[00:03:51] Robert Leonard: It seems like we always kind of connect around these interesting times. I think the first time we connected was during Covid. Then we now we’re talking during an interesting time now with financing interest rates. Talk to us a little bit about what you’re seeing in the real estate industry. Right.

[00:04:04] Dan Handford: In the beginning of 2022, what we saw was.

[00:04:08] Dan Handford: A lot of brokers still were pitching to sellers that they could get these really high premiums for selling their assets. And that kind of trickled, trickled over from 2021. And so as we moved into 2022, these unrealistic expectations were set by the brokers to these sellers. And so once we start looking at deals, Underwriting them and putting offers on it.

[00:04:31] Dan Handford: We just can’t get there with the current debt market. And in q1, I would say it was a little bit easier, but as we moved into Q2 and started seeing the Fed doing some drastic and rising of, of their raising of their interest rates, definitely saw a, a tremendous amount of, of volatility in pricing from, from almost day by day and week by week.

[00:04:51] Dan Handford: And so it’s been really challenging and. I would say that towards the end of 2022, we have seen several of our, of the, of the sellers starting to reset their expectations. I think it’s because the brokers are not setting unrealistic expectations to the sellers. Now. There are still sellers out there that are unrealistic.

[00:05:09] Dan Handford: And then I, when I say unrealistic, it doesn’t mean that they’re, it’s negative or it’s bad. Like we had four deals this year that we tried to sell in 2020. And we ended up not selling them because the assets are performing well, but we couldn’t get the strike prices that we were wanting for that these brokers were telling us what we could get to be able to achieve our returns earlier and early, instead of waiting the full five years for the, for the full cycle one kind of lifespan of the, of the project.

[00:05:33] Dan Handford: And so we put them out to market, you know, they did the tours, they did the bids, the call for offers, and we just couldn’t get there. And so we were one of those unrealistic expectations from a seller’s perspective. It was based on the broker telling us that they could get a certain number and us only putting it out to market, because if we can get those numbers now, then we’ll go ahead and sell.

[00:05:52] Dan Handford: But if not, we’ll just hold onto it and, and wait till the, on the, until we’re on the other end of this kind of recession that’s impending, right? It’s pending right now in the market. And so we’ve definitely seen a kind of a shift in a migration of seller or un resetting their expectations for, for pricing.

[00:06:06] Dan Handford: We’ve even had some projects that we have got under contract. We had. We were able to retrade it. It was a large like, you know, 80 million project, but we were able to retrade that deal because of some of the changes in the debt market and some of the things that we found during due diligence. And we were able to retrade that a little over $6 million reduction in the purchase price, which.

[00:06:26] Dan Handford: To us is like unheard of. Like when we, when we realized that we had to offer, we had to like go back and retrade for, you know, more than 6 million, you know, I was like, guys, this deal’s dead. Nothing’s going to happen here. It’s, it’s, it’s gone. But that seller was getting caught with rising interest rates and their debt service was expensive and they really could not continue to pay that.

[00:06:45] Dan Handford: And so they, they were forced to sell. And so they, because they were forced to sell, they had to reduce their offer price. And we still got it. And we still closed. And so those kind of projects and deals are happening. And there are deals that are getting awarded to other groups, and those groups can’t perform.

[00:07:00] Dan Handford: And so they’re coming back to people. And so there’s, there’s definitely from a seller, you know, perspective, there’s definitely some things changing. And from an investor sentiment perspective, we’ve been able to raise a significant amount of capital this year. So we, we raised specifically, you know, directly from our investor group little over 290 million from our investors just this year alone.

[00:07:19] Dan Handford: And we’re sitting here in December of 2022, getting ready to wrap up the. Our goal was, you know, a lot more than that, but because of the things that have happened this year, you know, in 2022, we were not able to achieve the, the, the larger goal that we wanted. But still, given what’s happened this year, I think we’ve done really well and growing, even growing from last year, we raised 196 million.

[00:07:36] Dan Handford: This year we’re at 290 million plus. And then moving into next year, I really honestly know where we’re going to end up because we’ve definitely seen a, a, a shift in some of the investor sentiment towards the end of this. Wanting to hold onto some capital and kind of have it ready to deploy next year.

[00:07:52] Dan Handford: Just some deals that are going to come available next year, they’re going to be great deals to capitalize on. And so we have definitely seen that We’ve, again, still been able to raise on a large amount of capital. I think that that investor sentiment is going to continue into, into 2023 and we’ll be able to continue to raise some, some significant capital into the new year as well.

[00:08:10] Dan Handford: As long as we can find deals that actually make sense and we can bring our investors.

[00:08:15] Robert Leonard: What happened with that property that you saved $6 million on? Like what, what allowed you to save $6 million? What were the, were there things wrong with the property? Was it just you knew that you had a little bit of a leverage because he was kind of in a, the seller was in a bad spot?

[00:08:26] Robert Leonard: Like what, what allowed you to get that reduction?

[00:08:29] Dan Handford: Yeah, I would say we did not know that the seller was in a bad spot. So we didn’t, we didn’t use that to our advantage at all. You know, hindsight’s always 2020. I, I just. In talking with the broker after the fact? No. That, that, that, that was definitely a challenge piece that was allow, that caused them to want to reduce the price.

[00:08:45] Dan Handford: But so the biggest thing was the, the changing in the debt markets. Since we had under, since we had got it under contract and underwrote, it initially fed increased the rate. Our, our, our lock and rate was higher. So the, the dynamics of the deal changed from that perspective. And then once we started doing some of our due diligence, we saw that the management side of what they were, of the property was not very good.

[00:09:04] Dan Handford: And so one of our negotiating pieces in that project, If we are going to move forward with this, we want a x reduction in the purchase price, a little over a $6 million reduction in the purchase price. And we want to go ahead and install our property management company on the property to manage the property during our due diligence.

[00:09:21] Dan Handford: And up until we close. So that we can make sure that the pr, the property is being managed properly and not being mismanaged. Because if you mismanaged the property and then you get down to closing, and then the lender does their, you know, additional, final, final checks, and if they’re not, they’re not seeing some of that significant changes or seeing that they’re maintaining the occupancy.

[00:09:40] Dan Handford: Then it could kill the deal as well. They, they agreed to it and they, they, we were able to, you know, come to an agreement with, with, with, with the reduction of the purchase price and then allowing our, our property measurement company to be able to go in there and take over operations.

[00:09:53] Robert Leonard: Is that pretty common that you guys do?

[00:09:54] Robert Leonard: Do you guys usually put PM in place before you you acquire the deal?

[00:09:57] Dan Handford: That’s the first time we’ve ever done that. So, you know, we’ve acquired since 2018, a little over 1.6 billion in assets, and that was the first time. But honestly, that would probably say that’s the first time we’ve. Needed to do it because most most operators are, are, have a decent property management company in there that can continue to maintain the operations until we take over and then the day we take over, we install our property management company.

[00:10:19] Dan Handford: But we just felt like we didn’t feel comfortable even with a reduction in purchase price unless our property management company was in there and taking over right away.

[00:10:27] Robert Leonard: And so what would you have done? I know this, you said this is your first time you doing it, so you might not know exactly the how it might have played out, but what would you have done if you ended up not closing that deal and your property management team was in place?

[00:10:37] Robert Leonard: I mean, I mean, I’m assuming just turn it over to the other guys again, but what would that

[00:10:40] Dan Handford: have looked like? Yeah. So even though it was our property management company, they still had a separate agreement that they had created through with that prop, with our property management company during that transitory period.

[00:10:51] Dan Handford: So technically the property management company was working for the seller, not for us, but that property management company manages all of our other assets and so, Them, them being able to kind of come in and take it over. There was still a contract in place, so if we didn’t close it, they would’ve still, probably still maintained as the property management company throughout, you know, you know, till the, till the next buyer came along, if you will.

[00:11:12] Robert Leonard: Is your property management team in-house, is it part of passive investing.com or is it a separate entity?

[00:11:18] Dan Handford: It is a third party property management company. We have considered bringing it in-house. We just don’t feel like we have enough assets under management for it to really make sense for us. It’s something that we are looking into and we have been looking into for the last couple of years.

[00:11:32] Dan Handford: And it is something we will likely do in the future, but I think that’s also one of the reasons why we’ve been able to grow as, as well as we have is because we haven’t tried. Water ourselves down so much that we’re also trying to manage property management side of things at the same time as trying to manage and and properly asset manage our, our, our, our, our, our assets, but also manage the, the money that, that the investors have entrusted with us as well.

[00:11:53] Robert Leonard: I was talking to some other founders, CEOs similar to your position, that own own companies and started companies similar to passive investing.com and a couple of them kind of regret. Property management piece so early on because it kind, it felt like they pigeon held themselves to the market that they were in.

[00:12:10] Robert Leonard: Because when you get dispersed, you can’t really, you know, you have to have a lot of units in one place in order for that property management company to really make sense. So I wonder if, you know, I know you guys have expanded into some different markets, so maybe that’s, it’s making property management in a little bit challenging.

[00:12:24] Dan Handford: There, there’s definitely a challenge that there’s definitely a hurdle there when you have your assets spread across multiple states. And we do, we have, we have, we have assets specifically around multifamily. We have assets in, in Texas, we have assets in Tennessee North Carolina, South Carolina, Florida.

[00:12:38] Dan Handford: So we, we are quite a bit spread out. We do have a, a fairly good concentration here in the southeast. And that’s, that’s the thing is as we grow our portfolio, we have more assets in one. It is something that we will consider down the road, but you know, I, I, I think it was a, a, definitely a, a wise and, and and smart move for us to not do it right out of the gate.

[00:12:58] Robert Leonard: You told us a bit about how the current conditions are impacting properties that you’re acquiring right now, but what about properties you already own? What? What impact is it having on it? Do you have fixed debt on those properties? So rising interest rates isn’t a massive deal. Do you have some maybe five year terms that are coming up, you know, in the next couple years, and you’re a little bit worried about that?

[00:13:16] Robert Leonard: Talk to us a little bit about some of the properties that you already.

[00:13:19] Dan Handford: Yeah. So the, the nice thing is that we do have about 50% of our portfolio is in fixed rate debt, so it’s, it hasn’t had an impact on those properties. We also have about another 50% of our pro of our assets that are in floating rate debt.

[00:13:32] Dan Handford: Thankfully whenever we buy a, a property and have floating rate terms, we always buy an interest rate cap, which is very, very important. You know, I’ve had investors already reach out that have invested with other groups that they did not buy an interest rate cap. And now this time last year where they were paying, you know, three and a half, four and a half percent, now they’re upwards over 10% on some of these deal.

[00:13:54] Dan Handford: And so they’re, they’re having a hard time making their debt service payments. They’re having to do capital calls, and it’s been very challenging for a lot of people. And so I, I have this seven red flags that my, my, my wife and I wrote after. We, we’ve actually have invested in, you know, right now we have a little over 74, 75 different LP positions with about 18 different operators around the.

[00:14:16] Dan Handford: And as we, you know, started to vet operators and look at different projects and deals, we came up with this kind of seven red flags for passive investing. And if any of you are listening, you want a copy of that, you can go to passive investing.com. And in the top right-hand corner, there’s a little, you know, button there that says, or a little dropdown on the menu.

[00:14:33] Dan Handford: It says knowledge center. If you go to the knowledge center there, there’s a link there for you to be able to register for the red flags to be able to get that article. It really helps people to be able to kind of make sure that they’re placing their capital properly. And one of the things that you know, we want to make sure that we do is we only invest in deals that have an interest rate cap.

[00:14:53] Dan Handford: And that actually was not even part of the original seven red flags. I’ve now added an eighth one, which is make sure you don’t invest with an operator that doesn’t buy interest rate gas. I just assumed that everybody was smart and they would buy those interest rate caps, but what happened was is, you know, the interest rate caps or you have to buy them, it’s like an insurance policy.

[00:15:12] Dan Handford: And so three years ago, four years ago, you could buy a interest rate cap for 2% above your, your floor interest rate, and it might cost you, you know, 20, 30, $40,000 for the life of the policy. But you know, as the Fed starts to increase their rate, of course that increases their risk for the insurance company.

[00:15:31] Dan Handford: And you know, now you’re lucky to get one for, you know, less than seven figures. I mean, that’s, that’s how much difference they are in price. And so, Some of these operators had to make a, a, an, an executive decision albeit, and probably not the smartest one or the wisest one, to not bring in additional capital and not buy the interest rate cap.

[00:15:47] Dan Handford: And now they’re caught in a position where they may lose their asset or have be forced to sell in a time that’s not very optimal. Whereas some investors may lose capital, but hopefully they at least forget their initial capital back. They just don’t make a return. Right. And so I think there’s going to be some, some assets like that as we move forward into 2023.

[00:16:05] Dan Handford: But from our overall, our, our portfolio is, is, is very strong. We did recently move from a monthly monthly distribution, distribution cadence to a quarterly distribution cadence, cadence primarily because we don’t know what’s going to happen in 2023. So are we going to have a higher increase in delinquencies?

[00:16:23] Dan Handford: Are we going to have a lower occupancy? Is there, are people going to, you know, stop not spending money? And so we wanted to make sure we had plenty of time to be able to make decisions around distributions in that schedule. And so we, we, we, and then in the, in the short term, we moved to our entire portfolio off of monthly.

[00:16:38] Dan Handford: Into a quarterly distribution cadence and our goal is to get it back to monthly as soon as possible. Likely, you know, end of Q3 and a Q4 of next year is when we’ll probably make that transition depending on, you know, what happens in the market. But we felt like that would be a wise thing for us to do, to make sure that we’re protecting investor capital, because our primary goal is not to make a return for investors.

[00:16:59] Dan Handford: Our primary goal is always capital preservation. That’s the number one goal in what we do. The second goal is to make a nice, healthy return and. But we have to constantly go back to making sure that we can preserve investor capital. If that means changing the investor distribution cadence or possibly reducing distributions or in, or, or or eliminating distributions for a short period of time, then of course that’s what investors pay us to do, is to make those, those, those high level and, and, and really kind of detailed, if you will, in the weeds decisions to make the best decision for the entire portfolio as a, not portfolio, but the entire property that they’re invested in as a whole.

[00:17:36] Dan Handford: And our investors also know that we’re going to make the best decision for them. because guess what? We’re usually the largest investor in these properties. And so we have a significant amount of our own capital in it, which is also one of the reasons why in that Red Flags article, one of the red flags is that you should never invest with an operator unless they invest alongside you as an investor.

[00:17:55] Dan Handford: You want to make sure that there’s that, that, that, that great alignment of interest by having their money on the line as well as your money on the line as they’re continuing to manage the.

[00:18:04] Robert Leonard: I’ll put a link to the red flags guide that Dan’s talking about here in the show notes, and so you guys could easily access it.

[00:18:11] Robert Leonard: Just scroll down, click the link, it’ll bring you right to it. But how has that distribution change been perceived by investors? Have they accepted it with open arms? Have they been a little bit hesitant? What has that sentiment been like?

[00:18:22] Dan Handford: I’ll, I’ll be completely frank and honest with you here, Rob, that I, I, I feel like we did a, we, we, we did not communicate it as well as we should have to our investors.

[00:18:32] Dan Handford: We sent it out in our monthly update to our investors, but we, and we also shot a video a, about the update with the three managing partners. But we, we, I feel like the messaging that we sent to our investors was, was probably not the best, not probably, it wasn’t the best. And so we did have, you know, a large, a large number of investors reached out, but.

[00:18:51] Dan Handford: It was still less than about 6% of our investors that kind of reached out and said that they were either confused or they had some questions or whatever. But, you know, pretty much everybody that we’ve talked to and we explained to them the reasons for that decision of changing the cadence of the distributions, they understood.

[00:19:06] Dan Handford: They’re like, you know what? I understand. I don’t, I I may, I may not like it and I don’t like it either. Right. , I mean, I’m, I’m the one that else gets cash flow distributions every month. But when I make the decision to do quarterly, it’s, it’s now quarterly cadence. Necessarily might, I like the decision, but they understand the reasons behind the decision and why we made the decision.

[00:19:23] Dan Handford: And they, and they’ve realized that, you know, they, they have entrusted us to be able to make the best decision for all of the investors as, as, as a, as a, as a unit, if you will. And so even those assets that are in floating rate, debt options right now, pretty much all of them are at their interest rate caps.

[00:19:38] Dan Handford: So we, we, we kind of have limited our exposure at that. But there are some assets that, you know, we, we’ve had to reduce distributions on because if you have an increase in debt service that eats into your cash flows and you can’t make, make those distributions anymore or have to make a lower distribution.

[00:19:53] Dan Handford: But I will say that one of the things that has really helped us is that. We, we learned early on that we always wanted to make sure we had a significant amount of operating reserves. So we basically have about four to six months of operating reserves in each one of our assets. So if the property goes down to 0% occupancy, we could continue to pay the expenses in the debt service for up to four to six months.

[00:20:12] Dan Handford: And so the chances that happen is very remote. But what that also allows us to do is that if there is any type of economic stress or strain or, or recession that ha is during the whole period of one of our. We have plenty of runway, usually between about 15 to 18 months of runway to be able to pivot and make changes during a recession.

[00:20:31] Dan Handford: Because if you look back the last hundred years, the most of those recessions that have occurred over the last hundred years have only lasted for more, no more than about 12 to 18 months. And so we have enough, if we have enough operating reserves to get through a recessionary type environ. Then we can do really well on the other end of that recession and be able to sell that asset and make a nice, nice return for our investors.

[00:20:53] Robert Leonard: What is the standard for most LP positions aren’t, aren’t quarterly distributions? Pretty normal.

[00:21:00] Dan Handford: So I would say that for most operators they do quarterly distributions. We have always done monthly distributions and we, we do it because it’s not that hard to do. And if there’s the cash flows are there, then why not distribute them on a monthly basis?

[00:21:14] Dan Handford: Is it more costly for you? It’s very minimal. I mean, I mean, I mean for Right, for the most part. It’s actually not, other than like, there’s just the labor of having somebody do that every single month. But we have an in-house finance team. We got, you know, I think it’s six or seven people now that are part of the finance team now and manage all that for us.

[00:21:30] Dan Handford: So, you know, there’s not, it’s, it’s, it’s not like it’s a, it’s a huge burden or anything. And if they, and I say there’s not any cost other than the labor because yes, the bank does charge us, but we get credits based on our, our, our balances on the accounts. And so we ended up essentially paying nothing for fees and, you know, wires and ACH and stuff like that.

[00:21:47] Dan Handford: So it really is, is a, a, you know, there’s no extra cost for us to do it monthly. But what it does allow us to do is make sure our investors know that we’re going to hit, we’re going to be monitoring the, the accounts enough so that we can make those distributions on a monthly basis. And it also, From a marketing perspective, if you think about it from that, kind of put those lens on for a minute that that lens on for a minute, if we’re hitting your bank account every single month.

[00:22:13] Dan Handford: The next offering that we come, come about or the next amount of time, the next time that you have money to place, who are you thinking about? The guy who only hits your account every quarter or the guy who’s in your account every single month. And so you, if you can see those, those, those, those wins getting into your account every single month, you want more of those wins, right?

[00:22:28] Dan Handford: And so we, we, we, you those out electronically and then investors get to see us. Then we have the next. We’re, we’re, we’re top of mind for that investor.

[00:22:36] Robert Leonard: Yeah, I do, I do really like that. For full disclosure, for everybody listening, STIG and myself are both investors in passive investing.com, and I did like the monthly distributions.

[00:22:44] Robert Leonard: I got the, the notice you said, the investor notice. I saw the video, et cetera, and I wasn’t, I mean, it didn’t personally bother me. I was like, you know what? Most, most places do quarterly anyway. It’s not really that big of a deal, you know, but like you, everything you said, it was nice to have the monthly while it was there, but again, it wasn’t, wasn’t the end of the world for me when it, when it went to quarter.

[00:23:02] Dan Handford: Right. Most, most of our investors aren’t living off their ca off the cash flows. They like the cash flows because it helps them. But it doesn’t, it’s not necessarily a, you know, make or breaker as to whether they make their mortgage payment because they’re, they’re getting that cash flow payment. So we knew that there was going to be some investors that, that, that wouldn’t, you know, like that, that change in the cadence, but, At the end of the day, we’re, we’re not making decisions on based on one investor’s, you know, thoughts or, or, or needs.

[00:23:27] Dan Handford: It’s, it’s, it’s the asset itself and the overall preservation of capital, and then again, secondarily making a nice, healthy return for our investors.

[00:23:35] Robert Leonard: So outta your whole portfolio, I know you have, you have a couple different asset classes. You got self storage, car washes, multi-family leaves. I know you did some hotel stuff Out of all of those different asset classes, What are you most worried about?

[00:23:47] Robert Leonard: What keeps you up at night out of those asset classes, and then which one are you not really worried about at all? What do you think is going to be the most.

[00:23:55] Dan Handford: Honestly, to be honest, to be completely frank with you, I don’t, I don’t lose sleep over any of these assets. I do get questions from investors, you know, before even, even this happened and even before Covid, like how, how do you sleep well at night knowing that at this point in time, we have almost $600 million of investor private equity from investors just like us that are invested in our assets.

[00:24:14] Dan Handford: I mean, our average investment is about 126,000, but we have about 1800 investors. And so I tell people like, I sleep really well all at night. Like I sleep like a baby. And they’re like, how do you do that? Like that would be like a lot of burden, stress to like manage that much money. And I will tell you that.

[00:24:30] Dan Handford: When I start to think about it, I can see how somebody can kind of get into that kind of state of like, you know, being anxious, but honestly we find really great quality assets and we feel comfortable putting our own capital into it. Usually seven figures or more of our own capital is put into each one of these deals, and so we sleep really well at night because we know we’re, we’re buying assets that are going to perform well during, during, during, you know, many different types of recessionary environments.

[00:24:53] Dan Handford: And so there’s not really one asset class that I lose sleep over because I don’t lose sleep over any of. They’re the, the ones that I would say I think could do really well during this time is the car washes. The car washes and the self storage. Because one of the things with self storage is, Self storage does really well during a recessionary environment because when people are having to downsize because they can’t afford a, a larger house or a larger apartment and they’re downsizing, and same thing with businesses, that’s one thing that people don’t realize.

[00:25:24] Dan Handford: I think self storage, just for personal stuff, there’s probably more business related storage needs and there is personal needs. So there’s businesses that are downsizing from a, you know, two or 3000 square foot facility and they don’t need that big of a space. In a recessionary environment, they’ll move from that to like a a thousand or 1500 square feet, but they need somewhere to store all their stuff.

[00:25:42] Dan Handford: And so, and sometimes it’s like, you know, medical offices that need a place to store their files and stuff like that. And so they, they, they, these types of storage facilities typically is hard to typically lease up even more during a recessionary environment because people need a place to build, to store all their junk.

[00:25:56] Dan Handford: And so that’s a, that’s a great asset class. And then of course with, with, with car. Asset class that we’re doing right now, we’re doing only express car washes. We’re not doing self-serve or you know, kinda like the breaking bad style of car washes. I guess if you think about that, we’re doing what’s called an express style.

[00:26:12] Dan Handford: So these ones are ones where. People probably, you probably have seen this before, where you drive up to the kind of stacking lanes, if you will. You go to the pay station, you swipe your credit card after selecting which wash you want, or you have a membership and you go through, they load you, you stay in your car, you load, they get loaded onto the tunnel.

[00:26:28] Dan Handford: You go through the tunnel. On the other end, you get to use the free vacuums. We also have compressed air. We have a microfiber towels and crevice tools and a glass cleaner. And, you know, a lot of those additional things that most car washes don’t have. We like to add on as additional amenities to be able to attract people to want to use our facility instead of the g the car wash down the street.

[00:26:49] Dan Handford: But the biggest thing with the car wash is that they’re a lot of the, the, there’s a, they’re really heavily membership based. And so because we have that monthly recurring revenue and the me, the memberships are not that expensive. They’re, anyway, there are 20, 30 or $40 a month. And so to spend $20 a month on your car to get it washed, even in a recessionary environment, people still have a car.

[00:27:08] Dan Handford: They still want to wash their car and they don’t want to do it themselves. So for 20 bucks a month, go to wash a car as many times as they. They’re not going to just cancel their membership for that. And we saw that during covid and membership’s actually increased because it’s one thing that they could do that was inexpensive.

[00:27:22] Dan Handford: The kids love it. They, they like getting, they like to have that, that car cleaned and it’s 20 bucks a month. Right. And so it’s a very low cost you know, type of have of, of, of Of a, of a, you know, product, if you will. And we actually pivoted from a monthly cadence from there, from doing a monthly $40 a month, or 20 or $30 a month to a four week schedule.

[00:27:42] Dan Handford: So now, instead of having just 12 month pay period, we actually have 13 months because there’s 13 four week periods during the year. And so even, we actually charge like 20, 30 or $40 for every four weeks since we get that extra, you know month during the year. Because of that four week cadence in the, in the, in the schedule.

[00:27:59] Dan Handford: I would say that really all the asset assets, you know, I think are going to do really well. But I think, so storage will be, you know, one of those ones that’ll be will outpace our, our underwriting all and, and, and I think pretty much all of those, maybe, yeah, one or two that have floating rate, Deb, but most of those are fixed rate.

[00:28:16] Dan Handford: Pretty much all of our, our car washes are fixed rate dead because it’s done by local banks usually. And they don’t usually do floating rate on those types of product. And same thing with the hotel. But I think, you know, again, I, I don’t sleep. I, I sleep really well at night, like a little, like a little baby.

[00:28:29] Dan Handford: Sometimes it’s hard to wake up in the morning, you know, cause I, I sleep so hard. But no, nothing really keeps me up at night. I think the portfolios going to going to continue to perform well and we’ll be able to survive this thing during, you know, for over the next, you know, 12 to 18 months and come out of it very strong and be able to sell some of these assets and, and make a good nice, nice and decent return for our investors.

[00:28:47] Robert Leonard: How often, I know you’re a car guy, how often do you use your car washes?

[00:28:51] Dan Handford: So, oddly enough, I have a car that has a wrap on it. And so, because I have a wrap on it I, I can’t go through our car washes, but my wife, she has a car that does not have a wrap on it. And so I’m, you know, I’m usually at least once a week, you know, driving her car at some, for some, for some reason.

[00:29:08] Dan Handford: And so, Whenever we pass by one, I’m always like, let’s go in there and then do another car wash. You know, because we also give away, you know, a, a free air freshener. Every time somebody comes in, they can hang in their, in their, in their, in their you know, their, on their visor, which has our little kind of stormy mascot on there and the, and the QR code to download our app and stuff.

[00:29:25] Dan Handford: And the course, the kids like to go through it too, so they’re always like, let’s go through the car wash. And so every time we have one, like from here, there’s literally one, like, like less than a mile away. It’s like half a mile from here. And so we’re passing by in all the time and we reuse it quite often.

[00:29:38] Robert Leonard: Funny. I, I live in New England, New Hampshire, and I was actually down in North Carolina, South Carolina area last year. I went through one of the car washes that you guys own, and when Stig and I were deciding which investment to go into, we were considering the car washes. I was like, I’ve actually been through these.

[00:29:51] Robert Leonard: I’ve seen them, and we were considering the, the self storage as well. I’m curious when it comes to the car wash, when you offer this membership, How much of the business, and it almost sounds bad when you talk about it this way, but like how much of the business is kind of predicated on somebody not using it?

[00:30:07] Robert Leonard: So I heard this interesting story the other day, planet Fitness, they set their prices so low so that people almost forget about it and that they just keep paying and they don’t actually use it because each location will have tens of thousands of people that are members. And if they have that many people that, and they actually used it, it just wouldn’t be possible.

[00:30:25] Robert Leonard: They just forget about it cause it’s only 10, 15, 20 bucks a month. And so I’m curious how much of that is, is part of it with the car wash? And then this also last question might be a little bit nitty gritty. Might have to talk to the operationals guys, but I’m curious, how many car washes does somebody have to use in a month before their $20 membership Doesn’t, you know, isn’t profitable for you?

[00:30:45] Dan Handford: Yeah, so I’ll, I’ll answer that. It’s a great question. So we have lots of data on that now, now we have 20 locations and we have 10 deals, 10, 10 different assets under contract right now that we’re going to be releasing a new carwash offering in, in January of 2023. But we also are going to be releasing a new self storage deal.

[00:31:02] Dan Handford: And, you know, we have a self storage deal right now that we’re, we’re closing out throughout, throughout between now and the end of this. That is, is great from a, from a depreciation standpoint, a tax benefits perspective. But when it comes to the memberships, the average person that gets a membership washes their car right at three times a month.

[00:31:22] Dan Handford: And so it costs us not including the labor side of things, because labor fluctuates based on the volume. But just looking at like the chemical costs and the utilities and the other kind of things to keep the, the facility open, it costs us maybe two or $3 to, to wash a car. So it’s not very expensive.

[00:31:37] Dan Handford: And actually we would prefer them to get used to washing their car more regularly so they get addicted to it. But, but we do have quite a few members that sign up and they might go, you know, two or three months without washing their. There, there is that, that, that, that dynamic which helps us, obviously from a cash flow perspective, but we want them to continue to use us.

[00:31:54] Dan Handford: We do some things that are member only type events. We have a whole 12 month kind of marketing calendar, you know, like, like for example, in January we’re doing free car washes for all law enforcement on Mondays, which is one of our slowest days. So we chose Monday because of that. And if they show their ba their, their, their badge or they bring in their, their patrol vehicle, they can, they can wash their car with the category five wash, which is our top wash for.

[00:32:17] Dan Handford: so each month we have a different, you know, category of people that we are going to be doing that kind of a special with. We also have a membership promos and, you know, we’re doing grand openings for all the different sites when we take ’em over. And so there’s a lot of things that we do from a marketing perspective to be able to attract people into it.

[00:32:32] Dan Handford: And even in, in January, one of the other things that I’m really looking forward to seeing the results of. Is, we’re actually, we have a company that is making us gift cards that are, they’re not really fake gift cards cause they actually are gift cards that have a balance on them. But then, we’ll here, I’ll have a code on the back of it.

[00:32:48] Dan Handford: But whenever you get a, like a little flyer in the mail or whatever and like a val pack and you just are flipping through and you see the coupons, you might take one and like save a coupon. But most of you’re just throwing away, right? If you do, you do the same thing. When you have a postcard that comes in the mail, you just take it and just throw it away.

[00:33:04] Dan Handford: Well now we’re going to be sending out these gift cards or legit gift cards that have value to them, $10 on each one of them that they can apply to a car wash. And they, our, our goal is to send out to all the people within a one to three mile radius. Around each one of the sites and give them these $10 gift cards so they can get in, come in and actually experience the wash for the top for the first time.

[00:33:26] Dan Handford: Especially because we want to be able to be able to onboard onto the app. That’s how they apply the gift card to their account and they can come into the wash to actually, you know, get their car washed, but then they’re getting people primed and ready and, and then habituated to pollen season. So when pollen season comes, comes around, which is usually for us in the south, it’s usually one of the biggest times of the year for us for car washes because there’s so many people that have problems with it, like pollen getting on their car and they’re washing it all the time.

[00:33:50] Dan Handford: They want to wash it more frequently. And so our car wash volume tends to tick up, you know, march through through, I’d probably say March through like the beginning of June. It’s really a big time for carwash. We’re trying to do a lot of things, kind of prime ourselves so that we can get ourselves ready for that big push coming up in a couple.

[00:34:05] Robert Leonard: What happens to those gift cards if they don’t use ’em? What if somebody gets it in the mail and and they just throw it away like a coupon? What happens to that?

[00:34:11] Dan Handford: It doesn’t do anything. It just, it just goes away. So they can’t redeem it for cash. It’s not, it’s like non redeemable, but they can use it and they can pass off to a friend.

[00:34:20] Dan Handford: They can give it to somebody else. They can use it for, for, for gifts. I mean, they can use it for a lot of different things, because it’ll actually look like a legit gift card.

[00:34:27] Robert Leonard: But you guys don’t get charged, like, you’re not taking money outta your bank account, so, so it’s not like,

[00:34:32] Dan Handford: They’re throwing $10 out of the, out of the, you know, into the trash.

[00:34:34] Dan Handford: Correct. So basically what they do is they sign up to our app online on, on, on the apps in the app store, whether it be on Apple or Android devices or whatever, and they download the app, they register for it, and then on, and there’s a, they have like a little area called the gift cards or the wallet area, and they can go in there.

[00:34:49] Dan Handford: It’ll say add the code. They can add their code and it’ll automatically apply $10 credit, basically a, a promo code, if you will. That automatically applies $10 balance to their, to their, to their account when they actually punch the numbers in and, and sign up for the app.

[00:35:04] Robert Leonard: What, what I think is so interesting is you guys are real estate investors, but what everything we’ve just talked about with car washes is business operations, and that’s such a different piece of car washes that you don’t necessarily have.

[00:35:16] Robert Leonard: I mean, you do have ops. You know, multi-family self storage, but it’s just so different than with a car wash. Do you have an actual operating business that goes along with the real estate of car washes? So I think that’s very interesting. How has your experience been with that? Do you like the business ops of the car wash, or do you prefer something with like multi-family self storage that doesn’t have that business like retail component to it?

[00:35:36] Robert Leonard: Yeah.

[00:35:37] Dan Handford: I, I personally don’t like the operations of it, like doing it myself. We have a, we’ve had to build out our own property management team just for car washes, because self storage, hotels multi-family, all of those have third party property management companies. But car wash, there was no, Hey, would you manage my car wash?

[00:35:55] Dan Handford: They, they just, it just doesn’t. And so we had to create our own property management company to be able to support these assets. And so we have already, we have little over 200 people now that are working for us in the property management company across all of our sites. And so it’s been quite, quite a lot of operations that we’ve had to, you know, manage.

[00:36:15] Dan Handford: Again, that goes back to the original thing about starting your own property management company. You’re going to have those same complications in multifamily just as you are with carwash. It’s just a different product that you are. And I think a lot of people that get into this business, even if they’re not doing car wash and they think that the operational side of things is, is going to be easy.

[00:36:32] Dan Handford: And I’ll say that the operational side is one of the most trickiest things to do, whether you’re doing multi-family, hotels, self storage, or, or of course these express car washes. Express car washes do have a little more complicating factor because there’s a lot of different moving parts to it. And there’s a lot of, and we have training manuals that we put together and we have onboarding training that we have, have videos and then documents and there’s a lot of different checklists and things like that for people when they’re opening and the opening and ch and closing and main items.

[00:36:58] Dan Handford: And there’s a lot of different moving parts to it. But we, when we, when we moved into that, started, started the car wash, We brought on one of our man, one of our new managing partners for Car Wash Cameron Broom, and he’s been doing a phenomenal job managing that and and making sure that, that that runs smoothly and as, as well as when we, when we take over car washes too.

[00:37:18] Robert Leonard: What got you interested in car washes? Like what? We’ll put it on your radar.

[00:37:21] Dan Handford: Yes. It’s actually quite funny. So I was, my wife and I were chartering a private jet to go to New York City to bring some friends out there just for the day to spend some time. It was for her birthday that I did. And we were, we were standing in the airport.

[00:37:37] Dan Handford: I’m at the airport, you know, getting ready to load on the plane, and the guy comes out and he’s like, Hey, do you see that jet over there? I’m like, yeah. He goes, that’s a citation 10. He go, I’m like, yeah, I, I can tell that guy. And I know my jets. You know, you, you can see my jets on the screen up here. I’m behind me.

[00:37:51] Dan Handford: I said I was like, okay. Like, he goes, do you know who owns that? And I was like, well, well, no. Like, I’m, I don’t know people who buy, who own these random jets in Columbia, South Carolina. And he goes, oh, that’s the guy who owns the local Franks car washes in. I was like, you got to be kidding me. He’s like, yeah.

[00:38:09] Dan Handford: He goes, they wash over 200,000 cars a year and that, that, that’s his, that’s his jet. I’m like, wow. I’m like, what does he use the jet for? He goes, it’s just for personal. He goes to Montana and then Hunts, and he goes to Vegas every once in a while and you know, goes to a couple ranches in Texas, . I’m like, how does this guy have that much money washing cars?

[00:38:27] Dan Handford: You know? And so it got me on a path of research in car washes and the cash flow and the opportunity. And the nice thing about the industry right now is that it’s very fractionalized, so there’s not a lot of like major players in the space. There are a few, but nothing like you would see in like multifamily or cell storage or anything like that.

[00:38:46] Dan Handford: There’s a lot of smaller mom and pop operators that have gone into the business over the last three to five years. And they’re ready to sell. And so what we’ve been able to do is buy these kind of portfolios, you know, 2, 3, 4, up to, so we’ve had, we’ve had seven sites at this point that we’ve bought at one time that have allowed us to be able to kind of add to the portfolio.

[00:39:04] Dan Handford: And the opportunity that I saw was that there’s, there’s high cash flow. So we offer a 10% preferred return on these investments, and then we set up the waterfall. So the investors like that are getting that, that those, those first fruits. And so the investors kind of get to capitalize on the cash flows during the hold period, and also the nice pop on the back end.

[00:39:23] Dan Handford: And our projections are based off, are, are very conservative and they’re based off of basically selling the assets for around the same equity multiple that we bought it. Right. And usually these, these are, are sold off of an equity multiple off of the ebitda. Right. And so that’s basically similar to N NOI and, and real estate.

[00:39:38] Dan Handford: It’s the net operating income. So it’s the net income that ebitda, there’s a few other nuances to the EBITDA number, but for all intents and purposes, whatever that kind of net income is, it’s an equity multiple off of that. And so some of these, some of these car washes, kind of the smaller mom and pop operators, you buy one, two, or three at a time, you’re going to pay, you know, seven to maybe 10, upwards to 11 or 12 equity multiple on those assets.

[00:40:02] Dan Handford: Our exit projections are usually only to sell them around like a 10 to 12 x on an inequity multiple based off the ebi. Well, there’s been transactions lately that have happened that have had large portfolios being bought by private equity groups and publicly traded companies that, that buy these, and they have had, you know, 22, 23 x.

[00:40:21] Dan Handford: So really huge numbers that have been at these exit multiples. And so our goal is to be able to build the portfolio where we have, you know, a hundred fifty, two hundred, three hundred locations and then we turn around and actually sell it to a large private equity and roll it up to their portfolio and have a large exit for us as well as our investors at the same.

[00:40:39] Robert Leonard: You think we’re in the early days of car washes? Kinda like we were in self storage. I don’t know exactly how long ago, but if you go back not that far. You know, not that long ago there was, self storage was very fragmented. There wasn’t a lot of big players in there. Now you have the life storages, et cetera.

[00:40:53] Robert Leonard: That are massive. But before that, I mean it was all mom and pops. Are you seeing like the car washes kind of like the early days of self storage?

[00:40:59] Dan Handford: Yes. I would say I would say absolutely. Yes, that’s correct. And I think what we’re going to see over the next, maybe say 10 to 15, maybe 20 years, is this consolidation happening in car wash and we’re going to be part of that, right?

[00:41:12] Dan Handford: Cause we’re consolidating right now. And then we’re going to be consolidated and rolled up into another group that’ll be even. Right. So for someone to build a buy our portfolio of say, 200 locations and they have 300, they can immediately go from 300 to 500 locations with one transaction and they can get to where they want to go faster as well.

[00:41:28] Dan Handford: And that’s really what we’re trying to kind of capitalize on is right now that is fractionalized. We’re trying to consolidate and oh, we’re not planning to sell in, you know, that lot that far out into the future, 10 to 15 years. I feel like that there is a runway of probably 10, 15, 20 years within carwash until we get to the space where we are right now in sell storage.

[00:41:47] Dan Handford: Where there are, there is a lot more consolidation, but what, right, what we’re seeing right now in carwash is that there is consolidation happening. We’re going to be part of it. We’re going to, we’re going to capitalize on it and our investors are going to be really be able to capitalize on it too.

[00:42:00] Robert Leonard: Have the investors been a bit harder to get on board with the car washes just given that they’re so different than, than other parts of real estate?

[00:42:07] Robert Leonard: Or has it been pretty.

[00:42:09] Dan Handford: I would say it’s been fairly easy and it’s, and it’s primarily because there’s higher cash flows, right? So there’s a higher cash flow during the hold period. There’s a higher preferred return, and they have that potential for the nice pop on the backend. Now, when we underwrite these things, we’re not underwriting them.

[00:42:23] Dan Handford: So we’re going to get this nice, you know, 30, 40, 50% return. Right? That’s going to be an unrealistic expectation for investors to set up. And so we actually, when we’re underwriting it, we projected on a five year hold period that, and that we’re going to get maybe between, you know, 20 to 22%, you know, return on there, maybe up to 25%.

[00:42:41] Dan Handford: But really where we as operators make money is that we can really outperform the asset and go way above 30, 40%. And that’s really what we’re looking for, is, is these assets that we feel like have a great potential for being able to exit that they exit them at even higher returns than what we’re.

[00:42:56] Robert Leonard: How are you thinking about markets these days? I know you’re, you’re in Texas, Florida, South Carolina, North Carolina, Georgia, that southeast area like you mentioned, are you looking at going into any other markets or just given the climate of the real estate world, are you kind of considering just staying put, staying in the markets, you know really well, kinda letting the dust settle before you go into some new markets?

[00:43:13] Dan Handford: Sure. So from a multi-family perspective and a sales store’s perspective and even a hotel perspective right now, we are definitely staying in some of our core markets. We really liked the primary markets. Even though you pay a higher, I mean a lower cap rate in those markets, you also have the opportunity to be able to sell with lower cap rates, and it’s because of the higher competition, especially from an institutional perspective in those markets.

[00:43:34] Dan Handford: When it comes to car wash, it’s a little bit different. We’re a little bit agnostic when it comes to the market, as long as there’s the, the, the, the market demographics make sense? So we, as far as the with car wash, we need population density. We need car counts. We need a great location with traffic going by the property.

[00:43:49] Dan Handford: It can’t be on a secondary or tertiary road unless there’s some waves. They’re like, traffic is being forced down that road. So we want to make sure that we have an asset that can perform really, really well in a market and that there’s not a lot of competition in that area as well. Or, or at least there’s a, there’s a barrier, there’s a lot of barriers to entry to build, able to put up a shop across the street or beside us to build a cause there to be, you know issues with competition.

[00:44:11] Robert Leonard: Talk to another big operator a couple month or so ago, maybe a month and a half, and, and he said he’s entirely pencils down on underwriting for. Acquisitions, development. He’s pencils up. He is, he’s, you know, he’s analyzing. He’s ready to go. He’s, he’s happy to do development, but he’s not, you know, pencil’s down with, with his underwriting.

[00:44:30] Robert Leonard: He’s not looking to acquire anything right now. How are you guys approaching acquisitions?

[00:44:33] Dan Handford: Yeah. So I would say, just to kind of speak to that, as far as being pencils down, I think everybody has a different level of, of where they, they are from a, from a risk perspective. And from where they are, from a, from a market sentiments perspective, we always feel like there’s an, there’s an opportunity to be able to buy in any market cycle, no matter where you are.

[00:44:50] Dan Handford: mean, you just think about that one deal that we just, we actually just closed it about two weeks ago that when we, we, we were able to retrade for over six. Most of the people that were bidding on that didn’t even bid on it, or they just put in a bid and they didn’t even make it. But we got it because we, we stayed strong and put our offer in.

[00:45:07] Dan Handford: We found out some things we retraded and they still got the deal, right? So that extra, you know, 6 million plus that we got in the reduction and purchase price is just an additional 6 million that we’re going to be able to capitalize on when we sell the asset. And so I, I don’t, from an acquisitions perspective, I do feel like there’s going to be, we already are seeing it a slowdown.

[00:45:25] Dan Handford: Right now we typically always see a slowdown in the Q4 of, of the year because people slowing down for Thanksgiving and Christmas and they hold deals and tee them up for the NMHC conference for, for multi-family and, and, and, and like the January and February of the following year. But I think that we’re going to.

[00:45:40] Dan Handford: We’re going to start seeing in Q1 and Q2 as some of these deals that, that were not underwritten very well or they didn’t buy these interest rate caps. And there’s going to be people that are going to be, you know, going to be struggling. They’re going to be struggling, and there’s going to be awesome opportunity for us to.

[00:45:53] Dan Handford: I never like to say there’s going to be opportunity for us to go in and like steal deals. I feel like it’s more because I, I really have a, have a, have a, have a pit in my stomach more for other operators that are not handling their investors properly. And I just feel for those investors that have put their hard-earned money with an operator and that operator’s not handling it well.

[00:46:12] Dan Handford: I just, I just, you know, have a really hard time with that. And so if there’s opportunities for us as a group to be able to go in and capitalize on some of these distressed deals and then hopefully, hopefully still save, save investors capital and, and us as an, our investors to be able to make some money, I think that that can be a, a win-win for both parties.

[00:46:30] Dan Handford: But I will say that there’s, there’s likely going to be some blood on the streets with some of these deals where there’s going to be, you know, some, some issues with some of these operators, and investors are going to be upset and s e C’s going to get involved and, you know, there’s going to be some, some turmoil out there.

[00:46:43] Dan Handford: And I don’t wish it upon anybody, but I, I will say that. I’ve already started to see it. We’ve already seen, seen groups reach out to us, you know, Hey, would you buy this deal from us at the price we bought it for three years ago? Because we’re, we’re not doing well. We need you to save it. You know? And and, and in some situations, you know, we, we, hopefully we can do that.

[00:46:59] Dan Handford: But sometimes there’s situations where we’re like, you know what? We, we can’t touch that at all. Like, we, we hope, we don’t want to be a part of it. We don’t want to be associated with it. Because we want to make sure that we can maintain the returns for our investors. We don’t want to bring our investors into a deal that’s failing just to cause it to potentially fail because some of their operator didn’t perform properly on that asset.

[00:47:17] Dan Handford: So I, I definitely think there’s going to be some opportunities for acquisitions. We are also starting a full development arm, two passive investing.com. So we just hired on, we just strategically hired on a, a very important person that they’ll be announced and released in January that will. You know, helping us as we move forward into 2023 and finding deals that from a multi-family self storage we already have two development sites under contract and underway breaking ground next month for car wash.

[00:47:45] Dan Handford: So those two car washes will be built out and then by, you know, July, August, they’ll be, they’ll be ready to turn the key on, on those as well. So from a development perspective, yes, I like that. I think it’s a great opportunity right now, especially where we are in the market cycle, but I think there’s also going to be some existing assets that’ll that’ll be able to be performing really well, that we can capitalize on by, and we are continually underwriting those projects as well.

[00:48:06] Dan Handford: It’ll just be fewer and far but in between.

[00:48:08] Robert Leonard: Why do you think development’s a good, good opportunity right now?

[00:48:11] Dan Handford: Well, I think it’s because there is there’s a lot of, of profit and, and, and, and development. It is, it is one of the riskiest investments because, you know, you may open up a facility and, and turn it on and, and nobody comes to wash their car or nobody comes to visit the hotel or, or, or rent self storage units or, you know, a, a rent a, a room in that for, for, for multi.

[00:48:34] Dan Handford: But as long as you have done your due diligence properly and you’ve had a third party, do a feasibility study to make sure that that, that decision to put it there is the right decision. The chances of it not performing well is, is pretty remote. Again, you right now, if you were to put a shovel on the ground right now, you’re going to be on the other end of the recession by the time it turns on anyway.

[00:48:55] Dan Handford: And so you’re going to basically be building something during the recession where most people are, are, are, are like preserving and hoarding capital and, and staying liquid. And if you can actually be the one that actually starts to invest during these. On the other end of it, you have an asset that’s ready to sell and you can sell it on the upswing of the market.

[00:49:14] Dan Handford: I think that’s really where, where, where the development is a great play right now. There is

[00:49:18] Robert Leonard: a, an apartment, multi-family apartment complex near where I live that just went up and it’s huge. I, I don’t know exactly how many units it is. I don’t know all the details, but I drive by it all the time. It’s on the way to my parents’.

[00:49:30] Robert Leonard: And it’s six, seven buildings, I’m guessing. Each building’s probably close to 75 units, a hundred units. Like it’s a big facility and there’s a lot of self storage attached to it on the same thing. And the parking lot is empty. And it, it, every time I drive by, I look over and I’m like, you guys just can’t in, like, you’re not filling like at all.

[00:49:48] Robert Leonard: There’s, they’re not, their lease up is not going well. And it’s been open for months now and I just, the parking lot is just empty.

[00:49:55] Dan Handford: Yeah. So I will say that self-storage is a different beast because self storage is one of the longest lease up of any asset class. So multi-family, you can usually lease sales, those, those things up pretty quick.

[00:50:05] Dan Handford: With, with self-storage, it can take up to 24 to 36 months to lease up a facility, but once you get it leased up, That’s really where the capitalization is on it is, is, is, is making sure that you can buy an asset and usually the target is 24 months, bu once you turn the lights on, you get your co, after you build something, you want to be able to have at least up within 24 months.

[00:50:25] Dan Handford: But it does take a little bit longer. But there are, there are, I, I’ve even seen some car washes that are, you know, boarded up and there’s, they’re not there anymore and some pretty, pretty big names in it. But I think a lot of it sometimes has to do with some of the other things that are happening in that market that you don’t really see unless you actually have boots on the ground in that market too.

[00:50:44] Robert Leonard: You’re going into car washes pretty hard. You turned onto it because of the guy that owned the jet. You like jets. Is that in your future? You is Dan Handford going to have his own jet soon?

[00:50:54] Dan Handford: So I, I would say that it is, it, it, it’s something that we have researched quite a bit and, and, and done the kind of due diligence on like what the costs are and, you know, be really balancing that with maybe say something with like net jets or other fractional owner, owner ownership type programs.

[00:51:10] Dan Handford: And to be completely transparent with you, we’re a Net Jets owner now, so we, we do fly around with net Jets, but it’s, it. Unless you are flying over 400 hours a year. In our estimations, it doesn’t really make sense to own the own, to own the jet, because you got to pay full-time pilots and you got all the vari fixed costs and the variable costs and all this kinda stuff and it just doesn’t make sense at that point.

[00:51:32] Dan Handford: But when you can share it and have a fractional ownership, that’s really really what really, when it, when it benefits, you know, you as a, as a flyer. because the biggest thing that I, I like to use it for is when I got to speak in an. Well, I want to, I want to preserve my family time as much as possible, and I do get invited to speak at a lot of different, you know, in-person events and a lot of ’em my turn down.

[00:51:50] Dan Handford: But the ones I do select, I make sure that I can speak on a Friday so I can fly out there in the morning, speak. And, and then maybe spend a few hours there kind of mingling and talking with people and then fly back and still be home for dinner. Right. And that’s really the biggest benefit with, with having the, the ability to fly with, with private travel is the ability to get where you want to go faster.

[00:52:09] Dan Handford: And for me, I’m in Columbia, South Carolina, so we always have layovers in either Charlotte or Atlanta or Dallas or, or Chicago or New York City. And so when you have those kinds of connecting flights, you always have to have a connected flight. It just adds so much more time and I can’t get home fast enough for that.

[00:52:24] Dan Handford: So from that perspective, I would say. I wouldn’t, I would still say that I wouldn’t put it past me, that I would eventually, sometime in the future own my own jet. But you have to get to the point where it doesn’t make, where, where it, it, it, you don’t care that it doesn’t make sense. Right. , if that makes sense.

[00:52:40] Dan Handford: You just have so much money that it doesn’t, and you don’t care if it makes sense at all. Right. And that’s kind of even from a fractional perspective, like you can’t. Does it make sense for me to fly commercial or does it make some more sense for me to fly private? It’s always going to make some more sense to fly commercial if you look at it just from the dollar perspective.

[00:52:56] Dan Handford: But it’s really how much is your time worth and how much is your time with your family? I’m worth.

[00:53:01] Robert Leonard: Well, I know you got to that point where you just buy cars that you like without it really making sense. So I wouldn’t be surprised if you got to that point, . I wouldn’t be surprised if you got to that point with a, a plane eventually.

[00:53:11] Robert Leonard: But Dan, as we, as we wrap up here, I want you to tell us a bit about MFIN Khan in Charlotte 2023. I saw you have Cini coming, had him here on the podcast. He was great. I love him. Arod Mark King. Last year I was, I was thankful to be able to go to the, the conference and see Shaq, et cetera. So tell us a bit about the conference you guys got going on, and anywhere that people can, can find you, connect with you, learn more about passive investing.com.

[00:53:36] Dan Handford: Yeah. So if you want to get some more information, more than what I’m going to share with you here and, and what Rob’s already shared about the mf i n con, you can just go to mfi n con.com and you’ll see the, the list of the speakers there and and the celebrity speakers. Definitely and looking forward to kind of rubbing shoulders and, and, and meeting and, and interviewing Arod on the stage.

[00:53:56] Dan Handford: And that’s going to be exciting. He actually has a large multi-family portfolio himself. We’ve invited Mark King on who’s the c e o of Taco Bell. He also used to be the well, he originally was the c e O of Tailormade and then Adidas bought them, and that was the Adidas Tailormade, and he was the c e O of Adidas Tailormade and grew it to the largest golf company in the world.

[00:54:15] Dan Handford: And then he retired there and got recruited by Taco Bell or Young brands to actually come in. And and, and actually, you know take over the, as the c e o of Taco Bell. So yeah, we’re really excited about having him coming in and I be able to talk a lot about leadership. And then of course, Dr.

[00:54:30] Dan Handford: Robert Aldini is great. He is, he’s he’s one that I’ve been, I kind of, hey, I kinda like a fan of his for, for, for many, many. I always, his book influenced the Art of Persuasion is one of my all-time favorites business, all-time favorite business books. And I call it a business book, even though it’s really not a business book.

[00:54:47] Dan Handford: It’s all about like, I got human social psychology and how people think and all the studies that have, that he has done himself. But I, I’m really looking forward to having him on stage and rubbing shoulders with him. And he’s going to be able to speak directly with our team as well about different, different things that we’re working on.

[00:55:00] Dan Handford: So it’s going to be a great event with the celebrities, but we’ll, but we’ll also have. 40, 50, maybe 60 speakers around multi-family. We’re also going to have some, have, have some some speakers talking about self storage and our car washes and the hotels. And it’s not just around passive investing.com.

[00:55:16] Dan Handford: It’s really, if you are listening and you’re interested in it, maybe doing some of this actively, it’s great for you to learn how to do it on the active side as an operator. And how to do it the right way. But it’s also a great place for passive investors to go to learn and, and maybe even meet some other operators that are, that are doing things the right way and be able to be able to create some of those connections.

[00:55:33] Dan Handford: Plus, of course, you get to meet me, right? So of course I’ll be there. Get to be able to rub shoulders with everybody. And it’s, it’s a great opportunity to be able to network with other high level people. The tickets are not I mean, I, I think they’re cheap. Just because I know the value that we’re providing to people, but the tickets are not cheap.

[00:55:48] Dan Handford: But we’re not trying to put on a cheap event and just sell you a bunch of, bunch of bunch of things during the event. We don’t do any sales pitches during the event at all except we’re trying to sell you to come to the next one the next year. Right. But we don’t, we don’t have programs we sell, we don’t have backend coaching programs.

[00:56:02] Dan Handford: It’s really about connecting great quality speakers and the celebrities and providing content that’ll allow you to be able to set yourself up for success when it comes to investing passively, but also if you are thinking about maybe doing this actively at the same time. And then I guess the other way you can reach me is through passive investing.com.

[00:56:20] Dan Handford: You go to the website passive investing.com. On the top right-hand corner, there is a big blue button that says Join the Passive Investor Club. Click on that, fill out your information. One of our team members will reach out to you, discuss your investment goals, and make sure our group is the right fit for you.

[00:56:35] Dan Handford: And if you want to just follow me further, you can certainly do that as well. You can link with dan.com. That just brings you straight over to my LinkedIn profile so you can connect with me there on LinkedIn and that’s just link with dan.com.

[00:56:48] Robert Leonard: I highly recommend the conference and checking out passive investing.com to invest.

[00:56:52] Robert Leonard: I’ve been to the conference. I had a great time. I invest with passiveinvesting.com. Stig does as well. All been a really great experience. Dan’s great. His team is great. I highly recommend everybody listening goes and checks that out. Dan, thanks so much for your time again today and look forward to catching up again soon.

[00:57:07] Dan Handford: You as well bro. Thank you for having me.

[00:57:09] Robert Leonard: All right guys. That’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

[00:57:14] Outro: Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday we teach you about Bitcoin, and every Saturday we study billionaires and the financial markets.

[00:57:32] Outro: To access our show notes, transcripts, or courses go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional, this show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.