JF2503: 5 Essential Steps to Passive Investing with Seth Bradley

After getting his law degree and opening his own law firm, Seth Bradley decided to pivot into passive investing through syndications. Listen to learn how Seth used his law degree to get his foot in the door with investing, how he was able to add value to GPs with little real estate experience, and his expert opinion for anyone that might be on the fence about further education.

Seth Bradley Real Estate Background:

  • Real estate attorney and founder of Law Capital Partners
  • 8 years of real estate experience
  • Portfolio consists of residential properties, flipping, and currently focused on passive investing through syndications
  • Based in San Diego, CA
  • Say hi to him at: https://www.lawcapitalpartners.com/ 
  • Best Ever Book: Pre-suasion

 

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TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners, and welcome to the Best Real Estate Investing Advice Ever Show. I’m Theo Hicks and today we’ll be speaking with Seth Bradley. Seth, how are you doing today?

Seth Bradley: Doing great, man. How about yourself?

Theo Hicks: I’m doing well, thanks for asking. And thanks for joining us today. Looking forward to our conversation. A little bit about Seth — he is a real estate attorney and the founder of Law Capital Partners. He has eight years of real estate experience and his portfolio consists of residential properties. He’s also flipped, and he is currently focused on passive investing through syndications. He is based in San Diego, and his website is https://www.lawcapitalpartners.com.

So Seth, do you mind telling us some more about your background and what you’re focused on today?

Seth Bradley: Absolutely, man. Thanks again for having me. I’m a journeyman of sorts. I started out thinking I wanted to be a doctor, and I went to med school a bit and wasn’t into it, and made the hard decision and walked away. I ended up getting my MBA, followed by my law degree… So I’ve done the entire gamut of graduate school. So if anybody needs advice on that, I’m the guy.

But a little bit more about my background — I grew up in West Virginia, a really small town, the bluest of blue collars. My dad was a coal miner, my mom was a grade school teacher, and I was just never really exposed to entrepreneurship or owning real estate other than your own home. It just wasn’t part of my life. And I tell this because I think a lot of your listeners can resonate with it. But I just started thinking, “What’s the best job that I can get?” And to me it was becoming a doctor. So I went down that pathway for a little bit. And then the next one when that didn’t work out, because I didn’t enjoy it and I knew I didn’t want to do that. It was okay, “Well, I’m going to be a lawyer,” and that’s just kind of a segue into kind of how I started in the real estate. But I did have a couple of a-ha moments while working in big law.

The big one for me was just seeing these older partners that were still plugging away, they’re 70 years old or more, or late 60s, whatever, and they’re still in the office, they are still billing 2,000 plus hours, they got their administrative duties, all that kind of stuff. And I just start asking myself, you know, why are they still there? Why aren’t they at home or on vacation? They made a ton of money, why aren’t they doing something else? And it’s just because I just realized that they’ve become married to their jobs and that’s all they know, and I just didn’t want to end up like that. Even though they’re very well off financially, I think they just missed out on a lot of stuff in the meantime with their relationships and with their experiences.

Theo Hicks: So your focus is currently on passive investing, or you are still doing the residential properties and flipping as well?

Seth Bradley: Mostly active and passive syndication. I’m still doing some flipping on the side, but I’ve transitioned out to my own law firm and I work for myself now. When I was still working at those big firms, I saw that these developers, these big developers, they were putting together these hundred-million-plus deals, they weren’t Donald Trump or the Prince of Wales or something.

Theo Hicks: Yeah.

Seth Bradley: They were just regular guys, you and me, right? I was like, “I can do this. I can be the principal on a deal.” And I’d rather be on the business side, that’s what interests me. So that’s when I started thinking, “How can I start building passive income?” And I started going down that residential path and buying rental properties and rehabbing them and doing flipping and wholesaling, all that kind of stuff, that pathway that most people make. Eventually, that kind of led me down the pathway of “We’ve got to scale, we’ve got to take this to the next level”, so I started investing passively in some syndications. And now I’m investing actively as a GP on deals.

Theo Hicks: Great. Thanks for sharing all that. So do you believe that your passive investing in syndications has helped you become a better GP, or do you think it’s possible or better going straight to being a GP, or would you recommend that people took your path, which is passive investing first and then becoming a GP?

Seth Bradley: Yeah, I always recommend to passively invest first. Even if you’re the type of person that has invested in single-family or smaller properties, and you have some experience, I suggest at least doing one investment passively. And maybe do it with someone that will kind of lift the curtain for you, let you see what’s behind… And just kind of getting a feel for those types of deals and the magnitude of the deals and the work that goes into it before you go on the active side. You can jump straight to active, I know a lot of folks that are my friends that have done it, but I think the best way is to invest passively first, see how that goes, see if it works out. And if you’re a highly paid professional, try to do it on the side.

You may find that passive investing is better for you, because you’re like, “Oh, I can get really good returns just investing passively and I don’t have to do all this other stuff.” So I highly, highly recommend investing passively first before jumping into an active GPDO.

Break: [00:05:10] to [00:07:12]

Theo Hicks: Another question I have on a similar line is that — you mentioned that you can get a feel for what it takes to do a deal by passive investing; if someone is willing to give you that kind of behind the scenes look, so as a passive investor looking at sponsors – can you maybe be a little bit more specific, what specifically would a passive investor want to see a GP do for them, in a sense? How do I find a sponsor who’s going to give me the passive investor enough of behind the scenes look, that I can get enough information to become a GP, as opposed to just getting the emails and that’s it? Does that make sense? How do I qualify them to make sure that they’re the right GP who’s going to give me enough information that I can learn enough about the process, so that I can become a better GP myself? Or is it just really any GP is fine, you can invest in anyone?

Seth Bradley: It’s tough, man. You’ve got to have a conversation with them. Just ask them straight out, “Hey, I’m actually interested in being on the active side at some point in time, can you just include me on some emails, include me on some things? If you’re going to visit the property in a couple of weeks, can I join you? Can I walk the property with you?” See if they’ll let you visit with them, have a conversation with them. There’s only so much they can do. They’re busy people, we’re busy people, we can’t just give all this information for free all the time, because we’re just so busy trying to operate the properties, because there’s so much that goes into it. But they just kind of at least give you a little peek behind the curtain and let you visit the property with them. Maybe send you a few pointers here and there, like, “Hey, we’re looking at this in our due diligence, this is why”, and give you kind of the how rather than just the what; that’s enough to kind of get you started… And then just ask questions. Even when you get kind of those monthly updates on the property [Inaudible [00:08:52] you’re an investor, you invested some money into it, they owe you just a limited time at least to shore up some of the things that you might not know about and you might be able to learn on the internet.

Theo Hicks: For your active GP site, is it just you or is it a business partner?

Seth Bradley: Right now, it’s just me.

Theo Hicks: Perfect. So have you done any GP deals yet actively?

Seth Bradley: Yeah, I have. I’ve done three deals mainly as a legal liaison of sorts; those are the services I offer, because I’m a real estate attorney by trade. So I don’t want to be the main real estate attorney on the deal. But what I can do is kind of serve as, quote unquote, “in-house counsel” for the direct operators and say, “Let me manage the real estate attorney. Let me review their materials, the negotiations they’re doing, review the SEC materials and work with the attorneys and make sure that they’re doing their part and that you’ve got a second set of eyes on it”, as well as all the other stuff that goes into it, and the due diligence, investor relations, raising some capital, all the stuff that goes into a syndication.

Theo Hicks: Okay, so on the GP side, you said you’re also raising capital and doing other things as well?

Seth Bradley: Yes.

Theo Hicks: Perfect. So that’s interesting, about the lawyer part. So if I’m like listening to this and I’m a real estate attorney, and I want to get into being an active GP, what should I do? How did you meet these people? How did you present yourself to them? How did you get yourself on board on these GPs?

Seth Bradley: That’s the thing, that’s the beauty of the law degree – you can do a lot with it, even if you don’t want to practice law; get good at your practice, especially if it’s something you’re interested in, like real estate or corporate law or going into business, startups, things like that… You can get your foot in the door in a lot of places… Maybe you don’t even belong. I feel like I belong. I can speak the talk, I know the talk, I’ve closed these deals tons and tons of times from the legal side of the table, buyer and seller side, but you just have to get out there and network, man. There’s so much networking going on through LinkedIn and through these webinars and through online meetups right now. It’s really easy to do, especially nowadays, because it’s all on, you don’t even have to travel to it, you can make those better connections in person. And as soon as travel picks back up, we’ll do that. But right now, it’s pretty easy to take advantage of just your networking opportunities, getting yourself out there and just kind of [unintelligible [00:11:03].16] yourself in the real estate world.

Theo Hicks: Can you tell us the story about how you found the first GP and how that worked itself out?

Seth Bradley: Yeah, it was really—I started talking to GPs, talking to these investment groups, signing up for their newsletters, signing up for their deals, reviewing their deals, looking at them. When I felt comfortable enough to where I could speak the language to them, and be like, “Hey, I’m thinking about investing in this deal passively.” And then I just kind of started forging those relationships. Then I would invest passively in a deal, and then I would start a relationship before that. So like I said before, I would ask questions. When you get to distribution checks, when you get those monthly emails, to get a feel for what the syndicators actually do behind the scenes before closing and after closing, and then just forge those relationships. And then eventually, you can just get invited into the deal and you can start providing value and show that you can add value to their team.

Theo Hicks: How did you specifically show them that you could add value? Did they know that you’re a lawyer and they came to you and said, “Hey, can you help us out with these things?” Or did you proactively say, “Do you guys need an in-house lawyer to help you review your documents?”

Seth Bradley: Yes, that’s actually specifically what I did. I said, “I do this for a living.” I said, “Let me look at the purchase contract. Let me look at the LOI before you send it out. Let me look at the title. Let me take a look at it. Let me get a second set of eyes on there for you.” Every attorney is going to look at these things differently and it doesn’t hurt to have another attorney on your team to look at the negotiations and see that you’re getting a fair shake.

Theo Hicks: That’s super interesting. Because we always talk about on this show how to get started in the industry; in syndications it’s really just finding out a way to add value. And so thank you for sharing that, because as you just mentioned, you learn the process, you figured out where you could be uniquely valuable, and then you just offered to help. So did you offer to help and then eventually they came back and said, “Hey, do you want to be a GP in the next deal, then we’ll give you a cut?” How did that work?

Seth Bradley: Yeah, pretty much. It was kind of a deal that I was investing passively in first, and I said, “Hey, if you want me to take a look at the purchase and sale agreement, I’d like to take a look at it for my own experience first of all”, and then I just provided some comments back to them and said, “Hey, you should look out for this, you should look out for that. Just make sure your attorney’s doing this, checking this box and doing that.”

And then on the next one, that’s when it’s kind of like, “Well, you’ve got a deal coming down the pipeline. I can do these services for you, I have some investors, I can bring them to the deal, or whatever else I can help out with. Next time you visit the property, let me know when you’re doing it, I’d like to come visit with you” and just kind of engulf yourself in it and just show how you can provide value.

Theo Hicks: And then you don’t need to go into super specifics if you don’t want to, but when you’re negotiating with the GP about what equity share you’re going to get, did they come up with a number and you’re like, “Okay”, or did you go to them with a number? Or was it kind of a back and forth to figure out what would be best?

Seth Bradley: For the first one, you’re just trying to get into deal. Most people will try to get in by just raising capital and Investor Relations and providing some due diligence, things like that. And there’s usually kind of a set amount; there is a set amount. For me, I’m just trying to get involved; that first one is — I don’t even care if I get paid. Really, I just want to be part of this deal; so let me get my foot in the door, and then from there, on the next one, that’s when you really realize where your value is and you can put an equity percentage on it.

Theo Hicks: Pivoting just slightly… So you said that you’re passively investing, you’re now starting to attempt to activately invest, and you said you’re still kind of doing some of the flipping on the side, but then you’re also a full-time attorney. So what are your weeks look like? How are you spending your time? How are you making sure that you’re focused enough on each of these different areas to be effective?

Seth Bradley: I’ve been able to scale down my real estate attorney practice; I’m not full-time at this point. I have phased down to about 10 billable hours a week, which for the attorneys out there know that that’s really low. It pays the bills, that’s where I want it to be. I’m not trying to grow that business. I serve as outside General Counsel for a real estate development company, and that’s pretty much as far as I go with that. So there’s limited hours in a day; I try to make sure that I schedule everything and put it down on paper and set my daily goals so that I accomplish the big things first, and then whatever else gets done in a day, it gets done.

But my time is also very important to me, my free time; my time with my wife and enjoying life. That’s why I said you take the big rocks, you fix those first, and fill in with what you can. But for me, it’s all about trying to develop and build this passive income stream so that you don’t have to work all these crazy hours all the time.

Theo Hicks: And then last question, you mentioned how you were in med school, then MBA and then law degree, so you said that you’re kind of the go to guy for advice on further education. So I know a lot of people in this industry — and actually you talked about how you don’t need to go to college, you started doing real estate immediately. What are your thoughts on that? Are you happy that you went through all that schooling? And you’d recommend that if someone is young and is considering it, they should? Or would you say, “Skip going to law school, skip getting an MBA and just start getting after it?

Seth Bradley: Yeah.

Theo Hicks: What are your thoughts on that?

Seth Bradley: I don’t have any regrets. I think you become the person who you are by experiencing the things you experience; no regrets. [unintelligible [00:16:03].10] school for a year a little bit longer. That was probably a waste for me; but getting my MBA, learning that stuff, getting my law degree – I don’t regret that at all. And that has opened so many doors for me, helped me grow as a person, and for other people looking at those things — and it’s funny, because I’m going to teach my kids the same thing. If you’re an entrepreneurial person and you can see that that’s your thing, like “I want to build businesses, I want to buy real estate”, you probably don’t need to go to college, you probably don’t even need to go to undergrad, to be honest with you. So you just kind of have to do some inside reflection and see if you’re that type of person. But if you’re not, then there’s nothing wrong with going to college and figuring it out.

Theo Hicks: I agree. Thank you for sharing that. Alright, Seth, what is your best real estate investing advice ever?

Seth Bradley: I would say finding a coach or finding at least a mentor. It doesn’t have to be a paid coach, it can just be somebody that takes you under their wing. I was one of those people for a long time that said, “I’ll do it myself, I don’t need to help. I can do it on my own.” But getting a mentor or a coach, whether it’s paid or not, it just really accelerates the process. And it keeps you accountable. For those of us that kind of put stuff off and procrastinate, and they have full-time W-2s, it just really keeps you accountable.

And another thing that people don’t always talk about – it opens up their network to you. If they’re already in a place that you want to be, they’ve already surrounded themselves with people that you want to surround yourself with. So being close to them opens their network up to you.

Theo Hicks: How did you find your mentor?

Seth Bradley: I actually paid for my mentor. Again, I waited a really long time. Like I said, I felt like, “Oh, anything that they teach me, I can learn on the internet and watch some YouTube videos and figure it out myself.” And a lot of that stuff, I did. But man, once you get a mentor – again, it just accelerates everything. And I found mine just through networking; networking on LinkedIn, on social media, in-person, all that kind of stuff, talking to people, asking around and then finally deciding on someone.

Theo Hicks: Alright, Seth, are you ready for the Best Ever Lightning Round?

Seth Bradley: Let’s do it. Okay, first, a quick word from our sponsor.

Break: [18:09] to [18:41]

Theo Hicks: Okay, Seth, so what is the best ever book you’ve recently read?

Seth Bradley: I recently read Pre-Suasion by Robert Cialdini; a really interesting, deep dive into psychology of how words and visualizations can influence you [unintelligible [00:18:54].05] So it just makes you keenly aware of what’s going on around you a little bit more.

Theo Hicks: If your business were to collapse today – I guess in this case  businesses – what would you do next?

Seth Bradley: I’d probably start a new one. I’ve got the entrepreneurial bug at this point; I would just start a new business. But like you mentioned, I have multiple businesses; so that’s the key, is to build multiple streams of income so that you’re not dependent on just one stream. Like, a lot of W-2 people are. If one fails, we’ve got more.

Theo Hicks: What’s the best ever way you like to give back?

Seth Bradley: I find myself helping two types of people at this point pretty frequently. One, you kind of alluded to earlier – kind of helping young folks out there. They’re either in law school, or maybe they’re thinking about going into law school, and I just lend an ear to them to provide advice on career path, where it’s going to take you, what do you need to do. If you go to law school and if you get in a top 10 school, maybe you can get that dream job you wanted. If you don’t get in one of those schools, maybe you won’t; maybe you’ve got to finish in the top 10% your class to get one of those jobs, and people will tell you that, “[unintelligible [00:19:59].06] been through it.” They just say, “Oh yeah [unintelligible [00:20:01].16] Go to law school. It’s great.” But you’ve got to know the realities of it and figure out your goals.

And the second person that I usually have been talking to lately are other attorneys, and that’s what I focus on on my podcast, Passive Income Attorney Podcast. I don’t think I’ve mentioned that yet. I’m just doing my best to step out of my comfort zone by doing things like this, these interviews I don’t normally do, and to tell my story to other attorneys, how to buy back their time.

Theo Hicks: And then I guess natural segue, what’s the best ever place to reach you?

Seth Bradley: I’m on all social media platforms. Just look me up, Seth Bradley. Again the podcast, The Passive Income Attorney Podcast at https://passiveincomeattorney.com/. And last, I’d love for your listeners to grab our new cash flow calculator. It’s a spreadsheet that lets you calculate and visualize how to buy back your time. So you can go find that at https://intelligentpassiveinvestor.com/.

Theo Hicks: Well, Seth, thank you for sharing that resource and sharing your best ever advice with us today. I really enjoyed this conversation. I liked how we took a deep dive into, specifically in your case, use your law degree to get into syndications. And also, in a sense, how to be a passive investor and get into active syndications. And it really ultimately comes down to knowledge, using your time as a passive investor to get an understanding of how the process works, so that you can identify based off of your investigations and what you do, what you’re good at, how you can add value, in a sense for free, to a sponsor, with the end goal of ultimately learning more, but also getting on the GP. So for your case it was specifically a law degree, but people who are listening can kind of use the same concept on themselves. We’re always talking, as I mentioned before, about adding value for free if you want to get like a mentor or start working with someone for new, and so I really appreciate you sharing your example with us today. Very helpful.

And we also got to talk a little bit about time management, your thoughts on further education, and then your best ever advice about the advantages of a coach or a mentor. So Seth, I really appreciate it. Thanks for taking the time to speak with us today.

Best Ever listeners, as always, thank you for listening, have a best ever day and we’ll talk to you tomorrow.

Seth Bradley: Thanks, Theo.

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