The Norris Group Real Estate Podcast

Inside DBL Capital: Building Value Through Fund Strategy with Andrew Falde | Part 2 #926

• The Norris Group, Craig Evans

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In part two of The Norris Group Real Estate Podcast, Andrew Falde, SVP of Capital Markets for DBL Capital, delves deeper into their innovative real estate investment approach. Building on the first episode, Andrew provides detailed insights into their evergreen fund's structure, investor qualifications, and strategic advantages. He explains the fund's minimum investment requirements, accreditation criteria, and how they navigate current market challenges to create value. The discussion explores the benefits of their investment model for sophisticated investors, highlighting efficient capital deployment, long-term wealth preservation, and a multi-generational investment strategy. Listeners will gain valuable understanding of how DBL Capital differentiates itself in the real estate investment landscape, offering a compelling alternative to traditional investment vehicles.



Andrew Falde is the Senior Vice President of Capital Markets, whose extensive background spans Wall Street, private equity funds, and institutional investment groups. With over $300 million in real estate transactions under his belt, Andrew brings a deep understanding of deal structuring, capital raising, and long-term value creation. In this episode, he shares valuable insights into navigating today’s capital markets, building scalable investment strategies, and aligning finance with real estate growth.


In this episode:

  • Investment Requirements & Target Audience: Overview of who DBL Capital is best suited for and the minimum requirements to invest.
  • Group Investing & Structure: How investors can participate as a group and strategies for structuring joint investments.
  • Insight into how current market trends influence DBL Capital’s fund strategy.
  • Why DBL Over Others: Key advantages of the DBL Capital Fund compared to traditional investment vehicles.
    Capital Deployment & Lockout Period: How investor capital is used and the terms of the lockout period.
  • Investor Education & Communication: How DBL Capital keeps investors informed and educated throughout the process.
  • Reasons why seasoned real estate investors may choose DBL Capital for diversification or scale.
  • How to reach out to DBL Capital and connect directly with Andrew Falde.




The Norris Group originates and services loans in California and Florida under California DRE License 01219911, Florida Mortgage Lender License 1577, and NMLS License 1623669.  For more information on hard money lending, go www.thenorrisgroup.com and click the Hard Money tab.


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Narrator:

Welcome to The Norris Group real estate podcast, a show committed to bringing you insights from thought leaders shaping the real estate industry. In each episode, we'll dive into conversations with industry experts and local insiders, all aimed at helping you thrive in an ever-changing real estate market. continuing the legacy that Bruce Norris created, sharing valuable knowledge, and empowering you on your real estate journey. Whether you're a seasoned pro or a newcomer, this is your go-to source for insider tips, market trends and success strategies. Here's your host, Craig Evans.

Joey Romero:

Welcome back to part two of our interview with Andrew Falde, SVP of Capital MAarkets for DBL Capital. Let's get to it. So who can invest with DBL Capital? What's the target investor for you guys?

Andrew Falde:

Accredited investors. There's a term. It's not spelled out anywhere, but it's kind of a, it's a well known term, but, it's not like a restriction by the SEC or anything, but it's called sophisticated and so that means, like, you understand what's going on in general. So if you really, just because, if you have enough income or you have enough capital available, but you don't really understand how it works and how the market factors affect the investment, and that you could lose money or not get the 12% in the, and we have this sense that there's like anxiety or discomfort around those ideas that we would say, well, this probably may not be a good fit for you then. So those who understand what's going on in general, have some experience with real estate in investing, and then are accredited, which is, that's the technical term that you can look up and see based on either the total amount of investable net worth, not including your primary residence. So you have to be a millionaire or not, including your home, or 200,000 and there's very and I never want to, I always like hesitate to say the exact numbers, because, you know, I'm just like talking like non stop said, I want to say it wrong, but you have to make a high income, so 200,000 or more, and then there's jointly with your spouse is a different number, which is higher. And so we ask you, we show you what that means, and then ask you to self identify and qualify yourself and say,'Yes, that's me'. But then, even though we go another step beyond that, we do verify that in during the process at the end.

Joey Romero:

And so what is the minimum to invest?

Andrew Falde:

The target minimum is 250,000 likely to be higher in the future, but we're keeping at 250 now and then we are at this stage of the market cycle, and this stage of the fund, allowing those who are capable of the target amount to start smaller as a way like 'I'll dip my toes on this first year, this first round of homes, this first round of investments, and see the returns, see the reports' and all that. So we're allowing them to dip in at a lower number, but we're just making sure they're accredited, sophisticated, and could do the minimum in the fund.

Joey Romero:

So what if I've got some friends, or, let's say, I've got, you know, a bunch of brothers and sisters, and we can all do, like, 50, you know, can we invest together? Or, how does

Andrew Falde:

There are ways to do that. So if they were to that work? individually, so say, like,'Hey, I want to make an LLC or a company, we're going to pull it up, and then we have this quote, you know, technically, "one client", you know, like, you know, Joey's Family Fund LLC. Hey, we that fund has enough capital. Well, if there are equity owners inside the LLC, then you have to look through the whole LLC to make sure everyone is qualified, technically accredited. Qualified is actually a different term. It's called qualified purchaser, and that's even higher. But where accreditation is the requirement we have, so we would have to go through and see that. Now there, there are other structures, and I don't even, well, I don't want to push people too far to think in this. But there are other angles you can take one's called, it's a type of note. I think it's called a Profit participation note, is the name of it. And you can do some research on that. So hypothetically, what you could do is say, I will, you know, Joey, I Joey will invest, and I have this capital, you know, or I'm investing through this fund, or this trust, or something like that, and you could borrow the money from someone else in this Profit participation note that would allow you to do that. So again, that's you're really pushing into, like you're being a fund of funds at that point, you're really becoming like a professional borrower and you really would make sure, like we couldn't pierce through and find that to see who's behind that ultimately. And that's where I would just have to advise you, to say, make sure you're dealing with people who are sophisticated, understand what's going on, willing and able to lose money in order for them to have the participation in there. And also, you're not going to be able to make all the profits. They're going to have to have some of it, such as something else to consider.

Joey Romero:

So there's, right now, there's no doubt that the mood of the market is not enthusiastic as it used to be. You know, at The Norris Group, we have this thing called the moodometer, and so the mood of real estate is a little down right now for a variety of reasons, you know, whether it's tariffs, whether it's supply, whether it's interest rates. So how is the fund taking advantage of this particular market right now?

Andrew Falde:

Yep, yeah. So it's, if you think of it as, say, like, oh, it's always two feet. I'm going to answer the question, but I'm going to preface it with this. You say, like, we don't have a ticker price, you know, we don't have like, a stock ticker. We don't say, like, 'Hh, the you know, the price to get into the fund is down right now. So it's you, you can buy at a discount', or anything like that. What we do with the capital is we're able to buy at a discount. We're able to hire better subcontractors through the construction company. I remember maybe 15 years ago, one of my, I've got a lifelong mentor who was a builder and we were going through a recession. I think it was, it must have been, '09, 2010, somewhere in there. I said, 'Oh, is this hard for your business right now?' He said,'It's a little hard because people are slow to pay'. But the best part is, which it solves his biggest problem, which is the employees, you know, right now, when the market's great and everyone's making lots of money, then all the best employees, all the best subcontractors, are as busy as they want to be. They won't answer their calls. You know, it's like you just have to beg them and beg them, to beg them. So then you have to go down to a lower level, to somebody who has availability because guess what? They're not as good, you know, and they're not as in demand. So then when the market slows, you get better subcontractors who work faster, have more experience, get the job done faster, will be a little more flexible in pricing in that process.Land pricing is way down right now. That's probably taking the biggest percent hit is that land value, which is goes directly to the bottom line, also that, that's the first thing you have to spend money on. So the amount of capital going out immediately is less. So there's a lot of advantages to a slow market. So you just have to be it. What will get impacted is things that you're already in will not sell for where you wanted them to be, but then. But you know, was it the rising tide lifts all boats, and the goat tide going out drops all boat. Well, yeah, the thing that is trying to sell right now is going to come down. But everything we starts going down too. The cost to build, the time to build, the land cost, everything's down, so we ride with that, and then on the way out, these new profits will make up for, any houses that we're going to sell for 10, 20, 30,000 less than we would have sold, you know, eight months ago.

Joey Romero:

So I'm gonna get a little technical again. What do you see there are the strongest advantages of the DBL fund being an Evergreen fund versus other evergreen funds, syndications or even self managed investments.

Andrew Falde:

I'll start with other Evergreen. So other evergreen are normally large, large institutional REITs or even just a private placement fund. And if you dig through the numbers, they are not truly putting the investor in the greatest position. It's almost like, 'Hey, you can kind of throw your capital in with us and, like, help us with the capital part. It will, you know, we'll find some some nuggets here. Some breadcrumbs for you at the end of the deal'. I've been in those. I've been through in them when the market has been going up, up, up like crazy, and they still can't pay anything out. I'm like, What are you doing? Because they have no efficiency, they have no profit margin. They're buying full price, retail, just whatever is easiest to get a hold of. They just know how to raise capital, and then they're not able to pay out very much. So the bigger they are, usually the busier and the messier all the pieces are in the middle, you're paying for, their high rise in Manhattan, you're paying for their marketing campaigns on CNBC. like, you, the investor, are paying for those things. So in a fund like this, the efficiency, it's way more efficient as an Evergreen fund, really feeling more like you're in it as a private investor. That's what it is, a PPM private placement. So you are in as a private placement partner in the deal, not just some retail buyer, you know, kind of just attaching themselves and getting whatever little dividend they feel like paying out. So that's a big difference in large Evergreen funds you'll find, versus a small to medium size Evergreen fund that operates much more efficiently. Then there's syndications where the like, inside the deal, you know, the returns can be great, or the deal could not go well, and you just won't know. But the great deals just feel really great. And the ones that don't work, we just kind of like try to forget about them and move on to the next one. And so it's, you have to play that game, and you're tied up with those two, and it's just that it'll be tied up and then it'll come back. And it may be tied up and not give you anything back, or give you less than you put in back, or you'll be tied up and you'll have a great return. But then you're out shopping for the next one, and that's where that dead zone, that dead time comes in if it takes you three or six months before you get into the next one. And you string those together over 10 or 20 years, and then you do the math on what you actually made over 20 years for the amount of capital that return is probably less than that I made, you know, 30% IRR on that deal, or I made this on that deal, that's great. But how long did it take you to get into it? You know, how long did it take you to get into the next one after that? Oh, six months before you found it and six months after that? Well, you just cut the number in half. Plus, you know, is it very passive, if you're having to, like, investigate every one of these deals before you go into them. And is it diversified? If it's just one project, probably not. So that's the greater advantage of going to Evergreen, is if you're saying, hey, I really want it to work more efficiently, maybe I won't be able to brag about that one deal did that great, but that's going to work across the board. Probably beat the real IRR number.

Joey Romero:

The last part of that was the self direct.

Andrew Falde:

Yep.

Joey Romero:

So do you have anything to say about the...

Andrew Falde:

Well, that's just, yeah, that's entirely different, you know, yeah, if you want to, you know, run the business, you know, just at some point decide, and really know, like, Is that the best use of your time, energy and life, you know, was it before, and it isn't anymore. Do you have enough where, hey, it's time to start divesting and diversifying who's doing the work, who's really in control and doing things? So that's the decision has to be made there. But it's, it is kind of an apples and oranges thing, you know, or like, is it time to trade in the origins?

Joey Romero:

All right, so, let's say I get a hold of you and I'm like, You know what? I'm good to go. I want to invest. How quickly does my money get deployed?

Andrew Falde:

So it's as soon as one penny. So if you put your capital in, and we say, as soon as one penny is put to use in any shape or form, you are now in for a pro rata for that entire calendar year for the fund. And so that could literally be a deposit paid on a piece of land that we would acquire and bring in. So if a deposit is paid, and we're buying this land, and that process could take as little as three weeks, but we say, typically, two months, I think, is the number we kind of throw out there, like, don't expect to hear that you're in until then. But our goal is to have that done within a month, you know. But sometimes we'll find a piece of land and then we find out, you know, there's some, you know, protected species living on it, and then we have to cancel the contract and go to the next one. And so that's going to add two weeks to the deal, right there. So that's just part of the process.

Joey Romero:

Is there a lockout period? And what's the purpose of it?

Andrew Falde:

Yeah, so there's a three year minimum commitment to the fund, so, and that's just to allow the natural life cycle of we need to buy land, we need to build the properties, and we need to know that we can redeploy the capital after that and reinvest and keep going. So we do a three year term. Some are longer, but ours is at three. So that's the purpose of that is just for continuity, for knowing, you know, able to plan ahead for what property needs to be purchased in order to prepare for the next ones, or what type of distress access assets we're gonna be able to buy in the next six months or so. So that's just the the cycle that works out best for this type of fund.

Joey Romero:

And is it every three years I have to re up for another three years, or is that just the initial three years?

Andrew Falde:

It's just the initial three years. Read through the docs very closely and make sure. So don't use this podcast as your quote, but I think it's a three year initial and then it's either annual or maybe less than annual after that. So that's something I actually have to double check myself.

Joey Romero:

All right, as we're winding this down, wow, we've almost been at this for 40 minutes. I've heard Craig mentioned education. So what does DBL Capital intend to do in terms for education, for investors?

Andrew Falde:

Yes. So these days, there's kind of three major modes, we'll say, for communicating and educating. So one is pre recorded content so and making that public and easily accessible. So we actually did some filming a couple weeks ago, captured three video series, and then those can be turned into shorter sessions as well. And so those are going to be distributed through social media, LinkedIn, emails, on the website, YouTube, etc. And so that's going to allow for people to be introduced to the concepts allow those kind of those paradigm shifts to come to light. As far as what's the difference between doing it yourself versus a syndication, Evergreens, big ones versus small ones, efficiencies, profit margin versus appreciation, having a leveraged return without signing for debt. What does that mean? How does that work? So we're going to cover a lot of that kind of stuff, and do that through video content, emails you're getting, Craig's Corners are going out. Then the second will be more live webinars. So those are being planned in the very near future as well, and that allows interactivity and more like on the spot, so you can ask questions right there that are more specific to you without getting too detailed, because there's other people there, and we can't give you direct personal advice, but they can be questions you have in the moment answered right then and there about how things work or what's going on. And then the third is, live in person. Because you know, as much as the world is moving more and more toward virtual and remote, there's something very, very powerful about getting in the same room and being face to face and really spending time with people, to learn from them and to get to know them and build relationships. Because it's not just about numbers and it's not just about paper and sticks and bricks. This is about people's wealth and their families and their legacy this life and for the future generations. So knowing who's involved and who's there and what's going on, it's very important. It's kind of like an attachment to your family. It's very important to have those relationships. So we're going to do those events in California and Florida where you can come to those learn, get to know everyone on our team. We get to know.

Joey Romero:

You what? No Bahamas. No, why not? That makes it fun. Alright, so Imma put you on the spot little bit, like we didn't talk about this at all.

Andrew Falde:

Okay.

Joey Romero:

Alright. So I'm an investor. I've been doing this for 25 years. Okay, I've got a good size portfolio. Give me your biggest reason why I should consider including DBL Capital into the way I invest now, going forward?

Andrew Falde:

Yeah, well, it kind of comes to your question. You asked about a three year you know, is there a lockout? And what is it? Is it three years? And anyone in real estate that I have found is not thinking in months or, you know, single digit counts of years, like 1,2,5,8, they're thinking, you know, what is this really doing long term? Maybe the deal cycles are shorter than that, but we're really thinking about a vehicle for wealth preservation, inflation protection, income growth, you know, and just pure outright profit gains you know, from these the ability to when you build something and produce it, you know, just like If you build, you know, a widget in a factory, like you create value. You're not just riding a market. You're creating value, so participating in that in a way that is designed and set up. And if you see, like, this isn't the Craig show, like this is a whole team, and he is on the phone all the time with advisors and people are structuring everything behind the scenes for this fund to be a multi generational fund. And when I say this fund like DBL Capital as a fund manager, because, as you said, we'll have other funds coming in the future with different approaches and different mandates, but the idea is that DBL Capital can be a partner with your family, you and your family moving on for decades and beyond. So that's really the shift in thinking of from deal to deal, or from property to property to who can I go with, whether a large percentage of your portfolio and assets or a small one, it doesn't matter that is going to be able to operate ongoing for a very long time. And then you could go, that's what life insurance companies are promoting all the time. The only problem is they're going to pay you four and a half percent, you know. So as we talked about earlier, the bigger the institution, the less they are paying out to you, the less efficient it really is. So this is that opportunity to get in with a group that plans to operate in a way and is already setting up all the procedures, the team management structures for a generational system and company.

Joey Romero:

Well, we're pushing 45 minutes now, so I appreciate you being on. We might have to turn this into a couple episodes, but why don't we, why don't you tell everybody how to get a hold of you and how to learn more about DBL Capital?

Andrew Falde:

Yes. So if you go to DBLcapital.com and send a form through there. I currently am the clearing house for those emails. Other people get them too just to make sure it's not missed, but that will come directly to me. My email address is afalde@DBLcapital.com and then, so that's another easy way to get a hold of me, but I think going to the website, looking at the materials, filling out the form, or the contact form that's going to come directly to me, give me in the information that you want to share, I'll reach out to you, and we can have a first initial chat. So it's just 5 or 10 minutes of 'okay, well, you know, what is your interest? What have you been looking at? Or do you have any immediate questions' and but it's not like a one call, you know, like, 'Are you in or out?' you know, kind of thing, you know, it's like step one, you know, did you get the materials? Do you have any immediate questions? You know, who are you going to review it with? you know, how long do you need? Do you need three days? Do you need three weeks, you know, to go through everything, and then we schedule, you know, schedule another call to get deeper into things from there. So that's the the initial process.

Joey Romero:

Awesome. Well, thank you. Thank you so much for being on with us this week. A lot of good information for our investors. We have a long standing following of people who are been in the game for so long, and I hear it all the time, like I'm just tired of everything that comes, you know, with being in the business, right? I want to be more passive. I want to spend more time with family. I want to come on vacation, on travel. So,this is a terrific way to do some of that and offload some of it, or all of it, like what you know, depends on what your goals are. Thank you, Andrew, for being on with us, and thank you everybody for listening. We'll catch you next week, Craig will be back, so bye for now.

Narrator:

For more information on hard money loans, trust deed investing, and upcoming events with The Norris group. Check out thenorrisgroup.com. For more information on passive investing through the DBL Capital Real Estate Investment Fund, please visit dblapital.com.

Joey Romero:

The Norris Group originates and services loans in California and Florida under California DRE license 01219911. Florida mortgage lender license 1577 and NMLS license 1623669. For more information on hard money lending go to thenorrisgroup.com and click the hard money tab.