From Farm to Fortune: Real Estate Insights with Paul Monsen

Christian (00:01.561)
Hey everybody, welcome back to the show. Today we’re going to dive into the world of commercial real estate investing with someone who knows how to structure deals at the highest level. Our guest here, Paul Monsen is a key player in the co-GP and preferred equity space working with MGG investment partners to fund and invest in high value CRE deals ranging from 1 million to 20 million. But I’m going to let him talk about all that stuff because that’s his, that’s his lane. So Paul, without further ado, my friend, welcome to the show. Super excited to have you on.

Why don’t you just introduce yourself to the audience, explain a little bit about your background and what you’re up to.

Paul Monsen (00:35.822)
Yeah, thanks. Thanks for having me on the show, Christian. I’m excited to be here and excited to talk a little bit about commercial real estate. What we do and hopefully impart some wisdom, I guess, if I have any.

Christian (00:46.223)
That’s right.

Paul Monsen (00:47.746)
Yeah, so my background is 15 years in commercial real estate. I’ve been fortunate enough to do some really kind of cool things. I worked in real estate technology for a little bit, but most of my career has been around structuring and financing a variety of different projects. Largest project I ever did was a huge, huge development in Northern California, 600 million total transaction. But right now I’m focused mostly on building out MGG Investment Partners, which is my investment firm,

kind of alluded to, we focus on partnering with sponsors or owners of commercial real estate that need help with their financial structuring. We really like investing in a multifamily, self-storage, industrial properties and we’re one of the few guys out there right now that really likes to take a look at land. We see tremendous upside in what can happen with land, especially if somebody has some local no-

So that’s kind of my very quick overview and we can probably dive into

Christian (01:50.689)
Absolutely. So I’m curious. mean, what you’ve been in the industry for obviously said 15 years. I mean, what, got you interested in saying, you know, I want to get into commercial real estate. How did you get your start getting involved in the industry?

Paul Monsen (02:03.212)
Yeah, it’s a good question. the answer is kind of a little bit corny, but I grew up on a small farm in Wisconsin. So I just grew up working with my hands, loved just the concept of land, right? Seeing something come together. And obviously commercial real estate is totally different than watching the crops grow every year. But in its core and its essence, it’s kind of the same, right? You’re just taking this piece of land that is

you know, underutilized oftentimes, right? And every, when you start a commercial real estate project, just, just similar to when you’re in the spring going for planting, right? You got to do a ton of field work. You got to do everything to get the property or the farmland ready to go and plant, right? And commercial real estate is kind of the same. So when I was in college, you know, was fortunate to have been a pretty decent soccer player. So I was playing, you know, soccer at the highest level, but

didn’t know what wanted to do after that career ended and then I just took one real estate class and I was like dang, I can like relate to this. This is very similar to like my upbringing and I dove in and I got my first internship working on a master plan community development actually in my hometown and I was like oh my gosh, this is literally, it was taking.

poorly utilized farmland and revolutionizing my small 12,000 person hometown. So, you know, I was hooked since then. Pretty much my very first internship I knew I was gonna be in commercial real estate and I really enjoy it. So, yeah.

Christian (03:40.697)
That’s awesome, man. That’s awesome. It’s funny how the things that happen to you, it leads you into what you’re doing now, right? Everything happens for a reason, 100%. So let’s talk about what was your first deal, right? And maybe talk about what were some of the biggest lessons you learned from that and also what just gave you that hunger to be like, you know what? I wanna take this further and continue to expand and build a portfolio for myself.

Paul Monsen (04:06.722)
Yeah, so, you know, it’s been a constant evolution and, you know, MGG investment partners, our first deal was definitely not my first deal. You my first deal where I really, really got in as part of the ownership and structured pretty much all of the finances behind this investment was a build for rent deal in Fort Myers, Florida, right? And so this was in, you know,

2020 when at the time build for rent was like known and it was becoming a big thing But it still on the precipice of just like launching it off and you know build for rent for those that don’t know It’s basically building a single-family

Community of single-family individual houses, but instead of selling them you rent them out, right? And I really really got in with the clients and we structured You know a 45 million dollar transaction and we literally Structured every single dollar of that transaction So, you know from the very first dollar in to the very last dollar out And I was fortunate enough that my clients saw some value in what I was doing and were able to bring me into the that partnership

And man from that first deal, I think you asked the right question Christian like from your first deal you learn so much right and Just everything on structuring deals, you know Working with the appropriate contractors working with the appropriate architects, know everything I like to think I’m a lot more efficient now, but you know

Christian (05:28.407)
Mm-hmm.

Paul Monsen (05:41.356)
The landscape has changed so much that even our last deal, you can really say I’ve learned just as much in the last deal. Even though we know what we’re doing, but you gotta be so nimble in today’s world that we’re learning a ton. But the Build for Rent project in Fort Myers, we’ve gone on now to build over $100 million of Build for Rent product in that market, and it’s all performing super well, fortunately. So that was a fun one to work.

Christian (06:03.628)
Mm-hmm. Mm-hmm.

Christian (06:10.786)
I love it, I love it, I love it. Thank you for breaking that down. So I know you focus also on co-GP and preferred equity, right? Can you break down what that means for investors or anybody listening who just maybe not be familiar with what those terms mean, have no idea what that is? Yeah.

Paul Monsen (06:27.586)
Yeah, And it’s a little esoteric, right? There’s not a lot of information on this. So this is a lot of great question. And really, know, taking a

12 13 years of my history of structuring deals I was we when we launched mgg investment partners me and my two partners We we kind of look where are we going to add the most value to the market? Right, and how are we going to add the most value to our investors? So We we focused really in on two things one is a credit strategy, right? And what a credit strategy means is we want to try and get the optimal risk adjusted returns so we want

to still get teen returns, mid to high teens for our investors, but we want to be safer.

So we’ve done a good number of preferred equity transactions, preferred equity is similar to a debt, right? But it is structured with equity style returns. you’ve got a marriage, like a loan with a common equity investment. And it’s got characteristics of both of those things. in those opportunities, we really, really love to

be obtaining high or mid to high team returns for our investors, but our leverage or our investment to value ratio, we never really invest more than 70, 75%. So we are.

Christian (08:03.79)
Hmm.

Paul Monsen (08:05.332)
much lower, much less risky on those types of investments. Now we’ll never get 20 % with those, so we do wanna see other opportunities where we’re making significantly higher returns for our investors. we launched a CodeGP bucket of money as well, where we will go out and we will find local investors, local operators, people that know a market.

Christian (08:12.686)
Mm-hmm.

Paul Monsen (08:33.646)
You know, for example, we work with a really, really great individual here in Phoenix named Chris Bade. He runs 48 Investments. He knows the Phoenix multifamily market better than anybody, right? So we partnered with him on several transactions now where…

Christian (08:47.074)
Mm-hmm.

Paul Monsen (08:51.808)
He will do most of the operations, which is great for us because he’s super local. He knows all of the main players, but we will come in as a co-general partner, so co-GP. And we’ll provide a lot of structuring help, a lot of investment, co-investments alongside of his investors. And we will…

then operate the property together. you know, we bring our national network into a hyper local market as a co-partner. We might not be managing the day to day on that, but we’re managing the week to week. And that allows us to take on more deals, see a diversified, you know,

Christian (09:25.496)
Mm-hmm.

Paul Monsen (09:34.518)
investment pool across the country, across different markets, and we still get that hyper local expertise. So I went through two different definitions quickly there. I don’t know if we need to dive into either of them more individual because they are nuanced, but you know, leave it back to you.

Christian (09:50.637)
Yeah, so something I do want to dive in on that and why do you focus specifically on deals in the $1 million to $20 million range? Is there a specific reason, reasoning on why that is?

Paul Monsen (10:03.534)
Yeah, so that’s a great question. I’ve been fortunate in my career, Christian. I’ve worked with some really amazing firms. I’ve had some really great bosses where I’ve spent most of my career working on $20 million to $150 million projects. Now,

As soon as you go over, it used to be prior to the current situation where there’s a lot of market turmoil, interest rates have gone up, you can still find a lot of value in projects or properties that were in the two to $40 million range, right? But now what has happened is,

All of the groups, the investment firms, the funds, the private equity shops that were investing in plus $50 million projects, they’re having a really hard time finding value. So what they have done is they have gone down.

So, you they used to be at 50 million dollars and now they’re at 40 million dollars and 30 and 20 So they’re looking at deals in the 20 million dollar space and it is just hyper hyper competitive, right? So it is really hard for us And most people right now, which is why transaction volumes are so low to find those value returns in that

plus $20 million space, right? Now, you got the Aries and the Black Rocks of the world, they can’t work on deals lower than $20 million, right? They’re just too big of an organization, they would have to buy thousands and thousands of deals that are below $20 million, and then they just have a huge operational burden. So that’s one of the reasons, but the other one is, is…

Paul Monsen (11:55.896)
You know, there’s a, and not to offend anybody, but a lot less sophistication in that market.

So we can kind of go and take our institutional knowledge and apply it to these deals and we’re able to make some outsides returns, right? So we’re able to return more money to our investors. And it’s also a responsible growth pattern, right? You know, we can pick off, you know, five to 10 of these smaller deals a year rather than have to pick off, you know, one to two that is a a maybe going to be going to be successful, right? We’ve got a much higher degree of success with 10 of these deals than, you know, two of them were.

everybody in the country is competing for.

Christian (12:33.134)
100%, work smarter, not harder, right? Absolutely. Yeah, that makes a lot of sense. I love that strategy. So something I know you even mentioned this to you, you were talking a little bit about BlackRock and maybe the interest rates and things like that. I’m curious to get your thoughts on, there’s rising interest rates, the market’s going crazy. People are saying right now is not a good time to invest and people are very skeptical, right? They don’t know what the next five to 10 years is gonna look like. No one really has a crystal ball essentially, but.

Paul Monsen (12:35.709)
We tried to.

Christian (13:00.972)
How do you see the capital markets evolving over the next few years? How do you see that effect, the commercial industry, maybe a positive way, a negative way? I’m curious to get your insights on.

Paul Monsen (13:14.188)
Yeah, man, shoot, if I had a crystal ball, right, the world would be different and everybody says that, but I think we have enough information right now to know or to make educated decisions, right? I think in the last two to three years, it was really hard to make an educated decision.

Christian (13:18.488)
Don’t we all?

Perfect.

Paul Monsen (13:36.238)
But now we have enough data, we have enough insight, know, mean, shoot, it’s kind of funny we’re having this though when the trade war is happening and I’m saying that, right? you know, we don’t have any insight into that, but we have enough of a data and roadmap to how the Fed and how everybody has responded to really what has been five years of unprecedented upheaval in our.

Christian (13:45.774)
Yep.

Paul Monsen (14:03.776)
economy, right? I mean, we went from COVID to record inflation, then to record interest rate increases, right? Today, we’ve even with the tariffs that are going on, and you know, the market going down a significant amount, there is a kind of a consensus of stability in a lot of the things that make commercial real estate an intriguing investment, right? We’ve got a now a favorable tax.

environment for commercial real estate, we’re likely going to have bonus depreciation be reinstilled, right? That’s providing a calming, calming to the commercial real estate world, but also…

We have had very little volatility in the interest rate markets, all things considered, in the last 12 months or so. The Fed only dropped interest rates twice last year, and then they’ve stopped. They have said that interest rates are going to stay relatively flat for a while. They’re watching inflation to see what happens.

But we’re getting real-time feedback on inflation almost every day. So I think it’s a great time to start looking at commercial real estate. But the biggest thing that we are spending our time on is has the value of commercial real estate reset. And so we are hyper, hyper specific about looking at the reset of value.

for real estate and you know one project we’re currently in contract to buy we’re buying for nine and a half million bucks in 2021 it sold for fourteen point eight million bucks right that’s a great deal because the value has completely reset right now we’re taking a look at a project a half mile away from that one

Paul Monsen (16:05.042)
And in 2021, that project sold for like 12 million bucks and they’re still they’re wanting 11 and a half today. So there hasn’t really been a reset in value across the market. We think that that one’s only probably worth eight and a half to nine. Right. So not everything is reset, but you can definitely find it. So that’s kind of a long winded answer. But I’m optimistic. I think, you know.

Even with the trade wars, think commercial real estate is finally somewhat insulated from that. We’re not dependent on massive inflation, construction costs, things, construction slowed down so much that rental rates are finally ticking back up after a period of crazy, crazy interest rate. We’re not pumping ton of money into the market. So commercial real estate’s finally seeming that it’s getting normal, I guess.

Christian (16:39.598)
Mm-hmm.

Christian (17:03.31)
100 % I couldn’t agree anymore and if you really want to be honest about it, it’s There’s been different market cycles since the beginning of time things have gone up things have gone down eventually Stabilization comes back into play right? So the reality is is that you know, it’s every single time no matter what the people that stuck it through and stuck it out Right, you eventually make it right and it’s it’s always we talk about right when others are fearful be greedy But obviously do it the right way, but I mean

Paul Monsen (17:28.942)
Thank

Christian (17:31.353)
There’s never a bad time, right? You just have to find different avenues on how to get yourself in the seat, right? And it’s, I think it’s imperative, you know, for people to, you know, even have conversations with you about like, Hey, like I can put my money over here instead of just letting it sit. Your dollar is losing value by just sitting, right? It’s fair to say that. And it’s just the truth. so it’s important no matter what the asset class is, is that you, you you start getting yourself involved, with that process, because I mean,

Paul Monsen (17:51.587)
Yep.

Christian (18:01.07)
You might not see the fruits of that, obviously in the first year, a couple of months, whatever, but you have to start thinking about, you know, what is the next 25, 30 plus years going to look like? Right. So that’s, that’s the way I see it, but either way, you know, regardless of the noise, regardless of what’s going on inside of the market, like it’s like we say, right, things go up and things go down no matter what happens. You know what I mean? So that’s the way I view it. You know, sometimes it’s best just to shut off the news channel, right?

Paul Monsen (18:11.053)
Yup.

Paul Monsen (18:21.934)
Yeah.

Paul Monsen (18:29.134)
Yeah, I I Look, I do not check the stock market. I know about it I read about it, but you know I think I think it’s a very unhealthy thing and that’s one of the beauties of real estate, right? I mean you you’re in that space to you You know just what you do in the flicks fix and flip world, right? And you know the projects that you’re involved with and other commercial projects you’re involved with the the kind of beauty of it is

Christian (18:30.624)
It is.

Christian (18:37.389)
Yeah.

Christian (18:41.421)
Mm-hmm.

Paul Monsen (18:55.168)
You just gotta invest and execute on a business plan and you don’t sit there every day looking at your phone and just getting techno stress from the market being red. We don’t have that. As long as you’re investing well and at the right basis today, it’s a beautiful thing to not have that techno stress.

Christian (19:18.67)
100%. You focus on the things you can control, right? And also the physical things that you can have in your possession, right? That’s the biggest thing. It’s, you sometimes we’ll get so fixated on these outside things that you can’t control, right? Whether you invest in the S and P, whether you invest in bonds, these are all things that are completely out of your control, right? I’m not saying they’re bad things to do. It’s just obviously you want to make sure, you know, you’re obviously diversifying yourself appropriately to make sure you’re setting yourself up for long-term success. So

Paul Monsen (19:23.424)
Exactly.

Christian (19:47.183)
I’m curious, with your process, let’s say someone wants to get involved with working with you, they want to invest, they want to take that step. Walk us through what that process looks like from A to Z and how do you position them, obviously, to make the best decisions to get involved.

Paul Monsen (20:09.23)
Yeah, man, it’s such an interesting question because there’s such a spectrum of when we get involved with individuals. I think one of the things that I recommend to everybody I speak to, and I sound like a broken record player, is just ask people that you know that are in investments about investments. It’s such a good thing.

If you want to kind of elevate yourself into a new level of like financial freedom, right? You just got to ask questions, right? So a lot of times we get introductions from, you know, friends that we know that are out there talking to somebody and they’re like, Hey, you guys should talk to, you know, Paul and Jonathan, you know, you guys should understand what they’re up to. And so in some instances,

We are one of our biggest investors Christian we were introduced to him about three and a half four years ago and Just there or his thought was I want to invest in the commercial real estate. I don’t know anything about it, right and Literally, we did probably 25 to 30 calls just Educating on what real estate is. What does it mean to be a limited partner?

in a preferred equity investment? What does it mean to be a limited partner in a co-GP investment? What are the tax implications? What is your expected cash on cash return? What does it look like to be invested on a project for three years versus a project for 10 years? oftentimes we will have

10, 15, 20 calls with potential investors before that they get comfortable. The other thing too is what we do a lot is we review, our investors are not exclusive to invest with us. We encourage them to go out and see other deals in the market. If they want to provide us feedback on our deals, it’s great for us, it’s great for us to learn. I would say in almost every instance though, we’re

Paul Monsen (22:25.55)
We’re pretty fortunate just because we’re very selective. Last year alone I looked at probably 400, 500 deals and we only invested into five of them. So we are very, very, very selective.

review an investors deal anytime, right? You know, give them feedback and we can walk through it. Now we do have some other investors that are, you know, have been investing into commercial real estate for 10, 15 years. And they want to dive in immediately into the nitty gritty of who we are, you know, how exactly our strategy performs. But the easiest thing is just, just don’t be afraid to ask. Like if you’re an investor, ask the questions, the questions you think are dumb are

probably some of the smarter questions that anybody has been asked in a while. So to any investor that, and this happens to us frequently, they’re like, well, I don’t want to come off dumb, but what’s…

an IRR mean if the deal goes for six years? that’s like such an intelligent question that investors like the newer investors ask that people in commercial real estate for 10 years don’t ask, right? So asking questions, just getting on the phone with somebody like you, right, as well.

Christian (23:39.02)
in this.

Paul Monsen (23:44.93)
So in your mastermind, in the group that you guys work with, you guys are such a good resource and we do this for fun. We do this because it’s fun, or at least I do. I think you do as well based on our conversations. But ask the questions if you’re an investor or even if you think you want to invest in the next 10 years. Just start the question back and forth feedback loop.

Christian (24:09.542)
I love, I just love your process and it’s no, honestly, it’s no coincidence on why you’re having the success that you’re having because I heard something and I really want to touch on this is you said you encourage other people to go look at other deals that are unrelated to you, right? Go see other resources. You don’t really hear that a lot. You don’t hear that a lot. I mean, that just goes to show that you’re looking out for people’s best interests, whether it’s with you or not.

It has to make sense and I think that’s something that you know for those listening you really got to pay attention to that because a lot of times and this is obviously not directed to anybody but there is a lot of that going you know on to where you know I’m the only option for you and this is it right and it’s like no you you have to check all the boxes and make sure you know this person if you get them you know what they’re looking for the first time You have them for life, right? And it’s a friend. It’s a partner forever

Paul Monsen (24:54.094)
You

Christian (25:06.958)
And you never know what that’s gonna turn into. It’s gonna turn into a referral. It can turn into everything. So by positioning yourself just to do the right thing upfront, no matter what, and just looking out for their best interests, that is truly the name of the game, in my opinion. It really is. So it’s refreshing to hear that that’s your process.

Christian (25:34.85)
That’s awesome, man.

Paul Monsen (25:36.226)
Yeah, you know, think it’s look if we just like to position ourselves as resource, just like your podcast, right? Like, you know, I would, the one thing I guess I would maybe caution any investor out there is if you get approached for an investment, right? And that investor, you know, that,

or that investment firm or the individuals approaching you to invest in their property isn’t willing to take a look at other projects that you’ve gone into, right? you know, they’re not gonna have the time for you down the road when you need to understand your investments better, right? So we love doing it, but it also just keeps us sharp. I mean, like if we’re seeing other deals that get invested into, like I said, I mean, I took a look at probably 400 or 500 deals last year.

So I think I’m staying sharp, like the ones I learned, I learned the most from are seeing what my peers are investing into, right? So I love seeing those deals and hopefully, hopefully anybody that you got that it’s investing along or you’re investing with as an investor, they’re willing to take a look at those deals and kind of learn as well. it’s, mean, it’s like I said earlier, it’s a positive feedback loop, right? It gets everybody better, the more deals they see, and especially the ones that are getting done. So.

Christian (26:57.436)
absolutely. 100 % Paul, man, I wish we had another hour to dive into this because there’s a lot more stuff I want to pick your brain on and talk about. Unfortunately, what don’t but for those that want to get involved for people that want to find you and work with you, why don’t you just break down, you know, where do people need to reach out and go to?

Paul Monsen (27:16.642)
Yeah, I mean the easiest thing is to email me, right? I’m…

perfectly able to find time for anybody that wants to talk. Like I said, even if you’re a first time investor to a family office that wants to get into new things. My email’s paul at mgginvpartners.com. Paul at mgginvpartners.com. I’m also on Instagram, LinkedIn. I got some of my portfolio.

up there. I’m starting to put out some more information on LinkedIn about just what is investing in commercial real estate. So that’s going to be a resource we’re rolling out here. You can also go on my website. I am a millennial so I’m somewhat addicted to my phone. So if anybody needs to get a hold of me, I’m there for it.

Christian (28:12.248)
Yeah, we’re gonna have to see your screen time now, Paul. See what we’re working with.

Paul Monsen (28:18.185)
It’s large. mean, you know, the one unfortunate and unfortunate thing about my life is I get to talk to a lot of people. So I’m on the phone all day every day. So I’ve got, I got a lot of usage on my phone. So.

Christian (28:19.661)
Yeah.

Christian (28:30.83)
Well, that just shows your commitment level, my friend. And those that are watching can definitely see that. But Paul, we’ll definitely make sure we get those links that you mentioned and we upload those in the description. So those of you that are watching, you’ll definitely be able to find them and reach out to Paul. But my friend, thank you so much for taking the time out of your day to jump on and share your knowledge, share your value to the audience. I know I definitely learned a lot and I know they did as well. And just wishing you nothing but the best here in the future, Paul. Thank you so much.

Paul Monsen (28:58.924)
Yeah, thanks Christian for having me on and you know, it’s a great great group that you put together. Mastermind’s awesome. Podcast is really great. So I’m really humbled to be on here. Thank you.

Christian (29:09.55)
Thank you, my friend. I’m humbled as well. Thank you so much. All right, guys. Well, I hope you enjoyed today’s episode. I know I did. I know you got a lot of value because I know I did. But as always, my friends, we will see you on the next episode. See you on the inside. Take care.