Alex Upperman’s Perspective on Trust

How did Alex Upperman grow as an investor? How did he decide when it was time to move on from a property? How did he make his way from active to passive investing? He gave himself grace when things didn’t go the way he planned, learned from his mistakes and losses, and recognized how to find a trustworthy sponsor.

Alex Upperman, an investor-partner in Kansas City, has thrived in five eCommerce ventures, passively invested in over 40 multi-family real estate acquisitions with ten different sponsors, and is a designated real estate professional, which helped him save millions in taxes.

I enjoyed sitting down for a conversation with Alex and received answers to all the questions above and more.

We talked about Alex’s tax strategy during our conversation, and I asked him how much of his tax knowledge came from his research versus a tax professional. He answered, “I would say most of it is from when I spent that time immersing myself in the space and meeting people who were doing these things…it’s the wisdom of other people.”

That holds true in my investment journey–I’m constantly learning, and a large portion of my knowledge has come from other experienced investors. So, I’m thankful for opportunities to learn from more investors like Alex.

I hope this podcast series, The 7 Keys to Passive Investing in Multi-Family Real Estate, can equip you with the knowledge you need to vet out sponsors and deals confidently. For the entire conversation, you can listen here. I hope you learn as much from Alex’s story as I did.

Alex’s Awakening to Passive Investing

He began his investment journey as an active investor in multi-family real estate, initially buying 20-40 unit multi-family properties at a time. Unfortunately, these deals didn’t go well for several reasons: the properties were old, took too much money to repair and maintain, and the locations weren’t the best.

He told me about the most challenging property–a 32 unit single-family property he acquired in 2016. The property was a 1970’s construction in the worst location. Up until this point, Alex had seen success in his single home active investments, so he signed for a deal his partner presented without knowing who the broker was. However, as time went on, more issues surfaced, and they ultimately found themselves investing more than initially forecasted.

About a year in, Alex realized he was spending too much time on this particular property.

Alex learned the hard way that third-party management was difficult, especially if done well. He spent countless hours on the phone with the property manager and exhausted time, resources, and money into the property.

He earned low returns with this 2016 acquisition and ultimately wanted to get out of this building. However, he knew creating strong investor-partner relationships was his way to achieving greater returns, so he began to make partnerships with several investors, otherwise known as syndication. Then, he began marketing the property, which took about a year and a half to sell.

Alex looked back, “I lost some sleep over that deal just because it was a stressful property to own.” He didn’t have time for the kind of attention this property demanded. He knew he could spend his energy better elsewhere.

But he didn’t let this experience turn him sour. Instead, he strategically rid himself of the property and pivoted toward passive investing.

As a result, he started earning better returns without the time and stress. As we move through different investors and hear their stories, you’ll learn many of them, like Alex, turn to passive investment after having similar realizations.

And recently, over the past five years, Alex has had 20-30% returns on realized deals.

On Notable Passive Deals

What impressed me was that Alex has worked with roughly a dozen sponsors. Most of the investments he made from 2016-2018 have yielded favorable results, and I had the pleasure of hearing about some of his most successful deals.

Alex managed to get back 100% of the capital in the most successful deal by refinancing an investment deal he made in 2018. As a result, he’s brought more than his initial capital back and still owns the property.

On the other hand, Alex invested in a few acquisitions in 2018-2019 but didn’t vet out the sponsor on paper. Though Alex still makes money on the investment deal, looking back, he would turn down that investment deal today. The difference is that now he understands a distinction between sponsors who value long-term business and those who value short-term gain.

I wondered how many other investors had the same realization as Alex. I thought about how many investors regretted some deals they made because they didn’t know how to correctly choose a sponsor or attended a conference and didn’t know what questions to ask.

Alex’s Take on Trust

Alex talked about the importance of trust from the beginning of any investment deal, explaining, “It’s the first box I have to check. If it’s a sponsor who doesn’t pass the mark there, then I’m not going to even look at the deal.”

Alex was correct. I thought about his investment with the broker. As Alex pointed out earlier, he didn’t have the necessary tools or insights at the time to make informed decisions about choosing a sponsor.

He sees trust in a few ways—implied trust comes first, followed by another sort, which happens on a much more interactive level. Like how I vet trust, it happens at the gut level.

Alex explained implied trust as something that comes with an incredible track record and credibility. He doesn’t count on sponsors without any experience, and if he likes the sponsor’s track record and trusts their past investment history, he’ll spend more time with the sponsor, vetting out their trustworthiness.

He described the next step as “The guts of getting on the phone with them, ideally meeting them in person, and discovering the intuitiveness.” He wants the potential sponsor to be someone he knows, likes, and trusts. During these initial conversations, Alex will look for credibility, expertise, thought leadership, and even how they carry themselves.

I enjoyed hearing how Alex carried himself through various deals and the journey from someone who wasn’t sure how to vet a sponsor to someone confident when approaching potential sponsors.

Alex and I continued to discuss the other Keys. He illustrated a few of his deals and what requirements he has for Track Record, what management model he wants team members to have, and the types of communication he values in Transparency. Alex also explained why he prefers the middle category of value add, how to validate a narrative, and what assumptions he scans for Terms.

You can find more details in the second episode of the podcast.

3 Takeaways

I gleaned three valuable concepts from my conversation with Alex.

  1. Making the switch from active to passive investing isn’t an easy change but will, for the most part, have the best return and the least stress.
  2. Trust is crucial when making decisions at any level of the investment process, whether an investor is just starting or experienced.
  3. Failing or bumping up against some challenges is necessary for growth. For example, I admired how Alex learned from his past investment deals to inform how he would conduct future acquisitions.


I’m grateful for the opportunity to learn from investors and friends like Alex. If you want to hear more about Alex’s story, listen to the podcast’s second episode on our website. Until next time.