Today’s guest is Dana Cornell.
Dana Cornell is a Certified Investment Management Analyst and Certified Financial Planner, whose passion is to take the uncertainty out of investing and provide consistent returns his clients can count on.
Show summary:
In this podcast episode, Dana Cornell shares his journey from working at Morgan Stanley to starting his own firm, Cornell Capital Holdings. He discusses his focus on income replacement and tax efficiency strategies, as well as his role as a capital raiser for real estate developers. Dana explains how his licenses and certifications as a fiduciary set him apart in the financial world and emphasizes the importance of thorough due diligence in making informed investment decisions. He also discusses his involvement in development projects, particularly in the self-storage sector.
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Intro [00:00:00]
Dana Cornell's Background and Starting Cornell Capital Holdings - [00:01:11]
Walking Away and Starting a New Path - [00:02:16]
Focus on Income Replacement and Tax Efficiency Strategies - [00:05:09]
The process of bringing capital to deals - [00:08:59]
The role of a capital raiser for developers - [00:09:28]
The number and types of investment opportunities available - [00:11:59]
Building a Team - [00:19:14]
Demand for Income Replacement - [00:20:09]
Contact Information - [00:21:37]
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Connect with Dana:
Web: https://cornellcapitalholdings.com/
Email: dana@cornellcapitalholdings.com
Book: https://www.amazon.com/Legacy-Wealth-Blueprint-Create-Investing-ebook/dp/B097KMXSTY
Connect with Sam:
I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
Facebook: https://www.facebook.com/HowtoscaleCRE/
LinkedIn: https://www.linkedin.com/in/samwilsonhowtoscalecre/
Email me → sam@brickeninvestmentgroup.com
SUBSCRIBE and LEAVE A RATING. Listen to How To Scale Commercial Real Estate Investing with Sam Wilson
Apple Podcasts: https://podcasts.apple.com/us/podcast/how-to-scale-commercial-real-estate/id1539979234
Spotify: https://open.spotify.com/show/4m0NWYzSvznEIjRBFtCgEL?si=e10d8e039b99475f
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Want to read the full show notes of the episode? Check it out below:
Dana Cornell (00:00:00) - So by going and essentially becoming an outsourced team member for our developer, I said to them, Look, I'm going to go raise this money, but you're going to pay me the fee, not the client. So it's very efficient from the client standpoint and it's very efficient from the developer standpoint because they're paying me a few percent. The same thing I used to charge a client, basically, but they deal with me. I handle all that. I raise all the money for them. And on the flip side, the is not paying a fee. So it's very efficient for them unless we're doing some deep planning for them, that type of stuff. And I'll just charge a flat planning fee.
Sam Wilson (00:00:35) - Welcome to the How to scale commercial real estate show. Whether you are an active or passive investor, we'll teach you how to scale your real estate investing business into something big.
Sam Wilson (00:00:47) - Dana Cornell is a certified investment management analyst and certified financial planner. His passion is to take the uncertainty out of investing and provide consistent returns his clients can count on.
Sam Wilson (00:00:58) - Dana, welcome to the show.
Dana Cornell (00:00:59) - Sam Thanks for having me, my friend.
Sam Wilson (00:01:01) - Absolutely.
Sam Wilson (00:01:02) - The pleasure is mine. Dana There are three questions I ask every guest who comes on the show in 90s or less. Can you tell us where did you start? Where are you now and how did you get there?
Dana Cornell (00:01:11) - I'll give it my best shot. So I'm from south of Buffalo, New York. A little town called Olean started pretty typical, you know, middle class family. My father is excavation contractor. My mom was a kindergarten teacher. Didn't really come from money. I didn't know many people that had money. Um, so I started knocking on doors to start talking to people and let them know what I did for a living and see what they needed and how I could help them. That turned into, 17 years later, fortunate to be recognized on the Forbes under 40 list for advisors in the country, best in the state, All that good stuff managed about 1.4 billion with my team and my group at Morgan Stanley and about two years ago decided, you know, I didn't feel like I was doing the best job for my clients, which I'm sure we'll talk about why and how and decided to literally walk away from that, which, as I told you briefly before we started, they asked they asked me if I needed mental health counseling because that's not typically the move in that industry when you reach that level of success.
Dana Cornell (00:02:16) - Um, but I felt strongly about it. I knew there was a better way to build wealth. I knew my ultra wealthy clients did it a different way. And so that's how Cornell Capital Holdings was born.
Sam Wilson (00:02:26) - Wow.
Sam Wilson (00:02:26) - Okay, let's let's let's let's do dive into that a little bit. Walking away because that 1.4 billion in assets under management those are hard earned clients. I mean getting people to put their accounts with you, to trust you with their finances. I mean, that's a that's a tough row to hoe.
Dana Cornell (00:02:44) - It is. It is. Yeah.
Sam Wilson (00:02:47) - And walking and walking away. And when you leave, you leave all your clients behind, essentially.
Dana Cornell (00:02:52) - You have to.
Sam Wilson (00:02:52) - Yeah, you have to.
Sam Wilson (00:02:54) - No wonder. No wonder they asked you. Do you need I mean, you spent 17 years just I mean, beating your head against the desk, getting this done, and now you're like, okay, I got to go. Like, I'm done. Yeah. Have you, have you Let me let me see if there's a nice way to ask this, since you had that move when you when you made that move, was it just like, yes, this is it.
Sam Wilson (00:03:15) - This feels amazing. I'm so glad I did that. And you've never looked back.
Dana Cornell (00:03:19) - Are you asking if they were right, if I needed that mental health counseling?
Sam Wilson (00:03:22) - Don't know. But. No, no, I wasn't asking that.
Dana Cornell (00:03:24) - But no, I have not looked back and I'll tell you why. So, you know, being a traditional financial planner. It's funny. Everybody would always ask me, What's your number? What's the number you need to retire? And it's all relative to what you need, right, and what you spend. Right. But if you reverse that and I talk a lot to my clients now about the reverse financial plan, if you start with income first and buy your time back by buying passive income and being very efficient with it in both not paying tax as best you can and fees to eat away at your your income and your capital. You know that's a it's a much different situation. So when I experienced that for myself investing in real estate syndications and then made the decision that, hey, this is how my ultra wealthy clients have built wealth, this is something I truly you know, I had two little boys show up around the same time.
Dana Cornell (00:04:19) - You know, they're five and and soon to be four now makes it just puts a different perspective on things maybe really reflect internally, hey, am I doing the right thing? So I feel great about what I'm doing and I didn't. You know, so the answer is no. I never looked back. And that's the main reason why, you know, I truly believe in how we're doing it now. And. You got to feel good about what you're doing at the end of the day.
Sam Wilson (00:04:43) - Oh, you do? Undoubtedly. Undoubtedly. Tell me. So what when you when you launch that on your own. How did you decide and what did you decide to focus on? Because you're basically doing the same thing. You've started your own, your own, you know, financial planning firm. But now you can you can call the shots because now you can tell your clients and you can advise your clients, hey, you could invest in this multifamily syndication or whatever it is. I mean, is that the gist?
Dana Cornell (00:05:08) - Exactly.
Dana Cornell (00:05:09) - So so, you know, quite simply, to sum it up, instead of being a more of a generalist, we're just more of a specialist. I focus on your your income replacement and tax efficiency strategies or not working with all of your capital typically. Um, some we do, but most we don't. And it just allowed me to be laser focused on what we're doing and what we're offering. So to answer your question, you know, I had started researching and interviewing different developers and there was a gentleman I knew that that had a similar firm he started 20 years ago, and quite simply they would partner with best in class developers in different asset classes of real estate. And I started with self storage. It's the most I did that because historically as an asset class, it's the most consistent, right? Um, that's where I started. Found a really good team to partner with there. Convince them that they could do more projects if I added fuel to the fire and handle the investor relations on their side.
Dana Cornell (00:06:09) - You know, and I helped coach a lot of developers now to structure their raise, how to find the right investors, how to do all that stuff on one side, and then on the other side, I'm profiling high net worth individuals looking for passive income and tax deductions and matching them to the right projects and teaching them about the risks and where that fits into their portfolio. So that's how it's come together.
Sam Wilson (00:06:31) - Got it. I want to hear your state of the market and interest rates and all of those things and kind of what you're seeing on the development side, maybe as part B here of this showed here today. But maybe before we get there, you said you're only handling portions now of people's income. I think probably previously you're handling the majority of what your clients had and now you're only taking portions of it. How do you how do you structure that? I mean, I think about that just, okay, how do you how do you structure it such that obviously you get paid because you got to still feed your family and I mean, without doing fun to funds and things like that.
Sam Wilson (00:07:06) - How does that process work with you as an advisor helping your clients?
Dana Cornell (00:07:09) - Yeah, so great question. So the beauty of it is, you know, I had worked previously on managing as much of your assets as I could, doing a financial plan charging an annual management fee, very typical wealth management structure. That's fine, but I thought there was a better way to structure the whole thing. So by going and essentially becoming an outsource team member for our developer, I said to them, Look, I'm going to go raise this money, but you're going to pay me the fee, not the client. So it's very efficient from the client standpoint and it's very efficient from the developer standpoint because they're paying me a few percent. The same thing I used to charge a client, basically, but they deal with me. I handle all that. I raise all the money for them. And on the flip side, the is not paying a fee. So it's very efficient for them unless we're doing some deep planning for them, that type of stuff.
Dana Cornell (00:08:01) - And I'll just charge a flat planning fee so it makes it much more economically viable. And the reason I say we deal with typically a portion of their money. Alternative investments are not appropriate for all of your cash. Right. We have liquid alternatives, but you can do that stuff anywhere. You know, I'm not going to charge you 1% to manage your cash and and fixed income exposure. It doesn't make any sense where rates were, especially right now. We can talk a lot about rates if you'd like, but, you know, I'll tell them, look, I can do that for you, but you can do it elsewhere just as efficient and cheaper. All right. Let me add value where I really, truly add value. And that's usually for about half, 40 to 50% of people's liquid net worth.
Sam Wilson (00:08:49) - That's that's really interesting because, I mean, a lot of times what we'll see in the I mean, you're a capital raiser in its own right just with a different kind of spin on things.
Sam Wilson (00:08:59) - And you're doing this through because you have your licenses. You you know, I don't know what they all are probably at this point forgotten a lot of those. There's a lot of probably reporting. I've had too many FINRa licenses over the years and I've kind of blacked out a lot of that. Yeah, it's like I forget a lot of that, but I mean, you have some compliance things to keep up with in reporting things. Maybe they're different than what somebody who doesn't isn't licensed. So how does how does that process work and why have you chosen to go the route you have in bringing capital to deals?
Dana Cornell (00:09:28) - Yeah, you know, I'm glad you brought that up. I appreciate it because I think it's something that sets sets me apart. So from the world I came from, right? I'm a fiduciary based on my licenses and my certifications to the client. Right. A lot of people. And I saw I experienced it myself, you know, going into syndications or a real a private investment of any kind.
Dana Cornell (00:09:50) - Doesn't matter if it's a private investment. It's private meaning the information is not as accessible as buying a publicly listed stock or bond. Sure. So how do you if you don't spend all of your working hours and have 20 years of experience like we bring to do the right due diligence to make sure it's the right fit and then figure out how does that fit into your world as an investor, what percentage, how much you should invest in each project, so on and so forth. So I blend both of those worlds. You're right on one side. I'm a I'm a capital raiser for the developers. I just make it easier for them because I'm one source of capital and I handle all things investor relations and, you know, it makes it streamlined for them. They can go further faster. But I'm really I focus. More on the investor side and being that guide and that bridge to making the right decision. So you're not getting burned, you're not over concentrated. You know what the risks are. I think there's a lot of value being that guy in the middle.
Sam Wilson (00:10:48) - You know how when you're looking because I'm thinking about this and if you're looking at someone's portfolio, what you how many deals do you guys have as available deals to your clients at a time? Because maybe one type of an investment may work for me. I may want you know, I may want something, you know, my stage in life. Like I really don't want necessarily the cash flow right now. I want it to double or triple in the next five years where somebody 75th May want to just flip the coupon. Yep. So how do you have the like what what is your set number of opportunities look like at any given time?
Dana Cornell (00:11:23) - Yeah. So, you know, it's a moving target. It kind of honestly comes by by opportunity and our underwriting process of what deals come through. You're right. So I'm always looking. I spent a lot of my time profiling deals, doing my underwriting, taking it through our process to have different offerings. And we have a menu of probably right now between registered fund offerings that we have access to that you would typically have to put a million or more indirectly to have access and you can get for a much lower minimum with us and the true direct private syndicated deals.
Dana Cornell (00:11:59) - You know, we probably have a menu of ten different options at any point in time, but really of the true privates, 2 or 3 going at one time that are more growth focused cash now, cash later, have your tax advantage trying to hit the main points there. Give them enough opportunity. You know.
Sam Wilson (00:12:17) - How do you stay in front of maybe you just have an amazing team behind you, but how do you stay in front of that many different opportunities and kind of I mean, because that's a lot of communication. That's a lot of I mean, just just reporting back to investors the status of those opportunities and where they're going and what the different moving pieces are like, how do you manage that whole communication flow?
Dana Cornell (00:12:39) - It's leverage. You know, I couldn't do it myself by any means. So it's the the old who to do the whole story. You know, I lean on a lot of other professionals to help me with due diligence to give me third kind of third party non biased opinions on deals.
Dana Cornell (00:12:56) - My team here is handling an awful lot of investor relations and summarizing and synthesizing all that information. So I can then take it, you know, and efficiently kind of put my spin on it and relate it to the investors so I can disseminate that to help them make good decision and keep them updated on what's going on.
Sam Wilson (00:13:15) - Right? No, I think that's great. Tell me a little bit let's let's let's go to part B here of this of this podcast and talk about the. Kind of the state of the economy, what you guys are seeing, especially because it sound like you're doing a lot of development stuff. It's not that you mentioned the word development a couple of times, so it sounds like that's kind of one of the niches that you've picked. Yeah. What's the what's going on in that world? Give us kind of the the the breakdown of where we are and maybe where you see things going.
Dana Cornell (00:13:44) - Yeah. So big question, man. You know, I'm always contrasting in comparing what I call traditional investments, publicly traded stocks and bonds to private alternative offerings.
Dana Cornell (00:13:59) - Um, we could talk about stock market and all that stuff all day long, but I think it's no secret that that market is going to fluctuate. It's going to go up and down. We're coming into an election year. It's going to have good periods. It's going to have bad periods at the end of the day. It's consistency of returns and the predictability of those. That that truly changes the game for people. And that's what you see the ultra wealthy focus on. So when I'm looking at projects, I'm looking at what is the predictability that one of course our principal is protected to if it's an income producing project. And that's why like a lot of our self storage development that where I started. We're building in areas where they have three times the amount of demand or partnering with publicly traded companies to run, operate and eventually acquire those properties. They've checked the box that it all makes sense ahead of time from their standards. So you're borrowing some credibility from a publicly traded company and their team and their resources, right? Instead of, hey, I'm going to I'm going to go out and build my own storage facility.
Dana Cornell (00:15:12) - And I like this spot because I'm biased towards it. And, you know, I think this makes sense and I hope it works. No, there's a lot more going into the research before I'm going to put my name on an offering and put my own money in it because we're doing that, too. You know, I'm not I'm not suggesting anything that we don't have our own capital in one way or another, you know. So.
Sam Wilson (00:15:36) - Think. Go ahead. I'm sorry.
Dana Cornell (00:15:37) - Well, I was just going to say so I think that then leads you to a path of, okay, if it's private investments over public investments where. Right. Real estate. There's a bunch of different flavors of private real estate rates going up so fast. You know, one of the things we did was underwrite all of our projects to historical interest rates. Mm. Commercial real estate historical rates are about 6.5%. Give, give or take. Right. That's what we underwrote that to. Plus a cushion. A lot of projects I saw over the last two years.
Dana Cornell (00:16:13) - We're underwriting the current rates plus a cushion in their pro forma. Well, I have 20 years of experience of seeing rates fall. I know they're not going to stay low. That's the new normal for people. But that's not our reality. That's not the historical average. We haven't been there in the last 30 years. We were for the last few. But if you're not building in that cushion, you're going to see a lot of trouble in a lot of asset classes within real estate and a lot of individual projects. So those are some of the things we're looking at. That's why you've heard me mention development, because I think you can kind of pick and choose your spots there. Um, not to say there's not issues there. It comes down to the project and the developer at the end of the day.
Sam Wilson (00:16:53) - Right. No, absolutely. You've mentioned a couple of things, and I want to hear your thoughts on this. You said the two things that you're really working with people on is income replacement and tax abatement.
Sam Wilson (00:17:04) - On the income replacement side of things, how? Because of where interest rates have been climbing, like how how have you combated that in its own right because preferred returns of whatever they were 7% 6% in 2019 were pretty attractive, but 7% in 2023 is like, okay, I can get five and a half at the credit union. So exactly it and I can get it out tomorrow is not tied up for five years. So what are you doing on that front to kind of structure things creatively?
Dana Cornell (00:17:35) - Yeah. So, you know, it's I talked to developers about this a lot, so it's knowing your marketplace and knowing where you're at in this market cycle. And you're right. So now the risk free rate of money, you've got to beat five 5% to make it even worth your time to get out of bed. Correct. So how do you change your offer and how do I find offerings that are more income focused in more of a really right now, a lot of what we've been doing is not as much growth focused, right? It's cash flowing properties or soon to be cash flowing properties at enough of a of a current yield to make it worth you know it is the eight, nine, 10% income.
Dana Cornell (00:18:15) - Right. Um, and it's looking at other asset classes, you know, real estate's great, but you got to keep your eyes open for everything. We do a lot of small business acquisition as well. Um, you move to where the risk isn't as much and in turn that creates more opportunity. And right now it's higher income tax deduction and less growth type strategy That seemed to work right now.
Sam Wilson (00:18:39) - Right. Oh, man, that's really, really cool. I love I love what you've done here. Dana. This is really cool. The just the I mean, leaving big business, leaving a $1.4 billion portfolio of assets under management to go do what you really feel in your heart is the right thing to do. I think is is admirable. And you know, it's it's cool to watch. Just see what you've done that on that side of things. Let's talk let's talk staff, building teams, those sorts of things. We touched on this slightly, but when you venture out on your own and and maybe you already knew, you're like, okay, I'm going to step out and it's going to be a home run.
Sam Wilson (00:19:14) - I have no I don't think this would be a problem at all. But or maybe there was some apprehension as you went out on your own and said, we're going to launch this thing. What's it been like building a team around you to help you guys run your day to day operations?
Dana Cornell (00:19:25) - Yeah, you know, it's it's been an interesting learning curve. When I left, I thought I could be. I thought I'd be more of a and I still am, but I thought it'd be more of a lifestyle type situation, kind of a one man band, limited staff, that type of thing. What surprised me, even though I knew and it proved concept, was the demand for people looking for the two main issues I solve for, you know, income replacement, passive income by cash flow don't pay tax on it. That's our core thesis, right? So the amount of investors reaching out, wanting help with that, whether it be on the planning side or just implementation of that, was overwhelming.
Dana Cornell (00:20:09) - So Morgan Stanley taught me about I mean, that's the beauty of a corporate structure. You see. You see how that works. You see how teams are built, an organizational structure, but it's also done for you, right? So I had to spend a lot of time increasing my learning curve and finding the right people. And that took a while. You know, we went through a few people that I thought were the right spots initially, and initially they probably were. But the business evolved so quickly, you know, we kind of had to increase capacity and increase the capacity of our people to fulfill that spot. So yeah, man, it's been a it's been a learning curve and it's a continuation of that learning curve as we continue to grow, Right?
Sam Wilson (00:20:54) - No, that's cool. That's cool. Thank you for taking the time to share that with us, Dana, And thank you all for taking the time to come on the show today and just tell us what motivates you, What makes you get out of bed and why you're excited about doing what you're doing right now.
Sam Wilson (00:21:07) - I think it's awesome. And I really appreciate it, too, because me and the number of financial advisors and financial professionals I talked to that are just their hands are tied. I mean, they're like, Man, I love what you're doing. I love, you know, I love that private real estate, private syndication, private business, any of those types of investments there. Like we can't touch with a ten foot pole. We just we're just forbidden from from doing so. So thanks for stepping out and doing what you're doing. This is. Great if our listeners want to get in touch with you and learn more about you, what is the best way to do that?
Dana Cornell (00:21:37) - Our website, Cornell Capital Holdings with an you can join our investor network. There's a button on there and you can email me directly. It's just Dana at Cornell Capital Holdings within. Com. Tim Thanks for having me on, man. This has been fun. Thanks for letting me tell my story.
Sam Wilson (00:21:52) - Absolutely. Thank you for telling it again.
Sam Wilson (00:21:54) - Cornell Capital Holdings. We'll make sure we include that there in the show notes. You get the spelling on that. Exactly correct. Cornell Capital Holdings. Dana, thank you again. The pleasure was all mine. Thanks, Sam. Hey, thanks for listening to the How to Scale Commercial Real Estate podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen. If you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories. So appreciate you listening. Thanks so much and hope to catch you on the next episode.
