FULL TRANSCRIPT
Slava Rubin (00:00)
In this episode of Smart Humans, we talk with Harold Hofer, who is the co-founder and CEO of Alture funds. He talks to us about the rise of the retail investor, how people who normally could not get into these amazing funds are now able to get access. We discuss what's gonna happen with the US economy and how he stays on top of all the various information. We cover all of this and more in this episode.
Slava (00:52)
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Slava Rubin (01:43)
Hello and welcome to the latest episode of Smart Humans. I'm excited for today's guest. We have Harold Hofer, who's the co-founder and CEO of Alture Funds. So Harold, welcome to the show.
Harold Hofer (01:57)
Hey, thanks Slava. Happy to be here. Really enjoy your podcast, by the way. You're doing a great job.
Slava Rubin (02:00)
thank
you so much. Well, it's guests like you that make it interesting. let's dive in. So you've obviously been involved in the world of alternatives for a while and you have a ton of experience. So let's just take it back, whether it's your childhood, work experience, wherever it is, how did you get into the world of alternatives?
Harold Hofer (02:04)
Hahaha
Well, I'm actually a lawyer by training. So I went to, I grew up in the LA area, went to UCLA undergrad and law school, practiced law for a while. And then I got into the commercial real estate business and started syndications and whatnot. But over the course of my career, you know, did a lot of different things, but probably most germane to our conversation today is that in 2012, I formed a company called Rich Uncles and Rich Uncles was a online non-trader public REIT. I think we're the first ones out the door with that.
My co-founder was a guy named Ray Wirta. Ray was the, at the time, chairman of the board of CBRE. He had retired as CEO, but he was chairman of the board of CBRE. So a very seasoned senior guy in the real estate world, probably one of the top 10 executives, or also the executives globally at that time. But his thesis was, when the Jobs Act came out in 2012, which liberalized the way that investors could, excuse me, sponsors could solicit capital from accredited investors,
We thought, that light bulb went off in our heads. Say, wow, that's a lot of people are using the internet now to solicit capital. And there's a lot of really, really good accredited investors only type platforms evolved out of that and still exist today. But our thesis was, Hey, can you even expand that even though jobs act hadn't didn't directly address it. Could you expand that and use the internet to raise capital for a non-accredited investor vehicle and non-traded public REIT? What was what they're called then and still now. So Ray and I.
formed Rich Uncles in 2012. I think we're the first ones out with an offering available to non-accredited non-millionaire investors. And what we did was we started with a California residents only intrastate offering. So you could have a public offering in a state, California, and follow all of the California rules as concerns, those sorts of offerings, but you did not have to qualify with the SEC as long as you were domiciled in the state, raised capital solely within the state.
and invest it solely within the state. we had a $25 million public offering in California only, and we could detect by a customer's IP address if in fact they were coming from California or not. Very successful. The thing went $25 million. We upsized it to $50 million, upsized it to $100 million. So we were raising a lot of capital, and our strategy was to buy single tenant net lease assets, which are kind of current yield focused.
Long-term leases with a tenant that covers all of their own expenses, property taxes, insurance and whatnot. So it was kind of a simple real estate strategy, but very focused on current income. So we then said, okay, let's go, let's go national. So we expand, we filed with the SEC for fully registered non-traded public read offering and the ball continued to roll. So we got to about $500 million of AUM by 2018.
Slava Rubin (05:02)
Wow.
Harold Hofer (05:04)
And we were cashflow positive as a platform and Ray's got to Ray's a very smart guy for a whole bunch of reasons. we had a lot of wind at our backs at the same time because cap rates were falling, interest rates were falling, cap rates were falling. So we kind of looked really smart. And the market made us look really smart. But those things always come to an end. So it's always tough to predict the top or hit the top or predict the bottom. So we elected to take our
are then our REIT public. it's currently a New York Stock Exchange listed REIT and we sold the management company, our sponsorship vehicle to that REIT and kind of rolled it up and took the whole thing public and exists as a public company today. My successor Renovated Modiv, M-O-D-I-V, but their New York Stock Exchange listed REIT and that single tenant trip on that lease space. But coming out of that experience, it's interesting, and Slava is stopping if I'm rambling on too much, but
The same time other things were evolving kind of in parallel fashion, the whole idea of other digital platforms that were raising capital for investing like RoboAdvisors, for example, or Robinhood, those things were kind of evolving in a parallel fashion. So the whole idea of using the internet or a digital interface as a medium through which to engage customers to buy investment securities that was really expanding rapidly. But also during that time frame in 2017, Blackstone
They came out with their own non-trader public REIT. It was called BREIT, Blackstone Real Estate Income Trust, and it was hugely, hugely successful. They've raised, I don't know, 50, 60 billion dollars in that vehicle. But that kind of opened the door to a whole bunch of other large alternative investment sponsors to say, hey, you know, we've kind of hit every pension fund in the world. We've hit every sovereign wealth fund, endowment fund, foundation, all trying out worth investors. And they're, you know, they kind of hit a wall with all of those things. Where else is there capital to be raised for these big,
alternative investment platforms like Blackstone for example. So they went to the public. they each, a lot of them, sponsored a public non-traded vehicle, something that's SEC registered but not traded on an exchange. And that's been hugely successful as well. Last year, for example, in this space, $138 billion of capital was raised from what's the so-called retail channel, which is...
individual investors represented by a financial planner, a broker dealer or an RAA. About $80 billion of that was stuff that's open to all investors, non-accredited investor vehicles like Blackstone, BREIT for example. The the balance were private placement deals. But the demand for alternative investments is just huge. And I think that both managers realized that to truly create alpha, they've got to layer in all. So I'm telling your story. You know, obviously that's what you guys are all about as well. So.
It dawned on us after we sold Rich Uncles, Ray and I sold Rich Uncles, you know, what's next out there? So you may have heard of the investment app Acorns. I don't know if you have or haven't, but Acorns is a very successful robo-advisor and micro-investing app. The co-founders of Acorns, Walter and Jeff Cruttenden are local. I know them. And so I tracked down one of Walter's other sons, Alex Cruttenden, who's my co-founder and the current venture.
and said, hey, you're really good at product, you're really good at designing websites, creating an intuitive, seamless investor flow. Why don't we team up? I understand the investing side of things and you understand the product side of things, the alternative investing side of things. So we teamed up and formed Alture Funds and we started talking to a lot of these huge public non-trader.
product sponsors, you know, like we didn't talk to Blackstone, but we talked to Blue Rock who's on our platform now. We talked about a half dozen others, you know, just hunted them down and said, hey, you know, the next opportunity for product expansion for you is to engage investors that don't have a human wealth manager, people that manage their own money, because there's a lot of capital out there is self-managed and why are you excluding those folks from these great products that you promote and provide? So that's kind of our current thesis. So the idea is that
we believe the next wave to be realized in alternative investment space is that these large sponsors, it's not just real estate, it's private credit, private equity, infrastructure, hedge funds, they've all got deals in those various spaces. They're going to further expand distribution, not just to individual investors represented by a human wealth manager, they're going to expand distribution to the public at large, through a platform like ours. So to my knowledge, we're the first
platform, alternative investment platform that focuses on these large legacy deals by these large legacy sponsors. So we're not a sponsor. We don't have to worry about trying to find real estate or private credit deals and manage them and administer them and deal with the SEC. 100 % laser focused on presenting this product to the public, to the customer acquisition. we think it's going to be the next wave in this space.
And these sponsors are so large and so long tenured and so experienced, it's tough to argue that, we, like even the Rich Uncles days where the Blackstone's BREIT was available, it would be hard to argue that, invest in our deal and not Blackstone's deal. So that's the current thesis. So we have two deals on our platform today, both with a sponsor called Blue Rock. So Blue Rock's kind of a top 10 player in that huge alternative investment space. Blackstone being the biggest player, Apollo, Ares, KKR, a bunch of
players in that space, but they've got a real estate fund, again open to non-accredited investors, $2,500 minimum. It's about a $4 billion fund, so it's a big, big, big fund, and they have a private credit fund as well. Again, open to non-accredited investors, $2,500 minimum, and that's about $180 million fund. It's a newer fund, so it's smaller. And the real estate fund pays a 5.25 % distribution.
annually on a quarterly basis and the private equity fund plays 11.7 % distribution annually on a quarterly basis. So these are really good yields, probably better than others you could find on a direct to consumer basis. so the problem we're trying to solve is that consumers or investors that are trying to create alpha outside of the public markets, how do you do that? well, alternative investments is the way we think it's done.
So let's present to those consumers, to those investors, your customer base, your client base, your audience, know, hey, there's something else to consider if you're really, you know, want to expand outside of stocks and bonds. And if you want to consider things other than private reg D type deals, one off reg D type deals, you know, take a look at these deals and they're on our platform. You go there today, you can buy shares today.
we think the next wave for these large, big sponsors, they just can't continue to ignore the investing public that manages their own money, whether it's through a self-directed IRA or otherwise. So that's our thesis. That's the elevator pitch. about, I guess, 420 now in the Burj Khalifa.
But yeah, so that's who we are, kind of my background I got in the space and where we perceive the opportunities to be for investors to continue to consider alts. Why not consider alts from these huge, large legacy sponsors with these huge, large legacy deals, professionally managed track records, multi-decade track records in the investment teams, multi-billion dollar track records. So you're not necessarily underwriting us as a sponsor, hey, what do you guys know about real estate or private credit or infrastructure? We're just that kind of the conduit through which
these deals now flow. So that's kind of who we are and where we are.
Slava Rubin (12:34)
Awesome.
So more than a soundbite there. in terms of you have a long history already, you've been doing a lot of great things. So you obviously have your own net worth. We love to get to understand that on this show. So how do you like to invest your net worth? So, you know, the classic is the 60 40 public markets, 40 % bonds, 0 % into alternative investments. Are you 60 40 zero or are you a different number?
Harold Hofer (12:39)
Yeah.
I'm overweighted to real estate, it's been my background, you so I got a lot of money in real estate. As far as the public markets are concerned, I just do robo accounts. I've got a robo account with Wealthfront, one with Betterment. I got a robo type account with Schwab. I got an account with E-Trade. So I try to just match the market in terms of my public market stuff. When I was younger and thought I was smarter.
Slava Rubin (13:22)
What percentage
do you think it is of your 100 % is public markets? And then what percentage do you think is real estate? So zero bonds and zero anything else?
Harold Hofer (13:26)
50.
50.
Yes, I mean the Robo might have some bond allocation, I even know actually. You know, they kind of put you into different things, but whether or not those Robo accounts that I have include a bond allocation, I don't even know actually. So, yeah.
Slava Rubin (13:46)
Nice. And when you get into real estate, how
do you like to get into real estate?
Harold Hofer (13:51)
You know, I'm kind of a local guy, so people pitch me deals, you know, people that I know. This guy went to this guy's a multifamily, that guy's an industrial, this guy's in retail. So, you they're always not always, but they come across deals. They have a network of people they pitch deals to. So I've never bought a deal on a platform, but I just buy deals through people that I know and believe that, you know, it's perfect, but that they're well-intended and they're honest or they're competent. And so that's kind of how I, how I source deals and invest in deals personally.
Slava Rubin (14:19)
How about
crypto? Any exposure?
Harold Hofer (14:22)
No crypto, I don't understand it. think it's great. mean like my son-in-law's got a ton of money in crypto and I used to lot smarter than I am but you know and then in crypto
Slava Rubin (14:31)
art
or collectibles.
Harold Hofer (14:33)
Then in collectibles, I like deals that offer a current yield. So, you're buying a collectible, you're buying a Lamborghini or a Picasso or whatever. You're waiting until a thing gets traded down the road, whether it's five years, three years, five years, 10 years or whatever, sometime they're gonna sell it, hopefully at a profit and then you cash out. But I like getting at least a portion of my investment return on a current basis rather than just waiting, it all being back and weighted. And I don't know if the secondary markets are that evolved yet in those platforms to.
really realize NAV if you had to sell your share of your Lamborghini for example, you know, with that, could you get what it's worth or would you have to sell a discount just to get rid of it? I don't even know actually. So I'm not a collectibles guy mainly because, mainly because I like certain part of my portion of my return to be current yield.
Slava Rubin (15:13)
And then.
back
to real estate, what parts of real estate do you like versus don't like?
Harold Hofer (15:24)
know, multifamilies have always been strong. Single family is strong. You know, the whole idea of a single family now being an asset class just like multifamily I think is great. So I guess I'm biased towards residential. I don't think I'm alone in that regard. You know, everyone's scared of office these days. I think that, you know, office is going through the same, you know, evolution that retail went through when Amazon hit.
You know, the C grade product, B grade product is going to be challenged. think A grade product will survive. But the whole evolution of work from home and people condensing offices where you just come in and you man a cubicle, you don't necessarily have a desk per se, and you kind of make an appointment to come into your own office like a WeWork thing. so I think it's evolved. offices are obviously very challenged and will be for a while. So I guess I'm biased towards residential, both multi and single family.
Slava Rubin (16:12)
And then do you
stick to your Southern California or you like any specific markets in the US?
Harold Hofer (16:19)
I like markets outside of California. California is very pricey compared to our national basis. You can get the same equivalent. Let's just say you're buying a fast food restaurant. The cap rate will be lower in California than say in Texas. So why you've got the same investment credit, same lease term, why would you pay more just to be in California? So I guess I'm in the smile stage type of guy from California through the Carolinas, I guess, is where I like to invest.
Slava Rubin (16:49)
Gotcha, and then how about private credit?
Harold Hofer (16:52)
A little bit private credit, just actually through this Blue Rock deal. You know, I got some money in there. You know, lot of my friends that I know, they were in the fix and flip business where they raised money for fix and flippers, you know, and I did that a little bit of that. Again, those deals are kind of short term. You got to really underwrite them carefully, kind of back and weighted. So, little bit of exposure to private credit. I don't have any fix and flips anymore these days, but I do have money and...
Blue Rock deal that we have on our platform. I like that their thesis, is CLO investing, which we can get into maybe later in the conversation.
Slava Rubin (17:26)
And then
in terms of your public markets, you mentioned you go through the wealth fronts, betterments, et cetera. So are you just kind of betting on US innovation? You're not really thinking about stock picking or trying to pick a specific stock?
Harold Hofer (17:38)
You
know, no. When I was younger, I was more of an active trader and over a long period of time, it's really hard to really beat the market in my experience. So rather than trying to incur brain damage, trying to be a stock picker and day trader, I kind of defaulted to let's put it in robos and let them kind of match the market. And that's good enough for me. Let me focus my attention on other things, which is alternative investments.
Slava Rubin (18:06)
So you have a ton of experience. Obviously, you've seen a few markets in your time. What do you think of the current market? And that's a very open-ended question, whether it's the stock market, the economy, what's happening geopolitically, what's happening with inflation, potential recession, interest rates, jobs, take it wherever you'd like.
Harold Hofer (18:26)
That's really open-ended question. like to folk, you know, the public markets, you know, it's hard to say. I don't try not to think about it too much. Are they too juiced up? You know, are we too dependent upon the big seven? You know, so those are discussions I don't have anything really to add. But I think in terms of private markets, you know, I think real estate, I've been through multiple cycles over my career. The first one was the savings and loan crisis in early 1990s where there's a big reset in real estate.
The next one was obviously a global financial crisis, big reset in real estate and kind of a frothy frenzy that led up to the collapse of these things and probably money was too easy to come by, debt was too easy to come by. But I think we're going to reset now for real estate. I think it's a great time to back up the brink, drop and put money into real estate, I believe. Real estate, obviously the current downturn has been tied directly to rising interest rates, lockstep.
And I don't think rates will rise further. I think they will come down. And I think as they do come down, just real estate just benefits because the yields on real estate, the expected yields in real estate correspond to the risk-free yields that you could get in the debt market. So I'm bullish on real estate. think we're bumping along bottom now, but I think it's going to be another 10-year run where real estate will enjoy on unlevered basis high single-digit, low double-digit yields for the next
say 10 years and so I'm bullish on real estate. I like private credit. A lot of money is going into private credit. It's been a very popular asset class these days, but there's a lot of different ways to skin the cat. Private credit wise, Blue Rock who's on our platform, they focus on the collateralized loan obligation space where they focus on investing pools of CLOs. So you have, know, broad exposure to a ton of different loans and different pools. like that space. I do believe that, you know,
it's only going to get bigger because there's the demand for capital, both debt and equity exceeds what the public markets can really provide, whether it's in public debt markets or bond markets or the public equity markets. So I think there will be continued capital to be deployed in the private markets just because of the constraints on the public markets in terms of size. So I like private credit and I think there's a lot of innovative strategies yet to be uncovered there.
Private equity, you know, the concern of private equity is a lot of these deals that are not liquidating. So you're hanging on longer than you thought you would have hung on a private equity deal. I know if that's good or bad. don't think the deals have necessarily worth less. It's just that it's easy to stay private and maybe not as appealing to go public for a lot of these companies. So they're staying private longer. So I think infrastructure is huge. I'm really bullish on infrastructure.
There's quite a few players entering the infrastructure space and the space we're talking about, the public non-traded alternative investment vehicle space. A lot of sponsors or several sponsors, I'm aware, are getting into that on the infrastructure side. So, embellish on infrastructure, I think the need for infrastructure, whether it's building bridges or data centers, you know, it's again exceeds the demand and the complexities exceed what the public markets can provide in that regard.
So I guess I'm a big alts guy guess the bottom line is a big alts guy. I just passively invest in the public markets, trying to match the markets, having just not, over the early in my life, really not been able to create alpha. I'm not just in it enough to really figure out how to create alpha, so I'll just match the markets there and create alpha personally through alts.
Slava Rubin (21:52)
So
lots of good points there. Lightning round are a few questions. Recession in the coming 12 months, yes or no?
Harold Hofer (22:01)
No.
Slava Rubin (22:02)
All right, interest rates, where are they a year from now?
Harold Hofer (22:07)
down 100 basis points.
Slava Rubin (22:09)
Nice.
Inflation, where is it? A year from now.
Harold Hofer (22:17)
down a hundred basis points.
Slava Rubin (22:19)
Interesting, it's pretty low already, no?
Harold Hofer (22:23)
It is low already, but I still think it'll be down.
Slava Rubin (22:27)
All right, bold statement. Stock market, whether it's S &P, Dow, QQQ, whatever, where is it? A year from now.
Inflation is down 100 basis points. Interest rates are down 100 basis points. There is no recession, but the stock market is flat. Tell me more.
Harold Hofer (22:48)
I just think it's too fully valued. I think it's unjustifiably fully valued. then in spite of the good news of lower rates, let's just say, and lower inflation, I think the markets will acknowledge that it's fully valued. the money will go elsewhere. Crypto, I mean, there's so many crypto strategies out there these days, ALTS. So I don't have crypto. don't know. I have no idea.
Slava Rubin (23:07)
But you don't have crypto. What's crypto gonna be a year from now? What's BTC gonna be a year from now?
Harold Hofer (23:16)
My son-in-law is a big investor in crypto. said, okay, know, that was not too much of your money, you know, yeah, I don't understand it. I mean, it's okay. A lot of things don't understand it. Just acknowledge it and don't worry about it too much. So.
Slava Rubin (23:30)
All good, stick to what you know.
So you already gave us some context on Alture funds. So you have the two vehicles. Are those the two options? So it's $2,500 minimum. Can you give me perspective on how long have you been around? What kind of metrics can you give in terms of traction, dollars being invested into the platform, number of customers, et cetera, anything that you could share?
Harold Hofer (23:53)
Just launching, just, you it's interesting if you should ask that question because part of our challenge in launching this particular venture that Alex and I are doing right now is that, you know, to get an online subscription agreement, the way that these guys raise money currently, these guys being Blue Rock and all of their peers is that your investment advisory, you fill out a form, you throw an envelope with a check and off you go. So for them to, at least the,
fund administrator that Blue Rock employs, who's a big player in this space, they don't know how to receive or accept a digital subscription agreement with a digital signature. They can't accept money via Plaid. They don't have ACH feature to accept money. If you want to buy shares, can either mail us a check or do a wire transfer. So it's been a big hurdle for us to kind of get them to pay attention to us because Blue Rock's just one of many clients they have and we're just one of many broken dealers.
Slava Rubin (24:24)
Mmm.
Harold Hofer (24:43)
that Blue Rock employs to sell this product. So to get their fund administrator to say, okay, yeah, we will work with you to try to figure out how to onboard investors and whatnot. It's been a bit of a challenge. So really just launching, know, we haven't raised a ton of money yet through these two funds. So we're kind of at the right at the starting gate right now.
Slava Rubin (25:01)
Awesome.
It feels like there's going to be lot of momentum in this whole space. Like you mentioned, whether it's starting with BReit or even going back to the jobs act, the idea of, you know, the big institutions, the endowments, the sovereigns, whatever they've somewhat been tapped out, right. And the big pools of money are the individuals and how do we access those individuals. And obviously having good product and having a good user experience is going to be part of that solution. You know,
Imagine I am your customer, which I could be and you're the best salesperson for your company since you're the CEO. Why should I buy one of your products? What would you say?
Harold Hofer (25:39)
Well, let's say if you're in the market for alternative investments, you should buy our product because they generate really good yields. mean, the private credit products north of 10%, the private real estate products north of 5%, and I look at other comps out there, similar comps, again, for these deals that are available over digital interface, they're the top. And you're investing, both of the Blue Rock funds are not levered at the fund level. There's a little bit of leverage, maybe 10%, but so you're not...
levered at the fund level on those deals. So I think it's, you those returns are pretty solid. They both operate in what's called the interval fund space. So they are kind of a fund of funds, almost a mutual funds of underlying big, huge institutional and real estate investment deals and CLO investment deals on the other hand. So you should invest if you want to generate good returns over time and not have to
spend too much time trying to dissect a one-off, say, Reg D private placement deal, which I think great as well, but they take a lot, you gotta spend a lot of time and attention underwriting them. They're typically short-term. So this is kind of money that you would pack away, sock away for five years or 10 years and just let it compound and let it grow. So my sales pitch to you would be there's just, I'm unaware of a better yielding deal in the private credit space or the private real estate space.
that's public non-traded vehicle and there's some out there that's generating these sorts of yields and backed by huge, long tenure, multi-billion dollar sponsor like Blue Rock.
Slava Rubin (27:08)
You mentioned
Blue Rock, obviously the main sponsor you're working with now. What's the benefit of me going through you versus trying to go direct to Blue Rock? Can you give me some color on that?
Harold Hofer (27:19)
You can't. So let's just say you wanted hey screw you guys. You can't go to the website. You go to Blackstone's website. You go to their BREIT their big real estate product. You want to invest, contact your financial advisor. There's no direct to consumer access point for any of these deals yet and maybe not be for a while.
So BlueRock and a lot of these other sponsors, they want some sort of licensed intermediary, whether it's an RIA or a broker dealer, between them and the customer. So none of these deals, none of these big, huge platforms, can you buy their products just going to their website. They'll refer you to your financial advisor.
Slava Rubin (27:56)
super interesting that that's not possible yet. It seems somewhat available, i.e. you don't have to be accredited, right? And it is a $2,500 minimum, which is very approachable.
Harold Hofer (28:07)
Correct. think it's great and I firmly believe, mean, we're basing our whole company's thesis on the fact that these products will become increasingly available to consumers. There's so much of capital in US is self-managed these days and for these large sponsors to not try to tap into that self-managed capital, they'll realize eventually they're going to, why wouldn't they? It's another huge source of capital for them to raise and deploy and that's what they do. ⁓
Slava Rubin (28:31)
is the idea that you're
starting with this Blue Rock Company first with their two products, but you're going to add other sponsors. So eventually it's almost like a shopping mall of options of alternative funds.
Harold Hofer (28:43)
Yes, the goal is, the near term goal is to have one fund from each of the main food groups within alternative investments. So right now we have private credit and private real estate, private equity would be next, infrastructure would be next and hedge funds would be after that. So we'd want a deal, a sponsor for each of those specialties. Further out, would we have multiple private credit products on the platform? Would we have multiple private real estate products on the platform? Perhaps, would we evolve into effectively an ALTS, a ROBO,
ALTS type advisor, perhaps, where we curate portfolios, alternative investments amongst all of these different types of deals. Yes. And again, but blue, we're starting with Blue Rock. You know, I like real estate. I personally, it's my personal bias that, you know, now's the time to invest in real estate. It is has bottomed out and private credit's a great long-term yielding investment as well. So we like those two products to start with. I think they're easy to understand from a consumer's perspective. Infrastructure's maybe a little more difficult.
private equity may be a little more difficult, but these are pretty plain vanilla type of deals to comprehend as an investor or consumer.
Slava Rubin (29:47)
when are you thinking you'll add the next product or two in terms of infrastructure or private equity?
Harold Hofer (29:54)
Infrastructure would be next. We're talking to sponsors right now. Part of the challenge for us is again with their fund administrator. They have a different fund administrator than Blue Rock has to okay, how do we integrate having them accept a digitally submitted subscription agreement? All the same information, all the same questions answered that you'd have on a paper subscription agreement. But how do you get them to accept it digitally with a digital signature? How do you get them to accept the customer's money? We use Plaid. How do you to accept the customer's money?
v. ACH versus just mailing a check. So, but we're talking, hard to believe, Yeah, they still have fax machines in these places too, it's unbelievable. But for me, it's ripe for disruption, for modernization. these folks, these sponsors, there's so much smart money these days, self-managed, that they're missing something if they don't expand distribution. These sponsors,
Slava Rubin (30:24)
We're still talking about this in 2025. It's amazing.
Harold Hofer (30:45)
to include self-managed money. These are really great top tier products that they have, not just Blue Rock, but these other sponsors as well, and all alternative investment asset classes, not just real estate and private credit. So why are they ignoring or not making it easily available, these products to people that are interested in alternative investments?
Slava Rubin (31:04)
Perfect.
So you've obviously been around the block, know a lot of things, seen a lot of things. What are the things that make you smart? What are the things that make Harold? Harold, what do you like to watch? What do you like to read? What do you like to listen to?
Harold Hofer (31:12)
Ha ha ha.
I probably subscribe to a dozen or more daily, know, yours for example is one of them, the ones that you guys publish, know, a lot of about thoughts and alts, know, really alts focus is where I'm focused. I would say that, you know, I've been through multiple cycles, multiple, in the real estate side, multiple cycles. So the big lesson learned in 1990s crisis, S &L crisis was leverage, you know, don't get over leveraged.
Global financial crisis didn't hit me as hard. I was kind of not as leveraged at then as older, smarter. Let's just say I was older. I don't know I smarter or not. More experienced.
Slava Rubin (31:51)
⁓ What's two
newsletters or blogs or podcasts that you like?
Harold Hofer (31:55)
I get one. I mean I get I get Bloomberg's every every day I get Bloomberg's newsletter every day. I like that one a lot Gosh, it's good. I got so many of them. What's I'll get yours obviously as well, which I like a lot as well
Titan, know, get them on Titan's distribution list. Altswire, Altswire, talk alternative investments. mean, so, yeah.
Slava Rubin (32:09)
All good.
Nice. Well, at
the end, we always like to put the person on the spot for three years out.
what will be your alternative investment pick?
Harold Hofer (32:22)
Real estate is gonna be in for a good run. You just wanna latch on to a good sponsor and participate in that run. Yeah.
Slava Rubin (32:27)
covered a lot of ground, Harold. We started at UCLA
back in the day. You're a California guy. Then here comes the jobs act and you create rich unclosed, did amazing stuff there. You then sold that to now what's called Modiv after it got over $500 million of AUM. You then saw what was happening with BREIT and all it's going towards the consumer, decided to get into that space, partnered with Blue Rock and create your new company, which is Alture Funds.
You don't really believe in the 60-40-0. You are 50-50. 50-0-50, which is awesome. 50 in the public markets. But you like to just stick with indexing across. And then the other 50 being real estate, since that's what you know. You like to get yield. That's kind of your jam. You're not into crypto or into art or collectibles because there's obviously no yield. You're into the smile states, as you say, from California to Carolina. And obviously, you gave us some perspectives on where the market's headed. No recession.
You know, interest rates are going be down 100 basis points. Inflation will be down 100 basis points, but stock market will be somewhat flat, mostly because it's fully valued today. You really do think that real estate is a great place to get into. know, with Alture funds, people can get into the private credit fund or they could get into the real estate fund. You only need a $2,500 minimum and it's open to the public, which is really quite remarkable. These are not the sort of things you can go knock on somebody's door and be like, hey, Blue Rock, I want to invest. You got to go through a front door like yourself. So that's totally awesome. You're going to be adding
private equity play, an infrastructure play, all great amazing things. Then you like Bloomberg newsletters, you obviously like our newsletter and other types of newsletters. Thank you Harold for this conversation.
Harold Hofer (34:00)
Thanks Slava, nice talking to you.
