JF2348: A&E’s Flipping Boston With Dave Seymour

Dave Seymour was a firefighter for 16 years and is now a full-time real estate investor who also was on the A&E’s hit TV show “Flipping Boston”. Dave has done millions in real estate transactions and now manages a 100 million dollar fund investing in multi-family.

Dave Seymour Real Estate Background:

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Educate don’t speculate” – Dave Seymour

TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast where we only talk about the best advice ever. We don’t get into any of the fluffy stuff. With us today, Dave Seymour. How are you doing Dave?

Dave Seymour: I’m well, Joe. How are you, man?

Joe Fairless: Well, I’m glad to hear that. I am well also and looking forward to our conversation. A little bit about Dave. He’s been a firefighter for 16 years and is now a full-time real estate investor. He was on the A&E show Flipping Boston, he was the star of that show, and he’s done millions in real estate transactions. Now he manages $100 million fund investing in multi-family. And that’s what we’re going to spend a lot of our time focused on. Based in Boston, Massachusetts. So with that being said, Dave, do you want to give the Best Ever listeners a little bit more about your background and your current focus?

Dave Seymour: Yeah, absolutely. It’s kind of interesting when you hear somebody describe a 10+ year journey in two or three sentences right there… But I was a firefighter and a paramedic for many years here just North of Boston, a city called Lynn, Massachusetts. I found myself in some financially challenged positions, and transitioned into real estate. I had some construction experience, Joe. Firefighters tend to have that second and third job, and mine was in construction, and that was my first taste of investment. I got to see investors. Their clothes were cleaner, their cars were nicer, they smile more than I did while I was digging ditches. So I kind of thought to myself, what are they doing that I’m not? And I figured that out, and it was an education for me. It’s crazy, man. I attended one of those seminars that were traveling around the country back then, invested, and actually did what I was taught to do. And the results from that spoke for themselves. It got me out of some financial jackpots I was in, just through financial illiteracy.

Spending more money than you earn is probably not a great policy. But I learned through real estate what an appreciating and a depreciating asset was, and a lot of the single-family stuff that most people are familiar with – the eating popcorn on a Saturday morning, watching HGTV; it looks so easy, doesn’t it? But in the real world, real estate investing takes expertise. It takes practice. It takes some guts. But if educated, and then implemented what I learned – it took me on a pretty dramatic journey.

One day I’m sitting in a firehouse watching the show, and the next day I’m on TV creating a show. We did about five years of Flipping Boston, which was great. It was a lot of fun, it was also a lot of work; it wasn’t financially what most people think reality TV is.

Joe Fairless: What do you get paid for that?

Dave Seymour: Yeah, look at you asking me such a personal question… It’s fine. Here’s what I didn’t get paid. I didn’t get paid Kardashian money. You know, we started out at about $1,500 bucks an episode, myself and my partner. And at the height, it was probably around $30,000 an episode. But you’ve got to remember, we weren’t doing fluff and puff, we weren’t doing garbage flips. In New England where we are, our stock is pretty old. The majority of our properties that we buy, fix and flip, were turn of the century 1910, 1920, ’30, ’50, ’60s. So they had a lot of deferred maintenance. Plus you’re bringing all of that up to code. So it was a lot of work, but the national exposure was the real value in doing that TV show.

Joe Fairless: So many questions, and we’re going to focus a lot on your 100 million dollar fund, but just a little bit of context for your background. You said you were in some financially challenged positions. How bad, financially, did it get?

Dave Seymour: I was working 120 hours a week. So I would work full-time in the fire department, full-time construction on my days off, and then part-time nights and weekends. And I came from a very blue-collar background job. I was never taught what money really was, which was a tool. I was taught that saving was smart. I was taught to just trade time for money. And when you’re continually trying to keep up with the Joneses,  I crossed that threshold where I had about $60,000, $65,000 in unsecured debt, depreciating debt, cars, boats, leather coats…

Joe Fairless: Leather coats? You don’t seem like a leather coat kind of guy to me.

Dave Seymour: [laughter] You know, that’s just — I use that as a term.

Joe Fairless: So you didn’t buy any leather coats?

Dave Seymour: Well, I might have had one. I didn’t look that good in it, Joe. [laughs] But being a consumer rather than an investor. I think we trained that way, Joe. I think it’s how America is driven. And for me, I was 2006-2007, I’d refinanced my primary residence I think three times in 18 months, because they told me my house was a bank, and it was always going up in value. And then I found myself in late 2007 in a pre-foreclosure, potentially working on a short sale. That’s when I actually started in real estate. The first job I tried to do was save my own house. Very pleased to say I was able to do that.

So it was bad… It cost me a marriage, it cost me a relationship. When you’re working that much you can’t really show up and be present for the people that you love, because you know, I’m riddled with fear, doubt, and insecurity every day, like, “Oh my god, can I make ends meet?” So I never forgot that. And it’s kind of interesting, Joe, because I carry that sense, if you will, that feeling into everything that I do today in dealing with our investors. Because I know that they’re probably feeling a lot of the things that I felt, like what is five years, 10 years, 15, 20 years going to look like on their financial landscape? So I’m very cognizant of that. I think my own journey has been a huge benefit to me and to my investors, rather than a deficit, like “Oh my god, that guy nearly lost his house. Why would I invest with him?” That’s probably the best reason to invest with a guy like me, because I take every dollar seriously as if it was my own when it comes to investing.

Joe Fairless: How did you get on the show?

Dave Seymour: I was a seminar student. I was a product of a three-day class and then some mentorship. It was amazing…

Joe Fairless: Was that Rich Dad, Poor Dad, or what?

Dave Seymour: Well, it was a different company. It was actually the Russ Whitney group. And Rich Dad, Poor Dad actually bought them out. So it’s the same kind of organization. It’s crazy, man; that world is a different animal in and of itself, buy… It really is, Joe. And I got to be on the other side of that curtain because they asked me to start teaching because I was doing so well, and I’m like, “What, are you crazy? I’m just coming out of a pre-foreclosure scenario. Now I’m going to get on the stage and teach?” They said, “No, just share that it works. Don’t lie. Don’t say you’re a billionaire. Just tell the truth.” And I found that people resonated with that.

So because I was recognized as a teacher and a trainer, somebody in that world suggested that I put in an application for a TV show. It was a company out in New York, it was a vanilla application that you could download… And I just did it for [unintelligible [00:09:17].07] and giggles, Joe, to be very honest with you. I loaded the application with profanity, so that I knew somebody would at least pay attention to it… And yeah. They picked up the phone, they kind of laughed at me. They said, “You’re either a genius or you’re crazy putting all these incredibly unpleasant words in your application.” And I’m like, “Look, dude, they got you to get on the phone, didn’t it?” And I said, “Why don’t you come up to Boston? I’m a firefighter. We do this real estate stuff the same way I fight fires – when everybody else is running out, we go running in.” I said, “I’ve got a great crew, we can have some fun. And if we don’t, okay, I’m still going to do houses.” And it was like that posturing I think was important as well. They came out, shot a little sizzle reel (they call it), sent it to the guys at A&E. And it’s funny, the guys at A&E their comment was, “That big English guy looks like he could get pretty angry. We want to see more of that.” And that was it, man. That was it. So the game’s began.

Joe Fairless: Now let’s fast forward, let’s jump ahead to a hundred million dollar fund. Have you raised all the hundred million dollars?

Dave Seymour: Oh, I wish. No. I could spend 100 million tomorrow, if somebody wants to write us a check. We’re about 80% of where we want to be right now, but we are in acquisition mode.

Joe Fairless: 80% of where you want to be. So you’ve raised 80 million dollars?

Dave Seymour: We’re 80% of where we want to be. There is not 80 million in the bank either right now. A lot of the money — I’m not trying to avoid anything, Joe. But a lot of the…

Joe Fairless: No. Fair enough. Yeah.

Dave Seymour: …a lot of the capital is coming through what’s called qualified funds. So I could say 80 million, but because it’s qualified funds, I might only land 50 million of it. But we’re consistently in a capital raise mode, because of the amount of apartment complexes. They’ve gone through our underwriting funnel job. They’re primed and ready to go. But the reason we transitioned into this world from where I was, is because the landscape demanded it. COVID has created an unprecedented opportunity. And that word unprecedented is used pretty much in every conversation today. Unprecedented that our kids don’t go to school, unprecedented that the restaurants are shut down, unprecedented medical front; it applies everywhere. So if you’re doing the same thing now that you were doing late 2019, then you’re probably not doing the right thing.

And we looked at it and we said pre-foreclosures will hit, the forbearances will be lifted, and people will be hurt. Unemployment is still three and a half times what it was pre-COVID. The moratorium on tenancy is going to be lifted, people will be evicted and they will need to be reassigned to new housing. We need to be ready for that. And it’s a case of he or she who controls the capital in this chaos is going to win the race. And the amount of dry powder – and we refer to dry powder as the capital dollars on the sideline – has grown exponentially as I’m sure you’re aware. So we have a responsibility to be in that position to put that capital to work. Double-digit returns, which is what we target out.

Joe Fairless: And when you say qualified funds, are you talking about retirement accounts?

Dave Seymour: Yeah, correct. So that’s your self-directed IRAs, your solo 401K’s. That money funnel, if you will, has got a lot of checks and balances along the way. I work solely with one company, Horizon Trust, so I have a great line of communication, and our systems integrate, so we can take maybe a couple of weeks off of the general timeline that it takes to get that capital into the fund. Because as soon as it’s in the fund, my goal is to get it out the door and on the street into a property as soon as possible. So yeah, that’s what we mean by qualified funds.

Joe Fairless: Why is a lot of the money through qualified funds?

Dave Seymour: That’s a great question.

Joe Fairless: Firefighter connections is my guess.

Dave Seymour: Yeah, it’s partly that. It’s an interesting world. Fearless real estate is kind of like our topic here, but at the end of the day, I’m now in finance more than I am in real estate. So these kinds of funds, what’s called a regulation D 506(c) fund – because I’ve gone through the SEC compliance process, I’m allowed to market to the general public for my fund. Well, there are really two kinds of investors; there’s what we call the retail investor and the institutional investor. The institutional investor are the smaller hedge funds, pension plans, things of that nature. They are very comfortable with 10, 20, 30 million dollar commitments into a fund, but they shy away when it’s a new fund or a first fund.

So the qualified funds for us are coming through the retail investor pool. I’m 54 years old, so I have a lot of commonality, for want of a better term, with my investor pool… Because we’re in their late 40s or early 60s age group where we’re starting to think significantly about “Will the retirement capital honestly get to the finish line for us?” The number one fear is having the money die before you do. It’s interesting, medicine has extended our life and yet our financial fortitude doesn’t meet life expectancy anymore. People are still just plunking money into 401Ks, are not paying attention to their expense ratios inside of there, and they talk about compound returns, but they never refer to compounding costs.

So that’s why we attract that kind of capital, I think. We have various marketing funnels, Joe, that are out there. And it’s a wide net that we cast. But it’s the retail investor that puts their hand up, because I think they just identify with the message. If you’re sitting on three and a half million, four million dollars right now, is that really enough? And most economists say it’s not enough money to get there. So I’m not necessarily interacting every day with the pension funds and the smaller hedge funds, although I do have a lot of conversations with those guys.

You know, it’s funny, man – you get to a point where you show them your PPM, your private placement memorandum, which is a legal document that explains the business model for the fund. Why we invest, where we invest, what’s that criteria, returns, etc, etc. And these funds are looking at it and saying, “I love what you’re doing. It all makes sense. You know what though? You’re only 100 million, you’re way too small for us. Please call us when you’ve got fund two up and running, with half a billion, and then we can write you a check for 75, 80, 90 million dollars.” So the business model isn’t what’s being overly scrutinized, it’s actually the size of the fund, which is pretty interesting.

So that’s why I think it’s commonality, it’s people resonating with the message that we put out there as to why wouldn’t you let somebody else do all the work, Freedom Venture Investments, and you the investor participate passively in those double-digit returns that we target on the fund when we execute and bring the assets in? Does that make sense?

Joe Fairless: It does. You mentioned marketing tactics, you’ve got a bunch of them. What’s been the least successful and the most successful at bringing in the accredited investor?

Dave Seymour: Yeah – the least successful is thinking that just because you have the TV guy status, that people are going to write you a check. [laughs] I think that’s kind of interesting. We brought in Kevin Harrington to be head of business development for us. Kevin Harrington was one of the original sharks on Shark Tank. And Kevin is a fantastic asset to the company. But you look at it and you think, why is this so much work? And you can’t just have a fund and think the money is going to come. So what we did was we stepped back after a couple of weeks and said, “What more that we need to be doing?” And for us, the most successful funnel, if you will, that we have, is actually building out an online education piece that brings the investors awareness and competencies up the gradient enough so that when we have the offer in front of them, it makes a lot more sense to them. And we do that through various online social media type platforms, and things of that nature. That’s been the number one spot.

And then the second spot is where we’re at right now, which is actually doing in-person presentations for our accredited investors. We do one down in Tampa, which is where the majority of our assets are, in the Gulf Coast region in Florida. We just go to a really nice steakhouse, we do an hour and 20-minute presentation, gauge the interest in the audience, and then start to work with them and bring them up the gradient, so that they can feel comfortable about making an investment. I’ve always done well live and in person, Joe, and it’s so hard right now with COVID. The very best restaurants — Tampa is a little looser than we are up here in Massachusetts. Our offices in Tampa are firing on all cylinders. But up here in Mass, I think I’m down to about 18 to 24 butts in seats. But again, look, my minimum investment is $100,000. It’s two, three, four thousand dollars to put on a decent event, feed your potential clients, gauge their interest… This isn’t a hard sell.

Joe Fairless: How do you find them? Like the in-person one.

Dave Seymour: Yeah. Direct mail. We pull a list of accredited investors, we can go in and base somebody’s accreditation on earnings. It’s amazing how much information is out there when you know how to go find it.

Joe Fairless: Who do you use for direct mail?

Dave Seymour: My marketing team does it. Blockbuster, or Big Block, I think, is a postcard that we use. A little bit bigger. And again, that’s where we get a little pop for the TV thing, because you get to be able to use you know the face and the names, and people are like “Oh, that’s a little bit different.” It’s just separating yourself from the noise, Joe. If you can do that… Just like I did using profanity to get a TV show… I now use the TV show to separate myself from the other funds that are out there that are vying for this retail investor capital.

Joe Fairless: And I know this is more the marketing team, but if you do have knowledge of this, we’d love to learn about it. On the direct mail piece, do you have a frequency in what you send those direct mail pieces to the credit investors?

Dave Seymour: Yeah. Let’s say I pull a list of 1,000 accredited investors from direct mail marketing. It’s not like 1,000 pieces one time; you want to segment that out. So we’ll do either a three or five-touch campaign over, I think it’s a three to four-week period. I’m not exactly sure how often they send them out. But we commit to that. I’m not a great marketer, I know the basics. So with direct mail, my response rate for these kinds of events is probably around three and a half, 4%. We haven’t done too much split-testing with these pieces because we haven’t really needed to yet. But it’s trial and error. Marketing is all trial and error. It seems to be in such an intangible world sometimes for me; I’ve learned my lessons over the years with online marketing companies and stuff like that. I like tangibles. I want to see dollars out, customers in, cost of acquisition. Again, the marketing team does all of that. But it’s not just a “one list, one time, I hope it works.” Its three to five-touch campaign is what you generally need to get that kind of response rate.

Joe Fairless: And you said three to five touch campaign over roughly a three to four-week period. Just so I’m tracking right, does that mean about one per week?

Dave Seymour: Yeah. Approximately one a week. It’s the consistency that really gets it done.

Joe Fairless: Different postcards each week, or the same ones?

Dave Seymour: Well, we haven’t needed to split-test yet.

Joe Fairless: So the same one over and over?

Dave Seymour: Yes. So the same one. We back that up locally here in the Massachusetts market. I have a radio show that runs on Saturdays, like a talk show piece. It’s a one hour show called Real Estate Revealed. So I also use that as an education and a traffic-driving platform as well. I bring in Kevin Harrington and interview him, and I interview my custodian from Horizon Trust, and that kind of stuff. It’s all angles. It’s all angles.

Joe Fairless: It’s a fun conversation, I appreciate you sharing the inner workings of how you’ve put together the fund. Have you purchased any properties with the fund money yet?

Dave Seymour: Yeah. We’ve got a smaller asset class that’s just about to come into the fund. And there’s approximately, I would say, another 15 or 18 million that has been underwritten and has been walked, and is right on the cusp of coming into the fund. It’s interesting, because what we’re seeing now is practically zero outbound marketing for leads for properties. My partner Walter Novicki, he has over 25 years syndicating multi-family apartment complexes in the Gulf Coast region… So he’s known as the guy to call when the you know what hits the fan. And we’re actually getting pre-foreclosure leads now… Because we deal with a smaller asset class, Joe; I don’t like these 200, 250, 500-unit complexes. I’m going to let Wall Street and all the big boys fight over those. And then what we’ll do is we’ll pick up all the crumbs, because the verticals are exactly the same for us.

Joe Fairless: What size units are you targeting?

Dave Seymour: We target 40 to 150, we’re in that range.

Joe Fairless: Got it.

Dave Seymour: And again, because the verticals are there, property management, construction, those kinds of things for repositioning, we almost look at it as if it is (and it is) all one fund or one real estate strategy for each of these complexes inside the fund. It’s inbound calls.

I was talking to a fund manager the other day, and he deals with international pension funds for teachers. And he asked me bluntly, he said, “Your fund is 100 million.” He said, “If I write you a check for 100 million, how long can you put it to work?” That’s a hell of a question to have somebody ask you. And I quickly dialed in my CIO, Walter, and I said “If I give you 100 mil tomorrow, how long can you put it on the street?” He said, “I can buy 300 million of cash flow and assets within the next 30 to 45 days.” And that’s a pretty powerful statement to make. But again, it only comes through longevity and expertise in a market, being able to execute on that stuff. So that conversation is still going on. I wish I could tell you with all confidence that we pulled that one off, but it’s interesting the way that they’re looking at this stuff. They’re looking for a lot of distressed debt right now, and that’s probably part of the fund too for us, is bringing distressed debt into the fund and working some of those angles as well.

Joe Fairless: Just taking a step back, based on your experience in real estate investing. What’s your best real estate investing advice ever?

Dave Seymour: Educate, don’t speculate. Really, it’s that simple. There are so many investors out there who think they know what they’re doing. I’m watching a lot of speculative investments going out there right now. People got hurt in 2008, 2009, 2010 because they did the ostrich thing. You know what I mean, Joe? They put their head in the sand and said, “Nah, we’re going to be alright.” No, you’re not. You’ve got to pivot, educate. Do you know what’s going on in the marketplace? Do you know what the yield is on a T-Bond right now? Because that’s important. Do you know how many mortgages are in forbearance right now? That’s important. You know, all of the easy data that they throw out there needs to be analyzed with a professional mindset, and a lot of people just kind of wing it. And I’ve seen a lot of people get hurt. I’m very proud to say I have never ever in my career, missed one payment or lost $1 of investor capital ever, ever. I’ve always done that from an ultra-conservative standpoint. I don’t do skinny deals. I educate myself first before I execute. So yeah, sorry to get long-winded man, but it’s important. Educate, don’t speculate.

Joe Fairless: We’re going to do a lightning round. But first, are you ready for the lightning round?

Dave Seymour: Whatever you’ve got. Bring it on, Joe. I’m feeling strong. I’m on a roll.

Joe Fairless: I know you — you can handle anything. First though, a quick word from our Best Ever partners.

Break: [00:24:21] – [00:25:08]

Joe Fairless: Alright, let’s do a lightning round… Real quick, Best Ever way you like to give back to the community?

Dave Seymour: Tunnels for Towers. It’s a charity close to my heart that supports 9/11 victims, and veterans, and first-responders.

Joe Fairless: How can the Best Ever listeners learn more about what you’re doing?

Dave Seymour: Freedomventure.com, look us up online. You can find out who we are, what we do, and how we can help you.

Joe Fairless: Dave, thanks for being on the show. Thanks for talking about your fund. Thanks for talking about a little behind the scenes action on the show Flipping Boston, and your personal story, along with ways that you’re currently attracting accredited investors to your fund, the focus of the fund being 40 to 150 units, and why that is the case. So I appreciate that. Hope you have a Best Ever day, and talk to you again soon.

Dave Seymour: Thanks, Joe.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.