For today’s episode, we are going to dive into a pretty important topic, how do you know you actually have a good deal?
We’re going to look at three things three factors that you got to have on lockdown to know if this deal is in fact, a great deal.
The audible version Passive Investing Made Simple: How to Create Wealth and Passive Income through Apartment Syndications is LIVE!!
[00:01 – 08:15] Bad Investing Advice: More Data Is Better! Data, Data, Data
[08:16 – 18:44] Factor #3: The Market – Location, Location, Location
[18:45 – 24:38] Factor #2: Ability To Execute On A Business Plan
[24:39 – 50:01} Factor #1: The Operators
[50:02 – 52:26] Closing With Book Recommendation
The Power of Now: A Guide to Spiritual Enlightenment
Reminiscences of a Stock Operator
“The more you do a thing, the less risky it becomes in the future because you have more data. That data is born from experience“ – Anthony Vicino
“The longer we have to play, the less risk we have.” – Anthony Vicino
“At the end of the day, the market we can get in the worst market and we can have the worst business plan. But the right operator can still make it work.” – Anthony Vicino
“Most passive investors need to be spending the bulk of the vast majority of their time identifying those key people to work with and then the actual deals that they invest in should be almost an afterthought.” – Dan Krueger
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3 Things That Make A Great Deal
Anthony Vicino : [00:00:15] Hello and welcome to multifamily investing made simple to the podcast, it’s all about taking the complexity out of real estate investing so that you can take action to date. I am your host, Anthony Vecino of Invictus Capital, joined by Dan. You’re making things awkward, Kruger, me, you
Dan Krueger: [00:00:32] Know, as you, I’m receiving the awkwardness. You are putting it out there.
Anthony Vicino : [00:00:35] I was just trying to get in the right mental space. Before this podcast. I was going through my exercises, my breathing, my getting into the persona of a podcast host so that our listeners could get the most out of this conversation.
Dan Krueger: [00:00:51] Well, it was a thrilling experience for everybody in the room.
Anthony Vicino : [00:00:54] Should I paint? Let’s paint a picture for them. As I, I sat for about 15 seconds, very quietly eyes closed, and Dan just stares at me like, what’s wrong with you?
Dan Krueger: [00:01:02] Long time.
Anthony Vicino : [00:01:04] Well, OK. So I was trying to think of a great nickname for you, and I really couldn’t. It’s getting harder. It’s getting hard. We’ve done. We’re almost we must be close to one hundred and fifty at this point. One hundred and fifty episodes. And for everybody who’s joined us for this ride since the beginning, if you have been since the very beginning, if you’ve listened to episode number one, it was probably pretty rough and you would think we’d be getting better at this. Nearly a hundred and fifty episodes later, but
Dan Krueger: [00:01:26] Surprisingly, no
Anthony Vicino : [00:01:27] Surprisingly marginal improvement.
Dan Krueger: [00:01:29] We have consistently average, which is don’t improve.
Anthony Vicino : [00:01:32] Yeah, we’ve improved the set and the quality of the audio, but the actual quality of the conversations. Low, low. Today, we’re going to try and redeem ourselves, though we’re going to dive into a pretty important topic. You know, how do you know you actually have a good deal? You know, we’re going to look at three things three factors that you got to have on lockdown to know if this deal is in fact, a great deal. But before we even get to there, that’s just scampering off way, putting the cart way before the horse. We’ve got to catch up with our horse. So Dan? Mr. Horseman,
Dan Krueger: [00:02:04] Yes.
Anthony Vicino : [00:02:05] What is your bad investing advice? Manana, is that there?
Dan Krueger: [00:02:11] Yeah, it sounds right, yeah.
Anthony Vicino : [00:02:13] What’s your bad investing advice?
Dan Krueger: [00:02:15] Manana manana. Today’s bad advice is that more data is better. Data, data, data, if you’ve got enough data, you can make any investment work, however, that sounds kind of good right now. Everything I do on this segment, it always phrased it too. It sounds good at first and then I just,
Anthony Vicino : [00:02:34] Yeah, that’s really good. That’s on a real
Dan Krueger: [00:02:36] Good because I’m a data fiend, right? You kind of are, too. We appreciate data. But I guess what I’m trying to speak to in this one is that you can’t get too caught up in the weeds with microdata. And there’s a saying out there in the investing world, more specifically when it comes to like stocks and equities and trading, things like that, and it’s when in doubt zoom out. And so if you’re caught up in the weeds about all the kind of inner workings of what’s going on in the moment in the day in the, you know, micro-market. So whether it’s stocked, whether it’s real estate or whatever. If you’re focused too much on the details and you don’t zoom out and look at the big picture, the macro view of like actually where things are going from a really high level and a much longer time frame, you can get caught up in stuff that just doesn’t really matter. It’s just noise. And so a good example of this would be turning on CNBC and listening to the financial news and starting to make transactions based on the talking heads on TV, right? Anthony, you kind of brought this up recently. In one of our episodes, you had a little bit of a FOMO experience. You saw a news article about a thing and you almost went into your app and bought based on that. And that’s kind of what I’m talking about is like, zoom out the big picture. You know, where are things going over the next several years? Right. That should be dictating your behavior, not a news article or something on TV or, you know, just noise, basically.
Anthony Vicino : [00:03:56] This is a really interesting one that we’ve never actually I think we’ve all the hundred and fiftyish episodes we’ve done have never really talked about this particular aspect, which is more information is not necessarily a good thing because what I find is at a certain point, we start falsely equating more data or more information with higher levels of precision. And really, at the end of the day, you’re making assumptions. You always have to make some kind of assumption based on the data and how you interpret it and how you choose to extrapolate and states. And so more data doesn’t necessarily make you more precise. It’s what they call false precision, where you have the illusion of just because I have more data to point to or more information. Therefore, I think I can. I can more accurately predict this thing when in reality, still, you’re making an assumption it’s fundamental to investing is that we’re making an assumption. And I think that’s the part where if you zoom out and you realize like, Oh yeah, at the core, there is still a human assumption that has to occur at this at some juncture, and more data isn’t necessarily going to be better. So you have to walk that line between knowing what’s the right amount of data and also the right data period, right? Because that’s the other part of this too, is there’s a lot of noise out there and getting to the signal and saying, OK, these are and this is why I find multifamily investing so is so powerful and so simple, because when you really get down to it, there’s like only a handful, like literally a handful of things that you really need to understand about what the macro levers are at play, and it’s going to dictate nearly all returns and all risks within this investment vehicle.
Dan Krueger: [00:05:33] Yeah, unless things change very slowly with multifamily, it’s part of what I like about it too, is you don’t have the ability to make those emotional transactions as you did. When I think you read some sort of article on crypto or something that you were already, you already were in it, right? But you saw something that kind of aligned with what you already thought, and that was kind of a false catalyst to go in and get more and you stopped yourself. But you know, the nice thing about real estate is it takes months to get in and out of a deal so you don’t have the ability to just change things on a whim because you got some, some data. So in real estate, or at least in the larger multifamily stuff, you’re kind of forced to sit on it and think about it before you can actually make some moves, which I think is fantastic. It helps keep emotion out of it.
Anthony Vicino : [00:06:15] Here, let me suggest a new framework here. Lack of liquidity. It’s a feature, not a bug. Yeah. Think about that. Like, right, as we’ve always talked about real estate in like, one of the big weaknesses of it is that it is illiquid, right? Like, you compare that to the stock market. And we’re trying to solve for that within our own investment and for our investors is like, how can we increase the liquidity for them so that they don’t have to be holding these assets for five to seven years? But when you really zoom out, you realize that’s a good thing, as the lack of liquidity is what gives these investment vehicles such inherent stability. They turn so slowly they don’t drop the valuation overnight because people can’t just go and trade stocks that are women, they can’t just liquidate their position instantaneously. So in real estate, you mean in real estate? Yeah, compared to like stocks and bonds, which is why we see those valuations fly all over the place. So instead of thinking liquidity is a bad thing. Just realize it’s a feature, not a bug.
Dan Krueger: [00:07:05] Yeah, I mean, it could be good or bad depending on, you know what, what angle you’re looking at it from. So the way you just put it, you know, lack of liquidity actually is a good thing because it reduces volatility.
Anthony Vicino : [00:07:16] Yeah. Now here’s the thing, guys, is that just in this one conversation, right? We started talking about how. More data is not necessarily a good thing, right? And I just gave you a compelling case for why liquidity is a good thing and also for why it’s a bad thing. So now you have more data, but you are not necessarily any closer to making a sound decision based on that, right? So it’s all about taking these narratives and weaving them into a thesis that makes sense for you. Context is going to play a large part in that, but just realize that at the end of the day, we’re squishy human machines. And as much as we can remove the squishy parts of the process and try to get down to like, here’s my process that I follow more or less each and every time. The better off you’re going to be, which is why we really like multifamily again. We know this. Our whole podcast is multifamily investing made simple. Like the more you do a thing, the less risky it becomes in the future because you have more data. But that data is borne from experience, and I think that’s the most valuable data that you can get.
Anthony Vicino : [00:08:16] Hundred percent, all right, that’s it for us, guys. Oh, I guess I guess we actually got a topic that we’re supposed to dive into here today, and this one is actually a pretty good one. So let’s talk about the three things that make a good deal. And if you listen to us before, if you’ve read the book passive investing made simple, then you know, already with these three things are now ruling it now. Don’t ruin it for everybody else at home, don’t you? Put your hands down. I’m not going to call on the class. There are no teacher’s pets here, so just sit there and absorb. Now, if you haven’t read the book passive investing made simple yet, I would highly recommend you do that at some point because we dive into these concepts and even greater detail. And this is really for a passive investor looking at multifamily assets. And even if I guess as I look at these, even as an active investor, these three things are still going to be necessary to find a good deal. The better you understand how these three pieces interplay and interlock, the better off you’re going to be.
Dan Krueger: [00:09:14] Yes, yes, so no, well, I guess we’re kind of going to
Anthony Vicino : [00:09:17] Take them in reverse order, least important, the most
Dan Krueger: [00:09:18] Important with number three, which is. The market, see, I numbered these so
Anthony Vicino : [00:09:26] Well, number three, number one, number one, kicking, kicking off the list is we’re going to talk about the market. So what? And this can mean so many different things, especially when we’re talking about real estate, where real estate is location, location, location, and it’s hyperlocal. So we want to understand what’s happening on the neighborhood block by block level of our buildings. But even just zooming out from there, like it’s really critical to understand that nothing happens inside of a vacuum. So even if you have the best neighborhood in the world, but it’s in a crappy city with terrible regulations and just like horrible crime and just valuations and jobs leaving left and right, like, that’s not a place that you want to be. So first and foremost is the not even first and foremost, third and third most the market is important.
Dan Krueger: [00:10:13] Yeah, no. I think that’s a really great place to start because as a passive investor, you don’t even need to see a deal to be looking at the market, right? You don’t have you don’t need to have a deck. You don’t need to have any insight into all the details that the operator is able to flush out in due diligence. You can assess the market from anywhere. All you have to do is get on a computer and start doing some research. And I was talking to an investor today who’s taken a look at a deal that we’re currently working on, and this would have been his first venture into our market, which is Minneapolis-St. Paul. And he asked me, You know, how do you feel about the, you know, the apartment asset class is at all-time highs? And the first thing I said was, well, every market is not necessarily going to be at the same point in their own cycle at the same time. So there are definitely areas of the U.S. that the multifamily market is at all-time highs from a valuation perspective. And there are other parts that are not, which is very interesting. So within this kind of larger macroeconomic picture, there are all these little individual markets that are kind of operating on their own timeline.
Dan Krueger: [00:11:13] And so you can’t really look at and say, real estate’s doing good or bad, you’ve got to look at the market and say, How is this market doing? Specifically, what I told him to be looking at is not just valuations and where prices are at, but look at income and cost of living and you want to look for a nice, healthy gap between how much people are making and how much it costs them to live in a certain area. Because if there’s a nice, big, healthy gap there, that means there’s room for prices to come up some more before it starts to become detrimental to the community. And then, you know, you look at the job market and stuff, and we’ll get to that in a sec. But just to kind of dive into the income piece and the cost of living and the cost of owning a home and the cost of renting, you know, taking a look at these things are really great way to determine whether or not a market is overheated and run in pretty hot or if it’s still got room to run. And for us in Minneapolis, St. Paul, we just came in second and third place for the most affordable metro areas to live in. So I think Des Moines was number one
Anthony Vicino : [00:12:10] And this was in the Midwest specifically.
Dan Krueger: [00:12:12] Yeah. And so Minneapolis was number two and St. Paul was number three and number two and number three might have been inverted.
Anthony Vicino : [00:12:17] I think with St. Paul number
Dan Krueger: [00:12:19] Two, Minneapolis three. So that’s a great thing to look at because that tells you that even though prices have been increasing for a long time, it’s still very much affordable, which means there’s quite a bit of runway left. If we want to see some more appreciation take place, we’re not going to be, you know, pushing up against what’s realistic. Whereas if you look at other markets, you know, the cost of living is getting unbearable for people. And so really, how much farther can they go? So that would be a much more appropriate metric to look at, which is the affordability as opposed to just, you know, where a price is now versus where it used to be.
Anthony Vicino : [00:12:55] Yeah, that question is for me. It’s always about context and everything in life, and this is where the market really comes into play. When we’re talking about what makes a good deal is that context really matters a lot. And when we say multifamily valuations are at an all-time high. The natural question you have to ask on the back end of that is high relative to what? Sure, the numbers might be higher, the valuation might be higher than we’ve ever seen before, but if income is also higher than we’ve ever seen before, if the cost of living is lower than we’ve seen before, well, it’s not high relative to the metrics that matter. And so nothing can ever be taken in pure isolation. And I think that’s the mistake people make when they look at, oh, houses and apartments, they’re more expensive than they’ve ever been before. And it’s like, Well, yeah, but people are also making more money than they’ve ever made before. Right. And if there’s more money coming into the system then you would expect those valuations to go up as well. So it’s like relative to what is that number high?
Dan Krueger: [00:13:56] Yeah, yeah. You really want to look at it as you know what? Percentage of income are people spending on X, Y, or Z? So on rent on their mortgage? Chicken, right? That’s a good way to tell where the aggressive price increases are taking place because if people are going from spending 20 percent of their income on rent to 30 percent, that’s substantial. Yeah, right. And maybe prices didn’t go up. People just started making less like it’s still the same outcome. So it’s really like how much of your income are you spending on X, Y or Z? That’s, I think a lot.
Anthony Vicino : [00:14:31] Yeah. And that’s a really good point for as a case point, what we look for as we’re renting to residents is we’re looking to make sure that they’re making at least three times the rent. So if they’re the rent is $1000, we want to make sure that they’re making $3000 per month because generally what we see as a good margin of like the cost of living for living expenses like home and residents is about a third. If you start spending like 40, 50, 60 percent just on housing alone, you’re spending too much. You can’t afford that if you’re spending 20 percent. All right, you’re living below your means. And so that is both a personal decision for the resident to say, Oh, maybe you’re living above your means, you’re going into an apartment that’s a little bit too much for you. But if we zoom out and just take this as the aggregate and this is a piece of data that would be very valuable to say, OK, in this market, people are on average spending fifty percent on living expenses. Ok, those prices might be high, then like there might be a problem there. But in our market, I think the average is still like sub 30. And so it’s like there’s still a lot of room there for growth.
Dan Krueger: [00:15:39] Yeah, yeah. And in addition to that whole income cost of living thing, you all look at the the the job market that is really one of the bedrocks of real estate because jobs draw people and people mean there is a need for housing, right? So the job market is kind of one of the biggest things you want to be looking at. And so it’s really, you know, how many jobs are there in an area? Is that number increasing? Are there jobs being created or is it flat or jobs disappearing? And what’s the breadth of the labor market? Do you have a diverse set of different industries or is it like Detroit where you’ve effectively got one industry that is holding up that local economy? So that’s another thing you want to look at pretty heavily, and I could sit here in our own horn some more, but this has already been a big commercial for Minneapolis-St. Paul.
Anthony Vicino : [00:16:31] So yeah, we love Minneapolis-St. Paul. And even within the markets, another thing to think about and be aware of is landlord-tenant regulations and laws, things that are going to make it even either easy or difficult to operate in that market now. Here’s the thing is like as investors in Minneapolis, St. Paul places that are notoriously not super landlord-friendly in the grand scheme of things. My caveat to this is if you’re going to be a remote investor, this matters quite a lot. If you have a home-field advantage and you invest in that market, it matters a whole lot less because you know how to navigate the ordinances, the rules, the regulations which can change very regularly. And so if you’re going to be investing remotely and just trusting like a third-party property management company, then I would be very wary of that. But if you’re investing with a group that has a boots-on-the-ground presence like us, again, this is a sales pitch, so come invest with it. Just know that like that is a thing to be aware of. Is like, is it harder to play the game in this market due to the regulations? If the answer is yes, well, what is your answer to that as operators on the ground, right?
Dan Krueger: [00:17:43] Yeah. And it’s always going to be unique to the operator and their business plan, too. So, you know, if you’ve got a really aggressive force depreciation, kick everybody out and jack those rents up really quickly. Approach. It’s going to be tough for you to operate in an environment that is not super landlord-friendly. But if you’ve got a more moderate approach to your business plan than even a fairly restrictive set of rules for landlords and tenants, you know, if it’s not the most landlord-friendly, friendly place, you know you probably still operate like, you know, in our area, there’s it’s fairly blue. There’s a little bit of rent control chatter going on in St. Paul, but at the end of the day, our business model still works and we’ve got a good reputation with the city and all of our residents. So for us, you know, we can kind of operate in any market, regardless of those types of controls, for the most part. But there’s a lot of guys out there where their business model just will not work in anything other than a very landlord-friendly environment.
Anthony Vicino : [00:18:45] This leads us to the second thing that you’re going to be looking for that makes for a good deal. First is the market, and second is the business plan itself. And this is really huge because the business plan is really easy to put on a spreadsheet and project. And that’s. One thing like, what is the what? How are you anticipating running this thing, that’s one. The other part of it, though, is like, realistically, what is your ability to execute on that business plan? So for me, when we talk about the business plan, it’s two aspects. It’s not just the ideation, but it’s also the execution. And for me, it’s that second one that’s way more important and way more overlooked.
Dan Krueger: [00:19:23] Yeah, yeah, I think that’s a lot of people forget this that like, you know, getting the property and buying it is the first step and this is the easy part. The easy part. A lot of people forget that the work starts after you’ve got the thing and you’ve got to actually deliver those results day in and day out four or five, seven, 10 years, however long the whole period is. And so you’ve got to make sure you’ve got the right people in the right place. They know the plan and that you’re tracking it daily. Pretty much. I mean, if you’re the operator, you’ve got to have your fingers on the pulse of this deal to make sure that every step of the way you’re working towards those pro forma numbers that you set out, so you actually achieve them. It’s not a set it and forget it type of thing. And another thing that’s, well, I’ll save that in case there’s anything else you want to say on the execution piece it’s going to move on to.
Anthony Vicino : [00:20:09] I’m cool to
Dan Krueger: [00:20:10] Move. Yeah, I was going to say one of the other things, at least I think we pride ourselves on is making sure that we’ve got a lot of options baked into our business plan. So we’ve got our plan that we want to execute based on what we think is going to happen. But then we also want to make sure that we’ve got multiple other ways to execute that plan. If the paradigm changes, if there’s a macroeconomic shift, if interest rates go up, if there’s just a change in the market like we want to make sure we’ve got options to do a refinance, not to a refinance sell in year three. Selling your seven, we want to make sure that we can pivot and change and adapt and be nimble if needed. And some groups, they get their business plan and they structure things in a way that they get the, you know, debt and specific. They get their terms as tight and as as as beneficial to them as possible, meaning rates as low as possible. And you know, they get these terms all trued up. So they’re super, super good for their pro forma, but they have almost no options, right? If they want to exit early, if they want to do something different from what they initially proposed to the bank, it’s going to cost them, it’s going to cost the investors. So that’s another thing you want to look for does not just do this plan make sense, is it executable? Do they have a good plan to execute? But what happens if things change? Like what are the contingency plans you want to make sure those are there?
Anthony Vicino : [00:21:26] Yeah. The only guaranteed thing in this universe, I guess, is that everything is going to change. And I guess there’s something about taxes and death. And but change is really the constant like, if you’re not expecting something to be worse in the future than it is at present, you’re going to be sorely disappointed. And when we talk about optionality, I think a lot about Nassim Taleb book Antifragile and this isn’t our book recommendation for today, but it is a book I would recommend that you guys go check out because it’s fascinating as we’re talking about an asymmetric return to risk profiles, and a lot of it is borne off the back of having options. And one of my favorite phrases, one of my favorite concepts, is to understand that time de-risks every investment. And what I mean by that is a lot of business plans are predicated on only like a two or three, or maybe even a five-year window of time and in the grand scheme of the universe. That’s not a very long period of time to execute a business model, right? And so if something changes macroeconomically or changes with your business plan or the labor market or whatever, then you might not be able to execute within that time frame. Now, let’s say you had 50 years to go and execute that same game plan.
Anthony Vicino : [00:22:33] The chances are pretty good. With 50 years, you’re going to see a lot of macro market trends, but generally, it’s going to trend upwards, and generally, you’re going to be able to ride out all the rough patches, and generally, you’re going to be able to get all the work done. Let’s extrapolate that even further and go to the far extreme. If you had 5000 years, you were investing and you had 5000 years and didn’t need that money in the interim, you it’s pretty much a risk-free investment at that point because it’s really hard to screw that. It’s really hard to screw that up. Right. And so just realize that as a time of all the options, when we’re talking about having optionality, time is the most powerful option. And usually, that’s because of the debt that we’re putting on the deal. The debt is largely going to define like our timelines and then how ambitious we are with getting in there and doing unit turns or if we’re not even doing value. I’d say we’re doing development like how ambitious we are to get in there and do the building or get the entitlements right. Like the longer we have to play, the less risk we have.
Dan Krueger: [00:23:30] Mm-hmm. That was usually a premium, though. So yeah, it’s a really interesting concept that and I know that anyone who’s read Naseem, they’ve read. And by the way, you just sneak in a book recommendation, just did it slip it right in the sneaky like that? Yeah, no, this is great. I will say it’s tough. It could be a bit dense and rub people the wrong way.
Anthony Vicino : [00:23:48] It can also be very abrasive.
Dan Krueger: [00:23:49] But yeah, he’s confident. He’s confident. But no, he’s an options trader. And so people coming from that space have a really good idea of the timing piece because in the options pricing model, there’s a specific valuation put or there’s a specific value to time. So like every second is kind of quantifiable and you know exactly how much you’re paying to get that time and that option, whether it’s a day, a month, a year, 10 years. So it’s very comfortable for people with that experience to grasp that concept. But the concept for most other people of time is kind of. Kind of lost, but I think for let’s said, like Anthony said, it’s really about the debt and how long do you have before you’ve got to do something on that debt? Is it fixed for 10 years? Do you have the option to refi without any kind of penalties like these are the things we’re looking at to give ourselves time? Super important. Mm-hmm.
Anthony Vicino : [00:24:39] All right. So those are the first two things that are going to make for a good deal. Got the market. We have the business plan and then the most important, we save it for last because it is just the most important. We beat this drum so darn much that every one of you who’s listened to more than like one episode of multifamily investing made simple knows what the answer is going to be. It is the operators, the people running the deal. Now, I don’t want this just to be a sales pitch for us. It’s not about us, and it’s not even about being a passive investor and putting your money with a group that’s going to go and execute on your behalf. I also want you to look in the mirror if you want to be an active investor. You’re the operator and you are the most important part of that deal. And so you really need to be assessing, where are you strong? Where you’re weak? Shore up those weaknesses or find people that you can surround yourself with that can shore those up for you. Because at the end of the day, the market we can get in the worst market and we can have the worst business plan. But the right operator can still make it work. It can still be done right. And so you can salvage an otherwise horrible opportunity just by being so good at what you do.
Dan Krueger: [00:25:51] Yeah, yeah. We’ve I mean, we’ve said it so many times on the show, but realistically, I think most people need to be most passive investors need to be spending the bulk of the vast majority of their time identifying those key people to work with and then the actual deals that they invest in should be almost an afterthought. So I think people need to spend a legitimate amount of time just talking to and getting to know. That’s the key part, really getting to know as much as possible the operators that you’re thinking about working with because it doesn’t matter, Anthony, says all the time. Numbers don’t lie, but I can make them say whatever I want, right? You can be with the wrong person, and they could present you with a really wonderful looking, pro forma and really paint this picture of an amazing investment opportunity. But if they’re a skeezy person that you can’t trust, then your money is as good as gone. So you want to spend a significant amount of time finding those key players, vetting them and doing your due diligence on them, and not spending so much time in the weeds on the numbers. Because if you find that good group to work with, then I mean, yeah, obviously still look at the deal, but the likelihood of it being of them missing something or doing something nefarious in there is quite low if you’re with good quality people.
Anthony Vicino : [00:27:01] Hmm. Same thing. Again, like, that’s the passive investing angle, which, you know, we spend a lot of time talking with investors, and that’s the most important thing. Like, we don’t want you to work with us if we’re not the right fit. And that’s going to be not just our skills in our abilities, but also your investment goals and also how you communicate like or we communicate very well with a very particular type of person, but not for everybody. Like we might be a little bit too jovial, a little bit too laid back and relaxed kind of guys. We’ve gotten that feedback before and, you know, like if that’s not going to be your jam, then that’s cool. Like, so understanding for you, what is it that you’re looking for in an operator, not just, you know, their skills, but also how they communicate and where they’re trying to go? And then again, I cannot emphasize this because I know, I know we have a lot of listeners who are wanting to be just like us, maybe not just like us, but they want to be active investors. They want to own their own apartment buildings and run them is like, Yes, you might be in a great market.
Anthony Vicino : [00:28:03] Yes, you might have had you might have landed on the perfect business model, but if you suck, it’s not going to work. And so do not. Please, good god, do not get lold because it’s so easy. And there are so many people out there in this business that are selling. You want to get a rich quick scheme that it’s all rainbows and sunshine. All you got to do is go buy these things and then you’re going to just roll in the money. It’s not that simple. You have to have certain skills that are going to allow you to, you know, work if you’re working with third-party property management on how to manage them to KPIs, if you’re going to be financing these things, how you come up with the money like there are all these aspects of how do you make this profitable that I think gets glossed over quite a lot. But at the end of the day, the number one thing for finding a good deal to know that you have a good deal on your hand is do you have the right operator? It’s a big one. I just dropped the bomb.
Dan Krueger: [00:28:55] Yeah, you just got to let it sit there for a minute and resonate because that is it. There’s a reason why we keep saying it over and over
Anthony Vicino : [00:29:03] Again, beating the drum.
Dan Krueger: [00:29:04] It’s a really important point, and I feel like it’s still going to go overlooked by some people. Unfortunately, I mean, hopefully, nothing bad happens to people if they invested with the wrong person. But that, I mean, that’s just such a big part here is just making sure that even if you’re not talking about nefarious stuff, just make sure you’ve got the competence, you know, competence and you actually enjoy communicating with the person because these are long deals, right? This is kind of like a business partnership more or less. And so if the person’s communication, style, or personality is off-putting to you like you’ve got five years of dealing with that person at least once a year to get your key ones, and if they’re annoying, then it’s just going to suck. So I’m not going to like them. They’re competent. They’ve got a good track record and just honestly spend as much time as you can on vetting the operator. The deal should be a quick, a quick breeze after that.
Anthony Vicino : [00:29:52] Yeah, give yourself a nice, long runway. Yeah. And so those are the three things that are going to make a good deal. You got the market, you got the business plan and you got the operators. That’s it. It’s that simple. It’s there’s no need to make this more complicated than it really is. At the end of the day, it’s just those three things you get figured out, and chances are you’re going to do pretty well. Mm-hmm. So let’s wrap it up, Dan. Let’s start moving for the door. But before we do, oh, I have a book recommendation. Do you mentioned you had one, too?
Dan Krueger: [00:30:26] I do. And I thought you already snuck one in. You’re certainly trying to.
Anthony Vicino : [00:30:29] I’m trying to get a go for the two-four. I’m trying to give. I want you guys to read so much. And if you want to be a great operator, I think one of the best things you can do to sharpen your blade is to read. So if you guys want to keep working on that number one, the most important thing for a deal? Go get a book. So what is
Dan Krueger: [00:30:45] This? What is this book recommendation you’ve just been Jones into with?
Anthony Vicino : [00:30:50] So this one is not actually on investing or business in any way. It’s called the Power of Now by Eckhart Tolle. Oh, that is good. It’s very, very good. And it’s a mindset book. It’s about living and being present. And I was thinking about it because I was on a podcast the other day. And I guess totally. What’s that, Eckhart? Totally, totally. I don’t know how you say it. Totally. Yeah, sure. Like toll house cookies. I don’t know. It’s all about living, like being aware that there is no future. There is no pass. There is only now. All you have is this instant, this moment in the universe’s timeline. And so you’ve got to you got to use that. And I was reminded that I’ve been thinking about this because the other day I was on a podcast and somebody was talking about how there’s not enough patience in the world, that people, especially in business, don’t have enough patience and they just want success right now. And I guess I channeled my inner Eckhart with this quote, which I think is like the quote that once I really sat down and thought about it, I was like, That might be the deepest thing I’ve ever, I’ve ever thought.
Dan Krueger: [00:31:51] I think I know what you’re going to say.
Anthony Vicino : [00:31:52] It’s that you don’t need to be more patient. You need to be more present. Mm-hmm. And when in like when you realize that in this grand scheme of real estate, which is going to take a really long timeline to realize results in your investment that you don’t need to be patient, you need to be present and living in the moment and doing the work that has to be done moment by moment by moment. And if you do that, then you don’t need to be patient because patients presume that you’re waiting for some end results. But if you can just be present, then the future doesn’t become part of the factor anymore.
Dan Krueger: [00:32:23] And, you know, I thought it was super interesting. That book was the concept of, depression is effectively like being stuck in the past and anxiety effectively being like stuck in the future. Yeah. And so if you take yourself to just the moment right now, you eliminate depression and anxiety because you’re not thinking about the past, which can make you depressed or you’re not thinking about the future you can make, which can make you anxious. You’re just thinking about right here right now, this instant. And there’s it’s just neutral. It’s just now. It’s just not. That’s all there is. I thought that was just such a fascinating concept to try to wrap your head around. It is almost impossible for me to implement that. Oh, yes, I am always thinking about past and future and very rarely about the present, but it’s really it’s a good kind of concept to be aware of because it’s until I read that book. I’d never really thought about that at all. But it makes perfect sense. So well,
Anthony Vicino : [00:33:17] It’s and you’re right. I think as humans, we live in the continuity of time and so we can’t separate ourselves entirely from the past and future because that’s how we’re hardwired. But and so living in the present requires intentionality. You have to really have to be present to the moment, and that only comes with awareness. And so I just want to put that forward to you guys. If you’re listening to this and you’ve enjoyed it today, you know, take some time to sit at the moment and be aware of where you are at this present moment, because chances are, even if you’re stressed out in life is hard right now, like it is far, far, far better. If you just sit and reflect on it, it’s so much better than it could be.
Dan Krueger: [00:33:53] Who stares out the window stare?
Anthony Vicino : [00:33:55] That’s all. All right, so what’s your book recommendation?
Dan Krueger: [00:33:57] You had one. It was nowhere near as deep and intellectually stimulating, but it was more on the investing type stuff.
Anthony Vicino : [00:34:07] So those people who want to learn about investing?
Dan Krueger: [00:34:10] Yeah, I mean, I don’t know. It’s not like it’s an investing podcast or anything. But no, I was going to recommend a book that I thought was fun, that I came. I’ve been hearing about it for a while and I read it a few months ago. It’s been a little while, but it’s called reminiscences of a stock operator by and when about his last name. Because I don’t speak French Edwin, the Ferrari, the Ferrari. You?
Anthony Vicino : [00:34:32] No, I think you nailed it. Yeah, that sounds. I have no idea what you’re talking
Dan Krueger: [00:34:35] About, but I say it quick enough. Lefevre. Edwin Lefevre Yeah, it’s about a trader in. I think it was written in either 1923 or 1928, but it’s about a guy who’s a trader in the 20s, basically just everything he learned about doing it. And it was just, for me, fascinating by how little has changed. Like all the stuff like there run around the tickets doing this stuff and old school matter. But like the fundamentals of what the heck is actually going on and what matters is like the same. Yeah, it’s super entertaining. It’s a good book if you’re interested in that kind of equities trading type thing. Check it out. It’s a classic.
Anthony Vicino : [00:35:14] Yeah, it is funny. The tools change, but the structure remains.
Dan Krueger: [00:35:18] The charts look the same behaviors, the same. It’s all mental. It’s all human psychology, just plain out in the form of prices of things. And that is consistent throughout history, which is just fascinating. So check it out or get it on your card. Totally, and we’ll get your mind right.
Anthony Vicino : [00:35:35] Go get your cart. All right. So that’s going to do it for us, guys and gals. We appreciate the heck out of you for taking a little bit of time out of your day to come and join us. Hopefully, you learned a little bit and if you did, if you got any kind of value, whether that was education or you just had a moment of, I don’t know, bliss because I don’t know, maybe, maybe just maybe that something happened in this episode that brought you bliss. Do us a favor. Go drop a review, please. I don’t. I don’t know what else to say. Go over to Apple. Itunes Drop Review. It would be so easy and it would make us so happy. So I’m not going to twist your arm, but next time I see you, I’m going to put you in a leg lock if you don’t go leave a review right now. I’m just saying, if you see me at a conference and you haven’t left a review, give me a wide berth. No, if you did leave a review. Let’s go. And that’s going to do it for us, guys. We’ll see you in the next episode.
