How to Vet Real Estate Sponsors Before You Invest | Pat Zingarella

Pat Zingarella (00:00)
Yeah, I think, I think a lot of the noise or weakness would come from a lack of education, but a lot of a lot of influence as well. think over the last few years, especially in the capital raising world, we’ve seen a lot of social influence be mistaken for social proof. And, you know, individuals who are great marketers are not necessarily great operators. And the hard part is up until this point, reputation and I would say track record has been primarily controlled.

The distribution of that information has been controlled by the GP.

Scott Bursey (02:01)
Welcome back to the Real Estate Pros podcast powered by Investor Fuel. I’m your host Scott Bursey. And today we have some serious jet fuel being pumped into this episode. We’re talking about achieving absolute clarity in your real estate investment strategies. Our guest is the visionary behind Invest Clearly Inc. Pat Zingarella. Pat is all about cutting through the noise and giving you our pros the tactical roadmap you need to scale.

Pat, thanks so much for being on the show here today.

Pat Zingarella (02:32)
Yes, got excited to be here. I’ll be honest, I’m a little intimidated. I feel like you have the best podcast voice I’ve ever heard in my life. So this is exciting.

Scott Bursey (02:40)
It’s going to be more than exciting. Thank you for joining us today. And Pat, please tell us, how did your career start and what’s your focus now?

Pat Zingarella (02:49)
Yeah, sure thing. So I’m the CEO and founder of a company called Invest Clearly. What we are is we are a platform that is a directory of real estate sponsors where investors that provide proof they’ve actually invested with those sponsors can write reviews on them. So the value prop to the investor is it’s a way for them to find and evaluate who they should be investing with based on real experiences from other investors. And on the sponsor side, it’s a way for them to differentiate from other, you know,

sponsors and what’s going on in the market by leveraging the voice of their investor. Ultimately, it’s a trust and transparency platform to help create a safer passive investment ecosystem. And the way this got started is almost like an all roads led here journey for me. And it was kind of like three roads converged into one. The first one was I was a corporate W2 individual. I was in sales. I worked for a massive organization called Gartner and I was in

small business division where we would ⁓ support startup CEOs with their go-to-market strategy and things like that. And Gartner was a tech advisory, a tech research and advisory firm. And they sat at the intersection between buyers and sellers of tech where objectivity, neutrality was the epicenter of everything. And one of their subsidiaries was actually a software review platform.

So I would be working with organizations, getting ⁓ exposure to kind of how to remain neutral in that type of world. And at the same time, I started getting into real estate investing, right? Listening to the podcasts like this, ended up active real estate investing, purchasing some small multifamily, and then eventually working my way up to the commercial world. But while I was working at Gartner and the sales role, I connected with a commercial real estate investor

The guy was quickly raising up in the ranks of notoriety, was like the top media guy. Everybody wanted to be around him. I got connected with him. I started doing some cold calling for him. Eventually, uprooted my life, moved out to like the Midwest, went long distance with my fiance. And it turned out the guy was committing a ton of fraud, right? Who he was, who he was portraying and who he actually was was two completely different people. took me about like six to eight weeks to figure that out. And then I got out of there. And on my way back,

And I’ll explain kind of how these all come together. On my way back, I was like, okay, I’m going to do some sales consulting. And a client that I picked up was actually someone, a company that specialized in accredited investor lead gen, you know, like running meta ads to raise capital, moving it to funnels. And I would talk to these GPs when I was selling for this company. And I quickly realized like, I would talk to 10 GPs in one week and I have absolutely no idea what the difference between any of them was. And I would also talk to some people who had mastermind groups.

that were outperforming their actual real estate. The real estate was going under, the mastermind groups was going really, really well, and I saw direct parallels to this other real estate investor that I just left. And so all of this, I was also thinking about becoming an investor myself, like an LP. And I was like, all right, let me find a place where all of these real estate sponsors exist that I can kind of put in my filters and figure out who matches those. That didn’t exist. I was like, all right, what about feedback, real reviews on these guys that I experienced in the software world? That didn’t exist.

And I was like, all right, well, let me learn what to ask these guys. And then every single time I would look this up, I would actually find an article that was written by these GPs. And so I was like, that is really not much for objectivity. And so the experience in the software world, the experience with commercial real estate investor, and then the experience with the accredited investor, Leadgen company, as I was becoming an LFE, all led to the creation of Invest Clearly.

Scott Bursey (06:56)
Awesome. Pat, your work at Invest Clearly, Inc. is all about focus growth. So let’s dive right on in. What’s the biggest strength that you see the company have right now?

Pat Zingarella (07:08)
Yeah, I mean, the biggest thing that we’re building is it’s unique, right? We are the only place publicly that investors can go and share their experience in, I would say, a validated manner. Like, we require every investor to actually provide proof that they invested with the sponsor before a review can be published. And we don’t gatekeep anything, right? And so our reviews are not behind a paywall. We don’t gatekeep. You don’t even need to sign up for the site to use it.

And I think the strength there is that position in the market, as well as the trust we’re building. the trust meaning investors know that these reviews are not cherry picked reference calls. They’re not random anonymous forum users. They know that every single experience on there is a real one.

Scott Bursey (07:51)
Absolutely, and what a great, great purpose. Where do most investors mistakenly introduce noise or weakness into their strategy, in your view?

Pat Zingarella (08:00)
Yeah, I think, I think a lot of the noise or weakness would come from a lack of education, but a lot of a lot of influence as well. think over the last few years, especially in the capital raising world, we’ve seen a lot of social influence be mistaken for social proof. And, you know, individuals who are great marketers are not necessarily great operators. And the hard part is up until this point, reputation and I would say track record has been primarily controlled.

The distribution of that information has been controlled by the GP.

So the unfortunate reality is most investors are doing their due diligence based off of collateral that was provided to them by the person who has the most to gain in their investment decision. And so where investors need to be focused right now is getting outside of the people who have the most to gain. And to kind of double down on that, we’ve seen a massive shift over not too long ago where the focus on the deal

is always important, underwrite the deal, make sure the deal pencils, but we’re seeing a lot more weight focused on is the manager is the operator the right person to manage the deal, right? Because this isn’t just investing in real estate, you’re investing in a business that operates the real estate. And I think there’s been with the way the market has gone lately, people are realizing that more and more.

Scott Bursey (09:13)
That was surgically broken down. Thank you for that. Really, really precise. And what emerging market trend presents the greatest opportunity for today’s Focus Investor?

Pat Zingarella (09:16)
Yeah.

Yeah, totally. think that the one of the biggest trends that especially for us, that’s I would say highlighting us is the leveraging of AI. Investors are leveraging AI to do more and more due diligence and understanding how that works fundamentally is important. Understanding the mistakes it can make number one, but for, I’ll lean it more towards us as well is because the access to information is easier than it’s ever been. It’s just a matter of where is that information being sourced?

And so when you think about training AI models to do your due diligence, it’s fantastic. Make sure you’re checking it because they do make mistakes. I’ve heard plenty of people that’ll say it can get you 85 % of the way there, but the last 15 is the most critical and stress testing those models. Um, but for us it’s people are looking for feedback on the GP, like, like, like they’re leveraging AI as a Google search tool. So like understanding how results are populating in these LLMs are critical.

Right. And, and where we’re seeing us show up is, ⁓ we’re being the source material for, for AI, right? You, you type in a sponsor, you want to learn more about that sponsor. I mean, if you, if you type in reviews, we’re a home run, but sometimes you just type in the sponsor’s name and AI is leveraging our content, our reviews to help those LPs do their due diligence. that’s the biggest, the biggest pivot is, is, is the shift into AI.

Scott Bursey (11:17)
Pat, there’s so many question marks in regards to AI. How do you see this play out integrated into your business in the short term, the next 12 to 18 months and perhaps a little bit down the road as well, the next five to 10 years, if you could provide a little insight.

Pat Zingarella (11:34)
Yeah, next five to 10 years, I’ve got no, mean, the growth and change and the rate of change that’s going to happen. don’t even, I can’t even tell you it’s wild. But in terms of what we’re doing in the short to midterm, everything we’re building is AI forward, right? I mean, from tools to our own code, to how we market, to how we’re running, you know, conversations and everything we’re doing is AI forward.

And it’s crazy the speed in which we’re able to do things that, you know, used to take days, take minutes. And it’s, just so impressive, honestly. And it’s so, I would say like, I don’t even know how to explain it. It’s really, it’s really cool to see.

Scott Bursey (12:13)
It’s evolving so quickly and ⁓ the speed of it happening is fascinating. I totally agree. And Pat, what is the single biggest threat to a long-term buy and hold clarity strategy in your view?

Pat Zingarella (12:26)
The number one, say that one more time Scott, let me think about that. You said the number one.

Scott Bursey (12:29)
Sure, sure.

If you could shed a little bit of light on the single biggest threat to perhaps the long-term buy and hold clarity strategy.

Pat Zingarella (12:39)
Yeah, you know, don’t really know if I’m the best, the best person to answer that the buy and hold side of things. I’m not too, I’m not, I’m not too sure. Right? I mean, I think, I think, I mean, if we want to think about our, our industry in this indication world, where I’m seeing the biggest threats to operators is all of this maturing debt, right? That’s the that’s the biggest threat I’d see to operators. And I guess that I guess that’s technically a

a buy and hold thing. But I mean, in terms of us, the biggest threat we face is, you know, it’s, I wouldn’t say it’s competition, right? It’s very easy to spin up what we do. You could spin up a platform that looks like Invest Cleary tomorrow. I don’t think you would necessarily have the trust that we’ve developed with the buyers. And that’s the hard part. I think the big step for us is speed, right? It’s like, can we get this in front of people at the masses fast, right? Because we are valuable. We are valuable.

when investors are in their due diligence phase, right? Like when they’re deciding, they can leverage the experiences of others to help de-risk their investment decision. And so our biggest threat is getting it out there as fast as humanly possible. Yeah, speed of execution more than anything. That’s what I would say. If you wanna find out what keeps me up at night, that’s what it is. It’s like how far can we go and how fast can we get there? That’s the big one.

Scott Bursey (13:53)
Let’s talk strategy for the company as a whole, short term, long term.

Pat Zingarella (14:39)
Yeah, short-term strategy, the number one north star we have is review count. Reviews are the most important thing on our platform. The more reviews we have, the more transparency and visibility there is among sponsors, the better investment decisions investors make. In the short-term, we’re right in the middle of a brand redesign. Not a brand redesign, I would say like a relaunch of the site. And so where the platform sits today is we’re…

We have out pretty much what is like our MVP, minimum viable product. would say this is like version one of the site that we’ve had and we’ve been collecting feedback from our users over the past year and some change of what’s missing. What do they want to see more of? What do they want to see less of? What are we over engineer? What are we under engineer? And so we’re right now in the middle of redeveloping all of that, making the journeys clearer. So when you get to the site, you know exactly where to go. If you’re an investor, you know exactly where you go. If you’re a sponsor and then they were building out tools that support that.

And so we’re also building out lot more investor resources as well, right? Like people are begging for connection. I’ve noticed that a lot among investors is there is a lot of demand for the ability to connect with other investors because it’s historically private. You don’t know who else is in your deal. Right. And so if you see someone going through a similar situation as you, or maybe can help you a situation that you’re in, you want to reach out to those individuals. We don’t have that capability on the site right now because we’re strictly focused on the reviews.

So we’re building out more, I would say connection resources among investors. Hopefully by the time this airs, it may be out, but I’m not sure yet, depending on how fast we can go. The future of the site, we wanna be part of every single, right now we’re focused on real estate and real estate adjacent, right? Think like private real estate, asset classes across real estate adjacent, we’ve got some oil and gas in there, we’ve got private credit, which can be a couple different industries.

But ⁓ we want to be a part of every single investment decision out there. We want to be synonymous with, if I’m making an investment decision, I want to check Invest Clearly. On the other side of things, we want GPs to leverage us as well. Every GP out there should be leveraging this. Hey, you don’t know if you trust me. You don’t know if I say, I’ll do what I’ll say I’ll do. Go look at the 10 reviews that you know are from real investors on Invest Clearly. And so…

From there, that’s the short-term strategy, really focused on that side of it. Long-term, it’s sort of like a bowling pin strategy, right? We’re starting in real estate and then we wanna expand asset classes, right? There’s private credit across the board, there is private equity, there is VC, there’s infrastructure. So like we want to do this bowling pin strategy where we start with real estate and then we expand across alternate investments across the board.

Scott Bursey (17:06)
Awesome and Pat if you could share just one pro secret technique that you use that investor clearly to quickly disqualify Let’s say 90 % of bad deals before you spend more than 10 minutes on them. What would that secret be?

Pat Zingarella (17:20)
Check the reviews, I would say check the reviews. Start with the sponsor. The deals are a part of it. The deals have the pencil. Start with the operator. Evaluate the jockey before the horse. Because if the deal only makes sense, it is the right person that’s operating it. Simple as that. And just so you know too, Scott, for our site, we put everyone on there, no matter what. Because we want the great sponsors, but we also want the ones that people should be avoiding.

And so ⁓ there’s no disqualification from us. We don’t recommend, we don’t discourage. Essentially, we are completely objective and then great sponsors are on there. Sponsors that are not doing so great are on there and it’s all about full visibility. That’s the highlight there.

Scott Bursey (18:00)
like to leave with our audience here today.

Pat Zingarella (18:03)
Yeah, I think the most important thing is when making investments decisions, especially in this industry to get outside of the people that have the most to gain financially. What do I mean by that? I mean, when you’re evaluating a sponsor, you can get placed on the phone with reference calls, you know, we’ll get a lot of collateral. think making sure you get outside of that influence.

I’m not saying it’s bad, right? I’m not saying that throw it out. I’m not saying disregard at all, but it’s really important to get some third party objective feedback versus a strictly leverage influenced collateral to make your decision. More and more people that I am connecting with, unfortunately never got outside that narrow lane. And what they thought was trust was an actual trust. Whether it be intentional, whether it be

Malicious whether it just be what happened to the market. They’re getting hurt right now And yeah, that is the number one thing I tell people to focus on and then let me say this guy I feel like I’ve I’ve talked a lot about the investor value prop on this so we didn’t build invest clearly to be the GP Reaper It is our there’s a you know fundamental value for those GPS as well And we built this to not only make sure investors can avoid risky investment decisions, but also find great ones We have a ton of sponsors on there getting

great reviews at scale. And so we want to make sure that those individuals are highlighted as well, because I have talked to plenty of GPS that cannot compete on marketing dollars when it comes to attention, but they have been outperforming their projections for years. And like this platform highlights it because it leverages the voice of their investor to actually do the boosting versus the engine of of

of spend, right? It’s like actual proof points versus just, hey, I could spend more money to be seen.

Scott Bursey (19:47)
Pat, this has been incredible. Before we say enough, I want our listeners that would like more information on how they can follow you or how they could collaborate with you. What’s the best way for them to reach you?

Pat Zingarella (19:59)
Yeah, definitely. So my email is [email protected] The website is investclearly.com and I’m also on LinkedIn. Any of the above, you’ll get me.

Scott Bursey (20:09)
Pat, thank you so much for joining us today.

Pat Zingarella (20:11)
Yeah, sure thing. Thanks, Scott.

Scott Bursey (20:12)
And to our listeners, we appreciate each and every one of you. If you got value from today’s episode, please subscribe. We’ve got lineups of exceptional operators, just like Pat, coming your way who are making huge moves in the market. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.