring stories on The REI Agent podcast, your go-to source for insights, inspiration, and strategies from top agents and investors who are living their best lives through real estate.
For more content and episodes, visit reiagent.com.
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Contact Salvatore Buscemi
Mentioned References
Transcript
[Mattias]
Welcome back to the REI Agent. My guest today is Sal Buscemi, CEO and co-founding partner of Brahim Partners, a family office group based in Miami. Sal came out of Goldman Sachs and went on to co-found two institutional distressed real estate credit platforms before building Brahim Partners, which focuses on industrial real estate and provide private credit for high net worth and family office clients.
He is also a published author and a frequent speaker on commercial real estate private credit markets and institutional investing strategy. He brings perspective on capital allocation and deal structuring that most real estate conversations never get close to. Sal, welcome to the REI Agent podcast.
[Salvatore Buscemi]
Mattias, it’s a pleasure and a privilege. Thank you for having me live from Miami.
[Mattias]
Yeah, that’s awesome. Sorry, I apparently can’t speak today at all. Normally it’s a little bit choppy, but that was a rough intro on my end, but I’m so glad that you are here.
Tell us a little bit about how you got started in real estate and why you came from Goldman Sachs, what got you into the real estate world?
[Salvatore Buscemi]
You know, I wrote about that in my third book, which we’ll talk about a little later, but I went to school in New York City from New York. And during my internship, I was pre-med. And during that pre-med internship between junior year and senior year, I was doing research for a surgeon and the surgeon was championing me.
And, you know, when you’re young, you sort of see what he has, but you don’t understand he had a beautiful wife and Aston Martin lived in, you know, Gloria Vanderbilt’s building on the Upper East Side and right across from the hospital. And he liked me a lot and he was championing me for law school, I mean, for medical school. However, what happened was, was doing research, I was actually holding a femur in the cadaver room in the basement of Beth Israel North, which is now turned into condos, passed down on the floor and had to be resuscitated with smelling salts.
And at that point, I went into my senior year because I wanted to get everything done in four years. I went into my senior year taking 24 credits one semester, 22 the other semester while still rowing and finishing it. But when I graduated, I had, you know, the doctor called me to congratulate me and wanted to talk about next steps.
And quite frankly, I never took those next steps because I was just ashamed because I didn’t think that I really quite frankly had the stomach for this and it’s fine. I know millions of doctors who can deal with that. However, because I gave him everything I could as far as the work ethic and getting in the research and, you know, with the exception of falling down after, you know, holding a femur, you know, he basically said, Sal, that’s fine.
I totally appreciate you. By the way, my brother just made partner at Goldman Sachs. I’ve been talking to him a lot about you.
He wants to meet you. And then the rest is just history of it. It’s really, you know, a strong, it’s really a strong lesson on reputation and good networking.
And at the time I was a college student, I wasn’t networking, but later in life, the network really comes through and that’s where we are today as it relates to managing, you know, a multifamily office where we’ve invested in things such as not just real estate, but also, you know, we did 10 rounds in the SpaceX. We’re doing, I think, six in the Stripe soon and other companies that you never heard of that are very, very, they’re very prominent in their own case because of how we source these deals and the people we work with. I know this is a real estate podcast, but I do want to make sure that people understand that the skills in real estate, especially as it relates to raising capital or transferable to other private investment type of stuff like venture capital, things that are not publicly traded.
So we’ve had a great run. We’re going back into real estate. We just completed a class A industrial, 150,000 square foot class A industrial flex facility just outside of Dallas with one of the largest families in real estate.
And our families like that because there’s safety in numbers and also there’s a lot of experience here too. And, you know, we only work with the best people and, you know, we can get into what that means, but really it’s a great culture of what we put together. And, you know, there’s a lot of similarities, I think, with your investors and your realtors can really learn about the, you know, the business, maybe the capital raising side.
Again, we’re not a broker. We don’t, I don’t have anything to sell you, you know, except maybe, you know, a book or, you know, whatever. But it’s, you know, it’s important, I think, to sort of parlay those lessons because I was preparing for this and I just wanted to see what are the, what’s the most impactful things or how can I make Mattias’ podcast the most impactful?
So that’s my story. We’ve been doing this for a while now and it’s a lot of fun.
[Mattias]
Yeah, I guess as it relates to agents, you know, they would have the opportunity to invest passively in certain deals. They could certainly get to, you know, a syndication for various real estate or whatever. And there’s certainly tax advantages of getting into syndications in real estate if there’s, you know, accelerated depreciation and being a real estate professional designation really makes that very worthwhile.
And so I think it’s something that, I’ve kind of attributed it to being like a, you know, a realtor 401k, if you will, like instead of having to wait until retirement to receive the benefits of all you save, all you’ve worked for, you can, you know, start building up your passive income. And, you know, with these types of deals, they are a lot more passive if you’re a limited partner because you have to do research, you have to, you know, invest wisely, you have to trust the partners, all that kind of thing. But once you’ve invested, like you want to stay up on it, but you’re not, you know, answering calls about, you know, plumbing issues or anything like that.
So I guess the long story short is, if somebody is not familiar with this space, with this world, can you give us a high level, you know, a syndication or investing with, you know, a fund or private capital for idiots, if you will?
[Salvatore Buscemi]
Yeah, yeah. I have three rules before I get into anything. And before we get into that, there’s a lot of headlines right now where a lot of new syndicators, especially in multifamily, have been blowing up because they’re a little smarter than they thought they were.
And they thought that they didn’t need to know bond math. And one recently, I just read on X, on the Twitters, you know, some Dallas firm lost 400 million in the conspicuous consumption was there. When I was at Goldman Sachs, there was no such thing as conspicuous consumption, right?
Everybody wore nice clothes, but it wasn’t like we had glasses with gold on the side that said Gucci and, you know, like it’s, you know, more conspicuous today because of social media than it was there. I mean, we all wore Timex watches. So, you know, when I start looking at people, you know, and because I’ve been, this is my third cycle right now going into it.
I know what looks bad and I know what looks good. So I have three rules before we get into anything. And this will clear probably 90% of your deal flow because everybody’s gonna be coming to you.
Most of them are gonna fit, they’re not gonna fit the three rules. And if you violate the three rules, just know you’re taking an unnecessary risk. Is that okay?
So the first rule that we talk about is number one, no first time operators. I want these people to have been through two down cycles. This one hasn’t started yet.
It depends on who you talk to. I want not just 2008, but going back to the late 90s. Okay, I wanna see that they’ve laid in a pool of their own sweat before.
That’s important to me to see that because the people who are still in the business who’ve been through, you know, the late 90s, you know, the basis point increase in the, you know, 2024 when everybody was getting smoked out and now you’re starting to see the headlines on that. I want people who have had that experience, the reputation and the network to fix problems quickly. That’s number one.
Same thing as if you needed open heart surgery, right Mattias? Like you’re gonna hire a guy who just came out of medical school in Grenada who gave you a free toaster or the guy who’s done it 5,000 times. And you have to look at your wealth the same way as that.
I think a lot of people get into wishful thinking. Number two, audited financials. Your track record’s so good, where’s the audit?
I wanna see that. And number three, and this is where a lot of people get messed up because this is where a lot of ledger domain happens. Sponsorship contribution or how much is the co-investment that the operator’s putting into this deal?
5% is cute, but really they’re just rolling their fees into the deal to say that. 10% is thoughtful. Anything more shows conviction.
The deals we do, the operator’s putting in at least 20. One of the deals with a family we did, they put in 40% of the equity. We put in 60.
We’re very happy with that. That makes me happy and go to bed at night knowing that very few things short of a nuclear disaster is going to really affect the development or the management of that. We just finished a deal in Dallas, Texas.
It’s being developed right now. It’s Flex Industrial in Melissa, which is a fast-growing suburb outside of Dallas with one of the leading real estate family offices in the country, who’s a good friend of mine for about 10 years. And we’re just very happy with it because the team is working well together.
They’ve been able to compress expenses on the development. They’ve been able to get favorable terms on their bank, on their development loans. It was very easy for us to get into the deal, not necessarily because you have to have access with the whole other thing.
And if you don’t have a reputation of writing checks or knowing what you’re doing, you’re not going to be seeing the best stuff.
[Mattias]
Yeah. Yeah. Well, those are really good tips.
Certainly something like if you’re not, yeah, if you’re not familiar with the space and you’re not following the news about some of these, there’s definitely some blood on the streets, if you will. I mean, the apartment sector has seen some, maybe getting the biggest headlines, if you will. Like I think there’s been a lot of problems there, a lot of unforeseen things.
Certainly people not expecting the interest rates to go up is one of the things that people were hurt. They were holding bridge debts. They weren’t expecting interest rates to go as high as they did.
And so then their numbers didn’t work anymore. I’ve heard of other things like, the insurance costs went up and they wouldn’t factor that in. And when you’re working with cap rates, any kind of thing that affects the NOI is going to affect the value of the property, not only the cashflow as well.
So a lot of people have been hurt. And so I can understand why you’d want to see that experience and have people that are smart to- I wanted to put a hot take, yeah.
[Salvatore Buscemi]
Yeah, go ahead. No, I mean, there’s a hot take here that might rub some people the wrong way, but in commercial real estate, the lowest barrier to entry is multifamily. The government gives you loans, they subsidize it and everybody rushes in.
It’s the lowest barrier to entry, but that’s not where all the smart people are all the time. And we’re starting to see that right now with the bridge debt and I mean, there’s nothing in the constitution, Old Testament, New Testament, that says that interest rates have to stay low forever. And I think a lot of people thought they were a little smarter than they were, first time operators and they rushed in.
[Mattias]
Yeah, yeah. So yeah, it tells us on industrial as a asset class to be looking into.
[Salvatore Buscemi]
You know, I like it because you’re dealing with, you know, credit tenants or higher tenants that, tenants that are much more professional and tenants that are in need. So, you know, I would say, would you rather own 10 single family homes with 10 tenants or would you rather have a piece of industrial facility where Milwaukee tool is a tenant and carrier air? Because after the next apocalypse, people are gonna need tools and air conditioning, right?
And those are companies that have been around for a long time. And if you buy right and you’re working with the right people and you’re, you know, the development’s done at the right basis or you’re buying it at a right basis, then it pays for itself very, very quickly. We like it because it’s just the last bastions of where you can get a very high IRR, if you know what you’re doing, without having to take on much incremental risk.
These things right now are just leasing out by themselves without even like having a CEO, which we really like. And it’s because there’s so much of a need for this. We like it because it’s, to me, it’s, you know, it lasted during the pandemic.
If anything’s gonna last during anything, it was the pandemic where we came out clean and we really liked that. If you look at people, unfortunately, who went head first into office or doing something during the pandemic or after the pandemic, there’s horror stories of people losing their homes and their lives as a result of this. And, you know, now is when the real, now is when the bones really start cracking, right?
I mean, people had a lot of pressure now, but now is when the bones are cracking. I like it because you don’t have tenants poorer than you are. And I think with residential and, you know, multifamily, we stay away from that.
We don’t invest in residential multifamily because we don’t want tenants who are poorer than we are paying rent. And the other risk with that too is that, you know, legal advice is free for the poor, right? It’s free for the poor and the stupid.
So if you have a classy tenant who’s having a hard time and his brother-in-law is a lawyer, you know, he’s gonna try to cause some trouble and heartache for you. I’ve seen it happen many, many times. It just seems so that, you know, the rights and remedies are skewed more towards the detainants, especially in blue states than they ever have been before.
And it’s sort of forcing, I hate to say this, but like a socialistic asset class.
[Mattias]
Yeah, that’s interesting. Can you help somebody who doesn’t know what IRR, understand what that is?
[Salvatore Buscemi]
Yeah, IRR is the return you get, but under the judgment of time. So if you received, let’s just say an IRR of, let’s just say you had a great return. You got a 10X, okay, on a deal, but it took you 20 years to get there, you have a very low IRR, okay?
If you got a 10X on a deal, but it took you three years to get there, you have a very high IRR because it’s a return as a function under the judgment of time.
[Mattias]
Yeah, that’s awesome. I think that- That makes sense? Yeah, yeah, yeah, totally.
And to people listening to that, this is a way that these are often sold, this is the projected IRR in this deal, that one of the factors that you can look at to gauge whether you’re interested in it or not. And if you’re investing your money into the stock market, for example, in comparison, you wanna see how your money would do in comparison in this kind of asset class. So, yeah.
Yeah, no, that’s really fascinating. I like that idea about the, I’ve never heard it described that way, about the tenant being wealthier than you are, which I guess is probably pretty unique to certain types of asset classes, most of which we’re not talking about when you’re looking at mobile home parks, when you’re looking at, what else have I talked to? Parking garages, apartments of- Well, that’s different.
[Salvatore Buscemi]
We like parking garages. Parking garages is good, yeah. Yeah, yeah, that’s fine.
There’s a huge rush for data centers right now. That’s not really our forte. People who are getting into that without any experience, I think they’re gonna lose their shirts.
It’s a very specialized, very expensive game to be playing. And if you’re not investing alongside people who’ve done this many times, you’re gonna lose a lot. Yeah.
Remember, when you’re investing in these deals, you’re married. I mean, a partnership is a marriage. And a lot of things can happen.
It doesn’t mean that you’re sharing a bed. It just means that you were stuck with someone for the long term. And I think we can talk about different types of capital, but I think when people are going into this, you’ve got to look at it and say, do I really trust this guy with my money or not?
[Mattias]
Yeah, because I mean, not only the fear would be, you invest in a deal and you’re not getting any kind of dividends. They’re not paying it back. But on top of that, they could ask you to bring more money to the deal, right?
To have a capital call. There’s another thing to keep it going, right?
[Salvatore Buscemi]
Well, I mean, that’s with first-time operators, right? Like, first-time operators, they don’t know what they’re doing. They’re finally able to get the loan.
They’re trying to make ends meet as quickly as possible on the loan and getting, most of them are mostly value-added or rehab type of apartment complexes. But they don’t factor in certain expenses or over-capitalize the deal the way they should. And that’s where they run into a lot of problems.
And then they have to do a capital call. And that’s very, I mean, it’s common, but it’s not a phone call you wanna make to your investor saying, look, I need another $100,000 from you or otherwise you’re gonna be crammed down or maybe diluted.
[Mattias]
Yeah. Yeah, totally. If somebody is looking to kind of, or considering getting into this space and investing in this, what are some of the steps they should take if they’re looking to invest in funds or syndications in general?
What are some of the steps they should do to prepare themselves, make sure that they qualify, that kind of stuff?
[Salvatore Buscemi]
I think what you wanna do is when you’re getting into these things, you should really network. And you should really network and you should find the people if you want to invest. You should network with people who have done this for a while.
And one of the things I could, people here are natural salespeople. If they’re on the REI Asian podcast, right? So what I would do is I would switch into, and if you really wanna get into this and really learn this business, I would offer to raise money for a deal on behalf of an operator, helping them raise money for it.
Not making any promises, but that’ll tell you exactly, that’ll be an MBA in real estate that you’ll, because the second rule of real estate really is what I’m trying to get to is always be raising capital. The first one is what Mattias, location, location, location, right? But the second one that nobody knows about and the one that always keeps going is always be raising capital.
That’s the second rule of real estate.
[Mattias]
Yeah, yeah. Other people’s money, right?
[Salvatore Buscemi]
That’s how the world works. That’s why America is a great nation, right?
[Mattias]
Yeah, which yeah, it’s a, to describe the win-win nature of it, I think it’s harder to understand if you’re not really familiar with the commercial space as well, but it really does work because typically the investor is able to be pretty passive in the deal and they typically have funds to invest and they’re looking for that and agents listening to this, they could also, again, get the tax benefits of it.
So there’s some huge advantages for it. And then obviously the people that are putting the deal together will get, you mentioned earlier, they have like a fee that they charge to put the deal together. And then typically once the deal is executed, they have some sort of benefit as well.
Like they might have ownership in the deal still or a higher percentage of return on the capital or something. Can you explain that a little bit more too?
[Salvatore Buscemi]
I think when you’re raising, so as an operator, there are fees that you make and those are acquisition fees. Those are, you know, there’s a lot of fees and sometimes that rubs the LPs or the investors the wrong way. So we’re very simple on the fees and we make sure that everything is simple on it.
But there’s, if you are going to be going out there, I would say raise capital for someone else first, look over their shoulder. Do not become an owner operator thinking you’re gonna make a lot of fees because what’s gonna happen is that you’re gonna get into trouble. Like a lot of these people are doing right now.
They don’t, they got in, they didn’t use the debt service they needed to, they couldn’t raise capital. Raising capital is as simple as networking. Like I just, I don’t pitch people, but you know, I think a lot of people, I think since the pandemic, Mattias has become very transactional, right?
Especially in Miami. Everybody’s a Bitcoin guy. Everybody’s sending you, you know, PDFs, your iMessage that you don’t wanna see.
You know, we call them deck picks. I’m like, dude, I’m not, you know, I’m not doing a freaking, I’m not funding a luxury development at the Dominican Republic like America. I mean, all the money is coming to America.
And I’d really start to develop that narrative too, that you’re actually, you’re not constantly selling, but you’re building relationships because in the world that I live in right now, finance is all about trust. And those relationships you have to continue to build and just like anything else. I mean, so when I moved to Miami, I put together a WhatsApp group called the 305 Intelligentsia.
And all the families and everybody that I know who’s in Miami to Palm Beach are all invited on a Friday to meet for happy hour at a bar in Brickell. It works out very, very well. But that’s the kind of community that you build.
And if you can build a community of people like that, then you’ll have the wind at your back and be almost limitless. But I would not go in trying to, everybody’s worst strength in this business is raising capital. And if you, I mean, it’s the worst strength.
And if you can build on that with studying persuasion, studying influence and sales, you’re gonna go a lot further because remember today, we’re being replaced by bots and everything’s going at Gentic. People want that organic carbon-based relationship or a community today. We’re in the middle of a loneliness pandemic.
And people are not gonna give you their money until they give you their time first. So it’s not like somebody’s gonna, I know somebody’s gonna send me an email, be like, hey, you wanna invest in this? I don’t know you.
I don’t know anything about you. The deal is not something I would get into. Even if I did know something about it, it’s just not good.
And if I don’t know the person, he’s gonna shoot back and say, oh, well, can you give me a referral of someone who you know might be interested in investing? I’m like, no, because then I’m the asshole by default if anything goes wrong, right? And I thought, well, Sal, he came from Goldman and he has all these funds and everything.
Yeah, I’m the guy who’s gonna get into trouble, right? So people don’t really think about that from a relationship standpoint. People today are much more guarded of their reputations than ever before because we live in a world of social media today.
[Mattias]
Yeah, there’s a lot of noise out there. And I think that authenticity is something that is a lesson that people should definitely learn for their sales business as well. Like I think if you’re thinking you can automate everything and have like tech spots go out or have like fancy AI voice cloning of your voice, answering services that are pretending to be you, not just like kind of, it’s gonna, people smell that and it turns them off immediately.
And there’s so much noise out there that like you said, I think there’s a real craving, a real need for real connection with people. And like you built up that capital, that emotional capital, that relationship capital, if you will, with that doctor, that surgeon in college. And if you hadn’t provided him so much value, there wouldn’t have been that connection to Goldman to begin with, right?
The same kind of thing, right? I mean, you’ve got to genuinely invest in the relationship to raise capital, to win the business for sales, all that stuff.
[Salvatore Buscemi]
I see it worse with like the syndicators and multifamily who are in their thirties and they were like hustle bros, right? They were just hustle, hustle, hustle. They all look smart and everything, but the people they were getting money for, I don’t know who gave them money, but there’s this common belief that if you don’t come from an investment bank or buy side private equity firm that, well, nobody knows where their money goes in a real estate deal.
They just think it’s in the building, right? But that’s not how it happens, right? It’s in a partnership that controls the asset itself.
So people think, well, it’s real estate, what can go wrong? Well, a lot of people are finding out and they’re finding out the hard way that rising interest rates will separate the men and women from the boys and the girls very, very quickly as we’re seeing today.
[Mattias]
Yeah, and I know that there’s also the danger in this space of people that are just trying to keep the lights on by charging those fees that we talked about to put the deal together. So they might go after a deal that’s not gonna really perform that well. It’s not that great of a deal, but they need to keep the lights on.
[Salvatore Buscemi]
They need to get the- Yes, yeah, yes, yes, yes, yes. That happens all the time. I see it, I see it too.
During the pandemic, people were buying multifamily and there’s something in our business that’s called a cap rate delta. So if you’re buying a fixer upper and you fix it, you wanna be able to sell it with the cap rate. The cap rate normalizes the return amongst all asset classes.
So let’s just say like if you bought it at say three cap and you were selling it at a five cap, that’s good. But if you bought it at three cap and now all of a sudden you’re selling it at, the highest you can get is 3.25 cap, you’re threading the needle with 25 basis points there. And a lot of people did that and they wound up sandbagging their investors because they needed to make fees, they needed to keep the lights on, they needed to pay the daycare or whatever it was.
And it’s not really a good way of doing it. And I can tell you with real, I can tell you really, I have a resource I’ll give away free for everyone. And I’ll tell you that at the end, but it’s something that’s gonna be very, very, it’s gonna be very interesting because it’s basically for free.
It’s a watered down training that I received at Goldman Sachs Investment Banking over seven modules that you can get certified and learn about this stuff. You know what cap rate is, fine. But do not raise capital until you go through this.
It’s free, it’s called akpar.org, www.akpar.org. I just gotta get the site fixed up for free. So it’s free for all you guys that are coming in there so that you’re not paying the $97 a month, but at least you’ll be able to be certified and you can post that on your, you can post that on Facebook, LinkedIn, WhatsApp as well.
And we have special certifications or stabilized real estate mastery. And we go through the four food groups, right? It’s multifamily, it is retail, it is office and industrial.
And we go through all of them. So now you’re not just relied on one sub-asset class, which everybody rushes into, right? Real estate multifamily, you’re going into other asset classes and you’ll be able to enjoy conversations with prospective investors and people who you’re building relationships with much cleaner because you’ll be seen as an authority source rather than someone who’s a juvenile pitching things all the time, leading with a spreadsheet that nobody’s gonna remember.
[Mattias]
Sure, that’s great, thank you for that. I’m curious what golden nuggets you have for our listeners today.
[Salvatore Buscemi]
One of the golden nuggets I have for real estate is something I said already, and that is the second rule of real estate, always be raising capital. Not necessarily putting it into the bank, but building the reputational capital that you need so that if you see something, hey, I’m good friends with Mattias, I’ve been talking to him for two months, he understands it. I’m gonna show him a deal, that’s number one.
And number two, build authentic relationships with people because what you’re asking for is the highest form of sales going back to Solomon, which is asking someone to partner with you to start with their wealth to invest in something. And I don’t think a lot of people understand that. Nobody’s going to, and this is the second tidbit, and I said before, no one’s gonna write a check or buy anything from you, maybe a book, if they haven’t spent any time with you first.
And that requires you doing a lot of things. If you’re really aggressive, if you really wanna do this, I would host meetups, doing all sorts of things. I have informal meetups with my family offices at bars in Palm Beach and Miami, which is fine because I always wanna stay in their face.
Attention is the new oil today. You gotta get on top of it. And interactivity is the new currency.
[Mattias]
Nice, well said. What about a favorite book, one that you think that’s fundamental that everybody should read or just one you’re currently enjoying?
[Salvatore Buscemi]
I mean, besides mine, there’s one that I think is probably the best business book when it comes to not just business, but also marketing. And that is David Ogilvie on advertising. It was written in 1984, but he gives a scathing MBA in that book as it relates to how he works with people, you know, how an organization is built and the rules for working with clients that really transfers into anything, investors or buyers or anything like that.
I like it, it’s a great book. I highly recommend it. It, you know, there’s a lot of books that people are out there, I mean, I get bored.
If I read a book and I don’t get anything out of it in the first like, you know, two chapters, I’m just, you know, throwing it away or returning it to Amazon, right? But I think if you really wanna get inside like what the super wealthy are doing, I wrote my third book that chronicles a little more in depth and detail with a little more intimacy, you know, my journey throughout working at Goldman Sachs and then also doing what I do right now. And that’s great because it gives people an entrance into my community.
Does that make sense to people? And it’s called Investing Legacy, How the 0.001% Invest. And this is a culmination of, and it’s on Audible, I actually narrated it myself too.
It’s the only book of the three that I wrote that I narrated myself. I’ll give you a free copy, Mattias, if you send me an email with your, with your, you know, an autographed copy with your mailing address. But it’s gonna give you an inside look.
I have partners quoted in there. I have partners at Goldman Sachs that I worked for quoted in there. I sit on the board of a company with a Rockefeller.
He’s quoted in there. And it talks about what the wealthy are really investing into today. And what, it’s just a little bit of a punchline.
Towards the end, there’s five different investor avatars that I talk about. And you have to remember, not everybody’s gonna be into crypto and not everybody’s gonna be into real estate, right? The guy that’s so crypto heavy, he’s evangelical like a vegan or a crossfitter.
He’s not gonna invest in your deal. He’s not gonna invest in any real estate deal. But the guy who’s older, you know, sort of looks like a college football coach wearing, you know, pleated khakis and, you know, Columbia shoes, he’s gonna be your investor for real estate.
But he’s not gonna be going into crypto or any, you know, wildfire or anything like that. So it’s gonna be very interesting to see, you know, how that, how people refer to that. But it’s, you know, if you’re looking to partner with people who are, you know, wealthier than you are, this is a good book to have.
And it really talks in chronicles because family office to me is 100 million plus in investable assets, okay? Anyone’s got like $5 million, it’s not a family, it’s just a rich guy, right? I mean, sort of rich.
You really wanna retire in this country today, you gotta have at least 10 million. But, you know, that’s kind of a controversial number. I think, you know, there’s a lot of people who have a lot of money, they don’t know what they’re doing.
And the more that you’re able to provide the leadership to these guys by just putting together a newsletter or incorporating it into your newsletter, the things you’ve learned or, you know, maybe outside of the box, we’re talking about, you know, office or we’re talking about industrial, it’s a great way to build commonality with your investors. And then at that point, if you do have people who are interesting and responding, build a spreadsheet. That spreadsheet, you know, is your CRM, you know, you can use Google Sheets, name, email, phone number and find out what they like to invest into.
Have they invested into anything before? You wanna find the guys that have invested in the stuff before, not the people that you have to train.
[Mattias]
Well, I’ll do a quick plug to my CRM because it is very relationship focused. And go to the REIAgent.com to find it. You can get a free 30-day trial on that and a special introductory price going from there.
But yeah, we base things off the four principles. So everybody in the CRM, you can, you know, jot down their family, their kids’ ages, that kind of stuff, and then there’s- Yes, that’s what you want.
[Salvatore Buscemi]
Yes, I have everybody’s, I get a message, I do it old school on my iPhone. It’s like, hey, today’s Nathan Lowe’s birthday. I’m like, oh, happy birthday, but it’s intimate and he remembers me, right?
So, you know, that’s important.
[Mattias]
100%, and so that’s exactly how we built this, is to, you know, not, like to have AI and have the technology help you be more authentically genuine with people, not like take you away from that relationship. And so like the tool, like the iPhone, reminding you to text somebody that it’s their birthday is an example of how you can, you know, use technology to be a better friend, to be a better, you know, build that relationship capital up. And that’s exactly what this CRM’s about.
So where else can people find you? So the books are on Amazon. Where can they, do you have a website?
Do you have social media?
[Salvatore Buscemi]
Yeah, they can go to SalvatoreBuscemi.com. They can get autographed copies of the books there. They can join a newsletter too, as well.
You can follow me on LinkedIn as well. I’m big on LinkedIn, Salvatore Buscemi. There’s a black and white headshot of me there in that photograph.
And yeah, if you, you know, the name of our family office is Brahman Partners. So it’s B-R-A-H-M-I-N partners.com. You can join, you know, and, you know, we’d love to hear from you, especially, you know, as it relates to the books.
So yeah, we’ve got a lot of stuff, but if you really wanna get like a jumpstart and you, you know, you got a few times, you got some time over the weekend, go to acpare.org. It stands for the Association of Capital Placement Agents for Real Estate dot org. We got to change the website to make sure it’s free for you guys.
So just, you know, give us some patience there, but I’ll make sure that that is taken care of very promptly.
[Mattias]
Awesome. Well, I appreciate it, Sal. Definitely go check that out.
If you all enjoyed this show, definitely follow, go on LinkedIn and make sure you follow it and buy books, et cetera. Follow our podcast for more shows like this. Go to reiagent.com to get, read the blogs for each episode. If you choose to read that way or sign up for our newsletters so that you can get a digest of the week’s episodes every week. But again, Sal, thank you so much for being on the show.
[Salvatore Buscemi]
Mattias, thank you so much for the privilege. I really appreciate it. I love talking to you.
I’ll be on anytime. If you need anything, just reach out. Awesome.
Appreciate that. Thank you, sir.
[Erica]
Thanks for listening to the REI Agent.
[Mattias]
If you enjoyed this episode, hit subscribe to catch new shows every week.
[Erica]
Visit reiagent.com for more content.
[Mattias]
Until next time, keep building the life you want.
[Erica]
All content in the show is not investment advice or mental health therapy. It is intended for entertainment purposes only.
