On this episode of The Darin Batchelder Real Estate Investing Show, we’re joined by Dusten Hendrickson, a seasoned expert in the realm of apartments. Dusten offers insight on market trends while discussing his journey from overhead roofing to multifamily spaces. With a passion for passive income and a love for green building, he has even worked on the first certified Passive House in South Dakota. Dusten is a multifamily syndicator and the founder of Mailbox Money RE, helping others invest the way wealthy people do. Get ready to dive into an insightful conversation about real estate investing, passive income, and more.

Episode Timestamps

• [00:02:36] Urban shift to suburban for cheaper space.
• [00:05:39] Brand new development cuts out garages.
• [00:09:16] Autistic side, entrepreneur, multifamily focus, successful projects.
• [00:12:41] Slow scaling until 40 units, then collect money.
• [00:17:36] High cash flow, focusing on design, low occupancy problems
• [00:20:45] Development offers higher returns and steady income. Acquiring is challenging due to high pricing.
• [00:23:30] Set up fund for raising money easily.
• [00:26:37] Like small projects, gain experience, help others.
• [00:31:42] Limited time for mentoring, but available.
• [00:36:19] Finding value in conferences and conversations.
• [00:39:02] Market goes higher, normalizing prices, few green deals.
• [00:43:08] Recession, distress, and lowered distributions due to higher interest rates.
• [00:44:25] Real estate value will increase in Dallas.
• [00:47:57] Liberal city allows unique development projects.

Episode Table of Contents

• Building Real Estate and Design-Focused Apartments
• Dusten's Journey in Real Estate and Public Speaking
• Dusten's Approach: Design-Focused Apartments and Organic Marketing
• Challenges, Personal Insights, and Scaling in Real Estate
• Design Innovations and Sustainable Approaches for New Apartments
• About Dusten Hendrickson

Building Real Estate and Design-Focused Apartments

Dusten Hendrickson, a seasoned expert in the multifamily space, joins Darin Batchelder on this episode. Dusten shares insights into his personal journey in the industry. Starting as a roofer and gradually moving into real estate development. He emphasizes the importance of mindset and persistence in achieving success in the field.

When discussing market trends, Dusten highlights the growing demand for design-focused apartments in the current real estate landscape. He explains that many tenants are seeking high-quality, affordable housing options without the burden of excessive amenities. Dusten believes that some amenities, such as pools, dog parks, and garages, are rarely utilized and can add unnecessary maintenance costs to properties. By eliminating these amenities and focusing on attractive, functional interiors, developers can provide comfortable living spaces that appeal to modern professionals while keeping rental prices affordable.

Profitable Apartments and Unique Living Spaces

Dusten shares his approach to building profitable projects, emphasizing the importance of scalability and specialization. He recommends focusing intensely on a specific niche, such as multi-family developments, to maximize returns. By concentrating on multifamily properties, Dusten has learned to identify promising opportunities and make informed decisions that align with his expertise.

In terms of design-focused apartments, Dusten discusses the benefits of providing unique living spaces tailored to the needs and desires of tenants. He believes that there is an opportunity to separate oneself from the competition by offering trendy, well-designed units in an underserved market. By leveraging social media and organic marketing strategies, developers can generate interest and attract tenants who appreciate the aesthetic and functional aspects of these modern living spaces.

Overall, Dusten highlights how combining his real estate knowledge with a focus on design has allowed him to create successful projects and provide affordable housing options with high occupancy rates and low concessions.

Finding Comfort in Panel Discussions

Dusten Hendrickson shares his experience and challenges with public speaking during the podcast episode. Despite considering it one of his weakest skills, Dusten finds comfort in participating in panel discussions and engaging in Q&A sessions. He reveals his preference for conversational settings, which align better with his natural communication style. Dusten recalls taking a speech class that didn't resonate with him, further highlighting his inclination towards more interactive and dialogue-driven interactions.

Real Estate Market Outlook

When discussing the real estate market outlook, Dusten expresses confidence in its continued growth. He believes that the market will maintain its upward trajectory, with high prices becoming more psychologically accepted and normalized among people. He also anticipates that a drop in interest rates will further boost property values. However, Dusten acknowledges the challenges faced by smaller players in the market, as large companies and insurance firms dominate deal acquisitions. He highlights the importance for aspiring investors to find their niche within the multifamily space, as syndicators make up only a small fraction of the market.

The Beauty of Real Estate Investments: "That's the beauty of real estate, is that you may gotta remember you're buying a business. So when we're developing a property, we're adding tons of value. Because we're starting up a cash producing asset on ground that's not producing anything and there's a liability."— Dusten Hendrickson

Dusten's Approach: Design-Focused Apartments and Organic Marketing

Dusten emphasizes the advantage of living in a liberal city that allows him to pursue unique and innovative projects. He shares his experiences in bringing novel ideas back to his community on a smaller scale. One example of this is creating an entire apartment comprising 30 studios, which wouldn't be feasible for other developers. Dusten's motivation comes from understanding the lifestyle people aspire to but are hindered by the lack of comparable properties in the system. He seeks to address this gap and sell his ideas by breaking into the system and taking advantage of the high cash flow in his area.

Market Demand for Trendy and Well-Designed Apartments

Dusten recognizes the market demand for trendy and well-designed units, which are predominantly available as condos for sale rather than rentals. With almost 100% occupancy, low concessions, and minimal bad debt, Dusten's properties have proven successful. His focus on design sets his properties apart from others in the market, making them desirable for renters. By providing high-quality living conditions at affordable rates, Dusten aims to meet the needs of tenants and create a sustainable business model.

The Power of Design in Real Estate: "So if you separate yourself through design, there's this massive pool… And with the Instagram age and everything, it's, like, just it keeps getting more and more like the HGTV. Everyone's more aware. And so then you have these trendy units, and there's just not that many in all of the market."— Dusten Hendrickson

Utilizing Organic Marketing Through Social Media

To market his projects, Dusten adopts organic marketing strategies through social media. He takes advantage of platforms such as Facebook to reach potential tenants and investors. By showcasing his unique designs and value proposition, Dusten generates interest and ensures that his projects receive maximum exposure. His approach to organic marketing helps him connect directly with his target audience and enables him to differentiate his properties from the competition.

Challenges, Personal Insights, and Scaling in Real Estate

Dusten candidly shares about his self-diagnosed position on the autism spectrum and the official diagnosis of his son. He believes that his different mindset and ability to work for himself sets him apart from others in his family who are engineers. Dusten recognizes that his unique perspective and thicker skin help him handle criticism and navigate challenges in real estate with resilience.

The Power of Focusing Intensely and Scaling

Dusten reflects on his earlier career in real estate, where he ventured into various sectors and experienced limited profitability. Attending a syndication event in Nashville introduced Dusten to the importance of intense focus and scaling within a specific vertical. Through his partnership with Omar, Dusten realized the benefits of specializing in multifamily properties and learned to turn down deals that didn't align with his core focus. By maintaining a deliberate focus on multifamily, Dusten found that scaling became easier. H was able to provide valuable insights and knowledge to his growing team.

Scaling and Focusing in Real Estate: "Like Warren Buffett always says, you gotta focus intensely to make the most money. So I really like multifamily, so I really focus on multifamily."— Dusten Hendrickson

Leveraging Conferences and Gaining Insights

Dusten highlights the value of attending conferences and gaining insights that can be applied to his real estate business. By participating in industry events, Dusten has acquired valuable ideas and connections that have contributed to his success. He emphasizes the importance of selectively absorbing useful information while staying focused on the core principles of his business.

Design Innovations and Sustainable Approaches for New Apartments

Dusten discusses the advantages and disadvantages of incorporating garages into apartment buildings. While garages were initially included in their projects, Dusten found that they had minimal impact on rental income as they were often utilized for storage rather than parking. However, the expenses associated with building and maintaining garages outweighed their returns. As a result, Dusten made the decision to remove garages from his apartments. He mentions the option of adding garages later by converting open-air parking spaces, showing his commitment to flexibility in design and adaptability to market demands.

Design-Focused Apartments and Scalability

Dusten expresses his interest in developing design-focused apartments. This combines his artistic abilities with the goal of providing affordable housing options. He believes in the importance of scalability in the real estate industry, starting with a single unit and gradually expanding to multiple units. However, Dusten points out that once a certain threshold is reached, individual efforts become less impactful. At that point, building an investor base and raising funds to support larger projects become significant challenges. Despite this, Dusten finds fulfillment in mentoring others in his team. Sharing his real estate knowledge as he continues to expand his multifamily ventures.

Dusten Hendrickson's insights on real estate development, design-focused apartments, and scalability provide listeners with valuable knowledge about the workings of the market and innovative approaches to property design. His experiences highlight the importance of persistence, adaptability, and the continuous pursuit of creative solutions in the ever-evolving field of real estate. Dusten's story serves as an inspiring example of how strategic decision-making, combined with a passion for design and affordable housing, can lead to long-term success.

About Dusten Hendrickson

Dusten has been immersed in the real estate world throughout his career. With a passion for passive income and a love for green building, he has even worked on the first certified Passive House in South Dakota. Dusten is a multifamily syndicator and the founder of Mailbox Money RE, helping others invest the way wealthy people do.

Where To Find Dusten Hendrickson

• Website
• Linkedin