PODCAST EPISODE
SA006 | How a Successful Entrepreneur Scaled to a $275M+ Real Estate Portfolio
Dan Handford
Dan Handford is the managing partner at PassiveInvesting.com, a private equity real estate investment firm, where they manage a portfolio valued at over $275M. He is also the founder of the Multifamily Investor Nation, where he educates a nationwide group of over 9,000+ members of multifamily investors on how to invest in multifamily assets and is the host of the popular Multifamily Investor Nation podcast, where he interviews sponsors who have closed a deal in the last 12 months.
Connect with Dan
Transcript
Aileen: [00:00:00]
Thank you everyone for joining today’s episode of the, How Did They Do It? Real
Estate podcast. We are your hosts Seyla and Aileen. And today we have our guest,
Dan Hanford. Dan is a managing partner
at passiveinvesting.com, a private equity real estate investment firm, where
they manage a portfolio valued at over $275 million.
He is also the founder of the Multifamily Investor Nation, where
he educates a nationwide group of over 9,000 plus members of multifamily
investors on how to invest in multifamily assets and is the host of the popular
Multifamily Investor Nation podcast, where he interviews sponsors who have
closed a deal within the last 12 months.
Please welcome Dan
Hanford. How are you doing today, Dan?
Dan: [00:00:40] I’m doing very well. Thanks
for having me. Looking forward to
sharing with your audience here.
Aileen: [00:00:44] Thank you so much. We’re
really excited. Before we get started, could you tell our listeners a little
bit more about your background and just, how did you get started in real
estate?
Dan: [00:00:51] Sure. It’s a long story, but
I’ll try to make it short. So I’m a chiropractor by trade. First got started in the business, really in
business really. So, went to chiropractic college while I was there. I started
my very first successful business that I still have today. It’s a business
called shopanatomical.com and we sell all types of skeleton, tens and skulls
and brains and hearts, plastic anatomy, models to colleges, universities,
doctor’s offices across the country and around the world.
And that business I started while I was in chiropractic
school because we all needed as a
student of chiropractic, we needed a spine model to actually learn what the
human spine looks like and how to adjust it and all the different, you know,
structures around it. And so the bookstore at that time was selling one for
$189.95.
And the students, I
heard complained about it being so expensive because at that time we’re all
poor college students, you know, and can’t afford a lot of stuff. And so the
bookstore has always, you know, doubling the price on everything and come to
find out. I did some research and found that spine model online for around $90,
it was like, it was actually like $89.95, so they marked it up by a hundred
dollars from the retail and I’m in the bookstore. And so I was like, I wonder
if I can get an order together, how and what can I get this spine for? So I
called up one of our, one of the distributors of that spine, you know, fast
forward today.
They’re actually my number one competitor, which is kind of
cool. But I called them up and I said,
Hey, you know, if I can get an order of 20 of these spines together, could you
get them? What could I buy them for? And
they said, you can buy them for $65 and we’ll even include the shipping. And so I was like, Oh, well, that’s kind of
good.
So I was like, Oh, I wasn’t gonna, I, you know, make a bunch
of money off of this thing. I was just trying to help out the students. And so
I ended up selling them for $69.95 and I included, of course, included the
shipping and everything like that. And then I started to go from class to
class. Now I just ask the professor, Hey, would you mind if I, you know, made
an announcement real quick about these, this really good deal of a spine I got,
you know, and, and the first week I had 80 orders in hand and I had cash up front.
Cause of course they’re poor college students. I didn’t want them to have an
IOU and be stuck with all these notes or whatever from them spine models. And so had all the money up front and, uh,
ended up trying to figure out a way to cut out the distributor.
So I found out who actually manufactured it and then cut the
distributor out. I went straight to the manufacturer, called the manufacturer
up and told them, Hey, I got this order of 80 spines today together. What can you sell these to me for? And they told me, they said, well, how many
times a year can you do that?
And I said, well, in chiropractic, we coach every three
months, we have a new student class that comes through. Cause they do it by the
quarter. And I said, you know, at least
four times a year, I could do that. And they’re like, Oh, okay, great. Well, we’re
going to go ahead and set you up on our highest top tier discount.
And we can sell you
that spine, including shipping for $42.48.
And I was like, of course, ecstatic. Right? Cause they went from making
a couple of hundred bucks to a lot more money than that. And so I cut the price
of $69.95 and then like another two weeks later I sold another 40 and then
every quarter I would go out and sell it, sell them.
But then that allowed me to start that business because not
only did I become a dealer for that one spine model, I became yeah dealer for
their whole catalog of over 2000 products and started to take my skills that I
had prior to going into chiropractic of web design, web hosting, things like
that, and started to sell a lot of the product on eBay and then started my
little website, started to push money into Google ads and then all the way fast
forward to today.
And we’re still doing six figures a month and seven figures
a year of sales of that product and have a whole team that runs that. And then
right after I got out of chiropractic college, I started my clinic and I was
able to start at debt-free because of that business that was producing nice
revenue for us.
And, when I first got into chiropractic, I realized early on
that I was really trading time for dollars. So I could only, I see so many
patients in an hour and whenever I want to go on vacation. Guess what? There
was nobody there to run the clinics and see the patients. And so I was actually
losing money and also having to spend money on the vacation.
So it really wasn’t working out too well. And so I started
to hire on a team of chiropractors to work for me, and then actually started to
integrate into the medical side of things and started to hire on physicians to
actually work for me, a medical doctors and the nurse practitioners. And then
about four or five years ago, we actually expanded to four clinics and cut out
the chiropractic and the rehab completely to reduce our footprint in each one
of the offices, as we continued to expand. And now we’re solely focused on
medical procedures doing nonsurgical orthopedics and sports medicine. I’m located here in Columbia, South Carolina,
but we also have a clinic in Charleston,
South Carolina, Greenville, South Carolina, and North Augusta.
And then as I built those up, I was starting to generate
some nice cash flows off of it. I was
writing really large checks to the government and I was really kind of
frustrated with it because you know, you work really hard all year long and you’re
writing these large six figure checks to the government.
And as painful, I’ll
tell you it’s very painful. And so I’d already done a lot of research in real
estate, but never took the time to really focus on it. So I ended up, you know,
stepping out of the clinics full time and promoting my COO at the time to the
CEO. He’s still there today is doing a phenomenal job running.
You get along with the rest of the team that’s there and I’m
able to focus my fulltime efforts on, you know, multifamily syndication side of
things. Start off in the beginning doing some passive LP investments in
different opportunities as a limited partner, and then started to put together
my own deals.
And even before I started to put my own together deals
together, I co-GP with another group or two.
Got to get that credibility and build that experience level, and then
closed our very first deal. As, as a group, did a syndication with it, it was
$8.9 million with $2 million of CapEx.
And then fast forward to today, our most recent deal we closed was a
$49.955 million deal out of Charlotte,
North Carolina, raising almost $20 million for that in the middle of the pandemic.
Seyla: [00:06:34]
Oh, wow. That’s very impressive background. So thank you so much for sharing
with our listeners. So when you first
started as a passive investor, could you walk us through how you selected, the
sponsors, the markets and the investment opportunities?
Dan: [00:06:47]
Yeah, well, it’s totally different than when I first did it. Right. my wife and
I right now have 26 different investments with nine different operators, in
multifamily. So we’ve been, definitely have learned a lot of things along the
way. But one of the, one of the biggest
things that I look for in a team for an operator is somebody on that team having some form of
background in business, some sort of successful background in business,
because I know a lot of people have
backgrounds in business, but they, and
they know how to run a business, but some of them know how to run it into the
ground.
Right. I don’t want somebody doing that. I want someone that
actually knows and has a successful background of running a business because at
the end of the day, when you’re buying these larger multifamily assets, you
know, we’re buying businesses that just so happen to have an asset associated
with it, which makes it really nice.
But you really have to know how to manage people. You have
to know how to put in systems and procedures and processes in place. And then
you also have to know how to make sure that you can measure things so you can
know how to manage them and pivot whenever it’s necessary. So that’s one of the
biggest things that I look for, but I also look for operators that offer
preferred returns.
I feel like that’s a great alignment of interest for me as a
passive investor. I also look for operators that have transparency of
communication. And they’re providing me with financials on a regular basis,
preferably at least quarterly, you know, more frequently as fine with me, but
typically at least quarterly.
And I also want to
see that operator putting skin in the game. And, and then to me, it’s not a
matter of how much they put in there. And I know our group typically likes to
put in 10% of the initial equity into the projects, but, I know some operators
I’ve invested with they’ll put in a hundred thousand, no matter what the deal
is, they’re going to make sure they put
in a hundred thousand, each one of those deals.
And I’m fine with
that. As long as I know that they have some skin in the game, because I want
them to have that significant amount of loss, right? If for some reason the
deal starts to go the direction I want and to be highly motivated, to be able
to make sure that deal actually is panning out and doing as well as it needs to
be.
Seyla: [00:08:39]
Awesome. So at what point did you know or realize that you wanted to jump into
the active site of the syndication?
Dan: [00:08:46] I
went into it from the very beginning knowing I wanted to be active. So, but I
knew that in order to be active, that I should be investing passively so I can
know what it feels like. And I can
experience what that communication level is like.
It also has allowed
me to be able to fine tune our own investor relations process with our own
team, with our own group. You know, our group is that
passiveinvesting.com is not there just to, you know, get an investor one time
and that’s it. You know, our goal is to have lifelong investors that want to
continue to grow their wealth alongside ours,
and an ability to build that
communication channel from experience of my own from other, other by
being a passive investor and other syndications has really helped me to be able
to fine tune that.
So since the very beginning, I’ve been wanting to be in the
active side of things. And so did a
couple of passive investments, started to co-GP and started to put together our
own deals right away.
Seyla: [00:09:32] Wow. That’s really
impressive. So what was the biggest challenge that you faced when you started
that first deal as a GP?
Dan: [00:09:40] I would say the very first one
that we did on our own was probably the money raise, honestly. I mean, it was
a, it was an interesting deal about how we actually got it. Cause it was a deal
that we offered on. We lost it. And then four weeks later it came back to us
and we were able to still get the deal, even though he lost it in the very
beginning.
And, but we may close it within 60 days. So we had a 60 day
timeline for closing. We did close it in
60 days, but the money raised piece of it
was the hardest, you know, that the financing was a big question mark because
we had never financed that large of a deal before. But what we knew we internally had had a
large enough bank sheet and to be able to help from that kind of guarantor
standpoint, but from, you know, being
able to raise the money, that was the hardest part. And the, the thing is that
was our that’s the smallest deal we’ve ever raised for, right. It was a, it was
like a $2 million raise that we have on that particular project where now we’re
doing almost $20 million.
Right. And we’re
looking to put together another deal. It’s going to have like a, you know, a 10
or $11 million raise. I’m like, that’s kind of a small raise for us. Now.
Right. and it’s been, and it’s actually easier for us because we have that
track record with our investors. We have
the investor database which makes it a little bit easier for us, or a lot
easier for us now than it was back then. But I remember on that deal and thinking, you
know, we got, you know, $150,000 hard on it and we’re going to be losing that
$150,000 if we don’t raise that $2 million. It was like $2,025,000. And it took
us the full amount of time to raise it right, whereas now, we can usually fill
up a deal within two to three weeks and it’s a significantly a larger amount
that we’re raising. So the very beginning it was, it was not necessarily
finding deals cause you can find deals, but the hardest part about syndication.
And if anybody tells you that it’s easy they’re lying, right? There’s no way to
make this easy, right?
The way you can make it right, easiest is to have partners
that you really, that really counterbalance and support you and compliment you,
that can help you in different areas, which is what we have here with our group
is that we have that balance of duties, if you will, where we have one person,
Danny is really good at finance, all finance related and asset management.
We have a Brandon who’s really good about acquisitions and
working with the brokers as well as on the construction management side of
things. And I’m really good on the investor relations side of things and
talking with investors and also from the marketing perspective, not just with
their own group, but also with the properties as well.
And so being able to find somebody that has that kind of,
those kind of, you know, mix of duties is really important. But, at the end of
the day, you gotta be able to find a group that you can actually work with that
you can actually know like and trust.
Seyla: [00:12:03]
That’s awesome. Thank you. So how did you scale up so quickly going from your
first day or two now managing a portfolio of over $275 million within just a
few years.
That is really massive success.
Dan: [00:12:17]
Yeah, I would say that the biggest thing for me that has really catapulted our
success is having a mentor that continued to drive us. And there’s, you know, several mentoring
groups out there, you know, lots of them out there that are trying to coach
people and things like that.
And some of them are really good, and some of them are not
so good. And you have to just start to
do your own due diligence to make sure that you’re going with an operator,
but you’re going with a coach that can
actually teach you the way you need to be taught. And for me, I knew that I
wanted to be, I was willing to pay up if I had to, but I wanted to make sure
that I had access to it.
Somebody who is actually doing what I was doing right then
or wanted to do, and that I, that they were still doing it. Right. I didn’t
really prefer to have like, somebody else’s student coach me, like having a
student coach or something like that. I
wanted to actually have the guy or the gal be the one that actually teaches me
one-on-one with what I was trying to do. And I want, I know, I knew I wanted to
well on that, on the large scale. So I knew I wanted to find somebody that was
playing in the large space already. And
even somebody who that’s, they’ve already been in the large space and they
didn’t start off small and go large.
They start out large and they stayed large and that’s kind
of what we did from the very beginning and really just kind of, you know,
modeled and mimicked exactly what our mentor had done and is doing now. And
that’s really one of the keys to our success that we’ve had.
Aileen: [00:13:36] So, so how did you find
your mentor?
Is it through referrals or did you do your own research?
Like how did you know that person was the right person for you?
Dan: [00:13:44]
Sure. So, he was obviously all over the place, when it comes to social media
and marketing and podcasts and things like that. I can share his name. His name is Joe
Fairless, so he’s my he’s my mentor and has been my mentor from the very
beginning and, just I’ve really just
connected with him. You know, I had conversations with him. I listened to a lot of his podcasts and he’s
a very direct person. So if you ever get a phone call with him or anything like
that, or meet him in person, he’s very direct.
There’s not a lot of fluff, just like his podcasts. There’s
no fluff with it. And that’s really kind of somebody who I’ve really connect
with. You know, I’m not the type of person that’s going to call you up and say,
Hey, how’s the family, how’s the kids, you know, how’s church and things like
that, you know, it’s business like, Hey, this is what I need.
My request was my answer, you know, move on. And sometimes I
do that and it’s, you know, it’s just perceived the wrong way on the other end
of the phone call. Right. cause I’m very
businesslike and very business oriented like that, but he’s like that very
much. And actually that very first deal that we got, I made a phone call to him
that I will never forget that lasted a minute and 47 seconds.
That allowed us to win that deal and that deal the way we, I
told you earlier that we lost it in the very beginning, and then it came back
to us. Well, I look at that and I go, well, the brokers come up with the
sellers coming back to me saying, Hey, the first buyer fell out. You’re next?
What do you want to do?
I’m thinking of all
the balls in my court, so maybe I can lower my offer price, lower my hard
money, you know, do something. Cause I have the levers that I can pull. And I
remember calling Joe up and just tell them the whole scenario and saying, Hey,
what should I do here? And he said, do the numbers make sense from the original
offer price?
And I said, yes, he goes, then make the broker’s life
easy. And if you do that, obviously
future deals will follow, but you need to just take it, like take it at those
numbers. That’s right. If the numbers work with what you made that offer
before, why don’t you just take it at that number? And I was like done and I
looked down at my phone a minute, 47 seconds and I pressed the red button on my
phone to turn it off.
And literally it was a minute 47 seconds and we got that
deal. Now you might look at that and go, yeah, maybe you could have negotiated
it a little bit, right? Well, I didn’t realize the impact of that phone call
until about nine, nine months later, nine months later, I got a, I actually in
my office, there was a private equity group out of Charlotte that drove down to
Columbia, South Carolina, to meet with me.
And that we actually
were having lunch in my conference room right across the glass windows there,
and now I’m having lunch. And he said, now didn’t you guys buy that deal? He
mentioned the name of it or whatever. And I said, yeah, that was us. We
actually bought that deal. And he goes,
I really hate you you guys.
And I was like, what are you talking about? He’s like, we
were $20,000 less than your offer price on that deal. And so to me, I looked at
that and I was like, you know, I would have probably offered a whole lot less
than $20,000 on that deal. Right. If I was going to go back and retrade after
the buyer came back to me, the seller came back to us, but I didn’t, I took the
advice of Joe and I really truly believe if I didn’t have Joe on my side.
At that time, we would have lost that deal. He wouldn’t have
it today and so to me, the biggest thing you need to do is find that, that
mentor and be able to have conversations with multiple people because there are
mentors out there that will help you in the small space. And they’re really
good at that, but they won’t get you to the large space.
And there’s people that are really good in the large space.
But if you want to start small, that’s not them, that’s not their cup of tea.
They only apply in the large space. And so you had to interview these people to
figure out who it is that you really want to go after. And you have to ask
yourself as well, Where do you want to start?
Do you want to start in the small space? Do you want to
start in the midsize, the large space? Where do you want to be? And there’s a
mentor out there for you, but you have to make sure you figure out to figure
out where you, what you want to do first, and then go find that mentor to
build, to help you get there.
Aileen: [00:17:07]
Yep. you’re building lifelong relationships. You’re not just doing one deal and
then one deal in done you’re building longtime relationships.
Seyla: [00:17:14]
Yep. That was really a great story. So, that was awesome. So what is your
strategy now to continue to scale up in this business?
Dan: [00:17:23]
Well, we got so many moving parts to this business now because we’ve got the
head of the acquisition going on every day, you have the investor relations
going on every day, we have asset management going on.
So there’s a lot of moving pieces and parts to it. And the
biggest thing, there’s two biggest things that you have to have in any type of
syndication business. Number one is deal flow. Right. So you have to always
have somebody looking for deals, which
thankfully we have that full time with our group. Somebody who’s dedicated to that. And then we
have, the, you have to always be looking for investors. Right? So, and then I
had somebody that the day I said, well, why are you still looking for
investors? You guys are so successful and you guys have so many investors as it
is. I was like, yeah, but you always have to be finding new investors because
there’s going to be a certain point in time you’re going to tap out your own
investor database if you don’t keep on adding more people to that database. Right.
and so you’re always have to be looking for investors and you always have to
keep looking for money. And then at the same time, you have to always be
watching your current portfolio. Now, when you first get started and you don’t
have a current portfolio, it could be a little bit easier, but it also is
something that you always want to be thinking about because once you have that
next deal, you now have to be managing
that asset from an asset management perspective and you have to be finding
deals and you have to be finding new investors. So there’s multiple plates that
have to be spinning at the same time. And if you’re the only one that’s
spinning those plates are gonna start to fall and you need to make sure that
you have your team built out, that they can come around and support you.
Aileen: [00:18:45]
Yeah, that’s totally true. And so you’re managing multiple businesses all at
once right now. So how do you juggle all of these different businesses and
keeping your investors happy? And then at the same time, continuing to build up
your multifamily business?
Dan: [00:19:00] It
has to do with building out a solid team it’s just to surround you. It’s one of the lessons that I learned very early
on in my business career is that, and that’s actually, when I, when I started,
I really saw the hockey stick moment in my business career is when I literally
learned to hire good people, as hard as it is to delegate tasks to those good
people. In the beginning, when I was hiring people, I was like, I’m just going
to hire the bottom of the barrel. I’ll
get the cheapest people. Right. And that’s not really what you need to do as
you’re trying the scale, a quality organization, you really need to find good,
solid people that can support you and be good to you in the long run. Right.
and so for me, even with my other businesses,
I don’t really have a lot of like, day to day, and weekly activities
with those. I have a good day solid team that runs all the businesses. And I have a corporate meeting that I have
with them once a month for an hour, or we go over the high level specifics of
things that need to be made from a, from an overall corporate perspective. And,
I’m still, playing an active role as the president in those different companies
as my wife and I still own them all a hundred percent.
We don’t have any other partners or anything like that, but
we make sure that we have a good team to support us. And you have to do that in this business as
well. And even when we started the group, the passiveinvesting.com as our three
managing partners, myself, Danny and Brandon, you know, we told ourselves in
the very beginning, we want to create this company so that it could be also
passive for us as well.
And then, so we didn’t want to just create another company
to create another job. And so we are all of the asset management fees that we
actually take off the company, go back into the company to be able to hire a
good solid team to support us. So we’re not taking those asset management fees,
like a lot of groups do and just take it home and put it in our pocket.
Right. thankfully we are we’re very well financially backed
and we don’t need those funds to be able to live and survive. And so we have
that luxury of being able to do that, but we didn’t want to just create another
job for ourselves. We wanted to go out to create, an ability to go, to have a
team that can surround us and support us so that we can still have some of that
passivity in our life.
Seyla: [00:20:53]
Wow. What advice do you have for someone who is just starting out now in this
real estate business?
Dan: [00:21:00]
From a passive perspective or an active perspective?
Seyla: [00:21:02]
both passive and active.
Dan: [00:21:05] So
for somebody who wants to be passive, I think it’s very important to be able to
understand the different operators and different skill sets and things like
that they need, and that an operator needs to have an order to be able to
invest with them because you’re taking your hard earned money and you’re
trusting somebody that you probably barely know, to be able to invest in an
asset and you’re wiring this, you know, 50, 100, 200, $300,000 dollars, and just hoping for the best, but you have to
make sure that you, you place it with somebody that you actually have some trust
built up within them, right? And so you
have to get to know these different operators.
So the first thing that I would suggest any passive operator to do is,
you know, get on the email list. I start to have phone calls with these various
operators and you’ll know quickly. And in the very beginning about how well
they actually operate and how they’ve run things, do they run a tight ship?
Are they more lackadaisical? do they actually lead by
application? You know, how, what type of leadership style do they actually
have? And then it’ll tell you a lot
about them. And then from an active perspective, I always suggest investing
passively first, because again, just like I did, I get to learn a lot about
what it’s like to be a passive investor and to get to sharpen your tool as you
start to communicate with your investors and then, after you passively invest
on like one or two or three or however many deals you want, then you just start
to become a co-GP. We’re actually
joining another group that’s an active operator putting together their own
deals. They have their own track record.
And then once you have a couple of deals like that, and you’ve built
your own track record in your ability to be able to talk to sellers and brokers
about how you have a certain amount of money or Number of units and amount of
dollar amounts or assets under management, if you will, it starts to build that
credibility with the actual brokers and the sellers that once they get a deal that’ll
be awarded to you a lot sooner, right. And then start going after your own
deals. And then once you start closing your very first deal, you’re going to
start to get more and more deals after that.
And people will start to reach out to you. I mean, right now
we’re closing large deals. And so now instead of us have to reach out to
brokers, guess what? They’re coming to us. And we have brokers coming to us
saying, Hey, I heard from this broker and that broker, right. As you close this
deal and that deal, and you know, you’re actually doing this via syndication
and that you’ve never had to extend and you’ve never had to, you know, not do a
deal because of equity or whatever.
Cause that’s one of the biggest things with syndication is
that the sellers and the brokers don’t like it because they’re afraid that you
might not be able to get the money. Right. And so they’ve spent all this time,
energy and effort trying to sell the deal and they’ve pushed away another one
buyer that maybe has all the cash, but you’re a little bit higher.
And so they’re taking
a risk on you, right? They’re taking a flyer to see, Hey, can this person actually execute. But I will
tell you that if you take an offer and you don’t execute, it can be very
detrimental to you because your reputation is going to be hampered and tarred
in that community.
And it’s going to be
hard for you to be able to rebound from that kind of a reputation. And you
might have to go to a different market to start investing, start to acquire
properties because these brokers do talk. They talk all the time and it’s
surprising to us because we’ve even had. Off market deals brought to us because
another broker was talking to another broker and they told us to call that
broker about the deal, right? And these aren’t even brokers that were in the
same group. They’re in two different groups. It’s not even associated with each
other, but they do talk. And so you have to make, and the sellers talk to the
sellers, talk as, Hey, this group or that group, you know, whatever do they
started to get that bad taste in their mouth and you have to make sure you
uphold that reputation.
Seyla: [00:24:18]
That’s really great advice , and I totally agree. Some of the markets they are close to each
other where the brokers can actually talk to the neighbor’s markets. So it’s
really important that if you take the deal, you have to make sure that you can
execute your business plan. So what is
one thing that sets the successful people apart in this real estate business?
Dan: [00:24:38] I
think it’s their drive. I think it’s their drive to actually move forward and
actually take action. There’s a lot of
people that I know that talk a big game, but when it comes to executing and
they just, they just can’t, they just can’t pull that trigger. I don’t know if it’s not, I don’t know if
it’s necessary, so they just can’t pull the trigger it’s that they just won’t pull
the trigger, right? Because there’s a difference between whether or not you
have the ability to pull the trigger versus whether you actually do pull the
trigger. And so for me, I’ve always practiced with a relentless implementation
mindset where if I’m going to go do something, I’m going to go do it.
I’m going to go do it a hundred percent and go do it now.
Right. I want to execute, and relentlessly implement. And the people that are
separating themselves from being successful versus mediocre are the people that
are actually going out and executing and not just creating a bunch of excuses
for themselves.
Aileen: [00:25:27] Right. You need to stay
defiantly committed to your end goal.
Dan: [00:25:30]
That’s right.
Seyla: [00:25:31] What has been the highlight
of your real estate career?
Dan: [00:25:35]
Wow. I would probably have to say in the middle of COVID-19 being able to lock
a deal up. A matter of fact, we actually locked that deal up a week before
COVID hit. And then of course had some big pit in our stomach moments when the
bottom falls out of the market and you have a pretty significant amount of
money, hard on a $50 million deal, and you have to raise almost $20 million,
which is the highest you’ve ever had to raise. And your second highest was $14
million. So you’re raising, you know,
almost $7 million or $6 million higher, from your prior raise. And then, the
bottom falls out of the market. So to me, that was a scary time. It was a time where we’ve definitely lost a
lot of sleep in that time. We knew it was a good deal. It was a solid deal. We
did have to retrain it because of some of the debt changing in the market. But we, you were able to get a reduction in
the price for it, right. But the, because of the quality of the asset and not
really doing very many rent very much on the renovation side of things, because
it was actually a class A asset that was built in 2014 and didn’t really need
any renovations.
It was really just a nice cash flowing deal for the next
seven years, we were able to raise the money. It was, we had a 30 day due
diligence, 30 days to close with no option to extend, unless the financing
contingency due to COVID, where are they? Like they like the lender couldn’t
send an inspector out or whatever cause of COVID travel restrictions or
something like that. So we really didn’t
have any options to extend. It was like 60 days or nothing. Right. and so we
were able to get that thing. We were very, we raised the last amount of equity
on that deal. 59th day. And after the 59th day, we got the money in and the
60th day we closed. And so it was really exciting to be able to see that one go
from the very beginning and then COVID
hitting, and then being able to actually have our investors pull through.
We have a really good database, but we have real good relations
with our investors, which allows us to be able to raise that kind of
significant money capital in the middle of COVID-19. And, we were very happy and thankful for our
investors that actually pulled through and
put money into that project.
And this can be a great deal for them for the next seven
years. So, so that was definitely the highlight so far of, of my real estate
career at this point.
Aileen: [00:27:40]
Yeah, that’s going to be really hard to top the next one.
Dan: [00:27:43] It
is. It’s definitely going to be hard. I’ll never forget that. I will tell you
that was probably the hardest next to the very first deal that we raised.
So, because that deal, I knew we had enough investors to
raise the money for it. It was a matter of having enough conversations and
phone calls. And we actually, I think did like six webinars for our investors
on it because every month, we wanted to tell them about the collections for the
month, because that was the big question mark.
Like everybody was like, Oh, well just wait till April comes
in. The April collections are going to be down. And then of course, April came
back okay. And then, well what about May? And then of course, well, every month
it’s going to be like that. Right. Well May comes in and what about June? You
know, so there was definitely a lot of question marks when it came to that, but
because of the quality of the asset that we were buying, the actual residents
were able to pay their rent just fine.
And they were, they were 98% plus collected through the
entire pandemic.
Aileen: [00:28:30]
Oh, congratulations to you and your team.
Dan: [00:28:32]
Thank you.
Seyla: [00:28:33]
So what tools or techniques have you used to improve the efficiency of your
business or personal life?
Dan: [00:28:39]
Wow. From the business side of things. The biggest thing that I’ve started to
implement is, is we just launched an investor portal.
So we had kind of been pushing back and pushing back. I got
weekends trying to do an investor portal because of some of the issues that we
had seen, but we have now implemented it. It has been very nice for our
investors to be able to go in there. It’s made our life a lot easier. From the
syndicator side of things, and there’s no more asking us for documents, that’s
all loaded on the portals.
They can access it whenever they want updating the ACH
information, all that kind of stuff. We
also use a software that’s outside of that. That’s called air table. it’s
actually a software that’s, line spreadsheet software, and we customize that software to allow us to
be able to keep track of our deal flow.
So there’s other paid programs that you can use for keeping
track of deal flow. There’s like a deal flow manager or something like that for
real estate, but we actually used Air Table and just customize it for ourselves
before we even knew that software even existed.
And it allows us to be able to internally, have comments and have
communication and load our T twelves and rent rolls and historicals, and, you
know, the OMs and the offer dates and things like that, which markets are
located in, and what’s status the deal is in. Whether it’s in, you know, are we
just in the initial underwriting phase? Or the due diligence phase or is it
actually an upending LOI? You know, where is the actual status of that property? Cause before we’re just using
buckets within Dropbox, right, to kind of keep track of things, but it was just
getting all over the place.
And then like, I would have a Dropbox folder full of things
and then somebody else would have one and yeah. All over. And so being able to
have everything, just one place that we can all communicate. And also we have a
place that we can actually go back to in the future to see why did we actually
not go with that deal? And actually have comments and historicals on there, and
even being able to see, like, what did they sell it for in the past? Or what
was the prior T 12 and rent roll and what how’s it doing now to have that
comparative analysis from the financial perspective has been really important
for us to, and from a personal perspective, there’s two things that I’ve really
found that’s been really beneficial is as we, our team just migrated over to
Microsoft teams.
And so we are, we’re all in the cloud now. And so that’s
been very beneficial. And obviously I use outlook for Microsoft teams for my
email system. And it’s, it’s been, I use my calendar. Like every single day,
like my calendar, if it’s not on my calendar, it’s not even, it is not going to
get done. You know, it’s to the point where I told my wife, like, if you want
me to do anything outside of work, you’re going to need to put it on my
calendar.
You know? And, I don’t see that like as like mean or like
derogatory, bad way for my wife to have to schedule something with me. That’s
not what I’m saying, but yeah. Like just today, I got three calendar invites
for my wife because we have four children. So we have kids that they’re all
under 10. So that was a nine, eight,
three and two. And so they are all doing types of different types of music and
sports and one has a string recital and a piano recital. So she’s just, she
makes sure that gets put on my calendar so I can know when it’s actually coming
up.
And then one thing that I use personally for my investors is
I use a, I have an assistant that schedules my appointments, but when she can’t
get ahold of them, she’ll send them a link to Calendly and Calendly has been
very beneficial cause it actually connects into my outlook and the investors
can’t see my calendar, but if I block off something on my calendar, it blocks
it off on Calendly automatically and they can see what open times I have
available and I’ve time blocked my calls with them on Tuesdays and Thursdays.
So that really kind of structures my time as much as I can. And so it’s allowed
me to be able to have a little more flexibility. And I have to have these
emails going back and forth to investors, to, you know, waste time trying to
figure out, Hey, what about 4:00 PM or 5:00 PM? They’re coming back. Oh, I’m
not available then. Well, Oh, what about, you know, you know, two or three or,
you know, going back and forth on the different dates and times, and you know,
you know, your account or here’s access to my calendar.
See if one of these works, if not. Well email my assistant
and she can, you know, jump on a phone call with you and kind of try to figure
out a better time for you. And it’s worked out really well. And I actually
prefer to use that on other people is when they send me when they want to send
an appointment to me, for me to schedule with them, I like clicking on those
calendar things because it allows me to be able to not have to have that back
and forth with them.
And same thing. I, it makes it easier for me to be able to
just pick out what’s available on my calendar or try to find one on theirs.
Aileen: [00:32:39] Awesome. Thank you so much.
Well, if our listeners wanted to find
out a little bit more about you and reach out to you, where can they go to find
that information?
Dan: [00:32:47]
Sure. there’s two different places. So if you’re interested on the active side
of things, you can go to multifamilyinvestornation.com.
There’s a place yeah for you to sign up for our weekly
webinars that we do every week. They’re
free. We don’t charge for them. And we talk about all kinds of things around
multifamily. It’s also good for the passive investor just to get some
education. But if you’re an investor that’s interested in being passive, you
know, we’d love to have a conversation with you and see if you’re a good fit
for our group cause not everybody is.
But you can go to passiveinvesting.com and on the top right, right hand
corner of the page, you will see a button that says join the passive investor
club. You can click on that, fill out the form and I’ll jump on a phone call
with you, discuss your investment goals, to see if we’re the right fit.
And again, thank you guys so much for having me on.
Aileen: [00:33:31]
Awesome. Thank you so much, Dan. It was a pleasure talking to you today.
Dan: [00:33:34]
You as well.
Seyla: [00:33:35] Thank you so much.