Table of Contents - Slick Syndication Tips with Dan Handford
Dave Debeau [00:00:08] Hey, everyone, this is Dave Debeau with another episode of the Property Profits Real Estate podcast. And today, zooming in all the way from beautiful Columbia, South Carolina. We've got a very, very accomplished, well known real estate entrepreneur in the apartment and syndication space, Mr. Dan Hanford's. Dan, how are you doing today?
Dan Handford [00:00:30] I'm doing great. Glad for you to have me on and looking forward to sharing with your audience here.
Dave Debeau [00:00:34] Awesome. Awesome. So, Dan, let's jump right into it. And you've got a ton of experience around multifamily. You've been raising money for this for quite some time. I believe your portfolio's worth getting close to four hundred million bucks these days. That's pretty significant. Why do you think apartment buildings are the class to be here? There's so many different options out there for real estate investing. Why do you like apartment buildings?
Dan Handford [00:01:05] Sure. Well, it's quite simple. So it's one of the most recession resistant types of assets in real estate. And the reason why is because there is some sort of a recession or downturn or even right now during covid, we've seen that next to people paying for the food. They can keep them alive. They pay for a roof over their head. And that's one of the main reasons why we like apartments.
Dave Debeau [00:01:26] Yeah. So major times when times are good, things are good, when times are bad, things are still good because everybody needs a roof over their head. And if if the economy's going to go in the dumpster, people are downsizing, where are they going? They're going into apartments.
Dan Handford [00:01:41] So there's three things that always do really well and in a great economy and also a bad economy. Number one is apartments. Number two is self-storage. And number three, the third one is alcohol. Alcohol. That's right. Alcohol. So those are the top three things. You know,
Dave Debeau [00:01:57] and nowadays where we are in cannabis is getting out there as well. So we had to we will go there. But anyhow. Yeah, it's amazing. So then tell us a little bit for those folks who don't know you. Tell us just briefly about your relistening investing journey and how you got into apartments and how you started using other people's money to buy your deals.
Dan Handford [00:02:20] So I'll kind of bring you all the way back to when I first got out of chiropractic college. I'm actually a chiropractor by trade. And when I first got out of chiropractic college, I started my first practice right out of college and started to work for myself, started my own business doing treating patients, going into the clinic every day.
Dave Debeau [00:02:39] One of the facts, as they say in the industry right there, again, cracking backs, like you say, in the industry.
Dan Handford [00:02:45] Well, the people who don't like chiropractic say it that way. Yes. But we usually just say we're adjusting the patients and we always just say don't get addicted to the crack. Right. OK, so but one of the things I found when I first started my practice is that I could never take a vacation without it costing me money, because even though I own my own business, I was the kind of dancing bear, if you will. Right. So I stop dancing. I started taking money. And so I want to go on vacation. I had to still pay my staff. I couldn't let them go for a week or if I wanted to do. And I had to still pay the utilities and the rent over the property for the actual facility and stuff. And so what I found is that I capped my income as well because I could only see so many patients an hour. And so I was I was maximizing where I was at. And so I quickly learned early on that I wanted to hire some other people or associate chiropractor's to work under me. So I didn't have to do all that day to day work. And that was my first kind of foray into hiring other people to do the things that I didn't really want to do, even though I was really good at it. I just didn't really feel like that's what I wanted to do long term and all I wanted to to have that flexibility and then fast forward a few more years. One of the things that I decided to do is integrate from just doing a chiropractic clinic to having a chiropractic and a medical clinic, all in one called an MD D.C. clinic. And then a few years later, I actually completely removed the chiropractic services from the clinics. And all we focus on in those clinics is medical services, mostly non surgical orthopedics and sports medicine. So we do a lot of regenerative medicine like prolotherapy, stem cell treatments, things like that. We right now have four clinics in the state of South Carolina, one here in Columbia, got one in Charleston, Greenville, in North Augusta, and have about 50 employees there and medical doctor, nurse practitioner that actually run that facility for us. And I actually haven't stepped foot in those clinics in about three years because I had decided to step away to really focus on the real estate side of things. Because what I found is that because I have these clinics, they were debt free clinics, though they were cash flowing very nicely, is that I was spending a lot of money on taxes. Right. And so to be able to reduce my taxable liability, that's what I went into the real estate game to be able to help reduce my own tax liability. And then I didn't want to do it on a small scale, like single family or small multis or anything like that, because I had already achieved a level of success in my life at that point. And I didn't want to feel like I was going backwards. Right. And so I took the same kind of business mindset and skill set and hired a mentor and started into the large apartment syndication space. And we partnered on our first couple of deals with another group, two other groups, actually. And then our very first deal we put together on our own was a hundred and thirty unit, eight point nine dollars million property out of Greenville, South Carolina. And then fast forward to today. Last year, we closed at fifty seven point six dollars million deal and raised about twenty one and a half million dollars for that property. And so we've had a great trajectory and the starting of our company, passive investing dotcom. And it has really allowed us to be able to acquire these higher quality assets as well. In the last year, we acquired just over one hundred and fifty six million in acquisitions and raised about sixty one million dollars from our investors. And that's kind of my my brief. Background, you know, there's a lot of different nuances in there, but I will say that the thing that really helped me early on to be able to achieve the level of success that I have even today as I continue to grow, is getting out of my own mind and thinking that I can do everything better than everybody else, because I still to this day have that problem. And it's a constant battle every day. But I have to constantly tell myself that if I could hire somebody, they could do it about 80 to 85 percent as well as me. And let me let somebody else do it right. And most of the time, I'm surprised they do it a whole lot better than what I could do. But it's a mindset thing for me.
Dave Debeau [00:06:27] Yeah, definitely. It sounds to me. And just understanding your background and talking about it, you're one of those smart guys. So, I mean, you're very to go through kind of practice going out to be fairly academically inclined. And and I think that's a very long it's quite a long process to go through all of that, I believe. So getting that business up and running and successful and then, you know, multiplying yourself and leveraging yourself and then getting into real estate. Very, very interesting. So you just kind of made the leap right into multifamily investing. And I know for the last several years you've been putting on big events with other multifamily investors. What have you seen as some of the biggest mistakes NewBay capital raiser's make when it comes to syndicating or raising money for their deals?
Dan Handford [00:07:17] Well, I think one of the biggest mistakes is I wouldn't necessarily say there's probably two of them. One of them is that they don't when they looking for their starting their syndication business, they are constantly looking for a deal to present to their investors. And they forget about trying to get more investors. So when they have a deal and I've seen this happen many times where they get a deal that's under contract and it falls through because they did get the equity for it. Right. And with the department syndication business, you always had to be looking for two different things have to always be finding the investors, the money. You always have to be finding the next deal. You have to have both of them going on at the same time. And so that would probably be the biggest thing that I see is the failure, if you will, and newbie syndicators. And then the second thing I would say, which would be very close to that, is that once they attract investors into their kind of her to their fans or their email list or whatever you want to call it, they stop there. Right. They don't have a regular way of communicating with their investors and making them feel more like a person and have that relationship with their investors. They just kind of throw them on an email list. And six months later, they get some random email from somebody about a deal that they have. And by that time, they'll even know who they are anymore.
Dave Debeau [00:08:28] Yeah, exactly. Yeah, very, very well said. So yeah, that was just is a flashback to my first painful experience, trying to raise money I'd sell finance my deals up till then. The credit, of course, that's where the perfect deal falls in your lap and you hear all the stuff, hey, find a good deal. The money will find, you know, not necessarily not true. Be right. Because when you got that deal on the go now you're in a position of need. Now you are desperately chasing after people for their money and they can kind of smell that, can't they? Just kind of it almost repels them because you're desperate, you're needy. And that is kind of creepy.
Dan Handford [00:09:10] I never I never want my investors to feel like I need their money. So whatever. I mean, there's many times where I met on a phone call of an investor, and they're drilling me with questions about an offering that we put together. Right. And I can just feel and sense that they're just not ready. And I push back. Mike, listen, Dave, I don't think this is the right opportunity for you. You got a lot of great questions. But I think right now I'm sensing you're a little uncomfortable. So while you just sit this one out, it's OK. It's not a problem. I remove your commitment, your soft reserve. I have backup investors. So I'm going to remove you on this deal and then just sit back and watch and observe and maybe the next one you'll be ready to jump into and you'll be surprised at how many times those people are like, oh, no, no, no, no. I definitely want to invest, you know?
Dave Debeau [00:09:50] Hey, please, David. And isn't that an amazing position to be in? Because someone like you're seeing so many other people there, they got the deal. Now they're chasing after the money and they're it's almost like a beggar with their hat in your hand. They're they're begging for somebody's investment. Whereas when you position yourself properly and done that second part where you're constantly top of mind with that communication, that marketing, that ongoing thing, so they aren't just hearing from you sporadically when you got a deal on the go, then you are in a position where you can pick and choose who you bring on as your investment partners.
Dan Handford [00:10:26] Very well. One of the things that I also suggest for for active syndicators to do is make sure that you have more than just an email to be able to communicate with your investors. So one of the things that we do on every phone call with an investor is we make sure we get their physical mailing address. Yes, that's correct. Their physical address, so we can actually put a stamp on something and send it to him. Right. And so every single month we are writing a 12 to 16 page newsletter, really high. Quality high gloss, a perfect bound and really done well done newsletter and sending it to our investors so they have that communication with us. And the reason why we started that is because our email list is very well curated and that we have about a fifty two to fifty three percent open rate with our emails to our investors, which if anybody knows anything about anything about online marketing and email marketing, that's a phenomenal open right now. Most people are good if they can get at least about 15 to 20 percent. Right. Obviously we curate that list very well. So it's a really high rate. But I still look at that and go, that's almost 50 percent of our investors that aren't even opening our emails. So how can we get them to be able to still hear from us and communicate with us through another channel? And that's where we started to do the actual newsletter. And we also use that for our referrals. So we at last last year, I had an investor email me and say, hey, I'm a friend of mine is receiving your newsletter. I'm not one of your investors. I want to be can I get on your newsletter list? And I was like, yes, of course. Absolutely right. And so I put him on the list and I was thinking I was like, we're already mailing these newsletters to our investors. Why don't we make it easy for them to refer people to us? And so what we did is we actually printed up a second copy of the newsletter. We shrunk rewrapped that newsletter so that we separated in the actual package we sent out. We put a sticker on it that said this is a second copy printed for you to hand off to a friend, family member or coworker to be able to spread the word about what we're doing, that passive investing dotcom,
Dave Debeau [00:12:24] very, very, very smart. And then hopefully in that Shrink-wrapped version, you've got all sorts of information for that person so they know how they can opt in, become part of your list, sign out. Absolutely. Have a phone call so that you can start that relationship. Yeah, that's brilliant. Brilliant. And so much more than just a pretty face. You've got you've got a lot going on.
Dan Handford [00:12:43] And I tried. I tried. That's what happens is if you're watching the video portion of this zoom has that nice zoom filter. So it gets all my wrinkles out and everything
Dave Debeau [00:12:53] I've got to find that filter about. I add some air to that. That is awesome. Done. So, yeah, I love what you're doing with the marketing. So just to get an idea, when somebody comes on to your to your list at your website and you've got a very nice website, passive investing dot com, so you make them jump through a few hoops before they can, they can opt in. You're really only looking for accredited investors because those are the folks that you really want to work with. So let's say somebody opts into your website. They're going to start getting your your emails, I would imagine. What else are you trying to get them to do right off the get go?
Dan Handford [00:13:30] We want to schedule a phone call with them. So most of our offerings right now are done via five or six, Charlie, on Regulation D, and so we can only accept those accredited investors. But we also know that even though we don't have to have those one on one phone calls with our investors, because on a five or six, Charlie, you don't have to have that prior existing relationship documented, it's still important to be able to create a relationship with your investor to have those phone calls. And so for us, we always try to get our investors on a phone call with us so we can create that rapport, create that connection with them and make sure that they understand who we are and make sure that that their goals still align with what our goals are. And it also allows us to again start that relationship with them.
Dave Debeau [00:14:13] Yeah, very, very smart. So then they're on the list. Hopefully they've had a phone call, they have the phone call. You're going to get their phone mailing address. They're going to get sounds like monthly electronic newsletters plus monthly physical news. That right. That's awesome. Do you do anything else? Do you do like regular videos for them? Do you do webinars for people when you've got a deal on the go? What are you doing when you've got a a new project? You need to raise twenty million bucks for sure.
Dan Handford [00:14:40] So when we actually are raising money for a deal that will send them an email to say, hey, new Deal alert, here's the business plan that we're projecting now, what we're doing on this particular plan, here are the projections for the returns that we have based on our initial underwriting on the project. Here's a link to the investment summary on the deal, and then here's a link to a webinar that we're going to do on it to kind of give you a nice overview and talk to all three of the managing partners and discuss kind of have any of your questions answered and things like that. And it's also recorded and we'll send that out afterwards as well. And then one of the other unique things that we do that I have not seen too many operators do, which we have found lots of success with, it is we take our investment offering memorandum and we actually printed up and we will mail it to every single one of our investors. That is on our email, on our our newsletter list. Right. That's receiving that physical mail because now we're going to get one hundred percent open rate and we don't send it in a white envelope like our newsletters, write our newsletters. We just send out on a regular first class mail. But when we send out these New Deal alert packages to our investors, we put them in a priority mail envelope. So it actually gets to them first right away, right? Usually one to three days. But then I also want to make sure that they know that it's important, it's special. I want them to open it up. Right away, and so we put it in those kind of express style envelopes, so they will see that and they'll want to open it right away as well.
Dave Debeau [00:16:00] Yeah, and of course, of that involves a lot of extra expense. But you understand very, very well the lifetime worth of even one of these investors to you. So that's it's pennies compared to the return that you're going to be getting. And that's all
Dan Handford [00:16:14] your referrals do, because there are those investors are proud of their investment. They're going to go show this trophy off to their other friends and family members, too.
Dave Debeau [00:16:21] Yeah, very, very, very smart. Well, you're a very smart guy and time flies when we're having fun here down. So if if people want to find out more about you and your company and people want to find out more about the educational type stuff that you guys do, what can they do?
Dan Handford [00:16:37] Sure. I want to give you three ways. So the first one is if you want to connect with me on LinkedIn, that's where I do a lot of my content and articles and things like that. You can just go to link with Dan Dotcom and I'll bring you straight to my LinkedIn profile. The second thing you can do is just go to multifamily investor nation dot com, sign up for our free weekly webinars that we do every single week. We've been doing it for about two years now. You can also find all the recordings on our YouTube channel as well, just multifamily investor nation. And of course, you can jump over to passive investing dotcom. We've mentioned it a couple of times throughout the podcast today if you want to join us on some of our future opportunities.
Dave Debeau [00:17:11] Dan, thank you very much for sharing some of your insights and your very smart marketing ideas. And I appreciate it. All right, everybody, take care and we'll talk to you on the next episode of. Well, hey there, thanks for tuning into the property profits podcast, if you like this episode. That's great. Please go ahead and subscribe on iTunes. Give us a good review. That would be awesome. I appreciate that. And if you're looking to attract investors and raise capital for your deals, that may invite you to get a complimentary copy of my newest book right back there. There it is, the money partner formula. You got a PDF version at Investor Attraction book, dot com again, investor attraction book, dotcom ticker.