Building Through Cycles: Surviving 2008 and Rethinking Real Estate Investing with Darren Fisk

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire, brought to you by High Level, the all-in-one sales and marketing platform. Today we'll be breaking down building through cycles from surviving 2008 to rethinking real estate investing. And to drop these vibe bombs, I brought Darren Fisk into EO Fire Studios. Darren is the founder and CEO of Forum Investment Group, a multifamily investment platform he launched in 2007. And He has led over$2.4 billion in investments across 21 states and also serves on the advisory board of ACE Scholarships. And today we'll be chatting about launching before the crash, evolving the business, multifamily, 1031 pressure, forum exchange, and oh, so much more.

0:44And a big thank you for sponsoring today's episode goes to Darren and our sponsors. If you're an entrepreneur, you probably know the feeling. Non-stop meetings, constant conversations, and too much information to keep track of. That's why I've been using Plod, an AI-powered wearable that helps capture meetings, discussions, and key details throughout the day so nothing important slips through the cracks. Plod, the world's number one AI note-taking brand. Check out plod.ai slash EOF and use code EOF for 10 % off. Stop duct-taping your business together. High Level runs your website, your funnels, email, automation, scheduling, payments, and memberships all in one place.

1:23And when you sign up at highlevelfire.com, you get a 30-day free trial, plus my exclusive bonus stack that includes weekly office hours with me and much more. Visit highlevelfire.com, highlevelfire.com. Darren, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. What's up, guys? Hey, John, thanks. Yeah, one of the things, you know, it's, I think so many people think that when everybody's doing it, that's the time to get in. I kind of take in the office that approach when everybody's doing it, it's time to get out. And when nobody's doing it, it is time to get in.

2:02So that's with investments specifically. Love that, Fire Nation, which is pretty apropos because we're talking today about building through cycles, surviving 2008, and rethinking real estate investing. And I want to talk, Darren, first and foremost, about launching before the crash. Because you launched Forum back in 2007. I mean, this is right before the financial crisis hit. I was actually working at John Hancock, downtown Boston, looking out my window, watching Bear Stearns and Lehman Brothers employees walking out with boxes in their hands. And I was like, we're next. So I had to ask, what gave you the confidence to pull the trigger at that moment?

2:42First of all, similar to you seeing everybody, I remember, and we had a real estate finance business. I literally was downtown Denver and I walked across the street to Wells Fargo to deposit this check. And I said, this is going to be the largest check and commission I'm ever going to see. And so it was just this sense that things were too good to be true. It's like that spidey sense. And like any entrepreneur, I just saw this opportunity that was about to come. I didn't know when, but it just seemed too good to be true. And I said, I'll be ready and hence was ready to go. And it was just out of those opportunities that I saw right in front of me.

3:22It's like the old saying, skate where the puck's going. And I saw where the puck was going. And by the way, John, it's easy for everybody to make up a story looking back how great it was. That wasn't the case then. It was just literally my intuition, my gut feeling. and the lesson learned is the biggest mistake is when you don't go with your gut is when you make the mistake. Always go with that feeling. I mean, I gotta tell you, when there's blood in the streets, we all tell ourselves, oh man, when there's blood in the streets, I'm a buyer. The problem with that is that when there's blood in the streets and there's really blood in the streets, I mean, you think it's going lower.

3:58You think it's going lower and lower and lower. And sometimes it does, but when it turns around, man, it turns around fast and it leaves a lot of people in the dust. So I love that, following your guts, trusting your guts, making that happen. And I wanna move into evolving the business because you didn't just stay in one lane, Darren. You expanded into debt. You expanded into private credit, into equity. What exactly did that evolution look like? Yeah, you know, again, the lessons learned when 08 actually did hit and we had investors that were single family home builders and were filing bankruptcy, too particular.

4:34And I just realized, I'm like, gosh, I don't want to have a build a business that is reliant on one thing. And so I didn't want to be in that case, like a single family home builder or just a developer. And so I looked at it and my analogy is I wanted my business to be like a casino in Vegas, that there is a slot machine going off in one of these verticals at all times. You know, euphoria is there's every slot machines going off at all times, but at least you have one slot machine, you know, going off at all times. And you're not, you know, subject to the hiring and firing that you see so many times, if you're just a single family home builder, or you're just a developer, or you're just a lender.

5:19And so I have that belief that there's always opportunity in every economic cycle or market. It's just where that is in the capital stack. One thing I found pretty interesting that we talked about actually before we pressed the record button here, this is actually a few weeks ago, is multifamily. Because I've always been personally fascinated with multifamily. I mean, I don't really understand per se how it works, why it makes sense, why it's exciting to certain people. And you've stayed committed to multifamily over the years and even now decades. So break it down for us. Why is this asset class specifically so resilient?

5:55And maybe by first off, share what exactly is multifamily? Sure. Multifamily is any housing, if you will, multiple units that's not for sale. So it's not for sale condos. It's not for sale townhomes. It's all for rent. And when we focus on multifamily, is typically kind of that sweet spot for us is 200 to 400 units, but you could own a three-plex, a 10-plex, you know, asset that you're renting, right? That you rent out typically on one-year leases. So, but to your point, you know, why multifamily? And this has evolved, right? Multifamily has evolved over the last few decades. And case in point, and why it's what I call a needs-based investment is you have to have a roof over your head or you're homeless.

6:51You can shop from home now. We saw that with Amazon. You can work from home. You don't need to go into an office. But if you don't have a roof over your head, you're homeless, right? So that's the whole thing is it's a need-based. And you could argue that the Amazon effect is really industrial, but I mean, our landscape has changed in multifamily and why people are delaying home purchases. Forget about the affordability part as well, but 20 years ago, you didn't have, you know, cold plunges and red light saunas and an Equinox kind of caliber gym. And today, you know, multifamily in these larger, you know, 200 unit or so have all the amenities that you would get like at a hotel or you would get at a gym.

7:39And so, again, it's a need based investment when you think about and just a need based for humans. And just to kind of wrap this up, like if anybody's listening right now, like why should they be excited about this asset class? Like what would be something that they could actually start moving towards when it comes to multifamily? Sure. You know, like any cycle and when things are, you know, everybody's making money in something, you get a lot of capital flowing in. So in the U.S. right now, we do not have a demand issue for housing. We actually and we actually are not, quote unquote, oversupplied.

8:19We're undersupplied on housing. But we did have in specific markets, too much product coming on new development at one point in time. So over the last three to four years, it's been a slog, you know, in multifamily and a lot of markets. And I think what most people don't appreciate is that owners of multifamily, you know, went from, you know, growth mode to survival mode over the last few years. because there was so much product being delivered. They were having to offer free rent, you know, to lease these things up, which what we call concessions. And these lease-ups have taken a lot longer. Interest rates went up.

9:06Values went down because of those interest rates, you know, going up. So, you know, there's an opportunity to come in today, you know, to buy at the bottom rather than buying at the top. And that's, again, as an entrepreneur, you know, we hadn't bought anything as a company in over five years. And most people scratch their head and say, well, don't you guys buy an apartment? I say we do, but we're actually an opportunistic buyer when it makes sense and it's the best risk adjusted return. And there was much better opportunity and value creation in our private lending, credit, real estate credit or development.

9:45That too has changed where development over the last 24 months has been out of favor. And we shelved eight developments and really leaned in on the lending side. So you're getting into the price point today at the bottom, not at the top. Fire Nation, that's value. You're getting the inside scoop from somebody who's in it every single day, seeing behind the scenes, making it happen. And we're talking about 1031 pressure, form exchange, leading through volatility and more when we get back from thanking our sponsors. One thing I've realized over the years interviewing more than 5 ,000 entrepreneurs is this.

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11:35Everything works together seamlessly. Plus, award-winning 24-7 support so you are never stuck. And when you go through my link at highlevelfire.com, you unlock my full bonus stack, a 30-day free trial of High Level with full access, a private 15-minute coaching call with me, weekly live office hours with me, a digital copy of my book, The Common Path to Uncommon Success, my 50 Days to Something Execution Roadmap, and more. Stop piecing tools together. Start building momentum. Visit highlevelfire.com. and start building your something today. Darren, we're back, and I want to talk about 1031 pressure.

12:15Because listen, 1031 exchanges, a lot of people have heard of them. Some people that are listening have probably actually utilized it, but tell us what that is. And specifically, how does 1031 time pressure impact investor behavior in the real world? So that too has evolved, but I want to give just 1031 the basics, the 101. Yeah. 1031 is basically a like-kind exchange where the IRS code has allowed people to sell an asset, take that capital they have, place it with what's called a QI or a qualified intermediary who holds their capital, and they have 45 days in which to identify new property or properties in which they would exchange tax deferred into.

13:03So you've got 45 days to identify after your sale of your property and then identify that new property or properties and close within 180 days. So what typically happens is folks see a price, it could be a condo in Vail, it could be a 7-Eleven in Miami. It doesn't matter what the real estate asset is. It just matters that they have that cash and they give it to the QI. So 45 days goes by pretty quickly. What would happen with us years ago, just on the 1031 side is a lot of our investors would call us and say, we have a 1031, we've got two weeks left to identify, what do you have? And the answer would be either nothing right now, maybe in a month or two, or we just so happen to have one, you're lucky, here it is, and they would, you know, identify those properties and exchange with us.

13:58Where the market has then evolved to is there's something called a DST or a Delaware Statuary Trust. And what that allows an investor to do is let's say they had a million bucks and a property they really liked was 10 million. They essentially do their exchange with other investors into that property. Well, same pressure has arrived, whether it's them 1031ing into an asset by themselves or with others, there wasn't a consistent flow of assets for them in which to choose from. Then comes the 721 uproot, which is a combination of somebody 1031ing into a property or a DST with others. And after a few years, they do what's called a 721 upgrade and that property comes into a fund.

14:56So think of it as like a 1031 into a fund. And now they have ownership and let's say 50 different properties, geographically diversified. And the key there is like at Forum, we have this fund already set up and all we're doing is we're now taking a property out of the fund and we can accommodate those investors at all times versus the old way we didn't have a fund and it was kind of hit or miss, if you will, if we had an asset in which they could exchange into. So what did that lead to, John, for people you asked? Making bad investment decisions because they ran out of time. Now, if you have that fund you can exchange into, you have a lot of different funds out there now that you could look at and say, okay, here's an institutional quality manager that I can exchange into.

15:50I'm no longer dealing with, you know, collecting rents or, you know, dealing with the hassles of the day-to-day management. Darren, I want to talk about real estate exchange strategy. I mean, first off, what exactly is that? What's real estate exchange strategy? And what led to the creation of you doing that? Really what it was, was just that simple issue of when we even sold assets to our investors. So when we sold assets at Forum, it's like, okay, we got the gun to our head 45 days. Now we don't have a gun to our head. And it really was just, again, just like with so many things that have evolved over time in business, is there was a better way of doing this where we didn't want to make an investment decision based solely on tax.

16:36We already own or owned at different assets in this vehicle that we then could pull out. And we want to eventually in a couple of years, as I mentioned, bring it back into our fund. So again, just like everything, it just evolved, you know, new products evolved. And it went again from like a 1031 to DST all the way to a 721 upreach. So that's really what happened is we just found a better mousetrapping way for us to provide for our own portfolio or other investors. Darren, if there's one thing that you've experienced over the years, especially since 2007 until now, I mean, we're talking about massive volatility.

17:22I mean, you've seen the ups, you've seen the downs. What would you say is one leadership lesson that's helped you stay steady through all of this crazy volatility? I would say, I call it the lessons learned, you call it one. It's maybe a two-part, it's adapting and evolving. You always have to be recreating yourself as the market changes. As much as I may have an idea of what I think the market needs, the market dictates to you what the opportunities become. So being adaptive and evolving, and so many companies do not evolve. They try and do the same thing throughout different cycles. It's like the old, you know, blockbuster versus Netflix.

18:06Like you have to evolve. Evolving Fire Nation without it. What are you doing? You're static. You're staying still and everybody's sailing right on by you. Let's talk about specific advice, Darren, for Fire Nation, because we have a lot of entrepreneurs who are listening right now. And listen, they're entrepreneurs. So what are they doing? They're facing uncertainty. That's part of the game. They knew that getting into it. But of course, we can still look to people like you with experience to say, okay, this might help. This might hurt. What is your advice to those listeners today? When things are volatile and uncertain, a lot of what do humans, the natural reaction is to do what?

18:43Is to do nothing. I like to say you have to get comfortable being uncomfortable. And when you get comfortable being uncomfortable, that means you have conviction on something that you're like, you know what? I know it's not if it's going to happen, it's when it's going to happen. That's the conviction you have to have. Just like today, you know, we talked about, John, we're leaning into buying again. Yeah. Where others are like, well, where's the bottom? We have 100 % conviction. We're putting our money, you know, where our mouth is and really leaning into that conviction. I love that because, I mean, for me, it's like, where are we going to be in five years, in 10 years, in 15 years?

19:22I mean, are you having that type of long-term outlook, Fire Nation, with what you're doing? Because, I mean, whether you're at the bottom now or you're 5 % or 10 % from the bottom, it's all going to look like a little blip on a screen decades from now if you have that long-term conviction, that long-term horizon and that mindset. And I love that phrase, get comfortable being uncomfortable, because that's what we signed up for, Fire Nation, so let's embrace it. And Darren, I want to give you the mic to kind of bring us home here. What would you say of everything that we talked about today? What is the one key takeaway that you really want to make sure our listeners walk away with from our chat today?

19:59I would probably boil it down to one thing, and it sounds like a saying, and when you really unpack what this means, I think people will understand it. But when you talk about entrepreneurs, entrepreneurs are leaders. Leaders ask questions. Don't ever get complacent, again, that things aren't going to change. When you ask questions, it's not because you're unsure about what other people are doing. It's because I think you're trying to understand there's a better way or a potential better way of doing things. So keep asking questions because that's what gives you the insight to where things are going.

20:39Not, you know, again, just staying, you know, in one spot. Keep your feet moving. Ask questions. Darren, if Fire Nation wants to connect with you, wants to learn more about you, your company, fill in the blank, what is your call to action for Fire Nation today? You can reach out to me through our website. It's forumig.com. I'm about partnerships. So love educating people and helping the next class of entrepreneurs grow up. So open book, happy to work with folks, but you can reach us at forumig.com. Fire Nation, you are the average of the five people you spend the most time with. You've been hanging out with DF and JLD today, so keep up that heat.

21:28And for links to everything we talked about, visit eofire.com, type Darren, D-A-R-R-E-N, in the search bar and the show notes page will pop right up. And Darren, thank you for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you and we will catch you on the flip side. Thanks, John. And thanks, Fire Nation. Hey, Fire Nation. A huge thank you to our sponsors and Darren for sponsoring today's episode. And question, are you an entrepreneur on fire who's looking to share your amazing message with the world? If yes, we are now accepting applications for EO Fire.

22:03So to learn more about becoming a guest, visit eofire.com slash guest. And I'll catch you there or on the flip side. If you're an entrepreneur, you probably know the feeling. Nonstop meetings, constant conversations, and too much information to keep track of. That's why I've been using Plod, an AI-powered wearable that helps capture meetings, discussions, and key details throughout the day so nothing important slips through the cracks. Plod, the world's number one AI note-taking brand. Check out plod.ai slash EOF and use code EOF for 10 % off. Stop duct-taping your business together. High Level runs your website, your funnels, email, automation, scheduling, payments, and memberships all in one place.

22:43And when you sign up at highlevelfire.com, you get a 30-day free trial plus my exclusive bonus stack that includes weekly office hours with me and much more. Visit highlevelfire.com. Highlevelfire.com. Important disclosures. This communication is intended for informational purposes only. does not constitute investment advice or a recommendation and should not provide the basis for any investment decision. Investments in such transactions noted within this communication will be made solely by means of offering materials provided to the recipient by forum or its affiliates. This material does not constitute a part of the offering materials.

23:27The term portfolio used throughout this communication means forum's collection of direct syndications stabilized multifamily investments, excluding properties sold and acquired during the quarter, as well as multifamily developments closed, under construction, and in lease-up as of the date of this communication, unless disclosed otherwise within this communication. Investment in these transactions involves a high degree of risk, and investors should not invest in such transaction unless they can afford to lose their entire investment. In making an investment decision, investors must rely on their own examination of the transaction and the terms of the offering, including the merits and risks involved.

24:11These transactions have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this communication. Any representation to the contrary is a criminal offense. The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering circular or selling literature. Investors should carefully consider the risk factors. The non-managing membership interest should be purchased only by individuals familiar with the contention of these transactions and who are able to bear the risks associated with such transactions.

25:02Forward-looking statements This communication contains certain forward-looking statements that are based on current expectations but which are not based on any prior operating history. In light of the numerous factors that can materially affect results, including those set forth in this communication, the inclusion of any such forward-looking information herein should not be regarded as a representation by forum, its manager, or any other person that the forum objectives will be achieved. Forward-looking statements contained herein, or other statements made for or on behalf of forum or their affiliates from time to time, are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict.

25:47Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. This communication is intended for informational purposes only, does not constitute investment advice or a recommendation, and should not provide the basis for any investment decision. Investments in such transactions noted within this communication will be made solely by means of offering materials provided to the recipient by forum or its affiliates. This material does not constitute a part of the offering materials. The term portfolio used throughout this communication means forums collection of direct syndication, stabilized multifamily investments, excluding properties sold and acquired during the quarter, as well as multifamily developments closed, under construction, and in lease up as of the date of this communication unless disclosed otherwise within this communication.

26:43Investment in these transactions involves a high degree of risk, and investors should not invest in such transaction unless they can afford to lose their entire investment. In making an investment decision, investors must rely on their own examination of the transaction and the terms of the offering, including the merits and risks involved. These transactions have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this communication. Any representation to the contrary is a criminal offense.

27:21The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering circular or selling literature. Investors should carefully consider the risk factors. The non-managing membership interest should be purchased only by individuals familiar with the contention of these transactions and who are able to bear the risks associated with such transactions. Forward-looking statements This communication contains certain forward-looking statements that are based on current expectations, but which are not based on any prior operating history.

27:59In light of the numerous factors that can materially affect results, including those set forth in this communication, the inclusion of any such forward-looking information herein should not be regarded as a representation by forum, its manager, or any other person that the forum objectives will be achieved. forward-looking statements contained herein or other statements made for or on behalf of forum or their affiliates from time to time are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.