Self-Directed and Individual Investors are the Heartbeat Behind the ‘Big Time.’
By Marco Santarelli
Although most people know me for my love of turnkey rental properties, I also have another love: theater, especially Broadway. My daughter is involved in the performing arts, and even before her talent emerged, I found the entire industry very interesting. So you can imagine my interest when I encountered a friend of mine who happens to have been involved with a name we all know — Andrew Lloyd Webber — and participated in productions like Kinky Boots, Spring Awakening, and It’s Only a Play, to name a few.
A lot of real estate investors and self-directed investors stay in one space — real estate and real estate-related assets — far longer than they really have to because real estate is where they are comfortable. I know that was true for me! If I had not been able to work closely with a friend and respected business associate on the Broadway projects I am about to describe, I probably wouldn’t have taken the leap so easily either. That is why I wanted to describe a little bit about what you can do with self-directed capital if you want to branch out into a passion project like theater has been for me.
It’s a Big Leap in Multiple Ways
When I told my friend (Ken is his name) that I wanted to be involved, I wondered whether my contributions would ever be noticed. Would I just be a faceless guy writing a check for “development” on a program that would never see the bright lights of a Broadway stage? I soon learned that while you can get involved at that stage of development, you don’t have to. In my case, I was able to participate in rolling out several exciting shows, including:
Broadway Vacation, an original story based on the 1983 comedy, National Lampoon’s Vacation. It depicts what might happen if everyone’s favorite family, the Griswolds, took a vacation to present-day Times Square.
A Neil Diamond musical based on the life and music of, you guessed it, Neil Diamond. It was written by an Oscar nominee, directed by a Tony award-winner, and (best of all) got a big thumbs-up from Neil Diamond himself during a private reading.
You can see from these two examples of about half a dozen that you do not have to just write a check for a performance that might never make the grade. While you never know with 100 percent certainty if you have a hit until it becomes one, you can see that these productions are not “small potatoes” and they are well-positioned for success.
Another thing that made this investment something particularly exciting for me is that I was offered the chance to be a co-producer. Now, that means different things in different projects, so if you decide to go this route you need to make very sure that what a project manager or producer means when they offer you this position (if they do) is also what you think they mean. In my case, that co-producer title came with the responsibility to help raise additional funds other than my own contributions for the productions. It is not really that different than when you get involved in a real estate syndication and are part of the project because your job is to raise funds for the syndication. And, as in a real estate syndication, it’s important to review the paperwork with your trusted lawyer and other advisors to make sure that you are:
A) Acting in a way that is fully approved by both the SEC and the IRS
B) Using your self-directed retirement account capital in a way that is fully compliant with IRS regulations
Finally, in a lot of cases you must be an accredited investor in order to participate in these projects. In my case, that was a requirement for my investment and involvement. However, not every project is the same, so do not rule yourself out without doing a little more investigation.
Individual Investors Ensure the Arts’ Survival
One of my very favorite things that Ken said to me when we were discussing investing in these types of projects has to do with how important individuals are to the survival of the arts. From the audience side, it seems like these productions are so big, so complicated, and so much larger-than-life that they must be funded by enormously powerful institutions and fine arts organizations. Ken told me something very different.
He said: “Individual investors are the lifeblood of Broadway. Without you, there would be no Chorus Line, no Rent, no Les Misérables, and yep, no Hamilton. Without you, there would be no Broadway as we know it. Well, that made my mind up for me, and I’m eager to see how things continue to progress as these projects make their way to the stage.
I’ll be sure to keep you in the loop!
Marco Santarelli is the founder and CEO of Norada Real Estate Investments and an investor in the fine arts. Learn more about Marco’s experiences investing in Broadway productions by emailing him at Marco@NoradaRealEstate.com or check out his real estate business at NoradaRealEstate.com.