by | 13, May 2022

Live Event: The Key To Getting Into Real Estate Investing

The other week, Dan and Anthony spoke at a local meet-up for people interested in getting into real estate investing.

It was such a great event, we thought everyone should be able to hear it! So, for this week’s episode, we have the live recording of the event. Dan and Anthony give their background, wisdom, and advice to those who are just getting into the game.

If this episode sparks any questions of your own, feel free to reach out! Ask away!

All of this and more on this week’s episode of Multifamily Investing Made Simple.

Tweetable Quotes:

It turns out it wasn’t SWAT, um, turns out it was bounty hunters, which is way cooler, but they don’t talk about that in books.” – Anthony Vicino

“I got older and getting into college age, I was very focused on finance, making money, financial security, stability. These are things I was just obsessed with.” – Dan Krueger

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five rules of investing

The Five Rules of Investing

** Transcripts

Mile 9 Meetup

[00:00:00] Dan: thank you guys. I guess I’ll take the mic first. Is this a good volume? I sound loud myself. Is this we good? Thank you. Thank you. Uh, so Dan Kruger, Invictus capital, like, uh, Dan said we’re local operators. We manage in house. I’ve been operating in here since, uh, we started separately, but together we’ll dive into what our stories.

Uh, Invictus, that’s sort of about 2019. Um, so I’m Diane Kruger. I come from a corporate finance background. I got into the real estate game in about 2018. Uh, so we get that into a little bit of that, but I’m gonna let Anthony introduce himself first.

[00:00:40] Anthony: Okay. I thought you were going to take that. Usually hog the mic.

So I thought that was going to go a little bit longer. Okay, cool. So I’m Anthony Pacino. Um, I’m curious for you guys that are here generally. Like w we don’t know what we’re going to talk about. We’re just trying to figure out what’s going to bring you guys the most value. So before we [00:01:00] talk about ourselves, I kind of want to understand where the room is at generally.

So raise your hand. If you’re new to real estate, you’re looking to do your very first deal. Cool. Cool, cool. Cool. Okay. Raise your hand. If you’ve done a couple of deals, like small single families, duplexes, triplex. And you’re trying to figure out how do I do more of that or how do I make the jump to larger apartment buildings?

Raise your hand. Cool. That’s all. Let’s see. Perfect. So we can help, um, hopefully share a little bit of our story. I started with the triplex FHA house hack that bad boy. Um, one month after I bought the thing I get called in the middle of the night by a frantic tenant, who’s like SWOT. And they’re going to kick down the door and I’m like, what are you talking about?

Uh, but it turns out it wasn’t SWAT, um, turns out it was bounty hunters, which is way cooler, but they don’t talk about that in books. Like when you’re reading about how to be a landlord, like how to go out and invest in real [00:02:00] estate, they don’t talk about how you’re going to have to deal with bounty hunters at some point.

Um, but that’s how I started. That’s how a lot of people start very quickly. You start to realize though, there’s a glass ceiling with duplexes triplexes, and they’re fantastic. They’re. But the problem is they’re not very stable. So if somebody moves out, then if you have a triplex or a 33% vacant and all that cashflow that you’re getting, and you’re running to the bank and cashing the checks and you really psyched, just kind of dries up and now you’re coming out of pocket.

So I think most people at some point, right, they’re in the game long enough, they don’t burn out. They think, well, this is cool. How do I do it bigger? How do I get more stability by buying bigger assets? How do I get cashflow the appreciation, um, and all the tax benefits. That’s what we do. Hopefully we can share a little bit of our journey and that can accelerate your path.

Uh, it’s not, it’s not the most complicated thing in the world, but it’s not very easy. So that’s the whole premise of our brand, whether it’s [00:03:00] the podcast multifamily investing made simple, or the book passive investing made simple, like just realize that if you understand the variables that matter and how to pull the very few leavers that actually run a deal, you’re going to do.

Um, so just know whether wherever you are in your journey at this moment, like, don’t be scared. Like we were all there at some point, um, kind of rewinding real quickly about myself. The thing you have to know, if you haven’t figured out is that I have really severe ADHD and this was like super, super problematic when I was young, came out of college and I was like chronically fired, like from every job I ever had.

Like, they were like, you are not good. Yeah, you’re right. I’ve really been, not very cut out for this world. So I had to go do my own thing. Uh, that led me for the better part of a decade being a professional rock climber. And then I started that doesn’t pay very well by the way. So like, sounds really cool, but just means I lived in the dirt a lot, climbed at places like VIII way back in the day, actually where starting up that one, but [00:04:00] back in Saint Paul and there came a point where.

My life kind of imploded on itself. My fiance left me, find myself living in the back of a van, not by choice, $80,000 in debt, rock bottom, like in rock, bottom sucks. But rock bottom is kind of cool because you have nowhere else to go, but up. And so a buddy came to me and he was like, Hey, let’s build a business.

I was like, what else am I going to do? I’m not busy in my van. So we did that and figured out. I really like building businesses. It’s a lot of fun. Um, and it helped me really get control over my ADHD and start to focus it in a way that was productive because so many, I think probably a lot of people will resonate with this is that you probably feel like you have a lot of potential.

And how do you close all the different doors that you could go through and find the one that means the most and go through that door. Like that was my big struggle. Um, fast forward, 15 years, I built an exited multiple businesses at this point. Um, real estate. I started in 2012 with my little, my little.

Actually I did a house hack or no, I did a fix and flip in college and all I [00:05:00] learned is that like, I can swing a hammer, but I can’t hit the nail. So like that was never going to work for me. Long-term um, but my real estate career started in 2012 buying little stuff, Dan and I joined forces in 2019. And that’s really the one we sprung board springboard did into large multi-family.

So 20 to 60 units, we have about 40 million in assets, under management. Right now it’s at about 2 70, 270 units. Something like that. Um, we’re on pace to double this year. So we’ll be at 500 by the end of the year. And we’ve done that largely through using our own money, but also through joint ventures and syndications.

So we don’t just send a kit. We also do a lot of joint ventures, which given where a lot of you probably are in the room, that’s probably the best place to start. Like that’s how Dan and I started was like joint venturing with friends and family going and doing deals and then using that to springboard in the syndications later.

So, um, Cool.

[00:05:54] Dan: He’s got more of an interesting story than I do. I have. I’m more of an average one, I guess I went to [00:06:00] college. So let me back up a little bit farther than that. I grew up in a family of artists. So in my house, uh, parents went to art school and my sister went to art school. Nobody went to university and everybody ended up working jobs that were, uh, You know, that’s like a trade, but basically no one was really making money from art.

So they were basically, we’re kind of operating on minimum wage. So that was kind of the household. I grew up in very kind of scarcity mindset, clipping coupons, and the most important thing in my parents’ eyes was to go to actual college. And when I say actual college, you mean like university and get some kind of job that would get you or get some kind of degree that would get you into the corporate.

And I remember when I was younger, my mom was very upset. One day I must have been like 10 years old and she was just beside herself upset because she was trying to figure out how to pay for our health insurance. They didn’t get benefits with their jobs. And so she’s trying to wrap her head around how to do this.

And she told me I was like 10 [00:07:00] years old. She’s like, Danny, get a note. By the way, nobody called me. Danny was one person that calls me him. That’s my mom. So like Danny, do me a favor and you. Do me a favor and get a job at a big company that gives you benefits. So you don’t ever have to worry about this.

And she was very upset and that’s been like ingrained into my mind since I was like 10 years old when this happened. And so it took a while for me to actually do anything with that. But as I got older and getting into college age, I was very focused on finance, making money, financial security, stability.

These are things I was just obsessed with. And so I went to college, studied finance. Thinking, Hey, if I study how to make money, um, that probably improves my odds of knowing how to make money when I get outta here. And so I got into the corporate finance track and spent about five years there before I realized that that just wasn’t doing it for me.

It wasn’t serving me after about a year, year and a half at every company. Um, I was looking for the next thing and I realized about three or four years into it that I was actually really entrepreneurial, which, uh, was surprising to me. Um, but I [00:08:00] realized that, and it was around that time they started looking into.

Um, I went to college around 2008, so I still had this kind of real estate equals risky thing in my head. And so I never really dug into it, but I started doing that because I started a side hustle in the corporate world and was just going deep into. Self-development and entrepreneurial books. And it didn’t take me long before I started stumbling on books that touched on real estate.

And I just got hooked quickly, which I am sure you guys can appreciate know I was doing, uh, it was effectively a consulting I was into, uh, nutrition coaching was really into fitness. And so I was basically telling people how to eat burgers and drink beer and still be in decent shape. And that was kind of like.

Anyway. So there’s a lot of marketing, a lot of sales, a lot of just business development stuff. And then I eventually kinda started to run out of content because I’m just listening to audio books all day at work. I’m still working my corporate job. And I stumbled on that book and I was like, I’d heard about it.

It sounded so cheesy, but then actually listened to it. And that was the gateway drug. Honestly, it sounds so cliche. I kind of hate to say [00:09:00] it. Uh, but that was the one of the first little ventures into that space. And then I kept going and the more I learned, the more, it just made so much sense. Um, so I got hooked pretty quickly started shopping for properties, and then it was a 2018.

I got the first property. It was a 60 event over in St. Paul and the a, there was a reason I picked a sexy, as some of you are maybe most of, you know, the valuation methodology changes above five units. And that was a big factor for me. So I identified a six unit that I got for 475,000. But probably vote.

Yeah, this is, this is back in the day. It wasn’t that long ago, but I got what I paid for. It was rough. Um, but, but like probably $75,000 into fixing it up and then refiled it, uh, for 600 grand, about nine months later, then when got into a unit down the street and we’ve just been doing the same thing ever since, just incrementally getting bigger and bigger around that third or fourth deal, friends and family started to get involved.

And then pretty shortly after that, it made a lot of [00:10:00] sense to look at the syndication. Uh, because we noticed that there was a lot of deals passing us by, and while we’re waiting for that refinance event to get more capital to go do the next deal, we had to pass things up and simultaneously all these people around us are like, Hey, can we just give you money?

And you can do this for us. And we’re like, yeah, I guess it sounds like a thing. So that’s how, that’s how we got into it. I mean, we didn’t start out with a goal of being syndicators. Honestly, I started out wanting to do it all with my own money out of. Um, but then realized it was a hell of a lot better to own a piece of something really big and amazing than own a hundred percent of something that’s sort of small and okay.

So show the ego side, move towards the same education model and that’s what we’ve been doing ever since. So I’m curious from you guys, at least the guys that raised their hands for trying to do your first deal. Uh, does anyone want to pop up and say exactly what they’re trying to get into or are you trying to do.

Buy a smaller property to re run on your own, or you’re trying to raise capital from people you’re trying to partner. What does [00:11:00] that first deal? Those you have to guess at least like three hands pop up earlier.

It’s more multiplayer yourself and what, uh, I’m not trying to pick on you or anything. I’m just, I, I love more engaging things like this, where we’re actually having more of a conversation. What, what’s kind of the thing that you’re looking for some here locally. Yeah. And what are you kind of struggling with?

Do you have questions about, you know, how to lock up that first deal? Whether it’s like how to find the deals, how to actually take it down, how to get the debt, how to actually run the thing. Everybody wants to know how to find deals, but, um, I have a deal under contract right now, but it’s going to lock up all my capital going on to the next one is kind of ending up being the question, mark.

I don’t have necessarily the, the refinance isn’t necessarily going to be right up front and I might not be able to get all that money out to be able to just continue. Sounds. That sounds very familiar for those of you in the back, that didn’t [00:12:00] cure. Uh, w what was it? Jake was basically saying that he’s concerned about having them capital locked up until he gets to that refinance event.

Now, what do you do for the. 1 2, 3 years while you’re waiting to get there. Uh, I think that’s a very good question. Anthony, do you want to talk a little bit about how to find deals in this market? It’s a hot market. I know

[00:12:18] Anthony: how. No, no, I don’t want to talk about something else. Let me go my own way. I go on my own path real quickly on the book question.

That’s a fantastic question. What books are really impactful for us? We do a series on the podcast. Where we go into a book, deep, dive it and give like our impressions of why it was so impactful for us. And then you can download what we call the sophisticated investor notes. It’s just like a beautiful infographic that Reed puts together, puts it all out there.

So you don’t actually have to read the book. You just read the paper for you. Wasn’t named Jake, Jake. So here’s the question, like why do it on your own? Here’s the reality of every business that I’ve ever been a part of is every business that sucks. Was off the back of a strong partnership. And every [00:13:00] business that failed was off the back of the bad partnership, but in both of those cases and all the businesses I’ve done, the variable is always people.

Your ability to go far and fast in this business is going to be predicated on your ability to work with and through other people, every deal you guys have heard this, every deal needs three things. You need somebody who has the time, somebody who has an experience and somebody who has the. Not all of those have to come from the same person and the situation you’re about to find yourself in right after you close this deal, you’re all your capital is going to be locked up.

So you might have time to go run the building and you’re going to be building the experience of actually how to run the building, but you’re gonna have a capital deficit and you’re gonna need to figure out how do I get over that? Otherwise, you’re going to grow very incrementally and very slowly because here’s the, here’s the hard truth right now.

Interest rates are interest rates at. You’ll want up going to the moon? Who knows if you can refinance in two, three years, right? Like it might not make sense. [00:14:00] Right. And so what works before might not continue to work moving forward. And we do not like to, like, we do not underwrite our deals based off of a refinance.

We always do them, but we never, we never bet the farm on that happening. We never present to our investors. Hey, we’re going to do a refinance in year three. Interest rates go to 10%. We’re not gonna do her refinance in year three. When we have long-term debt locked up at 3%, we’re not going to do it probably.

Right. He’s the numbers guy. And guys don’t get freaked out about the interest rates were still historically all timeless with inflation at eight and a half percent. And you’re still able to borrow money at four and a half percent. You’re being paid to take out money. Don’t don’t forget. But my, my challenge when you’re starting in your fig, like trying to go, how do I make the jump from where I am to where I’m trying to go.

It’s probably. It’s probably people. So the bottleneck, if it’s people first starts with you and your skills, cause you will never outgrow your [00:15:00] skills. And right now your skill is, I don’t know how to effectively work through certain types of people, whether that’s capital partners or other operating partners or whatever.

For some reason you have a block there that says people are hard and that’s true. They are. If you want to grow, that’s how you do it. Took Dan a while to figure that out. One year one year is a long time when I was, I wasted a year, basically when I met Dan, you had 30 units, 34 units. No, no. When I met you, you had 30 then together.

We did the, we did Duluth and then that was 60. Yeah. So when we met 30, now we’re at 2 75, 2 years. The power of partnership is massive. And if there’s nothing else that you walk away from here today is figure out who not have. If you guys haven’t read that book, go read it. Benjamin. And Tim, no Benjamin Hardy attempts, Sullivan, really good book, figure out who are the people that you need to surround yourself with that would enable you to go to that next level.

[00:15:56] Dan: Uh, so how we met, um, it was interesting as we weren’t, [00:16:00] neither of us were looking for partners when we met, at least I don’t think you were, uh, like I mentioned before, I was, uh, when I met Anthony, I’d realized that partnering with people, whether it be passive investors or even potentially like a business.

Um, was really the way to grow. Um, like I said before, it’s a limiting factor if you’re trying to do everything yourself. And, uh, we, we met at an event, but we weren’t looking for partners when we were there. I mean, we’re looking to meet people and grow our network. We were looking to network, but neither of us went in like, Hey, let me find a business partner to team up with.

Um, and he and I are both really introverted. And so, uh, I got to this event, I I’d just gotten back from vacation with my wife. I was really tired. Uh, we were in Europe. And so I was coming off of, uh, like that flight fresh off of that. This is 9:00 AM events. I think we got in at like three in the morning or something.

So I was just like, all right, I’m going to do it. And I walk in this room. It was, uh, probably twice as big as this. Maybe it’s a large event, few hundred people. There’s the north star, by the way. I don’t know if [00:17:00] anybody was there in 2019. Yeah. Um, and so I walked into this room and it was, it was full, right.

It was circular tables all over the place and I’m looking around and these tables were all full. Everybody’s need, even a conversation. I’m like, I don’t want to wedge myself in one of these conversations. Like that’s not my comfort zone at all. So I see this table way in the back, which is one dudes at it.

I’m like, okay, that looks like the least intimidating thing was this guy. Uh, so I was like, I can handle this. I’m not that social, but I can go up and start a conversation with one guy. Like that’s, that’s not that hard. So we sat down and started chatting, nothing hurts shattering. At first, it wasn’t like love at first sight or anything like that, but we just got to chatting.

Uh, all right. Uh, so we just got to chatting and we did the usual networking thing. Like we grab lunch or in the event, we’re like, all right, let’s, you know, catch up, grab coffee, get breakfast or something, and just keep talking. And like still no one tend to be. And it was after immediate up a couple of times, maybe like, I think by like the third or fourth meetup, we’re like, okay, we’ve got to at least do a deal or [00:18:00] something together.

What we noticed was we both had offsetting and yet complimentary skillsets. So the things that I am good at and I enjoy were things that Anthony, maybe isn’t a strong app or doesn’t enjoy as much in. And that’s a really powerful combination because what happens a lot and Anthony has got a story for this is you tend to gravitate towards people that are a lot like you and where you have the same skill sets, um, or you’re too much alike.

And we’ve seen this in relationships like personal relationships. If you’ve got two people that are exactly the same with one another, sometimes that can be, uh, not quite the best mix. Sometimes the opposites are a little bit. In this case, I think we’re a good combination of offsetting and complimentary skillsets.

And so it just organically kind of made sense after she was probably about a month or two of just hanging out and talking shop. We were kind of helping each other out with things. He had helped build the website for me. And we were just like, let’s just make sense. Like, let’s do a deal together. And it was either within that first deal or right after it, they were like, right.

Let’s actually form [00:19:00] a brand company and like do a bunch of stuff together for the term. So that’s how that happened.

[00:19:06] Anthony: I want to add to this. Um, is anybody else out there like super introverted and scared of like events like this? Yeah, yeah. Yeah. I feel, yeah. I would literally drive across town to meet up events, just like this.

I would get in the parking lot. I would sit there and then I would turn around and go home and I would count it as a win that I even got to the parking lot. Like, I’m not kidding you guys. Like it was bad. And at that event I was. He walked in and he sees me at a table by myself. I walk in, I just see an empty table where I go, that’s my table.

Yeah. That was the last table. So birds of a feather flock together with Dan. One of the things that Dan glossed over there is we did not come into the relationship. We didn’t walk, we didn’t, we didn’t walk into the bar and go up to the first lady and be like, you want to get hitched? Right. Like we just went up and had a conversation.

It was cool. We ended up [00:20:00] talking again later and Dan and I have this thing where one of our core values at Invictus is the number. Number one is we lead with value. So always show up. And how do I deliver value first? And we got there. It was kind of competitive uncomfortably. So at times where it’s like, who’s gonna pay for this meal, who’s going to pay for this coffee.

And it got like to the point where we were like one upping each other and. Then I built you a website because your website sucks. And I was like, I, I’m not along when this gave you the website. And then it was suddenly like, oh my God, like, why aren’t we working together? Like there’s there’s opportunity when we work this well together.

So all I’m saying is like, don’t go up to somebody to be like the first time you meet Emily, I want a partner like understand, like, what are your strengths? What are your weaknesses? And what exactly are you looking for? And before you can go up and find your ideal partner, you have to first become an ID.

[00:20:55] Dan: So at this point[00:21:00]

while we are in partnership missing

[00:21:11] Anthony: yeah. Good question. So was the first, the first question was, were we still working jobs? Okay. And the second question is in the partnership, what do we each do? Um, and you called me a visionary. I appreciate that. I called myself at first. We’ll talk about why that is. So the first part of that question, I haven’t had a job in a very long time.

I’ve had a number of businesses. The last one at that time, I was building a manufacturing company called escape climbing. We produce rock climbing, holds and port hardware that builds gyms like that. Um, I exited that in 2020 to focus exclusively on Invictus. Dan was full-time in real estate at that point now, in terms of like what we each do.

Um, the visionary thing, it’s really funny because we have a podcast and people reach out and so we get to see their [00:22:00] biographies. And the thing that we always laugh at is when it says visionary, it’s like, who called you visionary? But then we were, we were building out our business and figuring out what’s the, what’s the system, what’s the framework on which we’re going to build this.

And there is no right framework, just so you guys know the right framework is the one you actually use. And the one that we’re using for, for Invictus is based off of a book called track. And the EOS model, the entrepreneur operating system. It doesn’t have to be that one. If you go, and you can use the four D’s of execution, that’s a fantastic one that we use that escape.

The key is find one that you can use. And in that book, he makes a distinction that a company needs to have a certain amount of chaos and a certain amount of order chaos being the visionary, somebody who can push it forward and have the creative energy to say, this is where we’re going. But then the stability, the order to actually execute.

And that’s where Dan and I tried to swap hats. The interesting thing is that Dan and I neither Dan, or I are purely visionary or integrator, [00:23:00] but that’s kind of how we split the rules typically. So Dan will focus a lot on acquisitions, underwriting, running the property management company. I focus more on the marketing, the acquisitions, and like investor relations, acquisition, acquiring investors, acquiring buildings, and then operating the capital side.

So one of the things, I don’t know if we mentioned this, but we’re vertically integrated. So we have an in-house property management company. So we manage our own assets. We have a staff that manages our residents deals with repairs and maintenance and all that stuff. Dan oversees that side. I tend to see more of the capital side.

Any

other

[00:23:34] Dan: questions out there? Yeah. Yes, you were

Yeah. You can ask him if we have any like strategic partnerships, like, Hey, let’s do a deal with this construction company. They’ll do the work. Or, um, we’ve looked at [00:24:00] that a lot. The closest that we’ve come to that as a partnership with a, um, a brokerage in downtown called DRG. Where we, uh, we’ll do some deals in Minneapolis where their team does the property management.

And since they that’s their property management company and they’re general partners with us, it’s still in house. Um, I want to say that’s the only thing we done. Uh, yeah, we’ve looked at a lot of other, those, uh, you know, potential strategic partnerships, but I’d say that’s probably the only one we’ve done so far, but that’s another way to, uh, really be efficient in the.

Yeah. You know, if you’ve got somebody who has some kind of sweat equity component that they can bring, whether it’s labor, um, or, or the management piece or the construction piece, that’s, that’s a really powerful piece, especially these days, because in general, I’d say in this kind of, it’s kind of leads into the comment Anthony made before about not just walking into the bar and walking up the sand at someone and saying, Hey, if you want to get hitched, Uh, instead starting with, uh, you know, trying to [00:25:00] find those types of people around you and start a relationship.

That’s not predicated on you trying to partner with them, but that’s just you trying to learn about them and uncover what it is they’re looking for first and kind of focus on that. And then hopefully like the partnership elements should come at some point and try to kind of lead with what’s your problem.

Can I solve that? And then at some point, they’ll realize you are trying to do this thing too. And, um, Yeah, and we’ve got a core value. That’s why we lead with value. That’s our first value. Okay.

Yeah. I mean, it’s something because you want to just get to the point. Right. And it’s an opportunity, so you’re excited about it, but at the same time, it’s, it’s, I think it’s usually better to just start with what’s your problem. Can I help you solve that? They kind of like, yeah. If they built a website for me, and then naturally after that, I’m like, okay, now what can I do to like help him out?

I’m trying to figure out how I can help this guy. Um, and, and so that’s how I had to Trojan in [00:26:00] project.

[00:26:01] Anthony: Yeah. Yeah, I want it. So, um, overwhelm them with value, figure out what would add value to their life and then add it with no expectation of return. No expectation of a relationship coming out of it.

Because when you do something quid pro quo and it’s like, Hey, I did this thing for you. Isn’t that really cool. You like that? Now you want to work together. Everybody sees through that, but if you just keep dropping massive value on people, eventually they’re going to feel guilty and they’re going to be like, okay, I’ll just work with you.

Fine. Like, that’s the key, but the problem. Most people be honest here has anybody in this room in the last week said to somebody, so how can I add value to you? Has anybody done that? Does anybody raise their hand? Be honest? Yeah. I like, how can I add value to you? Seems like a really innocent question, but what you’ve really done is you’ve given me homework.

You’ve asked me to figure out how you can add value to my life. And I don’t know you, I don’t know. So [00:27:00] your power, your skill, if you really want to get through that door is figure out what would add value to me without me even knowing, give me the value. That’s what I did with Dan. We do this constantly with other individuals is figuring out, Hey, you seem to be struggling in this way.

We can see it from the outside. This isn’t as strong as it could be. So let us help you and do this thing. When you do that, people go, holy crap, they’re paying attention and you overwhelm them with value. And then they think I want to work with that. So instead of asking somebody at the end of the conversation, so how can I add value to you as something where like, Hey, what are you working on?

Like, if it’s somebody you don’t know, like get a sense for what are they working on and then go home and stock them ruthlessly to figure out what you can do to help them. Maybe that’s making a connection with a broker or a lender, or like a construction team. Hey, I know this person over here, you said you had this thing because if you have all these great conversations here and then you go home and you do not have any plan for following up with all the people.

What was the point? What [00:28:00] was the point? Like if you go home and you don’t clearly have a vision for, okay, this person here, I talked to this guy, I talked to that person. I talked to that lady and like, nice to meet you. Nice to meet you. That was cool. Timing. Is there a dog here? Oh, there is a dog here. Heck yeah.

If I’m not leaving these and making mental notes of like, okay, I can make a connection here. I’m going to follow up in an email or a text or a social media. I’m going to find you and be like, Hey, I want to make a connect. If you’re not doing that, then you’re not really getting the most out of these opportunities.

That’s

[00:28:32] Dan: good. I like it. The other big thing is actually this came up, we were speaking at Saint Thomas the other day to a much younger crowd and there was a similar question from, uh, somebody in the crowd. And then the main thing I wanted to get across to that younger guy was like, you don’t want to give somebody that you’re potentially trying to partner with, or they’re asking more for like, In like a mentorship context, but you don’t want to give that person a homework assignment, like try to come up with something I can do for you.

Like Anthony said, you want to just do that for [00:29:00] them and deliberate and not have them even think about it. There was another hand up over the street I skipped you before. I’m sorry. I want to come back. You’re good. Okay. What’s your name? Nice to meet you, Justin. What’s up? Yeah. So my

[00:29:14] Anthony: question is around the lines of somebody starting out in those smaller deal range.

Yeah. You’re all advice would be to seek out, um, raised capital in some manner. Um, what’s your advice when you’re not even sure you can do it and you’re talking about getting money from other people. You also want to prove to other people maybe ahead of time.

[00:29:42] Dan: Yeah, that’s a very good question. I like that you asked that cause it can clarify a little bit. I wouldn’t suggest raising capital from anybody. Who’s not an active partner until you’ve really ironed it out. Um, if you go out and find a partner, who’s, I’ll use the phrase joint ventures. So that kind of implies that it’s you and another guy who are both [00:30:00] actively of the deal and you both are you’re active, right?

You don’t have anybody who’s in their passive expecting you to do all the things in generate a profit. I would definitely stay away from that until you done at least a few deals, a decent way through, and you’ve worked the kinks out before you start to raise capital from people, unless you have a partner, who’s got a track record.

Um, cause otherwise it’s, it’s pretty risky, right? If you screw something up and you lose your money, that’s your own problem. And if you’ve got another actively involved partner, they should know that a risk that they’re taking. But I would definitely suggest that you really get some reps in before you take anybody’s money.

Who’s passive, and they’re expecting you to do all the things that produce a return. That that could be a tricky situation. If things go south, um, if it’s too active investors that go south that’s. A lot easier, but if you take money from somebody that’s effectively selling the security, and if you have an instruction a properly, and if you just don’t have the track record, then they’re going to have, uh, probably no issues.

So we knew for whatever. [00:31:00] So I’d go slow on the raising capital thing and all you need to do in that department. If you need a capital partner is just do a smaller joint venture and have them actively involved and just no. No, you’re signing out alone. We’re in this together and I’m new to this. Hopefully you get that.

My family and friends are fine with that. Cause they knew me early on, on that third deal. They knew that this was still new for me. So they appreciate the risk and they got a hell of a good deal. There were no fees. Um, they got treated as if they were. Earnings WeChat, sweat equity, just like me. So I didn’t really structure it in my benefit at all.

I mainly did that to get practice with investors and kind of go from doing deals by myself, to working with investors, knowing I was going to be syndicating. And I wanted, before I did an actual syndication, I wanted to have some experience with investors, so it wasn’t free. So does that answer your question?

[00:31:50] Anthony: Um, I firmly believe that you need to pay your tuition at the school of hard knocks on your own dime before you ever go take anybody. Like rewinding back in my life. There was a point when I was [00:32:00] $80,000 in debt and living in a van like that was not fun. And I remember the value of a dollar and having to do the mental calculus of do I buy noodles or do I put fuel in my van slash my home?

And so when somebody is giving you money as a passive investor, like you need to be sure that you can do right by that. And you have that experience and you can point to it and say, I know what to do when things are going right. And I know what to do when things go wrong, because things are going to go wrong.

So when you’re saying. I think joint venture, finding somebody who has money and structuring deals in a way that allow you to play long-term games with long-term people. This is a quote from Nevada, Rob comp. So play long-term games with long-term people find somebody who you’re okay. Saying I’m not going to make a ton of money on this first deal or second deal or third deal, but I’m going to get the experience.

I’m going to build a relationship. I’m going to get the track record and over time, I’m going to be able to use that and leverage. Real estate is not a get rich quick game. It’s the best get rich slowly but surely plan that there is. So [00:33:00] take the long view, take the long horizon. And here’s the other thing when it comes to multi-family like, you’ll look on social media and you guys will hear our story.

You’d be like, oh my God, like they got so many properties so quickly. That’s so great. It doesn’t work like that. Like truly we’re, we’re glossing over all of the time periods when things weren’t going. And so when it comes to buying bigger buildings, it takes. And if you’re just starting now, it could be 12 months, 18 months, 24 months.

And if you don’t have the stomach to weather that and build the mental callous to stick it through, you’re not going to, you’re never going to last in real estate because this is a 30 year plus game.

[00:33:34] Dan: Yeah. The first deal was a doozy. Uh, okay. So we, uh, we, we closed, did we do a podcast episode on this? I mean, we did a podcast episode of nightmare stories and this was in there, but I don’t think we did a story on this deal.

All right. So we closed. Yeah. So, um, so we closed on this in January of 2020. Yeah. It was a heavy [00:34:00] value add deal with a lot of work to be done and it was January, 2020. So, um, I want to make sure I get all your stuff here. So you want to hear this story? The first deal? Um, I guess I’m kinda curious.

Yeah. So that first deal that we partnered on, uh, we kind of alluded to this before when Andy and I met, we, I had like 30 some units. Uh, you have the triplex and I had this deal under contract. This was the first indication that I was doing was 32 unit praising a million for it, which seemed enormous at the time.

And I had all, but like what a hundred thousand I think, raised when you showed up. And so this was under contract and I want to say August. Yeah. So I put under contract when, on this five-year anniversary trip with my wife came back, uh, hit this event, uh, met Anthony there [00:35:00] and it wasn’t until probably a month or two later that we really started getting serious.

And then we figured that we were partner on this. But I’ve gotten to that point. And so the majority of the capital raise on that one was me. I found the deal, um, and got it pretty much up to the finish line. And Anthony came in on that one and that was really right when we decided we wanted to start working together.

And so that one was a little different because we kinda met, met when it was like right at about, right about to hit the finish line. So on that one, I did pretty much all of the. Um, Anthony came in and helped out with the, with the debt on that deal. So he signed up the loan, which helped because this was the biggest deal I’d done.

Yeah. And so that, uh, helped give a little bit extra oomph to the bank as far as the balance sheet is concerned. So that helped the story. And then really the thing that, that, uh, anti-fibrotic table wasn’t really on that. Um, and this is an interesting deal. So we can talk about a lot about that deal with the partnership relationship with us early on, it was largely like him really [00:36:00] maximizing the marketing side of the business because I was so busy being, um, the operator running the management, raising the capital, doing all these things that the, the websites sucked, uh, the social media presence was okay at best sporadic.

I was doing stuff when I could. Wasn’t the most quality and he’s a professional writer. So all the copies. Written by a finance guy. Okay. I don’t know if you’ve ever written read something written by an accountant. It’s not, it’s dry. It’s not good. Yeah. Bullet points. Massive amount of data, no feeling, no emotion, no story.

Um, so on that deal, a lot of that stuff was largely on me on deals that we’re doing now. It’s pretty much an even split on the capital raising. We both kind of hit that. Uh, we both are actually going out and looking for deals together. Um, he and our marketing was over there. Read, uh, put together the marketing packages.

And how did the webinars and all that stuff. So I’d say now it’s pretty much 50, 50. Um, I’m still only the, uh, the operations, the management side, and I’ll receive that and really kind of owning [00:37:00] the underwriting side. But I’d say most deals that we do now are kind of even split, but that one, like I was already doing, and then we met and then he kind of jumped in last minutes was a little bit.

But, um, yeah, I feel like there’s a lot of things that you’re talking about on that deal. It’s got some

[00:37:14] Anthony: stories there’s a lot as a fun. Um, I want to ask a question, which is, and this is going to seem like a silly question, but it’s actually the very first question that I asked new coaching clients when they come in, they want to learn how to invest in multifamily.

Raise your hand if you want to invest in real estate. Okay. Now raise your hand. If you want to build a company that invests in. Do you guys understand the difference between those two things to invest in real estate? All you need to do is give me your money and I will go and I’ll buy a building and I will run that building.

And it’s the whole, the whole concept of syndication and like, right. So if you want to invest in real estate, that’s one thing. [00:38:00] But if you guys want to build a company that invests in real estate, you need to think about it differently and the skills that you need to have. It’s not just about the. It’s not the building.

The building is just a tiny business. And if you don’t understand how to run a business, it does not matter if it’s real estate or a sneaker shop or an ice cream cone stand. It’s really weird business model. You’re not gonna, you’re not going to do good. So you’re not gonna do well. So the takeaway there is when Dan and I first started working together on that first deal.

It’s interesting because Dan didn’t really need me on that first. And like, honestly, if you didn’t invite me into it, I would have been like, whatever, because him and I were already starting to set the vision for the company that we’re building and the company that we’re building is not dependent on us.

It’s about the team and the systems that we can build around us for that thing to thrive. And so Dan was kind, and he let me come into that first deal, but honestly he could have done it without me, but at that point we were on a trajectory. We [00:39:00] knew the vision of where we want to be in 10, 15, 20 years.

And the type of. And he realized to get to that place. We could do it much easier and better together. And so exactly start it guys, if you, if you’re not asking yourself every single day, what’s my outcome. Like you are probably on the wrong path without even realizing it. Like, if you don’t know where you’re trying to go to any path will get you there and you might not really like where you end up.

So ask that question. What’s my outcome. All the time. Self-awareness just audit where you are in the path and the journey right now. Like I said before, you’ll never outgrow your skills. That’s going to be the bottlenecks. So figure out what are the skills that you’re lacking and how are you going to get them?

And you don’t have to gain them all. I’m not a spreadsheet wizard. I went and just found Dan like that, that that’s, that worked pretty good. So figure out where you’re lacking and then go find your, what did they, um, that, uh, Brokeback mountain, you complete me like the, the piece of the puzzle. I don’t know.

Go find your, go find your deal.

[00:39:58] Dan: I know what you’re trying to say. [00:40:00] Uh, I’m just going to double down on that. Say I could try to come up with something different, but I’d say that, that, that component of self-awareness has just been such a game changer for me, because I mentioned before that first year in the business for me was.

I don’t wanna say wasted on ego. I learned a lot, but my mindset was not appropriate because I wanted to say I own a hundred percent of this. I did all the work. Nobody helped me. I didn’t hire a coach. It’s all self-taught. I was obsessed with that for some reason. And looking back, I could have done so much more on that year if I hadn’t been so fixated on needing to be the one who got a hundred percent credit for everything.

Um, and so there’s probably some people in this room who might be. Dealing with a little bit of that too, and don’t even realize it yet. So like Anthony said, really kind of auditing yourself, figuring out what are you good at? What are you not good at? And also, what do you actually enjoy? Because there’s a whole bunch of facets to this business.

So if you’re able to either [00:41:00] identify very clearly what you’re good at and what you actually enjoy, you could find a way to carve out your piece where you’re just doing that and you’re not doing all the things I think that would lead to a much more successful and enjoyable career.

[00:41:15] Anthony: Um, our mission is we do not care if anybody invest with us, our mission is to make as many people aware of the fact that they can participate in multifamily investing like or commercial real estate.

Like there are ways it’s not super daunting and complex. They don’t have to build a business around it. So if you guys want to book, if we only brought a couple, but if you guys want one and you didn’t get one, just shoot me an email and I’ll send you one. So.

[00:41:41] Dan: Thanks guys. .

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