70. David Blatt Invests His Way To Wealth

This week I speak to David Blatt, founder and CEO of CapStack Partners, real estate expert and international speaker.

David had a very modest upbringing and always had an innate desire to work hard and apply himself. As a young man trying to break into real estate David ‘interviewed’ people in the industry to find out the essential principles of what it took to make it in the industry.

David was prepared to take a pay cut to become a receptionist at a real estate firm, in return for instruction on how to do deals. Eventually, he began to get involved in these deals, and the rest is history.

A fantastic episode that explores the benefits of putting money into assets, which will, in turn, provide you with a passive income to fund your lifestyle after you no longer wish to work. My recent blog post The Truth About Renting Versus Buying Property might be of interest if you want to explore this further.

Episode Transcript

0:05
Hello, and welcome to the Real Money Stories podcast. I'm Jason Butler. And I invite you to join me as I have intimate money conversations with people from all walks of life. Whether you're just starting out on your money journey, or well down the track, there's bound to be something you can learn from these stories about taking more control of your money, so you worry less and enjoy life more.

Real Money Stories is sponsored by Vanguard, bringing value to 30 million investors worldwide. Visit vanguardinvestor.co.uk For more details, and remember, the value of investments can go down as well as up and you may get back less than you invest in.

Hello, thanks for joining me again. This week's interview is with David black. And he's created a really big property business from pretty much nothing over the last 13 or 14 years. And I think you're gonna find his money insights. Very interesting. But before we get to that, I've got another research insight for you, and a book review. But first, the research.

There's plenty of evidence that trying to make money consistently by buying and selling individual company shares, known as stock picking is a loser's game, because current prices reflect all known information. And it's very hard to make more money than just buying an index fund over any meaningful time period. But some new research just out suggests that trading stocks on your smartphone leads to even worse outcomes. Now, it's a working paper called smartphone investing a within investor time analysis of new technologies and trading behavior. And the link is in fact, below the show notes. And that was based on looking at the transaction data from two German banks and how trading activity different depending on which device the investor is using. trading on a smartphone seems to have what the academics call a dis inhibiting effect. Now, what that means is that investors are more likely to trade riskier stocks. And they're also more likely to chase performance, buying stocks that are performed well in the recent past. traders who placed riskier trades on their phones are more likely also to repeat that behavior in the future, regardless of whether they use a phone to trade or not. So essentially, this is embedding the behavior and then becomes a habit. The authors of the paper conclude this, they say, collectively, our evidence suggests that investors make more intuitive system one type decisions. While using smartphones. This tendency leads to increased risk taking gambling like activity, and more trend chasing, they go on to say, previous studies have linked these trading behaviors to lower portfolio efficiency and performance. Therefore, the convenience of smartphone trading might come at a cost for many retail investors. Now, obviously, stock trading is increasingly popular among young people, a new trading apps are being rolled out all the time. And in fact, we've seen recently with GameStop, and the trading apps like Robin Hood, etc, and etoro that people can easily get drawn into this. Now I don't endorse or encourage stock trading. But if you do it, don't use your phone. Now the trading fees might be low or even free on your trading app. But the cost in terms of financial outcomes could be enormous. So you've been warned. Now time for the book review. This was in fact a Christmas present from my wife, Jane. It's called the art of wrist, how to find respect in the modern age by Claudia Hammond. I wonder if I wonder if my wife is trying to tell me something possibly. Now, Claudia Hammond writes about psychology and human behavior. And she also presents a radio for program as well. And I enjoyed her earlier book called mind over money. So I was quite looking forward to this one. And essentially what she does is she examines the 10 most effective ways to get mental and physical rest. Now I know it's not a money related book. But it's easier to make wise money choices and decisions when you have physical energy and a clear mind. That's why I think it's relevant. And I think the biggest message that came across from the book was the importance of actually getting proper rest and not beating yourself up if you can't, or you don't want to get up at five o'clock in the morning and do a marathon before breakfast, but also this frantic sort of obsession with activity that people have particularly high achievers or people who want to get ahead. And Claudia makes the point that we're all different and that we need to find out what works for us. And apart from the central message to get proper rest. I was quite heartened to find that the most restful activity is reading a proper book. Now I read for about an hour before I go to sleep at night, and I find it's really really good preparation for sleep.

I've almost finished writing my next book. That's the money miracle that's hopefully going to be out in early summer this year. So now I can promote its restful qualities, as well as the financial wisdom within its pages. Okay, that's enough for me. Let's get on with this week's interview. This week I speak as I say to David Blatt, who has created a very successful real estate investment business from literally nothing. Some very good life lessons in this interview, so make sure you listen all the way through.

Today, I'm joined by an interesting guest, David Blatt. Hello, David.

5:39
Hey, how are you?

5:40
Good. whereabouts are you, David? I am in New York City. And in Manhattan, right? We were just saying,

5:47
Yeah, absolutely. Downtown man.

5:49
So do you ever sleep?

5:52
Not really.

5:53
No? The waste of time. Good. All right. Well, before we get into your backstory, um, do you want to just tell everyone what you do?

5:59
Sure. So I run a platform called CapStack partners, which has been around for about eight years, is debt advisor and an investor focused in real estate in particular,

we, on the advisory side work with borrowers as well as lenders helping them just create Debt Solutions, either by securing debt or structuring it. And then I directly manage investments and pursue investments that are either focused in debt or in distressed opportunities.

6:40
And that really came from previously having run a distressed debt fund focused on distressed real estate and distressed mortgages, particularly in commercial real estate. So that's really the space that I've been playing in for the last 20 years. And it's quite an interesting space. Because it's not everything from every difficult situation can come good. And with the kind of approach that you have, I think, which is really to try and come up with solutions, which is the word you used. I think everyone should always realize that when we go through tough economic times, and there are people who get hurt, and the people who have difficult situations, it's also a cleansing, it's a, it's a clearing of the system, and the kind of situations Do you work for both sides, I noticed you did something with a Was it a shopping center, a shopping mall, or office block or something at the end of last year, you sort of you you went in something that was just just so people can understand how you sold problems. So just explain what you did there?

7:35
Yeah, absolutely. So this was an office property that the bank and foreclosed, it had a ton of deferred maintenance issues, it was also I think, something like 40% occupied. And so you know, it seriously impacted asset. And it was just mismanaged and neglected. So I came in and acquired the property from the bank, we figured out what needed to be done from a renovation standpoint, and also what it was going to take to attract tenants. And we were very successful in that to be able to do that in pretty much less than a year, which is a very fast pace, to essentially get it from something that was, you know, far, you know, reaching for underperforming and, you know, becoming a stabilized asset, that now I'm able to hold on to, for the long term. So, you know, with a lot of these strategies, you might get people who, you know, and no, no disparagement to the strategy. But you know, they're more in and out in a speculative kind of a way, where, you know, like, you know, the fix and flip model, you come in, you do the work, you exit out buy sell. The problem I find with that execution is you end up with cash, and cash is great. But in terms of being able to create a foundation of financial security and wealth, you need to create an acid base, a stable acid base that is essentially going to then, you know, throw off the cash flow. And so in that situation in particular, rather than sell, I went in and I refinanced the asset at the new value. And, you know, we have a 10 year fixed rate webinar on that, you know, so now I know exactly what my carrying cost is going to be. And, you know, now I'm going to just try to increase that cash flow for the long haul, and hopefully, there's an appreciation of the asset itself over that timeframe. But to some degree, you know, you have to manage it but there's a set it and forget it component to it. And now that I've brought it back from, you know, the fact that it was You know, effectively distressed.

10:02
Hmm, interesting. So David, we know that you figured out how to sort of build assets and build cash flow. Take us back to the early days. I mean, can you remember your earliest money memory?

10:14
My earliest money memory? Sure. Let me think about this, this is going back. Yet, you know, I would say that I probably, you know, I the only the only thing Yeah, you know what, I can't remember it, I can't remember it, the one that impacted me most in the context of just, you know, money was a I was I was a teenager, it was a summer job. And I was working at a hotel as a busboy. And it was a grind. And it was the first time I had a real job, I think I might have been like a summer camp counselor previously, you know, I had to wake up early every day, I had to, you know, be there, I was working in a hotel dining room, basically prepping three meals, it was nonstop, and it was physically exhausting work. You know, I was making money, and it was great. But I remember distinctly, you know, on one hand, it was very empowering to have cash for the very first time in a meaningful way. But at the same time, I most remember thinking to myself, that I there has to be a more effective way to earn money, then what I'm doing here right now, because I was literally just physically earning that money, you know, carrying around plates, setting tables, you know, attending to people, you know, just non stop, and, you know, just feeling physical exhaustion. And I was thinking, you know, the call it emotional, spiritual return on investment here was just, it wasn't, it wasn't worth it, you know, so I can articulate it much more eloquently now, you know, as a professional and as an adult. But I remember that, that really resonated for me, and it really just set me on a path thinking more entrepreneurial about how I can earn my money.

12:09
So you it wasn't I mean, no shaming anyone who does that kind of jobs at any stage of their life of a young or their infilling, or they can't you were had issues or whatever. We know that dignity and doing work. But you realize that that wasn't for you that kind of approach. You're just grinding it out for modest wages. I mean, how did you feel at that stage doing that work and getting very modest wages for it? Because, you know, lots of people do that, don't they? I mean, how, how did that make you feel? Why did that affect your motivation and your costs in life?

12:37
It's not an you know, to your to your point, you know, it's not any disparagement at all, you know, as to how there's numerous ways people earn money. And, you know, it's depending on the opportunities that are presented to you. It's more along the lines of thinking about, you know, what I would describe in a financial sense of economies of scale, and where I could apply my time and my efforts. And, you know, just thinking about the sheer physics of if I'm getting paid by the hour, and I'm using that hour to earn X dollars, there's an opportunity cost associated with that hour of earned money, versus where if I, you know, I it sent me on a path of thinking if there was a way to utilize those hours to earn more money as opposed to getting hooked on having to essentially continue to clock in and do that that work.

13:39
Hmm. So in it in a way you did you a favor that job because it taught you what you did value and what you didn't want to do and what you would tolerate what we wouldn't tolerate. So where did you go from the the busboy opportunities? Tell us what happened then? Did you go to college, or did you go straight into the workplace?

13:56
I did. Yeah. That was shortly before college. I did end up going to college. And then I I, from college, I went through graduate schools. I ended up going to law school, then I actually got a master's in negotiation after that. And then I got a master's in business after that,

14:21
but I'm still doing it a master's in negotiation. Now, what possessed you to want to take a master's in negotiation? Because I've never heard of anyone didn't even know there was a I know there's FBI negotiators, but I've never heard of someone doing a master's in it. Is that just because I'm Neanderthal IQ or there is actually this is a big thing in the States or was it?

14:41
There are programs you know, and I think it was probably early on at the time that I went to do it. There weren't that many. But I remember taking a few courses while I was in law school, and I thought that it was the most practical law school classes, I take the rest of them, just like the ACE laws from like, hundreds of years ago as the basis for whatever they were trying to teach. And, you know, suddenly I'm I'm actually learning hands on skills. And, you know, from there, I started to look into programs, and I found that there were, in fact, Masters where they were, you know, training you in different forms of, you know, negotiation, conflict resolution, you know, different contexts, business contexts, community contexts, cross border contexts, you know, so it was, it was really fascinating to me to be able to focus in on that, and, and learn that and, and earn a master's in that. So I mean, it was really just very helpful to my toolbox, and still is today, you know, and if you ask me to maybe point to things that I picked up, I couldn't necessarily tell you, but that's only because I've been utilizing those methodologies and skills for 20 years to the point that it's just second nature. So it's hard at this point to maybe distinguish and say, Oh, yeah, I picked that up, you know, in that course, or something like that. But to be able to provide a framework to something that I think is so critical for so many aspects of your life, and particularly in business, when you want to move forward and really try to advance yourself and, you know, identify and really take advantage of opportunities. I think it's, it's just great. I, frankly, I very grateful that I was able to

16:44
have that experience. And for anyone who's listening who doesn't get a chance to go on a Master's on negotiation, I think David's absolutely right. That just in my experience of life is learning just want to communicate, public speaking, that's worth everyone doing even if you never do public speaking, you don't think you do but secondly, needs to negotiate and negotiation isn't about, you know, strong arming someone to the ground. It's about finding common ground has to find a way through and a great book called never split the difference by Chris Voss, the ex FBI negotiator. I mean, there's loads written different books, but that's a really good one very accessible. And it's easy to read. So I read

17:17
Yeah, I would actually recommend the audiobook version of that because he narrates it.

17:21
Yeah. doesn't he? Yeah,

17:23
you know, you just get you capture some of the effect of

17:28
Yeah, the emphasis,

17:30
especially the storytelling with the hostage negotiations.

17:33
Yeah, brilliant.

17:34
And look, can I just touch on because I know that the the uni stroke college funding in the states is a lot more frightening than the UK, we have. We have fake student loans. You have real ones, right? How did you? Did you come through college financially intact? Did your parents help you out? Did you work while you were there? How did you how did you navigate that financially? Because it does frighten a lot of people, isn't it?

17:58
It's a scary prospect. So I guess, let me just say that. I, my parents were immigrants, I was the first one to go through college, my dad drove a cab. So I didn't, you know, have a leg up, you know, into my path professionally and financially at all, it was very much self made. Including learning about money and financial management and a lot of that stuff I you know, I didn't have a foundation even in that it was very much self taught.

18:34
Did you see your parents struggle with a group with money with a was it always a bit tight? Or were they really good with it and live frugally? Or how, I mean, how did you see them getting by?

18:42
I think, you know, we lived within our means I never necessarily grew up feeling strapped, per se. But I don't think we ever, you know, did anything extravagantly? You know, there may have been situations where, you know, I had friends who maybe went on nicer vacations, you know, we were always getting in the car to go on vacations when you know, maybe I had friends that were taking a plane somewhere, you know, so. But yeah, it was more just an ignorance about that, you know, and not necessarily getting that family foundation of either both learning about money or, you know, again, having a leg up in you know, advancing myself either educationally or professionally.

19:34
It's interesting because I interviewed quite a few I call first generation or sorry, second generation immigrants in different countries, particularly in the UK. Um, was there any expectation on your parents that they wanted you to do better? Or was there a low expectation or did you set an expectation What did you think about the whole role of money in your life well for success business, what what was going through your mind when you're at college? I mean, when did you did you just want to Did you just have a moment The panel just muddle through and just say I'll get a master's in negotiation and see what

20:05
I will say, as I was wrapping up, university, I had no plan. And my mother was just like, go to law school, I was like, all right, I didn't have any I didn't have I didn't have a counter to that, or plan B, it seemed like something to do. But I was definitely somewhat fatigued with schooling at that point. And, you know, you start to see friends who are getting full time jobs. And, you know, they get to buy the cars and all that. So I was able to get into law school, but I also fast tracked the schooling. And then somewhere along the way, I knew I never wanted to practice law. I had gone and done some summer internship positions and law firms. And every time I would read a contract, I realized I wanted to be the guy doing the deal, hiring the lawyer not doing the work for the guy doing the deal. So once I concluded that, I knew I was just there to get my degree. And I knew I wanted to get my license, you

21:16
know, just to have but no degree is not a bad basis to have, because it does help you with thinking it does help you with analysis, it does help you with the whole understanding the basics of law and how things work. So there's not a I don't

21:28
regret it. Yeah, I don't regret it. And I actually, to your point, I think that the biggest marketing misstep that law schools do today is they really focus on that linear track of going through law school so that you can come out practicing law, when in fact, I actually look at it as an alternative to a master's in business. for all those reasons, my analytical skills, my ability to read contracts, my ability to write, how do I present information, all of that absolutely, can be tracked back to my law school education. But I didn't realize that until I got into the working world, and I started applying it. You know, now I jokingly say, I'm the biggest pain in the ass professional client for any lawyer. Because very often, they'll throw legal principles at me and things like that. And I know exactly what they're talking about, you know, and so it's a little harder to maybe, you know, talk above you know, some of these concepts with me as a client,

22:45
what all the lawyers who are listening at the moment anywhere in the world, I've already got a black mark against your name, so no, not to be hired. Don't worry. Thank you. So So. Yeah.

22:56
Yes.

22:57
So you left you finished law school, then what happened, then? Did you go straight on to the world of work? Or did you sort of travel the world or what what happened to do to help you that out in the campus,

23:06
I What happened was, as I was in law school, I started taking these negotiation classes, I looked into these programs. And I realized actually that some of my courses in law school would actually transferred to the masters. So and then I also realized that some of the courses I was taking, I would take for the masters were transferred to law school. So I was I immediately went into that next program. And then while I was there, I remember thinking, Well, I know, I'm not going to practice, as I said, and I knew I was going to do something entrepreneurial. And I also knew that I didn't want to work for some large bank or you know, something like that. And so I decided that I was going to get my masters in business. And in the US, we have what's known as Executive MBA programs, which allow adults and professionals to take courses on the weekends, and finish at the same time as a full time student versus a part time MBA. So I looked into that, because I thought I want to start working. And two, I would be in classes with people that were, you know, had 10 or 20 years of professional experience on me and I could learn from them as much as the, as much as I could learn from the professors. And so I just blew through all that graduate school, and essentially was able to complete all three degrees in four years. So yeah, I had no summers. I was just in school, just in school and you know, but by that time, I came out I took the bar exam, which is what you take to get your license to practice law. And so that was it. Once I got all that I said, Okay, I'm ready to go to work. You know, now I'm ready. I feel like I'm armed up. I have like, all of the education credibility. Now I got to get out there and you know, start doing it.

25:17
And interestingly, did you feel the need to? I'm not saying you're over achieved, but did you feel the need to really feel your academic? I call it sort of your Power Belt? Did you feel that because you came from a more modest background that you have to overcompensate. Because often, often people do who come from modest backgrounds, they feel that they've got to go the extra

25:35
mile, I didn't necessarily feel a sense of inadequacy. From my background that was driving it, it was more along the lines of I would say it was the exact opposite. It was like, I'm going to do this, it was a sense of empowerment of saying, you know, what, I am going to take down these degrees, no one's going to be able to question that I achieved this, no matter what they might think, or, you know, the context of any communication I have professionally going forward, like I did this, it can't be taken away, it's mine. And, and that was really it, it was more just like, it started to feed on itself. You know, once I started to get through law school, and I took on the other program, and then I realized, you know, what, I can also pick off like another, you know, Masters in Business, I can use that education. And I'll also have that, you know, marketing credibility, if you will. So let's just do this. And so, it was really that, I felt that my background, you know, I will say, maybe into college, you know, I had, I did have high school friends, that went straight to work for parents They even made, so they skipped University, because they just had a path already charted for them. And at the time, I did have a level of envy that year, because they rolled up in there, like I said, they had flashy cars, you know, they had money, they were able to do things that I couldn't do illusion of wealth.

27:07
Yeah,

27:08
Correct. Correct. And so, you know, you know, there I wasn't, you know, I did take out a ton of student loans, and I can address that. But, you know, at the time, I felt, you know, a bit envious, but then later on, as time went on, as I was going through those programs, and as I started to work, I suddenly realized that my background was just a blank slate. And I really could choose what I wanted to be where I wanted to focus, I didn't have any legacy issues that were pointing me in a direction that I needed to go to, because my family might have been there, or there was a business of some sort that I had to assume the mantle for. And that part suddenly made me feel so free. Because at some point, I said, I mean, I've always believed that I can achieve whatever I want, you know, the level of confidence and being able to do that. So now, you're suddenly recognizing that I could pick the path that in and of itself was just, you know, also, it was it charged to me. Because I, you know, that it just went back to this whole idea of thinking about, okay, you know, where do I want to spend my time? How do I want to make my money? What do I like doing on a daily, you know, I was able to really think about those things and, and really just go in a direction as thoughtfully as I could, you know, obviously changing over time, as you know, I grew but just not being unfettered. And I really like that.

28:49
So you came in with your uni years college years with a significant amount of debt, obviously. Yeah. That didn't faze you. What? How did you get started in the in the workplace then?

29:02
So I, I came out with a tremendous amount of debt. I mean, it was like 100 something 1000 in debt at the time. I remember when I was assuming that debt I said to myself, I'm, I'm basically borrowing against my from my future self. But my future self would definitely think I'm credit worthy. I remember having this inner dialogue with two versions of myself. Yeah.

29:35
You thought you were a good bet.

29:36
Yeah. Yeah. I said, you know, what, if I'm gonna have to take this bet I I've taken on me, you know, so it didn't faze me. I, you know, obviously, no one wants to assume that but you know, it was what it was. I was like, I'm going to make this back. So it's just an investment, not debt. When I came out of school it was right around The time that like the.com boom and been happening, right? So I

30:06
just just so anyone who doesn't know sorry, anyone who's not listening the.com boom was the world was full of hope one minute. And the next minute it was full of doom because all of these small tech businesses were meant to take over the world the internet was gonna end it did eventually the internet but yeah, cab drivers know slightly your dad but cab drivers were telling me how to invest and they were doubling their money every week. And basically all ended up in a real big pile of poo. And people lost 5060 7080 90% of their money depending on what they're investing in money in about a year.

30:37
That was accurate. I so I ended up coming out. I you know, what was great about that was that I could go and work in a job that was paying me what I would, you know, describe as stupid money. Without I have to wear suit. I saw I was very excited. As a young professional, and all that money absolutely helped me pay down my debts pretty quickly.

31:04
It's the peak the boom, right?

31:05
Yeah, this isn't the peak. You know, this is like just about going off the precipice. Yeah, I would say maybe like, you know, he year, so I was doing that. But I remember also thinking I was working in business development. And I could not tell you what it was I did every day. I just remember coming in, and I didn't understand what it was I was supposed to be doing. And it was really just a reflection of the era Not that I couldn't comprehend what my job was

31:36
out of money for job. He can't remember what it was in a business, it probably wasn't doing anything or creating any value. Right. So it was all

31:44
about the loans. Right. Right. So you know, it was it was good from that standpoint, you know, and I feel justified having taken, though, so it was pretty much made whole, you know, and then of course, everything imploded. And by that time, I was already thinking about where I was going to pivot. And I really started to focus in on real estate as a means to create wealth and financial independence

32:08
cannot just be clear. Was it the.com crash, the crash galvanized you into action to change and pivot? Or are you already sort of angling to sort of move on because you knew it wasn't even going to last? Or it wasn't for you?

32:21
It was more the ladder? And the time just aligned? i? Yeah, it wasn't enough for me to be making a lot of money. But I just couldn't understand what was going on.

32:35
So you were gonna move on Anyway, you were in the process of moving on.

32:38
I was I was, you know, and there's an argument to be made. If I stayed in space overall, you know, obviously, a lot of people create a tremendous wealth, but I just didn't get it. And for me, I always knew I was gonna start my own venture.

32:53
And there's another take. So to interpret this another takeaway there, Davey, which I think is absolutely relevant for people to become is if you anticipate the plan going wrong, or wherever you are the good times finishing, what would you do? Do some scenario catastrophizing, planning? or thinking about if you didn't do this, what would you do? That's a good thing to do? Isn't it because then when things do change, you're not on the backfoot. You've got options. You've thought it through, you've done your lifeboat drills, right?

33:18
Oh, absolutely. Absolutely. And that's exactly what happened. I was ready. Like you

33:24
throw, like Minecraft. You're in it, and you're paddling.

33:28
I was I was I, you know, I understood. You know, I real estate spoke to me, I understood the asset class, I understood how wealth was created in the asset class. And I also saw a way that I could create my own platform to do that, where I wasn't able to really chart that out in my head. During the.com boom, I even the idea of creating something that had a.com at the end of it, and suddenly being wealthy. It didn't make sense to me. And I couldn't figure out how I would sustain that.

34:01
It was no joke, isn't it? I said, I want to become a.com millionaire multimillionaire. And someone said, you gotta have a good idea to become a.com multi millionaire. He said, that is a good idea.

34:10
Exactly. Yeah. Let's just be real sustainable today.

34:14
How did you how did you first of all, I mean, because real estate and distressed debt and all these exotic areas? There's a lot to that. I know, in its essence, it's simple, but there's actually lots of nuances. How did you go and find a firm or did you night score? Did you obsess in the read or how did you get into it?

34:30
So it was a it was a bit serendipitous, but I I started to interview informationally just people in the industry. And I was just trying to build my network and try to figure out my entry point, you know, so I spoke to investors, developers, brokers, people in the finance space, just really trying to understand the ecosystem and then thinking about Okay, where did I like to go? And there was one One very small firm that was focused on doing what was known as brownfield redevelopment, right. So environmentally distressed properties and their background was in environmental engineers. And so that's how they got involved in the space. And so I liked that area, because I like the idea of being able to pick up properties at a discount, clean them up, and suddenly, they're worth far more than where you started. Because they were shunned by everybody else, just that concept resonated with me. I think maybe it was just the basic concept of being able to get a good deal, you know. And they were looking to hire a receptionist. And I came to them and said, today's your lucky day, you're going to have the most overqualified receptionist come work for you, I'm going to do that job, you're going to pay me whatever you were going to pay the receptionist. And in exchange, I want to learn this business from you. I want to be able to build my network. And if I can earn pieces of the deals that get done along the way, great. with the caveat that as soon as I understand what to do, I'm leaving.

36:15
boozy, very ballsy. But at least you're upfront, right? You're honest. Exactly. Exactly. So

36:21
I laid out a I want to manage expectations, you know, and like, that's the that was the trade off. So

36:28
when do you start?

36:29
Pretty much that was it? I was like, let's just get

36:33
clear. Were you any good as a receptionist?

36:36
I you know what, I make a mean cup of coffee for people.

36:39
Yeah, but can you actually sort of Remember to write numbers down properly and get people to the right places. And remember,

36:45
it was drudgery. There's no drudgery of it was a skill that I mastered?

36:51
The when you were doing the valet work, or whatever it was you were doing? Yeah, yeah. It wasn't glamorous, but it's what you needed to do to get where you want to go.

37:00
That's That's exactly right. That was exactly right. And so, you know, the way that I looked at it was this, you know, especially, you know, I went through school, you know, to get the, you know, what I would describe as advanced education and the transaction there was that I paid for it here. I was being paid for an apprenticeship. So I thought it was a great deal. To be able to get that hands on experience.

37:27
So if you wasn't an enormous pay packet, right, then compared to the.com, it was paid. I took a couple of steps back because you were learning in in the right environment, right?

37:38
I would say, yeah, I mean, I took probably I was getting paid like 20% of what I was making in the.com.

37:47
This is a really important point, like by Asus sense, that's what happened. Sometimes we have to take a step back in life financially, because it's the right thing to do, to recalibrate, to learn to recenter to get in the right environment, etc. That's what you did. So you the value to you is immense. It wasn't just the wages, was it?

38:06
Oh, absolutely. I mean, I, the payoff, redirected me into my profession that I've been in for a couple of decades now.

38:16
So in the the the I call it the receptionist years, or months or whatever. How did you? How were you dealing with money at the time? Were you still living at home with parents? were you living like on beans and rice? or What were you doing? You know, because bear in mind, you did a pay cut, you'd paid off the most of the student debt from the good years. You're doing the student the reception was nice. How are you coping financially? Were you were you using public transport? You know, I'm interested.

38:43
Yeah. So I mean, I wasn't I i've always I, I've lived within my means, in general. I wasn't living extravagantly at the time. I had saved up money from my prior jobs to support me. And

39:05
emergency fund sort of thing. Yeah,

39:07
yeah. So I mean, I was able to bridge the gap when I needed to, you know, having wiped out my student debt really took a load off. So I didn't really have much to carry other than living expenses, which were pretty lean in general. You know, and I looked at it like I was spending most of my waking hours in my job. So you know, I'm spending it there. I'm not spending it spending on things. e commerce was not as prevalent. So you know, there was probably less impulse buying opportunities as well click

39:41
one click was just an I thought in B's or C's, I know.

39:45
Yeah, exactly. He was just mastering that so

39:48
so you kept your lifestyle quite simple. Even though you paid off the student debt notwithstanding It was a modest wage and you were learning vociferously. So, okay, how did you how did you start to get ahead financially, then was that The secret of counting on deals or what

40:02
you Well, I did, I was able to earn some pieces of the deals that we had done, you know, so that that was rewarding. And I was there for two years.

40:14
But why did that give you a piece of the action? I mean, you would go from Brooklyn, right? or wherever it was Manhattan, you know, why would they give a? Why would they give you even if you've got all the degrees in the world? Why would they give you a slice of the action? What did you do, though?

40:25
I was, I mean, I was helping put deals together, I was helping analyze deals, I was helping draft some of the

40:36
SEC, you're working on a lot of stuff that was in their midst as a business and you said, I'm adding value. So I want more than just wages and just hourly rate? Correct? Correct.

40:45
Right. That's when I made it my business to offer those things up. So when they needed to draft agreements for investors to come into the deals that they had, I did that instead of having to hire a lawyer. So they save money there, you know, which then helped me learn how to draft those agreements.

41:04
From the point you were putting it into their point what was in it for them, which is why you got a slice of the action you were talking about, not what you needed, but where you were bringing value. And that's what often people forget when they're trying to negotiate anything, isn't it? You were bringing value to your employer?

41:18
Oh, 100%. I mean, it was what I promised on the front end. And I've delivered,

41:24
yeah, and learning and learning along the way as well.

41:27
Yeah, exactly. Exactly. So I mean, the reception, his responsibilities were pretty easily managed. And so the enhanced contributions that they can make were the bonus that they got by having me there. Right.

41:43
So how is you when you earn a deal? When you add money on the deal? That was presumably very tasty compared to your perception of salary? How do you do with it? As you started to earn that money? Did you save it, spend it, invest it or a mixture of all three?

42:00
I remember just putting it in the bank at the time,

42:03
you know, it was if you hadn't had it sort of thing.

42:06
It was just there. I you know, I? Because my it wasn't, you know, it wasn't like, suddenly, I needed to upgrade my lifestyle and you know, get flashy. You know, maybe I went on a vacation, you know, but even then, you know, I was probably price shopping everything. To get the best deal.

42:24
You had all the coupons cut out on the paper and said, Look, you know,

42:27
the internet version of that, but yeah, pretty much, oh, I could just do this, you know, and I can go there if I leave on this day, or if I do

42:36
not care for your money, and you had not graded your lifestyle. Another great takeaway from people is that the dangers when you start earning more money, or bonuses or whatever, people start thinking a big shot, and they start having a big shot lifestyle. Right, and they never build capital.

42:49
Right. Exactly. Exactly. Yeah. And I think about that. I mean, I think now, I would say I'm much more attuned to that, just because I've dealt with money professionally for so long. You know, where I actually think to myself, money spent is taking it away from money invested that can earn money for me. Yeah. You know. So that's, that's how I think about a lot of things. You know, and then, but then it was more along the lines of I was excited by the concept of being able to earn these payouts sums off of the work that I was doing, and then I very much enjoyed doing, you know, so going back to, you know, the teenage gig, you know, where I was working per hour, and thinking about what's a more efficient way to earn more money. You know, there was manifesting, you know, years later, you know, where I could see essentially the time I put into an investment, having a return on that investment through the time and effort of doing something that I very much enjoyed.

44:05
So, how long were you at that firm for?

44:08
Were you?

44:08
I'm assuming you moved on from the receptionist role after a pretty short order, I thought, but how long were you there for learning your craft?

44:15
I would say that I was there for like, about two years or so. You know, and I I knew when it was time, I was already again, starting to think about that next move.

44:27
Was that because you'd run out of stuff to learn from them? You were doing stuff my routine or what

44:32
I can tell you exactly when I knew the right moment was I was very inquisitive. So I would ask a ton of questions about everything because I really just wanted to learn, become an expert in the business. And I just remember very often I would get this response back of you know, whatever I would ask, I'd be like, that's a great question. Why don't you go track down that answer. Yeah. And I and I got that response back a few times. And it suddenly dawned on me. They don't teach anything. Yeah, yeah, I was like, Oh, wait a minute, in order for me to leave and start my own shop, and do this for myself, I don't have to have all the answers, I just have to believe that I can find those answers. And I know I can find the answers. So it probably means it's time to go.

45:26
So after two years, you then sort of you went off to start your own thing?

45:30
That's right. Unbelievable. So

45:32
what you're 2324

45:34
that's, that's right.

45:37
And that's a really great thing. You know, this, the analogy, people say, imagine you took I'm trying to think what's one of your top basketball players? I mean, I'm trying to think of one of the Magic Johnson or whoever, you know, over the years, and if you got, if you got hold of them, and gave them an amnesia tablet, and then tried to convince them, they were on the world's best basketball players? And they said, No, no, that's not me. I'm not asking you a bit. But you believed it. Right. And that that point was at 2425? Doesn't matter. You thought, right, I'm gonna start my own shop.

46:08
Yeah, exactly. I was like, okay, you know, I know enough about the business to understand how to analyze deals to some degree, but whatever. I don't know, I know, I can figure out so I'll figure it out. Let's go.

46:23
So you went off and start your own firm then? And is that the same firm that you now run? Or was that a precursor to that?

46:29
It was a precursor. So the, what I started ended up evolving into a distressed debt fund that I ran for 10 years. It started from a deal that I did shortly after I left and scaled into a huge investment platform that had a private equity fund backing it, you know, we had a few 100 million under management at its peak through the recession, because we were doing distressed deals. And then I just dissolved that fund around 2012. Because the market was rebounding, it really wasn't distressed. And that's when I formed the current platform that I have

47:07
the current platform and just want to ask this question about your personal situation, where are you taking some value off the table and putting it into mutual funds and building your IRAs and the pension pots and stuff, or were you continually reinvesting in the business the fund because there's good and bad in it, it's great, and it shows confidence. But you're also concentrating all the time, you're wealthy in a single kind of part of the marketplace. So what was your approach to dealing with your own finances.

47:33
So at the time, I didn't really diversify into those types of investments, because I was just so focused on my own platform. And real estate, in particular, real estate investments, such a chunky business, you have to be ready with enough liquidity, maybe not to do the deal, if you're using investor money for to take down bigger deals, but you have to tie up those deals with deposits, you have to pay up front costs to

48:09
do capital intensive, isn't it? It is

48:10
it's very capital intensive. And so I just, you know, for me, it was always just having the dry powder ready to come into the next opportunities. And so, you know, I also felt, particularly because I came from the.com experience, and that, that implosion that followed, where I really had a hard time making passive investments in things I didn't understand. And I would say that there was also one thing that was missing at the time that's very prevalent today is a lot of these ETFs, you know, change

48:52
traded funds for anyone who doesn't know them,

48:54
you know, where you can just make, you know, an investment into the market as a whole or an industry as a whole didn't really exist. And so, you know, to me the idea, you know, I looked at it, like, I was analyzing opportunities in my business very closely before I decided to take risks and put money into it. So dumping it into something to get a passive return and not fully understand where the exit is, and necessarily understand it. It was just it, it was hard for me to reconcile. So you're

49:31
all in, let's be honest, you were all in it. 2425 26 when in this first fund, that you're running this first real estate thing, but in a sense, I suppose that's what all entrepreneurs do. They have to reinvest to start with to get the thing moving before they can start extracting out taking money off the table. That's essentially what you're saying. Right?

49:48
Yeah, I mean, that's, that's 100% true, you know, and I figured, you know, it came down to that same analysis. It's like if I'm going to take a bet on the success of a company, I'm going to take that first bet on mine.

49:58
Yeah. And did you Go out, either initially or eventually in that first fund business, did you go out and get other people's money or investors or angel investors? And how did you do that? If you did?

50:09
Yeah, it was it was immediate, you know, I was able to identify an investment opportunity shortly after I left my position and launched my own firm. And, you know, that's a huge component of our business. You know, we're always two sides, you're, you're chasing the deals, and you're chasing capital, you know. And

50:30
so that was one leads to the other, right? So if you've got attractive deals coming up, there's probably you're going to attract the capital. And if you have the capital, you'll probably get more deals. It's kind of like chicken in the egg. You just got to work over them. Right.

50:40
either side. Yeah, I like to call it spinning plates, you know,

50:44
just make sure you don't drop any and break it.

50:46
Exactly, exactly. You just got to keep going outside, you want to move the deal forward enough. But like, suddenly, like, and that's the thing, right? You're always like, the deal suddenly starts moving forward. You're a little further out from where the capital need is. So you got to get the capital to catch up, and then suddenly the capitals, surpassing the deal. And now you don't know if the deal is gonna close. And so you're constantly trying to like, you know, align that area is challenging.

51:14
And David, did you ever find did you start to see is this law of attraction in the sense of abundance and money wants to come to people who who are ready for it to it wants to hang out with people who think in abundant ways, right? Did you find that you're attracting more and more abundance? As you started to get moving with this first farm business? Or did you sort of it's a bit like you buy a BMW, you notice red BMW is right. Did you start to get known? And did you? Did you do PR? Or did you do networking? What did you do there to sort of, to sell your wealth creating wares?

51:50
So it was, it definitely was an organic process, you know, where I was having the initial conversations. And I think a lot of it also had to do with size and scale. Were the first few deals, I was scrambling to raise the money I needed for those deals. It was it was certainly hard because of the lack of track record. And you know, the momentum building that you reference, but I also found that as I started to scale up, I was able to attract more consistent capital relationships.

52:33
And did you find it easier to do the bigger deals than the smaller one? Because I've spoken to other people before I've said, it's easier to do big stuff than it is the really small stuff. In your mind,

52:44
I think that that's it is. There's no question that it is because I mean, I think, you know, one of the things that I realized early on. So my first deal, I remember distinctly it was it was a million dollar purchase of a property. And I need to raise just a few 100,000 in investor money, you know, and I was definitely pounding the pavement, trying to get that deal pulled together. And I did it. And it was very rewarding. And then I remember jumping from that deal to a 20 building portfolio. Only a few months later, and it was a much bigger raise, it was 3 million. And I you know, there was a moment where I was thinking to myself, you know, how are investors going to react to the fact that, you know, here, I was doing this significantly smaller deal. And then suddenly, you know, I'm in the Big Boy league to some degree, you know, in such a quick window of time, and I realized that there was an interesting phenomenon that happened. So first of all, you know, what I realized investors don't question, you being there, you know, they, they either will like the deal or not, like the deal that you're offering them. But, you know, whether they thinking it or not, I don't know, but they never approach me and say, Who do you think you are? Doing this deal size? Now? You never get that?

54:15
So it's just, it's just the voice in your head? Is it down? Yeah,

54:18
that's right. So you know, again, it was one of those moments where suddenly, you know, I took that it was like a self limiting belief that just went away very quickly realized. There's nothing stopping me from going for big deals, if I liked the opportunity

54:32
is like it. Yeah.

54:33
Yeah. And, and it came easier, because the bigger dollars are usually going to be, you know, high net worth and fund money. And, you know, it's easier for them to write the checks anyway.

54:43
So you name moved into the business that you've now been running for the last, what, seven, eight years? And how, you know, how is that gone over the last seven, eight years? And how have you are you still doubling up all the time of your own wealth? Would you ever take any out for building some diversification a little bit off the table or not?

54:59
Yeah, so I mean, I would say that, uh, you know, I definitely have made investments in, you know, the stock market and things like that and just sock money

55:08
away just to you probably, you know, home or something you bought home to live in?

55:12
I so I have I mean, so frankly, I've been, you know, renting

55:21
when I did live in Manhattan, right? And he's given me a million dollars a square foot, isn't it? Yeah.

55:27
It's Well, I mean, it wasn't, it's not so much the the pricing This is just that, frankly, speaking, I have found really good deals. And so to me, I look at it from a cash flow standpoint, and I say to myself, okay, I can take my equity and invest it into something, and my carrying cost is going to be higher. And there's an argument to be made, that I'm investing into my own equity and the value that home, but I could also take that same equity and invested into the assets that I invest in professionally, and carry, carry it for less. You know, and so that's been the analysis, if I, you know, I think it would be far different if I was paying market rent, but I'm

56:15
not, it's a really interesting point. So you're paying modest rent to live where you want to live Manhattan, etc, a great place you're using the capital you have is tied up in there and all the liability for for mortgage to work in your business, which happens to be these distressed debt and distressed properties, you're making a lot more return on the capital, and you are diversifying now where you can into mutual funds and tax favored stuff and nibbling around the edges. But your big engine for wealth is the real estate thing. Right?

56:42
That's right. That's right.

56:44
So just thinking just thinking about time now, because, you know, I, you know, could speak to you for hours. I mean, it sounds a fantastic journey, but what have you learned about money that you wish you'd known when you were sort of I know, you were gonna take over the world when you're 1415 anyway, but you tell the sort of 1819 year old you about money, and about building wealth, and about controlling spending and doing the writings that, you know, now being slightly older.

57:10
So, I mean, I would say the following the things that I know now, that I would advise my younger self, is that, you know, I have, I have the benefit of patience and perspective. With money in that, you know, you make the investments, and especially when you're excited about certain investments, you want to see that return and that value and your investment thesis materialize immediately, because you're excited about it. You know, but I have gotten the biggest payoffs, and been right about my opportunities over time, in certain instances. And I think it also by having that horizon, it also allows me to make much, much sounder decisions about how I'm managing my money, just being patient, having the running time scale is so tremendous, to just, you know, having, you know, just being able to create wealth, you know, and I, and you talk to a lot of investment professionals, and they talk about the magic of compound interest and things like that, you know, to me, that's, that all flows back to that same concept of really letting time do the work to earn the money. Charlie Munger,

58:39
I think says one of the rules is never interrupt compounding. Without good reason.

58:47
Right. Right. And that's, that's, that's absolutely true. And, you know, I've come to appreciate that. Now, more than ever, and, you know, even, you know, the way that, you know, I handle my investments, you know, as I mentioned, at the start of the conversation, talking about this one deal that I done, you know, where I had refinanced it with long term financing. You know, historically, even when I was successful with the fun that I ran, the, the winds were generated by, you know, buying something impacted, creating the value and then liquidating, and, in the end, I mean, it was great, but I didn't necessarily have anything to point to, after call it a decade of all that effort, you know, and even success, you know, and money was made no question, but, you know, to now think about trying to build assets to diversify, you know, like you said, you know, that's, that's really where I now see so much value and where if I had to go and tell my younger self, you know, think about that, you know, asset building, think about just, you know, if you're going to sock it away, think about it That plus time is really what's going to create the foundation for just wealth. And to me the underlying premise of wealth is really financial security and independence. You know, and so that's really something that came to me and resonates with me and, you know, really guides a lot of the decision making for me today,

1:00:26
doing what you want, where you want with whom you want for how long you want is perfect. Yeah. So if no, no, you've got you've written books, haven't you? You've got books out and you're a public speaker? Where can people find out about you if they want to find out more about you?

1:00:40
Sure. So I'm active on LinkedIn. David Blatt. caps tech CEO. I'm active on my socials and my website, cap stack partners.com. You know, so I'm

1:00:55
available know where to find you?

1:00:57
Yeah, pretty much. Yeah. I'm

1:00:58
not going to find anyone interested in this kind of distressed assets, distressed debt, and particularly stateside, David zemanta. No. And if he doesn't know, he'll know, someone who knows, right?

1:01:09
I think that that's accurate.

1:01:11
Good stuff. David Blatt, all around good guy. When we're over, when I'm over in Manhattan, I'll be looking you up, then you can tell me all the best places to go. And it's been really great talking to you. I know we've only touched the surface. But you know, the time flies so quickly. Very, very grateful for you being on today. It's been great sharing your real money story. And thanks very much for being on.

1:01:33
Thanks for having me. I had a great time.

1:01:40
What a smart, but humble man, David had a very modest upbringing, but clearly worked very hard and applied himself. I never knew you could do a master's in negotiation, what a really useful and practical thing to learn. And I loved the way that he viewed his student loan as an investment and that he thought his future self was a good bet. That's a good way of looking at it. When David was trying to break into real estate, he interviewed people in the industry to find out what was what, that's such a simple idea. And in my experience, is that successful people are very happy to share knowledge. And in fact, with the internet, now you can find that knowledge just a few clicks away. So do your research. And after you've built some savings, David was prepared to take a pay cut, to become a receptionist at a real estate firm in return for them teaching him the ropes of how to do deals, and he started getting involved in deals. And what a great insight did did you remember he said, money spent on lifestyle is taking away from money invested that can earn for me. So that's the point isn't it is that the money that you put aside and build assets, those assets can build you income that can then fund your lifestyle, so you're not working to drop. And David's point that it was easier to raise larger sums of money for his property deals is well worth remembering. Because I know from my own experience as an angel investor, that is much easier to raise several million pounds for a business than a few 100,000. And finally, very interesting David's approach to renting his home in Manhattan, New York, which is where he lives, it made much more sense for him to rent his house, because then he can use his capital to build his investment business. That's the same philosophy of us billionaire Grant Cardone. And it's one that might make a lot of sense for some people if you just think differently if your situations. Well, that's another episode finished. So thanks for listening. See you next time.

Thanks for listening to real money stories with me Jason Butler. If you like what you hear, please do tell your friends. And more importantly, please rate us on your preferred podcast app, because it really does help us get the message out there. So until next time, good luck with your money journey. Real Money stories is sponsored by Vanguard bringing value to 30 million investors worldwide. Visit vanguardinvestor.co.uk for more details. The value of investments can go down as well as up and you may get back less than you invested.

Transcribed by https://otter.ai