Compounding started when we decided we were in the wealth business with one client: our family.

[04:13]

"I think from a return perspective, it started compounding when we made it our conviction that we are in the wealth business and we just had a single client which was our family. So that was a turning point."

[12:40]

"So when you underwrite and when you look at an investment, you're always in really evaluating the person that you're making the investment with before you're evaluating the deal itself."

[19:59]

"Yeah. And I think it's um it's also psychological right when you're dealing with an eighth generation family office. It's very different. They probably built a lot of uh systems, outsourced a lot of that."

Full transcript

We're going to do our since millionaire fireside chat next. So, I'd like to invite up Yaya Mahmud to the stage here. I think this is going to be great and I appreciate your talk there, Patrick. I mean, one thing that we always emphasize is to do something unique, present it in a unique way and and obviously Patrick's figured out a model there that's highly unique compared to probably what everybody else is doing here in the room.

So, thanks for being here, Patrick. All right. Um, so as many of you know who have been to our events before, we like to do the strategy sessions and fireside talks. And what we like to highlight is the natural genuine stories of how a lot of the mainly offices are really, like I said this morning, uh, super founders and just real entrepreneurs probably just like you have been able to scale something up.

And so that's why I thought a guy would be great have here today. He's a seasoned real estate investor with over 25 years of experience. He has his own single family office. He started a business in 2017 that he sold in 2024. Um he's a proud family man with two teenagers. Um and me and QR is the name of this for and they primarily look for co-investment and co-lending opportunities with other families.

So um we're going to be going through some pre-planned questions here today and kind of getting a little bit of a story and a strategy and set out. What else would you add on about yourself and your background that you think would be good for everybody to know? First of all, thanks for having me, Richard. I love the platform.

I've been a huge fan of Richard's platform because it brings genuine people together and I think you learn more when you're within a room with people who are like-minded and share the same values. So, for me, it's been a great learning opportunity being part of the platform over the years. Um and I think just to add to that when when I started I didn't have any of this plans just regular middle class people 9 to5ers my wife and myself just working hard opportunities presented themselves and we were just taking those opportunities making the best out of them but we didn't start off handed anything down. We didn't start off with a big plan.

Um, and a lot of people ask me like when when you started, did you really think this is what you were building? The answer is no. We we we did not. We did not start off aspiring to build a family office and and mass the wealth we were able to build. So that's the one thing I'd add.

So okay. Um, so you took a a leap from working in big tech to going into entrepreneurship. You what was the real vision for that? How to use that to scale. I think the being in tech and consulting gave me an opportunity to think in a very uh differentiated way and when you think of um investments the natural tendency is to think of return on investment.

I think what a lot of people overlook is return on leverage and that's what coming from a tech background helped me differentiate cuz I was always thinking of systems. I was always thinking of how do you put sustainable infrastructure in place that does not really rely on you having to continuously touch it and how do you actually input that infrastructure in a sustainable fashion built so that it gets better the less you touch it and that was sort of an underlying ethos of what we were trying to do. I was fortunate enough because my wife used to work for Ernest and Young. So, we were sort of very like-minded that we were both systemic, analytical, we weren't very um hasty in making decisions.

We're just really disciplined and we'd say, "Okay, how do we want to make that decision? Let's put a framework. We we design the decision framework, then we follow the framework." We could refine the framework over time, but we were very very disciplined with the decision-m process. Okay. Uh what do you think unlocked the momentum uh gear exponential for momentum along the way?

Uh sometimes people are too systematic visa oriented they get you know analysis paralysis etc. So where where is it a growth where start companion? I think from a return perspective, it started compounding when we made it our conviction that we are in the wealth business and we just had a single client which was our family. So that was a turning point.

However, that's not how our business snowballed. Our our business snowballed when we started hiring for ownership. That was a major turning point for us because we stopped bringing in people to assume roles. We started bringing in people who were taking on leadership positions and we were empowering them with the right frameworks with the right support with the trust to make decisions autonomously while preserving from a risk perspective the reputational risk that we would take on from empowering others to make those decisions.

But I'd say that that was sort of the phenomenal turning point for us. It was truly pivotal when we started hiring for ownership. Bring in people, empower them, and just let them do their thing. And can you say what the business was that you skilled up? Yeah. So um we started investing in real estate um literally as soon as we got out of college.

So my wife and I met in university, so we're very fortunate. We grew up together. So, uh, she's truly my partner in everything we've built. And, uh, she's usually, uh, smarter than I am. Uh, and I'm lowering my voice now cuz, well, she's not in the room, so I can, uh, I can say it out loud. But we, um, well, well, yeah.

On camera. Yeah. Thanks. So, um, for us, it's, um, it's a tricky one because when we started straight out of college, we were really in real estate. It was really easy. We're just buying real estate.

Were flipping real estate. We're building and just renting out units and we weren't selling. But then when when the crisis hit, we had to pivot our strategy. We were not sure how to continue doing real estate without getting burnt. And in 2015, we got this opportunity where we were sitting on liquidity and someone asked us if we would lend them money.

And I'm like, that's an interesting proposition. We we didn't ever plan to be in the lending business, but we started lending money um secured by pretty strong covenants, but 2017 we scaled that. We started actually lending out quite a bit more and we pivoted a significant portion of our portfolio to private lending. Um so private credit market backed by real estate.

Um and the business really started just growing. We were in rooms with real estate investors who were like, "Can you help me with this? Can you help me with this?" And we're like, "Well, we're not sure. We we'll coach you, but we're not really going to do it for you. Um, and a year later, we were doing it for quite a lot of people.

Our business grew. Um, and 2024, um, a lot of the financial institutions were struggling because of, you know, interest rates, people not qualifying, and that presented an opportunity, right, in um, divesting part of your portfolio and part of your business is um, I I dare to say because I I take a lot of pride in what I built was a very emotional decision. So we we were able to scale it because we were thinking of how we wanted it to be sustainable, but we got a curveball. Someone said, "Well, we're interested in that part of the portfolio."

Um, and the due diligence on that was was quite easy for us cuz we're systems people. Oh, you want to see this? Great. Here's access. You want to vet that? Great.

Here's the report. Here's our loan tape. Here's And all of a sudden, that ended up being a pretty decent transaction. But being a very um again systemic person, I used as an opportunity to take a step back and say, "Okay, how do I make my overall business and my family office the business and grow it into a more sustainable venture that will grow independently of my efforts and that would create the legacy that I want for my family?"

Along the way as you were growing was there a single asset like a strategic choke point or a certain thing you did that I thought people never hear they did you know book is similar to their business yeah I think for a lot of entrepreneurs and I've been a corporate guy for the majority of my career I ventured into entrepreneurship very late 25 years in corporate activity right so I learned the hard way the things that we take for granted when you work for a large organization simple things like hiring, right? I realized, oh, I have to write the job description. I don't have an HR department. I don't have a recruitment team that's going to screen.

I don't have, you know, uh, 10 layers of managers and middle managers screening and interviewing, and I'm just having a 10-minute cup of coffee to shake someone's hand to say, "Welcome aboard." So one of the key things that I started looking at is that return on leverage because return on leverage from my point of view is not just borrowing. It's not just leverage from a financial point of view. It's leverage on people, leverage on time.

Can you find someone who's an expert in something that you need done who can get it done faster and more effectively? If the answer is yes, leverage. Being in a room like this, we're probably connected to some of the smartest people in the world. So leverage, leverage your network, leverage your capital, leverage your resources because sometimes your resources, you built a great asset and Richard's business is a great example of that.

They built great assets to do their own due diligence, but now they open up to the rest of the people in the room. So if you're part of the platform, now you're getting access to all this infrastructure that somebody else has built. That's called leverage. So, how do you continuously leverage, right? And your return on leverage is exponential and sometimes infinite because you can't build everything yourself.

And as an entrepreneur, if you try to do that, you'll go significantly slower than if you try to leverage everything you've got access to. Certainly the problem says that you have to hire the GP. Absolutely. And by the way, that's one of my favorite books. Good to Great has so many lessons that you can take away. And not only would you have made the wrong hire, I think you you really quoting again from Jim Collins, what you need to do is you need to really think hard of who you want on your bus, right?

And once you figure out who you want on that bus, you want to figure out which seat on the bus you want them in. And then you just enjoy the ride. Let everybody do their thing. Right. Awesome. Yeah.

Well, that's up to you. You quoted all and um what you learned the hard way you share with people here in the room. Money is the worst thing to possess. Yeah. And the reason is and I I bet you right I've already got like multiple messages on the app. Second I step off the stage, people are going to start chasing you cuz they they want to pitch you.

And I think this is the worst thing that I've experienced amassing wealth is that you become a target, right? In um and I think Richard in multiple occasions made this clear. People who are wealthy are not usually very visible. They try to have a low profile because they don't want to be targeted all the time. Um, what I suggest you do differently, um, that I think you should take away from from being in rooms like this, build trust.

There are people that I see here for the fifth time, and those are people that will come up, they won't shake my hand, they'll hug me, right? Because we've built that. We've established the trust. For me, that's important. And when I'm allocating capital, I'm judging and I'm underwriting character before the deal. And character is really important because nobody's going to be flawless.

We all have flaws. We're humans, right? That's just the nature of humans. We have our strengths and our weaknesses. But character tells you who's going to own when hits the fan. Like, who's going to say, "Listen, we up.

We're sorry." And excuse my French. And this is um but this is what happened. This is why it happened. And this is what I'm going to do about it. Right?

So when you underwrite and when you look at an investment, you're always in really evaluating the person that you're making the investment with before you're evaluating the deal itself. And sometimes the deals you invest in might not be the best deals from a numbers perspective, but you're betting on the individual that that individual is going to own what they promise, right? Do they have the ethics, the the value system? Do they share the same values?

Are they going to be looking at mitigation strategies as and when needed to reflect how they carry themselves? And that for me is the most important thing. So before you start pitching, um, and that's my advice to all the entrepreneurs in the room. Before you start pitching, start building trust and start showing people what you're made of.

What do you value? Are you a family person? Do you take care of your parents? Do you take care of your friends? Do you have lifetime friends? How do you treat your friends?

How do you respond to your friends? And that tells people a lot about can they trust you with their money or not? Because before they trust you with their money, they're going to have to trust you with the relationship. Frank said so true at least a testament magician cuz people say I have some deal this returns to this place and somebody go to my you know the relationship the trust some make introduction an investor plus seven figures is a speaker that I love I should invest as a travel like all the different things a lot of people don't realize what you just said is so central that um by the way I promote these classes and see how helping modified two of them.

It's just something that I was curious about. I selfishly wanted to ask him today and did not obviously be here in the sh. So there's a couple more questions. Um what are some of those that you operate on that others do not say we met your oriented you look for leverage internal leverage you know big tech fig backgrounds you know your brains work a certain way system thinking etc.

But whether it be non that is or your model said Lee go um barbell strategy that's for me is is one that really we we practice every day. Um it's really risk adjusted low intensity that compounds over time. So when you think of this, it's really the small things that you do in a risk adjusted fashion that can unlock asymmetric upside. So from my point of view in the lending business, I I'll just use a pragmatic example so that people understand this.

Um I'm assuming everybody in the room would understand what loan to value is. So, if we're looking at a 65% loan to value request and someone is willing to put in, you know, a 50% loan to value loan amount and I take a piece of a slice of that, a slither of that, even if it is in a much higher risk spectrum, but the entire container is already boxed. So, the risk is already contained. So despite the fact that I'm looking at a higher risk exposure, I'm actually in a riskadjusted position getting the very high yield in a very low risk environment.

So that is sort of the situation that I that's the mental model that I think of. What are the small things, the really small things that can in the risk adjusted position increase my risk exposure slightly but give me exponential yield on that smear risk that I added to my portfolio. So that's I call barbell strategy because it's really easy. Um just think of risk where am I on the risk spectrum?

How can I move myself on the risk spectrum and find those sweet spots and they're usually transition points. Um so that's the other one that I would personally emphasize besides the return on leverage which is my favorite uh mental model awesome and I know a lot of people in here you know think about the models out of F and etc. Um while the idea tools of the 30 is a visual model a freighter tool and we documented 100 of the top models from the billionaire but the intelligence tool 100 models from work 100 from Cuban for basis 100 for all the investors of the sage and we met models for the AI you can tell that it's time to get down with your business and it will suggest you models from a variety of ultra wealth investors a bellionaires coupon stage etc. I'm just like this.

I appreciate sharing seeker super helpful. Um and so what other tips really the due diligence or any partners along the way? We heard that you look for character first. So obviously that would normally be part of free and ser what else do you look for right away in due diligence money you have to be really careful obviously what you're leing against.

So who etc.? Yeah I think we always start with character. So we evaluate what you told us versus what we send out. So, we love it when we see, well, I had a bankruptcy a few years ago. This property was in foreclosure. We So, it's upfront.

We know this is someone who does not lie. So, that's the first piece of it, which we evaluate very quickly. The second is we never lend on on a property unless we've walked the property. And I think, you know, that's something that is common. For those of you who were in Beverly Hills, you've probably heard John Luter say the same thing.

Anybody who's in in a lending position is looking for security. But more importantly in the lending business, it's not about putting the money out. It's about getting the money back then some. So for us, we always start with how do we get our money back and how much time and effort is going to take us if we have to recourse.

And if we have to revert to that, that's a very worst case scenario. And we've only had to do that twice in in our business, which is very fortunate. Not because we're good, but because we tend to have a lot of repeat borrowers, people who we've built trust with over the years, and we try to stay within our lane. So when we're underwriting a deal, we're always looking for character.

We're looking for covenants. We're looking for security. But most importantly, how long is it going to take us to recover our principle, our capital, if we were to go into that situation? And if it's, for example, in a jurisdiction where it's very lengthy, we probably won't touch it. If it's in a very complex corporate structure where you really need to sort of go after three different corporate entities and full recourse against personal guarantee and it just gets too complicated.

Make it simple when you're presenting the deal. Uh that's what I always say. Got to get Sam out a great book ultimately to subtly talk about being miser like most businesses who have the one key critical element. That sounds like for you character person and then how long how easy is that? Can we say the hottie mat on the rhythm?

It's like the non central. Yeah. And I think it's um it's also psychological right when you're dealing with an eighth generation family office. It's very different. They probably built a lot of uh systems, outsourced a lot of that. They've got probably advisers, wealth managers, you know, multif family offices that they spread the risk and yet for first gen like people who built wealth themselves, money's near and dear, right?

Like they worked hard to build it that it's their sweat. So in a lot of times I think for firstgen family offices they tend to be a little bit more pragmatic with how they perform their due diligence and they tend to exercise excessive caution but at the same time they're more boots on the ground if I may use that term. They roll up their sleeves. They're more engaged in the deals.

They're more engaged in where they made their money. They're more engaged in the investments. They they want to be advisers to their borrowers, to their co-investors because they believe that their true capability is what got them there. So that's part of their net worth. It's who they are, right? Frankly says, um, would ra million inside leader say all be yourself.

You don't need to fake it till you make it. If this is your first fund, say it's my first fund. If it's your first deal, say it's your first deal. Just explain how you're going to mitigate risks. If you walk up and you say, "This is the deal." Great.

But what I like more is this is the deal. These are the risks and this is what I've thought of so far. These this might be a non-exhaustive list of risks. This is my risk register. This is my mitigation strategy. If risk materializes, this is how I would go about mitigating the risk.

For me, that's the one thing that I see a lot of people overlook. It's not about how great the return is. You could do 18%, 20%, 50% return. That's not what's important. What is the risk that I'm carrying to get to that yield? And if you explain the risk well enough, you explain how you're going to own it and how you're going to mitigate if those risks materialize, I think that's the milliondoll piece of nugget uh that I would leave people with that I usually see overlooked in a lot of pitches.

Awesome. Great. Thank you so much, team Rambo. Thank you. Join the family office club by visiting family offices.com. We look forward to seeing you at our next live event.