Bridging the Gap & Funding $5B+ in Real Estate Loans with Don Wenner – EP 191

Justin Donald: What's up, Don? Good to have you on the show again.

Don Wenner: Hey, Justin. Pleasure to be here.

Justin Donald: Well, it's really rare for me to bring anyone back on for a second time just because I have so many people I'm excited to introduce our audience to but you're one of my favorites. You're one of the early people on the mastermind. I think a lot has changed in the last four to five years, probably closer to five years. And a lot of cool stuff is going on in your world, and I'd love to talk about it.

Don Wenner: Awesome. I can't wait. Thanks for having me.

Justin Donald: Yeah. This is going to be fun. So, for those that don't know your story, I think it'd be fun to talk about it. But before we do that, we were just talking off-camera about summer travels and I think you live an incredible life. We were kind of comparing notes on where we're each traveling to and some of the fun things that we're doing with the family. And part of the reason I love having you on the show is you're such a family man. You put your faith, your family, your friends at such a high tier and above business, which I love. We talk a lot in the Front Row Dads community of being a family man first, a businessman second, and you exemplify that. So, tell us some of the cool stuff you're doing with the family this summer.

Don Wenner: Yeah. Thank you. And so, I have three boys, 12, 11, and 2. And so, my wife and I made the decision about four or five years ago now that we were going to virtually school our kids. And, really, for this reason, to give us freedom and flexibility and for us to have as big of an imprint on our children as possible. It’s been an amazing decision. I’m very blessed that my wife was a schoolteacher, so that's certainly helped. And we actually have a full-time teacher and her husband who travel with us. And so, it's been a really, really cool journey. And we setting a BHAG, a big, hairy, audacious goal as a family around that time and it was to have a thousand extraordinary days in a hundred different places before my oldest goes to college.

Justin Donald: Wow.

Don Wenner: So, when we set that goal, I think we had a 12-year time frame to do that. We have seven years left, seven summers left. So, it was about five years ago. And so, we worked out the math. It was like we have to hit about 80 days a year, extraordinary days. And how an extraordinary day works for us is every one of us has to vote that this was an extraordinary day. And so, we do that a lot of times at the end of the day, some we do it once a week kind of on Sabbath but it's created a really cool rhythm, not only to really focus on intentionally enjoying time together, but then the fun of talking about what we did. And at the end of the month, talking about all the extraordinary days we had, which one was our favorite at the end of the year. This created this really cool rhythm.

So, yeah, so what we have coming up this summer so, literally, to your note about Front Row Dads, it's literally my next travel in Asheville, North Carolina, where we live in the summertime. We live in St. Augustine as home base most of the year. So, next week we're heading on, actually, this Sunday we're heading to our Building an Extraordinary Family event, which is an event we're doing to help a lot of our clients, our investors, our operators build an extraordinary family. And we'll bring in all kinds of awesome speakers like John Maxwell and Jon Gordon. And we're going to have education for kids from five years on up, teenage education, etcetera. We've got America's Got Talent shows, and we're going to Dollywood, we’ve got all kinds of fun stuff, philanthropy for kids. It's a really cool time not only for us to get to have an incredible experience like this with our kids but invite a lot of our employees and our investors and our clients to do the same.

And then from there, we head to Pennsylvania in Newport, Rhode Island, Boulder, Colorado Springs, Jackson Hole, back here to Asheville. So, that'll make up a good amount of our summer. There’ll be some other smaller trips in between but that'll be our summer travels. I know you’re up to some really cool travels as well but, yeah, so that's what we've got coming up.

Justin Donald: Oh, I love it. That's incredible. And like you, we love having these summer experiences. And we're going to spend some time abroad in Greece this summer and we're going to live on Lake Powell for a week, which we did last year with some friends. That was incredible. And we're going to do this really cool food tour in, I mean, all over Europe but primarily in Copenhagen because three of the top 20 restaurants in the world, actually, I think three of the top five rated restaurants in the world are there. So, we're going to go to Noma, Alchemist, a couple of others right there that are just incredible, incredible opportunities. So, should be a ton of fun. Like you, we want to create these experiences because we have limited time, right? I mean, I like how you gave the countdown of the number of summers that are left, and I think it puts things into perspective when you say, "Hey, I only have eight summers left, seven, six, five, so on and so forth,” and to really get the most out of it.

So, I love that you do that. And you and I just got a chance to hang out in person, in Jacksonville with Tim Tebow. And I know you guys have done a bunch of stuff with him but it's always fun seeing what you and DLP are up to. And you live in a beautiful part of the world there in St. Augustine and then Asheville for your second home is really nice, a gorgeous place. But how did you get there? Let's talk about this because, I mean, DLP is one of the biggest companies in your space. You've had incredible growth. I mean, at one point in time and I don't know what the numbers are today, but I think I remember when we had you on the first time, you had like somewhere between like 6 to 10 years of 60% growth year-over-year, which is just out of control, just 11 consecutive years on the Inc 5000 fastest growing companies. I mean, obviously, you're doing some things right here, but how did you get there?

Don Wenner: Yeah. I thank you for that. Yeah, when I was on last time, it was actually you were launching your book and I was launching my first book, Building an Elite Organization, and they were having some of that conversation, which I’ll kind of weave into a quick story. So, I grew up in Bethlehem, Pennsylvania, Lehigh Valley, Pennsylvania, an hour north of Philadelphia, known today maybe most for Lehigh University, and grew up very humble beginnings. So, I grew up to two parents who had me very young, 16 years old, limited resources you expect from two 16-year-olds without high school diplomas. And I was the oldest of five and some reason God made me in a way He did and He gives each of us with specific gifts and blessings.

And for me, I realized at a pretty young age that I was pretty entrepreneurial and also pretty driven. And so, I had that spirit through my childhood and I also connect with that entrepreneurial spirit comes kind of pigheaded, stubbornness at times, and sometimes you can say overconfidence. And by 17 years old, in junior high school, I thought I figured out and I moved out of my parent's house and went out on my own and knew what I was going to do. And I didn't need to listen to my parents anymore and waited tables to get through high school and knew what I was going to do. I was going to be a wealth manager. I was going to be a financial advisor and got on my licenses when I turned 18 and figured I needed to get a degree and went to Drexel University. Unfortunately, on nearly a full ride, and worked at companies like Merrill Lynch and Blackrock and McGladrey & Pullen but knew I was going to be an independent entrepreneurial financial advisor and continue to wait tables.

And finally, a guy convinced me to come work for him, selling alarm systems door-to-door. I know you have a similar story. And that led to that gentleman being in real estate and convinced me to get my real estate license. I was 20 years old and it just took off really, really fast. And that was 2006. So, it was October 2006, which is the peak of the real estate market. That was literally the month where property values hit their top. And my marketing message was, "Your home sold in 68 days guaranteed or I'll buy it.” And that was a right message at the right time. And a lot of pounding the pavement, started growing a brokerage, started growing a home flipping business that led to growing a construction company and a property management company. That led to us needing more capital and starting to raise private capital into funds. So, your proverbial family and friends’ money but my family all did and still work for me and my friends were in their 20s. So, it was going to doctors and bankers and professionals in my market.

And it's been an 18-plus year journey since. And to your note earlier, we've grown our revenue by 50% or more every year for 18 straight years. And one of the 5,000 fastest-growing companies for just it'll be 12 years when the report comes out shortly. And a note to that, the more companies go out of business due to indigestion and starvation is one of my favorite quotes. And the Inc 5000 is a great example of that. It measures your growth over three years. If you make that list once, you're more likely five years later to be out of business than to ever make the list again. So, it's been a great journey and we know we're just getting started with doing what I know God's called me to do and where we get the blessing doing every day at DLP.

Justin Donald: Well, you're defying the odds. There's no doubt about that. I mean, I know very few businesses and founders that have grown 50% on the revenue side of things, 18 consecutive years. That's just, I mean, it's unfathomable, really. I mean, well done. Congratulations. I love what DLP stands for, right? Dream, live, prosper is kind of the roots of the business. And I love that you've basically kind of transitioned into different niches or industries or sectors over time starting as home flipping. You've done single-family homes. You've done multifamily. You're still in both of those spaces. You've done lending, you've done so many things, and even before that on the realtor brokerage side of things.

So, you've got quite the diverse background but something else that I think is really special about what you've done is you haven't just grown your business with these crazy numbers. You've actually built a framework that you have written about and have taught to other entrepreneurs. And five years ago or so, right around there, was when you launched your first book, and then you launched a second book after that kind of fine-tuning it even further. And I'd love to hear you share a little bit about the difference between those two books and really why you feel emboldened and passionate about sharing with other founders and other people this whole idea of scaling and scaling wisely and doing so in a methodical, proven format.

Don Wenner: Yeah. Thank you. And so, just to answer that question and give a little bit of a quick framework to what we do today and it'll lead to explaining the books and our thinking there. So, today, DLP we’re $5.25 billion of assets. We own about 25,000 attainable or affordable housing units, apartments, homes for working families. That's our core funnel business. I've been called to transform lives in the building of thriving communities. And at the center of a thriving community is safe, attainable housing. That's the starting point, not the endpoint. So, we own about 25,000 units and we operate them and we develop new housing units, etcetera. But the bigger side to our business is we provide capital to other developers, builders, and operators who do the same. And we started doing that about ten years ago.

And about six years ago, I got a phone call. So, we were four years into lending, and one of the clients who I was lending to was really my first client I ever was lending to. When I met him, he was a small home flipper flipping a few homes a year. And now four years later, he's got a business with 50 employees and he owns $150 million of the real estate. And he's somebody who I'm highlighting to investors. And so, for the success story to look, look at how it helped him grow his business by providing them with capital, helping them find deals. You know, he's grown this business. He's living this American dream. And on a Thursday night in December so let me think now, this is 2018. So, going back six years ago now. He calls me up and he's in a panic. And he's kind of rambling all over the place. And he's telling me all these problems he's got going on.

And he's telling me that he just had to fire his controller because he thinks he was stealing from them. He's telling me how he can't get anybody in his company to do anything. He's got to do everything himself. And he's working 100 hours a week just to stay on top of everything. And he just keeps rambling. And he goes on to tell me that he's been so stressed and working so hard that just this past week, his wife filed for divorce and is taking his two young kids. Right? And then finally he tells me why he called me, which was that he can't make payroll on Friday. It’s Thursday at 9:30 at night. He can't make payroll on Friday because he's out of money. And when I heard all this, so I don't know, just maybe a 10-minute phone call or a 15-minute phone conversation. It felt like, when I heard that, somebody just kicked me right in the stomach because I'm thinking he's a success story, thinking I'm highlighting him and finding out this guy's wife's leaving him with his two young kids, controller stealing from him, he can't make payroll, he’s stressed like crazy.

And it hit me right then and there like a ton of bricks that I failed him. And I failed him because all I did is what most lenders do. I provided the money and the deals all made sense, and they were good deals, but I had learned long before that, that the hard part in running a business isn't raising capital and isn't finding deals. It isn't the external side. It's the internals. It's hiring and building a great team. It's developing leadership. The great John Maxwell likes to say, "Everything rises and falls on leadership.” And it's true. A terrible quote in business, it said, "Business would be so easy if it wasn't for the people.” Right? That's the hard stuff, right, building process and structure and discipline.

And I knew that. I had been running this disciplined process in our company for years. We call it the Elite Execution System but I had only been using it for ourselves. And in that moment, it hit me. I needed to help first help him. So, we helped him make payroll, and then we got involved and basically implemented the lead execution system as business and helped him solve those problems, hire and kind of restack his organization, and now he's still a client of mine to this day, and he's running a great business. And then that led to me writing the book, Building an Elite Organization, which is this book that came out back in 2020 and helping a lot of other organizations build great businesses. We call it the blueprint of scaling a high-growth, high-profit business.

And any of the sponsors we deploy our capital with, we get actively involved in helping them scale their business, which not only helps them avoid that situation but also helps reduce our risk and in turn, the risk to our investors because if we're deploying our capital with them, we know the hard stuff is the internals of their business. We get involved in helping them hire, helping them how they run meetings. I think of the framework of the lead execution system is how do you set goals, how do you achieve them, how do you communicate, and how do you solve problems as you grow your company. And so, that's where we help other companies do. And the other reason we wrote the book is because I believe that all the biggest problems we face in this country, I hate to break it to anybody who doesn't know this, but they're not going to be solved by politicians, right?

They're not going to be solved by no matter who wins this next election. The greatest problems we face are going to be solved by small businesses, right, going to be solved by creative entrepreneurs who are going to come up with solutions for the biggest problems we face. And so, I know it's hard to grow a business. I've done it. I've helped a lot of organizations do it. So, the system helps people grow a high-growth, high-profit business that can solve people's problems. And it's been a really cool journey. And then last year, we came out with this book called Building an Elite Career, which is actually the employee version of the book, which talks to the employees within a high-growth entrepreneurial business. And it's been just an incredible, incredible journey.

Justin Donald: Well, that's brilliant. I couldn't agree with you more and so, yes, I believe that entrepreneurs are going to find the solutions, period, to all the issues or virtually all the issues. It's going to be an entrepreneur that solves for it. Politicians have different motives and often a lot of unintended consequences in decisions made. And so, it's the entrepreneurs that will grind, that will figure it out, that will see these opportunities and will take advantage of them in a very win-win scenario. If you have a good idea, if you execute well, you're going to be taken care of well because whoever adds the most value has the highest opportunity to earn and grow. But what I love about your model is you not only are, let's say, a lending platform, which is just one of many things you do but you come in and you add value, you help them, you de-risk the deal, but you help them run a better business.

And quite frankly, you may help them so much that they don't need you in the future, which is interesting, but that's for the better good. But also because of that, they may want to work with you more. And so, it's a really cool concept. And then to double up with, hey, let's just get this book to all your employees to get them on the same mission, create the culture, create the understanding, create kind of like a similar frame of mind and frame of work. So, I love what you're doing there. I think it's incredible. Obviously, the book has done well because you've hit all the bestseller lists, right, the USA Today and Wall Street Journal and Amazon. And so, your books have wonderful content in them. A lot of people have those accolades. It's actually cool to see that yours is actually showing up in these businesses in a very successful manner. Like, you see the fruit of the methodology in the results, and I think that's cool.

And I think for anyone that's heard of any of these different operating systems, I think it's so important that you have one. Just like personality assessments I think are really important. And it's hard to say this one's better than that one because if you learn any of them, they can be great. And, to me, I have a hierarchy of which ones I like better, which ones I think are more applicable. But to have something that gives a common language amongst the teams and a common goal I think is so important, and you obviously have the track record for it with 18 years of 50% growth on the revenue side.

Don Wenner: Yeah. Thank you. And, yeah, it's been pretty cool. It's cool when I get to meet people who I, well, I meet people and I get to know people who then we build a relationship with and we help them go through this journey of building an elite organization, building a high growth hierarchy. It's a lot of fun and it's really cool when I get to see and hear the stories and get the appreciation for the value that that's created for the lives of our clients and their employees and their client. But one of the coolest thing that's been happening a lot more over the past year or so is now I'm getting more and more people who I don't know at all who reach out to me or run into me in different ways and thank me and say, "Hey, I read your book, and now I'm running your technology or I'm doing this in my company.”

I had a really cool story. So, a few months ago, a guy reached out to me, runs a big technology company in Silicon Valley, and somebody gave him my book, and he read it and he went on his own. He's an engineer by training and he went and implemented the lead execution system. And it was pretty big for-profit business, right? And he loved it so much. He also runs a ministry in Belize and a really great ministry called PathLight. Anyway, so he reaches out to me and I say this humbly, a lot of ministries, a lot of nonprofits reach out to us for donations. And we do a lot of philanthropy. Anyway, so he reached out to me and turned out the mutual connections to the ministry already. And so, I flew to Belize, a part of a really cool vision trip I did. I went to Costa Rica, Panama, Belize, and Guatemala with three different ministries a couple of months ago and spent much time with him and his team, and it went great.

And we have now become a donor as well but he wasn't looking for donations. What he wanted was I was to implement the lead execution system into this ministry where he's changing the nation of Belize. And then his three-year plan is to go into two more countries. And anyway, so I just had a team of three people in Belize, Thursday, Friday, Saturday of this past week implementing the lead execution system into this ministry that helps these teenage kids, the most high potential teenage kids in the country change the nation. They’re developing the brightest, sharpest leaders in their country. And seeing ministries like that doing incredible social work, getting the benefit of putting in the discipline of a great business into a ministry has been pretty cool.

Justin Donald: I love it. By the way, it's got to be the coolest feeling in the world to see the ripple effects of impact that happen because you were brave enough to put down these ideas in a book that are kind of scary because people could, I mean, we all know if we have written a book, there are going to be people out there that just are going to hate on you. They're going to be negative. They're going to attack you. So, you got to have some thick skin on that but some people, they're looking for reasons to tear you down. And so, to be vulnerable enough to put your work and your ideas out into the world it's a huge thing. And I just love the idea of it's not exactly this but kind of creating a Y Combinator in other countries or some variation of it with really smart people that can go on and do things, have high impact in a nation that needs it, that is third world or certainly not first world.

Don Wenner: Yeah. Appreciate that. And just response to that is if He is for us, who can be against us, right? But there’s certainly people who will pay as you put yourself out there.

Justin Donald: That's right. Well, and I love how important your faith is to you. I mean, even the verse I think that is kind of like the verse that guides your life is, "To whom much is given, much will be required,” Luke 12:48. And I love that you are driven. We're in a mastermind called Wellspring, which is Christian entrepreneurs that really want to have impact and have meaning, have impact, be incredibly generous, help each other grow their businesses but to also make money matter, right, and to have impact with those dollars. And so, I love that you lead your team that way. You run your business that way. I think it's powerful to be rooted in something that is much bigger than you.

Don Wenner: Yeah. Agree 100%. And that's easy to do when you recognize how small in the scheme of things, how tiny our impact is, right? And a lot of people like you on your own podcast, like we're doing right now, everybody likes to hear the America's Got Talent or the rags to riches story, right? Everyone wants to hear those things and everybody likes, we’re in a society that likes to worship heroes, right? And we like to hear those stories of these business tycoons who have achieved this incredible success or wealth when they came from nothing. And people love to celebrate those kind of success stories. And it's easy for people who have, who achieved worldly business success to start worshiping themselves and to start feeling that people should worship them because they've achieved so much.

And when you recognize that I had no effect on the fact that I was born in the United States, the greatest country on earth. I was born to two parents who loved me and cared for me. I was born knowing God cared for me in the beginning, raised in faith. I was born with a set of gifts and capabilities and blessings that I had no role in and as each of us does, right? And I was given the wisdom to know how to go out and apply the skills that were provided in the platform at the right time to come into real estate and with the strengths of to be able to lead, and things that I had such a little time. If I worked really hard to live out that do much to be given much required and accept that discipline and hard work and focus as expected and that living on the beach and just hanging out and worrying just about myself isn't enough. Just living the American dream isn't enough.

But then when we call and when I called 100X American dream that the responsibility to impact the lives of 100 isn't… To a lot of people, it sounds like a lot but to me, thousands of people's lives, to transform thousands of people's lives, to help them live, per se, the American dream is my responsibility to use those blessings that are provided to me. It keeps you humble when you really believe that and accept that and understand that but we have such a small piece in our own story and what we're able to accomplish. It's humbling at times but it's been a lot of fun.

Justin Donald: Well, I love your perspective. I love your humility. You've always shown up that way ever since I've known you. You know, we got a chance to meet through TIGER 21 originally. We share a number of mutual friends and that's always how you've shown up to me, regardless of where you've been in terms of success, which is cool. You're just easy to talk to. And what's also fun is you put on some big events for your company with big-name speakers and you just want to have impact not just to the masses, but also with the people that you have the closest relationships with, your employees, your business partners. I feel privileged to have recommended one of my closest friends, Hal Elrod, to come speak to you guys on Miracle Morning. And I know you do a lot of stuff there. We actually just took him out for his birthday to dinner and had just a wonderful evening. But it's cool seeing what you're doing inside your business, outside your business, and the way that you're really blessing people.

Don Wenner: Thank you. Yeah. It's also, like you said, we get to be a part of a lot of really cool masterminds and groups, and not everybody gets to be a part of. So, I take it as a great responsibility to take the wisdom and the connections and relationships and knowledge you gain and try to share them with those, as you said, that we care about and we know we'll benefit from it. And Hal’s been awesome. He has come to a couple of our events. He actually wrote the foreword to my first book here. It’s foreworded by Hal Elrod. Yeah. So, he's awesome. Love Miracle Morning. And we've run Miracle Morning in our organization for many, many, many years. And, yeah, it's a great blessing.

Justin Donald: It's so cool. Well, I'm also excited to see the growth that you've had being an early investor with you guys. And we've done a lot of stuff through the Lifestyle Investor Mastermind with our community but I'd love for you to kind of break down all the divisions that exist in DLP because you guys are in a lot of verticals. And I think it'd be nice to just clarify kind of where you're playing, what are the investments that you specialize in because you've gotten into a number of things over the years but you've also been in some of the same things for 18 years.

Don Wenner: Yeah. You know, a simple way that I like to think about it and how I frame it and we frame it internally is what we invest in at DLP is to build thriving communities, and what that centered in is attainable workforce housing. So, that's really all we do. We invest in attainable workforce housing. That's it. So, that could be multifamily or apartments. It could be single family but it's attainable housing and almost everything we do as a community meaning it's a number of homes in one location with common amenities and onsite support and resources and activities and events and people doing life together. And so, that's what we do. We do that in a few different ways. We do that as we own and operate existing rental communities. And so, we own and operate 70 plus existing communities, apartment, and single-family rental communities.

And we have an investment fund that you can invest in that owns all of those communities. And we generate great current returns from rent. We sell properties over time, and we've been able to generate about 20% return to investors over the last good number of years, all sheltered from tax. And so, that's one thing we do. Then we go and we build brand new rental communities. So, we directly develop and build new communities and we have a fund that does that. And you can invest as an equity investor in building brand new housing communities. And that's the most impactful thing we do because no matter where you're listening to this from, I can guarantee you, odds are 99% chance that you're thinking to yourself, "We have a lack of housing where I live,” right? “We have a lack of affordable housing here.”

Every time we talk, people say, "Oh, you need to come to where I live because this is a major problem here.” Guess what? It's a major problem everywhere. We have a lack of affordable housing everywhere. And so, that's what we do. We build brand new housing that's affordable, and all of our funds are impact funds meaning we’re self-mandated that we create housing that is and will remain affordable. And then we have two funds that lend money to other developers, builders, and operators who invest in building thriving communities. And that's what we do. So, for investors, they can invest in a fixed-return private real estate credit fund that generates great current returns for making short-term loans to professional developers and builders like DLP. Or you can invest in our funds that invest pref equity, preferred equity into building new housing communities or owning existing ones.

All of those funds are evergreen, open-ended, meaning investors can stay in as long as they want, exit when they want. They all produce regular income. They all produce great overall double-digit returns. And I'm blessed and I say this very proudly and we've generated our return targets in every fund in every period since we ever started double-digit return, never missed a target. That's been a lot of hard work by a lot of people, especially in a market like we're in today.

Justin Donald: Yeah. It's incredible. Now, we're also in a market where we're seeing a lot of companies failing. We're seeing a lot of funds failing. We're seeing a lot of syndications failing. We are seeing really poor terms. We're seeing floating rates. We're seeing a lot of bridge loans. We're seeing an abuse on leverage. We're seeing, I mean, there's just so many things that a lot of people are in trouble. I mean, I just heard about another two. I mean, I'm not going to say the names of these companies because my goal is not to disparage but there are two big companies that I just learned about this week that are likely going to default on their investors and on their properties. And when this happens, the investors get wiped out completely. And the common equity specifically, which is lowest on the rung on the cap table, they get wiped out.

So, I'd love to hear some of what you have done and put in place to protect DLP from what is happening already and what is likely to continue to happen to a lot of these other operators in the real estate space.

Don Wenner: Yeah. You know, it's a great topic. And I was speaking at a really big real estate, probably the biggest event in the country for syndicators about a month ago. And it was funny, I'm there and the guy who’s running the event, he’s like, “Hey, we were originally going to do this panel about all the distress in the market and all kind of defaults,” and he said, "But after we started talking to people, we realized that there's not really any distress. So, we're not going to do that panel. We're going to change it to something else.” And I told him, I said, "You're completely wrong. There's lots of distress.” And so, I ended up being on stage for two different times. And I gave people some really tough feedback about what's really going on in the market that we get to see kind of firsthand being that we're providing capital and seeing so many situations coming to us for help all the time.

And what people don't like to admit or know or recognize is the first thing that we did and the first thing that great sponsors did is they did the hard work of the stuff we were talking about earlier, the hard stuff of building an elite organization. They invested in building a disciplined organization, really an organization with really great people executing at a really high level with a lot of accountability and ownership and having discipline around your debt, having discipline around having cash in the bank, having liquidity. And we were preaching this and I give a whole long story and I know we're kind of tight on time but when I talk to organizations and I tell them, "Hey, we can help you implement and build an elite organization back in 2020-2021, I get a ton of people say, "Yeah, that's what I want to do.” And they'd sign up for our help in doing that. And then they didn't want to actually do the work, right? Because it wasn't fun. It was easier to just go raise capital than to do the hard work of building discipline and structure.

And so, a lot of the hard work is done before something like interest rates going up 5% happens. Right? And so, the problems people are facing today beyond that they didn't prepare is two things. One is they don't have the capital, the staying power. They don't have access to capital to deal with the fact that they have capital calls on their loans or have to refinance and come up with cash or they don't have the resources, they don't have the capital, they don’t have the liquidity to weather this storm, this capital markets, financial market storm. So, that's the one big problem that a lot of organizations still have. They don't have the right capital structure to do these syndications with a bunch of high-net-worth investors that set no margin for error, no margin for anything that can go wrong, certainly no margin for rates to go up 5% on floating rate debt. So, that's the first fundamental issue that's going on today.

And the second fundamental issue is managing the business I'm in as rental housing. Managing rental housing is hard. So, everybody's pro forma will say, “I'm going to average 94%, 95% occupancy with half a percent bad debt and really low expense ratios. And I'm going to sell it at a four-cap rate in five years.” And operating at those kind of levels is very, very hard. Especially if you're in C and kind of lower B-class housing, it's tough. It's a very tough space. It's a very rewarding space if you think of it as a ministry as I do but it's a very, very tough business. So, executing to the assumptions that people set out, it's not easy, especially if you don't operate now. So, the most common situation that people invest in is a syndicator with two or three partners and four employees. We're using third-party management, third-party brokers, third-party everything, with no reserves, no capital, his or herself.

Now, in a tough market where rents aren't going up 15% a year and there's not a buyer who can just buy things from you and another lender will give you another loan. And so, it's a challenging market. So, one of the fundamental things we do for our investors is all of our investments are preferred equity or debt. So, we're never the common equity. So, we always have common equity behind us in every deal, which is to your example, I have a deal right now or our investors are going to get a 17% return on investment, and the common equity behind us is getting wiped out. So, they're getting zero returns and they're losing all of their money. But our investors are going to get all their money returned plus a 17% return because of where we're at in the capital stack. And most investors don't even know where they're at in the capital stack.

And if you don't know, you're probably in the top 2%, which means if the wind blows in the wrong direction, you can get wiped out because what a lot of sponsors were doing was take out 75%, 80% debt, then get an equity partner who gives you 90% of the equity. So, you're 10% of the 20% equity, which means you're literally the top 2% of the capital in the deal. And so, not only do we make sure that the deal level is always a lot of equity behind us, but in the fund level, all of the OP’s returns are subordinate to our investors getting their returns. So, we don't earn even a management fee until investors get their returns. So, we make sure investors are first because of the structure and the discipline we put in place to what we invest in and how we underwrite it. We operate it ourselves, etcetera. We've been able to be really consistent. It doesn't mean this market's not challenging. We've been able to navigate it and protect our investors really well.

Justin Donald: Well, I just love what you have put in place, the way that you protect the downside risk, the way that you optimize the upside. And really the track record I think is great. And you guys have also been very generous with the Lifestyle Investor community. You always give us preferred terms and we appreciate that. I know that right now you guys are seeing some pretty incredible things. And for those of you that are unaware, there are some distressed deals happening. There are, I mean, those of us that are in the know are seeing a lot of cool opportunities right now. And so, if you know the right people, if you see the right deals, there's just ample opportunities for returns right now. But I would be careful because I would say most people don't have those. Most people don't see those. Most people don't have the right systems in place or the right metrics to keep the investor dollars safe. But anything you want to offer to our community, we will gladly be the recipients of because you guys have been good to us.

Don Wenner: Yeah. I'll just maybe wrap up with kind of thoughts about that. So, I really believe and then I say right now, I mean, literally the last I'll call it 90 days, not in even the last two years, just within the last 90 days, we would say this has been the best market we've seen to invest in for what we do in the past 18 years since I've been in this business. So, the three things we see in this market as opportunities right now. So, number one, and this is the biggest thing we do is we're a senior lender. So, because of the illiquidity of banks, we're providing first-position construction loans to successful full time. Simply put, we're giving construction loans to the best developers in America, bar none.

Guys who've been doing this 20, 30, 40 years, who've done thousands and thousands of thousands of units, we're giving them first position loans similar to what banks were doing two years ago but we're earning 12%, 12.5% fixed returns on our loans and then we're able to use what we call back leverage and we're getting the teen returns as a senior secured lender with full personal guarantees to sponsors who've never defaulted on a loan in their life on really great projects that they're building at a great time to buy where they're getting lower construction costs, lower land bases, etcetera, etcetera. So, phenomenal projects where we're senior secured, first position loans on average about 20 million of equity behind us in the 12% unlevered returns with full personal guarantee.

So, incredible opportunity that not only to make money now and to make loans today but for us and for DLP, the opportunity is to build relationships with the sponsors that we'll be able to keep for the next 10, 15, 20 years as we're there for them in this market environment and build a real relationship and then add value to them in helping them scale their business, etcetera. So, that's the biggest thing we're seeing. We have a pipeline right now, over $1 billion in loans, signed up and our plan this year was to do $1.5 billion of loans and we're going to likely blow past that because the amount of opportunity we’re seeing today. So, that's the first thing we're doing a lot of that. We're getting equity-level returns as a senior secured first-position lender. These are loans banks were doing two years ago at 3% interest rates, right?

The second opportunity we're seeing is what we call rescue capital. And what I mean by that is great sponsors, great operators know what they're doing, who are executing well, who are not having any challenge other than capital market. So, let's say they have a bridge loan where they took out a loan for 70% financing, and that loan is coming up for maturity. So, now they go to refinance into a long-term loan but they can only get financing of, say, 60%. Well, now they have this gap that, "Hey, I have a bridge loan for 30 million. I can only get a $25 million permanent loan.” Where does that 5 million come from? And that's where we come in and we'll do rescue capital pref equity in a deal on a great deal that's performing sitting in the capital stack that's normally held by a lender but again, actually getting equity returns, getting around 20% returns to sit behind all their equity in a deal taking out a senior secured loan.

So, that's a second place but adds a ton of value to operators, great deals, great opportunity. They don't want to sell in this market because values are lower and so they want to wait. So, they just need to solve a short-term capital challenge. And the third opportunity we're seeing is we are finding opportunities to buy deals for a variety of reasons, often kind of brand new construction type deals at a big discount to whatever cost to build it today. And fundamentally, the fundamental belief I have, which I say is a belief but I think it's almost a guarantee, I can't guarantee it but it's almost you talk to almost anybody in space and there's very few who would ever argue with this, it will cost a lot more to build housing three years from today than it cost today or five years from today than it will cost today. Cost of building housing is not going down.

Also, if you look at it three or five years from now, rents are going to be higher than they are today, values are going to be higher than they are today, and we are finding opportunities. We can buy brand new or near brand new deals at a big discount to what we could build it today and deal with all the work and risk of building it. And so, example, we're buying a brand new deal or a few-year-old deal, nearly brand new deal here in Asheville, North Carolina right now at about $60,000 less than we could build it today. And it's already built. It's already stable. It's already 95% occupied. But there’s some distress on the seller side due to some other issues in their portfolio that's creating this opportunity that they need cash now. And our ability to move quick and execute quick provide that surety in a market where not a lot of groups have capital is getting us those kinds of opportunities.

So, this is the main type of opportunity we're seeing. So, we're doing something right now that I mentioned that we'll offer out to your group. It may be close to our general investor group by the time you listen to this podcast but we'll offer it out to your community, Justin, which we've never done this before. We're offering out a 1% kind of bonus or rebate to new investors coming and joining us right now. We're calling it our Invest Now Incentive. So, you invest $250,000, you'll get a $2,500 bonus added to your investment on top of the double-digit returns we generate and so forth just for taking action, helping us to act now so we can close on the whole pipeline we have and capitalize on as many of these great opportunities as we have. So, just incentive to help you kind of get going with us, give you another reason to get started, get going with us right now and not sit around and wait. And we're seeing the kind of opportunities now. They're going to create outsized returns in our funds in the years ahead.

Justin Donald: Well, thank you for always being so generous with our community and always given us some preferred terms. We appreciate that. I know we've been early adopters with you guys and really appreciate all that you guys do. So, where can our audience learn more about you, learn about your methodology, and learn about DLP in general?

Don Wenner: Yeah. I'd say two places. So, DLPCapital.com is our website and we can put a course on all the recording info, all the different exact links but there you can learn about our investment funds, learn about the events and free ministry-type work we do, and giving education and events and content to our investors like the Building an Extraordinary Family Event we have coming up next week. And so, everything about us you can see on DLPCapital.com. And then we have another website you can find off there but it's DLPElite.com and that's all the information about the Elite Execution System that I wrote books on. We give away tons of free tools and resources and whatnot. If you're focused on building an organization or just focus on learning what we're doing, and maybe if we're doing due diligence or evaluating eyes, you can learn a whole lot about what we do, not only in building a great business but also the personal development type training and educational resources we provide to help us build extraordinary legacies and lives as well.

Justin Donald: Well, Don, this has been awesome. Thank you for joining again and just love seeing all the cool things you're up to, seeing how much your business is growing, and seeing your investor base grow and then also just the impact grow that, as you're given more, you are more and more generous. So, thank you for that leadership. And to our audience, I love wrapping up every podcast episode or the question that I ask you and the question is the same every time. It's this: What is one step that you can take today to move towards financial freedom and really the life that you truly desire, so a life on your terms, not by default like most people, but by design? And I really challenge you to pick one thing, at least one thing that you learn from Don that can help you get closer to that reality. Thanks for tuning in and we'll catch you next week.