198: Everything I Learned After Losing $40M with Levi Benkert – 8FE

He lost $40 million in 2008… and built a real estate empire from the rubble.

Today’s guest, Levi Benkert, went from running coffee shops to flipping houses, losing $40 million in the 2008 crash, relocating his family to Ethiopia to run an orphanage and start businesses, and then returning to the US to build a thriving Class B industrial real estate empire in Texas. He breaks down the mindset shifts, lessons from failures, and disciplined strategies that turned what looked like a disaster into the comeback story of the century.

If you’ve ever wondered how to recover from a huge setback, this episode gives you the playbook straight from someone who’s done it.

Tune in to hear Levi’s journey from collapse to empire… and why the lessons he learned can help anyone in business or life.

Inspiring Quotes

• “Interest rates are everything; they drive the fundamentals underneath every single deal that we do.” – Levi Benkert 
• “If a million things need to line up for your plan to work, you should probably rethink your plan.” – Brad Weimert 
• “We’re never pencils down.” – Levi Benkert 
• “Do not underestimate the power of being relentless.” – Levi Benkert 
• “People have a lot more forgiveness for you breaking the rules than you think they would.” – Levi Benkert 
• “You have to assume things are going to get worse, and when they do, you’ll be fine.” – Levi Benkert

• 00:00:00 Intro
• 00:01:55 Understanding interest rates and market cycles 
• 00:04:08 The Chatham forward curve 
• 00:11:36 Levi’s early business ventures 
• 00:16:42 Fear and feelings in business
• 00:19:09 Transitioning to property development 
• 00:27:05 Institutional lending
• 00:32:12 Losing $40M during the 2008 crash 
• 00:41:49 Building an orphanage in Ethiopia 
• 00:49:22 Building a beef farm in Ethiopia 
• 00:57:51 Moving back to the US and starting Harbor Capital 
• 01:03:15 Industrial real estate and fundraising 
• 01:11:16 Advice for aspiring entrepreneurs 
• 01:13:53 Outro

Levi Benkert 0:00
You lost $40 million in the Oh, eight collapse. Yep, had 400 lots for homes that I had bought the land. Spent a significant amount of money on domino that fell. That was the worst. Was lenders said, we’re not lending to you anymore. Worst six months of my life. Do not underestimate the power of being relentless. People are gonna tell you, No, you can’t do that. You shouldn’t do that. Oh, that’s not going to work. Don’t just be like, Okay, it’s not going to work. Say, tell me why you think this isn’t going to work. And they might be wrong. Listen to them, but don’t stop pushing that’s the story of every company I’ve ever built.

Brad Weimert 0:34
Congrats on getting beyond a million. What got you here won’t always get you there. This is a podcast for entrepreneurs who want to reach beyond their seven figure business and scale to eight, nine and even 10 figures. I’m Brad weimert, and as the founder of easy pay direct I have had the privilege to work with more than 30,000 businesses, allowing me to see the data behind what some of the most successful companies on the planet are doing differently. Join me each week as I dig in with experts in sales, marketing, operations, technology and wealth building, and you’ll learn some of the specific tools, tactics and strategies that are working today in those multi million, eight, nine and 10 figure businesses, life can get exciting beyond a million. Levi Benkert, you built and manage hundreds of millions in assets, but your path to get here has been far from conventional. You went from owning coffee shops to doing infill real estate in Sacramento, losing $40 million in the 08 collapse, moving your entire family to Ethiopia to have a for profit company. Started nonprofit, nonprofit and for profit Ethiopia now you’re managing several funds for a very narrow type of real estate, which is Class B, industrial real estate in basically two cities in Texas under harbor capital. Welcome to Beyond

Levi Benkert 1:53
a million. Thank you. It’s so fun to be here. This is not

Brad Weimert 1:56
going to be a typical real estate episode. I talked to a shitload of real estate investors, and it isolates the audience, right? Because some people are super into real estate, and they want to learn everything they can. And some people are like, Ah, fuck another real estate episode. But I have to start with a couple real estate questions before we dig into all the crazy stuff that you’ve done, because we’re in a weird time in real estate. So I think one of the first questions I want to ask is, how does your investing strategy change from a low interest rate to a high interest rate environment? And what do you prefer?

Levi Benkert 2:29
My first advice, and I’ve been telling everybody this for a long time, go buy the book mastering the market cycle by Howard Marks. First of all, Howard’s just an incredibly good author, like he just explains things in a way that it just kind of lights up the content and the story in a way that just really pulls you in, but also in relation to real estate. I mean, he is talking much broader than just real estate, but interest rates are everything right. They drive the fundamentals underneath every single deal that we do, in every buyer, everything we sell. And I think a lot of people don’t necessarily understand just how important interest rates are. And so, you know, for us, having gone through, and we’ll talk about it more later, but having gone through 2008 I know that, you know, the market can crash and it gets real ugly and real dark. And so we always assume interest rates are going to be higher for longer and go higher from where they’re at. And try to not ride the the you know, you look at the Chatham forward curve, and everybody underwrites to that. We try to not ride that wave, assuming, hey, it’s always going to be peachy and it’s always going to get better. Chatham forward curve is some is wrong, something like 90% of the time. But yet everyone’s like, well, it’s the best we have, so we got to go with it. So, you know, we try to just assume things are going to get bad and worse. And when you do that, and they do get worse, first of all, the deals you already own are fine. They’re okay because you structured them for this second. Of all, you’re because those deals are fine. You’re not distracted by just trying to save things that are going under you get to go buy and use opportunity that no one else is doing anything right then. So that’s that’s fun. Chatham,

Brad Weimert 4:09
forward curve, yep, break that down for me. And also I want to know specifically, how do the mechanics change when you’re in a high risk or high interest rate environment? Because I heard you say underwrite for it, which for anybody that’s not heavily involved in real estate, it means, you know, look at the risk profile, right? And consider what the worst case scenario is going to be, and take that into

Levi Benkert 4:30
account. I mean, so the Chatham forward curve is what every kind of big asset manager uses as a benchmark for what, what the 10 year and the, you know, basically the benchmark rates are going to do in the coming years. And you know, if you go back and look at charts of what they said it was going to do versus what they did, it’s it’s always wrong. But the assumption is, is these are the smartest guys in the room, and they, you know, this is our best guess of what’s going to happen. And they’re taking the Feds dot plot and a. A bunch of opinions of big Wall Street bankers and everybody into into account and saying, Here’s what we think is going to happen. And so literally, you look at any sophisticated financial model, and they’ll have in there plugged in a link to the fact, to the Chatham forward curve. Say that tells them on let’s say you’re trying to underwrite a deal that you’re going to sell in three years, three years, three years from now, in June, we’re going to sell this building. They’ll have a link in there, in the Excel sheet that goes back to the forward curve, tells you what it’s going to be then, and then and then, if, if interest, or if cap rates today are, you know, a seven or a six and a half for that building, and they say the forward curve is going to go down by this they’ll have a sale price that is, you know, at its core, calculated off of a cap rate change

Brad Weimert 5:46
that’s tied to the Chatham forward curve, tied to what they think the interest rates are going to

Levi Benkert 5:49
be, what they think interest rates are going to be. It’s always wrong, and but it’s still, it’s like, I mean, it’s just, you know, the most sophisticated shops will tell you it’s the best we’ve got, and so we’ve got to go off of it, because it’s kind of widely accepted, you know, if you’re selling a deal to Blackstone, or if you’re bringing in, you know, any one of the world’s top asset managers, that’s a an accepted underwriting tool that everybody uses, yeah, and in general, it, you know, for the last several years, it has predicted a decrease from where we’re at today, sure. And so it kind of works in everybody’s favor. We assume the worst. We assume things are not going to go well, and not that we’re doom and gloom. We just know, if you assume that when you do go buy a deal and it works even with the worst assumptions, then we’re probably going to outperform, yeah, and as a result of the deals that harbor capital has bought and gone full cycle on, we have outperformed our underwriting by an average of 48% Damn. And so we’re, you know, happy to we’ll keep doing this. And what it does is it just gives you discipline. It makes you scour the earth to buy only the properties that are the absolute best, highest properties. Yeah, I

Brad Weimert 6:58
think, I mean, there’s a practical lesson there for all business which is if, if a million things need to line up for your plan to work, you should probably rethink your plan totally, right? And the temptation for most business owners is to see an opportunity, get excited by it and run with it. Yeah, without fully underwriting is the language that you use in real estate, but you could use that anywhere without actually fully looking at all of the risk assessment of the entire plant, right? And in what that means is foregoing a ton of opportunities because they don’t actually check all the boxes.

Levi Benkert 7:32
Yep, it’s a volume game. At the end of the day, you want to be underwriting hundreds of properties a month so that when the right one comes along. Hey, you know what it looks, smells and feels like, and B, you’ve, you’ve seen everything else that’s in the market. And you’re, you’re ready to move on something that is truly different. And they always exist. This is the thing that, like, I hate to hear this pencils down like we’re pencils down right now. We’re not buying anything because we think the fundamentals of the macro market are, you know, are not working in our favor right now, and that that was a year ago. Go to Wall Street because we’ve done a bunch of different Wall Street banks have funded our banks and investment houses have funded our deals. You kind of heard that over and over again last year. That has shifted. But for us, it was like we’re never pencils down. We’re just digging. We might not buy very many things for a quarter or half of a year, but we want to analyze as many as are possible, because when everyone else’s pencils down, you end up with, inevitably, with that desperate seller who’s just got to get out of it. Yeah, our favorite sellers by far are the like publicly traded or large institution don’t have to be publicly traded, but just these corporate sellers that you know they’re looking often. Let’s just get this stuff off our books. Let’s do it in this quarter. Let’s take a loss right now. They’re not inherently real estate investors. They use property to operate out of we’re buying a property right now from a company that does 22 billion a year in revenue, enormous publicly traded company. They they put this property on the market back in January. Here we sit in September, put it in the on the market for an asking price of $93 a square foot. We were interested. We put an offer in at 90. We thought, this is, you know, definitely a great property at 90 somebody else came and tied it up at 92 and so this one just went away for six months. We didn’t hear anything about it. Turns out, we heard from the broker six weeks ago that the buyer was trying to syndicate or trying to raise money around it. They couldn’t figure out how to how to put it together, and they fell out of escrow, or they were going to fall out of escrow at this point. And so the broker called us and said, Hey, we done deals with you guys before we know when you say you’re gonna close, you close, the seller has to get this thing off their books by the end of the year. And so, like, what can we do here? Yeah. And so we came back and said, you know, we just, we’ll talk about this later, but we just just. Close a fund with one of the top three global asset managers in the world. They have like, 2.2 trillion assets under management. Jesus, we were able to come in and say, hey. A, we’ve got the money ready. B, we know this neighborhood. We own all these other properties around here. C, we will pay you $64.50

Brad Weimert 10:17
a foot. Damn.

Levi Benkert 10:19
But we will close, and we know this property so well at this point that we’ll put up a half a million dollars, non refundable. And, you know, give us 15 days to do our due diligence and make sure it all checks out. They were able to give us all of the due diligence from the last buyer, so we were able to look at their environmental study and everything, and kind of accelerate that process. But, you know, we we paid, or we’re paying. We haven’t closed on it yet, but we’re paying, you know, a third less than this property is to us worth because of the type of seller. We just love these corporate sellers, razor, so fun.

Brad Weimert 10:51
I mean, like a fundamental underpinning operating procedure, operating belief in business, and it may apply to other things, but in business, which is, if you aren’t the macro, if you are a micro player in any space, you can outwork the macro. Yeah, if you are a part of the macro, right? If you’re Amazon in the macro economy tanks, you’re fucked. But if you are a player, anything short of, call it, 20% of the entire market, right, which is basically every business on the planet, yeah, you can outwork the changes. And your example of it’s a volume game, and then you find a player that just needs to sell. Well, you have a lot less competition in that time. Yeah, so you can pursue it. And I think that applies to a lot of opportunities in business period, yeah. Well, I want to talk more real estate, but so that we don’t lose everybody that’s non real estate investor. I want to talk about the chaos that is your life in business. Because, you know, rewind before 2008 you, before you got into real estate, you had a chain of coffee shops. So if you can tell me a little bit about that process and how you launched from there into real estate, I’d love to hear it. Yeah,

Levi Benkert 11:58
so, grew up in a real, non traditional family, I was literally homeschooled, didn’t, didn’t get a chance to go to school, even though I wanted to, it wasn’t allowed to. That’s why you’re so weird, that’s right. But I mean, I at 15, was like, screw this. I’m, I’m done, I’m, I need to just go work and figure out what to do. So I literally took my GED when I was 15 years old. Oh, wow. Have not been back to school since. Immediately started. It was living in San Francisco at the time when I was 15, started buying so I didn’t even have my driver’s license yet, started buying cars. You know, Craigslist didn’t even exist yet. It was looking through the San Francisco Chronicle, the the, you know, the classified ads. And would go through and circle the ones I was interested in and call them, because what would happen is people would move to the city for some tech job, have a car, and then realize parking is terrible. Public transportation is great. I have to get rid of this thing. And so I started buying, I mean, I figured it out a little while ago. I think I’ve owned like, 85 cars in my life so far. But I started buying cars. You know, the first one I bought was an orange 1967 Volkswagen bug. I paid $200 for it because the guy was like, can’t even park this thing. I’ve got to get do something with it. And sold it for $2,500 and just did this over and over. I wouldn’t even register him in my name unless I wanted to drive it. I had a, I wish I kept it to this day. Carmen GIA, you remember that? Oh, yeah, I had a white, just beautiful condition, 1972 Carmen GIA, that was, I think it was like my third car that i i drove for a couple of years and then sold it. But, you know, that was kind of my first experience in, like, you know, buy low, sell high. Use the opportunity of somebody maybe being in a situation that, you know, not necessarily distressed, but they’ve got to get out of it. And it’s like, I just have to sell this thing. I don’t really care. These were small dollars that, you know, but yeah, big to me at the time. And so some of the cars, I would buy them and literally, like, switch an engine out myself, and would figure out how to do this. I’d no idea how, but made it happen and crazy would do that for years. I worked at a summer camp as a camp counselor, and met my wife there. We ended up getting married real young, so I was 18 when we got married, had our first kid a year later, and bought a house in Sacramento. So we met. We were living in San Francisco, and then moved to Sacramento right away, and moved into a little apartment, lived there for about six months, and then bought a house. Walked into, I mean, no money, like 00, money. I was working as a welder at the time, walked into a real estate broker’s office, a realtor’s office, literally just sat down with this guy, like, we want to buy a house. I don’t know. I mean, he should have kicked us out of there. You know? He’s like, How much money do you have? $2,200 he’s like, that’s our down payment. And he was like, All right, we’re gonna use the FHA program. There’s like, he pulled together all of these, like, there was, like, a fund that helped First Time Home. Buyers. It was all kinds of stuff. Bought our first house for $103,000

Brad Weimert 15:04
put $2,200 down him

Levi Benkert 15:07
and worked on it for lived in it for a year, worked on it and fixed it up, sold it for $168,000 and I was like, Oh, this is fun. Like, it’s essentially what I had been doing with the cars, cars before. But this was, this was real estate. While we were living there, we found an old bookstore that I went in and tore everything out of it and put a complete coffee shop in. So I did all the plumbing and electrical and built the it was like a metal with concrete top, like countertops and like did all the work myself over three months, got all the permit. I don’t even I mean, the city building, the building department would come like, the guy was basically like, teaching me how to do this stuff, because I didn’t know. And I was like, you know, we’re gonna figure this out. Open that ran that for a year. Actually opened a second location too, and realized real quickly that, like, I did not want to get up at 4am and I did not like the micro transaction business. Like I was making a little bit of money every time we sold a coffee, but it wasn’t that much. And so put it on the market, and ended up selling the business to somebody, you know, that came in and ran, it’s still there. We went back to Sacramento last year, and still there and running. And, you know this, the first location is the second location. It shut down, but sold that. And did, yeah, I mean, it was not, I think we sold it for $70,000 or something, but it was a sale that that happened and got us kind of back into real estate. And then I just started, like, flipping houses. So fun. One of the, one of

Brad Weimert 16:42
the one of the interesting things that I heard was, didn’t go to school. GED at 15, figured out how to replace engines when you’re flipping cars. Figured out how to do the plumbing. Figured out how to get a house, even though you had no money and no business even trying to get a house. Yeah, most people stop before they start in those situations, and you, for whatever reason, didn’t have a limiter to say that’s not something I can do, to the point where you, like, functionally got to the closing table and we’re like, no, no, I just need to buy the house. And somebody was like, Ah, fuck. Let me show this kid how to do this. Yeah, but that pattern is already repeated by the time you’re 24 Yeah. Do you know where that came from? Yeah.

Levi Benkert 17:26
I mean, you know, you watch that, what’s his name? The rock climber, guy that did that big wall, Alex Honnold. Alex Honnold, and, like, I kind of resonate with the like, lack of fear. Like, it’s probably a healthy fear I should have that I don’t, I don’t like, even though, you know, we’ll talk about it later. But 2008 failing, I mean, just failing, losing everything was super painful. I wasn’t scared enough of that before that happened to know, kind of just how bad losing everything would be. But also had this. I mean, a little bit of like, bit of like a chip on my shoulder, of like I would walk into a meeting, a situation, to try to pitch an investor, whatever. And they, they, you know, like felt like everybody else had was kind of in this secret club that I wasn’t in. They all went to college. They all kind of used terminology I didn’t know understood, kind of the way the world worked in a way that I didn’t, and it was pretty early, though, that, I mean, I was early 20s, that I realized that that wasn’t the advantage that they all thought it was, and that I could actually go kind of figure out the fundamentals of what was really going on in a way that was, like, really powerful, I don’t know, like we were talking about before this started, like, some real estate special, right? And you walk up to a house, and my wife was really good at this, like, would find a house on the market, and I’d take her by there and like this, this one, like this one has a feel to it, like there’s something about certain properties that, and it’s the same with industrial properties, like there, there are some properties that work better for the function that they were intended for than others. And there are some that just shouldn’t have been built in that location, you know? Yeah, yeah. Well,

Brad Weimert 19:09
I, I generally anytime, anytime we get into emotions or feelings as it pertains to business, yeah, I’m like, yeah, no fuck. Show me the numbers. Yeah, right, yeah. Show me the numbers like in at the same time, I agree with you that sometimes there are, there are parts of life that you can’t put your finger on, and there is a sense that I can’t, I can’t granularly, logically identify the elements that make this thing, quote, unquote, special, yeah, but I know that That’s it, yeah. And I don’t know if it’s a gut feeling or maybe it’s a whole bunch of data that has brought me to a subconscious decision, yeah, but there is this sense of something special. So you then dove into what is referred to as infill in Sacramento, which is going into an existing city and adding property. To infill the space that’s open. Sometimes that’s putting brand new houses and empty lots. Sometimes it’s adding additional properties on a lot, so like additional dwelling unit, a guest house, something like that. Yeah. How did that shake out? And did this sentiment of finding special properties play into that at all, or was just strictly numeric. Let’s figure out how to make

Levi Benkert 20:24
there was, there was one particular transaction before that that was kind of the link between just flipping houses, which, I mean, we were buying houses that were 150 to $200,000 and selling them for, you know, we would make 30 to $50,000 every time we do it. And did it over and over and over again. This was, I mean, I don’t think you could do this today with the mortgage environment the way it is, but we were using countrywide and, wow, you know, just traditional lender, traditional lenders. But, I mean, you know, at the time countrywide was like, we’ll, we’ll, we’ll do two owner occupied houses at the same time. Sure, you guys will pick later which one you want to live in. It’s fine, you know, like crazy these stated income loans. I mean, I was 21 years old, and at one point had, I think it was five houses under contract to buy, and would, you know, I think it was two different lenders I was working with.

Brad Weimert 21:15
So you are the reason that the mortgage Exactly,

Levi Benkert 21:18
exactly, no, they should not have been offering these loans to people I you know, did really well for them, because I helped them originate so many loans, because we were buying good real estate, remodeling it, and selling it back to the market. And the market was thrilled to buy these things, but there was one house that came on the market, so we were living in Sacramento. This one was in West Sacramento, so just right over the river from the in Sacramento, California. This house was the most expensive house to ever hit the market in the city. Is $890,000 on five acres. It was a it was a doctor had built. It just this obscene, 6000 square feet. It was like a kind of Victorian revival type house with a pool and a guest house that was huge. I mean, it’s just this, like, sprawling property, but I looked at it was like, wait a minute, it’s found five acres, and it’s zoned for one acre lots. Let’s buy it. And the lots are worth more here, like this. This doctor was just selling it as if you wanted to, like, have horses out here, and so this was still fairly early on. I mean, this is probably the, I don’t know, 10th house or something that we’d done and didn’t have, you know, we were doing okay with this, but we’re mostly supporting. We had two, two kids at the time. We’re mostly kind of just supporting the family with flipping houses. It wasn’t like it was just this crazy amount of money we were making. But this came this house came on the market. I put $40,000 down to buy an $890,000 house. Just gotten my real estate license to try to make the process of buying and selling houses better. They they did that mortgage like as if I was a real estate agent. This is what I did. I’d never actually done a transaction at the time. Again, why? I don’t know why they were lonely, loaning money to people like this. I was 23 years old when this happened. Bought the most expensive house that had ever sold, that sold in the city. We moved into the mansion, I mean literally, at one point. So when we moved in, my wife was pregnant with our second somebody knocked on the door to, like, deliver something, and she answered the door, and the guy was like, Is your mom here? She’s like, No, this is my house. Like, yeah, we split the lots on on the property, sold the law, actually, one guy came in and bought all three, one acre lots, and then the house was on two acres, sold that for $890,000 and then sold the house. We lived in it for 15 months. Sold the house for exactly $890,000 so I think we spent $40,000 or $50,000 on the process to split it. But in 15 months, it was like, Okay, now we’re now we’re doing something here. So that was the like transition to, I’m not flipping houses anymore. We’re gonna do property development. And so went on from there on this tear of buying lots that were kind of zoned weird or, you know, like, could be a development property for a home builder. And just went over and over and over again, buying them, going through the process, and got to know the mayor and city council and couple of different cities around there would would get them rezoned, or get them, you know, through the process, and then sell them to KB homes and DR Horton and the big builders. We would sell them paper lots. So I never actually did any physical work on these for years. So that worked. Well, yeah. Well, it was fun. So look, the

Brad Weimert 24:39
you jump through a whole bunch of different elements of, like, the actual mechanics of real estate investing, yeah. And what I What’s fascinating about that, compared to what you’re doing now, which we’ll get to, is now you have a very narrow Buy Box, yeah? Like, incredibly narrow. You’ve got one asset class and said, Set another way. You have one specific type of thing you want to buy. That has to meet a very specific criteria, and you’re not interested in any other kind of real estate investment. Yeah, what you just described was sort of like meandering through the city and then navigating all of the problems to try to extract money out of a whole bunch of different types of real estate. Yeah, that’s what I heard. Yeah, right. It’s like, sometimes you’re gonna divide the lot. Sometimes you have to rezone it, yeah, sometimes you could have done it yourself. Sometimes it was big enough that it had to go to a home builder to do it right. Would you have redone that, to do it over again? Yeah? I mean,

Levi Benkert 25:34
it was a it was a special time in the market, because, like, you know, we talked about interest rates earlier. Money was cheap, like the lead up to 2008 money was not only cheap, but it was, it was more available than it should be. It was, like the post covid cycle that we’ve just had, and Austin’s kind of housing market is hurting a little bit because of the come down off of that was money was too easy for a little while. Yeah, sexy drug. Yeah, exactly. Ash is gonna hurt, right, right? Yeah. It was the right strategy for the time. What I should have seen, and did not at all see coming, was the fact that this money was too easy. It was a, you know, a drug in the market that, you know, that was kind of stimulating the market in a way that it shouldn’t have been that was, that was unnatural in hindsight. And so it was fun. I mean, you could just do it over and over and over again. And I ended up hiring a huge team, and I ended up in 2007 buying a home building company, bringing that guy and his team on on staff, and had them start with us, like, because we were, instead of selling lots, we were going to sell houses. And so started building houses, and figured out our first, like, big, you know, institutional loan from a big institutional lender. And like, got through that growth phase,

Brad Weimert 26:54
and then 2008 was like, oh, yeah, no, we’re done. Just so you shouldn’t do drugs that are harder than

Unknown Speaker 27:01
you are exactly yes.

Brad Weimert 27:05
Favorite rap lyric, yeah. But uh, so explain institutional lending in this context and in the jump from what you were doing with Countrywide traditional lender to

Levi Benkert 27:16
Yeah. I mean the money the first, you know, flipping houses, those were just traditional mortgages, mortgages. Then, you know, the first big institutional loan that I got was with a New York bank that came in and we were building 35 houses on a on a lot in downtown Sacramento. That was a, you know, kind of high density housing development.

Brad Weimert 27:38
And what was, what’s the makeup of that New York bank that, who is it that does those loans typically?

Levi Benkert 27:44
Yeah, I mean, there’s a bunch of different lenders that do that. I mean, there’s, there’s, now, I’ve learned a lot more about this, because we kind of do all of them, but there’s, there’s local and regional banks who typically have lower lending limits, but you can build relationships with and they’re, you know, supposedly easier to work with. A lot of times they are sometimes sometimes not. Then there’s the larger kind of institutional banks, which are typically New York based, but have branches all over the place. They can write larger checks, and kind of want more kind of institutional grade borrowers. They want more sophisticated underwriting, and they want to, you know, they want you to present a little bit better. And then there’s and then there’s other kind of asset manager type lenders that that come in with a little bit more creative financing. And then there’s CMBS loans, which is the commercial mortgage backed securities. Those are, you know, that’s kind of a dirty word because of 2008 but those are still a very highly functioning part of the market. They only want stabilized deals that are, you know, you’ve got tenants in place, and it’s in a good market, and you know, you’re going to be fine. Those are typically very low rate, but if you get them, you’re in a good spot. And then there’s life insurance companies we do a lot of borrowing from. Oh, really companies too. Oh, interesting. Yeah.

Brad Weimert 28:58
Well, I want to talk about that a little bit more later. I ask because, as people dig into real estate investing, I think there are a lot of different reasons people do it. Either that’s what they want to be their occupation, sort of, that’s that they want to spend their time on, or they are they’ve made money somewhere else, and they’re looking for a place to put it and invest it. And in both cases, as you dig in deeper, there’s a crazy lexicon, right? There are all these words for an acronyms for things, yeah, and they fly around quickly, yeah? And when you understand a concept well or a market well, those acronyms and terms are shorthand to shortcut communication, yeah, which is very effective, yeah. But if you’re trying to break into it, as you mentioned earlier, it’s very confusing, yeah, when you don’t know what those acronyms are, and you sort of hear it and it’s like, wait, what does that mean? Right? Who is that and how does that? What does that make up? So I think breaking down some of those, the lending options, is very helpful. As you skip into different parts of real estate investing, one

Levi Benkert 29:58
of the things that I think I have. Had a leg up on is because I didn’t go to school, didn’t, you know, kind of do the traditional route. I think most people like they’re kind of done learning. It’s like I did my thing, and now I’m supposed to go just get the experience. And for me, I’ve, I mean, my shelf of books that I have read is enormous. It like takes over the house. I’m constantly ingesting new information, and they just love the process of learning and diving into different markets and how industries work. And it’s one of the things I love so much about my role right now is as an industrial real estate investor with tenants. I get to go in and figure out how all of these different businesses work. That is fascinating.

Brad Weimert 30:41
You feel like it’s part of your job to investigate the mechanics of a business, yeah, yeah. I love that. That’s actually very much my world. It needs to pay direct, yeah, because we’re doing risk assessment on all these companies. Yeah. So one of my favorite things about it is understanding how the business models work. And for us, I guess somewhat similar is, you know, we get 500 applications a month. And now the business models, I know very, very well, but when a new one pops up, I’m like, well, that’s interesting, yeah, what are you doing? Yeah, how are you doing that? And how are you making fucking a million dollars a month doing it, or whatever. Hold on, crazy. So, but I struggle with how to allocate time for those things. So how do you think about sort of your day or your week relative to carving out time to learn or carving out time to read at this point in your journey?

Levi Benkert 31:31
At this point, a lot of the tenants are look alike, so you’ve seen three or four of these before. You know what

Brad Weimert 31:37
you’re still reading. So whether it’s Yeah, whether it’s that, or it’s just, Oh, you mean to be any knowledge,

Levi Benkert 31:41
I see what you’re saying. Man, I love audiobooks. That’s I still read some, not as much as I used to, I think partly because I need glasses and I just won’t make myself go do

Brad Weimert 31:51
it. Life for you. Man, exactly, only one way to escape it, and it’s not good. That’s right.

Levi Benkert 31:59
I just constantly, you know, when I’m in the car, when I’m driving, when I’m walking, whatever, I’m just constantly listening to audiobooks or podcasts to try to ingest as much information as I can. It’s just, I mean, it’s just fun, like, it’s like,

Brad Weimert 32:12
love that. Okay, so you lost $40 million in the Oh, eight collapse, yep. How did that happen? And what would you have done differently, to do it

Levi Benkert 32:22
over so caught at a kind of time in the development of the business that was just terrible for the market to hit, like to crash the way it did, meaning You were leveraged, leveraged, but had 400 homes, lots for homes that I had bought the land. Spent a significant amount of money on rezoning, scraping on in some cases, putting underground construction in doing curbs, gutters, sidewalks, you know, storm drains connecting into the city, sewer lines, like a significant amount of money had gone into all this dirt in California, there’s we would have swainson’s hawk fees. You’d have fees every time you cut a tree down, like enormous fees. Every time you cut a tree down, you had all these fees that had to be paid before you even, like, brought the first piece of equipment on there to start scraping the land. And so all of those fees had been paid on a bunch of these properties. It was just a lot of money in and really, the domino that fell that was the worst, was lenders said, you know, you know, those construction loans that we gave you to build all these houses, and we’re not doing that anymore. We have a clause in here that says we don’t have to. We, you know, it’s a term sheet. It’s not a commitment, and we’re not, we’re not lending to you anymore. So all of this property that I’d owned and had debt on to debt and equity in to do these developments, all of a sudden became unbuildable because the debt was not available to do it. And you can only sit and wait for so long, like, if you’re, there’s a, there’s a very viable strategy that a lot of people do, and that is land banking, right? You buy land, and you buy it for a low enough basis that you just wait for the market to catch up to you, and all of a sudden you’ve, you know, freeways are out there, and there’s an Ikea next door, and your your land is worth something if you bought it long enough ago, right? You know, it’s great when you’re thinking of like generational wealth, but the key there is low holding costs. You haven’t spent a lot of money on that property and your property taxes are low. For us, it was just an enormous amount of money went into the ground already. So had that, you know, just really painful process of calling all the investors and saying, Hey, we don’t have an option here. Got advice from a ton of them got, you know, I mean, it’s like, like, I did a lot to make sure I was communicating with them and telling them where things had gone wrong and what we were doing. And to this day, many of them are some. Of my best friends, one of our our largest investor today that we work with, lost several million dollars on deals with that were deals that I did back then. And wow, you know, there’s testament to a, he’s a great guy, and B, we, we did everything we could. I mean, I had a really good team that did everything we could to make sure that we were communicating. We were clear. We were just share the books. Here you go. Here’s all the bank statements and financial statements and everything that’s going on here. Here’s, you know, appraisals that we got six months ago saying it was worth this. Here’s an appraisal for today. Yes, there is a 70% drop in value because land is not like no one is buying land right now. And here’s a few transactions that have happened recently. And, you know, it ended up kind of, you know, it was 14 different properties, so it’s kind of a different story for each one. But ended up, in some of them, we did short sales. Some of them, the kind of primary investor on them were first deed lender took him over and and did something with him later. But frustrating process for sure, I had a dear, dear friend who was my kind of number one employee that I’d brought in. Had to lay him off. He was one of the last ones to go and let him know that, like we just didn’t have the money to keep paying him. He went home and had a kind of liver condition that had been latent for years, that he knew about. But, like, he died three days after I laid him off. Oh, my God, and was presumably healthy. I mean, no one knew anything was going on. And, I mean, I remember just internalizing that, like, I basically killed this guy because it was like for for the way I processed it, you know, and in hindsight, this is not what happened, but the way I processed it is I had failed and brought this situation on, you know, where he the stress in his life is what killed him. Had two kids, it was just gut wrenching. And then right around that same time, within two weeks of that, my brother committed suicide. Oh, my God. Had just said, like, 10 year struggle with drugs and alcohol, and got to a point where it was like too much. And, I mean, it was

Brad Weimert 37:12
just like, you know, some optimal situation,

Levi Benkert 37:15
absolutely, yeah, just worst six months of my life, you know. But a married really, well, just fantastic. Jesse was just amazing through all that. Like, just this incredible, like, rock of like, we’re gonna get through this. We’re fine. But like, I mean, it literally was, like, go to, you know, go to a funeral of somebody very, very close to me. And then later that day I had to have a call with an investor and be like, you know, that million dollars you put into the deal. Like, I don’t know what to do here, like it, you know, we’re caught at a very bad time. We had too much money in the property we you know, in hindsight, we probably could have structured this thing differently. We’d had less debt and more equity. But, you know, I don’t know what to do. What do you want to do? You know? And then go back to mourning the losses. Was rough. Wow. For

Brad Weimert 38:03
sure, if you’re enjoying this, subscribe to the channel. It’ll take you, like, five seconds, and then obviously, you’ll get to see more stuff that you’ll also probably enjoy. In addition, though, if you like the content in general, the subscriptions are ultimately what drives the channel and what lets us get better guests on the show. We’ve had some killer, guess we need your help to continue filling that pipeline so we can get the best and the brightest to continue to teach you tactics and strategies to grow your business beyond a million markets change. Recessions happen. Depressions happen. It’s It’s easy in those situations to say there’s nothing I could have done. So many smart people were blindsided by it, yeah. What were your takeaways? What did you learn from that situation?

Levi Benkert 38:50
Be more conservative. Be more you know, so you’ve got an appraisal saying the lots are worth 170,000 Don’t, don’t assume that’s true. Assume that the worst is going to happen. Structure your debt and your equity in such a way that you can be patient if things go wrong. Kind of have a, you know, plans B, C and D ready to go, just in case. Because not not everything is going to work out, you know, you’ve got, and then discount the information that you’re getting. I mean, brokers are always going to tell you, this is the hottest corner of the hottest market, and you’re going to have tenants quickly. You’re going to sell it quickly. And you know, where are they going to go? They have to go to your building. This is going to go so quick. Like, it’s, it’s bullshit. They say it over and over again. That’s, that’s how they get you to do the deal. So they get their commission. Like, figure out what kind of better sources of information that you know are going to be more conservative and cautious. I don’t think the answer is don’t do the deals. I think that that the answer is in the structuring of the deals in such a way that you can weather the storm. Yeah.

Brad Weimert 39:59
Yeah. I think that’s great advice across the board. Real Estate in all business, yeah, I mean, I think it’s just we hit on it earlier, but so many people dive in and go full speed in some direction in business, assuming that the worst is never going to happen. Yeah, and where all these things need to line up, or because one thing is working in the moment. Yeah, and they go full speed all in on that thing.

Levi Benkert 40:22
The other thing is just communicate. I mean, I can’t do this work without partners. I I’m so thankful for the I mean, we have almost 400 individual investors right now in our deals. I’m so thankful for them and the trust that they put like I want to take that seriously. And so we constantly are telling them, Hey, this could go wrong. Here’s all the ways this could go wrong, here’s the downside. And we we messed up. But we had a building six months ago that we bought. We got a roof report. The roof report was like, turns out, it was not a very reputable company that did the roof study. Like, I had to, we had to buy a $500,000 roof that we were not planning on. And that investor update was like, this is on us. No one else made this mistake. We’re not going to point our fingers. Oh, this guy, this, this, this happened. Like, we’re going to say, hey, our process has changed to make sure this doesn’t happen. We’re using different roof inspectors. Like, turns out this guy literally sat in his car, flew a drone up there, sent us a report. And, I mean, was just kind of one of those things we missed and we owned it, like we tell our investors, like, hey, this one’s we screwed up here. And by the way, we’re not taking asset management fees on this thing anymore. Like it’s a small token of us trying to fix the problem. But you know, I mean, thankfully that we paid a low price for the property, and it’s okay, like it’s, you know, a new roof is going to go a long ways in the value. But, yeah, that stuff, you know, own it,

Brad Weimert 41:49
yeah, that’s, I love that. I mean, I love how that was handled. But the the takeaway is, in this is, the cliche is, you make money on real estate in the buy but yeah, again, true of many other areas of business, right? If you dive into something and everything has to be perfect, yeah. Okay, so you lose a shitload of money, and you decide to move the family to Ethiopia. That’s right. So this is actually true. So this is actually true. Collapse happens. You lose 40 million in real estate, and you say, I think it’s a great idea to start a business in Ethiopia, family, let’s go.

Levi Benkert 42:22
So we had three kids at the time, two biological. We’d adopted one through the foster care system in California. Business was done, cleaned up as much as it could possibly be had, you know, had all the phone calls and meetings with all the investors told everybody, here’s where this is all going. Got it all to a spot. And actually had heard about some humanitarian group that had gone to Ethiopia, and literally, like they were supposed to be there for a couple of months, like photography, or whatever, kind of taking care of people and taking pictures. And they were like, Hey, let’s, let’s start an orphanage. And so they, they, in the two months that they were there, started taking kids from this tribe that had a superstitious belief that some kids were cursed and needed to basically either leave the village or be killed. And so, you know, love their hearts that they decided to do this, but they were all like 17, 1819, years old, and started an orphanage. Oh, my God. And so they had nine kids in this little house that they rented. But that was the whole plan. Like no one had thought through anything further than that. So we found out about this, and my wife is the one that was like, Hey, let’s go do something different with our life for a little while. Like, I don’t know how long, six months a year, let’s go, like, see what the situation is and go, like, help. We can help, right? We could probably help do something and stabilize that any money at that point? No, no, no money, no. So we, we literally, like, started a just, like, put a Facebook page together, and we’re like, we’re gonna go do this. If anybody wants to help, donate, like, we’ll like, use this money to, like, take a tiny little salary ourselves. But like, take care of these kids. Went over there, got this that, like it just grew exponentially. Start. We moved there, there was nine kids. Within six months, it was 42 kids. And started this whole, like, started a NGO in Ethiopia, 501, c3, in America. And just this thing just kept growing and growing. My wife was kind of the one like figuring out how to, like, run this organization and do the day to day and take care of the kids and stuff. And I was doing a lot of the like fundraising for it. But, I mean, it was, it’s crazy. So we lived in a house. I mean, it’s square walls, but literally, mud walls. House 18 hours from Addis Ababa, which is the capital city of Ethiopia, like dirt roads, mud roads, crossing rivers to get out to this little town that we lived in, in the middle of nowhere, like the power was on sometimes, like there was some power in the city on a generator, damn. And so we, I mean, it was just this, like, reset, right? You’re just. After having gone through all this in business. I mean, I remember it as being this just beautiful. Our kids were eight, six and 485, and four when we moved there, like, we just spent so much time with the kids and got this like organization running, and ended up adopting our youngest daughter. She was few days old when she moved in to the like, she got brought to the orphanage, and they didn’t really know how to take care of newborns, and so we took her into our house just to kind of take care of her at first. And of course, we’re like, Okay, well, we’ll adopt her. Wow, she’s 16.

Brad Weimert 45:34
Now I think about that as a single man at any point in my journey as a single person, I think about the adventure that would be Yeah, and the way it would contribute to my life man, and the reasons I won’t do that or didn’t do that. And then I think about the responsibility of having a family and kids, and the impact on them and the risk reward for them. How did you approach that, mentally and emotionally, moving the whole family to Ethiopia to do this good for humanity, functionally, yeah. I mean, at the risk of all the things that could happen that could help out, yeah,

Levi Benkert 46:17
obviously, like I said earlier, risk tolerance is probably a little broken, like the risk meter is probably a little probably a little broken. Both my wife and I have, like, we went back a couple of years ago and we were kind of like, how did we do this? Like, well, yeah, it seems incredibly risky, but also there was this thing going on, of, like, these kids are going to be killed. There is no organization here. No one else is stepping up to do this. Like, it felt so and I’m not trying to, like, self aggrandize, like we just felt like we we just had no choice. Like, this had to happen. Someone had to do this, and no one else was stepping up to do it. And like, these are real humans. Like, it’s the I know terrible things happen all over the world, but these kids were like, they wanted to live. They wanted to not be like, and some of them were already kind of, quote, unquote, rescued, but were basically being, like, just living on the street or ignored, or, like, thrown in a, you know, like, back room, and no one was taking care of them. So we were able to, like, think through, like, how do you give these kids a future and a life and build something around, like a real infrastructure that’s as close to what they love family that they lost as possible, and they were coming in malnourished. And, I mean, this is like, if you think of like National Geographic with, like, the lip plates and the like, I mean, this is like tribal, tribal Ethiopia, middle of nowhere, like almost untouched civilizations that these kids are coming from. And we’re able to say, like, hey, they’re gonna get education. We’re gonna, like, they’ve gotten three meals a day. It felt so I remember just this like, visceral feeling of, like meaningful, like, we can help, we can do something, or someone has to, and I know they weren’t our kids, but it just, I don’t know something about, like, the way this situation hit and where it kind of hit in our life, it was like we had to do that. We just had no choice. We had to go step up here and figure out how to make this work. So we lived for a year in jinko, in the middle of nowhere, and then ended up moving to the capital city Addis Ababa, which is a huge city. I mean, it’s, it’s gorgeous. It’s up at 9000 feet, and depending on the count, four or 5 million people that live there. Oh, damn. Like it’s a big, you know, bustling city. And kind of grew the organization had a different started a different branch up there as well. And like, kept growing, still going today, there’s 250 300 kids that have been rescued and are now. Many of them have, like, graduated college and, like, it’s pretty cool that it, you know, it still exists all these years later, and started it in 2009 but we needed a year in we realized we needed a money. Well, no one. We were raising my like, there were people. This is back when like, Facebook was special. It’s not anymore. I haven’t been there in a while, but it was like, a special place, because people were like, you know, we were posting whenever we could get internet pictures of the kids and talking about stories and like, if you can donate, like, it wasn’t a lot of money coming in, but there was enough money to like feed these kids. I

Brad Weimert 49:22
would imagine cost of living there is not super high, super

Levi Benkert 49:25
low. I mean, when we first moved there, our total cost of living was $800 a month for the feed in the family. And, I mean, it was nothing like we Wow, that, you know, yeah, okay, not much. So that helps. Does that change when you move to the course, yeah, it was a little bit more. I mean, it was, I think it went up to $3,000 a month or something like, it was not that much more, but we needed work permits to stay. And I was like, I’d always been fascinated with the like, turn of the century in America, like, like, back in the 1900s right? The kind of pre. Pre Great Depression run up in America where, like, steel and bridges, and, you know, Andrew Carnegie was building these just incredible businesses. And John D Rockefeller, I’d read, like, every one of those, like, you know, 1000 page books about these guys. And I felt when I got to Ethiopia like that. That was like, those opportunities still existed there, because this place wasn’t developed in the way that America was yet, but you, but you had it was a weird thing, because it was happening when all the technology existed, but the but the infrastructure didn’t yet there. And so I was like, hey, if we need a building or a work permit, I’m going to start a business here and figure out how to do something. Because I can, I can stay on a work permit. That’s easy to do. And so I ran through a bunch of different business models and landed on, realize there’s 50 million head of cattle in Ethiopia, no beef was being exported from the country, that it was kind of a way that they were using it as a store of wealth. And so they weren’t necessarily killing off the cattle, because you didn’t really have a way to monetize the value. But I mean, there were, I met a farmer whose daughter had died. Her six year old daughter had died because he didn’t have the $10 for the medicine that she needed. I mean, it was just an infection that she died from. And you talk to him, and he has 25 or 30 head of cattle, and I was like, why don’t you sell them? And he’s like, to who, who’s gonna buy my cattle here? I can’t. And so raised money and built a, what ended up being an enormous business. We were selling two to two and a half million dollars a month of beef to the Middle East. Whoa, realized early on it was like, the only way this was going to work is if we had a lot of land. And so I first started, you know, found a piece of land in an area, started with the local government was just getting nowhere. Spent months and months trying to, like, process, like, I want to, I can’t, you know, how can I get this land? The government owned it. It was just sitting. There was 8000 acres. Like, is there a way to buy it? Is there? Nobody was telling me anything. And so I went the Prime Minister’s Palace is huge in Ethiopia. It’s right, it’s like the top of the hill, and I went to the guard shack for the, like, palace. It’s like the entrance to the White House, basically. And it was a little guard shack. It was very minimal. Went in there and like, can I see I’m like, no, what are you talking about? I was like, okay, but I prepared this. I had, like, made this folder with our logo on it, this business that I wanted to start, but we had to have the land. And had, like, a letter to him in there. Can you give him this? Like, I mean, I guess you know. And so they took the letter from me. I showed up the next day. Did you give the letter to him? They’re like, I mean, we passed it on. I don’t know. I was like, Well, I have another letter. I showed up every day for 12 days. Wow. And would sometimes just sit there, like, I want to see him, I’ll just sit. I’ll wait. Like, if I can see him, I’ll wait. I’ll wait on the 12th day, 12 letter every time, new folder, new like, rewrite the letter. Every time 12th day, they were like, give me your phone number. He’s gonna call you. So I went home. Was like, super excited. Like, you know, this can’t be real, right? I literally got a phone number or phone call from the Prime Minister of Ethiopia. Like, it was, like, nine o’clock at night. He called. I, like, jumped out of bed, like, you know, answered this call. And he’s like, What? What is it you want? I’m like, Okay, here’s the deal. You have this many cattle, you know, he spoke good English. You have this many cattle. You’ve got this, you know, here’s the markets I can sell it to. I’ve already been to Dubai. I found buyers. I just need the land, and I’ll be able to buy the young cattle from the farmers, so they’ll be able to have the income and produce like, you know, cattle that lowers the size of their herd, but turns it into a money generating because otherwise they just get older and older and older and share the grass with the other ones who, you know, it’s just a very unproductive system. And I mean, he was like, All right, let’s do it. I’m going to give you the number of my fixer, guy that is going to help you through the process. And I mean, I think it took three months, but got the deed for you know, they do it with leases there, but it was 100 year lease on 8000 acres of land. And went in and hired a team, and we drilled wells and started growing our own corn there, and built a, I mean, many 1000, I didn’t remember what our capacity was like, 9000 head of cattle that we would buy them when they were three months old, put them on feed for three to three to six months, slaughter them in the slaughter facility. Ship beef to Dubai, Qatar, Iran, all over the Middle East.

Brad Weimert 54:46
Dude. That’s fucking insane. What’s the actual fuck So, okay, what were the economics of the business? And why aren’t you cattle czar now?

Levi Benkert 54:58
So the economic, I mean, the. Economics from the each individual cattle were good. It’s really hard to run businesses in Ethiopia. And so there was a lot of start and stop, like, we’d have six months in a row where you’re shipping beef every day, and it’s working fine. And then all of a sudden some like, new proclamation would come out, and they’re like, Stop, nothing’s shipping. And so you then you would have this like pile up of cattle that should have been slaughtered and processed and sent off, and you’d have, you’d go four months or three months without anything happening, all regulatory, all regulatory. And so it constantly was going back to the Prime Minister’s Office. Then the prime minister that I got to know was voted out, and somebody else came in, and that guy was, like, really hard. Like, I never actually connected with him, so didn’t have that connection, which made it harder. It, I mean, it was one of those businesses that, like, when it was working, it worked really well, and it and it made, I mean, there were 1000s of, you know, not direct job salaries. But there was over 3000 incomes generated by this business because of the cattle farmers that are able to sell us the cattle and how much they’re making, and the drivers and the and then the many hundreds of staff that we had on site, and we were building staff housing and all this stuff like it. When it worked, it worked really well. When it stopped, it would be so incredibly expensive, just it would stop all of a sudden. And so it still exists, but it’s a much smaller business today, just so that it can kind of keep going when it doesn’t like when it’s not working. It’s not like, the overhead isn’t quite as high. I also started another business within six months of that building apartments for the US government. And so we

Brad Weimert 56:45
would, we would go, and I that seems more in line with your skills. It does,

Levi Benkert 56:50
yeah, right. Hey, they’re all, it’s all real estate, right? It’s all met embassy families there. When we you know we’re living there, and you meet this expat community found out that all of them are living in housing that is not to the standard that Congress had set for what an American staff member needs to live in. And so they had this congressionally mandated like, if one of the houses that fit the needs existed, they had to rent it. And so I went to them and said, What if I build you something? And they were like, Please, we will rent all of it from you. And so ended up building multiple projects that were just these big apartment buildings that the US government, the State Department, would sign a lease on before we started amazing, and then would rent them. I mean, it was crazy. That seems like the right business. Yeah, it’s a good business, definitely, yeah. So we moved back. We moved to Austin in 2015

Brad Weimert 57:47
lived there for six years, got lived in Ethiopia for six years. In Ethiopia for six years, guy. And so what was the catalyst of moving back?

Levi Benkert 57:53
Our oldest was going into high school, and it was we needed some like home country experience, and so the businesses were still going. I spent three years traveling back and forth a lot. Like, it was a lot on the family because I was going to because we were building projects in Kenya, and we were looking at Nigeria, Rwanda, Uganda, like, this was all a bunch of the real estate stuff happening and the beef project. So I was on the road a lot. And then 2019 came, and it was like, Okay, this is time to, like, sell. So I had a partner that I’d started some of that stuff with, and sold to him,

Brad Weimert 58:25
yeah, out of curiosity, this is my, this is my privileged thought process. Were you flying first class or coach, back and forth to

Levi Benkert 58:34
Africa all the time at first coach, and at one point was like, I just can’t do this more. So then, then upgraded. I mean, it was the last like, two years, I would, would always upgrade. Yeah, it’s, it was worth the money. Look, you’d lose, you’d lose, like, two days. Yes, it’s a big

Brad Weimert 58:48
difference. There’s, there is a practical, you know, actual, calculated implication to flying coach when you’re flying 10, 1214, hours at a time. Yeah, absolutely, yeah. I mean, if you look, if you, if you, if you’re one of these crazy people that can just pass out on a plane, no matter where you are, no matter what seat, yeah, okay, that’s fine. That’s not, maybe it’s not me. I need to lay down. I can’t sleep for shit, even if I handle and

Levi Benkert 59:11
it’s, I mean, the the fastest flights are 23 hours, oh my god, time. So it’s, I mean, you’re losing a day, yeah? Get get a lot of work done on the plane. But, you know, hopefully, yeah, yeah, if you had a space, yeah, yeah, the normal connection was through Dubai. So we’d go spend the night in Dubai, like you’d land late at night and then leave early the next morning.

Brad Weimert 59:28
Okay, so you get to Austin, 2019, yep. And how long does it take you before you start harbor capital? And how did you land on this specific proposition? Because, again, as a reminder, this is somewhat unusual in real estate, and that a lot of the time. If somebody says, this is the asset class I’m in, they’re going to be in that asset class, and then they’re going to branch out to other areas, and they’re probably going to dance around the asset class the type of real estate. But you are Class B, not all, not all industrial, just Class B industrial properties. Mostly, and also in functionally, two cities. Not even you’re not even saying Texas is okay, just this is it. And you’re raising a ton of money to do this. So how did you choose to do that? When you got in because you kind of, again, sort of wiped the slate clean, right? You sold your stuff in Africa, and said, I’m in Austin now. I’m living here. It’s 2019 so we’re just about to hit covid,

Levi Benkert 1:00:23
yeah. So it actually the sale of the business didn’t close, like, I didn’t get paid on the sale of that business till, like, January, February of 2020, oh, right before covid hit. So I was trying to figure I had an idea for this. And there’s a couple of businesses that have done this since it was, like those pods that you see in airports that are little like office spaces, like you go in there and take a phone call or whatever. I had this idea that it was like, like, we work, but we were going to put those in, like lobbies of hotels and things all over so that anybody who needed, like, if you’re traveling and you needed to work, you could go do so I kind of played around with that idea, built some prototypes for a little while, looked at doing mobile home park development for a little while, and then it wasn’t till, I think, early 2021 that, I mean, it was a good it was like, perfect covid hit. I was able to spend time with the kids. We were, like, out on the water in the boat for for the whole summer. And, like, I mean, it was kind of nice, like, break from everything, because I’d gone from traveling a ton and working my ass off to, like, spend some time with the kids here. Kids were fun, really fun. Age.

Speaker 2 1:01:25
Then not anymore, yeah. Well, I got

Levi Benkert 1:01:29
three in college, now, just one at home in high school. So they’re all busy and driving and doing their lives. It’s not just, you know, not the same. But then started buying industrial buildings myself, just with my own cash, trying to see hey, I had done a bunch of investing with others in that and liked the space, and thought this might be a way to stay close to home in Austin, like close enough to home to be able to get back by the end of the day for dinner. And I love Texas. I love the kind of economics of the dynamics between Houston, Dallas, San Antonio, like those that Texas triangle is really dynamic. Mexico being right, there is a big deal the port in Houston. Like, there’s just some, like, really vibrant dynamics and and the industrial market. There’s just not enough of that real estate, especially to support the post covid Boom. I mean, the port in Houston is still doing double the volume that it was pre covid like. It just was a lot that happened here, like this just happened to be the perfect spot for the after covid world. And so that was a really good market that made sense. And it was, it was kind of going back to my roots of, like, putting structuring real estate deals in a way that it’s like, how can we do this conservatively, and how can we learn from all the things that I’ve learned over the years and put a business together, that it’s kind of like this. I mean, I was how old it was. I was 3940, when I started. It was like, this one song business. It was like, I’m gonna do this right this time. Like, it’s a it’s just going to be me. I’m have fantastic employees that run everything, but, like, this is my business. I’m going to, like, be the decision maker. I’m not going to have a co founder here, like this. This was time to apply all of those lessons learned. You

Brad Weimert 1:03:15
got into industrial You listed a bunch of things just now that are good about Texas in general as an ecosystem, what is in industrial for I believe this is true today, but in the last two years, has been one of, if not the highest, producing real estate asset class out there. Why do you like industrial yourself in 2025 Yeah, that is the same or different than in 2020 when you decided to get it in the

Levi Benkert 1:03:49
first place. We’re in. We’re in Houston, Dallas, in San Antonio and Laredo. So we actually are in Fort. Okay, I don’t actually love industrial as a whole, holistic like, just take it all. There are certain parts of industrial that are a not doing great right now, or over built. I like to think of industrial kind of three different buckets. There’s the small bay or shallow bay. That’s the basically glorified storage units. They’re 1000 to 3000 square feet. Somebody comes and they want to, you know, it’s their first Makerspace kind of business, right? They’re going to run a small business out of there, and this is the first space that they get to try to see if they can be a business owner. As the economy starts to falter, those tenants will just wrap up and go in their garage. And so you have a very non sticky tenant base that you can’t, kind of can’t get over that turnover like nothing you can do will keep them there. That doesn’t really work well, the like, the other thing is, you get personal guarantees we do from all our tenants on the on the lease, if it’s a small tenant and. They owe you $15,000 and they skip out like, you’re not going to spend $15,000 in legal fees chasing them. They’re just gone like, and then you’ve got to pay a broker fee to release it, and you’ve got to pay to paint that space and white box it again, like we’re, in general, staying away from anything sub 5000 square feet on the suite size. And we just won’t, won’t buy things like that. Then on the very opposite end, you’ve got the big bombers. We call them. It’s the 300 400 500,000 or even a million square footers. That’s what Blackstone and Morgan Stanley and all those kind of big players built way, way, way too much of in America, like you’d be hard pressed to find a market where there’s not too much of that product sitting, because those worked really well. I mean, that that for a while post covid, we didn’t have enough. I mean, Amazon has more than double the footprint right now that they did pre covid, because everybody started buying a lot more stuff online, and you needed a lot more warehouse space. And this is the thing that always happens in development, is everybody goes and builds everybody goes and builds too much of a good thing. I mean, look at Austin Apartments. There’s too many of them under construction. And so it worked really well. People saw it work really well. They did their first few projects that worked really well. And so then they just went and over built. That will change over time, and we’ll get back into that space. But for now, we’re not buying anything. I mean, we’ve set that limit as kind of 150 or 200,000 square feet and above. We’re not looking at that unless it’s some really special deal, something that’s just unique and different. But then you’ve got this middle, which is primarily this 10 to 80,000 square feet individual. We like them detached. We don’t want properties that are attached where we can buy we’re doing a lot of these development deals where as soon as it’s built, we can either sell it to an owner user, or we can rent it and then sell it. That space in all the markets that we work in is sub 3% vacancy of that product type, so there’s just nowhere near enough of it, and quality is scarce. There’s not much of it that’s been built that is high quality. And so we’re able to develop these properties and bring them to market. That Are you think of a 20,000 square foot concrete tilt wall space with a little office. You’ve got dock doors, you’ve got ground height doors, some of them, we do have cranes for. You know, roof cranes or truck can pull in and then they can offload off of that. Like, those are a highly functional, highly desirable building that we can either rent or sell. And what we do is just ensure that, you know, if the market’s saying these are $10 a square foot leases, that we can rent them for 10 to 15% below that, like, that’s what we model, because we want velocity, we want to move through these things, and so we’ll sell it for 10 or 15% below market because our basis is so low. Or we’ll lease every 10 or 15% below market.

Brad Weimert 1:07:54
Yeah, one of the things that I heard, that I like is, you know that there’s scarcity because there’s 3% vacancy. Yep. So through enough reps, when you look at enough of these properties, if all of them are at 3% it’s very clear, oh shit, there’s not enough of this out there. Yeah, right, yes, there would be more vacancy if there was definitely.

Levi Benkert 1:08:13
Or you look at Dallas, Dallas has had 57 quarters straight of positive absorption of industrial space in a row, just has not had one quarter in the last 57 quarters where Dallas lost, you know, least, like, lost net, least volume of industrial space. And then you you narrow that into specifically this market, which in Dallas, has many pockets of Dallas that are sub 2% vacancy of this product type. It’s just a very solid, strong, long term investment.

Brad Weimert 1:08:45
Well, I know we’re coming up on time here, but tell me about how you raise money to do these things, and what that mechanism looks like for you. Big,

Levi Benkert 1:08:53
exciting shift underway in the company. So we had, had been, it’s kind of a glorified friends and family fundraising. We had met several different, different kind of large family offices early on. Some have even worked with the Ethiopia stuff. Some I’d worked with back in the California days as well. So kind of brought them along and explained the thesis. And many of them are, you know, you know, anytime we’d put a deal out, there’s one family that started one of the big internet companies and sold it years ago that, you know, they put a million dollars in every time we do a deal like those, relationships are obviously really important to getting us up and going. We have, like I said earlier, almost 400 active investor like LPS in our deals that we work with, so that that helped kind of launch the company and get us going, but is not going to take us where we want to go, and so we’ve spent the last couple of years courting the big institutional groups, and just got a kind of first tranche is $150 million commitment from one of the biggest asset managers in the world. Second tranche is 250 and. Are hoping to get there by April or May of next year, as they’re ready to put more capital to work with us. So that’s been really exciting that that and that took years to develop the the kind of systems and processes within the company that we can do that type of reporting and all of our deals then get audited. When you have that kind of an institutional player in there, and having the now 13 people on the team, the support staff, to be able to run at that level is fantastic and really fun. I mean, I’ve got this theory that I just hire, I always hire people that are smarter than me and looking across this team, that’s definitely true, like these guys know what they’re doing, and it’s just a joy to watch them work, and it’s been really fun. Another, like major, just kind of life thing that I’ve had fun with. So I got my pilot’s license, started it about five years ago, and bought a plane. So I now, for all the little markets that you know, all the cities that we’re going and we land in these little airports and go see these buildings like tomorrow. I’m going, I’ve got a meeting in Fort Worth in the morning, and then Laredo. I’ve got lunch in. Laredo, like you just couldn’t do that. You know, Laredo is a six hour drive from here, but I can hop over there in an hour. Crazy, incredible. So I love flying. That’s been a passion for me. That’s been really fun.

Brad Weimert 1:11:16
That’s amazing. God damn it. I have so many other questions about that. What uh, what advice do you have for a new entrepreneur starting out,

Levi Benkert 1:11:26
um, do not underestimate the power of being relentless. Like, don’t listen to No. Like, people are gonna tell you, No, you can’t do that. You shouldn’t do that. Oh, that’s not gonna work. Like, and I’m not saying be dumb. Like, try to learn from that. Like, don’t just be like, Okay, it’s not gonna work. Say, why wait? Why? Tell me why you think this isn’t gonna work. And they might be wrong. Listen to them, but don’t stop pushing. And I mean that this, that’s the story of every company I’ve ever built. Is just relentless, relentless, relentless. Also, don’t underestimate yourself. Like, at the end of the day, everybody, even if they speak the lingo and have been there for a while, they’re all just kind of, this is one thing that living internationally helped me understand is like, there’s just customs and traditions, and everybody’s got a different thing. And like, you can offend somebody in you know, worked a bunch in Dubai. You can offend somebody in Dubai because you say something that if you said that to the same person in America, they’d be like, Oh, that’s fine. That’s not a big deal. Yeah. Like in Ethiopia, if you’re if you’re walking down the street and you run into an old friend, but you’re late for a meeting, that’s like, the most important meeting of your life, and Ethiopian would just stop and talk to the old friend and miss the meeting because they could not possibly imagine telling that friend, I’ve got to keep going. Like, it’s just interesting. You see all these like cultures, and you realize it’s all just cultural bullshit that has no real basis. So like, being relentless on your own and deciding, like, I’m doing this and I’m going to break the rules like people are have a lot more forgiveness for you breaking the rules than you think they would. And I don’t mean like breaking the rules, like doing something wrong, like illegal. I mean just breaking the customs and the traditions and the Oh, you shouldn’t be here yet. Like, no business applying for a loan to buy the most expensive house that had ever sold in the city at 23 but when you call up the lender, they’re like, I mean, there’s nothing in our thing that says I can’t give you this loan. So here you go.

Brad Weimert 1:13:29
I love that. Yeah, Levi, where do people find out more about

Levi Benkert 1:13:33
you? Harbor cap, calm is a website. We are in the process of raising a fund to match that money that we got from that asset manager. We are looking for new kind of large family office of investors. It’s always a fun. Part of my job is I do a lot of just connecting with investors and so yeah, Harbor cap.com, I love

Brad Weimert 1:13:53
it, man. I appreciate you carving out time, dude. I’d love to ask you more questions. So far around too. Let’s do it.

Levi Benkert 1:13:59
We need to go climbing again. Yeah, fuck yeah. Let’s do it. Do it. All right, awesome.

Brad Weimert 1:14:02
Thanks. All right, that’s a wrap for this episode. I’m supposed to tell you that you should subscribe to the show and you should leave a review. I really want you to leave a review, though, because it makes, like, a radical difference in the algorithm and getting other people to be able to see the show. So leave a review. It’ll take you like, 30 seconds. You seconds. Also, if you want more episodes that are amazing, you can check out the full length video versions at beyond a million.com, or youtube.com. Forward slash at beyond a million. You won’t regret it.