I want to be clear with new investors when we have a conversation about why Thompson Investing. How are you different than the operators you are investing in and why should I work with you? That is a great question. Here is my answer with some history of how the company evolved
1. Passion
This may sound cliché, but until you are passionate about something, you are not likely to be good at it. I have had an interest and passion for investing since I was a teenager. I earned a college degree in financial planning, ran a successful stock investment club, and spent any time outside of work reading about investments. I am now doing my passion in my own business. I encourage all of you reading this to never stop pursuing your dream because I can simply tell you by experience that you will never really work again once you find it. It is not all fun but it’s way more fun than working for someone else in a field that does not appeal to you. My lights are on and my energy is amplified!
2. Awareness
In 2015, I started my company by researching then working with an apartment syndicator to learn the business. I honestly had never come across such an attractive array of investor benefits. Further research revealed that some real estate sectors such as apartments, self-storage, and mobile home parks had outperformed the stock market (S&P 500) by almost 2:1 over decades and with far less volatility. Combine cash flow, appreciation, and tax benefits, it was almost too good to be true. What occurred to me, as someone savvy in investing, was how little I was aware of these opportunities previously, and that my mission should be to educate others.
3. Diversification
As I started working in the field, I quickly realized that I did not want to work with one operator, one niche, and one market. But as an investor I wanted access to more, and hence, Thompson Investing was born. I simply started investing on my own and sharing these ideas with friends and family. Growing niches, geographies, and sponsors would provide diversification for my own portfolio and my inner circle.
4. First Look
As investors were experiencing success, they told their friends and before long, the investor base grew. This additional investor capital provided an advantage in working with new operators, since operators need capital to get their deals done, and we could bring a lot of capital. Today, we get first looks at our operators’ deals and plenty of allocation so that we can get most of our investors into these deals. We are big enough to get a lot of attention from operators. Bringing $5M to $10M to deals is significant.
5. Due Diligence/Independent Review
I learned early on that I did not want to be the marketing arm of the sponsors. I perform due diligence, tour properties, and review the business plan. I hire a third-party analyst to review every deal Thompson Investing decides to offer to ensure we are getting an independent view of key assumptions and that estimates are conservative. Although we have strong ties to these companies and are compensated by them for bringing capital which can create a conflict of interest, we are under no contract to do any deal or a set number of deals. We tend to do more deals with them than not, simply because they have a good track record, they are focused on their niche, market, and continue to repeat the process.
6. Relationship Driven vs Transactional
Establishing key relationships with select sponsors reduces risk, plain and simple. We only work with a handful of operators. Transactional deals increase risk, so we avoid them. Relational means we have done deals with this sponsor before and/or we have decided to work with them only after careful vetting. Once selected, we get to know them well. We want them laser-focused on one niche and only a few markets.
7. Strong Deal Volume
Through careful selection of niches, markets, and operators, we can bring you a lot of good ideas. Think of us as a one-stop-shop for seeing a lot of quality deals on a consistent basis. In most years we would expect to share 8 – 12 deals per year. Investors like syndication because of the passive nature. They have busy lives. They want someone to sort things out and provide numerous, quality opportunities to consider helping them diversify, grow income and wealth. Timing is also important. With strong deal flow, we can be having ideas in front of our investors when they have capital ready to commit.
8. Alignment with Investors
We invest our own money in every deal we decide to share with our investors. You will not see a deal from me that I have not personally researched, vetted, and invested in. Having invested in these deals over time, I can attest that most are meeting or exceeding expectations and that the cash flow/tax benefits and sales have been rewarding.
9. Transparency
If you are an investor with us, every quarter I update returns on every deal we have or are invested in and you can see how we are performing compared to the forecast. Past performance is not indicative of future performance but it’s important for our investors to know how we are doing in selecting these investments.
10. No Added Costs
This comes up from time to time because investors wonder if I am adding some commission or uplift on the investment with them instead of if they went direct to the operator. In almost all the investments we provide to our investors, we are compensated by the operator and that is baked into their financial model. So, you get the same deal and return forecast as going direct.
11. Access to me
As my business has grown, I am cognizant of the fact that I can never outsource my relationships with my investors, nor do I want to. I love my business because it scales well. Most of the heavy lifting is being done by the sponsors/operators creating value at the property level. I can thus focus more attention on my investors, educating them about opportunities, helping them get into investments, and monitoring progress through frequent reports.
