Listen to hear Dan Handford pushing boundaries! He first creates a very successful business. Then he invests in multifamily real estate and builds a portfolio with $350 million in assets under management with a goal to grow that to over $1 billion. He doesn't stop there. Also, he focuses his time and attention on helping educate others and builds one resource after another bringing massive value to the multifamily community. Only time will tell what Dan has in store next!

Table of Contents:

• Where To Listen To The Podcast
• The Man Who Believed in Pushing Boundaries
• Scaling and Pushing Boundaries Through Multifamily
• Trust Is the Foundation of Investment
• Structuring Classes
• Despite the Hassles, Push Your Boundaries
• Origin of the Man Pushing Boundaries
• Multifamily Is a Giving Industry
• Dan Outside Real Estate
• How to Reach Dan Handford

The Man Who Believed in Pushing Boundaries

Darin: A little background on Dan Hanford before we start the show. Dan grew up and focuses much of his investment attention on the Carolinas. He is married with four kids, ranging from 2-10 years old. This guy built a very successful business then started to invest in multifamily. He has over $350 million in assets under management and wants to grow that to over $1 billion. In addition, he's dedicated his time, effort to help educate others and pushing boundaries.

He developed a website called PassiveInvesting.com with resources for passive investors. Also, he started a Facebook group called Multifamily Investor Nation that has over 31,000 members. He started an online multifamily conference called MFIN Summit and can be found at MFINSummit.com where he has leaders in the multifamily space speaking from all across the country. Additionally, he also has a podcast. I can't wait to see what this guy does next.

The way that Dan and I know each other, we actually ran into each other at a multifamily conference. I don't even know if you remember this, but we bumped into each other in the hallway. We talked for just a short bit. The next thing you know, he's invited me to go to dinner with him and a bunch of big-time multifamily people. For one reason or another, I already had a conflict. I wasn't able to attend that. Looking back on it, I wish I had, and I would have met some great people. But after I got my first syndication deal, Dan was kind enough to ask me onto his podcast. So, he was the first podcast that I was a guest on, and he showed me the ropes. I'm glad to have him on here today.

From Chiropractor to Investor

Darin: Dan, if you could just start out by sharing how many properties, how many units are you invested in?

Dan: Well, the number just went up last Friday. So, I think the total number right now, I could probably pull it up on our website real quick. I think we're, as far as the number of properties we're on, I think number 11 or 12. But as far as the total number of doors and the total portfolio value, right now, we're right about 360 million portfolios wise. And right about 2,600 doors or a little over 2,600, almost 2,700 doors altogether.

Darin: That is an amazing number in itself. But then, that is all on the GP side. You're also invested in a ton of passive deals as well, aren't you?

Dan: That's correct. My wife and I invest passively in other operators to fill our own LP bucket to be able to invest in other assets and pull it up right now. The current right now is we're almost at 7,000 doors on our LP portfolio, which is right about 6,800, 6,900. Then the number of deals is right at about 31, 32.

Darin: That's incredible. Those are both huge numbers. So, before you got into multifamily investing, what was your career path prior to that?

Dan: Well, I'm actually a chiropractor by trade. I actually own a couple of different businesses. The very first one that I have is one that I started while I was going through chiropractic college. There's a whole story on that one. We can get into that in just a little bit, too. But starting out in chiropractic college. Started my first business while I was there.

Pushing Boundaries From Chiropractor

Dan: Then when I got out, I was able to start my chiropractic clinics debt-free because of that business. Then I was from there, I actually started to integrate my chiropractic clinics into a medical clinic. I started to do that, which was called an MD DC clinic. This is where we integrated the medical doctors, the nurse practitioners with our chiropractors.

About four or five years ago, I just made the executive decision to remove the chiropractic services so we can really focus on the medical side of the business. So we can also expand from just one clinic. Now today, we actually have four non-surgical orthopedic medical clinics. We do a lot of advanced procedures like prolotherapy, PRP, and STEM cell treatments for orthopedic conditions. Then, we also do a lot of injection-based therapies for just arthritic conditions as well.

Darin: That's amazing. So, you still have those businesses?

Dan: Yes, I do.

Darin: How do you split your time between the business side and the multifamily investment side?

Dan: Sure. Well, I have a really good team that supports me. We stepped away from the full-time management of the clinics, probably about going on three years now. During the business hours, I actually haven't set foot in those clinics at all. So, I have a good CEO that runs everything. When I made the transition to doing real estate full time, I actually had to reach out to my COO. And I promoted him to the CEO because he's been doing this for a while and knew all of the stuff we had done and the growth that we had had. I knew he could take us to the next level.

Delegation Is Important

Dan: I stepped away to focus on the real estate, mainly, from a tax perspective to help reduce my tax liability from the income we were generating from the clinics. The other business that I had, which is actually called Shopanatomical.com is an online company. We sell all types of anatomy models, like skeletons and skulls and brains and hearts. That particular business has been running on its own for quite some time now. It has a team that runs that as well.

So, as far as the time component, you asked about what my time involved with that. I have a corporate meeting with my team once a month where we get together, strategize, talk about the metrics of the business and see what we need to do to pivot and change, make some high-level decisions. But the day to day has been delegated to other people. That's one lesson that I learned early on in my career. In order for me to be able to have the growth and the scale that I wanted, I needed to get out of my own head. Because I'm the type of person that feels like I can do everything better than everybody else.

Anybody who's listening, who, as an entrepreneur or owns their own business, they have that problem sometimes where they don't want to give up certain tasks. That's where I was. I wanted to do everything, but I knew I had to delegate in order for me to grow. So I had to play a little bit of a mind trick with myself. I would say, "If I could replace what I'm doing right now and have somebody else doing it for me."

Hiring the Right People

Dan: I say "And they can do it 80 to 85% as well as I can do it, then I would be able to step away from that and focus on the vision and the growth of the actual business itself." Most of the time people surprise me. They do it a lot better than I could have ever done.

Darin: That's a great surprise to have happen, right?

Dan: Yes. So, it's nice. One of the other things I learned early on is that I tried to replace myself with people that were not really as experienced in doing that. I just bought it. And I didn't buy it and I guess I'm buying them, but I just hired the cheapest labor. I got what I paid for.

But now, I learned that if I can hire the right people and pay them really well, then they're going to be loyal. They're going to stick around, and they're actually going to perform better in that specific role as well.

Darin: Yes, that's a great point. I had one guy a few weeks ago. He wanted to take over a property manager and said, "Hey, what would it take to keep you on?" She said, "Pay me $1 more." He's like, "How's two or three?" I said, "How long has she stayed with you?" He's like, "It's probably been like 20 years now." It was well worth paying her more than she even asked to get that loyalty.

You started out as a chiropractor by trade. Now, most chiropractors that I've come across, come out of school. Their goal is to open one office that they are going to be the chiropractor for. Then maybe they'll grow by bringing on junior chiropractors in that office.

Pushing Boundaries Through the Dancing Bear

Darin: How did you have that mindset shift that you didn't want to do that. That you wanted to actually build multiple locations, and have another CEO run it?

Dan: Well, it just probably starts back before I even went into chiropractic school. Before I even went into chiropractic, I already had the business side of running a clinic down. I really only needed the clinical component of it. So, I already knew that right out of school, I wanted to start my own clinic. I didn't want to do what's called an associateship or internship wherein work for another chiropractor first. I wanted to just go out on my own because my wife's uncle is actually a chiropractor.

That's actually how we met. I was working for him for four years while I was working on my undergrad in biology at the University of South Carolina. I’ve worked for him for four years learning how to do insurance and billing, working with patients and traffic in the patients and documentation. A lot of the back-end administrative duties that have to do with running the clinic and then running the business.

When I was in chiropractic school, I didn't have to worry about that because I knew I already had all that down. So when I got out, I started off right away. Now, in the beginning, I had no desire for multiple clinics. I'd always heard horror stories about that. It just wasn't something that I really want to go down. But about two or three years into working for myself, as the clinic owner and seeing patients is that I couldn't go on vacation without it costing me money because when you're the dancing bear.

Chiropractic Business as a Dancing Bear

Dan: The chiropractic business is a dancing bear business where if you stop dancing, then guess what? You stop earning money. The revenue goes down.

So, I was going in every day being that dancing bear. If I want to go on vacation for a week with my wife and our family, well guess what? I still had to pay my staff. And I still had to pay all my overhead, but I had no income coming in because no patients were being seen. So that really was the light bulb moment for me. I really wanted to hire an associate chiropractors to work for me. So, I started to hire the associate chiropractors to work for me.

I went to a conference a couple of years later after that. I’ve learned about how I could integrate the medical side of things into my clinic and started to hire a medical doctor, and then we ended up growing from just one clinic to four clinics in about a two-year period of time.

We were really able to scale and grow once we got through some of the growing pains of that second-growth clinic. Because the second clinic was actually the hardest clinic to grow. But once we got all the systems down and the processes down in that second clinic, we were easily able to open up the third and the fourth one without any issues and be profitable fairly quickly and also stay debt-free, in all the clinics do.

Darin: That makes sense. I think it's an important lesson because there are also people looking at franchises. I've heard people that have purchased a franchise, and one franchise location, and all of a sudden they end up, it's like they bought themselves a job.

Scaling and Pushing Boundaries Through Multifamily

Darin: They're in that franchise every day. They're working crazy hours. The people that I've heard that really have built wealth from franchises go in with the mindset that I'm going to own 10 or 15 or 20 franchises and hire managers, competent managers to run them. You figured that out in terms of growing the business.

That parlays into getting into real estate investing, too. You're really focused on large-scale multifamily. I wouldn't say that you have to start in large-scale multifamily. But it definitely offers the ability to scale where if you start small, you'll learn that you get bogged down in the day to day. It's hard to really scale. So talk to us about when you did start getting into multifamily, how did you start? Did you start in residential small-scale multifamily? Or did you go big right away?

Dan: That was a decision process that I had to go through in the beginning because I had stepped away from my clinics to be able to focus on the real estate side of things from a tax perspective. When I first got started, I was like, "I'm going to go look at some of these, even some rentals or some duplexes or some smaller multifamilies." I even remember reminiscing back to when I first had these thoughts of going and touring a 12-unit, and going and touring some of these smaller properties. I didn't even know what I was doing at that time. I'm just like going out there touring and being an investor if you will. Very glad I didn't do that because I learned that I'd already been down a path of success up to that point and I had grown to a certain point as well.

Finding the Right Mentor

Dan: I didn't really want to feel like I was starting back at square one again and trying to start on the small level. So, I tried to do some additional research, and then found a mentor that I've been with since the very beginning that has helped me get to where I am today. That's one of the things I always recommend to people is, is find somebody that can mentor you, that can reduce that learning curve because the very first property that we bought on our own was an $8.9 million property. We just scaled and grew from there. Because the one we just closed last week was a $57.6 million property. So, it's a big, big jump from that.

That was actually our third almost $50 million deal. We had one, earlier this year, at 49.955 million. We had another one last year at 51.5 million. So we're just constantly improving our investor relations process and improving things. But that mentor has been really instrumental in helping us get to the point of where we are today. So that's what I did in the very beginning is I hired a mentor. But I hired a mentor that I had direct access to.

So, I'm not a big fan of getting a mentor that basically or a coaching group that has their students coaching. I'm just not a big fan of that. So, I wanted to find a mentor that I can have access to. I wanted to make sure that they were currently and actively acquiring properties right now in the current market. Not how they used to do it 15 years ago or five years ago? I wanted them to be actively acquiring properties themselves, not just helping their students do it.

Pushing Boundaries While Giving Yourself a Break

Dan: I found that mentor. Even today, that person is still acquiring properties today, and actually investing alongside some of those properties as well on the LP side even today. That's the process we went through. But once I hired that mentor, one of the things I did is I partnered with two other groups to be able to help them take down some properties. That did a couple of things for me. It allowed me to be able to build my credibility with the sellers, but also build credibility with the brokers.

So, when I go to talk to them about other projects, even though I hadn't taken down a deal myself yet or our group. I was able to take down the next deal because I had that credibility built-in. We could actually acquire properties moving forward. Then as you start to close more deals, that credibility builds up. Two of the last three deals that we bought were truly off-market deals where it was a former seller that we already bought from before.

They knew we could execute, they knew we could close. We even now still get awarded deals where we're not the highest bidder, but we have that confidence of being able to close and not being difficult to deal with, and not trying to always re-trade on some of the piddly items.

Darin: That's great. There are people that are experienced, there are people that are looking just to get into space. One of the things that you said, I think is very key is "Look, we all started with no investment properties. We all started with no units." So, give yourself a little bit of slack.

Start Small Then Start Pushing Boundaries

Darin: When you think about touring that 12-unit property, you didn't know what you were doing, but you learned along the way. I was in the same boat. And I only got involved three years ago, and I did. I bought a duplex and I bought a new construction duplex. People were like you bummed out that you did that. I'm like, "Well, it got me in the game." Once I signed the contract, it got me over the emotional hump of actually getting into real estate. But then I realized I really wanted to scale and go bigger.

So for the listeners, look, if you need to start small, and that's where your mindset is, then do that and then learn how to scale, but know that you can go a whole long spectrum. You can go larger, but two things you said, one, you need to really find a mentor that can coach you along the way. Then two, if you want to go larger, you're going to need to partner with people that have the experience, or else you're just not going to get awarded the deal.

So talk about this large one, this 50-some odd, that must have been a pretty big capital raise.

Dan: It was a $21.49 million raise.

Darin: You know exactly what it was.

Dan: Yes, it's one of those things where when I look at it right now, I think $21.49 million, we took down properties that the purchase price was less than that. Not always equity for more than that purchase price from before. I think the process that we put into place from our Investor Relations piece is that we don't just treat our investors as a number.

Building Relationship

Dan: We don't want them to just come under our fold and just feel like they're not related to us. We want to have that true relationship with our investors. We go out of our way and do a lot of different things to make sure we can maintain that relationship as well.

Darin: What do you do to foster that relationship?

Dan: First off, every investor that comes through and they go to our website, PassiveInvesting.com on the top right-hand corner, there's a page or a button that says, Join The Passive Investor Club. When they fill out that form, my assistant will call them and try to get them on the phone and schedule them on my calendar. She will schedule them on my calendar to have an introductory call. If for some reason she can't get a hold of them, then she will send them an email.

First, she'll leave them a voicemail saying that she's going to send the email, and then she'll send out the email saying, "Here's a link to his calendar. If, any of these times, don't work, please let me know, and I can get you scheduled with him at a different time or day. These are the times that he has available. He's just open time, so you can actually call, have a conversation." I want to jump on a phone call with them.

Right now, we're doing a lot of 506 Charlie, so we're able to advertise, but we can only accept accredited investors. We don't have to have these conversations with them. But because it's an Investor Relations process, I think what has allowed us to be so successful is that we try to go out of our way to make sure we have a conversation with them.

Trust Is the Foundation of Investment

Dan: Because the more that they can get to know us, the more trust they're going to have built up into us, that we're going to be able to help them and want to invest with us when we have that next property. Then after every phone call that I have with an investor, I pull out my iPhone and I program their number and their name into my phone.

One thing that I do that's unique is after every phone call, I will send him a text message with my contact card, which has all of my information in it. Basically, I just say, "It was a pleasure speaking with you over the phone. If you have any questions for me in the future, here's my contact card so you have easy access to me. Feel free to reach out to me if you have any questions. Glad to help." It's from my personal cell phone.

I know some people are like, "Oh, I don't want to give my personal cell to my investors." I'm like, "Why not?" If you want them to be able to trust you and give you the millions of dollars that you want to be able to control, why not?

I'll tell you I give every investor that I talk to my phone number. I very rarely get phone calls from them. Every once in a while during an offering, where we're raising money or whatever, I might get a text message question or something like that, but I've rarely ever got phone calls. We're talking to thousands of investors. But one of the things that I do when I programmed it on my phone is in the company field, I put in the word investor.

Pushing Boundaries With a Beginner's Mindset

Dan: I put the city and state of where they're located. The reason why this isn't important is that when I'm traveling around and I'm just saying I'm going to go travel to Dallas or Tampa or Miami, I can actually type into my phone, to my contacts the city name, and all of my investors in that city will pop up. I can personally send them a text message and say, "Hey, I'm coming to town on this date. I'm putting together an investor dinner. We'd love to have you join us. Are you available?" Again, it's the high-level, high-touch process to be able to make sure you continue to have that relationship with the investors.

Darin: That's fantastic. That's a great idea. Talk about mindset because when you're in the beginning, your raise was significantly less than 21.49 million. But as you gain more experience, it gets larger and larger, and you have to, in your own mind, believe that you're competent enough and that you have something valuable to offer other people. Talk about how you grew your mindset to allow yourself to grow.

Dan: Well, I think a lot of it has to do with making sure that we're getting into the right properties. I do get investors asking me that, like "How do you sleep well at night knowing that in 2020, we'll have raised a little over $60 million from investors. So, how do you sleep well at night knowing that you have $60 million worth of investors' money inside of your properties?" It's an easy answer. It's because we are confident with the properties and the assets that we're acquiring.

If You Can Put Your Personal Money in It, You Can Invest in It

Dan: We're not going to go into an asset that I wouldn't put my own personal money in. I'm usually the largest investor in our properties. Because, again, the reason why I got into this business is that the cash flow that I was getting off the clinics, I needed to be able to do investment to be able to get that depreciation benefit to offset those taxes. So, I don't want to put my own money in something and I certainly don't want to put another investor's money in it if I won't put my own money into it.

It's a constant question that even Brandon on our team, who does all of our acquisitions, he's one of our other managing partners. He contacts me sometimes and says, before he even looks at a deal, he's like, "Hey, I think this might be a good deal. Here's the sub market, and here's the area." To me, I can usually tell by just the market, as to whether or not I want him to go after it.

I'm like yes, "Let's give that one a try. We'll look at it." Or I'll be like, "No, I can't put my money there. I don't want to be my investors there." Nothing. It's a constant process going back and forth with the acquisitions team to make sure that we're acquiring the properties that we know are going to be able to sustain economic recessions, but also being able to cash flow for many, many years.

Darin: Absolutely. The other thing I think that has to happen is some people, especially when they're first getting into syndication space, look at it as like an "I need this much money to get this deal done" versus "really, you're presenting an opportunity to."

Pushing Boundaries and Growing Wealth

Darin: As you said, you fully believe that you're going to grow your wealth with the money that you're putting in the deal. So, you're going to help all those other people grow their wealth. Why would you not want to present that opportunity to people? It's a different way of looking at things.

Dan: It's definitely not a sales process at all. I think some groups that try to play it off as a sales process, it comes across as like the syndicator needs you. Even though I need my investors to be able to acquire these properties, I never want to have the portrayal to our investors that we are desperate and we need their money in order to close. So, if an investor calls up and they say, "Hey, I know I committed 200,000 to be able to invest in your property. To me, I just don't think that deal makes sense or I don't think it fits my criteria" or whatever excuse they give you.

I don't try to backtrack that and second effort it. If like that, I'm just like, "No problem, I completely understand. I'll keep you on the list for some of the future properties, and maybe there's one down the road that might be a good fit for you." So, it's not an "Oh, come on, Dan. Really, you think that's going to be this and this," be like a sales-type piece of it is that to me, it comes across as more of like, "Hey, I need you, Darin or I can't close this property." I don't ever want to have that feel. I don't want our investors to ever feel that way as well.

Structuring Classes

Darin: That's great. Another thing I saw that you did, and I don't know if you've been doing this on all your deals. But I did see it on one of your more recent deals is that you offered multiple classes to limited partners. So as you grew, you probably realized some investors have a different goal in mind. They'd rather have higher cash on cash, but give up some of the upside on the back end, and other investors want to be able to share in that. So, they'll take lower cash on cash. So, I saw that you actually structured two different classes. Talk about that and why you did that, and how that has been perceived by your investors' database.

Dan: Sure. Well, I think a lot, especially in 2020, there's been a lot of people that are uncertain about where the market's going to go over the next six to nine to 12 months, however, it may be. So, being able to give them options like this helps them to be able to diversify their risks. Sometimes, if they want, they can do a blended approach where they can invest in both classes. We've got class A and a class B investment, where they have this blended return, but it's also a blended risk profile in the same investment.

But people who have risk-averse, and they want to really have more cash flow as you said, that's where that class A comes in. That class A is in a lower position in the capital stack closer to the debt, which means they actually have a higher priority when it comes to paying out, whether it be cash flows or when we go to sell the property.

Classes of Investors

Dan: So, because of that lower risk, they do give up some of that potential with the upside, but they get that preferred return and ours around that 9%. That's an annualized return that's preferred, that they get paid out on a monthly basis based on the cash flows of the property.

Then, of course, the class B investors are the traditional 70-30 split. They're going to get their preferred return of usually seven or 8%, somewhere around in there, and then they're going to have the potential for the upside gain as well. Of course, that outside gain changes depending on the property itself and the different metrics on the returns and stuff. Actually, I wrote an article actually on this topic and posted it on our website.

So, for your listeners, if they want, they can go to passiveinvesting.com, and we have a knowledge center on there, and you just type in the equity structures or whatever. The article will come up there, and there are some illustrations showing capital stack structures as well as this dual tier equity structure from the LP perspective. Because I felt like it was really important for our investors to understand where they sat in the capital stack. They understood their risk profiles, but also why there were the returns that were in that particular position.

This is another level in our Investor Relations. I have a piece that I didn't mention is, once a month. We actually have an actual printed snail-mail newsletter that we mail out to our investors every single month. Our investors, we have a lot of great feedback from it because we try to write articles in there that our investors would want to know about.

Preferred Return & Preferred Equity

Dan: So, this topic that we're talking about right now, I wrote an article in one of our newsletters this year about that. I wrote one on what's the difference between a preferred return and preferred equity and what are the different nuances of preferred returns. There's a lot of different topics we try to write on that really questions that I get from investors that I know are common questions and to try to help them, and educate them on exactly what they're investing in. That article was actually one that was originally posted in that newsletter that we decided to put it into a blog article. But that's another thing that we do is we send out that printed newsletter for our investors. And I'm not the only one that writes in there. It's actually a 12-page newsletter.

It's professionally printed. There are three of us. Each one of us writes an article about something that we're working on. Then we have an investor profile in there, an investor interview where someone on my team actually interviews one of our investors and talks about their background, and how they got to where they are now, and their experience working with us.

Then we also have like a market survey or market update on each one of them. Some of the markets that we're actually acquiring properties in. Then we'll put a few other articles in there based on some of the other things like earlier this year we did a demographic study of where all of our investors are from, from all the investments. We have almost 1,000 investors that are actively invested in some of our properties.

Pushing Boundaries to Reach Bigger Deals

Dan: We did a survey to just figure out what's the number one state and/or the top three states that are invested in there, from the number of investors, also by the dollar amount invested and things like that. So, trying to provide a lot of information in those newsletters. But one of the other things that we do with those mailing addresses because we have the actual physical mailing addresses of our investors is every offer that we put out, we actually print out a full high gloss, perfect bound.

I don't want to call it a brochure, but the offering memorandum is printed up. It is hard mail to each one of those investors as well, via priority mail. So, I can make sure that they actually are aware and know of that offering as well. Because, in our email system, we use a software called Active Campaign. It allows us to keep track of a lot of metrics. We have about a 52 to 53% open rate, which is actually really good.

I think part of it is because it's a very cultivated list. We're also very deliberate about sending out emails on a fairly consistent basis as well.

Darin: That's fantastic. So, that leads me to when you started out, you started out with a certain network. But then as you get into bigger deals, your equity raise goes up, and you have the need to bring in more and more people into the fold. So, you've done a lot of unique things. You're a great business guy. You came into the investing world. And you had already done the business side in the medical field.

Going Fully Online

Darin: So now, you get into the real estate side and you realize, "How do I get out to more people? How do I attract more people? How do we partner with more people?" So, you started up this passiveinvesting.com, which is a great name to have. It is exactly what it is. Then you started up Multifamily Investor Nation. I think you have something crazy, like over 30,000 members.

You have that. That's crazy. With COVID, there's a ton of conferences that are online. You were the first conference that I know of that really was an all-online multifamily conference. There were a bunch of conferences going on all over the country, and then you said to yourself, well, at least I think you said to yourself, "How do I differentiate myself from these other conferences?" So, you put together an online, fully online.

What that provided as a low-cost alternative for people to log on and learn the business. It also offered a lot of different speakers the ability to be a part of that where they may not have been able to fly to your location to do your conference and speak at your conference, but they can log on for an hour or two, and be a speaker from that. So, talk about your thought process in developing that and the success of that, and how have you been getting investors through that network.

Dan: So, when I first got started in that thought process of putting that together and doing some of this stuff in the chiropractic side of things, I actually have done a live event before I did some consulting in that space and absolutely hated it.

Despite the Hassles, Push Your Boundaries

Dan: I like the speaking aspect of it and getting in front of people and sharing my knowledge and experience and stuff like that, but the nuances of putting an event together, I have no desire to do that ever again.

Darin: Participating in it you liked, but it was the planning of it and all that because look you're a personable guy and an outgoing guy. Whenever you're someplace, you're always trying to put more people in and get to know more people, so that surprised me at first.

Dan: Yes. There's also a lot of risks involved with a live event. Then, most people who do a live event, lose money on the ticket sales but they make money by selling a coaching program on the back end. That's 20, 30, $40,000. I have no desire to do that either. So, people ask me all the time, "Do you do any coaching or mentoring?" I'm like, "No, but I know some people that do it."

I refer them over to the various people that I know that do some of that stuff. But to me, I feel like that's another reason why we've been able to succeed as well as we have is that we've stayed focused on the true acquisitions and building the Investor Relations piece of our business instead of trying to muddy the waters a little bit. We're trying to bring on students and coaching and things like that.

Dan: But when I first started that event, it was in November, we decided to do it. I wanted to do that event in December. I was talking to somebody about it.

Darin: You wanted to turn it around in a month.

Different Types of Perspectives

Dan: I did. That's how I am. I'm helping out with some stuff in my church right now, and I'm having a little bit of pushback from one of the members of the church on some of the stuff that's been there for 20 years. My pastor, I was talking to him yesterday. He goes, "Well, Dan," he goes, "You're like the helicopter. You like to fly in, swoop down, get it done and then fly out." He said, "This other person is like a B52 bomber. He needs a long runway to get in and land and get things done, and then have a long runway to take off." So, there are two different types of perspectives there.

I had somebody tell me, like, "Don't do it in December, push off till February." I was like, "No, I'll meet you in the middle. Man, I'm going to do it in January." So, we did our first one in January 2019 and are getting ready to have our fifth one. We do one in January and June of every year. So, this one coming up is going to be in January, January 21st, 22nd, and 23rd.

Darin: Where can listeners find information on that one because, listeners, I gotta tell you, the amount of speakers that he has at this conference is unbelievable. If you haven't been able to afford to go to a multifamily conference and fly there and pay for a hotel or you're just not that committed yet, but you do want to learn, this is a very affordable way to do it. You get access to so many different syndicators that are teaching on all kinds of different subjects.

The Multifamily Investor Nation

Dan: If your listeners want to check out more information on that, they can go to mfinsummit.com. So, MFIN just stands for Multifamily Investor Nation, so mfinsummit.com and have the speaker schedule there and see the entire schedule of events. It's also in 2021, we're actually putting a lot of networking components to this as well.

We've actually launched a new app, which I'm sure you probably have seen on some of these other live in-person events and even some of the virtual ones lately, I've been using it, which is the Whova app. So, it actually allows for a lot more networking opportunities with other people that are attending the events. You have a little more access to people to be able to continue that networking. One of the questions you asked me, Darin, which I didn't answer yet, was about, am I getting the investors from it.

One of the main impetus is behind trying to create almost a coaching but an educational platform because we have one component of it that we charge for, I guess, two if you call the MFIN Summit one. But we do a weekly webinar every single week, and we've been doing that consistently now for several years, a couple of years now. We are consistent with that. We try to come up with topics that people are interested in especially new people. Because there's a lot of people that are new in this space, that they think that they want to get started doing this, and then they dive deep into it and they go, "Holy moly, this is a lot of work. I don't want to mess with this. Here, Dan here's my money, you do it."

Pushing Boundaries While Keeping Track of Investors

Dan: Just one side of it, but then I also get people that come into our investments that are active syndicators. You'd be surprised, Darin, if I was to mention names. And I won't mention them for obvious reasons, but there are a lot of well-known syndicators that invest alongside us in our properties because they have a 401k or an IRA. They can't invest in their own property. So, they know our group and they know that we have that built-in credibility and trust, and they invest with their own money inside of our properties. So, that piece of it, obviously, was really powerful as well.

One of the things I was going to mention to you is one of the things that we do is keep track of our number of investors that we get into our website on a rolling 30-day basis. Of course, when we first got started, it was maybe three, four, or five, somewhere around in there. But now, if I look at it today, I'm going to pull that real-time. This changes every day because it's a rolling 30 days. It's not like just during the month of November or the month of October. We have 157 contacts that have come to our website, filled out the form, and said that they want to invest with us in the last 30 days. That's off of our ActiveCampaign software.

Darin: That's incredible. It really is. You mentioned that you have syndicators in your deals, and some of it is because they're doing 401k and IRA money that they can't invest in their own deal. But otherwise, they may be focused on a different market, too. They want to diversify. So, share with the listeners what kind of markets that you are focused on.

Origin of the Man Pushing Boundaries

Dan: We're primarily focused on the Carolinas. That's where I'm located, here in Columbia, South Carolina. So, on the North Carolina side, we focus on the Charlotte MSA and then the Raleigh-Durham-Chapel Hill kind of triangle area. On the South Carolina side, we focus on the Greenville, South Carolina MSA, and then Charleston, South Carolina. Then over the last couple of months, we've been looking into dabbling into the Atlanta, Georgia MSA as well as the Jacksonville, Florida MSA.

Darin: Got it. So, if you have syndicators in Arizona or Texas, and they know that submarket very well, but they want to diversify a little bit and get some East Coast presence. You've got a great reputation and a great process and a proven track record. So, it's a great way for them to get some diversification. I'm going to shift gears a little bit here. Where did you grow up? How did you grow up? Do you have brothers, sisters, rich, poor?

Dan: I would say we were lower middle class. I didn't grow up poor. I grew up in Greenville, South Carolina. Not too far from where I live now. My parents at the time owned a business. They were successful in the beginning, and they even bought out some of their partners that they had in the beginning. But then my mother is a very giving person. She loves to take care of people, and she has a hard time saying no. So, where that becomes a problem is when you have a business where you have certain budgets that you have and you really can't exceed those unless you increase the cost for people. She actually owned a daycare center, so the employees, obviously, were being paid a certain amount hourly.

Growing Up in an Entrepreneurial Environment

Dan: But when they come and ask her for a raise, she would give it to them. So, it got to the point where the payroll was so high, it wasn't being able to be supported by the income. Then the state of South Carolina changed some things about being able to now accept K3. So, a big component of their business was doing a lot of these pre-K programs. They also changed classroom ratios for infants. So that, of course, affected some things there. It got out of balance. Probably after about, I don't know, they're probably into it for about maybe 13, 14 years somewhere around there. They ended up closing the doors on that.

I grew up in a family that have always had a business of some form or fashion. I never really ever remember a time where I was not taken care of. Sometimes, probably, my mom would probably over-leverage a credit card just to make sure we had a good Christmas or something like that even though it's not always about just the things. Everybody has a different love language.

My mom's love language is she loves to provide, and she loves to give things. She's a very big gifter. For example, she knows that I've done really well, financially, but one year for Christmas recently, she gave me a $50 bill. I'm like, "Mom, I don't need cash. That's nice, but you don't need to do that." But because she gave me that, I specifically took that money and went and bought something and then told her what I bought. She knew what she was actually getting for me with that money. I grew up with an older brother and an older sister, and then a younger sister.

Learning Business From the Family

Dan: I was the third child in a family of six with four children.

Darin: Sure. So, how old were you when that business closed down?

Dan: I was already out of the house when it closed down. I think I was an undergrad when it went under.

Darin: Undergrad. Okay. Because you grew up with them always having a business. You see the entrepreneurial thing from them, managing the business. But had you been young and seen that closed down, that may have formed a little bit of fear. But you were old enough that you had already made up your mind that you were going to be a business guy.

Dan: Yes. I've actually, over the last couple of years, been picking my parents' brain about that business. Just ask them, "Hey, what could you have done differently, or what do you think really was the cause?" There's just getting into their head about what really was it that caused that business to fail. So, I've been able to learn a lot of things about what they did wrong to be able to help mitigate that into the future as well, especially working with people. My mom is a very good person. She's really good at managing people. So, I've been able to call her up and say, "Hey, I got this particular situation happening. Give me your thoughts on it." So, it's good to have people like that as a sounding board, if you will, too.

Darin: Absolutely. So, talk about when you were a child, did you ever think to yourself, "I'm going to be successful." Do you ever visualize that? Or did it come later in life?

Energy for Pushing Boundaries

Dan: Well, I don't even really know. It's hard because I don't really ever remember thinking that. Because even right now, I've been asked, like, "You have plenty of resources and do nothing the rest of your life and just go play golf all day long or go fishing every day."

I was thinking I was put into this world for a reason. I don't feel like I'm done yet. As long as I continue to have the energy to build it, push forward, to me it's not ever been a matter of trying to get a certain amount of money because I truly enjoy the pursuit. I like the process. The journey is amazing. It allows me to wake up every day.

Darin: Exactly. That's where you get charged up. The energy and the juices are flowing, trying to do something you haven't done before. But I've talked to a lot of people that they did have a vision for themselves. Maybe it changed over time. But at some point in their life, whether it was early childhood or later on, they visualized some success.

This is how it looked like at first, and then they chased it. In doing so, there are some sacrifices and there are some challenges, but they had their eye on the prize. Then, again, sometimes that changes, so maybe, in the beginning, it's "I want financial freedom. I want to be able to golf every day." But then as you get older, it's more about "I want to impact more people. And I don't want to just sit on the couch. I want to impact more people." So, talk about the power of networking.

Dan: Well, oddly enough, you might not think this, Darin, but I'm a fairly introverted person.

An Introvert Who Loves Pushing Boundaries

Dan: What I like to do to mitigate that, if it was me, if I go to an event, I will sit at a table. I'm not the type of person who's going to go up to somebody and start talking to them or anything like that. Not an icebreaker type of person. I will sit in the back of the room, wait for something to come up to me. That's how I like to operate. I call it reverse networking. For reverse networking to work, you have to do a lot of things before you go to that event.

For me, with the MFIN and be on podcasts and doing a lot of the things that we do from an educational perspective when you go to an event like that, people already know who I am. They already want to come up to me. They already want to talk to me. So, I like that better where I can just go to an event. Sometimes, it's hard because it's hard to go to the bathroom without getting stopped three or four times. It's like, "I really need to go to the bathroom. Let me come back and we'll talk some more," but I prefer that kind of networking.

So when it comes to true networking, where you're actually going up to people and introducing yourself and things like that, I've just never been a big fan of it myself. Like I said I'm fairly introverted when it comes to that kind of situation where if I'm at an unknown conference or event or something like that. Even if I'm invited to speak on the stage, I'd rather just go to my room and get some more work done if you will.

Multifamily Is a Giving Industry

Dan: I have learned to enjoy the reverse networking side of things and really being able to learn more about other people. But I still prefer them to come up to me versus the other way around.

Darin: Isn't that funny? I'm 50, I don't know how old you are, but life doesn't really change so much. I try to tell my kids when you go into school, be the first one to smile at somebody walking by. Or when you sit down in class for the first time, sit down and look at the person next to you and say hello. Because they're thinking the same darn thing as you.

They're nervous, they don't know what to say, they don't know if you're going to like him or not. Everybody has that anxiety. So, here we are grown adults, and people want to get involved in investing. When they first get involved, they're scared to go up and talk to people, whether it's at a meetup group, a free meetup group, or whether they attend a conference.

Correct me if I'm wrong, but what I learned is if you actually go up and talk to people, they are so open to helping you. This is one industry that is so giving. The people above you are willing to help the guy below. Look, there's a lot of competition to win deals, for sure. But in terms of educating people and just being friendly to people, people help each other.

So, just have the courage to go up and introduce yourself, and then it'll just blossom from there.

Dan: Yes. I know that that's a good thing to do, and I've forced myself to do that in many, many different environments.

Pushing Boundaries and Doing the First Move

Dan: I just don't like to do it. People don't like to do it as you mentioned earlier. But you got to have to force yourself to do that. You got to push yourself in that position. Most people, as you said, they want to have a conversation with you. They actually probably were more scared than you or to introduce themselves to you.

Darin: I think it's great to have the listeners here, here's a guy who's a general partner in 2,700 units. He's got $350 million in assets that he's managing. Also, he’s in 28 other deals, 5,700 units where he's a limited partner. He's still like, "All right. Well, when somebody comes to talk to me," it's just people. We're all nervous until you make that first move.

So, talk about if you do want to get involved, you mentioned it a little bit before. I think there are two different types of people. They want to get involved in real estate investing. There's some that, "Hey, I don't really want to go out and find the deal and all that. But I do know that I don't want to have all my money in the stock market. I want to diversify. I want to get involved in real estate. I've heard about this passive investing thing. I've heard about having multiple income streams and how that's beneficial. But I really don't know how to do it."

So that's the passive person that just wants to stay passive. Then there are other investors that want to start out as passive, but their end goal is that they want to become syndicators. So, with those two paths, how did they get involved? How did they get started? What's your perspective?

Self-Realization Is Key

Dan: Well, you're talking more from a passive perspective or active?

Darin: So, first, it's just a guy that just wants to be passive, completely passive, and not grow into an active role; and then second would be a guy who wants to start out passive to learn, but then get into more of an active role.

Dan: Sure. I think the first thing for somebody is just investing as an LP, whether you want to be passive or active.

Darin: So, how do they do that? In 47 years, before I got involved in these groups, I didn't have one person introduce themselves to me and say, "Hey, Darin, I've got this 200-unit multifamily deal." Do you want to invest. Once you get into the world, and I get emails all the time now, but I didn't before three years ago.

Dan: Yes. I think a lot of it has to do with the self-realization of this because even if somebody would have presented to me five years ago, I probably still wouldn't have done it. But it was me now at a certain point in time and moment where I was like, "I need to do something." It was the research that I did on my own. Yes, I think that you can still find people and educate them. But I think a lot of it is like you said, there's a lack of knowledge that you could actually do it. Because even a lot of people that I meet that are not associated with the industry that now invests with us, they're like, "I didn't even know you could do this." I'm like, "Yeah, either did I."

Educate Is the Responsibility of Syndicators

Dan: It's our responsibility as syndicators to go out there and educate other people that really have no clue about what we're doing. That is an uphill battle actually to try to find those investors because they come across as more sales. How're you going to attract those people? Because you could put an ad in the New York Times or throw out an ad on the television to be able to find those new investors. But it's so unknown that the easiest type of investors who had actually come into your fold.

As somebody who realized it on their own did some research, and they found you because of that? That's why it's important to be on podcasts like this and be on other people's podcasts to be able to have an educational platform.

Because, at any point in time, there's going to be somebody that's looking into this industry. If you are the one teaching them, guess what? You're the expert and you're the authority figure in the industry as well.

Darin: Great point! So, I think, the first thing is to determine what markets you want to be invested in. Then in those markets, find syndicators and start to reach out to them. You can do that through. Now, you have so many different options. You've got all these multifamily Facebook groups and you've got social media, you've got conferences. You've got this Multifamily Investor Nation Summit.

So, there are so many different ways to meet the syndicators that are putting these deals together. The difference between investing in IBM stock is you could actually call Dan. You could actually talk to the syndicators that are doing the deal and see if there's somebody that fits your fold and who you want to do business with.

Pick Your Market Wisely

Dan: Yes. It's definitely a relationship business. So, actually, if you're getting started, go out there. I think what you said Darin is very important about picking your markets because there's a lot of syndicators, not a lot. There are a few syndicators out there that I really want to invest with, but they invest in markets that I don't want to be in. So, I have a certain set of a number of markets that I really like and certain ones that I don't like. If they go to acquire a property and then a market that I don't like, I still don't invest with them. Because I think there's a certain hierarchy of what's the most important.

I think one of the most important pieces is the market itself. Because if a market doesn't have stability, I don't care how good of a syndicator you have. If the market starts to go down, the syndicator really can't do anything about the market conditions.

The market really is that number one thing. Then finally, as you said, that operator, that sponsor, as a syndicator, they can actually execute on the business plan the way that they're actually presented, and then they actually have some extra room in there for air. They have some extra buffer.

One of the things I do for myself when I'm investing passively is I tell myself that if I invest passively in this deal if I can cut the returns that are being projected in half, would I still be happy with the returns? So, I lower my expectations on that particular offering. So, they tell me I'm going to get 15, 20%, I dropped that down.

Dan Outside Real Estate

Dan: A 7.5 to 10% is what I'm looking for on that particular deal. Because I know that things don't go as exactly as planned. But if they can execute and still only get 15% of the return, I'm going to still be happy, then I'll likely invest.

I wrote an article recently on the five red flags of passive apartment investing. I think you actually have it on our website. You can go there and find it there as well in that Knowledge Center at Passiveinvesting.com. You’ll see some of the things that I look for as an LP as to what I'm going to the type of sponsors I'm going to invest in and what I'm not.

Darin: That's awesome. It's fantastic that you have all this free information for new people. So, definitely take advantage of that, guys. So what do you do for fun outside of real estate?

Dan: Well, I enjoy, spending a lot of time with the kids, the family because we have four children. Well, especially because they used to be all under 10. Then last week, I had our oldest turned 10. We have a 10-year-old girl, an eight-year-old boy, a four-year-old girl, and a two-year-old girl.

So, life is very busy when it comes to that. We're playing a lot of sports with them. My son's doing soccer right now and so is my daughter. My older daughter, she's doing soccer. He's involved in a lot of sports. They also are involved with a lot of music. So they both play instruments. My son plays the cello as well as the piano. My older daughter plays the violin as well as the piano as well. So, I'm definitely busy with that side of things.

Pushing Boundaries Means Having Fun Too

Dan: But I also enjoy a nice game of golf, but I also enjoy racquetball. I don't know if you have played racquetball.

Darin: That's old school.

Dan: It is. I love it though. It's a very fast-paced game. I'm a very fast-paced side person. I'll go out there and play for two hours at a time, try to get out there a couple of times a week.

Darin: Nice. Well, I'll definitely play golf with you. Racquetball, maybe, maybe not. I also saw a while ago, you posted something about a motorcycle. We're going to have to figure out a way to get out and ride together at some point, too. I don't have a bike, but I recently went down to Austin to meet with some other investors. I decided you know what? I've been wanting to ride for a while. I just rented a Harley and drove down. It was awesome. Do you still have the bike?

Dan: I do. It's actually an interesting story because my dad, all he rides and drives now is a motorcycle. He drives it to work and back to work, rain, sleet, snow. It doesn't matter what it is. He's a diehard biker. He's a big Honda enthusiast. So, he has a Honda PC, a Pacific Coast 800. He's had a couple of them over the years, and he's had a couple of accidents.

But he just gets right back up and goes and starts playing again. In one of the most recent accidents he had, some lady pulled out of a gas station like. It shattered his tibia and his leg. He'd have rods and stitches and pins put in there.

Learn How to Fly

Dan: I remember going to the hospital when he was there and I was like, I leaned over to him, I was like, "Dad, I think this is the Lord telling you that you need to give up the motorcycle." He probably said, "No, I think he's just telling me I need to be more careful."

Darin: That's great. Do you guys ride together?

Dan: We do ride together. I don't actually have a bike that's my own. So, the bike I have now, my brother passed away a few years ago, and he had a PC800. His wife gave it to my dad, and my dad has it in my house right now. I was like, "Well, I'm going to get my license again and start driving it around." So, I do enjoy getting out there and ride the bike. I think if I can convince my wife, I will eventually get an actual bike for myself.

But right now, I'm just so busy as it is that I don't really have a lot of time to get out there and probably have as much fun with it as I can. We also have some four-wheelers. My son and I will get out in the backyard and ride some four-wheelers a little bit. Back in August of this year, we actually bought an airplane, a little single-engine series.

Darin: You did. Really? Do you know how to fly?

Dan: I'm learning it. So, I started about 10 years ago. Actually, when I finished up my last year in chiropractic college and had about 65 hours of flying, almost did my check ride, and then that's when I moved to South Carolina after going to school for a while, and then started a family, stuff like that.

Next Big Stretch

Dan: So, life got busy. Then back in August of this year, I decided to buy one, mostly because of COVID, because all of a sudden, that was happening there. I was like, "I want to be able to fly wherever I want to fly and get to where I want to go." So now, we can use it to tour our properties really quickly and come all back in one day and stuff like that, too.

Darin: That's funny. So, you've accomplished so much, and you're a leader in the space. What's the big stretch goal for you right now?

Dan: Well, right now, we're on track and on par to try to get to a billion in assets under management. So, it's the goal.

Darin: A billion.

Dan: Yes. We have a five-year goal. This year, it was definitely taken down a little bit from COVID. So, our goal was to take down about 300 million acquisitions. We're right at that 160, $170 million marks right now for the year, which is where we'll probably end up.

Darin: Wow. So, a billion in assets by when?

Dan: So in the next three years.

Darin: Three years. Right now, you're at 350 million. So that is awesome. I talked to one interview after another guest, and it's like when they start reaching a goal, they just up the ante. That goes back to what we were talking about before is because it's nice getting the prize. But it's really the journey that charges you up and is where all the energy is, is that, "Can I accomplish this and how do I do it?" So, how did the listeners reach out to you if they want to reach out to you, Dan?

Learn More About Multifamily and Pushing Boundaries

Dan: Sure. So, I would say that there are three easy ways to do that. So, first off, you can go to PassiveInvesting.com, and you can go on the top right-hand corner of the page and there's a link there that says, "Join The Passive Investor Club," and fill out that form, jump on a phone call with you one on one, discuss your investment goals, see if we're a good fit.

If you're wanting to learn more about multifamily and more on the active side, but even if you're a passive investor, you can learn more about what happens on the active side, you can go to multifamilyinvestornation.com and sign up for our free weekly email that we send out about our webinar announcement. Then the third way is LinkedIn. So, I'm on LinkedIn. So, you can go to LinkedIn, just type in my name, Dan Hanford, and you can find me there, connect with me. We'd love to be able to connect with you and learn more about you, but also have you learned more about some of the stuff that we're working on as well.

Darin: Fantastic. Well, I really appreciate you coming on. It's gone full circle. I appreciate you bringing me on as the first guest a long time ago after I got my first deal. I applaud all your success and look to learn more and more from you and your team. Listeners, I hope that you enjoyed that one. Until next week, signing off.

How to Reach Dan Handford

• Passive Investing Website
• MFIN Summit Website
• MFIN Website