WS1962 Entity Formation, Asset protection, and Estate planning for the Syndicator | Mauricio Rauld

In this episode of The Real Estate Syndication Show, host Whitney Sewell welcomes back guest Mauricio Rauld to discuss critical considerations for syndicators regarding entity formation, asset protection, and estate planning.

This episode is specifically tailored for real estate operators and syndicators and explores common mistakes they make when structuring their businesses.

Key takeaways:

• Understand the intricacies of LLCs and separate investor classes: Learn about the different LLC structures and the importance of creating separate classes for your investors. This ensures clear ownership and voting rights for each group.
• Distinguish between manager and owner roles: Grasp the crucial separation between the entity managing daily operations and the entity holding your carried interest. This distinction is vital for asset protection and mitigating potential legal liabilities.
• Develop a comprehensive estate plan: Implement a solid estate plan to safeguard not only your personal assets but also the continuity of your syndication business. Mauricio offers practical advice to ensure your business and investors remain protected in case of unforeseen circumstances.

Ready to take your real estate syndication to the next level? Equip yourself with the legal knowledge you need to navigate the complexities and protect your business. Grab your copy of Mauricio Rauld's book, "Legal Strategies for Everyone: The Complete Guide to Covering Your Assets, Maximizing Wealth, and Protecting Your Family".

Remember, real estate syndication success goes beyond acquiring properties. Effective management and proactive protection are paramount. 

Thank you for joining The Real Estate Syndication Show! Like, subscribe, and share this episode with fellow investors and syndicators. Together, let's build knowledge and empower informed decision-making in the real estate market.

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Transcript

Whitney Sewell: Now that LLC will usually have two owners, right? It will have all of your investors, right? However many LPs come in, those will typically be a separate class. That'll be class A is what I typically like to call them. And then the sponsors or the GP will own the other 20% or 30% of the company.

Whitney Sewell: This is your daily real estate syndication show. I'm your host, Whitney Sewell. We are back with our guest today, Mauricio Rauld . I hope you listened yesterday, but we're diving in today further on the entity of formation, asset protection, estate planning. But today for the operator, the syndicator, there's many mistakes that he often sees when syndicators are setting up their entities, or they're buying a large piece of real estate, and they don't have the classes set up correctly, or they don't have entities in the right place in this structure, and you are going to hear that laid out today. Welcome back to the show. Grateful for your time. I want to encourage listeners go back and listen to yesterday's segment in case you didn't where he was much more focused on the passive investor and thinking about the entity formation, asset protection, some estate planning stuff that that all passives need to know. Hopefully before you even invest in your first syndication, or even if you've invested many times, there may be some things in there that you need to go think about how those things are structured for you and your family. But today, we're going to dive into some of the same topics, but on the other side of the transaction for the syndicator and looking forward to this conversation for myself amongst many operators that I also know and that listen to the show. Mauricio, welcome.

Mauricio Rauld : Well, thanks for having back. And this is fun. We do an episode helping from an angle of limited partners and past investors. Now we'll do one on syndication. And some of it's overlapping. So we're not going to repeat ourselves. If it's something that we talked about yesterday, we'll relate to that. Like, for example, the whole holding company thing. I think that's something that applies to both LPs and syndicators. So if you're wondering what that holding company looks like or why you should have a holding company in Wyoming, Nevada, Delaware, Texas, check out the episode yesterday. Because today I really want to focus more on the entity structure itself for the syndication. Because I think a lot of people, there's a couple of issues that I think a lot of syndicators make mistakes with, which I wanted to explore today.

Whitney Sewell: Yeah. Awesome. Well, let's jump in there. Let's do that. Let's start with that energy formation for syndicators and some maybe big mistakes as well that you see all the time.

Mauricio Rauld : Yeah. So the way most of these, and I'll try and keep it, we'll keep it a very basic level. Obviously syndications, as you know, can get super complicated. You can have portfolio raises, you can have 17 classes of share or whatever, but in its most basic form, we will, if you're buying an apartment building, for example, what we're going to do is we're going to set up an LLC, which by the way, is technically the issuer. Whenever you hear the issuer, that is the LLC that's going to own the property. And we typically will set that up in the state where the property is located. So if you're going to go buy a building in Texas, we'll set up a Texas LLC. If you're going to buy something in Atlanta, we'll set up a Georgia LLC. And the reason for that is no matter where you set up that entity, you're going to have to register that company in that state because that's really where the apartment is doing business. It's conducting business in that state. So if you're in Texas, If somebody slips and falls on your property or something happens, Texas law is going to apply. I don't care if you set up in Nevada, you're going to register it back in Texas. And if something happens, Texas law is going to apply. So you always start with an LLC in the state where the property is located. The only exception to that is a lender. Like sometimes the lenders insist on having that in Delaware, right? Just because they like Delaware, they're familiar with the laws, they're probably stronger for them. And so in that case, we may have to add the Delaware layer, but putting that aside, you're going to set up Let's give the example of the Texas property, a Texas LLC. Now that LLC will usually have two owners, right? It will have all of your investors, right? However many LPs come in, those will typically be a separate class. That'll be class A is what I typically like to call them. And then the sponsors or the GP will own the other 20% or 30% of the company. And those are typically a separate class called class B. And the main reason we do class A, class B is so primarily for control. So all of the voting rights are typically held with class B. So we can write that in the operating agreement so that the class A members don't have any say, no voting. It's this very limited partnership, right? And then the other reason is because sometimes we give investors preferred returns or some preferential treatment. It's just easier to articulate those when it's all a special class. That's usually why you see a minimum of two classes. Class A investors. Class B are the sponsors, right? The tricky part is the LLC then needs a manager, right? And we always talk about GPLP, right? General partner, limited partner, but that's just vernacular. And I'm okay using those terms, but that's not really technically accurate because we rarely set up limited partnerships anymore. We usually set up LLCs. Now back in the, I always joke with my buddy, Ken McElroy, because he started doing LPs because he's so old and he's been doing them for so many years. So back in the day, Right. If you've got some white hair, there was a benefit to doing LPs. There were some tax benefits of why you would want to do some more flexibility. Those have, by and large, gone away. And so the vast majority of people use LLCs. And so instead of having a GP and LP, you have a manager, which is really the GP, and then the members, which are now the LPs. But most people, not most people, a lot of syndicators I've seen use the same entity for the manager, right? That runs the day to day as the owner of class B. So, so they don't, because they're in their minds, they see that as the GP, but really there's a manager, which is really the GP. And then there's the class B interest, your ownership, your carried interest. When you own 20% of the syndication or 30% of the syndication, that is your carried interest. that should be separate because the manager is where all the liability is, right? The liability holds the managers making all the decisions. They're kind of like the board of directors. They make all of the decisions. And so if something goes wrong, you really should be looking to the management company, the manager LLC as the faulty party and asset protection 101 tells us that you want to separate the liability producing companies from your assets, because when that management company gets sued, and when I say management, I'm not talking about property management, I'm talking about your manager LLC. When that company gets sued, and if you're in this business long enough, it's going to get sued one of these days. You don't want that owning anything. You don't want it to own 20% of the syndication, or God forbid, 20% of 17 different syndications, because you've been doing them a lot, right? You want it to own nothing. You want it to have an insurance policy in there, and you want it to have a little bit of cash, right? You're going to need some operating cash, maybe two or three months worth of cash. But any excess cash, you should be distributing that out of the management company into the sponsor ownership. And you should have, ideally, an insurance policy. But If it owns 20% of the syndication and I get a judgment against that manager LLC, well, then I have access to your 20% carried interest. And if you happen to have that in three or four different syndications, well, now I suddenly have access to the carried interest in those syndications. It's very important to separate the manager LLC from the class B, so to speak, the carried interest. That's probably the biggest mistake that I see syndicators make these days from an entity formation standpoint.

Whitney Sewell: Yeah. And I think, uh, you know, when you're first starting, that can seem kind of, uh, redundant, right. Or overly complicated or, uh, whatnot, but that makes complete sense to me when, when, like you said, the, the class B or the GPs are the ones making all the decisions. So if something happens, uh, they're going to be the ones, I mean, they're the ones, the voting rights, like you said, they're going to be sued.

Mauricio Rauld : Yeah. So for me, the class B, it's almost, I think of them as, as passive investors too. It's like, you've got the passive side of, of, um, of the, for the syndicator, right? Cause that's my 20%. Really? Yes. I'm voting to hire the manager, right. And I'm voting to fire the manager, but really it's the, it's the manager that's making all those decisions, right? You've kind of, you, you, you voted in the manager and the manager is going to make the day to day. So if some, somebody makes a wrong call, it really is the manager LLC. And so, for your carried interest for that 20%, you should go back to the episode yesterday, you want to have some sort of entities in there, which are equivalent to the holding company. So you want to have your, that's where you want to have your Nevada LLC, your Delaware, your Texas, those LLCs that are in really good states. And I'll take it one step further. I think it's, You know, we talked about the difference between a single member LLC and a multi-member LLC. Multi-member LLC is having much stronger protection. I think if you have multiple co-GPs in a deal, I would encourage you guys to create an LLC together so you end up having a multi-member LLC. Your protection is going to be much stronger and it's going to be less of a chance for them to actually get to your assets. So if you're partnering with two or three people, I would set up, you know, ABC holdings where the three of you own a third or whatever the percentage is of that holding LLC, which would in turn own your 20% carried interest for the, for the entire thing.

Whitney Sewell: Yeah, that's a great idea. Yeah, great idea.

Mauricio Rauld : You know, one, one, one, one step further. And again, this is we always talk about the different layers to this. And so some have even argued that you may want to have a separate whole, by the way, let me just backtrack. When you put money into the deal, a lot of times sponsors will put in their own money, right, their own cash into the deal, we like to put that alongside the other investors. So we'll put that into the class A. So it's not uncommon for sponsors to own both class A and class B. There's an argument that those two LLC should be different just because on the class A side, you have zero voting rights, but on the class B side, arguably you could say, look, you hired the manager and the manager is the one that screwed up. So you should be on the hook too. So that's kind of next, next level. I haven't really implemented that yet, but I have heard some, some asset protection attorneys advocating, separating that. And again, it's just maybe one other layer or one extra step you may want to consider in talking with your your asset protection advisor.

Whitney Sewell: That's interesting. I was thinking about even the conversation we had in the last show, you know, around this holding company, right? Well, I have a holding company that I invest passively with. And obviously I'm investing in our deals as well. But I consider that a passive investment, you know, into that class a, you know, with the LPs, just like you're talking about, well, my holding company is holding that right. And that's, yeah. That's all it does, right? But it's interesting on the other thought as far as if you have numerous GPs and you create an entity that, you know, then their names aren't really on there, right? It's this other entity that's owning those shares, right? You know, are their GP shares a class B? But what's the difference in that as opposed to, say, all those GPs having their own entities that they own all their, you know, GP classes in?

Mauricio Rauld : It's just that the first line of defense that they would own a single member holding company, right? So if I set up my own holding company separate from my other co-GPs, that's a single member LLC. It's just me as the owner, or maybe me and my spouse as the owner, but that's considered a single member anyway. So then you really have to make sure you're setting it up in a really quality state. But if you live in Atlanta, for example, I'll give you a great example. So you're living in Atlanta, or you live in California somewhere, and you just set up an LLC and it's a single member LLC, those are like the worst state. So if I get into a car accident and I live in Atlanta, Georgia is most likely going to give that creditor my LLC shares and say, hey, Marisa, you owe this person a million bucks. You have an LLC that's worth a million bucks. Give this, turn over your shares over to the creditor. And now I've suddenly lost control. I've lost it. It's gone. Right. Versus if you're in a state that limits your remedy to a charging order. Well, I don't get your shares. I don't get management of your shares. I just get the distributions that you get. With a multi-member, it's just much stronger. Like the majority of states, I think it's 25, 26 of the states extend this charging load of protection to multi-members. So it's just a stronger chance of you surviving that attack if you're in a multi-member LLC versus a single member. In fact, a lot of people advocate to even if it's a single member to try and get somebody in there at 5% or something, a legitimate person who actually invests and is a legitimate 5% owner. But so you can make that a multi-member, because again, multi-members are generally stronger than single members.

Whitney Sewell: you know, let's, before we get too low on time, I want you to be able to talk about asset protection. I know we're talking about that a little bit anyway, but like estate planning, thinking through that, some of that, you know, for the syndicator, as we get into more and more hot deals, right? You know, it's like over a number of years here and really a short period of time, you know, it's like, well, all of a sudden we own lots of those class B shares, right? Or those GP shares across a number of deals, you know, what should the syndicator be thinking about as far as, you know, estate planning, asset protection?

Mauricio Rauld : Yeah, I mean, the book, you know, The Legal Strategy for Everyone, we talk about a lot of things. There's asset protection, estate planning, you know, how to work with the lawyers, you know, a bunch of, you know, how to raise capital. But on the estate planning side, that's interesting, because especially if you have kids, I think the title was something like, don't leave your kids hanging and let the government tell you what to do. Because literally, if you don't have a will, for example, right, everybody should have a will, people think they don't have wills. In fact, I thought a statistic, I think 40% of Americans don't have a will, but that's not true. You actually do have a will. It just happens to be in your state statutes. And so the government is going to tell you, if you die, you know, intestate without a will, they're going to go to the statute and say, well, this is who gets your money. And if you don't have any instructions about your kids, well, now the government, some judge, some, some, some child services is going to have to dictate, well, who, who does it, who do the kids go with grandparents, with your aunt, with your, you know, whatever. So you definitely want to have at a basic level, you want to have a will and ideally a living trust so that you can avoid the whole probate thing to begin with. But one of the things I think from on a syndication site specifically that a lot of sponsors forget to think through is like, well, what if you die? I know it's not something you want to think about actually we call it a demise because it sounds better but what if you die in the middle of a syndication so like who now if you have partners that's fine but if you're the only person that's running your single sponsor person and something happens to you don't have to die you're incapacitated you're in the hospital who is taking over. your responsibilities, because if you don't have, you know, if you don't have a plan that's outlined in the PPM, it's most likely going to default to the estate plan. So again, let's go back to the 20%, right, the carried interest, that LLC or that the owner of that 20%, it generally controls the whole thing. They hire and fire the manager. So if I die without instructions, and now that 20% goes to my family, and now my wife, owns that 20. So now my wife is in charge and she doesn't know anything about syndication, right? You don't know the first thing about running an operation, but now my wife is the person who's in charge. The manager has passed away because I'm also the manager. So now I got to go hire a manager. Is my wife going to be the one to hire the manager and take over that? Or should I have some process in place where, hey, if I die, I'm going to hire, you know, John, I'm going to call Whitney, who's my buddy. And Whitney's going to come over and he's going to take over the management because he's agreed to ahead of time. And we're going to pay Whitney. He takes over the management fees and all that stuff. So having a plan in place, that's all going to be found in the operating agreement of what happens. But if you don't put anything in there, it's going to default to whatever state plan the sponsor has. And sometimes they don't have an estate plan. So literally the state, you're going to figure out, well, who gets that 20 percent control? Because whoever gets that 20 percent control, it's going to control the whole thing.

Whitney Sewell: So wise, think about, hey, even if you think you don't have a will, there is a will for you, right?

Mauricio Rauld : That is true.

Whitney Sewell: If you've not written it down, somebody else has written it down for you. And it's the last thing you want for your spouse as well, right? During that time, as if that time is not going to be hard enough is for them to have to go figure this out. Yeah.

Mauricio Rauld : Yeah. And, and, and, and, and your living trust too, by the way, because especially if you're a real estate investor and you, you have, you know, a lot of us have real estate in multiple States. So we're talking about different stuff. I mean, that, that estate becomes really, really complicated. And if you don't have a living trust where you've spent a little bit of time ahead of time, thinking through that, having an attorney draft a documents, then it's going to go through what's called a probate process. And it might take a year to a year and a half. I mean, most of them won't take that long, but if you've got real estate in multiple States, it could be two years. before your assets get distributed to the people that you and your kids and your wife or however you've decided to do it. So spend the time, spend the money to set up an estate plan, which is not just a will and a living trust, but it's actually, you know, when I did mine, it was actually pretty shocked because I'm not an estate planning attorney. I literally got I think 11 documents, right? Cause it's not just the will and the trust, but it's also your, you know, your medical power of attorney, your financial power of attorney. It's like, cause look, you pass away. You still got to pay your mortgages. You still got to pay your bills. So who has legal authority over your bank accounts? You've got to think through all these things and bypassing that whole probate so that it happens instantly. It just makes you and your family sleep well enough, but also your investors, your investors should know what's going to happen. If you know something terrible happens and that leads to your demise.

Whitney Sewell: how do we find that attorney that can do say living trust or, you know, those, however many documents there that you talked about, we needed, uh, you know, give them a little guidance there on anybody.

Mauricio Rauld : Yeah. So, yeah. So lawyers are like doctors, right? You, you have your general practitioner, right. It is a doctor, but then if you have a heart problem, they're going to send you to a cardiologist, right? If you have this problem, I'm going to send you an orthopedic or whatever. And the same thing with us, like I'm a securities attorney. So I'm the one that helps, you know, folks like you, Whitney raise capital, but I'm not an estate planning attorney. You're going to need an estate planning attorney, uh, to go set up your will and trust. Now, I'll do a little mini plug here but we did, we did form our own separate law firm with with one of our great providers are called premier guardian, and we at that firm we have a state planning attorneys I can set it up so if you guys aren't sure I'll let you know how to get there but it's the estate planning attorney is the type of attorney that you need, not Susie Orman. Not, not, uh, you know, not, uh, what's his other guy's name? Uh, uh, anyway, yeah, not Dave Ramsey is that you need an estate planning and they're not that crazy expensive. They're like three or four grand or something to set it up properly. And you end up with a nice big binder. You end up with 11 or 12 documents. So if you're incapacitated in the hospital, you know, who's going to make the, who's got the authority to make decisions, even just a life, like, do you pull the plug or not? You want to want to have that information. But for me, the most important part was who takes care of the kids? Like, where do you want, especially if you and your spouse die together in a plane or whatever, who gets the kids? Is it your parents, their parents, your aunt, your, your brother, who gets those? And then if you have an insurance policy, right, that's the big one. If you have an insurance policy or you have all of these assets, how do you pass those assets to your kids? Do you just give them a bunch of millions of dollars when they're seven years old and good? Or do you have some plan where you start, you know, you start parsing out some of that wealth, and maybe you put some conditions on it or whatever. But you want to be in control of that. You don't want to leave that up to the government to figure out how that all gets distributed.

Whitney Sewell: Any other big mistakes that you would highlight that you see operators, syndicators make?

Mauricio Rauld : You know, all the other ones, obviously, on the security side. I mean, there's so much going on right now. I think the biggest mistake I'm seeing operators in general making now is is just, it's hard to raise capital. We were talking about this offline, right? It's the transaction volumes down, the investor disputes, it's a hard time to raise capital. And so there's this tendency now for people to start partnering up together and really trying to bring people on to their teams exclusively to raise capital. And you've just got to remember that in order to raise capital for other people, You need a license. It's called a broker-dealer license. Just like you need a law license to practice law or a medical license to practice medicine. In order to raise capital, you need a broker-dealer license or you need an exemption. And most of us, like yourself, I'll give you a great example. The general rule for you is you're raising money for others. You're raising money for your syndication LLC. So you have to either have a broker deals license or you need an exemption and you rely on what's called the issuer exemption. So that's cool. You do all the stuff. You do the underwriting, you do all those substantial duties and you get paid to do the syndication. But the minute you bring in somebody else to just raise capital for you and you give them a share of the GP contingent upon how much money they raise. Now you become a broker dealer or you need a license and you don't have that issue exemption because you're not primarily in the business of running the syndication. You're primarily involved in bringing in the capital. And what everybody forgets is that all of those emails that are going back and forth, Hey, I can bring in this money. Oh, that'd be awesome. I'll give you 5%. No, I want 10%. Okay. But about seven and a half, all of those emails are not privileged. So if this ever becomes an issue and investors lose money and they start doing an investigation, all of those email communications are going to be able to see them. So when you're trying to argue that you weren't brought in to raise capital, but the email say, otherwise you're going to be in a world of hurt.

Whitney Sewell: Yeah. No, I appreciate you hammering on that again. It's always a, always a hot topic for sure. And man, it's definitely, there's been some light shed on that in the last few years, but for sure in a number of ways. So man, well, you know, let's, let's transition a little bit, Mauricio here. You know, and I ask all operators this question and I would love your thoughts because you have a unique viewpoint into the industry as well. But obviously predictions around, you know, the next 6, 12, 18 months, any thoughts? And I say, you know, what I normally say on the show is, you know, none of us have the crystal ball. However, what we think is going to happen reflects what we're doing, right? Or what we're doing reflects what we think. And so, you know, what are your thoughts? What are you seeing, you know, as you work with lots of operators?

Mauricio Rauld : Yeah, we do work. I mean, we probably do 100, 150 of these every year. So we're working with all operators. Transaction volumes are obviously, I don't say collapsed, but I would almost say it collapsed. Now it collapsed about 18 months ago, and it's stabilized now for a while, but it's down about 60 to 70%, which has made all kinds of headaches for everyone. But I'm in the camp that I'm still a little concerned. I still think there's a recession on the horizon. So I don't think all the pain has still made its way through. And so I'm concerned that people are struggling now to make their rent payments or, you know, whatever. If you have a significant recession and you get an employment that's going up, it's going to be harder and harder for those guys to make pay the rent, which is obviously going to affect operators. And there's so many operators in trouble right now because, uh, primarily because obviously interest rates skyrocket and their, their rate caps are expiring. But also a lot of those folks, as you know, Whitney took out bridge debt. So that bridge debt is coming to an end three. It's usually a three year loan. A lot of people have admitted that they thought it was a five-year loan. They thought it was a three-year loan with two one-year extensions, and they're finding out the hardware. They're like, no, no, no, that's at the option of the lender. So all these things are coming to a head. And so there is going to be some opportunity there. I don't think any of those are actually going to see the light of day. You're going to have to have some connections to do it. But I think there's going to be some more pain. I think there's going to be more pain first before it gets better. And I think this is the year where you're going to have whatever's going to shake out. I think it's going to happen in 2024. I don't think interest rates are going to come down significantly. unless there's a dramatic thing. And so if interest rates do get down to like zero, it's not going to be a good thing. It's not going to be like the Fed just like, oh, let's just get it down. It's going to be because there's some, you know, some banking crisis, something that's similar to 08. And that's why interest rates are at zero. But that doesn't mean you're going to be able to go out and get a you know, a 30 year loan or a 15 year loan at a 2% interest rate. So I think there's more pain ahead, but I'm just, I'm just ready for it to happen. Like I hope, I was hoping it would happen last year. I just wanted to shake it out at whatever's going to come. I want it to happen so we can start the new cycle because right now, you know, our practice, certainly, and I've talked to my colleagues and even syndicators, they're just, it's just, they're just, they're just sustaining until that next leg up. And I just, I just hope we get there this year and not have to do that. What are they calling it thrive? ride to 25 or whatever it's called survive till 25 or something. I just want it to happen this year. So we can start towards the end of the year just starting that new cycle, have people come out of the woodwork. You guys haven't made a ton of transaction had to start having you guys make more transactions and start getting back into acquisition mode because right now people are struggling.

Whitney Sewell: What's your best advice for passive investors right now?

Mauricio Rauld : You've got to pay attention more. I mean, back in the day, meaning 12, 18 months ago, like you could throw a dart at whatever. So I think it's even more and more important to do your due diligence on the sponsors ahead of time. That was always the rule. But I think it's even more now that you've got to find out, do this, this and this is opera to have a track record. You know, I saw a statistic not too long ago that said that 70 percent of syndicators had three years or less of experience. I think that's 70% of over the last three or four years, 70% of syndicators had less than three years of experience, which is one of the reasons I think there's a lot of issues going on because they just don't have the experience. They've been going to these courses, they've been studying, and then they get thrown into the wolves. And when things are going great, it's fine. And to be honest with you, it's not that hard to acquire the assets. What's hard is actually asset managing and making sure it works. And I think people are finding it the hard way that it's not just about acquisitions. So as a past investor, I just think it's super important to make sure what's their track record. Have they been through cycles before? Did they go through the 07, 08 crisis? Who's actually going to be asset managing? Do they have experience in the actual asset class? A lot of times people are in the multifamily space, for example, and they go off and they do a self-storage deal. Well, What's their experience in self storage or do they have somebody on their team that's really well versed in self storage, what's your experience in the marketplace you know do they they may have been, they may have made their their their mark in the Orlando Florida market but now they decided to go to North Dakota it's like well what do you know about North Dakota when you know so all of these questions there's a lot of. kind of top questions to ask a sponsor. But I think that's more important than ever because a lot of past investors now are actually more concerned about return of capital than necessarily return on investment because it's tough out there and people are definitely scared. So it's incumbent upon sponsors too to educate their investors and let them know what their track record is and let them know where we are in the cycle and be a little bit more hands-on with the communication and teaching them where we are. But for a past investor, you got to do your homework because once you give up that cash, you've lost all control. All of your work happens before you make the investment during the due diligence period.

Whitney Sewell: What are some of the most important metrics that you track, Mauricio? It could be personally or professionally.

Mauricio Rauld : Well, obviously mine on the professional side, it's a little bit different because I run a syndication law firm. So, you know, my KPIs have more to do about, you know, how many deals, you know, deals per month and revenue per deal and all that kind of stuff. But I track some interesting things on the personal side, too. Like on the financial, for example, I like to track A lot of people like to track their income and their net worth. I like to track the percentage of the expense ratio to how much money you're making, because I think that's the key. My goal is always to get below 50%. If I can live off 50% or less of my income, then that means I can invest the other thing. Eventually, I want to get to a point where I'm spending 10% of my income. That's really my life goal. But right now, I'm trying to get to that point where I'm spending 50% of my income, because then that's like that ratio, I think is the most important part, because it's that that delta between how much you're making and how much you're keeping is that you can then take that those assets or that that excess cash and actually put it into syndications, past investments and the like. And that's ultimately what builds wealth over time. So that's something I track. I also track, you know, how many dates do I get with my wife every week? That's got a goal to do one one a week and we track it and I'm not saying I'm perfect, but you know, you generally get what you focus on. And so little things I got right now, I'm trying, I've got my health kick too. So I'm tracking my body fat percentage. I got to get that down and my VO2 max. So there's a lot of things I like to track, but to your point, I think it's important to track stuff because that is what you focus is actually what happens to you. So if you don't, if you don't focus on it, you don't measure it. It's kind of tough to get ahead.

Whitney Sewell: Love that a number of those there and that you're tracking them couldn't agree more, you know, for your expense ratio there. I love that as well. Kind of a side question here. How do you how do you do you have a third party bookkeeper for your personal expenses as well? How do you kind of manage some of that? Or you do that yourself?

Mauricio Rauld : I don't I mean we have a we have a bookkeeper obviously for the firm, but I probably should have a personal bookkeeper but I've also I've got this mentality where I don't when I say, you know, I kind of didn't say it but you're spending less than you make right but I don't believe in. going out and eating, drinking latte and getting rid of your lattes in the Starbucks. And I mean, I want to expand my income. Like I don't want to reduce my, I want to the rate that I expand my income. I want that to exceed the rate that my expenses are going up. Right. So I want to continue that wedge needs to get bigger, but I'm not going to do it by sucking it up. I'm still going to look at, we went to like, you know, we go to Nobu every so often. I love sushi. And I'm like, that's an expensive day. I'm not going to start clipping coupons or anything like that. Right. I'm going to figure out how do I make more money? So that ratio goes down without having to reduce my expenses. In fact, I'd love for my expenses to keep going up, but that ratio to come down because I'm making way more money than, than my expenses are going up.

Whitney Sewell: So, um, yeah, that's kind of my, yeah, no, I hired a, a, a personal bookkeeper and because I want to know those things as well, but our expenses and, and, but I found too, like, I want them to do the kind of the grunt. bookkeeping. However, it pulls me out of just seeing all the transactions too, you know, as much, which I don't like, you know, as much.

Mauricio Rauld : I mean, we don't, we don't have any crazy, you know, we don't go on a lap and we have a pretty consistent lifestyle. We don't, we don't live a crazy lifestyle. And so I literally every it's like to the penny, like this is how much money goes into this specific account. And we literally, I've just learned that's how much money I know we spend every month. And I don't track, I don't look, I don't really track it. I just know But when those 30 days are up, that number is going down to zero and I got to replenish it with another set. Right. So I have an idea of how much we're spending. So now it's just a question of, well, how much are we bringing in? And that's how I figure out the ratio. And I'm really focused on figuring out, especially on the business side, look, how can we add more value to syndicators? Can we start offering them estate planning and asset protection and tax help and pitch decks and all these other things is what I'm working on. Courses, fund and funds, things so that we can expand the revenue. Because I like to focus on that versus trying to figure out how to save a few bucks by skipping Starbucks.

Whitney Sewell: How do you like to give back?

Mauricio Rauld : You know, we we love charities. We just you know, one of our favorite charities, actually, thanks to my wife, is the Tim Tebow Foundation. I know Tim Tebow has just got an amazing foundation that helps child trafficking. So that's kind of one of our passions. And we just made some some contributions to Tim. So eventually I want to have my own foundation, but it's just so complicated right now. It's really more of a dollar a dollar contribution. But eventually I'd like to get more involved in that and having my own thing. And I've seen a lot of actually a lot of sponsors. And you're among those as well that will have their own their own events, right? And they'll put up their own charities. And I think that's really cool. Right now, from a time perspective, it's really just check writing.

Whitney Sewell: Yeah. Mauricio, grateful for your time again, and even giving back to us today and the syndicators that are listening and even passive investors. But, man, thinking through the entity formation of a syndication can seem quite complicated, but I think you just kind of got rid of a couple of those big mistakes that people are often making today and thinking through, man, those classes. of investors and who has the voting rights and the importance of having an entity or another entity there for those class B managers, right, or the managing entity. And so grateful again for your time. How can the listeners get in touch with you? How can they learn about your book as well?

Mauricio Rauld : Yeah, so the book is Legal Strategies for Everyone. And I set up a website, which guess what it is? LegalStrategiesForEveryone.com. So if you're, I think the book comes out first week of March. So it talks about four or five different topics. And then if you need to get ahold of me personally, just go to AskMauricio.com. And I'm really focusing a lot this year on my YouTube channel. I've got about 300 videos there right now. So pretty much every topic I can even think of is on there. So just Mauricio Rauld is my YouTube handle. And if you get value there, I would love a subscribe because I've got some, I've got some hefty tracking numbers. I got some hefty tracking numbers on the YouTube channel as well.

Whitney Sewell: Thank you for being with us again today. I hope that you have learned a lot from the show. Don't forget to like and subscribe. I hope you're telling your friends about the Real Estate Syndication Show and how they can also build wealth in real estate. You can also go to lifebridgecapital.com and start investing today.