How to Think Like a Bank: A Father-Son Blueprint for Private Lending, Predictable Returns, and Family Legacy with Dave and Josh Stech
Entrepreneurs on Fire Podcast Recap
Published:
Duration: 33 min
Guests: Dave Stech, Josh Stech
Summary
Dave and Josh Stech, a father-son duo, explain their approach to private lending and how it can yield predictable returns and build a family legacy. They emphasize the importance of controlling assets through lending rather than ownership to minimize risks and maximize returns.
What Happened
Dave Stech, who grew up in a trailer park, built a successful career in private lending, having navigated multiple market cycles. He argues that networking is overrated, advocating instead for cultivating fewer, high-quality relationships. His son, Josh Stech, the CEO of Sunday and former CEO of Kiavi, expands on this mindset by suggesting that external success is a reflection of internal beliefs.
The Stech family has become a leading figure in private lending to real estate investors across America. They've flipped 73 homes in Las Vegas over 14 months and learned that being the lender offers scalability and better returns compared to being the property operator. This approach allows them to control real estate assets without direct ownership, mitigating downsides typical in fluctuating markets.
Josh Stech's experience in fintech and venture capital has shaped his understanding of risk and capital efficiency. He highlights that only 1 in 2,000 startups receive venture capital, making his insights into the industry particularly valuable. He stresses the importance of passion in business, both for mobilizing capital and for aligning people towards common goals.
The Stech family uses Self-Directed Individual Retirement Accounts (SDIRAs) for structuring their lending activities. Through Roth tax-free, self-directed IRAs, they have created a repeatable system that supports their private lending operations. This method not only facilitates tax efficiency but also ensures predictable returns.
Dave and Josh Stech emphasize teaching their children to adopt a bank-like mindset for ensuring generational success. They believe in the power of being positioned correctly to control deals, focusing on senior positions in the debt stack and having strong collateral with clear exit strategies. They argue that controlling capital can be more lucrative than owning high-risk assets.
Their family office has developed a comprehensive resource library, including free guides and a white paper available at JustBeTheBank.com/eof. These resources aim to share their successful strategies with a broader audience. Additionally, they have authored a book titled 'Just Be the Bank: How to be a Successful Private Lender,' which serves as a part of their family legacy.
The book 'Just Be the Bank' is designed to help readers understand how to achieve double-digit returns through private lending and outsmart traditional Wall Street tactics. It is intended to be a tool for future generations, teaching them to think like a bank and succeed in the money game.
Dave Stech advocates for unlearning the concept of scarcity, focusing instead on deploying money like a bank. The Stech family has completed thousands of loans without owning properties, emphasizing a shift from ownership to control. They suggest that this approach leads to greater financial stability and wealth accumulation.
Key Insights
- Dave Stech emphasizes the value of cultivating fewer but higher-quality relationships, arguing that extensive networking is overrated. This approach is part of their strategy for success in private lending.
- Josh Stech notes that external success is a reflection of internal beliefs and assumptions. His experience in fintech and venture capital underscores the rarity of venture funding, with only 1 in 2,000 startups receiving such support.
- The Stech family employs Self-Directed Individual Retirement Accounts (SDIRAs) to structure their private lending operations. This method allows for tax efficiency and predictable returns, contributing to their long-term success.
- The Stech family believes in the power of controlling capital rather than owning high-risk assets. They focus on senior positions in the debt stack and strong collateral to ensure financial stability and generational wealth.