Listen to hear how Dan Brisse pushes past fear, takes action and follows his dream to become a professional snowboarder. He then has the foresight to start a real estate investment career and set himself and his family up for the next stage of his life. Hear Dan talk about the many similarities in working towards his goals in both his professional athletic career and his real estate career.
Table of Contents:
- An Athlete Turned Multifamily Syndicator
- The Catapult to a Professional Career
- What Led to the Decision to Be a Multifamily Syndicator
- How a Successful Multifamily Syndicator Chooses a Partner
- Skateboarding, Music, and Snowboarding
- What Is a Multifamily Syndicator
- Acquiring the Right Conditions to Win Over Your Fears
- Professional Advice From a Multifamily Syndicator in Getting Through Recession
- Continue to Sharpen Your Pencil
- An Advice for Those Who Are Starting Out as a Multifamily Syndicator
- How to Reach Dan Brisse
An Athlete Turned Multifamily Syndicator
Darin: Dan Brisse grew up in Minnesota, became a professional snowboarder, and then successfully became a professional real estate investor. Dan's on his eighth multifamily syndication covering approximately 500 multifamily units.
We met in a multifamily mentorship group. I just love your story because you're an athlete who decided at some point to get involved in real estate. I want to hear that story, but before we do, can you share a little bit about your snowboarding career. How you got started, how far you took it? It's just a dream for so many to go pro as an athlete.
Dan: I grew up in Central Minnesota, nine months out of a year it's pretty much a tundra. In the wintertime, we would be looking for stuff to do. My cousin got a snowboard from California and we just started riding in one day and it was just so much fun. We were all into sledding as kids. All of a sudden, we're on a board where you could stand up and you went way faster and you could hit jumps.
Being a young guy, pretty into athletics already. I just really like sports. It really appealed to me. I was a little bit more of a risk-taker I would say than some. That really meshed well as well. Basically, riding at Powder Ridge, a little local hill.
I don't even know the exact vertical feet of it, probably 200-300 feet, a tiny hill, three chairlifts. We would just go snowboarding pretty much every day, every night that we could. A bunch of friends from high school, and basically riding every single day.
Dealing With Pushbacks
Dan: As I was riding more and more, I started to get the hang of it pretty well. And learned that there's actually a professional snowboarding career. People do this professionally. So, early in my high school, I just made a decision I was going to try to be a pro snowboarder. There was some pushback from some people.
Darin: From who?
Dan: My teachers, my friends, parents?
My parents, luckily, were all about it. My parents were the biggest supporters of it, from the start. That says a lot. I'm a dad now, I got a seven-year-old and a one-year-old. Parents having my back and just saying, "Go for it".
My parents didn't do what they wanted to do when they're young, and they let us know. They always said, "Make sure you follow your passion and do something you love to do." When they told me that, when I was young, I believed it. I bit it, and I went for it. That was a big blessing and thanks to my parents for believing in me.
My parents were not at the hot mountain with me. They were never coaching me, they were never there telling me what to do ever. It was 100% on me, but as far as getting into it and really going for it, my parents had my back in the beginning.
Darin: That's huge. So, you finished high school and then go move out of Minnesota or what happened there?
Dan: I had a couple of sponsors that were giving me some products. Because as you come up in the snowboarding industry, first, you're a nobody.
Moving to the Breeding Ground
Dan: Then you start this sponsorship where they give you a product and, obviously, after a product, you get paid. A lot of the guys that I was riding with were at a level where we were sponsored, where you're getting product. But, of course, you want to be a pro snowboarder, you want to get paid.
After high school, five of us drove up to Salt Lake City, and we lived in Salt Lake City. That was an eyeopener for me because that's where all the guys who are trying to be pro or gals trying to be pro snowboarders at the time, they would really plant in Salt Lake City. That was the breeding ground. If you want to be an actor, you go to Hollywood.
If you want to be a pro snowboarder, you go to Salt Lake City. It's the hub. When I got there, I just realized how far I had to go yet. I didn't realize what level these guys were at. Coming up from Minnesota, I was really good at urban riding because that was what I grew up on. I'm snowboarding, I was known for being the urban guy, but I loved backcountry.
I love hitting jumps, cliffs, and all of that as well. I realized for those first three years when I was there, I was working these night jobs there. I was at Blockbuster because I didn't have a car at the time. I was broke, I rode out with my friends. I’d bike to Blockbuster at night and I would check people out for movies, and then I'd snowboard all day during the day.
If You Want It, Go Get It
Dan: I would just do that over and over again for the year. Then after the year was up, I would drive back home to Minnesota, work for my dad, summer job, detasseling corn, you name it. I was doing it.
Then next year, I moved back to Salt Lake City, get another job. One year I was at Payway busing tables. It's a restaurant. Another year I was at Red Lobster working as the ally coordinator, which was a ridiculously horrible job, and got me through, though, and I would ride every day during the day.
Year after year, finally, I got to a level where I went to Aspen, Colorado. And in Aspen, they had a contest called the Aspen Open. It's basically like the US Open of anything where you're a nobody, you can go pay 250 bucks and ride, and I won.
Darin: Holy cow! You went out to Aspen and you actually won. Was that your goal or did you just want to place?
Dan: I don't remember specifically if it was. Knowing who I am, I probably wanted to win. I mean, I'm a competitive kind of guy. What happened with going to Aspen is one of my real good friends had a little bit more money and had a car.
He actually was the guy who said, "Yo, get in the car. We're going to Aspen. You're going to ride in this contest." So, he drove me there. We rented some dive hotel and ended up winning. Yeah. It's a great story.
Darin: That is awesome. There are a number of things that I love about that entire snowboarding story.
The Catapult to a Professional Career
Darin: One was that you actually left your hometown with a bunch of buddies. You went out to Salt Lake City, you took action, you went after trying to follow your dream. With most people that are either starting a business or starting something new, they have to sacrifice something.
So, you were riding all day long, following your dream, trying to get better, and compete. At night, you had to work some jobs that weren't your favorite jobs just to get by. That says a lot.
Dan: It was all on me. My parents, they were supportive, but they didn't fund any of it. They just said, "If you want it, go get it," and that was the way it was set up. I understood it, I knew that if it's going to happen, it was up to me.
Looking back, the grind from being an amateur to being a pro snowboarder, there was so much that went into it. So much hardship that if you don't, with professional sports, you've got to want it so dang bad. You're just so committed, so willing to do whatever it takes for as long as it takes.
I was willing to die to make it. That sounds extreme, I understand. But if you watch some of the videos that we were creating and created, a lot of it was you risking your life. As you progress, as you take steps year after year, you start to get more comfortable doing more dangerous stuff that's a little bit easier.
Darin: Now, you win in Aspen. I have to imagine that catapults you into the professional career a little bit. What happens at that time?
A Multifamily Syndicator’s Love Story
Dan: Once I won that contest, I had a couple of brands that I was already riding for amateur level of getting product. That was the point where I started to get invited to a bunch of professional events. Superpark, where pretty much every major brand and every team manager comes. It was the way they're spotting the up and coming kids.
If you could go to Superpark and you could stand out, you basically started signing contracts left and right. That's how things went. I went to Superpark, and I was really comfortable riding at the time. I just had just been on this four-year push of just an obsession, and I think I standout that first year.
I signed a couple more contracts with a couple more brands, Volcom being one of them. Volcom is a brand out in the West Coast, surf, skate, and snow. I was a part of Volcom for 11-12 years, and it was just a dream come true, really. It happened quickly once that first contest went down.
Darin: Then now, you live out in Washington State. When did you move out there?
Dan: As my career launched off, I started traveling nonstop. It was pretty much November 1st, travel, chasing snow till May 15th about. During that time of coming up, I met my wife, actually, at TGI Friday's.
She was there busing tables. Looking back, it's so funny to me, but she was busing tables, and I was busing tables. We got along well, and I liked her a lot. We started to date. Then she moved back to Salt Lake City the next year.
The Decision to Pursue a Dream
Dan: She was there by herself pretty much every day and I was gone traveling. She's got all this family up here in Washington, and she's got these sisters. They're real close.
She was like, "Is there any reason that we need to continue to be here when you're not even here?” I was like, "Not really, I guess. Things have really elevated to a different place." So, we moved up here, and we've been here ever since.
Darin: Fantastic. Well, I'm going to tell a little story about I was in college just graduating. A buddy of mine, I was asking him what's he's going to do when he graduates. He said he was going to go out West and go ski for a year.
I actually thought to myself, "This guy, he's going to waste a year of his life. He's going to go out be a ski bum, and then he's going to have to start from scratch in the corporate world. And I'm going to be that much further ahead.”
Now, I graduated, I started working for Pricewaterhouse. I'm in their training program, I'm starting to come up the ladder. When I leave the apartment in the morning, it's pitch black, and when I get home, it's pitch black.
I'm taking a train into Boston from Providence. I'm thinking to myself, "That guy might have had it right going out and spending a year skiing before jumping into this working world." So, look, I applaud you for going after your dream and not only did you go after it, but you succeeded.
What Led to the Decision to Be a Multifamily Syndicator
Darin: So, at some point you decide, "All right. The career has got to slow down or stop, and I need to look at what's next for Dan and Dan's family."
And you decide to get into real estate. So, help us understand, one, how did you make that decision to want to get into real estate? Then, two, there's a lot of different asset classes within real estate, how did you decide on multifamily?
Dan: When I was moving through my career, I became friends with a lot of my heroes who were older than me. Who's been in the snowboarding industry for a long time, and who had done very well. Most of the guys that I got to know lived in these big homes overlooking the city, driving big cars.
They're 10 years in front of me, and all of a sudden, their career would end and things went South quick. I was like, "Gosh! If I'm lucky enough to have a 10-year span. Be as big as they are, as big of names and do as well as they've done, I'll be very lucky."
Halfway through my career, already in the middle of it, I started to realize I needed to understand more about money. I never got that training growing up, and I needed to figure out what to do with the currency I was making?
Because it's just not taught in school. So, I started reading a bunch of books and ended up hiring a CPA. Because the CPA I was working with didn't understand real estate investing and didn't understand how to reduce my taxes legally.
Joining the Rich Dad Organization
Dan: So, I was just paying this large bill of taxes. I was blown away. I was a kid making four, five, 8,000 in the summer, and all of a sudden, you're paying these six-figure tax bills. It's just unbelievable to me.
I decided to hire Provision, which is a company out of Arizona, I found through the Rich Dad company. Rich Dad organization, Robert Kiyosaki. Read Rich Dad Poor Dad, my eyes were opened and I was like, "Whoa! I need to understand this better."
I got in with those guys, and they basically took a look at everything I was doing. They said, "Hey, you should buy real estate and we can show you some massive depreciation." That was my real reasoning for getting into multifamily.
Darin: That's awesome. Well, you're a much younger guy than I am. I just turned 50 about two, three weeks ago. I'm guessing you're in your mid-30s?
Dan: Yeah, 36.
Darin: I applaud you for figuring that out so much earlier. I grew up and like so many, climbed the corporate ladder, put money into your 401Ks and IRAs. Into the stock market, into ETFs and stocks, and it will grow exponentially over time. I didn't find out about these other avenues until about two years ago when I got involved in real estate.
Then I started networking with other people, and they put me in touch with, "Hey, Darin. You got to read this book, Tax-Free Wealth."
Doing Things in a Whole Different Level
Darin: That's by the same company that you went to. I was in the same boat. I had my own company, and I've been paying six figures in taxes for years and years.
When I read this book, I was like, "Oh, my gosh! I can't believe that I spent so much time paying all that tax. Where if I started investing in real estate at a much younger age, I would have been able to, one, shelter that tax and defer it. But, two, grow that savings over and over again."
That is great that you figured that out now. I try to have those conversations with my teenage kids, but sometimes they're not ready to hear it yet. There are some listeners out there that are going to be like, "Man, Dan was smart, and I'm going to follow his lead." So, that's great that you took that action. Now that real estate, did they tell you multifamily or did you decide on multifamily?
Dan: I was reading a bunch of books at the time. I was a big fan of Ken McElroy. He just preached cashflow. That really spoke to me in the sense of having residual income and not working every single day for a paycheck. And just feeling like every two weeks you're starting over or every year starting over.
That idea was really intriguing to me. I was building my wealth strategy with Provision because they're a high-level CPA firm, and they do it at a whole different level. And they build you a plan of where you are, and where you're going to be, and how you're going to get there in a five-year period.
How a Successful Multifamily Syndicator Chooses a Partner
Dan: When I was telling them some of my goals, similar to snowboarding. I had pretty clear goals of what I was trying to do. And they just said, "Based on what you're describing, multifamily, apartments, is something that you should look in to." That was it. Then I started buying some smaller stuff on my own.
I bought a duplex. I bought a nineplex. I bought a 24-unit deal. As I was buying these deals and seeing cashflow and seeing the tax savings and all this was happening. The loan pay down, just getting excited about what it was doing for me. I started to really become a little bit more obsessed with it and delve in a little deeper.
Darin: Then now, you're doing much bigger deals, and you've partnered with someone else. Help me understand how you picked your partner.
Dan: I was doing these smaller deals on my own. And I didn't fully feel like I had 100% grasp of making sure that I was buying in a professional manner. I felt like there was still another level that I could get to, just like with snowboarding. Becoming a pro snowboarder and becoming a professional real estate investor, I feel like there's a lot of similarities.
You can just tell you're either there or you're still not there. So, as I was buying these deals, one of my really great friends from high school in snowboarding. His name is Mike Roeder. He came out to visit us in Washington in 2014 or 2013 maybe. And he was telling me about all the single-family homes he was buying.
Connecting With Like-Minded People
Dan: He was in insurance. We've got a lot of similar values as far as just the way we look at wealth. I could hear the way he was talking. He was describing a lot of multifamily, but just on the single-family level. When he was describing all of the single-family stuff, I just brought it up.
I said, "We should buy a deal together. Let's buy an apartment together. You're already doing single family, I'm doing multifamily. Let's just buy a multifamily property together." That summer, we ended up buying a 28-unit deal, he, myself, and one other gentleman. We both really liked it a lot. That was the beginning of the Granite Towers Equity Group.
Darin: That was the summer of what year?
Dan: Maybe it was 2015. I'd have to ask Mike exactly. Then after that, we bought that property and we both really liked it. That was when we were like, "Hey, let's go check out Brad Sumrok." We've been hearing a lot about him.
I listen to the Real Estate Guys Radio Podcast, and always heard him talking about apartments, specifically. So, we both flew down there in 2017, and we ended up signing up in 2017 to be a part of his organization.
Darin: It's funny how things work. You went to the snowboarding world. When you left Minnesota and went to Salt Lake City, you were surrounded by all these other people. People that were going after the same dream as you, you're around so many like-minded people.
How Childhood Heroes Play a Role in Shaping a Person’s Dream
Darin: You see so many different levels of athletes, where you want to go and how they got there. And being able to network with them is a huge advantage. Then you went and did that same thing on the real estate side. You sought advice from tax professionals, and then you went after an asset class and focused in one area.
You partnered with somebody that you know, like, and trust. Even though you've already done multiple deals, you decided to join a mentorship group. So that you can network and leverage that experience even that much more. Not everybody does that, but it's funny.
Once you start getting into that small world, you start hearing things, right, that you wouldn't have heard otherwise. Somebody said something and then it grabs a hold of you, and then you go after it. So, before we get more into the real estate side, just want to understand your childhood just a little bit more.
It sounds like you had supportive parents that really encouraged you to go after your dreams which is awesome because that's not always the case. Some people are brought up in an environment where the parents just want them to go to college, get good grades and climb the corporate ladder. So, they were very encouraging. Did you have brothers and sisters? Where did you fit in in the mix?
Dan: I've got one older brother. His name is George. He lives in Minnesota still and, actually, major riots going on back there right now. It sounds wild with all the stuff going on in Minneapolis, but that's a whole new story.
Darin: It is crazy.
Boys, Toys, and Brotherhood
Dan: Crazy stories of my friends hearing what's going on back there. But, my childhood growing up in Minnesota, it was phenomenal. We grew up on a lake. It was in the country. I had this tight group of friends that were and still are some of my best friends.
I can't say enough about the friendship I had growing up in Minnesota, how they mold you. You become a different person because of the people you meet and become really good friends with.
When I was coming from first grade to seventh grade, I was a jock. I really loved football, basketball, and baseball. My brother, being a couple of years older than me started getting into skateboarding and music and snowboarding. The little brother follows the big brother kind of. That's just how I've always been.
He started snowboarding more, and we had this group of friends that I started to become better friends with that were snowboarders. All of a sudden, I was a skater in high school. And I was the kid that was transferred from the jock world to the skater world. I had a great childhood, I can't say enough about it.
Darin: How much older was George?
Dan: George is two and a half years older than me. He's really into music.
Darin: I see that a lot with different families when there's multiple kids. The younger one is always trying to catch up with the older brothers. A lot of times, they end up becoming much better athletes because they're around that much better competition early on.
Snowboarding Pro Versus Real Estate Multifamily Syndicator
Dan: Exactly. You know what? I remember when they were getting good at snowboarding, I always wanted to be at their level. I could tell that I was starting to pick it up a little quicker than a lot of them. It just came a little more naturally. I got to the point where I started getting better than them, George and his friends.
They started to quit snowboarding, which is unfortunate. I don't necessarily know if it's because I was getting better, but they just moved away and I kept going with it. Definitely a huge part of it was wanting to impress your brother and his friends and then thinking you're good at something. That was a huge drive when I was a little kid. When I was 12-13 years old, you're a young kid.
Darin: Absolutely. In the snowboarding world, you made your career when you started to really try to look at doing something different, taking action to get in the real estate area. Your network within the snowboarding world, did you share that with them?
Were they supportive? A lot of times, there's people that aren't in your world that may not be supportive and you have to fight through it, anyway. I don't know if that was your experience or whether they were like, "Hey, man. Go out and figure it out and then tell me how to do it."
Dan: In the beginning, I kept it all very quiet. The snowboarding industry is very niched. It's very much like high school. You're either in and you're the cool guy, you're at the parties, you got good style.
The Long Road to Becoming a Successful Multifamily Syndicator
Dan: You ride for the good brands, and you're in or you're not really that in. I could see the writing on the wall that eventually my career was going to end. I didn't want to be in a position like most of these guys are. Where they're caught struggling or back working a job that there's just absolutely no passion at. That was my way of doing it under the radar a little bit.
When I formed the business with my partner, Mike, he's not in the snowboarding industry. He never was deep in the snowboarding industry. It was really easy to correlate and just build this business on the side, and you continue to buy assets and learn.
Especially with snowboarding, you go really hard all winter, and then summertime, you're pretty much off and you're off the radar. People don't really know where you are. It's a nice time to be able to put in some extra work with still being paid to really get your skills going and start to build that business on the side under the radar.
Darin: Now, you're in the real estate world. You bought a duplex, a 12-plex, a 19-unit, then you started partnering and doing some bigger deals. But I know you've done a ton of deals. So, let's just talk high level, how many deals have you done? How many units have you purchased to date because you've done extremely well?
Dan: We're working on our eighth syndication right now. We did four or five last year. Going back to snowboarding, relating it to snowboarding, you do all this effort.
Having a Big Spurt of Growth Takes Time
Dan: You put all this time and at least that's how it was for my snowboarding career and nothing really seems to happen. Then all of a sudden, you have this big spurt of growth. Well, same with real estate.
From 2013 to 2018, there wasn't a lot that I really did. I felt like I was learning, and that was my pace. I've applaud others who have been able to go much faster and build it quicker. But ours was a little bit more of a slower steady, and then pace. Then as we really understood how to do it right, how to underwrite properly, how to put the debt on properly, how to raise capital properly in a professional way.
Now we're at a point where we're able to move at a much quicker pace. As long as we can find the deals, capital seems to have been very easy to source thus far. It's more about locating the deals. So far, we've done seven. We're working on our eighth right now.
Darin: What was the total number of units? What's the range?
Dan: Somewhere between 400 and 600, 400 or 500, 400 or 500.
Darin: That's pretty amazing. At one point, you bought a duplex. Now, you're at 400 to 500 units. It doesn't happen overnight, but you have to start somewhere.
Dan: Yes. What's interesting, too, is when you surround yourself with people who are at another level, a higher level than you. I almost say that in an embarrassing way that it's only 400 or 500 in the sense that I know how much other people have done.
Darin: Isn't that crazy?
What Is a Multifamily Syndicator
Dan: I shouldn't think like that. We're at our own pace, and I'm happy where we are. We've done a dang good job, but I'm excited for the next five years as well.
Darin: How would you define syndication? Because there are some listeners that that word could be intimidating like, "Syndication. Oh, I can't be a part of syndication." It just sounds intimidating. How would you define what that is?
Dan: I remember when I first heard it, too. I was like, "What is it exactly?" All it is is you're going to have an educated group of people who find a deal that we think is going to have some extreme value to add. And you basically break the deal up, so you own a part of it as the deal sponsors, the cosponsors.
You own a section of it, and you sell other shares of the rest of the business to investors. And you all own it together, but you own it in different percentages. It's basically raising money to buy a business together and splitting it up accordingly based on the deal and the returns.
Darin: I think it's an amazing concept. Until two and a half years ago when I got involved, I didn't know how the syndication programs work. Basically, in my mind, it's just a bunch of people coming together to buy an asset that they couldn't afford on their own.
So, you could buy a much bigger asset together, and it's amazing. It really is. Before you dip your toe into the network of multifamily investors, how many times did you get offered an opportunity to invest in those types of deals?
The Keys to Being Successful
Dan: I didn't get offered an opportunity very often until I got very much more connected. It was very rare, actually.
Darin: For me, 48 years, and I was a part of a lot of different golf clubs, and around a lot of wealthy people. I didn't have one person offer me an opportunity to get into a private placement syndication opportunity. Now, once you're in that small world, I have deals coming in my email box all the time now.
But prior to getting involved, I didn't know how to do it, and nobody offered me the opportunity. It's crazy. I probably could answer a few of this on my own based on what you had said. What are some keys to success? Some of the things I heard was that you're a man who follows his dreams. You're also a man who sets high goals for himself.
You are willing to take risks and you're also somebody that will take action to go after those goals. Those are all very admirable qualities. Anything that I didn't mention there that you think also helps as key to being successful? Both as a professional snowboarder and as well as getting into the real estate world?
Dan: The biggest thing I can say is find somebody who has what you want and try to do exactly what they did to get what they got. I thought of hiring a mentor, somebody who's got the track record, who's doing it successfully, who's been through a recession, who really does care about your success and try to get around that person.
A Successful Multifamily Syndicator Reveals the Two Secrets to His Success
Dan: Understand the way they think. If you can get their thought processes and you can repeat those thought processes, you'll get the similar results that they're getting. I'd say a mentor and just copying successes was key for snowboarding. I did it with snowboarding, and it worked great. I just copied somebody else who was very successful and stuck to it, that's another piece. You got to be extremely determine, persistent and you just got to stay at it.
One thing that happens way too much with other people I know or even younger kids is it doesn't happen quick enough so they quit. That's the most detrimental point because at that point is when you really have to stick with it and you got to give it. I think a big part of that is how bad you want it.
That comes back to snowboarding, too. I can correlate so much of snowboarding with real estate because I think success is a habit. It's more of your habits, of your behavior and thought. You just got to have that persistence, and you got to want it bad. If you don't want it bad enough, you'll know because you won't be doing what works, you won't be putting in the effort.
So, I always thought of that with snowboarding in the sense that when I was coming through my career, I wanted it so bad. I was out there first and I was out there last. It was just the way it was and you couldn't stop me. That's what I wanted to be.
How Does a Multifamily Syndicator Deals With Fear
Dan: With real estate, if I'm having trouble getting in the office or I'm having trouble underwriting a deal, I go back to, "Hey, why? Why do you want it? Do you want it? Where are you on the spectrum?" You can pump yourself back up, and give yourself a little more enthusiasm as needed because enthusiasm is something you got to do daily.
You got to get yourself excited daily. It doesn't just happen once. It's like eating food. I've heard Zig Ziglar talk about that. You got to do it daily. You can't eat once and expect to be full the rest of your life. It's the same with enthusiasm. Those are some points that I have kept close in my mind.
Darin: What about fear? Talk about some times you had fear of trying. Typically, fear crops its head when you're going to try something new. You obviously had situations that could have caused fear. I don't know if you were fearful or not. Explain whether you were at times and how did you push past that fear.
Dan: That's a great point. Fear is something that I've dealt with in a very heavy way for my entire snowboarding career, and it's always there. There isn't a time when we were filming I wasn't very, very scared of what could happen. I don't know exactly how to explain it in the sense that you just got to do it.
It doesn't mean you just jump off a building and hopefully you get to the other side. You got to have some thought process of where you are, are you at that level, do you have the right team around you?
Acquiring the Right Conditions to Win Over Your Fears
Dan: Do you have the right conditions to take those steps. So, that comes with experience. With fear, there hasn't been a time where we bought a property where I wasn't a little uncomfortable.
You put a new property in our contract, it's uncomfortable. You've got questions in your mind. Will we raise the funds? What are we going to find here? It's a hard money they want. It can be sometimes significant money.
The biggest thing with fear I could say is continually get educated. Continually learn more so that you understand what's coming. It's what you don't know that is so dang scary, especially in real estate and in snowboarding.
Darin: Exactly. Also, I would imagine having a snowboarding experience. When people have asked me that question, one of the things I talked to is think about another time in your life when you were scared and you took a chance, and it worked out. And then you can implant that in your own head. Use that the next time you're scared.
You had different fears and they've just gotten bigger, but your experience has increased as well. I'm sure buying the duplex for the first time was scary, and then buying an eightplex. Now, if you were to buy a duplex, I'm sure it wouldn't be scary at all. Buying 120-unit or 150-unit deal gets a little scary. And then down the road, it may be a 300-unit deal. Who knows? But you have the experience.
In snowboarding, you went off and took a jump. The first time you did a jump that was a certain height. You're probably like, "Oh, man! Am I going to be able to land this thing?"
The One Thing to Keep in Mind When It Comes to Fear
Darin: Then two years later, that jump looks small and you're going after a bigger one. For some people, fear will prevent them from taking that chance.
Dan: One thing to keep in mind with fear is do what's in front of you. Focus on what you can do now. If you look too far ahead and I find myself doing this sometimes with everything in life. Because I'm looking a little too far ahead, and I'm trying to figure out something that I can't see yet.
But if you just take that first step of what you can do now. If you're not in real estate yet, you want to be, and start with books. Get a few books and plow through them.
Maybe by that time you'll know more of, "Yeah, this isn't what I thought it was," or "Heck, yeah. I'm going to learn more." You got podcasts that you can be tuning in to. Obviously, yours is great right here.
Then if you're still liking it, maybe you buy a small deal. Or maybe you go get trained by somebody who can move you forward much quicker. But just taking some steps and working your way through it is the biggest thing.
It happened a lot with snowboarding. We have spots that were scary and I didn't know how to hit it the first time. So I would break it down and make it a little bit less dangerous so that I could hit it and then I could build myself up. Same stuff here with real estate. One step at a time, and just keep at it.
A Multifamily Syndicator’s Approach in Dealing With COVID-19
Darin: That's such a great point. I have so many people that reach out to me on Instagram. We have sidebar conversations. They're like, "Which part was scary doing your first syndication deal?"
I laughed and I'm like, "You know what? Every part was scary the first time I did it." Calling the brokers the first time not knowing how to build the credibility, going on property tours, putting together letters of intent. They were all scary. The first time I put my first letter of intent out, my wife was like, "Are you excited?"
I was like, "I'm scared shitless. I don't know. What if they accept it?" Now, those steps seem very easy, but in the beginning, the first time you do it, it's scary. So, I think that that's great advice is focus on not all the steps that are required, but the next one or two steps. Just focus on getting past those.
We are in the middle of a very difficult time with COVID-19. A number of states are starting to reopen now, but go back to we're recording this near the end of May. It will most likely come out some time in June. But before going into April, when all this was happening in mid-March, and the government comes out and says for 120 days not going to be able to evict any tenants.
I know for myself and a lot of people in the multifamily community there was fear that we didn't know what collections were going to look like in April or May and how bad it was going to be. Help us understand what's been your experience through this time period.
Professional Advice From a Multifamily Syndicator in Getting Through Recession
Dan: Unfortunate times, indeed. We've been extremely fortunate thus far. Out of all our deals, they've either done as well or increased other than one, which is an oil market. And that deal is still doing pretty dang well all things considered. This is where I'm so grateful that I look back, that I joined somebody and I got trained by a professional.
I got trained by a guy who had been through the great recession. Just making sure to stick to his guidelines is the best advice I could have given or have been given coming to this point here. All of our deals are well-capitalized, and we've got fixed debt on them.
We are in a position where we know what our debt is going to be. It's not going to change on us. We're not coming looking for a new loan here in the next two years because does this go down for two years. Does it go down for three years or does it bounce back by the end of the year? I don't know. It's unknown.
It helps us and our investors sleep much better knowing that we are well-capitalized on our deals. We have underwritten them conservatively. We have long fixed debt. We're doing some more stuff on the asset management side to just basically help our tenants. Instead of battling with them, we're communicating with them much more to set them up on payment plans.
Like you said, we can't evict, and it's probably a good thing. Otherwise, you probably have a bunch of homeless people and it would be spiking. At the end of the day, it's good that we're not kicking them out.
How Resilient Is Multifamily
Dan: And we're working with them to try to have them feel like we're in this together. At the end of the day, we can't pay our mortgage unless you pay rent. We can't fix the property up and take care of it unless you pay. What can we do to get through this together has just been our mentality.
Darin: That's a great attitude. Prior to going into this, you had debates with, not necessarily debates, but discussions with a lot of different syndicators. And people inside and outside the industry in terms of when the next economic downturn comes, how resilient is multifamily? So many people had told me, "Hey, look. We focus in on BC properties."
They're not really building any BC properties anymore. Those properties should maintain to be resilient during an economic downturn. Because you could have some people on A properties that want to save money and flow down to Bs and Bs flow down to Cs. You may have some families that sell their home and become new renters. For those reasons, multifamily should maintain resiliency.
All of that conceptually makes a lot of sense, but I hadn't been through a downturn. I was still wondering what is the true nature going to be. Here we are, we've fallen to a realm, where government-mandated, you're not to be able to change out tenants if they're not paying. That was a scary thought.
But to your point, the performance has been so much better than I anticipated thus far. We're only halfway through it right now. Who knows if it's going to be months or it's going to be years. But what's come to fruition is that people are paying for the basics.
A Day in the Life of a Multifamily Syndicator During This Pandemic
Darin: The money that they have, they're putting towards food and shelter, and rent is their shelter.
Dan: That's it. I feel like that's one thing, though. With snowboarding, it's just a pleasure that could be cut so easily from someone's budget. Am I going to pay rent and eat food or am I going to go snowboarding? Well, it's easy to see the answer there.
That's another thing. Looking back when I was getting into something after snowboarding was something that was very, very important to everyone. A place to live is right up there with food in my book. I'm paying for food and then I'm paying for shelter. So, that's critical.
Another thing we've been doing a lot with our team is just weekly communication. Getting on the phone with our property manager and just checking in exactly how our rent collections exactly this week. Every five days, how did we do compared to previous months? If we're off somewhere, why is it exactly and have we communicated with that tenant?
Those little bit more intensive asset management processes can really help a lot in helping with getting you through these times. And also upping your communication with your investors a couple of times a month. If there's anything that's not going well, maybe even up it for once a week. But so far, deals have been pretty dang healthy, and two times a month seem to be good with our investors.
Darin: What's your philosophy now that we're in the middle of this? Are you guys on hold and wait and see? I've talked to a number of syndicators.
Continue to Sharpen Your Pencil
Darin: Some of which are like, "Look. I'm just not going to really look at deals right now.” Or are you like, "I'm still on the market if the right deal comes around"?
Dan: We're definitely still in the market if the right deal comes around. Everything comes back to snowboarding in my mind because it was what I grew up on. Is that you're always in a snowboarding position.
Darin: I'm jumping in here, but you're making a lot of people jealous when you bring up the snowboarding experience. Because so many of us would have liked to have pursued sports right out of high school or out of college. So, you're very fortunate there, my friend. Sorry I interrupted.
Dan: No problem. In the summertime, you're still training. You're still doing stuff. If it's your passion, my mindset is that I'm always working at it and trying to get better at it. And listening to Brad, he's the guy we hired. He suggests continuing to underwrite deals and continue to sharpen your pencil. It just seems like the logical thing to do.
We definitely are looking at deals. When they do come up, we underwrite them. We put our best foot forward. It doesn't mean we're getting anything at the moment that we've felt good about yet. But I think that as we continue to do it and continue to run the business and continue to treat it like a business.
We could have bought them when we start to see maybe some loans start to unfortunately gone bad with forbearance or whatever it may be. We'll be ready and our investors will be ready to move with us, too.
What’s the Stretch Goal of a Multifamily Syndicator
Dan: And appreciate that we're continually diligently working on our assets and finding more.
Darin: What's next for Dan? You've pushed yourself to the limits in snowboarding. You've risk your physical life. Now, you've continued to grow the real estate channel. What's the stretch goal for Dan?
Dan: I would say for the next decade, for sure, it's really just to focus on buying good assets and trying to add value to our tenants. Add value to our investors. Help people like my parents who maybe didn't have the best place to put their funds through most of their lives. To try to help them for the last 15-20 of their lives.
Try to give them a little more back monthly, quarterly with our cashflow checks. And just expand Granite Towers and add assets that we think are powerful. One part of our business that's really passionate for Mike and I is we donate 5% of whatever we make to Sheridan Story which is a company in Minneapolis that helps kids that are less fortunate with food and try to help feed more hungry children.
Over these next five, 10 years with persistent effort and clear annual goals, we could potentially build something really special. To be doing it with one of my best friends, I couldn't ask for a better situation. I'm excited, just to keep going and doing what we're doing.
Darin: Dan, I love that perspective because I've talked to other syndicators. One of the challenges that could come is raising capital. You've mentioned that the capital always seems to be there for you guys. One of the things that you just mentioned, I have a similar perspective on.
Helping People Grow Their Wealth
Darin: I have another business that I've grown since 2007, and all the profit of that business goes to myself and my family. But one of the things I love about these syndication deals is the ability to bring other people into the mix that aren't out searching for those deals.
Yes, we're raising capital to get the deal done. But I love looking forward and thinking to myself, "How can I help all these other people grow their wealth?" We have 44 limited partners in our deal. I'm sure you have way more than that in all your deals.
You're helping all these other families grow their wealth at the same time you're doing it for you, your business partner, and each of your families. I mean, that's a great, great, great perspective.
Dan: Freedom for me has always been a top value that I hold. I know that if we can kick back more residual income to our investors and give more of their money back and multiply their money over the years, that freedom can be for more of our investors. We can bring that incredible gift almost in the sense of it because that's what multifamily feels like to me.
It’s this gift of being able to leverage debt, leverage a team, leverage others around you, and all do better and I'll have more wealth. It's a great business. I mean, you're helping your tenants, literally.
You can come in and buy a business that's being managed poorly. You can come in and upgrade units and give a hard-working mother with children a better life, a better home. I just think that's an awesome giveback.
An Advice for Those Who Are Starting Out as a Multifamily Syndicator
Darin: Help some of our listeners understand if they're on the line for the first time, they're like, "You know what? This sounds interesting. I'm interested in becoming part of it," which would mean that they're interested in becoming a passive investor in a deal. How does somebody go about doing that? If they're not in that small network of multifamily investors, how does someone get involved as a passive investor?
Dan: First thing I would do is if you are listening to podcasts maybe such as this, if you can find people and you feel there is just good synergy, get to know them. Reach out to them on their website. You can attend live meetups, you can attend seminars, you got to maybe fly in and get to know some people.
If I was doing it all over again, I wanted to be a passive investor. I would probably join Brad's group and I would get to know some syndicators very well. I’ll get to know their track records very well, and I would wait for the right deals.
Getting to know that syndicator and their track record, and getting to know their style is the most important part of it. As you grow and educate yourself through these great training programs, you can start to spot deals that are complete BS. That's what I would do if I was a passive person or if I was trying to get into passive investing more. I would join Brad's group and get to know the right syndicators.
Darin: That's great advice. I've given similar advice to people.
Various Learning Mechanisms
Darin: Some people have the capital to join a group, and that's my advice to those that do have the capital. Others explain, "Hey, look. Darin, I just don't have the capital. How could I do it without that?" You've mentioned the free meetup groups.
That's an opportunity to go meet other syndicators and other passive investors, and podcasts. That is another way. But once you start meeting the syndicators, and then you exchange business cards, that gives them the ability. Once they start developing that relationship to include you on their investor database, when they do have a deal, you could be notified.
They typically do an hour-long webinar on the deal. Even if you're not ready to invest, if you get that invitation, register for the webinar. That's another learning mechanism for you. The more that you attend, the more you get comfortable with it. Then you're ready to actually take action and pull the trigger.
Dan: Exactly right. If anyone wants to connect with me, and if I get to know somebody's situation a little better, maybe you only got 100 grand. Or maybe you got 500 or maybe you only got 10.
You can guide them a little bit on a direction to potentially go for maybe a couple of years here. Or you just get to know the person a little better, and you can give them better advice versus just a blanket answer.
Reach Out to Dan
Dan: You can reach out to us, granitetowersequitygroup.com and there's a little tab there, contact tab, and just reach out to us. Mike and I can have a conversation with you. Even if it has nothing to do with real estate, you just want to figure out some financial direction going, reach out to us. We love to talk.
Darin: That was perfect timing. I was just going to ask you how can people reach out. So, that's perfect. So, reach out to Dan on his website. I know both Dan and his business partner Mike, they're great guys. I definitely would recommend you reach out to them if you have an interest in doing this.
Dan, I really appreciate you coming on the show. I look forward to getting together with you here soon when we get back to actually networking in-person. Was there anything else that you wanted to say before we sign off?
Dan: I think we covered it pretty darn well. I really do appreciate you having me on. I'm looking forward to continuing to listen to your podcast as you keep growing this awesome little network.