Grow Your Cashflow Podcast

Pascal Wagner:
All right, welcome to another episode of the Legacy Wealth Podcast, where we help accredited business owners become educated and get access to private investments. We do this by providing insight and access to successful fund managers and investors across multiple asset classes. Said another way, our promise to you is that by listening to this show, you'll learn how to get access to the high returns of private investments without losing your shirt. I'm your host, Pascal Wagner, and today we have Dan Nunny, and I'm excited to have him here today. Welcome, Dan.

Dan:
Yep, thanks for having me.

Pascal Wagner:
Yeah, so I'm going to do a quick bio on Dan. Dan is a former corporate attorney, turned e-commerce entrepreneur, and real estate investor. He's started multiple seven and eight figure e-commerce businesses that sell parts and accessories for different recreational vehicles, one of which I know is golf carts. The other I know is, I think it's ATVs. But you can correct me. And then Dan's also a general partner of the Long Game Fund where he... invests in the picks and shovels of the Bitcoin and crypto gold rush. He's invested in over 20 deals and I'm excited to have him here on the show. So Dan, let's dive into what is your story related to investing in funds? So you actually like your story of when you quit your job. Maybe we start there.

Dan:
Yeah, yeah, sure. Yeah, I guess I'll give you a little bit of background. I'm 38, I'm from Cleveland, Ohio. I'm married, I've got three kids, so that keeps me super busy. You know, when I grew up, I sort of always had the dream to be an entrepreneur. I always wanted to own my own business. I think it's because I didn't like being told what to do. I wanted to do whatever I wanted. And you know, I went to business school, I went to Indiana University, and when I graduated, I started my first business. And... It was an epic failure. Uh, I spent a year on it. Uh, no success, no traction. I learned a lot. And then I sort of had this, um, like winding path in my twenties where I went from, you know, starting a business to working at a hedge fund, going to law school, uh, working as a corporate attorney and just kind of, uh, you know, trying to figure out what I wanted. Um, so my, I guess my first. real, real job was as a corporate attorney. I worked in Chicago at a big firm and, you know, it was a grind. It was 2200 hours a year for attorneys is a lot. It's hard to describe that, but that's like 60 to 80 hours a week, nonstop. I was sort of that associate for anybody that has bought or sold a business. I worked in M&A and so I was the associate that was putting together the deal in the late nights. you know, finding all the signature pages, putting it all together. And that was good learning. I learned a whole lot, but you know, I worked next to this guy, and this is a story I always tell that he was kind of the worst attorney in the entire office of like 700 attorneys, and I was right next to him. And anytime somebody would go into their office, yeah, he'd start screaming, and people would sort of shudder to get away from him. And what do they say, like, you're like the five... people that you hang out with the most. And so I was worried I was gonna turn into that guy. And so I sort of had thoughts of trying again at starting a business. And so I basically quit. I had a really great paying job. It was a six figure job and I was sort of set. I just had my first child and I decided if I'm gonna make the attempt at it again, I've gotta do it now. And so what I always tell people is that right after I quit, I printed out a picture of this guy and I framed it and I put it in my closet.

Pascal Wagner:
Ha ha ha.

Dan:
And every single morning I would look at it and just like I am never going back there. I'm never going back. And so I still have that photo. And it's funny because it's in my office and my kids draw mustaches all over this guy's face. He has no idea, but it was good motivation to get me going. So that's kind of the quitting my job story.

Pascal Wagner:
Yeah, so you quit your job, you then basically said, I'm going to make this business work. And you started this e-commerce business. And that then grew, obviously, now to the point when you've been able to bring in excess cash flow to start investing. So now, kind of walk us through that point to why funds, how did you get into funds?

Dan:
Yeah, you know, it took a few years to really get all the systems and processes in place in my business to the point where I didn't have to spend every single minute in it. You know, so I got away from the, you know, exchanging time for money, which is what I was doing as an attorney. I sort of was doing that at the beginning of the business, but now I don't have to do that. And so a couple of years in, I started to have excess cash flow and I'm like, well, what do I do with this? Right? You know, this. internet business could sort of go to nothing. I need to have something else in the back of my pocket. So I read all the books that everybody reads, Rich Dad, Poor Dad, all the real estate books. I sort of went down the rabbit hole there and I started buying single family units. And then I bought, I think a double. So I had five or six rental properties in the Cleveland area. And even though I had a property manager, as you know, it's not exactly passive, right? I have to get every call about, ah, the toilet overflowed and the tenant's pissed and this tenant's not paying and they're leaving and they damaged it and all that stuff.

Pascal Wagner:
What do you want to

Dan:
And

Pascal Wagner:
do?

Dan:
so,

Pascal Wagner:
Do you want to cover this expense? Do you? Yeah.

Dan:
right, right. And then the property manager, oh, he's got his cousin that's doing the work. And it's like, it's just a headache. So for me, It was good. I ended up doing okay on that. I ended up selling them all recently, but I sort of thought, well, it's got to be easier than this. And I think listening to some of the Real Estate Podcasts, a bunch of guys were talking about syndication. This was in 2018, 2019. And I thought, well, this is a lot easier. I can get into a deal. I can own a piece of an apartment building and I don't have to do anything. I just have to cut a check. So that was kind of the idea is that I don't want to manage these rentals anymore. I want to just get into a fund, let the pros do it, and get my return, which is probably going to be better than doing it myself, which was the case.

Pascal Wagner:
Yeah, so started getting into learning about all these different asset classes. Why funds over the equities market, stocks, you know, out of all the different instruments and things that you could invest into. Why that?

Dan:
Yeah, I, you know, I had looked at that in the past.

Pascal Wagner:
And actually, let me before I cut you off, you know, what's the makeup of that portfolio? Like, is it mostly in private investments or?

Dan:
Yeah, I would say majority in private investments. I don't know, I just always, the stock market just felt so random and didn't have as much control. I like control as an entrepreneur. And I just, I sort of like, also like the idea, especially with the real estate deals where they would pass along some of the depreciation as well. So that was sort of in the back of my mind. At one point I was a real estate professional. for a year or two. So that was something I was really thinking about was getting into these funds and then I'm able to, bring back a lot of the passive losses and the active losses. So, yeah, I mean, I first started out I think in 2018 and I honestly, I picked, I started listening to Grant Cardone, like a lot of people, he was my first LP investment, a very small check, right? Like, looking at it now, it's like, yeah, I didn't do it again after that, right?

Pascal Wagner:
Yeah

Dan:
But to his credit though, he's paid every single month for the last five years and all is good, right? It's been a good deal, but that was the first one. I got into a multifamily syndication. I think it was a fund where there were multiple assets, so I thought that was great. Hey, I get to own a very small slipper of a couple of these pristine assets. So that was the first one.

Pascal Wagner:
Yeah, similar to you. I mean, one, when I got into the game, I wanted to just understand how the professionals ran their funds. And Grant Cardone was, honestly, only the biggest, the biggest influencer I knew in the space that had one. And same thing, that was my first investment in Grant

Dan:
Okay,

Pascal Wagner:
Cardone's

Dan:
there

Pascal Wagner:
fund,

Dan:
you

Pascal Wagner:
yeah.

Dan:
go.

Pascal Wagner:
So,

Dan:
Mr. 10x. Yep.

Pascal Wagner:
yeah, so maybe not the, you know, highest returns, but I resonate, like, consistent, you know, cashflow and... and reporting is awesome and I think they're a great fund to be a good pillar, you know, like of what a great fund looks like. Okay, so that first fund was in multifamily with Grant Cardone. How does, how did your investing journey then change, right? Like you've started investing in funds, your eyes opened up. and you know, you didn't just do one, you've done 20. So walk me through how you started picking which funds you'd go into. What was your process?

Dan:
Yeah, so I think what I was really looking for was diversification across asset classes, sponsors, and then geography. So those are the three things that I was really thinking about. The way that I sort of came across a lot of the funds was that I was a member of two different private investor groups. I think one is called 506. investor group and in others, I think it's like the private investor group, you know, very generic sounding names, but you would get in here and it's all accredited investors. And they basically would do diligence, there'd be hundreds of them doing diligence on all of these deals. So I'd take a look and I'd say, well, you know, I did a multifamily deal. How about a self storage deal? I don't have any of that. Right. And so it was kind of, I would go down the line one by one by one. And the great thing about these is that you've got literally hundreds of people doing diligence and then they would bring the sponsors on to do a presentation. And if they got enough money pulled together, you would get preferential terms. So instead of, let's say, getting like a 65-35 or a 70-30 split, you could get class A shares and get an 80-20 because you were a part of this group and you brought a bunch of money. And so I did that for a number of the deals that I was in. We got preferential treatment, which was great.

Pascal Wagner:
Yeah, yeah. Did you ever think, oh man, I think the economy is doing X or, you know, I think interest rates are going to go up in the future, so I'm going to start investing in this asset class or is it just, you know, I want to invest in one of every asset class for diversification and just understand of what's happening once I invest.

Dan:
Yeah, you know, even in 2018, 2019, everybody was saying this is a terrible time to invest because the real estate market has run up so much. And then obviously we look back, you know, five or six years, whatever long it is. And that was a great time to invest, right? And so I wasn't really thinking about that. It was more like you said, I just, you know, I got some multifamily, okay, I did a couple of those. I want some self storage, I want a mobile home park, and then kept going down the line. And so for me, it really didn't matter what the economy was doing. I was just like, hey, I'm going to put the minimum in. I want to not only get a little slice of this asset class, but learn from each of these sponsors because I get all of their emails. And so I'm learning, you know, how they run their businesses and about these asset classes, which I knew almost nothing about beforehand.

Pascal Wagner:
Yeah, now that you've invested in the gamut, I mean, I have a list here of all the things you've invested into it, but I'm just going to go down. Multifamily, cell storage, mobile home parks, retail, ATM, Bitcoin mining, VCs, hotels, cannabis, debt lending, assist living, crypto in general, and then also just distress real estate. Is there now, do you currently have an affinity towards? specific asset classes and if so why and how'd you get there?

Dan:
Yeah, you know, I would say the vast majority of those were in 2018, 2019, and early 2020. And then when the sort of the COVID crash happened in the stock market, that changed a lot for me. So I think LP investing is amazing. I think it's better than stock market investing because a lot of these sponsors, they have an edge, they have an advantage. And I like being a part of that. The downside is that. there's generally not much liquidity. Now you can get a preff where you're getting paid cash flow on a monthly basis, which is great, and some of them are 8% preff. But in general, if something happens in your life and you're like, I would like my money back now, please, like in the equity markets, you can't do that as an LP. And so I think I was a little bit too heavily invested as an LP. And so at that time, about three years ago, I started to think, well, I want to get invested in some things that are, you know, I have a little bit more control over. And so for most people that know me that that's in the Bitcoin space. And so that's where I spend a lot of time. And so I haven't done as many funds. I still have done a number every single year. And I think they're probably more in the crypto space and the VC space than they were 2018, 2019, 2020. They were more real estate based. And I think that's just because I've evolved a little bit as an investor.

Pascal Wagner:
Yeah. So let's go down the rabbit hole of like, why do you like that asset class so much?

Dan:
So

Pascal Wagner:
Especially

Dan:
just the

Pascal Wagner:
now.

Dan:
crypto asset class.

Pascal Wagner:
Yeah.

Dan:
Yeah. It's still such a small asset class at like a trillion dollars. And there's just so much innovation happening there. It's really, really exciting. It's just constantly new things happening. I know a lot of people are sort of bearish on the space, but we sort of look at it. It seems to operate on a four year cycle. At least it has. two or three times before. And so I sort of believe that it's kind of like the next wave of the internet, right? It's just an iteration on the internet. And at first there were sort of all these crashes that happened in the dot com bubble, right? And there was a pet.com and all this stuff that didn't work out. But then there were all these really premier businesses like Amazon that made it through and then Facebook that started after it and it's Google that started before. And so I sort of think that that wave is going to happen again in the crypto space. I just think that eventually there will not be crypto businesses. It'll just be businesses. All businesses use crypto in some way. I think mostly it's probably Bitcoin, but there are interesting things in the crypto space as well. So that's kind of my take. It is against what I was doing years ago, which is so much more cash flow based. But I've got a good mix between cash flow investments and then... more VC or longer term investments that hopefully I get my money back on. We'll see.

Pascal Wagner:
Yeah, so before you mentioned there were three things that you look for when you were diversifying. It was like sponsors, asset classes, and

Dan:
Geography was one.

Pascal Wagner:
geographies. Does investment objective fit in there, meaning cash flow or equity growth? Like, how do you think about how much cash flow that you want? Are you trying to meet your minimum expenses? Are you, you know, is it like, oh, crypto is down right now. So, you know. forget the cashflow piece, I want to just keep investing more in equities.

Dan:
You know, I don't know, that's not, it's probably the way that you should look at it. I think I just look at overall portfolio and what do I have? So like I said, I want a little bit of this, little bit of this, little bit of this, and that includes, you know, maybe half of it is cash flowing, the other half is not. So yeah, I think all of it is for net worth optimization. It's kind of where I fall in that spectrum. But yeah, it's certainly good to have some that give you some money back as opposed to waiting 10 years for something.

Pascal Wagner:
Totally. Talk to me a little bit more about the investment strategy that you're pursuing now with the Long Game Fund.

Dan:
Yeah, so this is a, you know, I had invested in 20 deals as an LP. And so I got to learn a little bit about how these funds operate. And I came across, I met two guys that were both in this group together called Go Bundance and it's a great, you know, men's group, networking group. And these two guys basically had been in the Bitcoin space for about 10 years. They're owners of the Bitcoin magazine, the Bitcoin conference. And in a group of all real estate investors, you know, we sort of bond because we're the only guys that are interested in Bitcoin. You know, real real estate investors are like, oh, it doesn't have a door, so it's got no value. Right. And so our kind of thesis is that this. This, you know, cyclical nature of Bitcoin and crypto is going to play out again. It's a boom or bust scenario, right? You're either on top of the world in the crypto space or it's like, it's a goblin town. And right now it's goblin town, right? It's been in the bear market for a very long time. We are starting to see some things move a little bit. And our thesis is that it's going to play out again in the next couple of years. And it all surrounds around the Bitcoin halving. So in Bitcoin, every four years, the actual supply of Bitcoin gets cut in half. So if right now every day there's whatever, I think 900 Bitcoin that are mine that are brand new, like fresh Bitcoin, think of it as like fresh gold that comes out of the ground. In a year from now, it'll only be 450 new fresh Bitcoin that come out of the ground. And so that's usually a crazy bullish catalyst for the next bull run. And... a lot of these other asset classes inside of crypto, all are sort of beta on Bitcoin, and then they run up significantly, sometimes generally even more than Bitcoin. And so what we wanna do in our fund is we sort of want to spread it out across the whole space. So my partners, they've been in the game for a very long time, so they have very good deal flow with a lot of these managers, they know them all. And so our idea is we wanna get a little bit of you know, let's say discounted Bitcoin. We want to get a little bit of some VC in the Bitcoin application layer. We want to get a little bit of, let's say, DeFi. And we think that putting that portfolio together gives you a great opportunity to ride the next bull run without having the crash. And so I think the big, most important thing for us is when we invest in things, having liquidity, so that we've heard of a lot of funds where Oh man, they did really great and multi coin is one they did. They did a hundred acts right while they were well that while the last bull run was going and then guess what? They came all the way back down and investors didn't get out in many cases. Though, if you look at it, I think they're still doing pretty well. But the biggest thing for us is having liquidity at the time where, you know, Hey, the market started getting oversold. We want to pull back a little bit and capture some wins for investors. So. That's the idea behind the fun.

Pascal Wagner:
Yeah, as you've started now going down this path of graduating from first being an entrepreneur, then investing in other people's deals, and then now starting to run your own fund, what do you think are takeaways or learnings that you've had along the way? Because I'm imagining once you come to the GP side of the table, other things start to click. Oh, I understand why these fees are collected. Oh, you know. What are those takeaways?

Dan:
Yeah, I will say, especially in the VC space, I didn't understand any of the, any in terms of fees when I was investing. Now I do. And I would say some of the big learnings is, would be just how to communicate with investors. I think that is just so important. It's just like, if you're a doctor or a dentist, half of it is the actual work product, the other half is the bedside manner and how the patient feels. whether you're going to get sued or not. And so I think the biggest thing is often being communicative with investors as much as possible. So providing quarterly or even monthly updates, just letting them know, hey, listen, this is exactly what we're doing. This is what we're thinking, and making sure that they feel comfortable. Not over-promising at all. Right, coming out and saying, hey listen, this is risky. You can lose everything. We're very bullish on this place, in this space, but just making sure to set the table for investors. So I would say understanding the fees is one, and then how to communicate with investors because I've been on the receiving side in 20 different funds.

Pascal Wagner:
Yeah, a great example would be especially as SVB collapsed and having, you know, there were many funds that came back and said, hey, we had exposure or didn't have exposure and here's what we're doing. And there are some that, you know, waited two weeks. You can already tell and those are signs of cracking and just expose good or not good communicators in the fund management world.

Dan:
Absolutely. And I mean, you know, like, we want to do a great job. You know, anything that I do, I want to do a great job. Right. And so if we do a great job for investors, then there will be additional opportunities for us. If it's other funds or other, you know, opportunities that come up, that's what we're thinking about. So we call the fund the long game fund. So we're trying to play the long game, right. Not take, you know, short term wins at the expense of anything. So.

Pascal Wagner:
Yeah. What I'm also wondering about is, okay, you've invested in this whole magnitude of different asset classes. There's so many different things that you could be investing in. PE, pharmaceuticals, you know, even invested in distressed properties. Like, how are you going about deciding which ones to go into? Or is it just access or knowing people that are in them?

Dan:
That is, I think, the hardest thing because most people have limited capital at some point. And especially in the group we're in, I know hundreds of people that have funds and syndications. And there's so many great opportunities that come up. So it's really difficult. I'm good friends with many of them. And I had to be like, sorry, I can't invest. You know, I would love to if I had a checkbook that was endless. So I really think that that's the hardest thing. I think that there are so many great deals out there, especially if you have the network. And it's hard. And so I have sort of, in the last couple of years, like I said, I've done a couple of deals every year, but now that I have a fund, I invested as well as an LP in my own fund in a significant way. And then it's very hard for me to not invest in Bitcoin. So that's always something that's difficult. Maybe when it starts running up a little more, I'll be able to look at other things. But yeah, you hit the nail on the head. I mean, what to pick? So difficult. And like we mentioned, I've got a good smattering of options there. So I feel like I'm sort of set at the moment, but I'm sure I will get the itch in coming years to start diversifying again.

Pascal Wagner:
Yeah, no, okay, cool. Thank you so much for sharing everything here with us, Dan. I enjoyed having you on the show and sharing your investment journey.

Dan:
Thank you, buddy. Always great to see you.

Pascal Wagner:
Likewise, man.