In 2021, Pascal Wagner’s world was turned upside down.

His father suddenly passed. After grieving, Pascal realized that he was now in charge of providing for his mom. His dad had been the manager of the family and his mom knew nothing about finances.

Pascal needed to find something that was 100% passive for them so he wouldn’t be pulling his hair out from running the investment himself.

So he tried all kinds of passive investing:

• Real estate, which isn’t truly passive

• Dividend stocks, but if the stock price drops, you lose money

• Bonds, which only pay you out at maturity, so not really passive income

Eventually, this led him to the world of funds.

Now Pascal and his mom are invested in a number of deals, like workforce housing, development, self-storage, multi-family, cannabis, ATMS, etc.

So how did Pascal get there?

He had an investing thesis

A thesis helps you know where to invest, and almost more importantly, where not to invest.

If you hear about a deal without a thesis, you might throw money into it. But throwing money around means you aren’t doing it according to plan. Without a plan, you don’t have a vision for the outcome you want and how to get there.

So if you don’t have an investment thesis, you are hindering yourself from getting closer to your dream life faster.

An investment can do 3 things for you—Pascal calls this a Money Pie:

• Cash flow

• Equity growth

• Tax advantages

Some investments have all three, like real estate. Crypto only has equity growth.

Figure out what you want your money to do. You can only put so much into each area, so optimize for your dream outcome.

For Pascal, he wanted to put all of his money into cash-flowing investments so he could get to financial freedom faster. Only after he hits his cash flow goals will he look into higher growth opportunity buckets.

A problem a lot of people have is their investments don’t line up with their goals.

For example, you might say you want passive income. But all of your money is tied up in equities, which are a growth asset. If that’s the case, you need to adjust your strategy to find more cash-flowing opportunities.

Your investment thesis should match with what you think is going to happen in the world.

You’ve heard of a buy box.

“I invest in 2,000 sq ft single-family homes with 4 bedrooms in XYZ market.”

But you don’t want a buy box first without a thesis.

Pascal’s thesis is that he doesn’t see people flocking to Luxury A-Class buildings or commercial real estate in general in this current environment. So he has to figure out where there’s going to be more demand. He sees more people downsizing and needing workforce housing.

Now, he can go to his buy box because he has his thesis played out.

• I’m looking for an investment with consistent monthly passive income

• At an 8% annual return or more

• From operators with a great track record, who have been through a downturn.

Pascal spent hours researching and studying his investment thesis.

Yes, it’s upfront work. But now that he has his thesis, he can deploy his money in the right places accordingly. And it prevents him from getting shiny object syndrome, bouncing from investment to investment without a plan.

In summary:

1. Figure out your long-term goals and where you want to optimize your money

2. Come up with an investment thesis

3. Then create your buy box

This was a summary of our podcast episode with Pascal. Check it out (along with the New Conventional Loan episode!) 👇🏽

Podcasts this week:

• The Investing Thesis With Pascal Wagner: Meet Pascal, my best friend whom I became close back when I was living in Florida. This episode is about coming up with an investment thesis based on the outcome you are seeking. It’s easy to get distracted by all of the investing opportunities. That makes it easier to get distracted by the outcome you are looking to achieve. Pascal breaks down how to create your investment thesis.

• New Conventional Loan Rule: For Financial Freedom Friday, we discussed the new loaning rule allowing you to put down 5% on a small multi-family. We talk about the pros and cons and how to apply for one so you can decide if it’s right for you!

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