WS1343: Building Wealth With Syndication | #Highlights

EPISODE 1343

[INTRODUCTION]

Whitney Sewell (WS): This is your Daily Real Estate Syndication Show and I’m your host, Whitney Sewell. Today is a Highlights show that’s packed with value from different guests around a specific topic.

Don’t forget to like and subscribe but also go to LifeBridgeCapital.com where you can sign up to start investing in real estate today. I hope you enjoy the show!

[INTERVIEW 1]

WS: Our guest is Ken Van Liew. Thanks for being on the show, Ken.

Ken Van Liew (KL): Thank you, Whitney. A pleasure to be here.

WS: Ken started his professional career with a civil design engineering job, twins, and two master’s degrees, – twins would have been enough right there, – two Master’s degrees also underpinned with a six-figure debt and a burning desire to serve others. Three years later, he cut the ribbon on the development of a 17-million dollar, 72,000 square feet, 113-bed assisted living facility. Alongside the syndication and development of over a billion dollars of high-profile real estate investments, Ken created the modern wealth-building formula as the fastest track to building wealth – a project that has empowered thousands of developers over the last 20 years. 

Ken, welcome to the show. Obviously, I wanna hear a little more about your background, and as I said, the twins alone with a… Man! That’s a degree in itself. But then two master’s degrees, and then the way you’ve got into real estate. Give us a little more of that journey and build that picture for us a little bit so we can move into this modern wealth-building formula as well.

KL: Absolutely. It’s been a blessing for me. I wasn’t a great student. I loved football, and I was an all-State football player in high school and won a couple of championships. And when I got to college, I figured I would create the six-year plan. I just couldn’t pick up on calculus and physics. I struggled, and I met my wife in my third year in College, and I’m still with her today. Thirty-eight years later, she taught me how to study, and that was really the start of a career where I decided maybe I couldn’t be an engineer.

And a few years later, I graduated Engineering School. I had won an award on civil design and had a sub-divide and had planned to the scene, but I really didn’t connect all the dots with civil design, a little bit of summer job construction and what’s going on with real estate. It was just about the time that Robert Allen came out with a book, ‘Buy a House with No Money Down’ and I couldn’t even afford a car. My first car was like 700 and it had multi-colors from several accidents that didn’t start.

So that’s kind of what I started. Dad gave me 10 a week, went down to college after six, packing washing clothes where you’re pretty much just hustling. And that led eventually to a civil engineering degree, but I was bored sitting at the table, got back into construction, had an opportunity to do my first building into Kipsy and that led into skyscrapers into New York City, and it’s just been a ride ever since.

WS: Wow. In the skyscrapers in New York City. I guess give us a little insight into what your focus is right now? Like what are you doing in real estate? What’s your business now? Help us to visualize that.

KL: Yeah, I jumped and I’ll drop back to… The first big one we did was back… You mentioned the $17-million assisted Living, which was the beginning of the modern wealth-building formula. And I didn’t really know what it was about that. And I was finding funding and facilitating development and it turned into the formula. But today we continued to apply the formula. We revolved in a large multi-use development in Chester, New Jersey, which has a 100-year-old restaurant that we’re restoring. 

It has affordable housing, market rate housing, commercial office, and being driven by my first CVs that we signed the lease we’re really excited about. We have another 13 acres where we’re developing anywhere from still in conceptual design, between 75 and 100 residential units and carving out three acres for somewhere between 100 and 120,000 square feet of self-storage. We’re consolidating land in three different towns, watch on Warren, and Hanover like this time consolidating, trying to create something pretty extraordinary, talking to some continuing care, retirement community groups in the assisted living space.

I have some other small sub-divisions and we’re also gonna take advantage of what we believe can be tremendous opportunities across the country with the upturn happening, with everything and all the excitement. So that’s having fun.

WS: Tell us about the modern wealth-building formula, like what is that? And let’s go through that a little bit.

KL: The modern wealth-building formula was something I coined after 30 years. I never was good at board games or word puzzles or anything like that, but with all my personal development, – I was always thinking Tony Robbins, – and I was sitting there one day, I’m always like, take massive action, take massive action. And popped up, and then I had just finished this course with Landmark. It was on wisdom, and the W popped up and I wanted to be… 

I didn’t wanna just to be a leader, I wanted to be a bold leader. And then I was forward-thinking and I was playing around and he was like, wow, modern wealth-building formula, how to master real estate investing. And what really came from that was I’m starting to put together what I’ve been doing all these years, which have been very successful, and looking back and proven at this modern wealth-building formula, which was syndication. I had not only done it on a real estate development out of the box.

I took that top-down thinking and then applied it to multi-family and residential, wholesale, fix and flip, and show that in almost any type of real estate, eventually, if you wanna scale it, it’s nice to have a little bit of cash flow, equity available when necessary, share the wealth, give opportunities across the board, saw it to start to work and I said, ‘Well, it’s really kind of a system on what I’ve done, I think a little differently.’ 

There’s a lot of data out there to find deals, but I find projects a little bit different than everybody’s at a finding process as part of the system. And I had a funding process. I called it unlimited funding, ’cause when I started… I didn’t think I was gonna be able to finance a 17-million deal. But when I finished that, it gave me the confidence where I was like, ‘Okay, I got this figured out, I could do unlimited funding,’ and the facilitation of the development, I always figure out if you can manage a development… 

It has all the components. If you find the developments, the same skill sets that you use in finding a residential multi-family, funding is kind of the same thing, so not like I’m totally reinventing the wheel, but I had to find fun and facilitate a 3F system that I called it, which ultimately added in a little bit of injection of personal development, a little bit of Tony Robbins, and that created this what I would say sports enthusiastic, modern wealth building formula.

When you read the book, it tells you a little bit about the pre-game exercise and where you kind of size up in the line-up, if you look at it from a baseball perspective, it just… You have a little fun with it, and it really comes down to top-down thinking, ’cause if you think from the top, you could pretty much do anything in real estate, and that came from building a couple of skyscrapers in New York City.

WS: Well, let’s talk about that a little bit. I know building not just everyone’s been a part of building skyscrapers in New York City or anywhere, for that matter, but what are some things that you learned from that have helped you throughout your real estate career? 

KL: Great question. The biggest takeaway, the first takeaway was, this is swimming with sharks every day, there was a book, they wrote it at one time, but what I really took away at the end of the day when I…I wouldn’t say I left New York City construction… paused last year on some New York City construction ’cause of the pandemic, and two years ago, I had a concrete company was report a couple of 30-story towers, and after building 1500 units and 3 million square feet in New York City, I really analogize building a skyscraper as building an extraordinary life. 

And I don’t wanna go off too with real estate, but I’m doing it for a specific reason, ’cause it applies across the board for anybody, and I think everybody wants an extraordinary life, and if they can do it through real estate, they get the best of both worlds, and what I learned in New York city construction… And if you’ve ever seen a project, obviously, you probably have in your neck of the woods, but in New York City, you’ve seen this green fence that goes around the site, say it’s a parking lot, or if there’s a demolition, you see some activity. 

But this green fence goes around the site and you just see this green fence, it opens up once a day, and it’s storing the six months process that you build this foundation, and I can only say that the foundations in New York City or the foundations of the songs in the world… And like in life, you need a strong foundation because there’s gonna be a couple of earthquakes and poured concrete structures, I learned that without that structure that can handle the earthquake loads and the wind loads, that’s the backbone that you get in life that you have to build upon.

And the New York City, it’s all about the cycle, so as I was pouring concrete, by the time I was up to the 10th floor if things were managed properly and my project manager on top of things, we were literally starting the elevators and starting to install the skin on the building, and that’s because, in life, you need a tough skin because you’re gonna weather the storm and we’ve raised to the top and of course that and down the hatches with the roof, and then start life, building that building and coordinating hundreds of men and getting accelerated by it.

Like there’s nothing like waking up in the morning and having four or 500 guys on your job and things are humming, and you’re building the heart and the guts of a high rise. And I say to people that are building houses, you can do it, it’s just like building 30 houses on top of each other, you’re… You’re gonna get that cycle instead of just going in and frame in one, the framer just goes to the second-floor frame or goes to the third floor, followed by the electrician, followed by the plumber, and it’s just a cycle you create… 

And that’s what life’s all about. It’s a cycle and real estate is a cycle and it’s all a fine thread through everything. As you really sit back and look at what’s going on in life, like I’m not confused.

WS: Yeah, I think it’s interesting, that you talk about the six months to build a foundation, but it looks like there’s really nothing going on.

KL: It really does. There’s so much behind the scenes and pre-construction on those jobs, sometimes we build on paper for another six months, but the beauty of it is when it gets to the street level, and we used to pride ourselves on my concrete company that every four days we’d have another floor, so it takes six months to get the ground level, but then you’re talking in three months, you’re up… We go six days, four-day cycle, and you’re looking good, all of a sudden, 20 floors pop up in two months and it’s game on.

WS: Wow, what are some of the difficulties as a developer that maybe aren’t known or seen by just the average real estate investor? 

KL: Did you say difficulties or… 

WS: Yes.

KL: Yeah. I would think with developers, there are more moving parts, which means more personalities, and what it really comes down to, if you know your game, it’s really just more creating unity and teamwork, eliminating delegating or remaining as much as you can, because you as the top of the hill or calling the shots, you can’t get stuck in other things other than critical path items that if it’s delayed, it’ll delay the project and ultimately cost you extra money, and that’s really what the developer does. 

One of the things that we analyze is this nine-foot matrix of the development process and segments of that matrix apply to multi-family, if you’re buying a project, there may not start with conceptual design, but it starts with intense due diligence that you really have to dive into… And you have to dive into all your contracts and warranties and guarantee things that you’re doing on a development from the onset when you’re buying contracts out. 

You’re not gonna wanna deal with warranty and guarantees at the end of the day, when you don’t have the leverage, you wanna take advantage of the leverage you have up front, right, by it, strong, and that’s where you make your money. You’ve probably heard If you make your money in to buy, the same applies when you develop.

[INTERVIEW 2]

WS: Our guest is Dan Kryzanowski. Thanks for being on the show, Dan.

DK: Awesome, Whitney, great to be here.

WS: Dan is an active real estate investor and fundraiser. Leveraging self-directed accounts, STI, IRA, and solo 401(k)s to create a diversified real estate portfolio yielding double-digit returns. He specializes in self-storage, last-mile industrial, and niche multifamily and residential. Dan and his partners have raised millions of dollars from family offices and individuals and empowered his community to raise seven figures on multiple occasions.

Dan, grateful to have you on the show. This is definitely something that the listeners and myself have worked a long time on, you know, is raising capital and just thinking through that process and what that looks like. But you know, give us a little more about who you are, your background, and then let’s jump into your superpower, raising six figures in six minutes?

DK: Sure, thanks so much. Yeah, I grew up in Scranton, Pennsylvania so I’ll take a moment to let The Office jokes come in here. And total Ozzie and Harriet’s lifestyle. My dad was a high school principal, my mom is a social worker. I know you do some great stuff on the nonprofit side, I’ve been engaged with Hugh O’Brian Youth Leadership with high school sophomores for a long time.  To keep the math easy, I say, not the brightest guy so I graduated from Wharton in 2000.

And probably like many folks on the call, as heavy as 9/11 was on the psyche, from a work perspective, we kind of still kept on plugging away. I was with Merrill Lynch in post-grad schools with GE capital for a while. Fortunately, I had a taste of Austin, Texas so it’s still weird down here in a very good way. I joke, I used to be able to – I should have bought the land where Franklin Barbeque is now because I could have had free barbeque every day forever. We all have our misses in life.

But you know, I share that because I maybe had a little crystal ball foresight of where I think, especially where I saw the world today but about a decade ago, in terms of you know, do I want to strictly work a nine to five, strictly max out my 401(k) and then kind of hope and say, “Hey, great, I’m 60 years old,  here’s a pension.”

You know, the world is not playing out that way. I give myself a little bit of credit and for the past decade, I’ve really double-downed here in Texas both on the nine to five, started in real estate tech and FinTech but also being very open to multiple asset classes primarily in real estate and finding myself as probably a lot of folks are just as a passive LP investor.

And then realizing, “Wow, I really – pun intended, I’m sinking with the syndicators.” From here which has been natural discussions and like folks say, you know, it doesn’t really feel like work on what you’re doing is what you enjoy. That’s not deep in the weeds but at a very high level, I think it’s sometimes if you’re in the right place, you just got to ride the wave.

WS: Wow, well, I’m just looking forward to this conversation, Dan, and just really thinking through some of the stuff you’ve accomplished in helping us do the same. Let’s just jump right in there and you know, being successful and raising capital, how you’ve done it.

Let’s just jump right in and I guess, get us started in how you’re enabling sponsors and to do this and break it down for us.

DK: Sure, I mean, Whitney, much like you, I think really educating and servant leadership and you know, having some faith and things play out, it’s how I really viewed it. I was very fortunate, you know sometimes it’s serendipitous, way back, well, in 2017, I was on a flight with Henry Yoshida and Henry’s last company Goldman Sachs gobbled up about 18 months in and I said, “Hey Henry, you ever think about self-storage?”

And he said, “No, not really,” and I’m like, “Well, you know, if you fill out all these papers and boom.” And in his – imagine if there was just some buy-in or if you eliminated all the friction and we can unlock this 10 trillion dollars of self-directed money, how beneficial would it be for not only the average Joe/Jane America but also all of the sponsors out there.

This was part of my first step in terms of I’ll call it mass evangelization where I had the great opportunity, particularly on the multifamily side to meet with many of the headline players but also, speak to and mentor, advise a lot of folks that are still trying to get their first deal and how to get to it. In some ways, it’s very simple. If there’s any takeaway from this call, I would suggest, whether you’re on the LP side or syndication side, get your big text messages that you’ve been doing during COVID and say, “Hey folks, did you know you could use your retirement dollars to invest with me or co-invest with me in this deal?”

Lo and behold, people that had done this, particularly syndicators on a regular basis, get about 15 to 20% of the raise. I like to say I get to take Friday off because your audience has made aware that they have their share of this 10 trillion dollars on the sidelines to invest in your deal.

WS: You think, a big part of what we need to be doing then is telling people that they can use their IRA, I mean, most to having a clue, right?

DK: Yeah, it’s a really – this isn’t something like the – I call the – I’m dating myself here, the Mr. Burns of the world, you know, keep back with their accountant. SDIRA’s have been around for 50 years. That said, it’s been kind of an old stodgy – It really has not been – it’s like country club cool, and for my Texans on the call where they’re wearing jeans and boots are all prettied up.

It really hasn’t been cool but you know, recognizing how folks are just stereotyped in a good way, the millennial generation,  how they want to sign up quick, they want transparency, they want to see one price, no fine print, that is where I think the self-directed world is moving and there are a few select providers that are making it very easy, whether through just the tag line you mentioned or something like a knowledge base in FAQ to really get into the deep details so folks can self-educate or have conversations with people that have been around the block a few times.

Which ultimately is going to move money. Frankly, that’s probably sitting in cash or a bond right now or some old Fidelity, that 401(k), IRA. Into something where you’re investing with somebody you know you trust or in your community.

WS: Wow, what are some ways that we can inform people and let them know that you know, obviously, to grow our investor base and to educate them or maybe ways that you seem to be most successful?

DK: Yeah, I mean, like anything, I think it’s, this is going, just have faith in your offering. I know a lot of folks do when they’re pumped up about it but I think you should look to educate because even, I know multifamily, I call it versus the niches such as a storage RV park where frankly, probably even 90% of active investors aren’t familiar, most folks kind of general feeling of multifamily.

That said, I have a buddy and he’s in the greater metro DC area. So, politics way aside, it’s still kind of unique, most of it is capital but really don’t know what multifamily would look like, you know? Is it you know, is it going to be a hundred-year-old property? Is it a brand-new development? Et cetera. Where is it in terms of proximity, school districts? I think there’s a lot of education off the bat that you can do. That’s how I think you get the folks engaged.

Secondly, I think to have some sort of urgency on the call. I do think you want to get up to a certain threshold. If this is your first property or smaller property, this might even be 25 or 50k. A lot of crowdfunding sites which I would not recommend doing for your first deal or you know – but, what they do is they say, you know, you have to get to a certain threshold and then we’ll give you more love, you know, from our marketing efforts. I think in the same way, you want to get that first call it, hundred k through the door and a lot of it is going to come from education urgency and you know, maybe you throw an extra percent or we call this the A share. Maybe you say, “I’ll give you a point back.”

There’s different ways that you can get that – like anything, once the first hundred K, you know, you keep on seeing the bricks, save the after reason, a million dollars. That’s been really I think successful and you know, folks like to get that grand back if they put in a hundred K, that’s just a little strategy to get to that first step.

WS: Okay, what are some things you’re doing now to increase your ability to raise capital and move forward?

DK: Yeah, I’m a licensed finder here in Texas so it’s great to have this conversation, you know? From Texans for Texans. And we have a great meetup community, obviously, it’s a bit more virtual art. We tend to naturally have social distance here in Texas. So, you know, you could have a few guys around the fire as they say.

But you know, as they said, I think it’s two things. One is just you know, the education on how your asset class may be changing or a new asset class. For example, I never thought of industrial real estate. If we’re going to poll on the call, I’d be curious what people would think of and I was even more surprised to know there’s a sub-retail component of I think of something like a Floor & Décor something that has been considered essential by the government or somebody that built almost like an industrial park and put in five, 10 million of tenant improvements.

Well, they’re not moving out and their cash flow has been. For me, as my LP hat says, “This might be something really good to invest in.” And then you know, say from a syndication standpoint, I think it’s a very easy sell to say, you know, everybody has cash and bonds and 1% sort of CDs on the sidelines. This is as close to – Nothing is risk-free but I say recession-resistant as possible. Maybe you should put some money here.

Really getting down to what people are going through, what people are thinking, the gentleman I talked to yesterday is 53 years old. This is perfect for his IRA because he can’t touch it till he’s 60 without penalty at this time. This is kind of realizing it’s two things, the sub-group that you’re talking to, and then providing the education.

And then finally, this might be a bit of a tougher pot if one does not have the track records yet but what really surprised me and you know, Richard C. Wilson of Family Office Club said this and when you take a step back, it makes sense is outside of Mark Cuban, a lot of family offices don’t have like endless deal flow, you would think that everybody would. But it’s not a venture capitalist Andreessen Horowitz et cetera, they bring in tons more deals than they can handle, and probably toss 99% of them out anyway.

But the typical family office, it’s not really structured that way. Some of it I would say for folks that you know, maybe you have deep roots in your demographic area or you’re in oil and gas. Take advantage to speak to probably the three or four family offices really learned their mandate because ultimately, they’re going to invest with somebody that they personally like and trust. If you sync with their mandate, meaning that I want dividend pay right now or I don’t care if I do them for 10 years, I want to go 2X, 3X, 4X. that’s a very powerful thing about how you’re going to structure your deal.

WS: Okay, sinking with the family office. It’s interesting, it’s probably a lot of listeners are thinking, “Okay, wait a minute, you know, I’m just trying to speak to the local investor, you know, I’m not really ready to think about or maybe not even understand what a family office is.” Maybe you could give us just like the 30 seconds on what a family office is and let’s talk about that family office a little bit and why we should be thinking about partnering with something like that?

DK: Yeah, the family office would be the – think of the financial arm of a successful or notable family. For example, down here in Austin, Texas, everybody has a Dell computer at one time in their life so Michael Dell, no surprise, he has a family office, now, that’s a pretty sophisticated, he’s probably has a team of 20 to 50 people. You know, that said, think more – listen, I grew up in Scranton, PA or Dunbar actually, small-town America. There is a few folks that have the equivalent of a family office.

You know, maybe there’s 50 to 250 million in it. They’re obviously quiet about what they invest in, you know, where they want to go, that said, you can probably figure out who is on their team relatively quickly. It’s not that super hush-hush. From that standpoint, yeah, if you feel there is a natural engagement, either it’s somebody in the family or on the team, that’s how you develop this relationship.

WS: Thinking through like when do I work with a family office and maybe some pros and cons as well. You know, you have a partner like that, obviously, they have a lot of control, some more than others. You know, I know there are some operators that say, “I don’t want to work with family offices,” because of that right there. Then again, if you’re going to have one family office that’s partnering with you that’s such a different process as supposed to working with 150 investors on one deal, you know? Can you talk to that a little bit then?

DK: Yeah, your comments are spot on, why it’s particularly hard for a first or novice sort of syndicator, it’s difficult because particularly if you don’t have the relationship. Family offices, you know, the benefit here is they – for them, they do not have to imminently invest in anything. They can hold off a few months and frankly, they’ll be fine.

You know, with that in mind, a lot of them, I think wisely hedge their bets. You know, particularly if they do have expertise in the space, say if they were in real estate or they think they have expertise in the space, they’re going to put in all – you know, we’ll call it the 51% clause, they may not actually own 51% but they may have some rights to say, “If you don’t hit these metrics, these KPI’s, key performance indicators, we can boot you out.”

Which you know, as I’d say, a versed syndicator, particularly staying in a niche market such as self-storage, you know, there’s obviously a difference in opinion from there. I would just say, be aware, like any contract you sign, if you were to get into that, I think another way to talk family office general, this is more of an, I think high net worth individuals also. You had mentioned Whitney, kind of the 50,1000 K investors, a lot of folks on the first deal, that’s great, I need friends and family, they’re warm referrals.

The other thing is when kind of the big check comes in. That’s what I got back to an earlier conversation you’re just not saying, “Hey, here’s the webinar or my marketing deal terms.” No, it’s, “Here’s why I think this market is very unique or here’s what I’ve learned, here is our sweet spot because you know, this operator has known, say the Mexican American communities at San Antonio for these many years, this is who we’re partnering with.”

Oh, okay now I have some interest in it. I look at the economics and you’re right, this partner who you wisely got to manage a property has had a 30-year track record. You know I’m like pony up, you may not know I have a million-dollar and I might pony up a $1 million now. So, you know I go back to really just the education of it and you know if you are sincere with it and very transparent and honest that you might be welcomingly surprised how many referrals you got.

[END OF INTERVIEW]

[OUTRO]

Whitney Sewell: Thank you for being a loyal listener of The Real Estate Syndication Show. Please subscribe and like the show. Share with your friends so we can help them as well. Don’t forget to go to LifeBridgeCapital.com where you can sign up and start investing in real estate today. Have a blessed day!

[END]