Ep795: Craig Cecilio – From Trust to Turmoil: Lesson on Friendship and Business

Andrew Stotz 00:50
it's a fun mission. Let me introduce you to the audience. Craig is a visionary disruptor and CEO of diversity diversify fund dedicated to democratizing wealth building. He has broken barriers in private markets, raising over $1 billion and offering investment opportunities once reserved for the elite. Craig empowers others to reclaim financial control and make meaningful, lasting impact. Craig, take a minute and tell us about the unique value you are bringing to this wonderful world.

Craig Cecilio 01:27
Well, I got a lot of transactional experience, so I built that up over years of doing work. So I have a lot of great stories, great lessons. I could share that and help people who are new have done it before. We could share kind of war stories together, or someone who's just beginning a few market cycles as well good good times and bad times adorned both. Yeah.

Andrew Stotz 01:49
So tell us a little bit about what you guys are doing. So I understand your business.

Craig Cecilio 01:55
Yeah. I mean, first of all, what we're doing is a gargantuan project has really opened up private markets to everyone. So I kind of how Robin Hood took the stocks and fractionalized it and made it really accessible and easy for everyone. So you could buy like, a higher dollar amount stock, like, let's put Bitcoin days, like $100,000 right per coin, and you can still buy it for like $1,000 or fractional through Robin Hood, we've done the same with private market investing, and it's a little different type of investing. It's a little bit more for people who are a little bit more in the financial journey, a little bit more concerned about their future growing wealth, maybe had kids already understand it. However, it's something that the the establishment, I call it, has all the access to the everyday person doesn't really understand it, how it works, and they don't understand that because all the people in the industry, and I see all the players in that game, aren't they can't benefit from the everyday person doing it, so they're not going to really share that knowledge with them. And this is where the wealth is made. This is where the money is made in good times and bad. You always hear all these hedge funds making all the money, all these institutions making money, this is how they do it. And now we're trying to democratize that and give access to everyone. So you're

Andrew Stotz 03:09
creating funds that have assets inside those funds that the average Joe can get access to. Is that how it works? Yeah, yeah. And how many funds do you have?

Craig Cecilio 03:22
Four? Four funds always open up a fund. Probably this year we'll have a couple more opened up with that stuff right now, lot of anxiety, a lot of uncertainty. I'm a contrarian. That's when I like to invest so like, hey. And what's lesson here is the general public fears the retail investor is motivated by emotion and fear, so they're running away from things, and they should be diving into things. And this is a lesson that we try. We're teaching. This is one of the biggest things we have to do, is educate so we're almost like, I feel like we're going to be an educational platform. So to educate people is the establishment, the wealthy. They're very patient, and they wait, and they know when to kind of bump. They know where to act. And the everyday person moves on that emotion too much, and they're always kind of missing out because of that. They do get you can do get lucky at sometimes, right? You do get lucky at sometimes. That's an exception, though. Look at the numbers, look at the data, and right now in this country, we have a crisis. The middle class is vanishing. It's vanishing. It is going away, and I don't know if it's going to get better. Yeah, home ownership is could be gone for most people.

Andrew Stotz 04:32
So let's talk about, let's just imagine an average investor. Let's say they're 50 years old. They've built up a portfolio. Let's say, let's just keep it simple and say that they own an index fund, and they're owning the whole stock market that they got a million dollars in that, and they're happy with that for the next 2030, years. They don't want to think too much. And then they come across you, and you say, Well, I've got four funds that could be interesting. Uh, you know, maybe this one more than that one or whatever. And here's the reason why you should add one of these funds, maybe only 10% of your overall portfolio, you know, but here's the reason why, what would you say is the the main benefit he's going to get from that, or she's going to get from

Craig Cecilio 05:17
that, uh, diversification. That's when I got the name diversity fund from diversification is and again, I like what you said. With 10% that's a good benchmark. Some cases, I look at 5% in some of these things, and maybe do multiple funds. And maybe, Okay, where am I in my journey? Maybe I want to be in alternatives up to 20 to 30% it's an individual opinion. You gotta look at it holistically. And then maybe I go into four funds at 5% each to do 20% that's just my opinion. I'm not really giving financial advice here, but I like one out of 20. That's kind of the way I look at things personally.

Andrew Stotz 05:51
And what do you say to the guy when he says, Well, don't I have real estate exposure when I'm investing in an index fund I'm buying all these REITs? Is this just reads,

Craig Cecilio 06:03
I love that. So what I love the best tool we have today. It's like, chat, chat, open, chat, chat, GBT, you just, you could just go right there for your information in literally seconds to get it. So traditionally, the asset class we have performed 12 to 15% don't ask me. Ask chat. We'll spit it out and give you all will aggregate all those resources where it comes from, and you're looking at holistically, again, over five to 10 year time periods, not these little windows that everyone likes to market. And you know how that is. You're an investment world. You could have a great investment. You have tombstone and advertise that, but that's not really how it works. Everyone kind of has a winner, but they're not totally looking at everything from a holistic point of view. Is like, let's look how this does over markets, over decades. That's the way you have to be to be a practical investor. There's the optimistic investor, right? But there's practical investors the way, the way I like to go more look at the data.

Andrew Stotz 06:57
So what you've explained diversification is one thing. The second thing is the idea of the return, that it's possible that I could get a higher return by investing in this asset class, and just so that the listener and the viewer understands that this is not necessarily what you would get in the stock market. What are the typical assets in your funds, commercial, residential. Are they different? Are they different in maturity? How do they look?

Craig Cecilio 07:25
Well, I'll go for the standard one. There's always exceptions. I could talk about exceptions all day long, just home runs. But let's go right in the standard. Our standard is more value add, multi family real estate, around two to 400 units, something that's institutional grade. The purchase price is around 25 to $50 million the everyday person, even if you add a million dollars, it's hard to penetrate that, because you need close to ten million of equity to buy those assets. So it's something that not a lot of people have access to. And for us, since you have that purchase power with more money, you can play that game. Is a good way to put it. You can get those assets at a discount. Again, the industry insiders only deal the people have the money because they're incentivized by what, not by you. They don't serve you. They serve who their checks, you know, say, commission sense. And so if you go to them, they're not going to talk to you. Hey, even if you have a million dollars, they might make, okay, I may make 10, 20,000 but if you have 50 million, 100 million, a billion, they're gonna start sending all their off market stuff. That's just how the game is played, and that's what people have to understand. This is the game and to benefit from it. How do you, you know, how can you benefit it? Now, I have a tool where you can benefit from

Andrew Stotz 08:36
it. And one last thing, I think, now we understand what you're doing. The last thing is that, you know, you mentioned a little bit about the middle class and what's happening. I left America 32 years ago, so I really have no idea what's going on there, but maybe you can give a picture of what you think is happening in the real estate market for the next, I don't know, three to five years or something like that. Where are we at in the cycle? What are the pressures up and down?

Craig Cecilio 09:01
It's all over the place. I think you have to dig into which asset class within that itself right now, we're not really building new homes. Interest rates are double. Prices went up double. So that means 4x to get payment on the same home. You're looking at taxes in certain areas, very tough for construction costs or through the roof, and people are locked in these low rates, so they're not incentivized to leave a 3% rate and then buy a home with a 6% rate. So you have this whole uneven, balanced situation, and so people need a place to live. And then also, at the same time, I think you have this, we have to look again, holistically, and look what's going to happen with the immigration policies. Are we going to have more people come into this country? And if that does happen, now, they need to live somewhere. And so that's why I always look at apartments. Hey, can't afford a home. I can live in an apartment. More people are coming in this country. They need a place to live, and then where are they going to go? They're going to go into apartments. And that's why I feel it's a safe. Asset class. And

Andrew Stotz 10:01
there's a great book called hidden in plain sight that explains some of the origins of the 2007 boom and bust. And part of it, he goes back to 2000 or so with Bush and later Clinton, basically pushing Fannie Mae and Freddie Mac the secondary, you know, market mortgage companies pushing them to have lower and lower quality, a higher amount of lower and lower quality loans. And when those loan quality, you know, when it went from maybe 20% of their overall portfolio at Fannie Mae or Freddie Mac when it went from 20% to, let's say, 40 or 50% 50% all of a sudden things changed. And one of the big changes was, well, they gave access to millions of people that didn't have access to the market. So immediately millions of people were able to get these loans because fame May and Freddie Mac would buy them off the banks, you know, easily. And then those people would then enter the market, and so there was a huge surge in demand. And so my question is, you know, there's, there's talk, for instance, from the Trump administration that there's going to be mass deportations if that happens. Does that affect the property market, or does that not really, is it not that significant for the residential

Craig Cecilio 11:26
we'll see what's going to happen today. There's a lot of fluff out there. Really was reality a situation, because now being in office is different than trying to be in office. Now he's in office. Let's see what actually does happen with that. It everything is cause and effect, right? But I would be all these people come in the country, where they go, right? I don't know where they go at the end of the day, and are, if you're kind of thinking about it, if the right people come in this country, someone needs to fill the jobs that people don't want to do, because there's jobs out there that people want to do no more, and we get taxes off, so that's good, as long as we're not kind of paying for them all the time with government subsidies. And I think that's more the concern is we're paying them and paying their living everything coming to country, but they come and get assimilated in the workforce in the right manner. It could be a positive thing, and that's where we don't really have that conversation. It's more like it's polarized. Don't come in or come in, right? Let's, let's talk about, well, what's a positive positive you come in the right way. You become citizens, you get jobs, you get taxed, you know, you absorb some of the housing, right? That could be a positive thing. So we'll see where it goes to send and push all these people back. I don't know if that's really a reality, because how you gonna run around the whole country? You're gonna be just kind of thinking of the visual in your head right now. You got these people in these police outfits knocking down doors, because they go from the border up to like New York and Minnesota. I was in Minnesota, never been to Minnesota before, and they're up. They have a problem with that too. So I don't see that really being a plausible solution is to round them all up. Are gonna have like, helicopters come down and SWAT mill. And I don't know what's gonna happen there, but I also see the point there that if there is a shortage of supply and demand at the end of the day that but I don't think it's gonna be that big of an issue. Yeah,

Andrew Stotz 13:18
all right, well, now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be, tell us a bit about the circumstance leading up to it and tell us your story.

Craig Cecilio 13:30
Yeah, I mean, there's a couple that come in mind. There's been a few in life you always have to endure that. It's part of, I said, the process of developing yourself. And we were doing, I had a potential business partner, and we were doing this land deal. He always liked to chase his big deals. And he was always chasing big deals. I was like, I'm a singles hitter by, like, massive singles so I was always or a Clyde Saleh horse, right? And I'm like, Okay, let me just throw 10 grand at this. It's just 10 grand because I'll feel comfortable. And finally, I wired the money over. And lo and behold, I think we had a couple other people. It was about 250,000 was a deposit into a land development deal in New Mexico. And then, like, couple a week went by, and then, you know, nothing, we got ghosted by the person. I got leaned into it. I ran around the banks and started understanding how wires work and what happened, because there was a little bit back and forth. And received your wire. Yeah, I received my wire at the end of day. So I lost 10 grand. Some other people lost some money on the deal. So that was a big thing about it. And then it started me questioning this potential business partner of his, how can you read people? Because as I dug into the circumstances and the paperwork. There was this basic stuff that was missed, basic due diligence items that were like, I have this whole checklist of underwriting stuff and just one on one stuff, if you know how to underwrite some of this stuff. And I was like, oh, so it was like, double whammy for me. It was like, one, it was just the money and two. It was the person. So it was so it was a pretty it was, it was a good lesson, a little expensive. Didn't hurt me too hard, but I wasn't happy about the whole thing. And the bigger I think loss for me, was the loss of that potential partner, and the trust and faith in Him underwriting things. So then I had to sever that relationship as well.

Andrew Stotz 15:18
So how would you describe the lessons that you learned?

Craig Cecilio 15:22
Uh, that you learn. Well, one is kind of like, I know how to underwrite so it's more make sure. I'm gonna make sure those boxes get checked, ask those questions a little bit more. That was the big thing. And then also, and this is a big one too, and this is something that's a repeat pattern for me, he was referred to me by a friend, not a business associate. And there's a thing I have in life, is friends in business aren't kind of really connected. Whereas, if I respected you, Andrew, in business, you referred me to someone, I would take that different than a friend who I socialized with, who's refers me someone. So there's a difference between the two that was a lesson there as well. I

Andrew Stotz 16:01
remember a friend of mine always said friends are the worst

Craig Cecilio 16:07
when it comes to business. Yeah, I know what he means, because you just, you let your guard down. You don't go up that whole list. You go, you know, maybe it's one to 10. You jump to, like, eight or nine. Yeah. Okay, so yeah, in

Andrew Stotz 16:19
fact, um, it reminded me, recently, I got scammed, despite the fact that I'm the host of my worst investment ever, and I've heard every scam and everything. Basically, we signed up for a membership to a particular group, and it wasn't, it wasn't a big amount, but they sent us an email and said, Here's the bank to transfer to, and so we, you know, transferred the money, and we called them and talked to them, and they said we didn't receive anything. I was like, wait, what? Well, a scammer had come in between us, intercepted our communications, had come up with an email address that was that company's name, with a one at the end of the email address, or something like that, and impersonated them and put their bank details in the middle. And so we transferred it to that person's, that person or entities Bank, which we immediately, you know, submitted a police report here in Thailand, and then tried to, you know, go to the bank to get that back, but it was already gone, and we couldn't So, but that was, you know, something similar that I transferred money. And now I realize, like you really before you transfer anything, you've gotta really stop and go through a checklist to make sure that you're really sure what you're doing, because you've gotta assume that once it's gone, it's gone.

Craig Cecilio 17:37
There is something going on with my business every time a new employee starts someone Texas, them saying they're me and asked them to get it like an apple gift card or something, and, and it's funny, because not most people just ignore it, like and, but a couple people didn't. They ran around town, and I'm like, you know, I don't just just walk in my office. I'm not asking for gift cards, but they got a couple of people with it. But it's a thing. It's always happening. They get creative with things. So they know when I hire someone new, and they hit them right away before that relationship forms, right? They don't know how you communicate your new boss. And they're just like, oh, you know, new boss wants a gift card. I'm like, oh, it's like, it's almost funny. It's laughable to me, because it happens so many times. So maybe I gotta put that in my onboarding documents. If the CEO texts you to get them a gift card, it's fraud.

Andrew Stotz 18:27
I will never text you. Just come to my office. So based on what you learned from this story, and what you continue to learn, what's one action that you recommend? Think about a person that's just about to do what you just did, what would you, you know, suggest that they do to avoid suffering the same fate?

Craig Cecilio 18:46
You gotta do your due diligence. At the end of the day, really do your due diligence on the all the parties involved the transaction. I think it starts with like, where did it come from? So if it sounds too good to be true, oh god. I hate saying this like my dad here, and I promise that's not gonna be like, it sounds too big, it true. Just do your due diligence. I have this book. It's right on my shelf here, and this is for investing. It says, assume everybody is the crook and work backwards. That's the key to underwriting and any investment. Just assume that. And you should, you should be okay? Yeah, I didn't say it's from the book. That

Andrew Stotz 19:23
reminds me of a statement. It was attributed to a man named Dr Deming, which, but it may not have come from him directly, but I know he said it, which was, trust in God all others bring evidence.

Craig Cecilio 19:40
Yes, but that's a good one too. Because why I have, like, this little checklist, if someone puts trust in God and their signature, I have a red flag that goes up because I don't know why that is, because a lot of the stuff comes from the, I don't want to say colts, but they do come from a lot of these groups that they target you based on, if you're. Uh, hey, I could use God, they use religion for a way to infiltrate fraud. It's a high, high incidence of it. Yeah, it is crazy, but it's the data, and you got to follow the data, yeah. So

Andrew Stotz 20:12
what's, uh, maybe you can share, like a resource, either of yours, or a resource that you've used over the years, a book, an activity, a habit, or, you know, something that you've that you provide through your business, that you can share with the listeners.

Craig Cecilio 20:29
Oh, activities, books, a lot of things at the end of the day. So I've done this for like a while, raising capital for over 25 years. So I just started to sell do courses, online courses. So I launched that next month, so check that out. CXC is my initial so that's my handle, my social handle, so the out there for people to do it. And I actually wrote my first book, and I'm publishing it in a couple months, so I'm really excited about that. And it's called, you know what you got to do. And that's named after my mom. Through childhood, anytime I face diversity, she her advice to me was, you know what you got to do? To this day, she'll say that when the tough time you know what you got to do, says the title of the book, and it's a bunch of stories of from me, from my, from my from my journey and how I got to where I am today, peace and diversity,

Andrew Stotz 21:21
interesting. Well, we'll have links to all that in our show notes so we can go out and update me when you get the link on the book, and I'll put it in there.

Craig Cecilio 21:32
Yeah, I will definitely, I'm getting close. Yeah, I know the

Andrew Stotz 21:35
the challenge I've written about four, four or five books, and it's painful. I'm not as I say. I'm an author, not a writer, which basically means that writing is painful for me, but for some people, writing is joyful. They're writers. So last question, what's your number one goal for the next 12 months?

Craig Cecilio 22:03
Oh, the next one? That is a great question. Mine is the

Andrew Stotz 22:08
right time of the year to ask this question. Yeah, my is

Craig Cecilio 22:11
a good question. But some always goal set right now is one, launch the courses of course. Two is a little bit of how I run this organization, diversity fund, how we're going to put it on the map? We like for it to be a public name. We are doing something for people. You don't go out and create a funds for the everyday American and do it really about the money. It's about the purpose, and really make ourselves a household name. That we are actually helping you by doing this, we're giving you an opportunity here. At the least, we're giving you awareness this exists, and maybe putting you in a path so you could do some research yourself and benefit from it. Great.

Andrew Stotz 22:50
Well, listeners, there you have it. Another story of loss to keep you winning. Remember, I'm on a mission to help 1 million people reduce risk in their lives. As we conclude, Craig, I want to thank you again for joining the mission, and on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Craig Cecilio 23:12
Well, I say about investing, just get started. Just lean into it and get started. Take the first step. Read about it. You got so many tools at your hand. This most more tools in the history of the world. So just get started.

Andrew Stotz 23:23
Yeah, it's remarkable, and that's a wrap on another great story to help us create, grow and protect our wealth, fellow risk takers, let's celebrate that. Today, we added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast host, Andrew Stotz, saying, I'll see you on the upside and.