Grow Your Cashflow Podcast

Pascal Wagner:
All right, welcome to another episode of the Legacy Wealth Podcast. I'm your host, Pascal Wagner, and on this show, we teach accredited business owners how to invest in private alternative assets. And today on the show, we have Jay Bourgana, who is a veteran management consultant turned business owner. He started the Home Early Real Estate Group, which he grew from zero to 350 million in real estate sales in four years. facilitating over 5,000 real estate transactions and subsequently getting acquired. And now Jay is the founder of Forsight Partners, a private equity company committed to turning good businesses into exceptional ones. He lives in Oahu, Hawaii with his wife and two kids, and he's invested over $2 million as an LP, and I'm super excited to have him on the show. Welcome, Jay.

Jay Bourgana:
Thank you for having me.

Pascal Wagner:
Hell yeah. So to get us started, as I love to start every show, give us a little bit of your background and story of how it relates to eventually investing in your first fund.

Jay Bourgana:
Yeah, so I had just sold my company and I was kind of looking for ways to invest and I started investing in real estate. I bought commercial retail centers and I bought some short-term rental properties and being part of multiple mastermind groups, I started hearing about the high returns that some of my friends were getting through limited partnerships and I got curious. So I started diving deeper into multifamily syndications as well as private equity funds and that's when I started investing.

Pascal Wagner:
Got it. So give us a little bit more of the journey of before you started investing in these funds of like maybe why you didn't start doing it earlier and how you just kept reinvesting in the current business that you had then before getting acquired.

Jay Bourgana:
Yeah, I mean, when you when you when you grow in a business, especially the way we were growing, we were growing 40% a year, you're constantly reinvesting back into hiring talent, marketing operations. So honestly, there wasn't enough room to be able to invest in anything else outside of the business that I was growing. And like you mentioned earlier. We went from zero to $350 million in sales within four years. It's massive growth that requires a lot of energy, time, and capital. And honestly, there's no room for that. It was either going to sell or I'm going to take on a partner and get a liquidity event to be able to have enough capital to be able to invest in anything else.

Pascal Wagner:
Why did you eventually end up selling? Why not continue growing that business, put someone in place, maybe be more passive?

Jay Bourgana:
Yeah

Pascal Wagner:
Why sell that and then invest your capital elsewhere?

Jay Bourgana:
That's a great question. So the goal for me was to essentially grow easier, faster. And we had essentially we wanted to connect to a mothership. So the company that bought equity in our business was a six billion dollar company and they were growing through acquisition fast. And so we had the ability to join them and absorb some of the divisions that look like ours. and increase our revenue and our profitability without adding more overhead and also just tag along to their organic growth. The company has been around for 40 years so it almost has its own gravity pull. So they get people, it's a lot easier for them to recruit, it's a lot easier for them to get the big companies, big banks or big organizations to work with them. And so just having affiliation with them that opened up doors for us. So when we joined them, we essentially doubled every year from now on, from that point on. So I ended up exiting twice. I exited the first time and exited the second time at the end, three years later.

Pascal Wagner:
Got it, so you joined with this company, they took an equity stake, you continued growing with them and then eventually they just bought the whole company

Jay Bourgana:
Correct.

Pascal Wagner:
and you were, and just was the right time to do that and then that's when you moved on.

Jay Bourgana:
Yes, correct.

Pascal Wagner:
Okay, okay. So, so then walk me through. So you have this big pile of cash, and it's probably burning a hole in your bank account. What, what are you doing then? Why, why not look at equities? You know, maybe you did maybe you've put a portion of it into into all these different investments. How did you think about what to do with that pile of cash?

Jay Bourgana:
Yeah, so at first it was a tax mitigation strategy so I needed as big of a commercial building I could get to cost segregate and get depreciation to alleviate some of that tax burden. So that was the first thing. And then the next thing was, okay, let's invest in something that's growing. So at first it was commercial real estate for taxes. We looked at short-term rentals as a way to, for fast growth and high cashflow, high revenue, but at the same time, the values were growing, real estate values were growing up so fast so we can build equity and we can pull that equity and reinvest back into other things. And then we went into, real estate flipping was big, so I invested in it as an LP in a syndication. And then I went into multifamily now because multifamily was doing so well at the time and the returns were really high So I went i'm talking the period between you know 18 19 I was doing stuff on my own 20 21 22 is where everything was hot and that's when I went more limited partner than Yeah, than doing stuff on my own

Pascal Wagner:
Yeah, so when you talk about you had this big tax burden from this acquisition, was your goal to try and reduce that tax

Jay Bourgana:
Breath,

Pascal Wagner:
down to zero?

Jay Bourgana:
breath,

Pascal Wagner:
Was it to 50%? And

Jay Bourgana:
breath.

Pascal Wagner:
then each multifamily deal that you might have invested in, you invest $100k and you can write off 50% of that? What did that look like

Jay Bourgana:
So at

Pascal Wagner:
and

Jay Bourgana:
first,

Pascal Wagner:
how did

Jay Bourgana:
yeah,

Pascal Wagner:
you think about

Jay Bourgana:
so

Pascal Wagner:
that?

Jay Bourgana:
at first it was always looking for dollar for dollar. So I wouldn't do any investment unless I put a dollar in, I get a dollar in depreciation. So that was usually my investment, my thesis, because I did transactions on my own where I got more. I got two, three dollars per dollar invested in depreciation. So it was very important for me to get that, maximize the amount of depreciation I get. during that first period. And then once I did that, then the second thing was how can I maximize the cash flow? And then later on when appreciation, value appreciation was going up, then I was like, oh, how can I maximize the amount of like big exits? And then once the market turned, then we started focused more on cash flow than anything else. because when you evaluate, it's going to go flat.

Pascal Wagner:
totally. Okay, helpful to frame that picture. So walk us through, walk us through that first fund that you invested into, like, who were you talking to? How'd you get introduced to it? How did how did you make the decision to finally overcome the fear of investing in your first deal?

Jay Bourgana:
Yeah, so I'm part of GoBundance and I've been in GoBundance since 2017. And I've been to a lot of a lot of the events. I've been to a lot of chapter events. And at the time, I lived in California, so I was close to the L.A. chapter and we used to meet all the time. And so I used to hear all the, you know, the the outcomes, all the you know, we just sold this multifamily building and I'm getting double my money and only after four years and you know, so and so did such a good job, I'm going to reinvest back in into the same fund. So when you're around, surrounded with people that are smart and that have done, have had multiple experiences with certain operators, it's much easier to just piggyback on that experience and say, hey, you know. Can I get the contact of so and so and let me reach out to them and sign up for their website or whatever and then have that one on one zoom call with them and then understand what the next what the pipeline looks like for them in terms of the next couple deals. And that's how it worked for me. It was just being around people that have already invested in other funds and then just piggybacking on their experience.

Pascal Wagner:
Yeah, making it so that when you're surrounded by a bunch of people who've already done it, it makes it so much easier to take that next step.

Jay Bourgana:
Yeah,

Pascal Wagner:
I definitely

Jay Bourgana:
absolutely.

Pascal Wagner:
hear that. Yeah, so... I wanted to go down the rabbit hole of one of those more of that first fun, but

Jay Bourgana:
Yeah.

Pascal Wagner:
do you think there's more to uncover there?

Jay Bourgana:
Well, go ahead. What were your thoughts there?

Pascal Wagner:
Yeah, I mean, I'm interested in what does it look, what did that first deal look like? Okay, so you're in this time period where, you know, you want to get a bunch of depreciation for your tax burden. And you know, are you did you think about, oh, I want to make sure, you know, I don't care really what the deal looks like. This operator is one that my friends have invested into, and I'm super interested or, or, you know, What did the diligence look like for that first deal?

Jay Bourgana:
Yeah, that's a good question. Honestly, the diligence was... Because at the time when I first started doing this, I didn't know enough. I didn't know what I didn't know. I mean, now I've done a few deals, I understand more. But at the time, I wouldn't understand what an IRR was. I would tell you what I was thinking through. I was thinking in terms of very simple, in terms of capital multiples. So, okay, so I heard that so and so got two times their money within three to four years. I want that. And then tell me about this deal. Tell me about your projections in terms of rent growth, your projections in terms of interest rate, your projections in terms of, you know, so I got that first deal analyzer. I looked at it. I asked the question about where the... where they got their rent growth. And the person that I invested with the first time was very conservative, so it ended up doing much better than what was projected. And also the time, you know, we were talking about 2019. So everything that you bought in 2019 did really well in the following, you know, four years. So honestly, I got lucky in a way where I had friends who have, okay, so they gave me like two or three people. So it's kind of like a little bit of a psychology too. because they gave me three people to talk to. The first one didn't wanna talk to me. He didn't even wanna take my money, he didn't wanna take on new investors. He was like, already had plenty of investors that are experienced, know him, trust him. And he almost like was reserving positions within his deals for these investors that he's worked with in the past.

Pascal Wagner:
which I think is pretty common

Jay Bourgana:
Yes.

Pascal Wagner:
actually.

Jay Bourgana:
Yeah. So now having that experience, I felt like awkward a little bit or I felt like I'm not good enough. So that was part of like almost like as you're going into the next conversation, you're not trying to push too hard or you're not trying to you're trying not to be hard to work with. You know what I mean?

Pascal Wagner:
Right.

Jay Bourgana:
So that's where kind of like almost like a reverse psychology there where I had to kind of get my due diligence was a lot weaker and but I understood what I was looking for. I was looking for a certain multiple on capital. I was looking for understanding of what the assumptions were in the deal and just and for me it's not really a matter of like accuracy of the information is the tone on how how things are explained, it's more qualitative. I used to be a business consultant and I interviewed thousands of people. So I've developed essentially pattern recognition for people. And so I can tell when someone is telling you the truth, someone is bullshitting, and I can tell someone knows the details, understands the assumptions and where they're coming from. and they can explain any number within their spreadsheet. And I know that people that are copy-pasting stuff or just using old spreadsheets or just BSing the numbers. So

Pascal Wagner:
Yeah.

Jay Bourgana:
I'm gonna rely on that pretty much to achieve probably 80% of the outcome.

Pascal Wagner:
Yeah, is there like a type of tone that you... So, I mean, you're pretty much just saying, if you're noticing that someone is a little squeamish or they're not as, you know, on top of knowing the metrics or, you know, parts of the deal, then that's a flag for you.

Jay Bourgana:
Yeah, or sometimes they get defensive. Sometimes they get uncomfortable. Sometimes they get, you know, why are you asking me these things? Like, give you that tone. Or sometimes I'm like, Oh, let me get back to you on that. Or maybe there's contradictions in their stuff. You know, people who are, who do this at a high level are excited to explain their deal. You know what I mean? They're excited

Pascal Wagner:
Right.

Jay Bourgana:
to tell you the story of the deal and how they found it and how they came up with the number and how they, you know, if I do the deal, I'm excited to show, to walk through it. So when I get that defensiveness, when I get that people are, or like salesmanship, you know, they're trying to go over, they're trying to sell me on it. So it's, yeah, it's gonna, it's gonna take a lot longer for me to really be comfortable with the deal. And if I'm not comfortable, it's not worth my time.

Pascal Wagner:
Totally. Yeah, you have to feel feel good about who you're investing in and what you're investing in.

Jay Bourgana:
Yeah.

Pascal Wagner:
Now you you've invested in a ton of different types of deals,

Jay Bourgana:
Yeah.

Pascal Wagner:
everything from multifamily commercial shopping centers, self storage, ATM funds, short term rental funds, or syndications and, and even like a managed service provider fund.

Jay Bourgana:
Yeah.

Pascal Wagner:
Talk to us about like Those are all very different. And I imagine you don't have expertise in most of them. How did you figure out that you wanted to invest in those asset classes? How did those opportunities come about? How did you think about that? I think you're on, go ahead. You are, I thought

Jay Bourgana:
Oh,

Pascal Wagner:
you were on mute before.

Jay Bourgana:
Harry, having been a management consultant, I'm used to being dropped into different industries and different places and different geographies. So I'm comfortable with the... with the change or with the, what's the word, things being obscure, things not being transparent, things to being new. So for me, I can spend probably an hour talking to somebody and understand the drivers of that business. And I may actually reveal the drivers to the business owner who's running it because we may not know. you know what the drives are because I've seen so many other businesses this one looks like that one. So I'm comfortable with that aspect of it. I just want to understand the drives of the asset. What are we trying to achieve? Are we going for steady cash flow? Are we taking or we're looking for that big equity win? Are we going for a turnaround or a value add or... or some type of arbitrage of some sort. And so once I understand the strategy, I want to understand the asset. Once I understand the asset, I want to understand the market. Once I understand the market, I want to understand the operator. And so I think that's probably the process that I go through mentally. And then once I understand the operator, then I go through the numbers with them. By then, it's already kind of made my decision, but I just

Pascal Wagner:
Alright.

Jay Bourgana:
want to kind of reinforce just learned and then once that happens then it's easy for me to say yea or nay.

Pascal Wagner:
So you've talked about that you had two kind of different strategies. One was more tax depreciation as a benefit and the other one was cash flow. Which

Jay Bourgana:
Yeah.

Pascal Wagner:
investments had the highest tax depreciation and maybe like what are the reasons for that?

Jay Bourgana:
Yeah, we have big retail, standalone retail, as well as shopping centers in the middle of the country kind of markets like Minnesota. And so because the value of the building is 80% of the value of the whole thing, you get the maximum amount of... And then also... Assets there, cash flow, you can buy it at a 7, 8, 9, 10, 11 cap at the time. And then you could finance at 3%. So there's a big enough gap and you get both. You get a little bit of cash, you get decent cash flow and you get max depreciation.

Pascal Wagner:
Yeah, and I also know that, for example, we're both in an ATM fund. I'm wondering if we're in the same

Jay Bourgana:
Yeah.

Pascal Wagner:
one.

Jay Bourgana:
Yeah.

Pascal Wagner:
But

Jay Bourgana:
Which

Pascal Wagner:
because

Jay Bourgana:
one?

Pascal Wagner:
those... Oh man,

Jay Bourgana:
David Zuck?

Pascal Wagner:
I'm in... Yeah, David Zuck,

Jay Bourgana:
Yeah,

Pascal Wagner:
Prestige Equity Group.

Jay Bourgana:
yeah, yeah,

Pascal Wagner:
Yeah, all right.

Jay Bourgana:
yeah, yeah, the leverage

Pascal Wagner:
Yeah, so...

Jay Bourgana:
one. I'm in the leverage one. So that one also, you know, that's a great one. I like that one a lot.

Pascal Wagner:
Yeah, yeah, and just to kind of highlight the depreciation aspect, you're investing, at least in this fund, it's a fund that invests in 4,000 ATMs across the country. And we're talking like automated teller machines, things where you go and you put in your credit card or your debit card and you get cash out. And because these are machines, you're pretty much able to write off most of your investment. I think it's like 90 to 100%. And then... those things spit out cash flows. So whenever you get charged that $3 fee from using an ATM, that's what the revenue that the fund collects that we are then getting those monthly mailbox money checks. So yeah, so that one kind of spans both the depreciation

Jay Bourgana:
Yes.

Pascal Wagner:
and the cash flow

Jay Bourgana:
Yep.

Pascal Wagner:
and can achieve both of those goals. When you're thinking about cash flow, are you looking for cash flow immediately? Or, you know, in a lot of these, kind of like value add deals where you buy a deal, you need to renovate it in some way, and then it starts cash flowing.

Jay Bourgana:
So I was in 18, 19, 20, 21, I was looking for those value add, big payday, quick, a lot of them were, had three, four year, five year, three to five, and then they were exited within two, three. And they were great. But now those are non-existent and very risky. So I don't do that anymore.

Pascal Wagner:
Yeah, why do you think they're risky now?

Jay Bourgana:
Well, because you know in a market where interest rates are low, you have the wind in your back and you can make a mistake and the market will help you, will support you. In this market, if you make a mistake in your underwriting or your exit point or your rent appreciation or your cost or your timeline, anything can kill you. Any one of those mistakes can kill you. in a market where liquidity is shrinking and values are on the cusp of coming down. So I would, yeah, it's just too much risk. And usually

Pascal Wagner:
Yeah.

Jay Bourgana:
rule number one is don't die.

Pascal Wagner:
Yeah, don't lose money.

Jay Bourgana:
No money.

Pascal Wagner:
So how has your strategy shifted then? So

Jay Bourgana:
Yeah.

Pascal Wagner:
early on you were looking for tax breaks, then looking for cash flow, and now that the market's

Jay Bourgana:
Yeah.

Pascal Wagner:
changed and interest rates are higher,

Jay Bourgana:
Yeah.

Pascal Wagner:
how do you think about that?

Jay Bourgana:
Yeah. So I look for stuff like that deal like the David Zuck stuff. I'd also look for right now I'm looking into service businesses and service businesses anything from if you have to hire if you hired a plumber or you hired an HVAC company or a pesticide company today, you know, it's hard to get good people to come on time. and you're gonna pay whatever they tell you you're gonna pay. So right now all the cash flow is there in the service business providers. And so for the good operators that have good teams with good cultures, that have high level, strong recruiting and strong retention strategies, those guys are doing really well arbitraging the labor shortage that we're seeing. And so that's what I do right now. So I buy them, I invest in funds with good operators, but I also buy them directly myself. And hopefully I'm planning on building a fund myself as well.

Pascal Wagner:
Yeah, yeah, it sounds very similar to one of the other funds that you mentioned before on the call, like these managed service providers.

Jay Bourgana:
Yeah.

Pascal Wagner:
Tell us, tell us what makes that interesting to you. Let's let's go down that red bull.

Jay Bourgana:
Yeah, so, so, man service providers are essentially any third party IT company that comes and helps your company build the network or, you know, build their servers or do security or maintain your computers. So they're businesses that are essentially hire technicians and they rent you those technicians for a few hours. Or they, you can, you can have dedicated technology team for. maybe $150 to $200 a computer per month. And so there's a recurring income component and then they sell equipment, so they make a percentage of the equipment and then they sell software and they make a recurring income on the referral of that software. So there are three models where they make money but the bulk of their cost is just labor. and they're usually anywhere between 48 to 55 percent gross margin and they can net you know anywhere between 20 to 30 percent margin so and they're right now they're being sold the smaller size under a million EBITDA they're sold in three to five times multiple anything over two million they go up to like eight to ten times multiple so the you know, as soon as revenue goes up and profitability goes up, the multiple goes up, which allows for really nice exits in addition to the cash flow component as well. So they cash flow really well. So a typical deal would have anywhere between 10 to 12% preferred return. It will return the money within three years, 100% of the money within three years. And then it will have anywhere between 30 to 35% IRR. And usually it'll be, it'll swap, it'll start like 80% paying to the investors and they'll swap after that 30 to 35% and you stay on a 20% equity after that. So it's a really

Pascal Wagner:
How do you

Jay Bourgana:
hard

Pascal Wagner:
find

Jay Bourgana:
return.

Pascal Wagner:
these

Jay Bourgana:
Yeah.

Pascal Wagner:
deals?

Jay Bourgana:
Yes.

Pascal Wagner:
Yeah, I'm interested now.

Jay Bourgana:
So that's the beauty of like business acquisition is that it does, you know, it does provide It does provide higher returns for sure.

Pascal Wagner:
Yeah, that's super fascinating. What, like, where do you go to find deals like that? Like, I haven't come across a deal like that, probably because that's not the space I'm playing in.

Jay Bourgana:
Yeah, yeah. So I'm, you know, I'm like, because I've done this before, like I, so I used to be the, the hired help, if you will, the contractor that comes and fixes this when, when a company buys, a private equity buys a value add. So I used to be that person that goes in and adds the value. And so I have plenty of contacts in the space. But there are funds, there are plenty of funds. Just look up small, middle market, private equity funds, and or middle market private equity funds. Those are the ones. And you just talk to enough of them. Again, I'm hoping to start build one this year, but yes, there are plenty out there. It's not very hard to find.

Pascal Wagner:
Yeah, yeah. I'd like to take a second and kind of go to one of your deals that has went sideways. Before the show we talked a little bit about one of those deals and would love to share that with the audience of just like, you know, share one of the deals that you invested in, why it went sideways and what you've learned and maybe what you're gonna do differently moving

Jay Bourgana:
Yeah,

Pascal Wagner:
forward.

Jay Bourgana:
yeah, I'm gonna go a little bit graphic here, but you know how like this

Pascal Wagner:
I love

Jay Bourgana:
area,

Pascal Wagner:
it. More graphic the better.

Jay Bourgana:
you know, I just say like kids that get abused usually abused by someone they know, and some family member or whatever, usually investors get abused by someone who they know. And I think this

Pascal Wagner:
Hahaha

Jay Bourgana:
is one of those things where I've known this person for a long time, I've trusted them. I've liked them. We've never worked with them. But I've. been around this person, I've seen, I've known this person for a period of 10 years. So which kind of like made me not and we were in the market again, we were smack in the middle of like 2020, like the second half of 2020-21 where you could do no wrong if you will. So it's the one time that I got screwed. It's like the one time that this happened to me. And it's the one time that I didn't pay attention and I didn't do any due diligence and I didn't really researched much. I should have just called somebody that invested with this person before I would have found out that they have not been. I wasn't like, I'm a skeptical person. You know what I mean? As an investor, I ask a lot of questions and I'm a skeptical person, but in this case, I wasn't. I was trusting.

Pascal Wagner:
So you've gotten used to investing in deals and then this

Jay Bourgana:
Yes,

Pascal Wagner:
one got away from you.

Jay Bourgana:
and I trusted the person because I thought I knew the guy. And it just turned out and honestly, it's not like the person was a bad person. They just, they were just incompetent to, to this at that scale. You know, so they

Pascal Wagner:
So

Jay Bourgana:
were

Pascal Wagner:
set

Jay Bourgana:
a

Pascal Wagner:
the

Jay Bourgana:
bit.

Pascal Wagner:
scene, set

Jay Bourgana:
Yeah.

Pascal Wagner:
the scene. Like what was the asset? When did you invest?

Jay Bourgana:
Yeah.

Pascal Wagner:
Like when did you start to notice things go sideways?

Jay Bourgana:
Yeah, so it's a single family flip fund. And it was end of, I believe it was end of 2020, early 21. And the goal is to acquire, you know, hundreds, thousands of houses and then fix them and buy and hold and then put tenants in there and then build a portfolio that we can sell to private equity. And that was the play. And And so this person was doing okay at a small scale, maybe 50 to 100 houses. But what they did is that they raised and they found enough, they raised enough money to go scale to that thousand, 2000 homes, but they didn't have the capabilities, the team, the leadership skills, the management, the financial chops to be able to run that big of an operation. and they sold it, they were really good, it was a good communicator, good salesperson, they sold it as they had this, you know, mission impossible team that can get it done, but they did. And essentially like a few months later, we started asking more questions, the people that were asking the questions did not have answers, or they will say they're going to come back to us and they don't. and the numbers, you know, the the the prep returns weren't there. And we asked more questions. And then you start seeing turnover and the team. And then and then you find out that it's all, you know, coming down collapsing and they're asking you for money. They're asking you for more money. And you know, and then the decision is you just put in more good money after bad or you just walk away and you eat it. And I decided to just walk away. It's not worth my time. My mental health is valuable and I don't

Pascal Wagner:
Yeah.

Jay Bourgana:
want to put good money after bad money.

Pascal Wagner:
Yeah, so how do you think, I mean, we talk a lot on the show about operator first, you know, and a lot of people say, you know, I've known this guy for a really long time, and, you know, he's someone who I trust, and, and I look at the operator first and the deal

Jay Bourgana:
Yeah.

Pascal Wagner:
second. And, and so this is maybe a good example of how that how that's gone sideways. I mean, you also you mentioned that you know, it would have been good to maybe connect with other investors who've invested with them. Do you think that really would have uncovered this? Or are there other things

Jay Bourgana:
Yeah.

Pascal Wagner:
that you're now having in your mental checklist

Jay Bourgana:
Well,

Pascal Wagner:
moving forward?

Jay Bourgana:
it's a good question. I think you have to look at it like, so if you know whether you know somebody you don't know them, you have to like you give them the same level of scrutiny. And then you literally have to like you don't want to go in with the warm and fuzzies. You want to go in with like a cold hearted, I'm gonna get to the bottom of this kind of you know scenario like what what can I find so I don't invest in this person I mean that's pretty much the idea and if you don't we can't find anything and the deal looks good then yeah then that's when you invest and to me that's how I've always done it except that one time when you know I went in deciding that I'm gonna invest before I did my due diligence so and um and I just went through the numbers and people can show you any numbers they point through the team, they can show you anything. It doesn't matter. The experience, yeah, I should have called enough people. I should have asked more questions, but I didn't just because I kinda knew the guy. So,

Pascal Wagner:
Yeah, it happens.

Jay Bourgana:
give me once.

Pascal Wagner:
It happens. Yeah.

Jay Bourgana:
Yeah. Yeah, I think

Pascal Wagner:
Totally.

Jay Bourgana:
there's, I think a lot of it is people, understanding numbers for sure. understanding the deal, understanding the asset, understanding the structure, understanding the market, understanding the operator. All these things are all data points that add up at the end. You know, so when we talk, we're not going through them, but these things are happening so quickly, so fast, and all at the same time that sometimes we don't break down that process in our mind. how we're going through. And if you go in with thinking that you're going to invest with somebody before you even do due diligence, you're going to skip all that and make a mistake.

Pascal Wagner:
Yeah, happens to the best of us. What you've mentioned something where you talk about understanding the market.

Jay Bourgana:
Yeah.

Pascal Wagner:
It's something I've heard often. What does that mean to you?

Jay Bourgana:
Yeah, so understanding the population growth, understanding income growth, understanding the drivers of that change, of that growth or that, you know, if the strategy is to go to a growing market, okay, how is it growing? How much growth? And then why? And is it growing just in population or is it growing in income as well? And then what are the drivers behind this? Is there like new industries? Or is it just... in the environment that were the economic environment that we're living in because of covid or because of something else. So, so I think just going, you know, peeling the layers essentially of the story behind the market. If someone comes in and says, oh, this is a stable market. Great. What does that mean? What is a stable market? What's where the drivers of that stability? You know, is there a certain type of employers are there are there certain types of industry, certain type of. you know, so lifestyle. So there, I just want to understand, you know, how this market has done in the past, how is it going to try to predict, how is it going to do in the future based on, you know, different data points.

Pascal Wagner:
Yeah, something a mentor of mine has told me, for example, is like looking at Detroit. So if you're investing in Detroit and the automakers are the only real employers there. Well,

Jay Bourgana:
Yeah.

Pascal Wagner:
in times of bad economic crisis, like in 2008, when a lot of the revenue of those companies went down and they let off a ton of employees, they were really the only employer of that market. So if you owned real estate during that time in those markets, you would have been crushed.

Jay Bourgana:
Absolutely, yeah. And a lot of times you think, oh, they say, oh, there's the banking industry and then there's the medical system. Well, maybe if the banking industry goes away, that medical system is not going to be there. Or you don't think they're correlated, but they are. And if you have a big drop in population or big drop of incomes, a lot of other things are going to affect it that may not look correlated. they're going to be correlated. So I just want to understand the dynamic. Demographic is destiny, especially for deals.

Pascal Wagner:
Yeah. Jay, this was awesome. Thank you so much for joining us on the show. I loved having you on and looking forward to seeing you soon.

Jay Bourgana:
Thank you for having me. Right.