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Why do people travel? Some of the reasons could be to immerse in a different culture and learn a new language. If the destination you pick is real estate, the same rules apply – to belong is to dive in and learn the culture. Dan Handford swings by once more to break down the different ways of understanding the foreign language in the multifamily syndication space. He is the Founder of the Multifamily Investor Nation, a nationwide group of almost 10,000 elite multifamily investors and the Managing Partner of PassiveInvesting.com, an apartment syndication company that has 130,001,300 doors. With such awe-inspiring experience, he shares how you can start learning, and one of them is attending the Multifamily Investor Nation Summit which helps you to network afterward as well as build up your own investor database for some of the future products that you put together. On top of that, find out the do’s and don’ts before you enter a conversation with a broker and more. Massive takeaways are up for grabs in this another impressive episode with Dan.
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Immersing In The Language Of Real Estate with Dan Handford
Our guest is Dan Handford. Thanks for being on the show again, Dan.
Thanks, Whitney. I appreciate you having me back once again.
You can go back and read more about Dan and his background in WS14. He was one of our first guests. He’s had lots of more success since then and we’re happy to have him back and just sharing from his success and experience. Dan is the Managing Partner of PassiveInvesting.com. It’s an apartment syndication company that has 130,001,300 doors. Dan is also the Founder of the Multifamily Investor Nation, a nationwide group of almost 10,000 elite multifamily investors. Give the audience a little about who you are and let’s dive here.
Thanks again for having me on your show, Whitney. It’s a pleasure and a joy. I’m looking forward to continuing to provide some value to your group. I have a background in business and have five non-surgical orthopedic medical clinics that I own and run. One of the reasons why I started in the multifamily space, the larger syndication route was because of the tax advantages of multifamily. I go into that detail a little bit more in episode WS14. I mentioned about the summit coming up here, which is called the Multifamily Investor Nation Summit. It’s a three day online live and not pre-recorded virtual event. You don’t even have to leave the comfort of your own home or office to attend. All the sessions will be recorded so that if for some reason you can’t attend the sessions live, you’ll be able to watch them later.
For those of you who are interested in growing your multifamily space or investor database, one of the most unique things that we do about this event is we share to all the attendees the name and email of all the contacts of all the attendees that are attending the event. It helps you to network afterward as well as build up your own investor database for some of the future products that you put together. If you’re interested in that summit, Whitney will be speaking there as well. That should be my second time speaking at the event. You can go to MFINSummit.com and find out more information about the 60 plus speakers that’ll be there. You can find out some of the topics and some of the things that will be covered at the event.
[bctt tweet=”You’ll know that you have learned and understood something when you can go and teach it to somebody else.” via=”no”]
We’ll be talking about lots of different things, capital raising, financing strategies, due diligence, how to get started, what do you need to do when you’re exiting a project or a deal and so much more. Check out at MFINSummit.com. For those of you who are interested in that event and you register with Whitney’s promo code, which is Whitney, we’re going to donate all the proceeds from those ticket sales using that promo code to the Life Bridge Capital, a nonprofit that supports on children adoptions. Check it out. I look forward to having you there and I look forward to seeing you there as well, Whitney.
I’m honored to be back again and speaking there again, Dan. I appreciate that opportunity and I appreciate you partnering with us and helping fund children’s adoptions. We’re grateful for that. I just had this thought too about the summit. Since it’s recorded and you can watch it later, you can watch so many of those panels and different sessions and all these experts speaking, I was thinking back to our show WS225 where we talked about meetups. Think about all the content you could have for a meetup from this event. You watch one of the panels and there’s some content for one of your meetups if you’re struggling for content or how to come up with that.
You can use a lot of these sessions as launching pads, launching points or talking points for various meetups that you do in your own hometown.
It’s just a thought that could be valuable to the audience. If you want to start that meetup but you’re worried about the content, here’s a weekend where you can gain more than a year’s worth of content for your free meetup. By that time, you’ll be ready to go. Let’s stop a little bit about learning this language. You call it a foreign language and I agree. When you’re getting started in this business, there are so many things that when people are talking, it seems like a foreign language, this multifamily syndication space. Help us to get started.
In real estate, in general, there is this language that’s called a foreign language. My background is in multifamily investing and the larger assets through our group. When you’re trying to learn a foreign language, Whitney, what’s the best way to learn it?
Go to that country, go to that place, or wherever that’s all they speak and you have no choice but to dive right in and that’s all you hear.
That’s exactly right. The key thing that you said there was to go. A lot of times people think that they could just sit behind their computer and they’re going to be able to learn, build a network and be able to do all this stuff. It’s not true. You’ve got to be able to get out. We have that Multifamily Investor Nation Summit and I thought about doing live events. There are so many live events out there, so I decided to start to bring people on to a virtual event and we also have a component of our virtual event. We have some virtual networking opportunities at the same time. The biggest thing I heard was go. You have to go, and you have to immerse yourself in that culture and in that language where everybody is speaking the same language. You have to be able to do that.
There are a couple of different ways to do that. Going to an event is one way to do that. You are going to go to an event and you’re going to immerse yourself into the content. I would say go to multiple events. If you go to two, three or maybe four events, you’re going to know the content that people are going to be provided at the event. Most of the time, when you and I go to a multifamily event, we’re not going there for the content. We’re going there to network with other people and to build and meet people. You go there too because when you’re doing your networking, you could use this podcast like, “Let me invite you on my podcast.” That gives you that additional conversation to have with people. You have this daily podcast where you totally immerse yourself in this language.
You have to ask yourself what are some other ways that you can immerse yourself in this language. I want to talk a little bit about why you would want to immerse yourself. What’s the point of all this? First, we said networking. Going, having and hosting your own meetup or maybe going to various events and meeting people, those are some great ways. Another good way to do it is to listen to your podcast. You talk about a lot of high-level stuff. For somebody who doesn’t know the language of syndication in general, will read this and go, “I don’t know what they’re talking about. What is this IRR, cash on cash, Regulation A, Regulation D, tier one and tier two fund structures? What is the difference between a $50 million fund and a $20 million fund? Which one of 506(c)s and 506(b)s is going to advertise on versus not advertise? How many accredited versus sophisticated investors can I have?” All those things you hear about and you don’t even know what an accredited investor is. You have to start to immerse yourself in this foreign language of syndication so that you could start to speak clearly about it.
Podcasts are a great way to do that. Every time you listen to a podcast, if you hear a word that you don’t know what it means, you should write that down and go look it up because it will help you learn the language of multifamily. You should go and learn the language to a point where you can start to teach other people about it. That’s a good way to do it. You mentioned that you go into our Multifamily Investor Nation Summit and getting a lot of content for your meetups. That’s a great way to do it. Go watch the videos, learn the content, and then try to teach that to somebody else. You’ll know that you have learned and you have understood something when you can go and teach it to somebody else.
[bctt tweet=”The more you start to learn, the more you start to realize how much you don’t know.” via=”no”]
If you know you’re going to have to teach something, you’re going to study it a lot harder. You’re going to be thinking a lot different about that material as you’re going through it if you know you’re going to have to explain it to others.
Another good way to teach it is to do some of the things that I’ve been doing in our Multifamily Investor Nation group. I try to host regular webinars on various topics around multifamily. I’m providing value and giving back, but I’m also learning myself because I’m either bringing a special guest on and asking them very difficult questions and challenging questions. I’m also doing my own webinars where I’m teaching around certain topics. It allows me to be able to understand how much I know and also how much I don’t know, at the same time. The more you start to learn, the more you start to realize how much you don’t know.
You get some confidence. You feel like you’re learning a lot, but then something happens or somebody asks you a question that makes you think about, “I need to dive back into this topic.”
One of the other things that you can do is networking in live events and then also teaching that stuff with your own meetup groups, and then teaching it with some of your own webinars virtually. You can also immerse yourself in this language by learning from attending online webinars. Our group, Multifamily Investor Nation, has those weekly webinars that we do so you can have that component and we put them on our YouTube channel. You can go to YouTube and not just follow us, but all the other people in multifamily and learn from them. Learn from them interviewing other people and teaching you about various topics because you can learn a lot. Even BiggerPockets, going in there and reading those posts. Providing some feedback and some value to those people allows you to better understand it.
When you first get started in this space, you’re going to start to hear some terminology that you’ve never heard before. Even if you’ve got a lot of background in business or finance or whatever, a lot of times you’re going to get this information that you have no clue what it is. You’re like, “What is the rent roll? What is T12? What is T3 and T1 or T6? What are all those different terms? What’s the cash on cash? What’s the annualized return with proceeds and annualized return without proceeds? What’s the cap rate? What’s the LTV?” All these are terms that you should be very well knowledgeable on. You should understand how each of them works so that when you’re doing underwriting, you know how to use those numbers to be able to allow you to understand that if the deal you’re getting into is a proper deal. When you start to talk to other people, it helps you understand that a little bit more as well.
Investors are going to ask. They may not understand what these terms are. You need to be able to explain it to them well.
We’ll talk about a few books that I would recommend. I’m sure you have a few books to recommend too. What you said is good. That’s one of the good reasons to understand this. If you start to put together a deal and you start to have investors call you up and ask you questions about, “What’s the IRR?” You go, “I’m not sure. I know it gives you a return number.” That’s not the right answer. They want you to be able to teach them and explain it to them because these passive investors are going to be new and they are going to ask you, “What is IRR?” You have to learn how to explain certain things in a certain way. If you tell an investor, “IRR is like your ROI.” That’s not completely true because it’s not. If I told you that if you put $100,000 in a deal and you’ve got $200,000 back, is that a good deal? Most people you ask will say, “Yeah, it’s a phenomenal deal.” What if I told you it took me twenty years to do it? It’s not so phenomenal. That IRR is what bakes into the time component of the calculation of your return. You have to be able to explain that stuff to your investors. When you start to talk to and build relationships with other people on your team like lenders, brokers, attorneys and you want them to start to take you seriously, you have to start to speak that language.
It made me think of a guest that I had on the show. He was telling me about when he started investing in other syndications and he wanted to start including his son. He wanted him to be in these deals or at least start gaining some knowledge about money and how investing works. Some neat things came out of that because he would include his eleven-year-old on this call with the syndicator. The eleven-year-old had different kinds of questions. There are lots of other questions that came up from this eleven-year-old that he hadn’t thought of before and maybe even more elementary stuff too that he didn’t know. However, from the syndicator’s point of view, he had to be able to explain it to this eleven-year-old so he can understand. This person liked that because then he got to test that syndicator a little bit to say, “Can you explain it to my eleven-year-old so he can understand?” That was a totally different dynamic that I liked.
I hadn’t heard of that before. That’s a great way to see how well they understand things and explain them, but also build and teach your kids at the same time. That’s phenomenal. I love that idea. I’m going to steal that one, Whitney. I would say that the person that you need to speak this language most is your investors. You won’t even need investors unless you can try to talk to him to your brokers about it. These are the brokers that are finding these projects and finding these deals for you. These brokers get phone calls all the time from people and they know the moment they talked to them, whether or not they’re a big player or a serious player or not by the language that they speak. If they start to talk about certain things and they don’t understand it, they are wishy-washy, they don’t sound very confident or competent on the phone, it’s not usually a good thing.
They don’t usually try and take you very seriously. They have to filter out these phone calls because they get so many of them. It’d be very hard. I get questions all the time like, “How do you find all these brokers and how do you build these relationships? How do they start to go to bat for you with the seller?” That’s one of the biggest things these brokers do. As you start to build a relationship with them and they started to know how you work, they will go to bat for you when they try to go to the seller. Even if somebody has a higher valuation or higher price than you, a lot of times they’ll talk to the seller about awarding you the deal because they know that you know your stock. They know that you’re very confident and you’re competent. Even sometimes when you’ve never even done a deal before, they’ll do that if you build that relationship with them. That broker has to understand and be confident enough to do that. That’s all about this foreign language of multifamily or this syndication, in general.
[bctt tweet=”You have to immerse yourself in the language of syndication so that you can start to speak clearly about it.” via=”no”]
Dan, could you maybe give us an example of some dos and don’ts? We talked about the broker and that conversation. We’re talking about this foreign language and some things that we need to know before we enter that conversation with that broker.
One of the things that they’re going to ask you is, “What’s your criteria?” You have to make sure that you give them your criteria. If you say, “I’m just trying to find anything you have,” it’s not going to fly very well. Our group is very specific. We tell the brokers that we don’t look at anything unless it’s at least 100 units or more and $10 million in acquisition or project cost. If you send something to us and it’s 99 units, we’re not going to look at it. We have very strict criteria. We don’t go outside of that criteria. They know that. They don’t send us stuff that’ll waste our time. If you have 50 units that have got phenomenal returns, I still don’t want it. It doesn’t fit our criteria. We’re very focused on our criteria. You have to set those criteria up front and be very diligent about letting them know that you don’t want to look at anything outside of that criteria.
The criteria are the number of units and the actual acquisition cost. Also, being able to spew out what are some of the returns that you’re looking for, whether from an IRR-driven standpoint or cash on cash driven standpoint, whether you are a short-term or a long-term type of buyer. They know exactly what you’re looking for and also letting them know if you are in the B or C class on the property or maybe even in A class. Are you looking for more of your core products or are you looking more for your value-added products? Give them the vintage of the property and the assets that you’re looking for. If you just heard me spew all that stuff off and use some of that stuff and you were like, “I don’t know what you’re talking about,” you need to start immersing yourself with the foreign language of syndication and multifamily in general. There’s a lot of stuff that I said there that every broker that I talked to understands every word that I said. You have to be able to spew that stuff off and talk intelligently and competently. You could also tell that I knew what I was talking about. You could ask me follow-up questions about that and I’d be able to answer those back to you very confidently.
It shows another level of confidence. You know what you want too. You want 100 units plus and $10 million plus, some other things you said that shows your confidence and shows you know what you want instead of just saying, “I want to see everything you’ve got.” It’s a very different conversation.
One other thing that dovetails that is the last episode that I was on, which was episode WS239, we talked about the investor triad about how you need to make sure that your investors know, like and trust you in order to invest with you. I can also call that the broker triad. These brokers have to know, like and trust you. If you get them to know, like and trust you, you’ll have all the deals you want. You won’t have to worry about finding your own deals.
Help us in learning this language. Where do we start as far as podcasts and immersing ourselves with other people that are at a higher level, but maybe even more basic than that? How do I start to learn this language before I’m ready to go have a meeting with you, Dan or with somebody at a much higher level than me? I want to prepare myself a little bit.
I’ll tell you what I did. The very first book that I read on multifamily, which gave me a great foundation for the knowledge base is the book by David Lindahl, Multi-Family Millions. It has a lot of great information in there. He dives into a lot of the definitions and this gives you a great solid foundation base of knowledge that you need to have in this multifamily space. I haven’t done any mentoring or coaching with David Lindahl. I’ve been to a few of his events. I’m going into another one here because he does put on some good events. That was the first book that I ever read in multifamily. It helped me give myself a good base, the knowledge and the foundation for this space. His space has been primarily the smaller mom and pop space, so I knew I didn’t want to stay in that space.
I hired a mentor. My mentor is Joe Fairless. Some of you might be familiar with him. He has a book that he published called the Best Ever Apartment Syndication Book. I would highly recommend you grab that book. It’s a phenomenal read. It’s a thick book. You could knock somebody out with it. That’s how thick of a book it is. I will tell you that everything that I learned from Joe, he was gracious enough to stick into this book. Obviously, you don’t get him with the book, which is the most valuable piece to it. Even now, I’ve been with him for over a year and every week I’m still jumping on a call, gaining knowledge and insights from him. That’s important for everybody to have a mentor. The mentor that I was looking for is somebody who was already where I wanted to be and I knew that I could have direct access to that particular mentor. Those are the two books that I would highly recommend. I’m sure you might have a book or that you have in your background and you’ve read that might help somebody in this multifamily space as well. Can you think of any other ones?
Joe’s book would have been my first pick as far as learning the space. He elaborates in so many areas in that book, helping you get started. The information he’s put in there for a $40 is incredible. I highly recommend that book and Joe’s content for immersing yourself in this business.
Joe is going to be keynoting our Multifamily Investor Nation Summit as well. You’ll hear from him live and ask him questions. Every single one of these sessions has a live Q&A at the end as well.
Dan, are there any last things you’d like to leave the audience with as far as how they can start to learn this language?
One of the biggest things is diving yourself and immersing yourself as deep as you can in this space. With every free moment you have away from work, family and friends, you should be learning this stuff. Whether it’d be when you’re working out, listening to podcasts, when all the kids are in bed, your wife is in bed or even your spouse, you can go in and start to watch some YouTube videos. You can read some books, listen to books while you’re driving down the road, and all of that stuff. We have our own group called the Multifamily Investor Nation and we’re doing webinars on a regular basis. I’d love for you to join us there. This summit would be a great space for you to be able to get started.
The nice thing about this event is that we’re also going to be donating all of the ticket sales when you use the promo code, Whitney, to the Life Bridge Capital nonprofit that helps support children adoptions. You can go to MFINSummit.com and check out the event. I’d love to have you there. You’ll be able to hear Whitney speak as well live and maybe even ask him some questions. If you’ve been reading his blog for a while and you want to have a little bit more FaceTime with him, you can do that as well. If you have some questions for me specifically, you can shoot me over an email at [email protected]. If you’re interested in investing with us, you can go to PassiveInvesting.com and join our passive investor list.
Thank you again, Dan for the knowledge and experience you’re sharing with all the audience. I hope everyone will be at the Multifamily Investor Nation Summit and use the promo code Whitney. I appreciate your support in that in helping fund children’s adoptions. Go to Life Bridge Capital. I’d love to have a conversation with you and help you any way we can. Also go to our Facebook group, The Real Estate Syndication Show where we can all learn and grow our businesses together from experts like Dan. We will talk to each of you next time.
Important Links:
- WS14 – Past episode
- PassiveInvesting.com
- Multifamily Investor Nation Summit
- MFINSummit.com
- WS225 – Past episode
- Multifamily Investor Nation
- YouTube – Multifamily Investor Nation
- WS239 – Past episode
- Multi-Family Millions
- Best Ever Apartment Syndication Book
- The Real Estate Syndication Show on Facebook
- [email protected]
About Dan Handford
Dan and his wife, Dennae, along with their 4 children (3 girls and a boy), reside and work in Columbia, SC.
Dan has an extensive successful background in starting multiple seven-figure businesses from scratch including a large group of non-surgical orthopedic medical clinics located in South Carolina. His family of companies have annual budgets in excess of $10MM.
He is the founder of the Multifamily Investor Nation where he educates a nationwide group (9,000+ members) of multifamily investors on how to properly invest in multifamily assets.
He is the co-host, along with his wife, Dennae, of the Tough Decisions for Entrepreneurs podcast which can be found on iTunes and Google Podcasts.
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