For today’s episode, we will be discussing how some opportunities that have been in front of you, could be a rare opportunity you've been looking for.
We have a book coming out next month called Passive Investing Made Simple How to Create Wealth and Passive Income through Apartment Syndications. Email for a FREE copy. The book is coming out on August 11th.
[00:01 – 10:40 Opening Segment
[10:41 – 22:01] Why Now Is The Right Time To Move Into Minneapolis
[22:02 – 31:08] How We Underestimate The Psychological Pressures
[32:25 – 38:44] Closing Segment
"And so it was just kind of one of those things where the first couple of deals are going to be inefficient and frustrating until you get the scale to have that hub.” –Dan Kreuger
“we were buying properties in twenty, seventeen, eighteen or nineteen people kept asking, are we overdue for a crash.” –Dan Kreuger
“Yeah, and this is the key takeaway is that, like, even when we're dealing with some of these older guys who have a lot of property and we want to transact with them and do deals like the deal has to make sense for us to act” – Anthony Vicino
"we find is that a lot of people, they they don't want to be I wouldn't say contrarian, but they go with the flow. So when everybody's buying, they're also buying and that's not necessarily the right time to buy. And when everybody's selling, they sell and that's not necessarily the right time to sell either. " – Anthony Vicino
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Keep up with the podcast! Follow us on Apple, Stitcher, Google, and other podcast streaming platforms.
To learn more, visit us at https://invictusmultifamily.com/.
**Want to learn more about investing with us?**
We’d love to learn more about you and your investment goals. Please fill out this form and let’s schedule a call: https://invictusmultifamily.com/contact/
**Let’s Connect On Social Media!**
LinkedIn: https://www.linkedin.com/company/11681388/admin/
Facebook: https://www.facebook.com/InvictusMultifamily
YouTube: https://bit.ly/2Lc0ctX
For today’s episode, we will be discussing how some opportunities that have been in front of you, could be a rare opportunity you've been looking for.
We have a book coming out next month called Passive Investing Made Simple How to Create Wealth and Passive Income through Apartment Syndications. Email for a FREE copy. The book is coming out on August 11th.
[00:01 – 10:40 Opening Segment
[10:41 – 22:01] Why Now Is The Right Time To Move Into Minneapolis
[22:02 – 31:08] How We Underestimate The Psychological Pressures
[32:25 – 38:44] Closing Segment
"And so it was just kind of one of those things where the first couple of deals are going to be inefficient and frustrating until you get the scale to have that hub.” –Dan Kreuger
“we were buying properties in twenty, seventeen, eighteen or nineteen people kept asking, are we overdue for a crash.” –Dan Kreuger
“Yeah, and this is the key takeaway is that, like, even when we're dealing with some of these older guys who have a lot of property and we want to transact with them and do deals like the deal has to make sense for us to act” – Anthony Vicino
"we find is that a lot of people, they they don't want to be I wouldn't say contrarian, but they go with the flow. So when everybody's buying, they're also buying and that's not necessarily the right time to buy. And when everybody's selling, they sell and that's not necessarily the right time to sell either. " – Anthony Vicino
LEAVE A REVIEW if you liked this episode!!
Keep up with the podcast! Follow us on Apple, Stitcher, Google, and other podcast streaming platforms.
To learn more, visit us at https://invictusmultifamily.com/.
**Want to learn more about investing with us?**
We’d love to learn more about you and your investment goals. Please fill out this form and let’s schedule a call: https://invictusmultifamily.com/contact/
**Let’s Connect On Social Media!**
LinkedIn: https://www.linkedin.com/company/11681388/admin/
Facebook: https://www.facebook.com/InvictusMultifamily
YouTube: https://bit.ly/2Lc0ctX
Anthony Vicino: [00:00:15] is Hello and welcome to Multifamily Investing Made Simple, the podcast, it's all about taking the complexity out of real estate investing so that you can take action. Today, I am your host. Anthony, I hit the microphone. This scene out of Invictus capital is joined as always by Dan. You're not going to like it, Kruger.
Dan Krueger: [00:00:34] But now our listeners have no context for that.
Anthony Vicino: [00:00:38] That one came out of nowhere near like I'm very curious. Just before we went on the air, I asked Dan a sedan to watch bad investing advice because this is what people are looking forward to. He says, yes, I do, but you're not going to like it. Mm-hmm. And I was like, oh, I'm intrigued. Color me the color of intrigue.
Dan Krueger: [00:00:57] Now everyone's intrigued. Yeah, this is unique to Anthony. Everyone else is going to like it. Anthony, I'm the
Anthony Vicino: [00:01:02] Only one,
Dan Krueger: [00:01:03] Anthony, if I want.
Anthony Vicino: [00:01:05] Ok, so let's just get right into it. Like, no no preamble. No. How are you doing? No, none of that stuff. I'm just I'm here for the kids. I'm here for the meat and potatoes. You give me my dessert right now. Yeah.
Dan Krueger: [00:01:16] Do you want your bad investing tip of the week? Yes, I do. OK, here it is. Stay hyperfocus. I don't I just use your whole brand against
Anthony Vicino: [00:01:31] My framework and not returning it. What are you doing?
Dan Krueger: [00:01:34] Well, it's a sneaky plug for all your stuff, because that is kind of like your thing. And I think a lot of your stuff has been kind of branded under the hyperfocus mind. So, you know, with that said, what the heck am I trying to say here? Stay hyper-focused. If you listen to us and what Anthony talks about, you'll think that being focused is a good thing. It is a good thing. However, right before this call, if they were doing something called pulse meeting, those you had have read traction might be familiar with this, with what this is. But it's kind of a weekly meeting of the leadership team in a company where you kind of talk about a bunch of stuff. And one of the things that came up on that was a book called Well, I'll leave it for later because I think it's a
Anthony Vicino: [00:02:19] A good book to come in at the end of the episode.
Dan Krueger: [00:02:20] Yeah, but we were talking about a book that was speaking to a concept that should have been very obvious for us given our track records and where we've come from, the things we've done in the past. But because we've been so hyper-focused on the specific business model, we kind of forgot about this concept of growing through acquisition. And you hearing me say that sounds ridiculous like you have a business where you acquire businesses like you are an acquisition company. But when it comes to like being vertically integrated, we've been hiring people and really focusing our energy on bringing on team members one member at a time. And we kind of forgot, like, you know, we could just buy some of these ancillary businesses that we need to service our properties in a cleaning company, buying lawn care or a landscaping company, even a management company. We don't need to build it from scratch ourselves. We can just buy the thing. And because of how focused we were, we kind of forgot about this really super obvious thing that we could have been looking at. I've looked at buying small businesses in the past before I got into real estate. Anthony has been a serial entrepreneur and grew one of his previous companies through acquisitions extensively. But for whatever reason, it just didn't occur to us because we had our blinders on the way it never was.
Anthony Vicino: [00:03:32] So it's fascinating to look at when you start talking about and I agree, I think hyperfocus is a great thing. But what you're talking about there is like not getting tunnel vision. You still need to be able to pull out and see the full-wide view. And I talk about creativity all the time as being one of the most important skill sets that you can have. And creativity for me is the ability to take two unconnected pieces of information and connect them in new novel ways. And this one, it's so simple and straightforward. You're like, oh, yeah, we don't have to grow everything exactly from the ground up we can acquire. Which, as Dan alluded to, I've done a number of times in a number of other businesses very successfully. And for whatever reason, it just never clicked in my head that that could be a path of growth for us here at Invictus. But now that we're thinking along those lines now, it's opening up some possibilities of like, OK, how can we improve our operational efficiencies on our properties? Well, maybe if we acquire like a company or a plumbing company, like these are services that we rely on very heavily for our portfolio so we could deliver better, more consistent services to our residents, which then in terms of delivering better returns to our investors because we control that company, we can do that as well. So these are some things that are starting to spin through our heads. And as we're thinking about this and so for you, I think at home listening to this, the takeaway is like don't get so locked into how you've always done the thing that you don't, that you forget to step back every now and then and ask yourself, how can I do this differently? What's another way of getting to the top of that mountain? How could I like what am I missing? Because sometimes there are things are just right in front of you that are so obvious.
Dan Krueger: [00:05:15] Mm-hmm. Yeah. This is something that I've seen countless times in my life outside of business, investing just in life. You know, if you're so focused on one thing, sometimes you miss really amazing opportunities that are right for you. Maybe it's because you're just down in the dumps and you're feeling sad and depressed and you don't realize that there are all these doors opening over here because you're too caught up in your own head. Or, you know, for me, I ended up marrying somebody who I've known for five years. Meanwhile, I was out there doing the online dating thing, like something obviously in front of me. And then with this is just another example. You just get so fixated on a certain way of doing things and you kind of miss some really obvious resources that are right from day.
Anthony Vicino: [00:06:01] One of the things that have been reflecting on a lot in the last couple of months is that opportunity very rarely looks like opportunity. It's usually sitting there in front of you and your ability to recognize it for what it is. That's really the game-winning skill because people who are like, oh, that's nice for you. Like, I had never had the chance. I never had that opportunity. And it's like, well, everybody does. It's just your ability to recognize at the moment. Like, that's the opportunity. Right there, because it doesn't look like it, because if it did look like an opportunity, then everybody would jump on it, and then it would no longer be an opportunity. So it's the same with your wife. It's right there in front of you the whole time. You just don't realize it until one day something happens. You pivot, you look at it just slightly at a different angle and you go, wait a minute, wait a minute, wait a minute. I'm stupid. It's been here the whole time.
Dan Krueger: [00:06:48] Exactly. Yeah. So I'm sure I'll tell you guys can relate to that stuff. So that's
Anthony Vicino: [00:06:53] Good advice. I like that one. You did throw my brand out into the sewer.
Dan Krueger: [00:06:58] There hasn't been any publicity. Is good publicity, right?
Anthony Vicino: [00:07:02] Yep, exactly. And honestly, guys like whether it's hyperfocus or it's being scatterbrained, whatever it is like, the key to life is living balanced. It's the middle way. You can't be ever too far on to one end of the spectrum or the other like that's not the place to be. So I like that advice. That was a good one that gave that. I like that. Well, Dan, thank you. All right. So I got to renege on your nickname. Dan, you're not going to like this. Crigger Because Dan, I did like this.
Dan Krueger: [00:07:34] Kruger and Dan, it's kind of like the Schrader.
Anthony Vicino: [00:07:38] So now we're going to get it. Now we're going to go even deeper into things that you're going to like at home. We're going to talk about our latest acquisition. Now, if you've been listening to the podcast for a while, you're like, wait, we're going to talk about Charles Avenue again. Did you guys just close that, like two weeks ago? Yes, but that's not our latest acquisition. So last week, this last Friday, somewhat less than five days ago, we closed our second deal of July, our third deal of twenty, twenty-one. So July has been very busy. But we talked about Charles, which is the deal that we did earlier in July. And that one was it took a little bit longer to do five months. And there was some setbacks, some pivot, some adaptations. There's a good learning opportunity. This deal that we closed that we're going to talk about today is what we called the Origin Properties. And this was a much easier acquisition. This was thirty-four units in the heart of Minneapolis, fantastic buildings, fantastic area. Everything about it was just easy peasy. Like you couldn't ask for a more seamless deal just from beginning to end. So this podcast is going to be a little bit less interesting. There's not going to be any drama, no intrigue. It's just it went exactly how you wanted to. And sometimes that's
Dan Krueger: [00:08:50] Nice. Yeah. I think this one serves as a nice contrast to our previous episode where we showed you what it looks like when a deal has a lot of lots of twists and turns and winding roads and stressful situations. And this is what, you know, almost every deal is like this one right here, the one where things went smoothly. That's most deals. Usually, there's one or two little things, little snafu, and closing process because it's real estate. I mean, there are always things that pop up, things that change, but less. The Charles was a very entertaining ride, that's for sure, as far as a podcast goes. And this one is just going to serve to kind of contrast with that, like what is a usual deal look like for us? This is it. So. Well, how do we kick this off?
Anthony Vicino: [00:09:34] Let's talk about people that are at home that not familiar with the Twin Cities. They know that we're Twin Cities investors, that we're vertically integrated. So we invest in our backyards. But what they maybe don't realize is that St. Paul in Minneapolis, they're like really close together. It's why they're called the Twin Cities, but they're very different cities in a lot of ways. And there's there are subtle differences between St. Paul and Minneapolis. And historically for us, our entire portfolio has been in St. Paul. Like that's really been where the numbers make the best sense for us. And we've wanted to invest in Minneapolis proper for years, but for different various reasons. It didn't make sense. It was too expensive logistically because of the vertical integration that posed a little bit of an issue, because while there only a couple of miles apart in the middle of the day if you have to send a property manager from one end of the city to the other, you know, it's cumbersome. And so, Dan, let's talk about that breakthrough, like, why now is the right time to move into Minneapolis and put a flag in the ground and say Invictus is here?
Dan Krueger: [00:10:41] Yeah. Yeah, well, I can't. They mentioned we've had our eyes on Minneapolis for a long time. We live in Minneapolis. The investment portfolio has been in St. Paul. However, we're Minneapolis guys. I live right in Minneapolis. And Anthy lives in a suburb just to the north of Minneapolis. So we call it kind of the west side of things. Right. Minneapolis is on the west side, St. Paul's is on the east side. We're all we spend 90 percent of our lives or more on the west side of things. We really just go over to the St. Paul side of things for real estate purposes, to look at deals, basically to look at deals, or maybe to go to dinner. They have those restaurants over there we'll go to. But by and large, we live our lives on the west side of town. And so we've always loved it over here. We've wanted to invest in it for a very long time. Everyone else loved it, so the price tag for a very long time was tough, people were always paying a lot to get into Minneapolis. And so the rate of return that we were seeing in Minneapolis deals was always underwhelming.
Dan Krueger: [00:11:39] And that coupled with the fact that we're vertically integrated and we've got, you know, hundreds of units in St. Paul trying to tack on a 30 unit in Minneapolis would have been just a logistical inefficient, like Anthony mentioned, having people run back and forth for just one asset. It really makes sense if you're going to have stuff all over town to have a Minneapolis hub and a St. Paul hub. And so it was just kind of one of those things where the first couple of deals are going to be inefficient and frustrating until you get the scale to have that Minneapolis hub. And that was just what I was kind of the second point for. So we really didn't run it anything. Minneapolis was too hard until we found a strategic partnership. Again, someone who had been who had known for years. And we just never really sat down together and talked about what each of us was doing and what we wanted to be doing in the future. And it turned out that there was actually a lot of alignment there.
Anthony Vicino: [00:12:34] It's not funny like this, it's a perfect episode, given the bad investing advice, because you had that friendship with Joe and it's funny like I'll just say this is like St. Paul is historically known as a kind of like not sleepier, but it's definitely quieter, less trendy, quieter. It's I would say it's like we're an older demographic that's like at a certain point in their life that family and kids and starting to lay down roots, whereas Minneapolis is like the trendy place. And so it's always very pricey. And so this relationship, you know, is very interesting because it was there the whole time, is there for many, many years. But finally, you guys saw it from a different angle and realized, oh, there's an opportunity here. And so at the beginning of twenty, twenty-one, we started sitting down with this local brokerage here in Minneapolis, specifically focused in Minneapolis.
Dan Krueger: [00:13:23] The end of twenty is when that those conversations started in twenty twenty-one is when we actually hit the ground running in the ship. You said early. Twenty, twenty-one so.
Anthony Vicino: [00:13:34] Oh yeah. You know in early twenty, twenty-one we started actively looking at underwriting and like say this is the game plan. But yeah this, this preceded that for sure. Yeah. And so, so just maybe give a little bit of groundwork here is like a staple brokerage of Minneapolis. It stood for the Downtown Resource Group and previously they for the last 15 years were focused in downtown Minneapolis. So these are the guys and gals who know this market inside and out. They know this is
Dan Krueger: [00:14:04] Condos and lofts are really what there were. That was their need for a very long time, you know,
Anthony Vicino: [00:14:10] And then when you know, when Dan and Joe, the owner of Doug, sat down and they started realizing, oh, my gosh, like, this is what you do. This is what we do. And here's the opportunity. They started to realize they had just rolled out this new vision Dorji did for twenty twenty-one. And for the next ten years, they really want to expand beyond condos and single families in the downtown area of Minneapolis. They wanted to serve all of Minneapolis. They wanted to do single-family homes, duplexes. Arriflex is large multifamily. And that's where we came in, is like we have the multifamily experience and they they have the local boots on the ground power. They have the property management company in-house right there. They're already managing hundreds and hundreds of units. And so this was like an opportunity made in heaven where we had this operational expertise and this desire to be in the cities. And they had the actual muscle, the people in the city to do the work alongside us.
Dan Krueger: [00:15:06] Yeah, it was very serendipitous. I mean, honestly, what happened was in twenty, my wife and I got pregnant and realized we realized that we needed a little bit more room, but we didn't really want to leave where we were in the neighborhood we lived in. And so I connected with Joe because they don't just do buy and sell transactions. They like Anthony mentioned, they've got a property management division that handles a lot of condo rentals. And so I, I hit them up because I knew we wanted to stay down here. And we had a couple of months where we're able to find something more appropriately sized for the new coming attraction. And so we were sitting down talking about that. We're settled on buying a place and we're sitting down talking about that and started kind of asking me like, you know, so what exactly do you do? I know you're in commercial real estate, quote-unquote, but what does that even mean? And I started describing to them, what am I doing for the past few years? And he's like, that's exactly what we wanted to get into. But that's you know, he would he had just started going down the rabbit hole. So he was like getting said, Repromed syndication model. He's got a ton of real estate experience, but syndicating apartment buildings were new. And so that was really the piece that's really where the puzzle piece is connected is our track record and experience with syndications. Plus, his property management resources equals a match made in heaven. Right. He didn't have the track record of experience managing large properties yet, but with us and him combined, we had a very powerful team.
Anthony Vicino: [00:16:37] Hmm. So let's lay the groundwork of how we found this deal because this is actually another relationships thing. It's another old seller in the Twin Cities that old he's not that old. He's a young buck. He goes, I'm not going. I don't want to give out too many details about this fella, but he's a biking stud. You got second place in a mountain biking race recently. So, yeah, I wouldn't
Dan Krueger: [00:17:01] Call him old by any means. I would call him I would say he's done his time in multifamily and he is like many people who have been in the business for at least ten years, looking, as you know, you could make a lot of money in this business. So by the time you hit that ten-year mark, the desire to make more money starts to really decrease because you've got a lot and you start to look at how can I just use how can I protect my capital and gain a decent rate of return without doing as much work? And like most people like him, he fell. The triple net lease thing is like buying a CVS or Walgreens or Cariboo, where it's pretty much the landlord doesn't do anything. The tenant does everything. The returns are much lower, but it is as hands-off and passive as you can get without being like a limited partner in syndication. So he's transitioning into that phase. And that was really kind of how this deal came to be as he's nearing the end of his is his multifamily career and starting to divest. And we are in growth mode.
Anthony Vicino: [00:18:04] And so when he came to us and so I want to say that we originally looked at like what was it, five buildings with them, four or five or two of them off his hands, because, you
Dan Krueger: [00:18:15] Know, there are at least three. One of them, we were just like, this is kind of junky. It's not. Yeah. Someone might look at it and see Value-Add. I looked at it and saw a lot of CapEx. And the area, I don't think was all that exciting either. I can't really remember where it was.
Anthony Vicino: [00:18:30] Yeah, and this is the key takeaway is that, like, even when we're dealing with some of these older guys who have a lot of property and we want to transact with them and do deals like the deal has to make sense for us to act like there's a lot of things that we just don't want to deal with and don't want to handle. And so over 50 percent of the properties that he showed us initially were like, yeah, we're good. We don't know about that one. But then we found two that we were, like, pretty excited about. They were in areas of Minneapolis. And this is I think the big narrative that's interesting to think about is Minneapolis had a tough 20, 20. Like we all saw what happened with George Floyd and the riots. And like, there's no denying that stuff all happened. Right. Like, Minneapolis is a great place. We love it. But there is a bit of a stigma here right now due to that. Right. And it's going to rebound. And we have confidence in the long term that all the things that make Minneapolis awesome are still there. And so there's this short-term stigma. And what that did was it created an opportunity. You know, we were mentioned before that the prices never really made sense for us from an investment perspective before.
Anthony Vicino: [00:19:36] Now they kind of do because a lot of them I would say the the easy money in the Twin Cities, like there are suddenly, like sitting on their hands, because what we find is that a lot of people, they they don't want to be I wouldn't say contrarian, but they go with the flow. So when everybody's buying, they're also buying and that's not necessarily the right time to buy. And when everybody's selling, they sell and that's not necessarily the right time to sell either. And so that's kind of what we saw is like a lot of people are like, well, I'm a little scared to move into this market now. So a lot of people are sitting on their hands and a lot of sellers are suddenly like, well, maybe I don't want to be here either. So that presented like this pretty cool opportunity for us where when other people are running away, we want to run in because that's when the deals are found. Like, again, recognizing opportunity doesn't look like an opportunity at the moment. It looks like the buildings are on fire and you're like, oh, maybe we shouldn't run in there. It's like, no, if you run in there, like, well, I don't know. I don't know where that analogy really goes. I don't run into burning. But it's not a perfect analogy.
Dan Krueger: [00:20:36] But I mean, I'll tell you this. I've been getting asked for years by people who I talk to about this business than we're in. You know, when's when's the next crash? Because for those of you forgot, from twenty-nine through twenty nineteen December or even January, twenty, we were just on this nice, strong trajectory up to the right. And we, we were buying properties in twenty, seventeen, eighteen or nineteen people kept asking, are we overdue for a crash. Isn't there going to be another big explosion. I'm like yes, yes we are. And I cannot wait because as soon as that happens I'm going to go shopping. And I have been saying that for so long and it finally happens. And I was surprised by how many people just fell into following the herd and behaving like a bunch of sheep and saying, oh, my God, Minneapolis is going like nothing. Minneapolis is dead. Basically, that's what people are acting like. And it's just it's really interesting. Like you said before, a lot of times people don't recognize opportunities when they're right in front of them. And it's like this is a major opportunity to go in and buy some really amazing assets at a very good price point that we're going to hold for a long time. And this is the shopping season I've been waiting for and I know you've been waiting for. A lot of people have said they've been waiting for. But as far as I know, there are not that many people chomping at the bit right now, which is fantastic. So I'm excited.
Anthony Vicino: [00:22:02] And that's the thing is like everybody talks about how they're sitting on money and they're ready for that next downturn because they missed the last one. They're not going to miss the next one. But they underestimate the psychological pressure that you feel when you see people running away or not. Do you sense weakness? And once you do that psychologically, it's very hard to now put your money where your mouth is, which is why what is one of the things that we find helpful? And then we're talking about this earlier during our pulse meeting, is that it's very good to set your parameters before emotions ever get set, like get involved. So if you can say like this is what a good deal looks like to us, these are the numbers that we're looking forward. This is why we like this area. And you come up with all those that thesis before all the turmoil. Right. Then you just trust in that thesis rather than letting the emotions get involved. And that's the problem that a lot of people, they they let the emotion get involved in. They forget to like.
Anthony Vicino: [00:23:03] Well. Historically, Minneapolis has really strong economic growth, really strong job growth that has really strong desirability, the the replacement costs of these buildings is astronomical and we have a huge housing crunch. So it's not as though they're just going to build new buildings and that these areas are going to be less desirable because they're three, four blocks away from the lakes in the downtown area. It's like people want to live here for a reason and those reasons haven't gone away. And so having a investment thesis is one of the best things that you can do is that in moments of turmoil, you can fall back on that and say, here's the parameters that I set for myself. Here's what I need to do as a result. Does that mean you're always going to win? No, it's like poker where you play the odds. When you have seventy-seven percent odds of winning the pot, you play the pot, you're going to lose twenty-three percent of the time that's going to suck. Seventy seven percent of the time you're going to win and. That's that's what you're banking on.
Dan Krueger: [00:24:03] Yeah, I think it's such an important point, I'm going to kind of reiterate it's making a point of. Making investment decisions ahead of time when there's no emotion involved is huge. And so we took a very long-term approach to think about how we're going to approach our business over the next year, the next five years, and the next 10 years. And during that thought process, we we know there is going to be some kind of correction at some point. And we have the mindset that correction is healthy and very much welcome because it presents a buying opportunity. And so we were prepared for this. I mean, no one was really prepared for Koven. What happened? But the economic impact is something that we were. I was waiting because I don't want to say we're waiting for things to happen, but the winter starting point when there was a good buying opportunity and a present and so and we acted, we didn't have to deal with the emotion because we did all the thinking ahead of time. And nothing worth noting as well as this is not the first time that buildings have been burned in Minneapolis due to racial tensions and in many cities for that matter. And people forget that this kind of stuff happens and. People forget about it, which that's a whole another topic, but that stigma goes away, the stigma of a riot happening or some kind of protest happening, it's there. And then within a few years, there's something else that happens and distracts people and people completely forget about it.
Dan Krueger: [00:25:37] So many times over the past 40 or 50 years, there have been times where there have been riots and buildings burning down in cities across the US, but no one talks about that. Maybe the Watts riots gets talked about still, but for the most part, every time this kind of stuff happens, people move on and those areas go back to normal and business is good and real estate goes up and all that stuff goes back to normal. But people forget that the the attention spans of people, especially these days, are very short. So as soon as there is a next thing to get. Sensationalized and hyped up, not to say that the racial tensions are being sensationalized or very much warranted and need to be discussed, but there's going to be something that distracts people from the fact that there were riots in these areas within the next 12 months. And it's going to be not an issue as far as real estate's concerned in the future. So I think that's something that people forget. They see this happening like this is the first time it's happened. It's like, unfortunately stabbed multiple times before. But the fact of the matter is, this market has been amazing the past 50 years and will continue to be amazing. There's going to be some some cyclical occurrences of negative things that happen and bring things down a little bit. But it always goes back up because of those fundamental concepts that I mentioned.
Anthony Vicino: [00:26:51] Yeah, it's the long horizon. Right. You mentioned, like the last 50 years, this has been an amazing market. And you have to realize real estate is a long game. If you're trying to get in and make money in the next six months. Well, OK, then tread very, very carefully, because I don't know what the next six months are going to look like, but I know fairly, fairly, reasonably certain that in the next 10 years, this area is going to continue to be good and desirable and continue appreciating. But here's the thing is that we don't want to bank on that and we don't bank on that. And so we're still looking for solid fundamentals. That makes sense. And so for US Origin Properties, we ended up buying it about seven hundred thousand dollars below market. Seven hundred thousand dollars. That's a huge discount. So even if there was a massive correction and we lose a ton of value, it's incredibly unlikely that we're ever going to get back to that level. So that's one. Number two is real quick.
Dan Krueger: [00:27:50] Theoretically, we could just turn around and sell it again and pocket that money, but it's going to be really inefficient. So it would be really inefficient. That's how good of a deal it was. We bought something for seven hundred thousand dollars less than it was worth, right? Yes. It's kind of like it's a
Anthony Vicino: [00:28:04] Ton of it's a ton of money at this purchase price. And then for us, we see more opportunity and holding it. And so that tells you a lot because from, I would say in-place market rents, there's a solid delta of about I would say one hundred and fifty dollars, which is a good amount of rent growth right there. So there's a lot of value to be added. And so when we're talking about like running into the fire, like when people are running away, that's when you should run in. Like now you still need to buy at a good price to buy it a number that makes sense. And honestly, this number made a lot of sense for us. So it was a no-brainer in that sense. And something else I want to point out is in 2020, a lot of people were starting to pooh-pooh places like New York because, you know, covid happened everybody when the shutdown and everybody's like people are going to move out of New York. And they were they were moving out to the suburbs. And we were seeing that in Minneapolis, too.
Anthony Vicino: [00:28:53] People are leaving the downtown area because they couldn't go to restaurants and all the reasons that you want to live in downtown. But the thing is, my thesis has always been what makes New York desirable place to live hasn't changed. You know, like we're in lockdown and people are scared. But in a year or two years, three years, New York is still in New York and people are still going to want to live there and they're going to go back because what made it in New York hasn't changed overnight. It's the same with the Bay Area people like the Pooh-pooh on San Francisco, the Bay Area. But it's like. Everybody is leaving for Austin, Texas, sure, but there's still a reason why everybody likes living in the Bay Area because it's gorgeous, beautiful. It's awesome. And so those things aren't going to change. And it's the same thing I feel about Minneapolis as well as like all the reasons that have made it an incredible market over the last 50 years, but haven't hasn't gone away just because of the last year.
Dan Krueger: [00:29:47] Yeah, and it's you know, if you focus on the fundamentals, as Anthony mentioned with Minneapolis, the job market, it's the recreation for the citizens here. It's its size, it's big. So you get all the nice parts of the big city that's on too big. It's like a little mini Chicago almost. You get a really good restaurant scene. You get Proxima. It's all these lakes. You're right next to all these great outdoor resources. And so it's just an amazing place to live like that has not changed. The only thing that changed is there's been a stigma attached to some of the unrest and that, as we discussed before, is going to be going away. And what you're going to be left with is the fundamentals that make this place great. So real estate's a slow, a slow cyclical business, right? It's not like the stock market or bottoms for a day and then it's back up almost within a couple of days. The nice part is we've got a nice window of probably a good year here where we can pick up some really good quality assets. So I'm just really excited that we got a really good one and we've got another at least six, eight, 12 months here to find some other good opportunities, really, to use this as our opportunity to build a foothold in Minneapolis, plant our flag there and really kind of set up shop. And then going forward, even as the markets rebounded, we'll be able to take down deals more effectively because of our new partnership and infrastructure on this side of town.
Anthony Vicino: [00:31:13] Yeah, this feels like we're just super excited about it, as you guys can tell. Like, we're pretty bullish on Minneapolis. And this episode might just seem like we're trying to, like, sell you on Minneapolis or defend our decision when we are. If you want to invest within Victus capital, make sure that you go over to the website and join our investor network so we can have a conversation with you so you can look at future opportunities.
Dan Krueger: [00:31:34] But I think it's important, just so people know, we're not just sitting here doing a pitch fest for Minneapolis for our own purpose. I think it's just important for people to realize that the image that is the perception of Minneapolis, the people that are not from Minneapolis, is skewed because of how the media presents things. You know, if you watch TV, you would think that the streets are overrun with rioters. And, you know, when the when the riots were actually going on, that the whole city was in flames of reality, there was pretty much like two spots that are maybe two blocks of actual space where things are happening. And that was it. There were like two locations where very similar things are happening. And by and large, the city as a whole is fine. But it's just this perception of what's really going on that I think is beneficial for us to try to kind of connect with stuff like this.
Anthony Vicino: [00:32:25] Yeah. And so the whole theme of this podcast today, guys, is not really even about this deal that we just closed. It's that seeing opportunity where others don't see it is the key to being a successful investor or entrepreneur or whatever you want to say. But recognizing that opportunity doesn't look like opportunity a lot of time. And I think that's the recurring theme of this conversation. So we're really excited about it. Like I mentioned before, if you guys are interested in learning more about deals, make sure you go over and sign up for the newsletter. That's the only way that you get access to him. And then let's let's get to the book recommendation. We alluded to it at the beginning of the show. So people are probably they've probably been sitting on there on pins and needles this entire time waiting just like what was that book that they like, opened up they're their third eye. So what is it? Oh, no, not that one.
Dan Krueger: [00:33:14] That's not this book.
Anthony Vicino: [00:33:18] This book. I'm sorry if you can't see that at home. He just held a passive investing made simple to me all about taking the complexity out of real estate investing so that you can invest today. So make sure that book is coming out on August 11th. Make sure you put it on a calendar. No, the other day that he's holding up now is by then build Diebold data German.
Dan Krueger: [00:33:41] I think it sounds very dramatic.
Anthony Vicino: [00:33:43] Diebold didn't buy then build is it's about aquisition, entrepreneurship, and how most startups fail. That's true. We know that entrepreneurs like we're not in it for the easy money, that's for sure. But acquisition entrepreneurship is interesting because you acquire already solid, well-run companies that are profitable in the same way that you do with multifamily, the type that we do. You go in there, you improve the operations and then you know your profit well. But that's less interesting to us than thinking about the synergies of acquiring companies that our company, Invictus already relies on. Because, you know, our thesis, we hate relying on third parties like we'd like to control as much as possible. So if we can control and have in-house construction or plumbing or HVAC, if we can control those things, are the landscaping that all the better? Because then we can ensure an excellent product to our residents and for our investors. And so it's like just a cool book. A really great book walks you through exactly how to go and acquire companies. I don't know if you have anything to add there.
Dan Krueger: [00:34:51] Yeah, I mean, I'm just going to kind of add by my two cents here, I'm about twenty twenty five percent through. I think Anthony is closer to 90 percent through by this time he put it on my radar. The interesting thing about it is like none of the concepts that this author is talking about are novel. You know, I come from a corporate finance background where I was building models for acquisitions that Thomson Reuters was doing that we got into real estate where we're acquiring apartment buildings, which are existing businesses. And prior to getting into real estate, I was looking at these exact opposite. I was looking at buying small business laundromats, things like that. I ended up doing it because every day I looked at was just crap. But this is not a new concept. But it's just I think it's really important to kind of read this through a lens, even though I know a lot of the stuff that's in there, reading it through this lens of knowing that we're about to implement this strategy in our business, hopefully, build a golden nugget or two. And so it's not going to be like the most profound information out there. I think most people are aware that they can buy a business. But I challenge people to kind of think about things a little bit differently, specifically real estate, you know, if you're going vertically integrated, give this book a read. I bet you'll I bet it will open up a few doors that you didn't know were there.
Anthony Vicino: [00:36:11] Mm-hmm. Yeah. And that's the key. Regardless of if you're an entrepreneur, an investor is like an egg. And the recurring theme of this podcast learns to see opportunities where others don't and recognizing like, yeah, we're really big fans of staying in your lane and really becoming masters of what you do, but also surrounding yourself with the right teams. And that's really what it businesses. At the end of the day, it's a team. And if you can find the right team and acquire them and then learn from them and grow with them, like, oh yeah, that's like catnip for me.
Dan Krueger: [00:36:47] I would kind of equate this to let's say I want to learn how to invest in real estate. I could go out and I could do so, I could do self-study and I could educate myself on how to do it. I could go through all the steps of doing it myself and it might take me a year to really get that wrapped around it. Or I could go and find a really good mentor coach who could take that year and turn it into like three months. That's kind of what this this growth or acquisition strategy is really all about. You could take all the time, but all the energy capital into building all yourself, or you could just go by the thing that someone over here has already spent their time creating and plug it into your business. So that's kind of the long and short. At least that's how we're going to use that concept. So definitely check it out. It's good. So far, Anthony's a lot faster than me and it confirms that it is still good. I liked
Anthony Vicino: [00:37:38] It. I like it. I recommend it. So that's going to do it for us. Guys, we, as always, really appreciate you taking some time out of your day listening to us ramble incoherently at times. Make sure that you put August 11th on your calendar to pick up passive investing made simple the minute that it drops or if you want a free copy, remember, I'm giving out review copies. Shoot me an email. Anthony Victus multifamily dotcom. Say, Hey Anthony, I want to review the book. I'll send you a free copy and then on launch day, if you would be so kind as to drop the review, that would mean a lot to us. So as always, guys, thank you. Thank you. Thank you for being here. And we will see you next week.