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265: Pull Out the Stops from Your Growth with Nic DeAngelo

Nic DeAngelo, President of Saint Investment Group, is driven by a mission to empower individuals with health, wealth, and legacy by helping them pull out the stops from their growth through smart investments.

We learn about Nic’s journey from business ownership to founding Saint Investment Group, a platform providing access to off-market real estate opportunities. He explains the Entrepreneurial Investment Framework, which includes educating yourself to grow, achieving $250k net income to become an accredited investor, investing in single-family mortgages for stability, and exploring alternative investments for diversification. He also highlights the tax advantages of real estate investments and shares strategies for identifying and removing growth roadblocks to scale a business effectively.

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Pull Out the Stops from Your Growth with Nic DeAngelo

Good day, dear listeners, Steve Preda here with the Management Blueprint podcast. And my guest today is Nic DeAngelo, the president of the Saint Investment Group that is leading a new era of real estate investing through proprietary analysis, technology and access to off-market deal flow. Nic, welcome to the show.

Steve, great to be here. We’ve been talking for a long time and lining up schedules. So excited to catch up today, even catching up beforehand and looking forward to jumping in.

Yeah, well, I have a question for you, which you may not have expected back in February when we first spoke, which is, what is your personal “Why” and what are you doing in your business to manifest?

That’s so powerful. I think people talk business strategy and line by line and whether it’s tactics or going through deep analysis of the business, but really if you zoom out, the question is, why do we do this? Why do we work so many hours? Why do we take on the stress? For me, it’s three things every single time, health, wealth, and legacy. And really the first two lead to the third, which is the legacy piece. Everything is for that legacy piece. Health is physical health, it’s emotional health, interpersonal, all the things that make a person feel whole, feel good, have the energy and pour from a full cup. So health is first, wealth is second.

It doesn't matter how good you feel, it doesn't matter how good your intentions are. If you don't have the resources or the ability to make a significant impact, then you will be limited in your lifetime. Share on X

So to me, wealth, it’s much less about how much money’s in your bank account and how many numbers pop up on a screen when you check your account. It’s much more about having the freedom and the ability to make the world a better place for the things that are most important to you. Then the third is legacy. Unbelievably important and really that’s the number one focus, but it comes at the end because I think the other two are so important to pour into legacy. Legacy to me, it’s education. It’s always been education. It’s so important to me to give back whatever I can and we have a ton of focus on that at Saint and in my own life. Also it’s the virtues that we put forth, the things that are valuable to us, how do we move those forward and improve the world to make it better? And then really, it’s my kids are another one. That’s another aspect. The biggest gift that I can give to the world are kids that are competent, they have good virtues, good morals that make the world a better place, that as they move into the world, they have the responsibility to do big things and great things, and hopefully they, whatever we’re gonna talk about, whatever Saint does or any businesses I’m involved, I hope my kids just make the world an even better place and make a bigger impact. So health, wealth, and legacy are my focuses every single day. I arrange my days around those and it helps me to focus and not have dead weight in my days of doing things that aren’t important.

Interesting. It reminds me of Benjamin Franklin, early to bed and early to rise makes a man healthy, wealthy, and maybe legacy wise or whatever. So it’s a very classical. I like it a lot. So tell me about how Saint Investment Group is manifesting these values or this personal philosophy.

So I think the investment world is in tune with those three things in a lot of big ways, especially candidly, the wealth and the legacy piece. Maybe not as much the health side, although having financial health and having that in order, I think it allows people to focus on other areas. I think that is what the finance industry is, is an opportunity for people to grow their wealth, grow their legacy, so that they can live better lives. At Saint, we are very focused on who we help and how we can help them. Because we understand parts of the market that are different than other people. Some people might be focused on dentists or yoga instructors or a specific niche. We typically cater to people that are business owners that are much more on the successful side as far as finances and net worth. We typically cater to individuals that are closer towards retirement or are in retirement mode. So that’s kind of more of our lane. And what we’re trying to give those individuals is opportunities to grow their wealth, have fixed income, have lower risk than average in the marketplace, and have great returns at the end of the day. So that’s what we’ve leaned into. That came from me owning businesses over the years. That came from me taking on risk in the business side of the marketplace and realizing that I needed to invest other places so all my eggs weren’t in one basket. So that’s what we’re really passionate about as far as investing goes and that’s what we do day in and day out.

I’m just looking up my notes. This was actually not something I considered for this discussion, but now that you mention it, so you talk about a three-step investment approach and that is something to do about not putting all your eggs in one basket. So tell me a little bit about what are these steps and how is it helping you to diversify or basically manage your risk?

Yeah, I think, so we’re in a marketplace today that it’s a little more defined than it used to be. We used to have what was traditional investments, stocks and bonds, and then it was alternative investments, it was real estate and all the other stuff. The world is changing. The world is changing dramatically. The stock market since 1995 has lost nearly 50% of the company count, the amount of companies that are in the stock market. So what used to be a huge and luscious booming stock market industry is now much more condensed. There’s a much more risk in less companies. So it’s a different world today. You now have the baby boomer generation, the most wealthy generation we’ve ever seen in history. Not just in the US, but also in history. And they’re the largest that we’ve ever had in US history. All of these things are reshaping the investment marketplace. So us, listening to this podcast, us, you and I talking here today, us as business owners, it’s important to understand what that world looks like. The first is, I’d say, and this is item zero, really, this is not one, two, three, this is item zero, is understand where you’re at in your investment journey.

So if your goal is to invest, your goal is to improve your net worth, improve your income, then you really have to understand where you're at in the journey. Share on X

You may be a business owner, you may be a W2, you may be somewhere in between. And I think from there, you can really understand, hey, do I need to get certain pieces up? What am I missing? Am I over-invested in this than the other. So a lot of that’s going to be education early on just to understand the lay of the land, what exists out there. Number one, step one, the first thing to achieve if you’re really trying to blow up your net worth and go to the moon, I think you really have to be making and taking home $250,000 of income. That’s a big step. I’m not saying that it’s not. I’m not saying that that’s not a big number for many people, but that’s first rung of the ladder for several reasons.

Is it pre-tax or after tax?

Pre-tax, yeah, pre-tax. But to you, not your business. If your business takes expenses after that and you net out to zero and you’re covering your bit, I’m saying you as an individual, pre-tax, $250,000. And the reason for that is a couple, there’s a couple reasons. The first is you have to have enough money to be able to cover your expenses and invest consistently. Simply put, that usually shakes out to about $20,000 a month. The second reason is it makes you what’s called an accredited investor. So if you’re making $250,000, you’re really the benchmark’s $200,000. I’m saying $250,000 just because it checks more boxes if you dig into kind of personal family wealth and how that shakes out. But when you’re an accredited investor, in the eyes of the SEC, the Security and Exchange Commission, you have access to a whole new world of investment options. You have private funds, you have private individuals you can invest with, and the returns are typically much higher and the opportunities are typically much greater. The risks can be higher in some instances. Now it puts it on you as the investor to sort through a little bit. But typically, the returns are much higher than traditional markets like bonds. So now you have an opportunity to more investments. You have an opportunity with more income coming in. And you can put a bigger chunk of cash away each month towards opportunities. So that’s step one, make $250,000. To get there, if someone were to say, well Nic, that’s easy to say, and it’s easy to say why, but how do you actually get there? I’d say education is going to absolutely be the path. The first investment to make until you’re making $250,000 is to be educating yourself, going to coaching, finding the best coaches, reading the best books, finding the best education, whether you’re W2, it’s improving your skill set with your employer and what will get you paid more. Or if you’re a business owner on the other end of the spectrum, it’s improving your business and yourself as a leader to get there. So once you’re making step one, you’re making that $250,000. Step two, I believe the next most potent and powerful next step is to start investing into fixed income. So that gives you more streams of income. Share on X Many great opportunities out there that are paying 10, 12% returns based on very stable, solid assets. I’d be looking for opportunities like those to add in your income. Many business owners know this, and I’m talking specifically to business owners right now, that you will have highs and lows. Sometimes it’s seasonal. Sometimes there’s other things that will affect your income and your business. When you’re investing and you’re setting chips aside for other streams of income, you wake up in a position where you’re not wholly reliant on one piece of cash flow from one business, from one potential, even avatar of client. That’s where I was at one point in business and I analyzed my income and realized the inside investments that I was making at the high points when I was making a lot of money were filling in the gaps for the more tough times and the tough phases in my business at that time. So step two would be to invest in fixed income. Step three, I’m gonna say invest in things that appreciate over time. Invest in assets that are going to give you a tax benefit. Invest in assets that are going to give you a hedge against things like inflation or market conditions that are longer-term investments. Things like real estate, I think are great. Some strategic stock investments, although that’s not my favorite, but long term things that grow over time, growth investments. So that’s what I would do. Income first, fixed income second, and then I’d be looking for things that appreciate long-term.

Yeah, I like it. And it’s basically, it’s a mindset that is the profit first mindset. Basically make sure you’re not putting all your eggs back into the same basket, because you may not be objective about your own business. Your own business may not be a good one. I’m not involved in all the old businesses that have spun out. So you’re taking too much of a risk for putting everything in back in there, even though intuitively, we entrepreneurs believe that the best place we can put our money is in our business. And it certainly works for some people. Famously, I think Andrew Carnegie said that I’m putting all my eggs in one basket and then I’m watching the basket. But it doesn’t work for everyone. And we know that a lot of businesses disappear. I always talk about 12% of businesses disappear each year. So put some money aside. Now you talk about fixed income and you also talk about being an accredited investor so that you don’t just have to rely on government bonds and displaying vanilla, low coupon or deposit accounts are even lower interest. So what kind of fixed income are we talking about?

So there’s a whole world of fixed income and there’s tons of opportunities. I’ll just tell you my favorite. I like real estate back fixed income. Most people have IRAs, most people have different investments, most people have different retirement vehicles that they look at. So I won’t cover things like stock market investing strategy. Many other people have covered that a million times. I, personally for my own portfolio. I mean, I just put another six figures into this exact strategy I’m looking for real estate investments that pay fixed returns. That’s what I mean by fixed income. The reason for that being I want to diversify not just in companies in the stock market, I want different industries. I want different asset classes. And I’m a traditionally more boring investor. I don’t want things that are speculative. I don’t want things that have a lot of risk attached. So for me, in my research, digging down into layers and layers of economic data and looking at projections for the next 10 to 20 years, looking at historicals, I believe that mortgages in the US, single family houses, the mortgages behind single family houses are the most stable fixed income investment that we have in the US today. So that’s what I’m looking at and the vast majority of my focus in the fixed income space will be that for the next handful of years, 10 years probably.

Yeah, that’s interesting. And it’s easy to see why. I mean, people, they take out single-family mortgages because they live in the house. So it’s going to be a high motivation for them to not allow that mortgage to fail. And there’s also a lot of flexibility by the mortgage lenders to restructure mortgages to make sure that people indeed don’t fail and the legislation is there to support mortgage payments and collection mortgage payments and so on. Plus, you have the real estate behind it. So really the risk is very minimal there. So how does one get exposure? Because I know that mortgage banks, they originate these notes and they sell it to Fannie Mame and Freddie Mac and all these big organizations. But how does someone, a private investor, maybe a couple 100k of the investment income or income available, some of that for investment, how do we get exposure to these mortgages?

You hit the nail on the head when you think real estate in the United States or I’m going to go invest in real estate. Typically, people start by they want to buy a house and then they want to buy three houses. And then, if they work their way up, they want to buy an apartment building. It’s kind of more of a structured group. People understand houses. Many people live in houses. So it’s just an obvious investment. Very few people are thinking about this behemoth, this massive mortgage industry, because it’s assumed that it’s only the big banks. It’s only Bank of America, Chase Bank, et cetera. But the reality is, it is a lot of those banks, and they do the majority of the originations, but very few of those banks hang onto those mortgages for the full life of that loan. Very often they’re traded, not just between the big banks, but for investors. Very often when those mortgages have issues along the way, maybe it was COVID was a perfect example. Individuals that got furloughed or laid off during COVID, they might have missed six months of payments. And then so what happens? Well, those big banks, let’s take Bank of America or Chase or any of the big names, their job is to originate. They want to create mortgages at scale. So they make the fees, they make the early interest, there’s all kinds of benefits to them doing that. Also the Federal Reserve, the controller of currencies, etc. have requirements, they reserve requirements of what these banks can hold in numbers of bad assets. So the bank can choose to hang on to all these bad assets and really gunk their financial books up and be dealing with the Federal Reserve and the Comptroller of Currency, kind of nipping at their heels saying they need to fix these loans, or they can work with third parties and they can sell off loans that are underperforming or semi-performing or have big issues or little issues, but they’re not sterling perfect mortgages anymore and that’s what they’re trying to get rid of. And what’s interesting is, even when those mortgages have problems, we still are in an industry where 98% of mortgages in the United States are fixed rates. 30-year mortgages. We’re talking three decades of investment with a house, with an asset that backs up that financial instrument. So it’s still rock solid. We’re still in a rock solid industry where baby boomers own over 40% of the housing market and plan to live there for the rest of their lives, 10, 20, 30 years. Then you have government backed mortgages are, what is it, north of 20%? So just between those, you have 60% of the industry that looks really stable. So when you have a minority of mortgages that have problems along the way, banks want to get those off the books and it offers huge opportunities for companies like Saint Investment to step in and say, hey, we will personally call the homeowner instead of having those big banks have to do that. So what we do in that case is we step in, we contact the homeowner, why aren’t you paying, how can we adjust your payments, how can we help you so that you stay in the home, you retain the equity, you retain the home. So your question was, Steve, how does the individual investor make the most of this huge, unknown, lesser known marketplace that’s the other half of real estate in the United States? There’s a few ways. They can go buy mortgages on their own. There’s plenty of places to do that. There’s trading platforms like PaperStack. That’s one route. They could absolutely do that. They could go make relationships with big banks on their own. Try to get in the door with Chase Bank or Bank of America. That’s another option. Maybe take a long time, but they could do that. If they’re not willing to write huge checks of 20 plus million, then it might be a more difficult scenario to get those meetings. The other half, which is very interesting today and a newer opportunity for investors, is investing with bigger buyers, bigger operators. It used to be that if someone did it on their own and they invested on their own, they made higher returns. That’s the history of real estate. If you invest with someone else, you’re going to make lower returns. If you invest on your own and you manage the assets, you’re going to make higher returns.

Yeah. And economies of scale, if you’re only buying, onesie, twosie, and then you build a relationship, you’re never going to make back any advantage that you might have by avoiding an intermediary. Okay. So people can just go to you and then what do you do? Do you like securitize these mortgages so that people don’t invest in specific mortgages, but they’re pool of assets or, or they just pick certain mortgages. And then if that mortgage goes sideways, then they were unlucky. And if it straightens out, they are lucky. How does it work?

Sure. So there’s an opportunity for people to invest with operators that have a larger pool of mortgages. We have over 500 to quantify what that looks like. So the nice thing exactly to your point Steve is if one mortgage has a problem or one mortgage takes a longer legal process or one mortgage has any issues and stops paying or whatever there’s still hundreds that back up the cash flow stream and the value of that investment. So where people invest with us, everybody sets up the structure differently, they invest into an entity that entity invests into mortgages. So that’s who holds the mortgages on our side. So it’s pretty transparent. It’s pretty straightforward. It’s pretty simplified the structure on that. And then that entity holds the mortgages, receives the payments from those mortgages and distributes it to our investors.

Okay, so that’s clear. And then you report to the investors, I assume that this is the pool of mortgages and this is what’s going on, it makes sense. Now, what about tax strategy? So you also mentioned earlier that there are some tax advantages as well, pertaining to this kind of investment. So can you speak to that as well?

Tax issues, when someone’s making too much money, is a fantastic problem to have. For people that are listening to this that understand that, hey, you have to make decisions that make it you have strategic opportunities to invest to offset your taxes. There’s a few different ways to do this. I would say talk to your CPA. They might have other options.

The best that I've found, the most interesting that I've found is to find ways to not just reduce your tax burden, but also grow your net worth and grow your income. Share on X

That’s the holy grail. If you can check all those boxes at once, that is absolutely what I’m looking for to offset in those situations. Real estate is, bar none, the best opportunity that I found for that situation. I live in California. California is very optimistic about how much money they can get from people on the tax side. So if you don’t have some degree of strategy going into your tax situation in California, it can be really painful and it can be a lot to manage. Real estate on that side, if you’re working with your CPA and you’re checking the boxes, oftentimes you can reduce your tax burden by 50. Sometimes if you’re really organized, up to 100% on that, and that’s through investing into properties with an operator, a fund, you can do it yourself also. And then you can receive a tax write-off on that for a huge chunk, 50 to 100% of your tax owings, depending on the strategy you utilize with your CPA. So huge opportunity. Most oftentimes that asset over time is going to grow in value, especially a hedge against inflation. Most oftentimes if you purchased or invested strategically, you’re going to have distributions and cash flow along with that. I just don’t know any other asset class that has that degree of opportunities that real estate offers for that.

Wow. Okay. I’m sure that’s there’s more complexity than we can cover in two minutes on this point. So that’s definitely interesting. So where do people find information? So if they’d like to learn more. Yes, I’m an accredited investor. I’m looking for higher than publicly available retail investment returns. I don’t want to just invest in the stock market in this five tech stocks that is swaying the market. I want something more tangible, something that feels safer, that I understand better, mortgages. And someone wants to learn more about the tax benefits of doing that. Where can they go and how can they find out more?

Yeah, we are hugely focused on economics at Saint. So we drill down not on the, not just on the strategies of investing, although we have plenty on that, but also the economics behind it, why we do the things we do, and also opportunities that investors, wealthy individuals, high earners, etc. Things that they can take advantage of in the current environments. So we go through all those, we give all those away for free, free webinars, free books, etc. at saintinvestment.com/resources. I would start there. Tons of great stuff, we give it all away for free, all the research that we do.

Okay, so saintinvestment.com. So definitely check that out. Now, before we wrap up, I’d like to ask you a final question. So you being an entrepreneur, what do you think an entrepreneur should be asking themselves? What is the most critical question they should be asking themselves in order to be successful?

Yeah, I mean, if we’re talking in the context of an entrepreneur, a business owner, somebody that’s responsible to be the leader of a company, I think it’s growth, Steve, 100%. I don’t think there’s a question on that. It’s how do you, as the entrepreneur, as the leader, scale the business? How can you grow this? Most importantly, what’s the number one item that’s holding you and your business back from the growth? And once you can identify what that item is, what the biggest problem, what the biggest roadblock is, holding you and the company back, how do you remove that immediately? And if you can answer that question, and you can answer the next time that you have a problem, you ask the same question and you solve it, and you have a progressive overcoming of obstacles, I think you wake up with a business that’s thriving and you’re crawling up the ladder one rung at a time, but really it’s growth. If you’re the entrepreneur, if you’re the CEO, if you’re focused more on pushing the business forward, it’s always what’s standing in your way and how to be growing faster.

I like this approach. Most people think, okay, what can I do to grow my business? And what you’re saying is, what can I do to pull out the stops that prevent from it? So the default is not that the business is stagnating. The default is that it wants to grow. There’s life force in your business that is trying to break out. It’s like the little tree that grows out of the rock. There’s life force there, but something is blocking it. So how do I find this blocker, remove it so that it can grow? It’s much more than enabling the growth that is there, rather than creating something from plain cost.

That’s exactly right. We’ve had phases in the business where our ad spend per month was over 125,000. So if we’re spending that kind of money, I could go, anybody, you could go spend that, anybody could go spend that and not get a return on that investment. So where would be the roadblock? The roadblock at that point wouldn’t be ad spend, it wouldn’t be ads, it might not even be the lead flow. The issue would be, do you know that you’re converting those leads at that point? Do you know that you’re even reaching the right people? And do you know that you’re even offering something that they want, that they find valuable? So each stage of the growth, I think, has to identify what the roadblock is, and businesses will grow naturally with those roadblocks removed. That’s been my experience, and that’s really what we’re constantly trying to identify. The number one problem to solve that’s holding our growth back.

Okay, that’s very deep. I love it. Thanks for coming up with this. Nic has some good ideas. I can confirm it to you because of his answer to this question. Check out his company, which is the Saint Investment Group. Go to saintinvestment.com.

Saintinvestment.com, exactly right.  Saintinvestment.com/resources.

Saintinvestment.com/resources. And check out his mortgage investment opportunities and all the tax saving benefits that he can advise you as well on. So thank you, Nic, for coming and sharing your ideas. And if you enjoyed this show then please don’t forget to give us a review on Apple podcast, follow us on YouTube and stay tuned because twice a week we coming out with new episodes on the management blueprint. Thanks for coming. Thanks for listening.

 

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