Why People Want To Give Up A 6-Figure Pay For Real Estate Wealth With Dr. Jason Balara

There's a lot of career paths that don't prepare us well on the financial side of things.

But I'm very passionate about now is trying to raise awareness amongst my veterinary community, if not other medical professionals, that there are some opportunities out there that you probably don't know about.

Welcome to Truly Passive Income. I'm Neil Henderson.

And I'm Clint Harris. And Today's guest is Dr. Jason Balara. He's a board certified veterinary surgeon who moonlights as a real estate and small business syndicator.

As CEO and co founder of Lark Capital Group, he's raised millions to acquire class B and C multifamily specialty construction companies and even launched the Lark Veterinary Impact Fund, pledging profits to not one more vet to fight the profession's sky high suicide rates. From the operating room to 450 unit complexes, Jason's mission is simple.

Create wealth with purpose and teach other busy professionals to do the same. Jason, thank you for your time. Appreciate you being here today. How are you?

I'm good, I'm good. And thank you Neil and Clint for having me on. I'm excited for the conversation today. Thanks for letting me join.

Yeah, me too. I'm excited too.

My dad was a veterinarian and I'm one of six kids and all of us at one point in time worked in his veterinary office for summers or I ended up working for him for two or three years. So excited to unpack your journey and how you got to this. So tell us a little bit about yourself, how you got started.

I'd love to know where you went to vet school and about your journey and how you made a transition into real estate.

Yeah, sure. I, I, it's, it's interesting because the, the real estate and veterinary journey actually paralleled each other.

I was the kid who wanted to be a vet when he grew up, but I was also the kid that grew up. We didn't have much money. We moved almost every year of my life.

And somehow in all of that, the idea that I wanted to own, originally the idea was just I wanted to own where I lived, but, but, but the idea of owning real estate was pretty foundational in me early on. And so I got into construction and real estate before I even went to vet school. And they kind of went together mostly on a small scale.

My own homes, some of my friends houses. I worked for a number of different contractors and then I went to vet school at Tufts.

I'm originally from Massachusetts, so I did all my training out there. Vet school at Tufts, my internship at angel, which is in Boston. Boston. And then my residency was actually split between the two.

So all of that training based in Massachusetts. Before vet school. I did have some moments in time where I was like, do I want to go full in construction? Do I still want to go to vet school?

As I said, I'm from Massachusetts and I really don't like the winter. And I, at the time, construction meant being outside in the cold. And I.

I wanted to be more serious about investing. I wanted to scale that side of my life. I also had felt like maybe the.

My son was a year old and I wanted to be able to be around him more and not be on call so much. So I. That's when Lark Capital started and we got into the syndication space and I think kind of just. It evolved from there, but.

But I still do surgery, but I've been able to sort of create a really efficient business model on that side of things and then incorporate real estate as well into my life. I, I like how you said moonlighting sometimes. I. It probably varies week by week which one's the moonlighting, whether.

Which one I'm spending more time on. But yeah, it's. It's definitely. They've run in parallel.

I don't know anything about veterinary medicine, but it strikes me as a similar sort of journey to dentists in that, you know, a lot of you guys, you get out of school and now you're.

Suddenly you've spent all this time learning the craft and now suddenly you're a business person and not, you know, a lot of times veterinary school or dental school doesn't really prepare you to be a business owner. Is that a correct assumption?

Yes. Yeah, very much. There's very, very little, little to no financial education in the.

I mean, I had, you know, four years of undergrad, four years of vet school, and then four years of additional training.

No one in that time was ever like, hey, someday you're gonna have to talk to people about money and you know, think about things from business perspective. So it's definitely something that, that I think most vets are not prepared for. I don't, I don't know that that's unique.

I think there's a lot of career paths that maybe don't prefer prepare us well on the financial side of things. But yeah, it's definitely not the focus.

And something that I'm very passionate about now is trying to raise awareness amongst my veterinary community, if not other medical professionals that, hey, there are some opportunities out there that you probably don't know about.

And, and I did it probably for the same reason as you is I realized like I was doing surgery as a medical sales professional, not a physician of any type. And that's got a pretty high ceiling.

But it has a ceiling because at the end of the day, if you're a veterinary surgeon, dentist, cardiologist, medical sales rep, whatever, you are trading your time for money. If you're basically production based on any level. And so if you're trading your time for money, eventually there's a ceiling.

Now if it's a really high ceiling, there's a good chance that people keep doing that for the rest of their lives because you can't walk away from it and do anything else.

The problem is in that situation now, you have to save enough to eventually get to the point where you have enough money and you don't have to do it anymore.

It.

The only other way to break that cycle of trading time for money is you either have to have time to go get experience and be an active investor, or you have to take capital and be willing to partner that with someone else that has time and experience and that can break the cycle of getting up and going to work and earning the paycheck to pay for the groceries this week.

If you put yourself in a situation where your money gets up and goes to work and is going to earn more for you, that can break the cycle of trading time for money. A lot of people don't think about that when they're on the trajectory towards a very high earning income career, especially medical professionals.

The focus is on study and getting there and learning it.

And finally you, you flip that switch and you go from, you know, spending a lot of money on school, then maybe as fellowship, like making a little bit of money, and then when you're practicing, like making a lot of money, but then a lot of times, a few years in, you realize, well, this is it. I got to keep working forever. If I'm living on this level, the only way to break free from this is there's. I got to find something else I can do.

And it's really hard for me to go find something else to do to make more money than I'm currently making. So I need to start investing and putting that money to work. So that's.

And I did the same thing just for the purpose of trying to spend more time with my kids, because as we all age, we all get to the point where we realize time is worth more than anything else and you can't get it back, so you want to stop trading it for money.

So when you, you came from a construction background and obviously that never left you, now you're in the veterinary space and you're obviously very busy. So what made you, like, as you started investing into commercial real estate, multifamily and things like that, how did that transpire for you?

Did you find general partners that you're partnering with them and raising capital? Are you active? Like, what did show us what that involvement looks like for you?

And how did you balance that with being a father and, and having a veterinary practice?

Yeah, I mean, I, yes, 100% agree with, with what you said about kind of that trajectory of, of earnings and, and getting to a point where you, you, you suddenly have money and it's like, well, what do I. You don't know what to do with it. As far as how I may. I mean, I had to be very, very deliberate about it because I had, I had a W2 job.

I had actually already started. I had a side business that was a mobile surgery business. And I was, it was truly just a side hustle. I, it wasn't. We weren't pushing that at all.

But so I had that. And then, and then when I added real estate to the mix, I kind of did both. You know, you mentioned, did I invest alongside of other operators of gps?

Yes, but I also wanted to be involved actively. So the very first deal I was in was a passive investment.

The second deal was a, was a jv, but all with the idea of getting to the point of being, you know, sort of the active operator.

And that's where I think my construction, I felt my construction background would be Very valuable when you're talking about a value add strategy and kind of how do we maximize the impact and, and raise values of our properties? So I think I did both sort of simultaneously, I guess.

So you. Your Veterinary Impact Fund links cash flow to mental health advocacy.

For listeners new to the term impact investing, how does your model turn profits into measurable change for veterinarians at risk?

It's interesting that you had mentioned a parallel to dentists before because I think most people don't know this, but veterinarians and dentists tend to fight out the top spot in terms of highest suicide rates. And so I think there's maybe more parallels across those industries than we even know. There's probably a lot of reasons why it's that way.

Not enough time to probably dive into all of them. But certainly some of those reasons are financial pressures and student loans and things like that. But ultimately not so not one more.

Vet was is an organization that was formed as a.

I'm not 100% what year the it was founded, but I think you would be hard pressed to find someone in the veterinary community that hasn't been impacted by a friend, a mentor, a colleague that took their own life.

And so with our fund, the idea was how can I give back to the veterinary community that's been such a, such a big part of my life and one of my mentors is someone who took their life and I can't. The impact that she had on me as both a vet student and a resident was huge.

And I never would have thought like if you told me to name anyone I worked with, like she would have been not on that list. And so I think we don't know what people are struggling with.

And so my goal with the fund was really to, I think, try to address this from a number of different angles. The impact being probably threefold.

One is just awareness, awareness in the veterinary community about investing and some level of financial literacy and ways to kind of get yourself out of at least some of those pressures of this job. Also, the second component would be awareness on the side of people outside the industry of.

There are some things that get said to veterinarians on a day to day basis that are pretty harming, I think, to their mental Health from clients and perception of the industry. And then of course the third piece is truly just giving back in terms of a financial donation to not one more vet.

I don't think that I'm happy to be a sounding board, but I certainly don't think I'm a qualified therapist or someone that would be the go to person for someone who's having suicidal ideations or thoughts. And so what I thought I could do was help financially support this organization. This really there for that. It's at least a start.

You know, I kind of look at it that way.

It's.

It's at least a start and, and hopefully to, to do some good.

I love that. You know, sometimes imperfect action is better than perfect inaction in terms of getting started and trying to create an impact.

And I want to dig in on, on part of what you said there. And first of all, let me just say this. I love having a bigger why than just money or tying it to something bigger than that.

One of the things like Neil and I are syndication operators. We also host a podcast called Truly Passive Income. And frankly I get a little bit burned out talking about money all the time.

And I think we, we all agree, at least Neil and I do and I have a feeling you do too is that money can't buy you happiness at all. And, and I don't have ambitions of dying with a lot of things.

I, Neil and I both talk about dying with a big stack of pictures of things that we did in beautiful places with people that we love. Right. And life is more about relationships and experiences.

So I think money does create options and I think those are options are important and hopefully with those options you choose to do things that affect your family and the community around you in a positive way. But that's going to look different for everybody. Right.

So it's refreshing to be talking about something that's significantly more important than just money.

I want to dive in a little bit on one specific thing you just brought up about the education gap that we see with investors, especially with those professionals in the veterinary industry and the gap that that is there inherently from spending so much time studying medicine and not business and not knowing about this. For those high earning income individuals, the traditional model is may.

If you're saving money, you're parking it in Wall street and putting it into paper assets.

So what is your approach and how are, what are you doing to educate people in your field about the options that are out there? And what do you think is the best and most effective way to do that?

Yeah. Oh, gosh, I wish I knew.

It's a hard, it's a hard thing to, I mean, as you guys know, there's, there's actually a lot of legality around the, the space and a lot of regulation through the SEC and things. So it, it's, it's not as simple as like, oh, you just, anybody knows.

And, and I, I really, I don't like the term alternative investing because we, we're talking about real estate. Like everybody, you live in real estate, you work in real estate, you play ball on real estate. Like there's all it.

And, and you, as you said, like, syndication is relatively no new, but investing in real estate is like the initial form of investing. Like back in, you know, I don't, thousands of years ago, it's like, like that was how investing, that's how it started.

And so it's, I, I, I think that there's too much regulation around it. And so I, I think things like the podcasts, the, the what we put out on social media, having lots of conversations just around that space.

I mean, I think it's, it's tricky because a lot of the, a lot of people that, that don't necessarily have the, the financial education and, and, and to be clear, I was one of those people. I had to really make a conscious effort to, to do this and learn this. But it's scary, it's scary to talk about some of this stuff.

I think it's, uh, in, at least in veterinary medicine, a lot of instances, money gets vilified and, and that's where some of the stresses come from.

Um, I think that when you, I think that when you start to understand it and believe in it and get passionate about it, you also maybe start to sound a little like pushy or evangelical. I, I don't know. But it's like, and I, and I've, I'm guilty of it too. I mean, I do talk about stuff on my podcast.

I created a spreadsheet to see if I could create billionaire status for my kids based on sort of like standard hold times of passive investing. Not because I think my kids need to be billionaires. It was more for me just like an exercise in demonstrating the possibilities.

But I, but I Think maybe that scares some people when they're like, you're talking billionaire, and they're like, I'm trying to make my first $50,000 investment. I don't see that corollary. And so I think it's. It's trying to meet people where they're at is maybe the most important thing.

I love that. Yeah.

I still remember the conversations the first time we started talking about projects that were selling for 8 or 9 million instead of 8 or 900,000. And then we're. Now we're sitting at 150 million in assets under management. There was a time when I couldn't say that with a straight face.

And now we're talking, our goal is 500 million in five years and a billion in 10. And like, to say the B word is there was a time literally like, I was like, what? What are we doing here? Like, this is ridiculous.

But it's a mentality, right? And when you. A lot of the lessons you learn with smaller projects are the same thing with bigger projects, just a few more zeros.

And you have to train yourself to think through that limiting mentality and understand that the fundamentals are the fundamentals.

And it really comes down to the vision you put together for your life and partnering with the people that have the skill sets that you need to pull it off. So I get it.

But.

But a lot of people have that limiting mentality, and I've been one of them most of my life. So I completely understand. I want to dig in on something. This is me being in a skeptical lp, right? There's. There's a couple groups out there.

Not many. A couple groups out there investing in small businesses. Especially we hear about the Silver Tsunami, right?

We've got this giant generation of baby boomers that are starting to age out, and you have an unprecedented amount of, like, roofing companies, plumbing companies, electricians. Though this week, I've got a friend looking to buy a pest control business.

These are small businesses that people have poured their heart into for 20, 30, 40 years. They've raised their kids off of these businesses, and now it's time to turn it over. And they're looking for the heir apparent.

And so there's a plethora of these. You know, there's a couple groups looking at this wider range of businesses to step in and basically do a roll up, go buy a handful of.

And I don't know that this is what you're doing, so please educate me.

But like buying a handful of three or four small roofing companies in One town in eastern North Carolina, or plumbing companies or electrical and eventually they're going to put it all together as a service package and roll it up to a REIT or somebody like that who's interested in a buyout at a 4 cap or whatever.

One of the things that I keep getting lost on that I, I hope you can explain me is that the, the scenario that I just ran into is a friend in Daniel island, which is Charleston, South Carolina trying to buy a pest control business from a friend, from a gentleman who's a neighbor who's been operating the business for 35, 40 years and he's looking to turn it over to somebody, but he is white knuckling the reins on this business because it's been his baby and he can't let it go. And my associate was looking to basically buy the business and run it differently, put managers in place.

It's going to be a little bit more passive because he's going to structure it that way and automate the systems and blah, blah, blah, all the things. Ultimately it's not going to work out. I think they've just come to this realization over the last two weeks.

I came to this realization a couple months ago in that that business owner has poured so much into that for so long and it is so relationship based, especially in that small town. I don't know that that translates really well. When you're buying it on a net operating income approach.

I would expect there to be a dip there, at least for a period of time and there's going to be clients that don't like the new owner. And I watch my dad sell his veterinary practice and the same thing happened there.

So like, what does it look like if you're trying to acquire small businesses that could be so dependent on a who, not a how as to why that business was working and then Mr. Jimmy is gone and doesn't own that mechanic shop or that roofing company anymore. Like how do you navigate that when the people are so integral in small businesses and expect that to continue on?

Or how do you frame that in a way that you're going to have success with that?

And so I, and, and I am, I'm actually a part of one of those masterminds, so I'm not, I'm not knocking them, but I'm saying that it does create this perception that it's easier than it actually is.

And your point about the relationships, it is so, it is so different than real estate, which is something that, that I've just had my eyes open to because, I mean, I've been trying to, to acquire a business for 18 months now and I've been under contract on a few. And it is so relationship driven because you're exactly right. This is essentially, it's like someone's selling their child.

They just imagine like you've owned this business for 20, 30 years and now you're just going to pass it off to someone.

And, and most of what people are talking about on, on the, you know, if you see this stuff in social media, they're talking about truly small businesses because private equity firms do this all the time. They're buying businesses, rolling them up and creating, you know, large, large returns based on that. But they're doing it at a much higher level.

They're buying businesses that already have that management structure in place and they're not reliant on a single face of the company. So, so those things are very hard to navigate.

One thing that, that for me, and, and why I ended up kind of back at construction being my focus of the businesses I want to buy is I know that space and those guys that own the roofing company, when they hear, hey, you like, I can actually talk to them because I've put on roofs and I can tell them, hey, I just got my California contractor's contractor's license because I'm qualified to have my California contractor's license. Like, there are ways to create, I guess, a bit of a moat in that space, but at the end of the day, it's still very, very relationship driven.

And so you're looking for a bit of a unicorn when you're looking for these businesses.

And people say, oh, I'm going to buy the business that, you know, has a good management place and then I'm going to go and I'm going to upgrade the systems and technology and it's going to be amazing. And we're going to make a.

Well, there's a thing called the J curve which is, I don't think we really talk about that in real estate, but basically like you can expect your revenue and profit to go down after you take over, like almost guaranteed it's going to go down. And the question is how are you going to manage that J curve?

So then you come up the other side of the J and, and that's really where the focus needs to be through your due diligence. And, and, and, and you have to be patient.

The nice thing is when we value, when we do, you know, evaluation on say a multi family property, some sort of commercial property, most of the time we're running our, we're doing our underwriting and we're looking at some level of future projections and we're saying okay, I expect the rents to grow to X and if we're being really conservative, they're not going to grow in year one and then they're only going to grow by 1%. But we're, but we are really looking at what does this look like five years down the road in a business.

The nice thing is we get to underwrite it and the per, and the purchase valuations are based on what it's doing right now. And so I think I, I actually find the underwriting and the valuation process much easier, but getting something closed much harder.

It's not transactional, it's much more relationship driven.

So your new fund mixes multifamily and niche construction companies. Walk us through. You mentioned the underwriting.

Walk us through the underwriting gymnastics that let those very different cash flows live under one roof.

That's a great question. So I spent a lot of money having a custom model built that could put it all together on paper. It's very hard to understand.

And so then, but, but I'm happy to show it to someone who wants to look.

But, but what I also did then is, is I tend to be a, keep things simple and I think this is maybe why I've had success in, in surgery is I can explain a complicated thing to a, to a pet owner in, in a sort of more simple way. But basically what I did for a high level model is I just simply took. And this is how I modeled it. I simply took.

Okay, here's our projections based on a multifamily real estate transaction. And, and we have, those models are pretty commonly used in the space, right?

Like every has one whether they got it from someone else or, or they, you know, had their own they, they all have a lot of the same things on there.

So I had one, I, I took one of those and then all I did was take existing cash flow on a business at X valuation and I just added that cash flow on the annual basis to what the real estate's cash flowing. So if you look at, you know, say you have, say you have a real estate asset that's cash flowing.

If we say, we say one single investor and they're getting, they've invested 100,000 and they're getting say a 5% return because I think that's probably a fair cash on cash in today's environment. So they're going to get $5,000 in that first year and it probably goes up a little bit each year, right?

So you have 5,000 and then you know, seven and then nine, something like that. But then the cash flow on the business on a similar investment might cash because you can lever these up to 90%.

The cash flow on that business might actually be $40,000 in the year or more. And so I just simply went and said, okay, what's 5,000 plus $40,000? Well now our cash on cash in year one is $45,000. But I kept it the same.

So I didn't even, my, my complex model models out increasing over time, whatever.

But I literally just took, if it stays exactly the same and we were to go through and layer this on top of the, the, the multifamily returns, this is what's going to look like after five years. The nice thing about the business prospects is, you know, in syndication you're sort of expected to have a five to seven year time frame.

If we have a business that hits and it grows and we can sell it for a greater multiple or we've just increased the valuation and paid off the debt, I didn't model that in. So that's, that would be gravy. If we have a business, we buy multiple businesses and we do a roll up that's going to increase valuations.

I didn't model in those additional multiples.

So for example, we buy a business that has cash flow of say 500,000 a year, the multiple on that is probably going to be somewhere in the 3 to 5 range, 3 to 5x on sale purchase. But if we get it to a cash flow of a million to 2 million, now our multiple is going to be 6 to 8x.

And so you're not only increasing the cash flow, you're increasing the valuation at sale, which is not in my model. So I tried to make it as you're right. It's, it's complex to put them together. And I did that exercise.

But really, if you want to look at it at its most basic level, you can just kind of say, okay, I'm going to add this cash flow onto whatever my real estate is doing.

Yeah, it sounds complex and I'm sure it varies depending on which business you're looking at. Like, that's a, that's a very layered model that you've, you've got to put together there.

It makes each offering very unique, which is, which is great. I think a lot of people are looking for unique right now.

And it, it gives a little bit of a cash flow background to a B or a C class property that may need to take have, you know, a year or two of renovation. I'm assuming you're putting an LVP and granite countertop, stainless steel or whatever.

And until you turn that over, you got money going out, not coming in. So we, we love, we do conversion projects and we love the ones that come with an additional brewery or antique mall or something.

Anything generating a little bit of extra cash flow really creates stability and reduces the amount of interest reserves that you have to raise in a high interest rate environment right now. So it's a little bit of a diversification built all into one offering. So I love that. What do you have going on with Lark Capital right now?

Are you actively raising for anything just for this fund?

The fund is the main focus. We have one 452 unit multifamily asset in Arizona in the fund and still trying to get that first business closed.

Like I said, I've been through three and it is very challenging in the sense of getting it across the finish line. A lot of reasons because of what we talked about. It's just a, it is almost like they're selling their child. And, and I get it. I mean, it's.

You have to have a very good relationship with sellers. So it's tricky. And, and I don't want to buy something that's not the right buy. So it's just. I'm being very kind of discerning about it.

Yeah, this is actually refreshing to me because the people I've talked about this area, like young, hungry guys that were fun to fund guys, and now they're going after these small businesses and it's. It there, it's such rose colored glasses. This sounds a lot more realistic about like you're. It's a unicorn.

You're combing through a lot of deals to Find a few that might work and for them to work, it's going to be very, very relationship based and probably time consuming. If you get them, it's great. But there you're making it sound harder than they made it sound. And to me the word, I mean there is realistic.

This sounds more like kind of what I was expecting is you're asking somebody to hand over something they've been working on for sometimes half their life. So I get that. Well, before we. I'll let Neil take it out in just a second, but.

So Jason Balara, there's one question that we ask everybody and it doesn't have to be a favorite, but is there one book that you find yourself recommending more than any other when you're talking to anyone interested, investing or learning or another veterinarian or a small business owner, anything else in life, is there one book that you find yourself recommending more than any others?

Yeah, probably. The book that I, that I would point to the most is who, not how.

Dan Sullivan. Ben King, my man.

That book is like was. I mean I am, I am a DIY guy. Like I have done all the things myself. I joke that as a surgeon, I'm just like a highly educated carpenter.

It's not that different. I, I am very to do things myself.

And that book helped me realize like the only way to actually grow and scale and have, you know, multiple businesses is to be able to find the people that will, you know, kind of go along that journey and make that journey easier for you to, to, to put your resources where they need to be. And, and I think that could, that can apply to real estate, it can apply to business, certainly can apply in the veterinary world.

And I think it's one of the most like paradigm shifting books I've ever read.

We probably had this, we're coming up on like 110, 115 episodes or something like that. We probably had that one referred, I don't know, six or eight times maybe. I've used that as the book on every podcast I'm on as a guest speaker.

That, that had a huge impact on me especially I built a few small property management companies and things like that.

And I'm not surprised to hear you say that because one thing I know from your bio is that you're spending around 15 or so a week in the surgery business and you're big on teams of teams.

And in terms of hiring, incentivizing talent and things like that, you can only have that kind of efficiency if you understand the concept of you used to say, how do I do this? How do I do that? How do I do this? How do I do that? And the question is, who do I have that would be better at that job than I am?

Or who can I incentivize to do this in an effective way so that I don't have to? And that, that's, that book is incredible reference. So good for you. I love that. So excellent. Any questions from you, Neil?

Nope.

So, Jason Balara, if any of our audience wants to reach out to you and find out more about what you're doing at Lark Capital Group, what would be the best way for them to do that?

Yeah, I mean, they can email me directly. It's Jason. Larkcapital.com or go to our website, which is lark capital.com lark Excellent.

Well, Jason, thank you for being here. Really appreciate your time. Congrats on all your success and hope we continue to see you be successful in everything you're doing.

Thank you so much. Thanks guys for having me on. I really enjoyed it.

Thank you so much for listening and watching the Truly Passive Income podcast.

If you liked the show, if you think it would be useful for someone else, the greatest compliment that you could give us would be to share the episode. Leave a comment down below or leave us an honest review. If you have any questions, don't hesitate to let us know down below.

And remember, with Truly Passive Income comes freedom. Freedom of time, place, and the freedom to pursue your higher purpose.