Syndication Simplified: The Strategy That Builds Generational Wealth | Desiree Doubrox E41

Ever wondered how people raise millions to buy real estate without using their own money?

In this episode, Desiree Doubrox breaks down the world of syndication and how she built an eight-figure fund while empowering hundreds of others to do the same. Whether you're new to investing or ready to raise capital for your first deal, this conversation simplifies the path to building generational wealth.

You’ll learn:

• What syndication really is and how it applies beyond real estate
• How to gain credibility even if you’re brand new
• Why experienced operators want to partner with beginners
• The right mindset for raising capital
• How to structure your first deal (and avoid legal pitfalls)

If you want to master the skill of using other people’s money to build lasting wealth, this is the episode to start with.

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About Desiree

Desiree Doubrox is a seasoned real estate investor, broker, and syndicator with over 30 years of experience in the industry. She is the founder and CEO of HomWork, a co-living and co-working platform designed for professional women and remote workers. Through her $10 million fund partnership with Outsite, she’s scaling lifestyle-driven properties that combine community, productivity, and passive income. Desiree is also an educator, hosting workshops like “Syndications Simplified” to empower others, especially women, to build wealth through collaborative real estate investing.

Connect with Desiree

Email: desiree@homwork.com

Linkedin: https://www.linkedin.com/in/desireedoubrox/

Website: https://www.homwork.com/

Instagram: https://www.instagram.com/homworklive/

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Email Us at info@hotelinvestorplaybook.com

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Transcript

Michael Russell 0:00

Most people never get started in commercial real estate because they're asking the wrong question. It's not how do I raise money? The better question is what value do I bring to the deal? Desiree DeBro has taught hundreds of investors how to raise capital, structure deals, and break into syndications, even without a track record. In this episode, we get tactical on how to build credibility, partner with experienced GPs, and earn trust from investors when you're just starting out. We also talk about her $10 million fund, how she structures deals with non-accredited investors, and the $140,000 lesson she learned on a deal that fell apart. Whether you're raising your first check or scaling into bigger deals, there's a lot to take away from this one. Let's dive in. Welcome to the Hotel Investor Playbook, your guide to building wealth and freedom through boutique hotel ownership, hosted by Mike and Nate.

Nathan St Cyr 1:05

Get in the game.

Michael Russell 1:15

We're Mike and Nate, founders of Malama Capital, and your host. On this podcast, we talk story about everything you need to know to make money investing in hotels and hospitality assets. On today's episode, we have Desiree Dubra. Desiree, welcome to the show.

Desiree Doubrox 1:32

Well, thank you. Thank you. I'm excited to be here.

Michael Russell 1:35

Yeah, it's not every day we get to sit down with someone who's raised an eight-figure fund and taught hundreds of people how to invest in real estate without using their own money. It's fantastic. It's exciting. Yeah. And before we get into these tactics of raising capital and running a fund, I just want to say I was raised by a single mom who built a real estate brokerage from scratch. And so when I meet women like you who are leading and teaching in this space, it it really resonates.

Nathan St Cyr 1:59

Yeah. I was raised by a single mom as well. And I am a very, very proud girl dad. And so so I get pumped, right? I I when I I think a lot about the messages that my daughters will hear about money and power, what's possible, all of these different things. And I I love that you're helping women build wealth and and take ownership of their future. So I'm excited for the conversation today.

Michael Russell 2:24

Well, let's start at the beginning. What drew you to real estate in the first place?

Desiree Doubrox 2:28

Well, I've been an entrepreneur since I was 12 years old. I've always had my own business and was working and promoting either my projects or whatever I was working on. So when I had my first child in 1980, '85 and '89, I wanted to start and do something that I could make the most profits from and give me the most freedom and flexibility. And that was real estate. And I love houses. I was always looking and decorating and going to open houses. So I combined the two: my fascination and love for houses, and then being able to build wealth through the real estate.

Michael Russell 3:02

So at what point did you realize syndication was the key to scaling?

Desiree Doubrox 3:08

Well, as a realtor, most of the time people say that we get access to all the good deals, and that is true. We see them. But many times we can't afford to acquire them because we're working commission to commission and we don't really have those resources. So when I found something, I had, and people who were saying, Well, you find a good deal, let me know. Tell me about it. So I reached out to all those people that said that and say, I found a good deal. Do you want to participate? And when we first started, it was really smaller. Like they would with the money, I would throw in my commission, I would throw in the sweat equity and be able to do the project, and then we would sell it. That's when I got started in the picks and flips. And then obviously, as the projects become became larger, the amount of money became larger than was necessary. But I also did it not only for real estate, but when I started homework, I didn't have the funds because it required proof of concept, required having a property. So I raised a quarter of a million dollars just to start the company, get the legal fees, to get the logo, the trademarks, and get the first property and reserves to handle the proof of concept. So you can do it not just for real estate, but for startups and for anything you want. What's funny is that even this horse racehorse secretariat, that was syndicated. Formula One cars are syndicated. So you can use whatever you want if you want to start something and syndicate it.

Michael Russell 4:27

Yeah, interesting. What you're describing is syndication is not just limited to real estate. It's it's so true. Like I walk down the street and I see these huge buildings, and you know, as a younger person, I just assumed, oh, some someone owns that or some company owns that. But it's actually very common that most things are actually pooled money together. It's a collective, it's a collective effort. Whether that's a horse or real estate or a business, this is all very common. I want to know what do most people misunderstand about syndication?

Desiree Doubrox 4:55

Most people think it's a lot bigger and more complicated than it is. And actually, the true definition of a syndication is where a group of people pool their funds together to acquire a certain asset. So definitely we're talking about real estate today, but just the horse secretariat that was syndicated because they needed money for the horse. Some of the Formula One race cars are syndicated. We can do boats, we can do businesses. I did my startup homework. I syndicated it because it was, I needed a lot of cash to be able to get proof of concept, to be able to acquire property, trademark, legal, things of that type. So I syndicated a quarter million dollars and gave them percentages that they will gain over time, as well as being able to participate in the exit. So it's it could be used for anything. And in all the big projects like you're referring to, as far as apartment buildings and businesses and so forth, even those who have the funds to be able to buy the properties outright, they syndicate, they pull the funds together. It gives you more leverage, less risk, and it just makes you much more a viable option.

Nathan St Cyr 6:02

Awesome. So this concept of what a syndication is, I think most people probably have familiarity with. But I think the scarier thing is, okay, well, that's that's great in concept, but how the hell am I going to syndicate something? Maybe I don't have experience, or maybe this is my first project in this space. I'm going to purchase a hotel. I want to get into the mindset of number one, what gave you the confidence that you could do this? And then number two, where does this, where does the capital come from?

Desiree Doubrox 6:33

Those are great questions. And I think that's what holds a lot of people back. One of them is that knowing the space, knowing the project. So if you're just starting a business, you should know something the business or have partners or someone that does know the business. And real estate, the same thing. If you want to buy that hotel you're referring to, then if you don't have that knowledge, being on a team, because you can have a team like GPs, legitimate partners, someone that has experience and expertise in that, because the last thing you want to do is fail at some other people's money. You don't want that because that's the beginning and the end of your career. Even if you have to take a less percentage yourself, it's better than to have it than have it done. Another reason is that when people are going to give you money, they're going to ask, have you done this before? And who is going to give you money, hard-earned money, if you have never done it before or for? So you want to bring on a team that has experience, that has knowledge, and has the expertise in making it work. With that, you bring an opportunity. Okay, what is the benefits of this? Sometimes you can have recurring revenue where they'll get a certain amount every month if it's a cash flow type of property. Sometimes there's participating in the equity at a certain day and time when the property is sold, they have a capital event, either it's refinanced or sold, they will get a return on their investment. So it could be equity lending, it could be note lending. Sometimes, like in my situation with homework, it's not until we exit the company. So there's no distributions, they're just accruing interest until we sell the company. So there's so many different ways you can structure it, but you have to know what you're doing. And people say, well, I can get a great syndication attorney. Definitely get a securities attorney. That's the difference, not a PI attorney or a divorce family attorney. Because it's securities that you're working with, not only to protect your investors, but to protect you. Because they will ask you, we have in the 12Ds all the different questions, like if something happens, what if someone gets divorced, either you or your investors, what if someone dies, either you and your investors. They go through all those different scenarios. And if you get the right attorney that protects you in those ways, then you have an opportunity to be able to present it to much more investors. And people want to invest. People want passive income. People want to be a part of something bigger. It's just that you have to be able to exhibit the experience and the expertise and the ability to make it happen. Start with something small. Start with one house, a fix and flip, something that's easy before you grow into something that's much larger.

Nathan St Cyr 9:01

Okay. And why do you say that people want to be involved in something bigger?

Desiree Doubrox 9:05

I say that because the majority of the people want passive income. We all, again, working hard for our money, want our money to work hard for us. So professionals know that they're in their genius. They're either again an investor or mortgage or they're in medicine or engineering. They don't have time and they don't want to be a landlord. But yet they know real estate is one of the asset classes that are very profitable. So they rather take that money and give it to someone that's qualified and have it grow for them. They can't do it all. And it's a mistake for some. You see, some people fail and they, again, maybe they're into science. For them, trying to be a landlord and do short-term rentals because they can be profitable, they're not going to have the same success as opposed to investing in someone who's doing that day and night and who has the experience and exposure to them.

Michael Russell 9:53

All right. Well, yeah, I kind of want to hone in on a particular part of this conversation, which is, yeah, it's great in theory for someone to go out and be like, I'm going to raise money. And then you're like, okay, well, go partner with someone that has done this before. Well, why does that person that's done this before want to partner with somebody? What are like the tactical steps they need to take to get started as a syndicator beyond like what they're offering limited partners in return? What does an experienced GP want out of this to partner with someone who does not have experience?

Desiree Doubrox 10:24

A GP would participate only if they felt that that person that is qualified is bringing something to the table. So maybe they found the deal, maybe they're the person that can do the deal. Maybe their expertise is in the fix and flipping part of the construction, or maybe they have a network of people. And maybe they even have money, access to people's money. One young lady, her husband was on the board of a country club. So he had access to all of these wealthy people that are always looking for investments. She had asked, she didn't have experience. So bringing an experienced person would be important. As a GP, yes, it's a big risk because you're risking your reputation. If it goes south, then that's your reputation that's on the line, and you don't have time or want that experience behind you. So you do want to vet that person. Like when we do it, we only vet people that we've won goes through our masterclass. We do have a masterclass where we train step by step how to be a syndicator and not only be a syndicator, but also how to be a bet better investor in syndications. Because you feel if you know what's supposed to happen, you're much more confident in investing into one. And that's how you get experience by working with other people. So maybe you're the person that does the running, maybe you're the person that does the scheduling. I mean, you participate in a way to learn and see, but you do have to bring something to the table. And the way that you can get started is by interning or working with somebody. We've had people participate with us as intern and they've grown, and then now they're able to do their own. Because the experience is always the best teacher. And it's always good to say that I participated in this syndication and this syndication and this syndication before you start doing your own. Because again, people will ask you, What have you done? I think I did it because I just had the access to the people and I had access to the property. And I read and I got really good attorneys that just kind of walked me through that process, but it was a longer process. This is over years. But so a quick start would be taking a program, mentoring with somebody, interning with somebody.

Michael Russell 12:21

All right. So let's say I'm brand new to this. I want to partner with someone, I want to gain some experience. I know that for me to have enough credibility, typically, not just private investors, but also banks, they're gonna want a GP that's got experience. And let's just say I have none. So what do I do? To me, it seems logical. First step, go and find a deal. If you can go and bring to the table a deal that works, that pencils financially, go underwrite 100 deals, go find a deal, go get that thing where it actually makes sense and then bring it to someone that has the experience to actually take it down. That's that's one thing you can do. The second thing that you said you could do is you could help raise money. Maybe you have a large network of high net worth individuals. Maybe you work for, let's say, a tech company, and in your office there's a hundred people that are technically could be qualified as accredited investors. So, you know, if you got a roll of decks, call people, bring money to the table. The other thing that you can do is you can do just the groundwork. You know, there's a lot too. There's a lot of that. Yeah. Like, I mean, we just went through raising, we we got commitments about $2 million. We went through the whole process of going through syndication. We ultimately pulled out from the deal because, and this is sort of a side topic, but we all we you mentioned that look, you you got to be responsible for people's money. And we realized, like, through the inspection process, there were some things that came up that we could not in confidence put anybody's money at stake. It was too great of a risk. And so we just had to communicate that and move on. And part of that experience and due diligence, that that's just that's how the chips fall sometimes. But what I'm saying is in that due diligence period, we had people on our team that were doing a lot of work, like task, like coordinating all the different inspectors is a huge responsibility. And if you're a qualified GP and you've got a lot on your plate, these are some of the tasks that it you might want to outsource to someone who's willing to do it and in exchange get a piece of the ownership. And the last thing I'll say that I'm just resonating with what you you mentioned and speaking is once you have the you've participated in a hotel deal or a syndication more generally, then then you've got the experience. And at first it was a little surprising to me when I realized this that there's a lot of people out there that are expressing, like, hey, I have an ownership stake in real estate. If you pull back the onion a little bit, I mean, most of them have a very, very, very small stake. And that's okay. Yeah. But at that point, once they have ownership, even if it's 1% or half a percentage, they're able to speak to the public and say, hey, I've purchased properties, I've stayed. Exactly. And there's value in that. So sometimes people get hung up on like, well, being a participant requires all this responsibility. No, sometimes the first deal just means having a small stake to gain insight, to gain knowledge, to gain experience, to gain the the credibility, all of these attributes, even if you have a small stake, but that leads to bigger and better things down the line.

Desiree Doubrox 15:29

Absolutely. Absolutely. We have some people that, again, we had an 18-year-old started with us and he made his first investment. He took his savings into his syndication. And then two years later, he had his own syndication. He actually syndicated a property in Arizona that he did. And he only thing he got paid was not even a percentage. He just got paid for expenses. He was reimbursed for expenses. So yes, it was like in lieu of going to college, this was the best education for him because this is what he wanted. And to your point, it also lets you know if this is something you're interested in. Suppose you decide after doing the grunt work for a while this is not for you. Then it gives you a chance to step aside and move on to something that may be more appropriate. So you're absolutely right.

Nathan St Cyr 16:10

You know, the the one unique thing to syndication from a partnership with Mike and I that have bootstrapped everything from the beginning and then created, forced a lot of appreciation and have created a portfolio. Mike and I may say, well, look, we have a portfolio that's valued around 30 million. Maybe there's only less than 50 percent levered against that. And so then if you take that number and you're like, all right, well, 30 million is $15 million of equity, but we bootstrapped it all, right? So we're 50-50 partners, we have $7.5 million worth of equity there. But sometimes in the syndication world, people are like, I've got a $100 million portfolio. And you're like, damn, like that is unbelievable. But then when you break it down and you're like, okay, well, that $100 million, well, 65% of it is lent on. So there's really $35 million. And with a 70-30 split, that 30% equity to the GP, that ends up being $17 million. And then you break that down and you're like, okay, well, we're partners. So the end goal is actually ends up being less than if you actually just grow your real estate to $35 million that you bootstrap. So I do think that this is important when people are entering into this space to recognize being a syndicator does not pay off in the short term. That being a syndicator is something that is going to happen if you're looking to really create a significant amount of wealth. It's going to take time and it's going to take an extremely large portfolio because ultimately your slice of the pie when you're syndicating as the GP is, it's, I think it gets missed a lot. I think people overlook this. They just look at the big number of, okay, here's $100 million of assets under management, but they don't really break down well, what would that mean to me if it took me 10 to 15 years to create that $100 million portfolio?

Desiree Doubrox 18:14

Great point. It's very well worth talking about because of the fact that, and again, people think that you make all of this money, and you can make money. I think the magic in the syndication is when you have the intention of acquiring a property, using other people's money, you can invest in it or not, and then building it up, and then either refinancing it, and refinancing it to a point where you can pay off your investors, and now you have an asset yourself that you haven't had to put any money or credit on because you can use guantors to do that. So that's really for the people that want to build their portfolio. That's one with one way to do it without any of your own money or credit is to do that. But to your point, yes, syndicators get the percentage going in, which is a very small percentage, what two, three, four percent of acquisition fees. If there's cash flow, you get a little bit of maybe management along the way, and then you get the disposition fees when you dispose of product capital event. Again, if you sell it, then you get your percentage proportionate, like you mentioned. And then if you refinance it, then you'll have an asset that you've basically have curated and nurtured and seasoned to the point that is profitable for you. But like you said, it's over years and depends on your bandwidth. Usually you can only handle so many syndications at a time. What people do find discouraging is that they think it's a rich quick thing. And it's not. Now, some people do have a program where they do fix and flips, they go in, they syndicate it, they fix it, they're in and out in a year. And then like anything else, you take whatever the profits are from there. But the true long term wealth is built with that time and with multiple and with a large amount of assets because your percentage is broken down quite a bit.

Michael Russell 20:00

I got a question and I was wondering whether or not I should ask this. I'm going to put you on the hot seat a little bit here.

Desiree Doubrox 20:06

Uh-oh.

Michael Russell 20:09

So I love the theory or the concept of yeah, buying something, syndicating money, refinancing, and paying the investors off, and then being able to own the asset outright. In theory, man, that sounds like that's the dream, right? And if you can make it work, great. But I've not heard of any syndicators actually doing so. And I'm curious to know, in your experience, have you participated in that sequence or do you know of anyone that has? Because from what I can tell, is when you syndicate and their owners, once you pay them their capital off, it doesn't remove them from the deal. And in order for it to be enticing enough for them to want to invest in the first place, then the return profile has to be large enough. And in order for that to pencil, where a refi would not only just give them their capital back, but also give them enough return on their original investment, it's got to be like a grand slam deal. And most of these, from what I can tell, they don't pencil with that sequence. And so I'm curious, like, okay, is that actually feasible what you described?

Desiree Doubrox 21:13

Yes, it is. And some properties, you definitely have to buy the properties like you would or any situation undervalue. You have to be able to get it as a deal, which is hard. It's just why we don't do as many as we want to. Like you, we've had a couple of transactions where we were in escrow, do the due diligence, the numbers, you find a $200,000 air conditioning roofing problem or whatever it is, and now you have to cancel because it's that takes that spread. But if you have enough press spread, example would be we have a property in Cabo. It was a woman owned the boutique hotel and the restaurant, passed away from COVID, and set this in disrepair for a couple of years, purchased it, family didn't want to have anything to do with it, got it at 1.2. It's currently now about 3 million. And that's been two years, two 2025, 2023, rather. So we have three to five year stretches. So we're gonna wait a couple more years and see where it is. You do some improvements. We also, like you say, force appreciation, take properties, add more bedrooms and bathrooms. One way to do it, change the use of it again from a multi from a multi-residential or to co-working, co-living, that makes a difference. So yes, because we worked with the 20% and we promised our investors to double the money in five years. And yes, I have done it in smaller projects, but we have done it, and it just has to be a great deal. You just have to have the numbers that where you can do it. And then it depends on your split that you're giving too as well. Like sometimes you said it's a 70-30, 60-40, 50-50. Also, then we and my husband works more with the numbers, but we've also structured a cap who they make X amount of percentage up to a certain point. And once we reach that cap for them, then they're complete. They've made what they're you know, what we were promised plus some and any extra would go to the GPs.

Michael Russell 22:59

Hey guys, quick heads up. Malama Capital, our investment arm, is full steam ahead on finding our next hotel acquisition this quarter. If you know of a deal or you're working on something yourself and want to partner up, we'd love to hear about it. We offer a generous finders fee, or if it's a fit, we can bring you into the deal for a slice of the equity and give you a front row seat to the whole process from A to Z. There's a short form linked in the show notes. Just drop your name and a few quick details. And if it looks like a fit, we'll be in touch. Now, back to the show. There's a lot of ways to structure the waterfall. And we could go into the complexity and then you go down the rabbit hole. But what you're saying is, yeah, there's ways to structure very simple, high-level. It's like, okay, if the goal is to get your investors a 20, 20% return. And once they hit that 20% return, rather than the deal being split 70, 30, 70 to the limited partners, 30 to the general partners. Once the investors get a certain amount, I'm using 20% just as an example, but thereafter, then you can split it up however you want. Like it could be profits are split 50-50 thereafter, or profits are split where like everything from 20 to 25% goes strictly to the GP. And then after that, it's split 50-50. So, you know, that's the beautiful thing about a syndication is there is no one way to do it. It's really what the deal profile is, what the investor's risk tolerance is, how much, what are they looking for in return? And part of that is the story and the narrative in which you present the opportunity. So I guess I'm curious from a like a marketing perspective, right? Like, what are some of the tactical things that you do to be able to raise capital, whether that's having a qualified pitch deck, webinar, like what are some of the things that you say, hey, you need to start focusing on this in order to be able to raise money?

Desiree Doubrox 24:53

First of all, I always tell everybody look at your database, look at your rolodex. Who do you have access to? And include everybody. Many times the people that we think don't have money, they're the ones that have the money under the mattress and they're just waiting and they're not exposed to the opportunity. They're not getting letters and emails from investment advisors because nobody thinks they have any money, and they do. And then the people that use has the most money, many times they're the ones that maybe are leveraged and they don't have the excess cash. So I say everybody that you do transaction with, whether it's your manicures, to your pet groomer, to your housekeeper, I mean, it's everybody. Is you have a conversation with them as to what they're doing, what you're doing, and are you interested in learning more? And if they say yes, they go into your list. Be very, very specific about the list that you have. Utilize the CRM that is because first of all, you if you're not dealing with credit investors, you need to show the communication. So you want a CRM to be able to track it, but not your cell phone and not an Excel sheet, something that actually will document and timestamp your communication. The next thing is that your sources, again, if you belong to a church, if you belong to an organization, if you have belonged to a school, do you mention webinars, do webinars, you do dinners, we do brunches, we like you speak to different groups, organizations, podcasts, do everything. We've done field trips where we've actually had the property in Vegas. We had an open house, a soft open, we called it. We didn't even own it yet. We were simply there getting a lot of estimates from different vendors. But we had a period of time that the AA just let us have, and we had refreshments there, and people came in, potential investors came in so they could see. And people love the idea, like, oh, I could be a part of this, I could have ownership in this, and they're impressed. Because, like you said, to your point, people love to say, oh, I'm a part owner in this building or that building, or I'm an international investor. Whether it's $10 or $10 million, it's a good thing for them as well as for you. And then friends, referrals. We have investor testimonials that we will do with the investors. So, because people want to hear the other people. They want to see people like them. So we have them do testimonials, video testimonials that we'll put on our website. We have it on Trustpilot, we have it on a better business bureau, we have a better business community where we do podcasts. We do the Fourth of July parties where we invite everybody and have different things that are have our name a brand or introduce everybody, say, hey, this is what we do. We do a lot. Dude, it's a lot of work.

Michael Russell 27:21

What you described. This is a lot, you know. You put a post out recently on, I don't know, Instagram, LinkedIn, one of those, it resonated with me because you were basically saying, like, look, when we're going to raising money, people think like, oh, I'm asking you for money, but no, no, no. I'm offering you the opportunity because what it takes to go and unearth a deal, number one, is incredibly difficult and an inefficient market. This is not the stock market where everyone has access to equal information. To go find a deal takes years of experience and legwork and effort. But then to take that deal to the finish line, when you're a passive investor and you just write a check, yeah, it's a risk, but man, it's a good deal. And so when you give someone the opportunity to invest in a deal, I think it's really important to kind of like have that mindset of like, I'm offering someone an opportunity. I'm not asking for money. Can you maybe talk on that?

Desiree Doubrox 28:16

Do you hit it on the nose? Because a lot of the successful, even people that take our class, when we follow up, the biggest thing that people say that they don't have their success, even realtors, which I'm thinking that you're always asking for the deal, they'll say, Oh, I feel uncomfortable asking for money. And you're not. You're offering them an opportunity. You're it's not for you, it's for them. The return is for them. And the thing is, especially for non-accredit investors, they don't get those opportunities. Where are they gonna find out? Most syndications are for accredited investors only. So if you don't meet that criterion, you're a non-accredit investor. So you'll hear about things, opportunities for the accredit investors because you're able to promote it openly. Non-incredit investors, you must have a relationship with them. So unless you have a relationship with somebody who's gonna turn you on to this opportunity, you'll never, never have the opportunity. You'll never know about it. So for that's a large group of people, that doesn't mean they don't have the money. They don't have the they're able to invest, but that means that they don't have access to it. So I feel like I'm giving people access, especially those who are non-accredited. And then for the accredit investors, they have so many different opportunities. I'm giving them a different asset class to be able to invest in. So you're right, that's what keeps people. You have to turn that mindset. Mindset is everything. I'm not selling anything. And you have to have that attitude when you're talking to them as well. You can't seem needy or beggy. Hey, this is an opportunity. And we invest in our opportunities for that reason to say, okay, we've invested in it. And my husband and I, we're about to retire. So we don't have a lot of do-over time. You know, we're not willing to do something and then have the years and years do over. We select properties and assets and investments that we would invest in and that we feel confident is going to help us in our retirement, contribute to our retirement. And that's what, and every syndicator and GP should think about the same thing. Is this an asset that you would invest in yourself? And you are investing. Another point that comes up a lot is people will say, oh, if you don't have any money in the game, or you should have every syndicator should have sweat in the game, money in the game. Sweat is more than money. I mean, the time that we give up, the years, the days, the hours, the due diligence that we give up, that is a lot. So if you don't have money, you don't have to have money in the syndication to be credible because someone mentioned that in my we guaranteed the loan. And it was a $1.2 million loan, and we said no one has invested $1.2 million worth of their credit. You have perfect credit, and that's a big risk. If something goes south, we're at risk for that. So whether we that's a big investment. So people have to realize that time is money, and you can get money again over and over again. You can never get that time back. So you do not have to have money.

Nathan St Cyr 31:00

Well, and I don't even think it is, and it's not just about the time today or the money today. It's about we've spent our entire lives right becoming who we are in this to get to this moment right here. Right. That's the reality of it. We've spent that entire time. So you're leveraging that I've spent a lifetime to get to the point where I can provide you with this opportunity. Like an entire lifetime has gone into this for me. And look, I might invest financially, but the investment is way more in what I've already done, already accomplished, and I'm bringing this opportunity both from the time and the money standpoint. What about the millions and dollars we've already put at stake to create the success that we currently have so that we have proven that we are expert operators? Well, millions of dollars of our own money has gone into that. So you have to understand that as the GP or as a syndicator, you are the one that is providing someone else with an opportunity. And if you don't believe in that, you're probably in trouble.

Michael Russell 32:07

Yes, agreed. Can we talk about what you have going on currently? I understand you are in the midst of a $10 million raise right now. It's a fund. So maybe you can explain the difference between a fund and a single asset syndication and then break down for us what you're working on and how you structured it and how you're raising the capital.

Desiree Doubrox 32:30

Great. Thank you. The difference is the syndication is usually for the one single asset. So this particular house or this particular building or project. And we were doing that. And there's pros and cons, but we were doing that until we partnered with a company called Outsite, because we had these different properties and we were struggling with consistency in the management. And they are able to manage co-working, co-living properties throughout the world. They have over 50 properties in 17 different countries. So with that, we were saying, okay, now we're able to scale. We're able to go boom, boom, boom, and concentrate on what we do best, which is the acquisitions of the properties. So we started the fund, and so the fund is 10 million, is different types of funds. Our fund is specifically for our asset class, which is co-working, co-living. But some people have a fund where they can do fix and flips or do commercial or multi-residential, storage units, whatever they decide to do. They have people invest into the fund and you have specific returns in it. And the money is there for the operators, your GPs to use and to acquire and to purchase properties as they choose. It varies whether you get dividends quarterly or monthly or annually. It varies as to how many properties to go into the fund. We raise as we need, though, however, because if we raise all $10 million and could not find enough assets, we're paying interest on that money because people have pulled it out of other interest-bearing accounts. So we're paying interest on that. So now if we have a $2 million property, we had one again in Vegas and $1.75, and we need the extra $200,000 for rehab, FFE, reserves, things of that type. So we raise that $2 million at that time for that property. Then we'll then we'll get that stabilized, and then we'll go and raise what we need for the next property, the next property. But it means we don't have to go back to the attorneys each time. All the terms and conditions and the paperwork is done. It's a difference in pricing, but not that much. It's not double the pricing. The disadvantage of it, though, I find is that maybe there's some things, some properties that mean we want to the terms would be a little different, like maybe wouldn't be given as much. You know, like they that 20% return in five years, double your money in five years. There's some properties that maybe we found that may not meet that criterion, but maybe they would met a little less. But now that we're committed with the fund, those funds and the funds, we have to abide by that. We just have to be doing more underwriting for the properties that we are looking at to acquire.

Nathan St Cyr 35:10

Okay. So I want to I want to take a time out there. So basically with your fund structure, you came up with all right, here's the asset class we're focusing on. And then secondly, because these are the targeted returns, anything that we acquire will fit this profile. And that's what you're sharing with the investors up front. So if it doesn't fit those targeted returns, even though it might be a great asset, it's something that you've you've you can't.

Desiree Doubrox 35:42

You rent in like 20%, double your money in five years. That's pretty aggressive. I mean, that's pretty what that's not aggressive, that's pretty good returns. There's people that are making three, four, or five percent in the savings account. So even making six percent would have been good to them. We've had people say, well, I'm only making three percent. So if I can double my money at six percent, I'm good with that. When you do individual syndications, you can adjust it accordingly to the market that you're approaching at that time or the market that you're in at that time, or the property and what the property would bear at that time.

Nathan St Cyr 36:14

Well, if you have leads that are good with six percent at that time or boy, boy, do I have an opportunity for that.

Desiree Doubrox 36:21

The people that have their money in savings accounts. It's not the sophisticated says we because a lot of people approach the sophisticated investors, the people that are used to getting 13, 14, 15, or that are in a stock exchange, right? But people that just have those money, their money in the savings accounts or in those conservative bonds, they would be happy. That would be doubling their money for them. You know, so it really depends on your market. We have maybe again, we approach the more sophisticated because they are accredited because they have the money available, less questions, it's easy. But, you know, there is a whole market that just has mom and pops that have money in savings accounts.

Michael Russell 36:55

Okay, so I want to rewind. So you might have already mentioned this, but this fund, is this a 506B or a 506C? In other words, accredited or open to non-accredited.

Desiree Doubrox 37:05

Interesting. We did a five, we started out as a 506B because we wanted to exhaust our community and our what we had available. And once we felt that we have you have we spread it or shared this opportunity with our community at that point, then we converted to a 506C, which just happened. So, because then we wanted to be able to go on podcasts, we wanted to be able to go and speak an opportunity about it openly. So we started at that. And the conversion was relatively easy and then expensive as well. So you can start out with a 506B so that you can kind of be able to share the opportunity with your warm list and people that you know, like, and trust. But then once you get to that point, you realize that we're gonna be able, we didn't have $10 million in our database. A couple of reasons. One, maybe they weren't that net worth, but also they have invested in other projects with us. So you you have a database of people, we've done so many of them. A lot of them invested in one after the other, after the other, after the other, which is what you want. You want repeat investors, but there's only a percentage of that they're gonna have you have so much money.

Michael Russell 38:04

Well, I want to ask you this. Look, if you've got 10, 15 years of doing deals and a proven track record, people are gonna just trust and they're gonna have a lot a little bit more confidence to commit to a fund, which a fund, it's kind of blind. You don't know exactly which assets are gonna be purchased next. Now you're contributing your capital and you're just kind of you're hoping for the best. But for someone starting out, like how do you build trust with investors?

Desiree Doubrox 38:29

I wouldn't start with a fund. I would start with the syndication. I would start with the asset. And even after there's a special asset that we find we may have to give do another syndication without outside the fund for it if we felt that the terms we needed to rewrite the terms of it. So I wouldn't start with a fund. I would start with individual. It depends on where you're going, how long you intend to do with it, how many properties you intend to acquire, and just how far you tend to go with it. I would start with a syndication. Get your teeth under that for many different reasons.

Michael Russell 38:59

What about war stories? I want some some wisdom that you've gained for some war stories. I mean, I heard that you you've lost money in the past on in escrow, right? Like you you had money in due diligence, not on a deal. Let me clarify. No, that's like and uh, but look, we just we just invested into due diligence and it was our own money, and ultimately we didn't move forward with the deal. None of none of no investor money was lost. As the syndicator, you have to put the money up front to invest in the reports and the studies and what have you in order to bring the deal into fruition. And that's all on the syndicator. Like, I want to know I I think it was $140,000 that you had in escrow that you were moving forward with the deal. What happened there? Like, what are the lessons learned from that?

Desiree Doubrox 39:45

The lessons learned, what happened there was that we're going through the property and it was a probate. And so they had a lot of extensions and and because they didn't couldn't confirm the court dates and so forth and so forth. Then when they were ready. To say yes to go forward, we were involved deep entrenched in a project. Like we maybe had like a month left and we couldn't leave that project. So we asked for extensions and they wouldn't give us the extension. So we said, okay, then we'll have to close this transaction after much, much, much, much, much negotiation. Then what happened at that point is you're supposed to get, and it was within our contingencies. We had all these contingencies there. And what happened is that we were still negotiating with them. They didn't want to release it. They wanted to release a portion of it. It's like, no, we should get released minus the fees, like the escrow fees or title fees, whatever. We want the balance of it. Went back and forth. The attorneys knew each other. They had worked together before and so forth and so forth. And then it got to the point where they couldn't negotiate. We were going to have to go to court. And then here in the US, or you know that there's a les pendes. The les pendings on the property, so they can't do anything else, lawsuit pending. And things got ugly. Yeah, they got really, really ugly to that point because we stayed just were adamant about, and it was not the even the seller herself, because her husband had died. She's an older woman. It was her younger siblings, her younger children. And anyway, so it got really bad. So when we researched it, though, we found out that they sold the house to somebody else. But the same escrow officer, the same escrow company, knowing that we had a deposit, that it was still an open escrow. So technically in real estate, if you have an open escrow, you can't sell that property without the buyers and sellers signing off on it to close that escrow. But they did and they sold it to somebody else. And then it was that we had no recourse as far as being able, we'd have to go to court, first of all, get to a trial date, which is what we were trying to avoid in the first place because it was taking like a year. How they're able to sell a property that was already in escrow that had not been signed off. We had some feeling, maybe someone fraudulently signed our names off. We had no proof. The escrow company wouldn't cooperate with us as far as providing us any of those documentation. And again, we would have had to subpoena them and go to court and so forth. So now or the lesson learned is that we put very, very little deposits. We do it because very little. I mean, people want 3%, 10% now. We'll do like 1% after the inspections and the contingencies. And then we'll do another percentage after the loan contingent. We'll work up to it, but we will not put a large amount day one into escrow.

Michael Russell 42:26

And you think the sellers are okay with that?

Desiree Doubrox 42:27

They have to be. And we just for sure that's our company policy. It's our investors' policy. They will not allow us to put more than this amount in until we have this contingency period. And if they want to sell, I mean, that's that's it.

Michael Russell 42:39

We got a deal spinning right now where the seller is looking for $200,000 for contingency earnest money. That's a lot of money to put down, and especially hearing your story and all that.

Desiree Doubrox 42:49

I'm speaking to twice a little. No, don't put it down, put pieces of it down. But yes, I will give you the $200,000, but this is how it's gonna happen. X amount is gonna be released at this particular time after because the biggest thing is a home inspection policy, done in contingencies, right? Inspection. That's where a lot of the problems come out. We've had problems with term, I mean, permits had an addition, pay $250,000 to contractors, didn't get it permitted. And they don't disclose this. And the agent didn't disclose it. Another one we were in escrow, he had a fines, the one in Vegas, he had $59,000 worth of fines. We didn't find that out until the final escrow papers were through. And so it's like, well, where are these fines? These fines are short-term rental. He wouldn't tell us. For one thing, so we asked the city, they said it could be short-term rentals, it could be drugs, it could be parties, it could be a number of different things. Seller wouldn't tell us what it was for, so we had to pass.

Michael Russell 43:40

I want to make one comment on this: that if you do have an opportunity to buy a property with seller financing, the cool thing about that is if ever there's a dispute on something like you just mentioned, that the seller has fines, penalties, violations that weren't reported, well, all that stuff is look, this you owe this, you the seller is expecting you to pay him. And you got a little bit of leverage there. So there's an added value in doing seller financing where you're the peace of mind of knowing, like, look, if there's these unknown things and we do have to hold them accountable, at the end of the day, the seller wants their money, so we can use that as leverage.

Desiree Doubrox 44:19

Absolutely. Absolutely. But you know, the unfortunate part is that that used to depend a lot on title and escrow and the agents, and you can't anymore. These things that slip through, slip through title, slip through escrow, slip through it. So you really had to do your due diligence every step of the way.

Michael Russell 44:36

I mean, I I think a hit like that could have made a lot of people go sideways. How did you convince yourself to move forward, to continue to keep going in this game and not let yourself be discouraged after a hit like that?

Desiree Doubrox 44:47

I think, gentlemen, that in real estate you're gonna have a lot of hits. That's not my first hit. I've been in real estate since 1989. So you had to be committed to the process, you had to be committed to the results, you have to be committed to knowing that real estate is an asset class that you want to be a part of and you're gonna keep going forward. That is and you learn from it. You learn from each experience and you just get wiser. And the funny thing is that you would think after all those years, over 30 years, you've known everything. You never know everything because this there's things now that was non-existent, right? Years ago. So you're constantly learning, and you just have to be prepared, be diligent, and participate in things like what you're doing. Listen to podcasts, listen to things of that type. You learn so much because again, you don't experience everything yourself, but experience is the best teacher, and you just keep going. I'm committed to real estate. I believe in real estate. I've lost a lot of real estate personally in my personal portfolio and when that market went south in 2008-2012. I lost $8 million of my own personal real estate. And people say, why'd you come back after that? Because it's not real estate. I believe in real estate. It was the happening of events. These events that happened that caused the loss. It wasn't necessarily the industry of real estate. And I separated it from that. You could take a lot of hits at no matter what industry you're in, right? You know, food industry, restaurants. If you're an athlete, you're gonna hit some home runs, some not. If you're you take hits in whatever you do.

Michael Russell 46:15

Well, I I think that's a very valid point. And the the reality is this anything that you invest in involves risk. I think that the smartest strategy for someone who wants to eliminate taking those hits is to get an education, to learn from others, to partner with someone who's has the experience. Right now, currently, you're helping folks who want to learn about syndication, you're mentoring people, you're partnering with folks. Can you walk us through a little bit about what you're doing outside of investing in real estate, a little bit more about like your teaching or your coaching program?

Desiree Doubrox 46:50

So we have a program called Syndication Simplified, and we really break it down step by step by step. So it's a uh weekend class, and we first, you know, you start, we start with the game cash flow. Have you ever played cash flow, rabecued hockey's?

Michael Russell 47:04

I've heard of it.

Desiree Doubrox 47:05

All right, oh, you gotta play it. And so because it's a great way for people to get in touch with their mindset about money and for us to learn what their mindset about money is and just to see how all that works. It's a great game. And then we go from how to find the asset, how to search for it, how to underwrite it. Lots of time before underwriting. Gary has created a special worksheet that if it works, it's green, and if it doesn't work, it's red. And then if it's green, then we go to a second level of the worksheet to really fine-tune it from that point on. So what tools and things are available for that? How to do the all the legal papers. We show them, not only just tell them, we show them what they look like and what they should include. So what we do is we go through the education and then we have them actually find a property themselves. We have them underwrite the property themselves using these tools. If the properties are and they keep going until they find a property that's green, then we they make a deck. They actually create a deck, a pitch deck themselves, and they know what the components are, and then they actually pitch it to the crowd. So they actually have gone through the processes, the whole process all the way. And then after they leave, they're supposed to take that property and then go. And if it's a Sunday, they can reach the realtor, they contact the realtor. If not, they contact the realtor that Monday, see the property, and then we have our masterminds on Wednesdays. They bring the results, they write an offer, how to write the offer, what to put in the offer, as far as and or signing, all the different things that you're supposed to include in it, whether the time dates, how long to make your escrow, because it's not a short escrow, you got to make a longer escrow, all that we go through. So they actually do it, and then we start evaluating those offers on Wednesday, and we go for eight weeks thereafter until they're actually in rescrow. So that's how they we hold their hands to that whole process. Good deal, no deal. I'm stuck here. What do I do? This is what you do. I need more investors. Some people have offered, say, I'll be your last investor, I'll be your start investor, whatever it is. I I need to redo my pitch. Hey, practice your pitch. So it'd be all of that we do. So they when they walk away, they're prepared to actually, and lots of times they partner with each other. Some of them have done two or three of them. One of them even did a yacht, a boat. She had a membership, she bought a cabin on a boat for a million dollars. Her and her boyfriend, they broke up. So now she needed to come with the rest of the money. She says, What do I do? Get the syndicated. She got three other people to chip in that $250,000. They put in a million dollars and they each get three months a year to use the yacht. I mean, so being able to have access and brainstorm about things like that is just really huge. So that's what we do, that's step by step.

Michael Russell 49:40

Yeah, it's pretty comprehensive. This has been great. I feel like there's been a lot of great takeaways here. I know that joining a mentorship program, like in your case, syndication simplified might be something that could benefit a lot of people. So if someone wants to learn more about your syndication simplified program or join your investor list, another option if they're just looking to invest passively, where should they go to get a hold of you?

Desiree Doubrox 50:03

You should go to homework, h o-m-w-o-r-k.com. And then the menu, you'll have an option for syndication simplified, and you have an option to be or become an investor. And then, or just reach out to me directly. I would love to talk to you. I will leave my contact information in the show notes, but it's desire at homework, h o mwrk.com. And by the way, homework is where you can live where you work, work where you live, anywhere in the world. Cool.

Michael Russell 50:30

Excellent. So this has been great. I want to remind our listeners before we check out is that look, if you guys have gained any benefit from this, we like to pay it forward. We're putting a lot of effort into trying to bring on the best guests like Desiree and others that can teach folks how to become better real estate investors, how to learn everything you need to know about investing in hospitality assets. So do us a favor. Right now, look on your phone and review us. Rate and review us. Give us a five-star review. It means the world to us, and that's going to help us continue to move forward and continue to offer great advice for folks looking to invest in hospitality assets. So, with that, thank you so much. This is another episode of the Hotel Investor Playbook. We are Mike and Nate. She is Desiree Dubrol. And we'll catch you again next week. Aloha. Aloha. Thanks for hanging out with us today on the Hotel Investor Playbook. If you got even one good nugget of wisdom about hotel investing, do us a favor, hit that subscribe button and leave us a five-star review. And hey, if you're feeling extra generous, drop a quick line in the review section. Something like Mike and Nate are the go-to hotel investing guys, or best podcast for anyone looking to crush it in hospitality. Or, you know, whatever feels right. Those little shout-outs go a long way in helping more people find the show. And they pretty much make our day. All right, appreciate you guys. Catch you next time.