When investors think of diversifying their portfolios, the immediate thought often veers towards stocks and bonds. However, as markets evolve and become increasingly volatile, alternative investment strategies are gaining traction among savvy investors. The podcast episode featuring Thomas McPherson, led by Jay Conner, provides valuable insights into how real estate and private lending can serve as powerful tools for financial growth and stability.
The Value of Private Money
One of the key themes discussed in the episode is the role of private money in real estate investments. Unlike institutional financing, which can be laden with complex processes and stringent requirements, private money offers flexibility and a more personal touch. Tomas McPherson emphasizes the advantages of using private funds, which often result in uncorrelated returns compared to traditional stock investments. This aspect of diversification is crucial, especially in uncertain economic times.
Lukrom I Fund: A Case Study
Tomas McPherson outlines the workings of the Lukrom I Fund, a private money loan fund dedicated to real estate investors. The fund is heralded for its conservative approach, aiming for consistent and reliable monthly income. With a Loan-to-Value (LTV) ratio of 52%, the fund provides a layer of safety for investors, safeguarding their interests unless the market experiences severe declines exceeding 65%.
Investors in the Lukrom I Fund can expect returns between 7% to 10%, which, while modest, are stable and less prone to market fluctuations. The fund’s “first loss commitment,” where owners absorb losses up to $5 million, further underscores the alignment of interests between fund managers and investors.
Expanding Horizons: Aggressive Lending and Opportunity Zones
Beyond the Lukrom I Fund, Thomas McPherson introduces the concept of more aggressive investment vehicles, such as the soon-to-launch Lukrom Mending Fund. These funds offer higher pay rates but also carry increased risk, which is suitable for investors with an appetite for bolder endeavors.
Moreover, opportunity zone projects are highlighted as significant undertakings for long-term wealth accumulation. Thomas McPherson’s involvement in over $100 million worth of these projects showcases the potential of strategic real estate investments. Opportunity zones provide tax benefits and encourage investments in economically distressed communities, aligning financial gain with community development.
Building Trust and Confidence
Another intriguing discussion in the episode revolves around the psychological aspects of investing. Thomas McPherson recounts his challenging trek—a metaphor for the investment journey—emphasizing the importance of self-belief and validation from supportive networks. His advice of “gathering positive affirmation” and engaging in personal interactions rather than relying solely on digital tools resonates deeply in a world brimming with virtual connections.
Educating Investors: A Shared Goal
Jay Conner’s approach to attracting private lenders through education, rather than solicitation, was another focal point. By teaching prospects about private lending and the nuances of self-directed IRAs, investors are empowered with knowledge that shapes their financial journeys.
Both Thomas McPherson and Jay Conner stress the importance of relationships based on trust. Personal connections, whether established through investor dinners, unique networking strategies, or shared interests, form the backbone of successful investing. This emphasis on relationship-building is integral to sustaining long-term partnerships.
Conclusion: Embrace the New Era of Investing
The insights shared by Thomas McPherson and Jay Conner are not just about embracing alternative investments but also about reshaping how we think of risk, trust, and community involvement in our financial endeavors. As more investors seek to navigate beyond the traditional confines of stocks and bonds, private money and real estate investments offer promising pathways to sustainable growth and financial independence.
Embrace these strategies, understand the risks and rewards, and build your financial future with confidence and integrity.
10 Discussion Questions from this Episode:
- In what ways does Thomas McPherson’s background in the Navy and real estate contribute to his approach to investment and raising private money?
- How did Thomas McPherson’s experience of losing trust in conventional investment systems in 2008 shape his current investment strategies?
- What are the benefits Thomas McPherson sees in private money over institutional money, and how does this perspective align with Jay Conner’s views?
- What strategies do Thomas McPherson and Jay Conner use to attract private investors without directly asking for money?
- How do Thomas McPherson’s investor appreciation events and private dinners contribute to building trust and attracting new investors?
- Discuss the significance of aligning incentives between the investor and the fund manager, as mentioned by Thomas McPherson with his first-loss commitment.
- How does Thomas McPherson ensure trust with his investors, particularly in terms of investment risk and potential losses?
- How does Thomas McPherson leverage personal interests, such as aviation, to connect with potential investors?
- Discuss Jay Conner’s approach to teaching potential investors about private money and how his method differs from traditional investment solicitation.
- Considering the financial strategies discussed, what are the risks and rewards of shifting from traditional investment vehicles to alternative assets like those managed by Thomas McPherson?
Fun facts that were revealed in the episode:
- Lukrom I Fund’s Safety Net: The Lukrom I Fund has a unique “first loss commitment” where the fund’s owners absorb losses up to $5 million before impacting investors’ money. This structure provides an added layer of safety for investors.
- Building Connections with Style: Thomas McPherson uses creative approaches to make connections and stand out at events. From unique personal styles like a mohawk to metal business cards, he knows how to leave a memorable impression.
- Physical Feats and Real Estate: In addition to his financial acumen, Thomas McPherson shared a personal story about completing a grueling 40-mile trek at 5,000 feet. This challenging endeavor took 14 hours, highlighting his determination and resilience, traits that likely serve him well in his investment strategies.
Timestamps:
00:01 Phoenix Private Capital & Distressed Debt
03:27 Real Estate Investing Insights
07:34 Private Money vs. Bank Loans
12:43 Seeking Success with Service Mindset
14:46 Wise Caution for New Entrepreneurs
17:46 Building Trust After Financial Loss
21:59 Metal Business Cards Elevate Networking
26:43 Conservative and Aggressive Investment Funds
28:50 Connect with Thomas McPherson:
30:29 Military Memories and Business Reads
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Diversify Your Investment Portfolio: Insights from Thomas McPherson on Alternative Assets
Jay Conner [00:00:01]:
Welcome to another amazing episode of Raising Private Money. I’m Jay Conner, your host, also known as the Private Money Authority. Welcome to the show. This is the podcast where we talk about how to raise private money for your real estate deals, actually, without ever having to ask for money. Well, my guest today in his career, he has raised over $100,000,000 in private money from private investors, and he’s gonna pull the curtain back for us in this episode. You’re gonna be amazed at how he and his team have gone about raising private money for his real estate deals. Well, not only is he a real estate entrepreneur, but he is also a US Navy veteran. Now he began his real estate career as a broker with Sperry Van Ness, and he won their national rookie of the Year Award back in 02/2010.
Jay Conner [00:01:01]:
Well, in 02/2012, a couple of years later, he founded a company called Phoenix Private Capital Group. And the reason he put that together was to focus on improving underperforming real estate assets throughout Arizona. Now at that company, at Phoenix, he participated in purchasing and repositioning value-added multifamily, office, retail, all kinds of real estate assets, and industrial properties all across Arizona. Now, how did he do this? Well, this was accomplished by buying properties either by short sale or auction, bank-owned, or conventional sales using personal capital, private lender money, banks, and raising equity. Well, fast forward to a few years ago in 02/2019, he took note and realized that the real estate prices, and didn’t we all know this, in 02/2019, were sort of eclipsing pricing records set before the Great Recession. Well, he’s got the spidey sense, and he saw an opportunity to help homeowners, lenders, and investors. And if and when the market corrected, he cofounded this particular fund called the Due or the d o income fund, and that’s a distressed debt fund that purchases underperforming and nonperforming loans originating by private lenders across the country. Now, since then, he and his team have transacted on hundreds of loans from Washington to Florida across a very broad spectrum of property types.
Jay Conner [00:02:42]:
In just a moment, you’re gonna meet my very special guest, and we’re gonna pick his brain on raising private money, Mr. Thomas McPherson, right after this.
Narrator [00:02:54]:
If you’re a real estate investor and are wondering how to raise and leverage private money to make more profit on every deal, then you’re in the right place. On raising private money, we’ll speak with new and seasoned investors to dissect their deals and extract the best tips and strategies to help you get the money, because the money comes first. Now here’s your host, Jay Conner.
Jay Conner [00:03:21]:
Well, hello there, Thomas. Welcome to the show.
Thomas McPherson [00:03:24]:
Jay, thanks so much for having me.
Jay Conner [00:03:27]:
I’m so excited to have you. My lands, over $100,000,000 in private money and private investors. And so on today’s show, Thomas, I want you to and I want you and me to speak to both segments of our audience here on the podcast. We’ve got real estate investors that are looking to raise private money for the real estate deals, and we have another segment of the audience that are people that are just interested in being passive real estate investors and just wanna collect high rates of return safely, you know, securely, and have a reliable rate of return without having to go out and negotiate deals. So first of all, let me ask you this question. How are you qualified to talk about what you’re gonna talk about?
Thomas McPherson [00:04:16]:
That is probably the best question that you should always lead out with. I have been in real estate now for over seventeen years. Bought my first property in 02/2008. I’ve got considerable experience as both a broker on the multifamily commercial side. I got into buying distressed debt from banks and special servicers in the great recession, in addition to new properties, all kinds of property types as you outlined earlier, multifamily, office, industrial, retail. I’ve built from the ground up several very large projects. The largest one to date is over $44,000,000. We won the sustainability project of the year out here in Arizona for that project.
Thomas McPherson [00:04:55]:
So, you know, I’ve got quite a bit of experience from brokerage to raising private money to doing deals, development, repositioning quality assets, as well as in the private lending and distressed debt workout space. And in addition to that, some leadership experience in the Navy.
Jay Conner [00:05:13]:
Wonderful. Thank you for your service, by the way.
Thomas McPherson [00:05:16]:
Thanks for paying taxes.
Jay Conner [00:05:19]:
Absolutely. Absolutely. So, you mentioned different types of asset classes. You mentioned multifamily. Have you done multifamily, new build, or has it all been like, you purchase existing multifamily and add value to cash out a few years down the road?
Thomas McPherson [00:05:41]:
That was my strategy for the first ten years in the business, and I have since pivoted to adding development, ground-up new construction into what we do. I’m passionate about, you know, buying, owning, and operating quality assets, something that you know where all the skeletons are hidden, and you get to do that in a new build. So we do both. I like both for a variety of reasons. I think that the development risk when you’re, you know, buying and building new construction is substantially higher. And you also have opportunities to earn higher rates of return. So, we do both to answer the question.
Jay Conner [00:06:16]:
Right. Any other commercial-type projects other than multifamily?
Thomas McPherson [00:06:22]:
I have done retail, large retail experiential centers, office centers, and industrial. You know, right now, we like industrial, small, medium-sized industrial. In the Arizona marketplace, we’re seeing a lot of industrial activity as well as multifamily. Our population is continuing to grow at a very rapid rate, so housing is a big need here for us in Arizona.
Jay Conner [00:06:45]:
Have you ever invested in single-family houses?
Thomas McPherson [00:06:48]:
I have, and we do. We have quite a few loans that we make, with our private credit fund, and I have also built single-family houses and flipped fixed and flipped and bought many of those as well. But my primary love is in commercial real estate. It’s for me, relatively speaking, the same amount of work just with a few extra zeros.
Jay Conner [00:07:10]:
Hey. A few extra zeros. Nobody minds a few extra zeros. Right?
Thomas McPherson [00:07:14]:
That’s right. And not only that, but you know, everyone always tries to say, hey. Add a zero. I say add a comma.
Jay Conner [00:07:19]:
Oh, that’s even better. That’s even better. So let’s dive in and talk about raising private money. First of all, why private money and not just keep it all institutional?
Thomas McPherson [00:07:34]:
Well, I’m a big fan of what you said because I’ve had to do this before. I go and I beg and I borrow and I plead with the banks to give me money and, you know, they want my firstborn. They want a blood sample and everything else under the sun. And I swear their fundamental, you know, basis is to start with no. They wanna just tell me why the loan’s not going to work, and I have to beg, borrow, and plead to get them to do that loan. Private money is so much easier in the sense that, you know, folks understand what you’re trying to do here, and they’re willing to participate and help drive forward my investment goals, their investment goals, and do some good in our community. So I think it’s a great way to diversify investors from the stock market, more traditional investments, and earn a fantastic yield that’s very uncorrelated to traditional returns and not nearly as volatile.
Jay Conner [00:08:26]:
Yes. Yes. No begging, no chasing, no pleading, no pulling up your skirt for them to look at your pssets
Thomas McPherson [00:08:35]:
Yep.
Jay Conner [00:08:35]:
And etcetera. Yeah. My experience as well as private money is just so much easier, so much easier, so much quicker. I have 20 reasons why I love private money over institutional money, but we won’t dive into that right now. The main reason I like it the best, Thomas, is as an operator, it just really puts me in the driver’s seat. You agree with that?
Thomas McPherson [00:09:01]:
100%. Yep. 100%. It’s we have much more discretion. You have to, you know, be a good steward of those people’s money, and that is incredibly important to me. You know, one of the things I learned in the military was that alignment creates all of the right decision-making processes. And so one of the things that I’ve focused on is making sure that I’m taking risks along with all of my investors. As a matter of fact, in my most recent investment fund, I’ve subordinated my entire investment to all of our investors so that if we ever take losses, I lose my money first so that my investors know we are completely aligned from a risk standpoint.
Thomas McPherson [00:09:43]:
I do not want them to lose a penny. It means I’ve lost over $3,000,000. From a reward standpoint, the other way that we get good alignment is that our investors get paid their entire preferred return before we’re compensated. So with that private money side, I think you have much more discretion and a much higher kind of threshold for fiduciary duty.
Jay Conner [00:10:03]:
Well, that’s powerful when you’re able to pay back your private lenders, your investors, first before you and your company get your money. That’s what I call putting your investors first.
Thomas McPherson [00:10:17]:
Well, I’m sure you’ve seen this in your decades of experience in the industry. I see some funds and and and fee structures that are, you know, borderline predatory. You know, multiple fees going into a deal, acquisitions, underwriting, disposition fees, management, they take part in the commissions. And it gets egregious in my, you know, kind of humble opinion. So I think that I’ve got a, you know, philosophy that was passed down to my grandfathers, both of them. And they said, you know, take care of your customers, your clients, your community, your employees, your vendors, everyone else, and the money will take care of itself.
Jay Conner [00:10:57]:
Yes. My philosophy on raising private money from our private lenders is teaching, leading with value.
Jay Conner [00:11:09]:
Leading with a servant’s heart, and teaching people who don’t even know anything about this world. And I don’t even associate a deal with it in my initial conversations. And interestingly enough, Thomas, so compared to you, my operation is much smaller. I’m only working with about $10,000,000 that we rotate from single-family house projects to single-family house projects.
Thomas McPherson [00:11:35]:
That’s great.
Jay Conner [00:11:35]:
And we have 47 private lenders that are funding all of those projects and deals. And what’s interesting is that not one of these 47 people had ever heard about private money or private lending until I put on my teacher hat and started teaching them about this world of private money. And I taught them about the world of self-directed IRAs and how they can use retirement funds. So that’s sort of a 50,000-foot view as to how I go about raising and attracting private money without ever asking anybody for money. You know, I tell people, I mean, some new capital raisers will say, I’ve got a fear of rejection. And I answer that fear with a question and that is, how can someone be how can you be rejected if you’re not asking anybody for anything? You’re you know, you’re exposing them to this world. And so that’s sort of my outlook, my philosophy on attracting versus chasing. How would you describe your philosophy of attracting private money and not having to chase it?
Thomas McPherson [00:12:43]:
I love and I’ve watched a handful of your other podcasts and your shows, and I love the magic phrase, as you call it, which is I need your help. I think that is just such great positioning, coming to and bringing value to the table first and foremost, and just sharing investment opportunities. You know, you look at an extremely affluent investor group like Tiger Twenty-One. You have to have net investable assets, I believe, of 20,000,000 to meet their criteria to become a member. And only, I believe, around 29% of folks in Tiger twenty-one, only 29% of their portfolio is held in publicly traded equities. The vast majority of their holdings are in what we would call alternative assets in the space that you and I play in. So I think it’s important to do what successful people do if you want to get what they’ve got and emulate them. And so by leading, as you said, with a a service based mentality and trying to add value, be an educator, you become the authority in the space, and you truly are helping these folks sleep better at night, accomplish their financial goals, and do so in a way that meaningfully helps a lot more stakeholders.
Thomas McPherson [00:13:59]:
And so everything that you just said, I am in total agreement with, and I think educating and then asking not for money, but for help. And leading with that is the best way to do it.
Jay Conner [00:14:11]:
Well, for some reason, I thought we were gonna be in alignment, Thomas. So I’m glad my spidey sense was correct. Now my guess is you and I have got something else in common. And that is when we first started raising private money and private capital, we learned some lessons at the very beginning, and along the way, maybe we shouldn’t go about it like that type of thing. So, did you have any challenges at the beginning and any lessons learned that you’d like to share?
Thomas McPherson [00:14:46]:
A couple. You know, marketers and advertising folks will always sell you the moon. So I would just, you know, caution folks into believing anything that marketers and advertisers out there will tell you about being able to get leads and grow your brand. You know, you just want to, again, start with driving value and talking about things that you’re very knowledgeable about, and I think that’s a great way to start. I would always caution folks, you know, be a little bit more conservative in your first couple of deals when you’re taking on your first few investors. Because the last thing that you want is to do a deal that goes sideways and takes a whole lot of time, energy, and effort, and puts a bad taste in your mouth and the and, you know, in the mouths of your first few investors. So be a bit more conservative starting. But the last thing is, you know, believe in yourself, believe in your abilities because there are people out there who know far less than you, and you will be the expert in the room.
Thomas McPherson [00:15:46]:
And so, you know, trust in yourself and your abilities to go out there and do good things.
Jay Conner [00:15:51]:
You know, that word trust that you just said is so powerful. Trust in yourself. In my live events, I have my audience members stand up and repeat affirmations, as I lead them along. And part of the affirmations that I have them repeat is saying, I trust myself. I trust others. Others trust me. And I’ve said it a thousand times. In this world of private money, there’s a five-letter word that starts with t.
Jay Conner [00:16:18]:
That’s very, very powerful, that being trust. And the question is, who is going to invest with you if you don’t have confidence in yourself to begin with or or trust in yourself to begin with? And so, if someone is not feeling confident about what they are doing, what advice would you give on how to get confident?
Thomas McPherson [00:16:46]:
That is a good question. I think we’ve all experienced periods in time and in our lives where we’re not sure, we’re unsure of ourselves, or we’re unsure of what we’re doing. You know? Ask those who are close to you. Hey. What am I good at? What do you value in my relationship or our relationship? Why? And don’t be afraid to solicit some positive responses because sometimes we forget. My wife, the last couple of days, has been incredibly supportive. Just this past weekend, I had a friend who turned 40 on Sunday. I turned 40 four months ago, and so we hiked 40 miles on Saturday.
Thomas McPherson [00:17:27]:
40 miles. It took fourteen hours. We were at about 5,000 feet elevation, and it was a it was tough physical endeavor. But my wife for the last several days is, wow. I’m so proud of you. You were amazing. And it’s been great. And from time to time, I’ve had to solicit feedback from her when I’ve been feeling a little down on myself when things have been tough.
Thomas McPherson [00:17:46]:
You know, hey, baby. Remind me. You know, why do you love me? What am I good at? And so that would be one of the things I said that can be parents or friends or, you know, religious folks and leaders in your life, a mentor, whoever that is. Ask some people and have them help kind of build up your confidence and self-esteem there, and your trust in yourself. One other thing that I did wanna quickly mention, one of the reasons I got into the real estate in the private investment world was trust and the lack of trust in 02/2008 that caused me to lose my entire life savings and have a negative net worth. I had just separated from the military. I was the ripe old age of 23, turning 24. And I had a little bit of money saved, and I invested that in the stock market.
Thomas McPherson [00:18:35]:
And I was a bit too aggressive at the time. I borrowed some money from a few different banks with some signature loans. I invested that in a stock trading account with a company called Scottrade. I think they’ve since been bought out. And I opened not a cash account, but a margin account. So I had, you know, buying power that the brokerage firm was willing to provide me. And I bought options. And actually, I did exceptionally well.
Thomas McPherson [00:19:00]:
I made about a hundred and 50,000 dollars in six weeks. And then the market traded sideways, things didn’t go so well. And, you know, that fateful kind of couple of months there, couple of weeks in late September, early October, of 02/2008, there’s one period of time, you know, Bear Stearns on Friday afternoon, the CEO, everything’s fine, folks. Everything’s fine. We’ll get through it. And by Sunday, they declared bankruptcy. Right? And so the Senate didn’t pass a stimulus package. The Dow was down, I believe, 900 points, which at the time was a massive, massive, of six or seven or 8%.
Thomas McPherson [00:19:38]:
And my brokerage firm closed out all my positions. I owed the brokerage firm, Scottrade, fifty thousand dollars, and I owed the banks $30,000. I had a negative net worth and no job after just separating from the military. And so I completely lost trust in the conventional investment, ecosystem, and infrastructure. And now I only predominantly invest in alternative investments through either real estate or private lending because I don’t trust what they do. I don’t trust the leaders of other companies to have my best interests at heart. They don’t have nearly as much money at stake as you and I do in our deals. So trust is paramount in my business.
Jay Conner [00:20:22]:
Woah. Well, the big lesson that I’m hearing there, Thomas, is that by you making the rules and you being in the driver’s seat of your business, then you’re not playing by conventional rules. You’re not playing by conventional rules. You’re playing by your own rules. And so I’m so glad you shared that. What are your favorite ways to go about raising capital given your experience?
Thomas McPherson [00:20:52]:
We like to do a couple of different things. We like to host dinners. We just call them investor appreciation dinners. And, you know, we used to give a big pitch at the dinner, and I would talk for ten or fifteen or twenty minutes at the dinner. And sometimes that goes well. Lately, we’ve just been doing dinners for our investors, and we ask them to bring a plus two, you know, bring another couple of folks that you know and that you like. And, you know, as I make my way around the room with either myself or my colleagues, one of my colleagues, we’ll keep these relatively small, 20 to thirty five people. You get a chance to interact with everyone.
Thomas McPherson [00:21:29]:
There’s already a level of trust and validation because they are there with friends who are already invested in me and our fund. So I like that, the investor dinner and investor appreciation events. The other thing that I targeted in on are finding commonalities with people. I’m a pilot. I have a plane. I like to fly my plane. I like to take people up to the Grand Canyon or Sedona, or have a lot of fun. So those are one of the groups that I do a lot of outreach with.
Thomas McPherson [00:21:59]:
And I go to different aviation events, and I’ve got special business cards. They’re actually, they’re pretty cool. They’re metal business cards, so they stand out here. You know, when you hand somebody a metal business card and they go, Wow, and they take notice. So I think not only is the message important, but also kind of how that message is being delivered. And so if I’m delivering a message on an advertisement, that lands much different than I’m if I’m delivering the same message at a dinner with people that are mutual connections or at an aviation event that I’ve flown into and maybe another pilot’s flown into, and we can share our love for aviation. And then I can talk about investing. So I always look for some commonality to bring me closer to people and get that established trust and credibility.
Jay Conner [00:22:51]:
Metal business cards. Nice. So you are the only you are one of two other people, besides myself, that have metal laser engraved business cards. The first one I saw was over ten years ago. Dear friend of mine, John Ruhlin, unfortunately, passed away last year, but he wrote the book he wrote the book Giftology.
Thomas McPherson [00:23:15]:
That’s right. Fantastic book. I I fantastic.
Jay Conner [00:23:18]:
Yes. And so John and I were at this same, small mastermind meeting in Hollywood, California, over ten years ago, and he handed me his little, metal business card. And I went, woah. I have never seen anything like this in my life. And his was, like, half the size of a regular business card, and it was stainless steel. Right? And so, of course, I said, John, man, you gotta tell me, where in the world do you get these business cards? Mymetalbusinesscard.com.
Thomas McPherson [00:23:50]:
That’s right. That’s right.
Jay Conner [00:23:51]:
Is that where you get yours?
Thomas McPherson [00:23:53]:
Yeah. That’s right. That’s right. We’re ordering another we’re ordering another set, you know. Just when you give and I’ve just got it right here, you know, investments by pilots or for pilots by pilots, and then it’s got my contact info on the other side of a QR code. But when you hand that to someone, you know, because I just kind of talk, hey, I run an investment fund, you know, and they go, oh, interesting. And you hand that to someone, immediately there’s a shift. And they’re like, oh, wow.
Thomas McPherson [00:24:16]:
This is cool. Cool card. I have leveled up in their mind because I’m operating at a higher frequency, at a higher level, you know. So
Jay Conner [00:24:25]:
Yeah. That’s what that’s what you call how to start a conversation without saying anything.
Thomas McPherson [00:24:31]:
Exactly. Exactly. Some of the other things I do, and these might be a little silly. I just shaved. I had quite the beard, but I used to show up to different events, you know, and I would have a huge mohawk or a big, you know, kind of Fu Manchu shoe or goatee or something. And that always generates a little bit of buzz. People are like, who’s that guy with the wild suit or the mohawk or something like that? I wanna go meet him.
Jay Conner [00:24:57]:
Yeah. Well, and you mentioned private, private investor dinners.
Thomas McPherson [00:25:02]:
Yes.
Jay Conner [00:25:03]:
I do the same thing. I teach the same thing to my community. I love private lender luncheons. My very first private lender luncheon, I put on years ago, I had my CPA there, my real estate attorney, my realtor, and I took the opportunity with no deals attached to it. And just in that one private lender luncheon, I raised $969,000 at just that one little, you know, sixty-minute luncheon. So I know exactly what you’re talking about. Let’s switch gears, Thomas. Yeah.
Jay Conner [00:25:36]:
Let’s talk about your fund, or your funds. We’ve got people listening here to the podcast who are interested in being passive investors. They just wanna get high rates of return, that is, you know, conservative, and and and and they wanna feel safe about things. So, take a minute and talk about your fund and why someone might be interested in reaching out to you to learn more.
Thomas McPherson [00:26:01]:
Absolutely. So one of our flagship funds is called Lucrum I Fund. It’s our income fund. And what we do is we make private money loans to other real estate investors with that fund. It is a very, very conservative investment fund that is designed to produce consistent, reliable monthly income for you. You can also compound that, you know, reinvest it to grow and accumulate wealth over time. But as I mentioned earlier, I’ve got over $3,000,000 of my own money invested in the fund. My executive team and advisory board have millions more invested in the fund, and something that we think is a bit of an industry first, or at least we haven’t found this out there.
Thomas McPherson [00:26:43]:
And it’s what we call our first loss commitment, and that is we absorb any loss that the fund takes up to the dollar amount that we have invested, which is hovering right now around $5,000,000. And so all of our investors can invest with that trust and that confidence knowing that we are operating an incredibly conservative investment fund. So right now, our fund LTV is only, I believe, 52%. So the market would have to go down by about 50% for my money to be at risk and closer to 65% for our investors’ money to be at risk. So that’s an incredibly predictable and conservative investment fund that we have. We have another one that we’re getting ready to launch, which is we’re calling our our lending Lucre Mending Fund. So they do the same things, but our lending fund is going to be a bit more aggressive and have a slightly higher pay rate. Our pay rate between the two funds ranges from seven to 10%.
Thomas McPherson [00:27:40]:
That’s dictated by how much you invest and for how long you choose to invest with us. In addition to that, we’ve got a few equity investment opportunities. We haven’t launched those opportunities yet. We’ve got the land under contract. We’re designing the buildings that will be built. So these will be new construction development opportunities. I’m a big fan of the opportunity zone legislation that came out in 02/2017, Donald Trump’s Tax Cuts and Jobs Act. I believe that the legislation will get extended with some of the great benefits that were in the original 02/2017 legislation.
Thomas McPherson [00:28:17]:
So we’ve got quite a few opportunity zone projects. We’ve got about a hundred, just under a hundred million, of opportunity zone projects that we’ve done. My single largest check writer is a family office here in Arizona. They wrote a $44,000,000 check to me for one of our projects, and that was an opportunity zone project to take advantage of the numerous tax benefits there. So we’ve got some great income, private lending opportunities, as well as some equity investment opportunities here at Alucrow.
Jay Conner [00:28:45]:
That sounds fantastic, Thomas. What’s the best way for our listeners to get in contact with you and your team?
Thomas McPherson [00:28:52]:
That’s great. Our website is one of the best ways to reach out to us. Again, lucrum.com, l u k r 0 m. Real simple there. It’s a play on words. It’s the Latin root spelled slightly differently, but if you think of lucrative, l ucrum is kind of the Latin root. So we’re just a little play on phonetics there. But that’s the best way to get in touch with me or my team if you want to borrow or invest with us.
Jay Conner [00:29:17]:
Okay. So that’s the same website as to whether you wanna borrow money for real estate or if you want to invest with you. Right?
Thomas McPherson [00:29:25]:
Absolutely.
Jay Conner [00:29:26]:
Alright. So that’s w w w of course, this will be in the show notes. But www.lukr0m. Lukrom, l u k r 0 m Com. Thomas, what a pleasure to have you on the show. Parting comments to wrap us up.
Thomas McPherson [00:29:43]:
You know, I was asked the other day, I was on I was on a podcast and someone said, hey. What digital resources do you recommend out there for folks? And I hesitated, and I couldn’t come up with a good digital resource, and I’m I wish I had been thinking a little bit better on that show. I’m pushing back and I’m saying, listen, I think that we need to do less on screens. And we should be diving into books, conversations with people, and, you know, engaged in our minds and thoughts. So that’s my little bit, you know, put the social media down, go read a book, go connect with your family or friends, and get out there. The real world is out there, not in here.
Jay Conner [00:30:26]:
I love it. Speaking of books, what are you reading these days?
Thomas McPherson [00:30:29]:
I am halfway through Extreme Ownership, a book by Jocko Willink, a guy, two SEALs, two former Navy SEALs, Lee Babin. And it hits close to home because during my first deployment with the Marine Corps, I was actually in the city that they talk about in the book. I was in Ramadi, and had to, you know, do my job, I was a combat medic, I was a corpsman, and I had to take care of some friends that didn’t make it, you know. So I’m reading the book and I know the streets and I know all the combat outposts and everything else in there. So that’s the book I’m in the middle of right now. But as as it relates to business, there’s a fan there’s two books that I love and I recommend. One is on lending. It’s called the Bankers’ Code.
Thomas McPherson [00:31:10]:
It’s a fantastic book. And the other one is about investing in small multifamily properties, and that one’s by Larry Loftus, investing in duplexes, triplexes, and quads.
Jay Conner [00:31:21]:
I love it. Thomas, thank you so much for sharing your experience and your advice.
Thomas McPherson [00:31:27]:
Jay, thank you so much for having me. I hope that I did a little bit of good for the listeners, and I’ve watched what you’ve done lately over the last, you know, many years, and keep it up. I love what you’re doing. Thank you so much, sir.
Jay Conner [00:31:37]:
You got it. God bless you. There you have it. Another amazing episode of Raising Private Money. And as Thomas referred to in the show, my quote, I need your help. Here’s what I need you to do. I need you to like, share, subscribe, follow me, and listen to the podcast. And if you happen to be watching, on YouTube, be sure and subscribe and click that bell so you don’t miss out.
Jay Conner [00:32:02]:
When you do this, when you leave me a five-star rating and a review, that allows me to continue to keep bringing on amazing guests just like we had today with Thomas McPherson. God bless you. Have an amazing day, and I look forward to seeing you right here on the next episode of raising private money.
Narrator [00:32:26]:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to www.JayConner.com/MoneyGuide. That’s www.JayConner.com/MoneyGuide and download your free guide that shares seven reasons why private money will skyrocket your real estate investing business right now. Again, that’s www.JayConner.com/MoneyGuide to get your free guide. We’ll see you next time on raising private money with Jay Conner.
