In this conversation, Pat Zingarella and Bela discuss the evolution of real estate investing, the importance of education and trust in investor relations, and the strategies employed by Origin to maintain investor confidence.

Bela shares insights on the current performance of their portfolio, the significance of diversification, and the role of relationships in building a successful investment business. They also touch on the impact of AI in investment strategies and address common misconceptions about private investments.

What Investor Relations Looks Like at $3 Billion AUM

Pat Zingarella (00:00)

All right, awesome. Bella, thank you so much for joining us. For the listeners, you were one of the first people I actually put Invest Clearly in front of early on. We were joking because from where we are today to where we started, I literally put a slide in front of you from when we were in a mastermind together and I was like, "Hey, what do you think of this?" So it's really cool to reconnect with you on this. Thank you for joining.

Bela (00:14)

Thank you for thinking of me and thank you for reaching out. It's really rewarding, even though I have nothing to do with it, just to see where it was from the seed inception stage to where it is today. It's unbelievable and remarkable and a testament to the product. It's something that's needed and wanted. So congratulations to you and your growth.

Pat Zingarella (00:39)

I appreciate it. Awesome. Why don't we take just a couple seconds to introduce yourself as well as Origin? You guys are one of the bigger players in the market, and so I'd love to hear about your background. I know you are leading IR right now, if I'm not mistaken. When we first started, you were moving up through the ranks, so I'd love to hear that journey.

Bela (00:59)

Absolutely. I'll take you way back to young Bella. Growing up, my dad actually owned apartment buildings, so I would grow up going to his property tours and investor meetings, and I even ran the books for him. It's kind of a silly example of where the spark and interest in real estate started for me. I ended up moving from Texas to Wisconsin for school because I had the opportunity to play soccer in college there, and I ended up double majoring in real estate and finance.

The past 10 years, I've really been doing iterations of both. I started my first four years in an analyst role; I rated commercial mortgage-backed securities for two years, and then I was an analyst for a family office out of Chicago for two years until a recruiter reached out to me about my current role at Origin. I was intrigued because it allowed me to still apply my real estate background with a more client-facing role.

Now at Origin, for the past six years, I've been in client services and investor relations. If anyone has a question about Origin's offerings, they would call me or email me; I'm there to be a resource for them. At Origin, we really pride ourselves on a white-glove level of service. From there, I make sure our current clients are taken care of, making sure every question they have is answered regarding their investment overall. Aside from that, I actually started my own podcast and community last year where I help educate investors on the due diligence process because, similar to Invest Clearly, I just want people to feel more confident in that investment decision. I don't think you can build real wealth by just leaving your money under a mattress. Instead of being scared to invest, how can I help empower you to be more confident in that investment decision?

Pat Zingarella (02:56)

That's fantastic. That education aspect is so unbelievably necessary. The more people I talk to, the more you realize how less educated people are as a whole before making some of these commitments. It's wild. That's awesome you're doing this. Talk to us a little about Origin—it is a behemoth. What do you guys do that really differentiates you from a trust standpoint with investors?

First of all, are you mainly raising from retail, high-net-worth, accredited investors, or do you guys go more of the institutional family office route? And what does that process look like from an educational standpoint when someone calls for the first time?

Bela (03:40)

Sure, absolutely. We do a lot of educational content; that's something we really believe is important. Whether it's hosting regular webinars led by members of our leadership team, or issuing quarterly reports, which a lot of folks do nowadays, we also have articles that we write. Whether it's thought leadership or, for example, how tariffs will impact construction pricing, how we're mitigating those risks, how the recent bill affects real estate, or how our markets are being affected—just things like that.

Before someone gets on the phone with us, they have the ability to see how Origin thinks and help educate themselves. We truly believe that if someone comes in educated, then it's up to them to make the final decision, and we want them to be as competent as they can be in that decision. We think it's very important to lead with education first and be over-informed. We also have a comprehensive guide to real estate investing that I've heard has been very useful for prospective investors. That's where I think it really starts in that ecosystem: just having a presence online and having that social capital to back it up.

Pat Zingarella (04:58)

Yeah, for sure. And your primary investor base—is it mainly the retail side of things?

Bela (05:04)

That's right. In our case, we do target retail investors: high-net-worth accredited investors mostly. We also have recently started a program where we are forming partnerships with RIAs. That's a bit of a newer strategy that we're advocating for, but in our history since inception in 2007, it's really been targeting high-net-worth retail investors.

Pat Zingarella (05:34)

Sure. Is the path towards the RIA just about bigger deals and bigger checks, or is it a shift in strategy or an expansion of interested capital? What would you say?

Bela (05:45)

I would say it's a little bit of both. Certainly, the expansion helps because one RIA relationship can lead to many. That being said, it is a longer due diligence process, as it should be. Something a little bit unique to Origin is that we are actually merging with an RIA company. Through that, it's a two-way street where our RIAs can now confidently offer their clients a solid real estate investment, and we are now getting in front of potential new clients on the RIA side.

Pat Zingarella (06:21)

Yeah, that's awesome. You're probably the biggest GP that we've had on the show so far. What do you think separates your ability to scale, especially when it comes to investor trust? A lot of the individuals I'm working with are maybe sub-500 million, still with founder-led IR conversations. You guys are over 3 billion under management, and it's a full business practice. What has separated your ability to scale in that manner?

Bela (07:02)

Sure. I don't know if it's "different," but I do think we value the client first, whether it's the experience or the decision-making. Everything we do is centered around our partners. For example, in March of 2020—the pre-COVID era—we didn't know what environment was about to ensue, but our co-founders knew it probably wasn't positive and decided to kill our entire pipeline. We had been working for months, sometimes years, on a deal, but because we weren't willing to sacrifice that risk, we decided to just end it all until we had a little bit more clarity.

We just aren't afraid to make those decisions in the best risk-adjusted way possible. We also want our partners to be as informed as possible. We're hosting webinars and quarterly reports with someone you can access at any time. It's a real-life human being; you're not going to be sent through a call center to "press one for this" or "press three for that." I recently have heard stories of investors talking about other sponsors or deals going south where they can't get ahold of anyone. It makes me sick to my stomach. It's so sad. The least you can do is be as transparent as possible. I think that's what I would attribute it to. I don't know if it's true or not, but I think it goes a long way.

Pat Zingarella (08:31)

Yeah. That is brutal. It's a topic I feel like I touch on in every single one of these podcast episodes. I talk to these investors, and there are things going on with deals—that's not a hidden thing. But people will get on the phone with me and bring up the loss of capital for 10 seconds, and the rest of the time, it's all about communication, how it's changed, and how they can't get ahold of people. It's gut-wrenching when you talk to individuals about that.

Bela (08:57)

Yeah. Exactly. Even if it's bad news, you just have to be in front of the investor. You have to let them know what's going on.

Pat Zingarella (09:10)

Yeah. That's not an easy decision your founders made to just stop, especially at your size. It's an operating business; it's tough to make that call. It's wild that happened. In terms of the portfolio as a whole, how are you guys performing currently?

Bela (09:16)

Sure. We have four open funds right now. We have a credit offering, an income offering, and then the tax strategies: QOZ and 1031. With 1031, it's a little bit newer, but you have to acquire a property that's already built and performing, so it's more of a core property. Those properties are performing fine.

Opportunity zones, depending on the vintage—it was tough to acquire properties back in 2022. But because we believe in our thesis, our business plan, and our markets—which is where the risk starts over a 10-year investment horizon—we think everything will be OK. For our credit fund, it's performing well as expected. Our income fund has never sacrificed a distribution. That is not to say we haven't run into lower appraisal values and things like that, but if you're holding for the long term, we think it should recover rather quickly.

We haven't sacrificed a distribution because the income portfolio we have is multifaceted. That's done on purpose so we can be nimble based on what the market environment is telling us. When we first started back in 2019, the portfolio was made up of mostly common equity. Fast forward a few years, we don't believe in the cost of capital and think everything's still overpriced, so we've now shifted the portfolio towards preferred equity. We're getting mid-teen returns, and values can still drop 30% before our first dollar is at risk. So the risk-return is there for us. Hopefully, someday soon, we can go back to tilting more towards common equity, but I think that's what's helped us sustain our distributions throughout the past six years.

Pat Zingarella (11:23)

Yeah. You know, what's really interesting about preferred equity versus common equity is that most investors don't fully understand the capital stack. They don't understand how much value a property can lose and wipe out their position before the property actually goes to zero. I had somebody recently write a review and email me; he was like, "I put in 100K, and I think I'm going to lose 90%." He never saw a world where he would lose 90%. He thought real estate always had some value, and he was mixing up the value of the asset versus his position in the capital stack. It was a really interesting conversation. I thought about that when you started talking there.

Bela (11:57)

Yeah, interesting. I actually just interviewed a gal at BiggerPockets and I really loved something she said. She said when LP investors think of diversification, it's usually across asset classes: "Yeah, I'm in hotels, I'm in VC, I'm in multifamily, I'm diversified, I'm good." But she talked about capital stack diversification. That's something we don't think about all the time, but it's true. You need to be diversified across the capital stack to have that cushion to loss in the preferred equity position, but also being able to take a little bit more risk and being in that first-loss common equity position too.

Pat Zingarella (12:46)

Yeah, that's really interesting. I've never heard anyone bring that up either. That's really cool. In terms of actual diversification at Origin, are you guys looking into additional asset classes, or do you have your specialty lane and you'll stay there?

Bela (12:49)

Yeah, I know it's a common question we get. Our first funds started with asset classes of all kinds, but over the years we've found it's better to go an inch wide and a mile deep rather than being a jack of all trades. So we build, we buy, and we lend, but it's all in the multifamily Class A space. We like multifamily because it's an essential asset class; everyone needs a place to live. It also has the highest return for the lowest level of risk across other asset classes. In particular, we're targeting Class A. These are typically folks that are renters by choice; they have higher educations, more stable jobs, care about their credit scores, and have savings.

Pat Zingarella (13:46)

Yeah, great stuff. Are you seeing investors looking for additional asset classes, or is it more tied to what they see in terms of trends in multifamily? Is it a concerning question when they bring it up?

Bela (14:10)

I guess I was focusing more on the sponsor side of the equation. When people are bringing us deals, they're asking us, "Will you entertain this hotel deal or student housing deal?" For the multifamily asset class right now, headlines are showing everything is overbuilt and oversupplied. I always like to challenge that with, "Well, what about the whole equation?" Yes, there is supply, but there's also demand. What does supply and demand look like together in terms of multifamily absorption? I think it's so easy to just focus on one side without considering the other, but multifamily has many tailwinds in our opinion in the coming years.

Pat Zingarella (14:57)

Yeah, that's great stuff. Thanks for going into that and clarifying. I would love to dive a little more into your background. Obviously, this is a relationship business and trust is at the center of it. I see a lot of things online about people trying to automate the IR process, but I just don't think it's going to happen. Every time I see you online, you're doing something cool or flying somewhere. I'd love to learn how that passion relates to your journey into this role.

Bela (15:34)

Sure. It might sound a little bit cheesy, but I do think it has to be innately you leading with good intentions. For me, what fires me up and brings me joy is finding where someone has been, where they want to go, and how I can help play a part in that. That's just what my heart leads with. If you're leading with just the sales or the commission, you have that—what do they call it?—"sales commission breath" on you. It's very off-putting and obvious.

I think it's always just leading with genuine curiosity. I just try to put myself in their shoes. I know how hard it must be to have this wealth that you've worked so hard for and just trust wiring over $100,000 to someone you just found online. There are a lot of scams out there—Ponzi schemes or sponsors with bad reputations that put a sour taste in people's mouths. Just being able to be in person when I can helps. As much as we try to replicate in-person interactions, nothing will ever replace it. I do try to offer up in-person meetings with people because trust is the name of the game, and there's no way to build trust stronger than meeting face-to-face and making sure you are a real human.

Pat Zingarella (17:04)

Yeah, that's awesome. Do you do many of those face-to-face meetings?

Bela (17:16)

Yes. Especially now at Origin, I've known some of these folks for six years now, and it's crazy. I feel like I know what's going on in their lives, but I've never actually met them. I have made a bigger push in recent years to go and meet them in person. I'll try to go to a market for 48 hours and see how many meetings I can stack. I was in LA earlier this year and in two days I met with eight investors. LA is a big place, so I was driving all over the place. It's true what they say about LA traffic—it is no joke.

Pat Zingarella (17:50)

Yeah, no, that's my nightmare. I'll stay in a little small town in New England. I hear a lot of LPs going into territory, but I don't hear many GPs actually initiating travel to go meet their investors at their home base. That's pretty cool.

Bela (18:14)

Yeah. I think it goes back to your earlier question: what helps Origin grow? I think it really is just relationship building and making sure you're leading with a client-first approach.

Pat Zingarella (18:24)

Yeah, that's great. When you think about client-first, are the majority of Origin investors repeat investors, or are you guys constantly sourcing new investors?

Bela (18:45)

I would say a lot of it is referral-based or investors who stay with us and reinvest in our funds. Again, it goes back to trust building. If I find someone online versus if someone tells me, "You should check out this investment opportunity," the referral is going to have a higher weighting. It probably does lean more on repeat or referrals.

Pat Zingarella (19:13)

And do you guys do much top-of-the-funnel marketing?

Bela (19:18)

We have a great marketing team. They focus a lot on top-of-funnel, SEO, and seeing what conferences might make sense. It's been tough in recent years compared to when I first started because of where the economy is, but it's definitely something that we still entertain.

Pat Zingarella (19:38)

Yeah. We're seeing that across the board. One of my partners runs growth for a digital ad agency in this space and an IR ops business, and we're seeing almost a doubling of the cost of capital on ad spend. The investment capital required for leads is twice what it was two years ago. It's heavily around people waiting, slower decisions, and more comparison. Are you seeing more LPs now playing the comparison game, or because it's so referral-based, do you have that differentiation? What does the LP journey look like as they come into your pipeline?

Bela (21:10)

Sure. It's also interesting now because you have AI. AI has come up a lot in my conversations recently. If I ask someone how they found us, they'll say, "ChatGPT. I asked ChatGPT who are the top real estate syndicators or sponsors and your name came up." It's just a crazy different world in that respect.

Yes, there's definitely always going to be competition, but it's just a matter of highlighting what you do and leading with good intentions. This is what I would tell my family and friends when I'm evaluating an investment opportunity. I allow them to go through their process, due diligence, and education to ultimately make a decision that's best for them. I personally don't want to shove a product down someone's throat that's not for them. If we're not a good fit, or if someone wants something outside of multifamily or a more risky investment, then I say we might not be for you. Being able to say "no" to someone is really important.

Pat Zingarella (22:41)

Yeah, for sure. You mentioned AI—we've talked to quite a few people leveraging AI to do due diligence. How are you guys adopting it internally?

Bela (22:57)

We do. We have a proprietary in-house AI tool called Multilytics. It helps us with our rent growth projections currently, and we're looking to make that a little bit more robust. It analyzes 3 billion pieces of data and it goes smaller than the zip code level. We always look back at our prior year projections to see how we performed against actual. Last year, we deviated about $6 from the actual. It is an incredible tool.

Back in 2020-2021, we were one of the only people predicting negative rent growth in Austin. When we had conversations with potential investment partners on the other side of the house, they would laugh at us. Fast forward, that's exactly what happened. It's funny to think about now, but that's an AI tool that we've made.

Pat Zingarella (23:57)

That's awesome. Smaller than the zip code is pretty powerful. Find out what the neighborhood's doing. I have to ask the one question I ask on every call: what part of passive investing do you think needs to die?

Bela (24:13)

I think lately sponsors are seen as villains. For example, this week in the Wall Street Journal, there was rhetoric out there that 401ks might be open to the private markets, and I just don't know why we have to villainize private investments. Headlines just go in one way versus another. Yes, there might be some bad actors out there, but there's also entrepreneurs who are trying to make a difference and doing things right. That's when I think educating yourself is important.

I know there was another headline talking about single-family homes and how investors are getting more market share. But if you dig into the data and actually question it, they're not gaining massive market share. It's because the data focuses on the share of home sales, and it's up a bit because owner-occupied housing is down. Jay Parsons had this whole post about how investor purchases of single-family homes are actually at their lowest since 2013. It just goes back to getting both sides of the equation. Make sure you're digging into the data to see how they're coming up with the numbers. Not all sponsors are evil. Even though private investments aren't registered with the SEC, two big scandals—Enron and Bernie Madoff—were registered with the SEC. That doesn't necessarily guarantee you any safety. The SEC doesn't audit financial statements; it just requires you to have an independent auditor, which most funds have if you ask. Private side is typically subject to anti-fraud provisions of federal security laws. All to say, not all sponsors are evil.

Pat Zingarella (26:22)

I 100% agree with that. The headlines are clickbait; it's just what will terrify someone enough into clicking. The purpose of Invest Clearly is not to be the "GP Reaper," because there are great GPs out there. Sometimes it's hard to find them when you're sifting through the noise. Data is essentially fuel for the story; you can manipulate data to fit a narrative. Headlines don't actually represent reality, just a small sliver of a manipulated reality. I'm with you 100%. I hope the actions of one don't cause a shadow over everyone else.

Awesome, Bella. Before we jump, you briefly mentioned the open offerings you guys have. If you want to go into any of those in a little more detail and tell people how to get in touch with you?

Bela (27:25)

Sure, absolutely. Getting in touch with me is super easy. LinkedIn is the easiest option; just type in Isabella Carrasco. Send me a message; I'm happy to send you anything you might need.

For Origin right now, we have a credit fund. That is different because we focus strictly on multifamily and we are one of 25 groups that has access to the Freddie Mac K-Series product. Historically, in its worst-performing vintage, it had a loss of 0.04%, which didn't even translate to a loss for bondholders. Fun fact: we're actually moving that fund to an interval fund, which means you don't have to be a qualified purchaser or an accredited investor anymore; the minimum investment is only $5,000. That should be finalized in the next couple of months.

A step up in risk is the income fund. We focus on a projection of 9 to 11% there. It's multifaceted; we want low-volatility, stable investment into real estate. Then, for anyone that has 1031s, we offer 1031 exchanges via a 721 UPREIT. That means you're invested in a single property for two years until you are put into a product that's diversified across many properties and geographies. Not only are you lowering risk, but you're also helping your liquidity. You can have pretty instantaneous liquidity. Finally, we have our Opportunity Zone fund for anyone with capital gains.

Pat Zingarella (29:51)

Very interesting. Awesome. Bella, thank you so much for joining me. Thank you for the support you've showed early on and I look forward to staying in touch.

Bela (30:00)

Sounds great. Can't wait to see where Invest Clearly is a year from today.

Pat Zingarella (30:02)

Thanks, me too. Thank you.