BiggerPockets Real Estate Podcast

BiggerPockets Podcast 342: From Duplexes to a 64-Unit and Self-Storage Millions with Kris Benson

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From buying duplexes to a self-storage empire! Today’s guest Kris Benson sits down with Brandon and David to talk about his remarkable journey across all kinds of different real estate asset classes.

Kris began with a successful sales career and explains why he transitioned into owning real estate instead. You’ll love Kris’s story about how he built a 64-unit apartment complex (in a cornfield), how he found partners to bring the project to life, and how it all started with one phone call! He also shares why he now invests in self-storage, how he evaluates properties, and why he believes this asset is recession-proof!

Kris provides great advice for raising money and finding your niche, and explains his theory that “deals create deals” as he walks through his journey. This is a fantastic show full of great content.

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Listen to the Podcast Here

Read the Transcript Here

Brandon:
All right Kris, welcome to the BiggerPockets podcast, man. Good to have you here. Thank you so much for having me, David, Brandon. It’s pleasure.

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Brandon:
Awesome. Awesome.

David Greene:
The pleasure is ours.

Brandon:
All right. That was very creepy the way you said that. I’m not going to lie. The pleasure is hours. All right Kris, tell us about yourself. I mean, how’d you get into real estate? Walk us through that beginning journey.

Kris:
Yeah, so I think mine’s an interesting one. So, my background, when I came out of college, I worked for a B2B sales company. So, ADP for your listeners out there maybe who are selling some B2B stuff, it was a payroll company and that was my first job out of school, slinging payroll to companies with less than 50 employees. And soon after that I got into medical devices. And so my background’s always been built around sales. And, my last job was with a company called Intuitive Surgical. They make the da Vinci robot, which is an incredible piece of technology, if you’ve not seen it before, an incredible company.

Kris:
But, at about the age of 28, 29, I distinctly remember waking up and saying, “I can’t do this for the next 30 years.” I made a ton of money and that part was great, but the downside was my work-life balance was awful. So, I was traveling a ton, usually three to four days a week. I worked like a dog and in return I got paid for it. But about that 29 year old arena, I realized that time was the biggest thing I didn’t have more of. Right? So, everything else was replaceable. I made a little bit of money and that didn’t really make me happy. I bought some toys that didn’t really do anything. And so for me, it was about capturing time.

Kris:
And so I looked at a number of things, passive income, kind of Rich Dad Poor Dad type mentality. I’m not really creative. I couldn’t conceive myself building a business, but I’m pretty good … I’m an executer. If you give me a task and say, “Hey Kris, go do this,” I can do that pretty well. And, so real estate fit that skillset for me because it’s numbers. Right? As I started getting into what underwriting was, I said, “Oh, I can make work.” And so, that was the start for me.

Kris:
So, Brandon, to answer your question, my first endeavor into real estate was a duplex in the county that I live in. I bought it. My brother was actually moving into town and I bought it as a opportunity for him to move in easily. My parents were actually the loan on it and that was the journey. That was the beginning of it. So, it was an interesting start and I don't know how far along the journey you want me to go-

Brandon:
Yeah, we’ll dig in. That’s good. We’ll dig it in. Before we get there, I do want to read this. Mindy, the BiggerPockets community manager and host of The Money Podcast, she sent me this message and said, “Hey, here’s Kris first post ever on BiggerPockets over in the forum.” I don’t know if you’ve seen this or remember it. But yeah, it just says, “Hey, my name’s Kris Benson. I’m a father of two. Currently live in Saratoga Springs area. I’m 33 and seem to be having a midlife or not so midlife, bit of a crisis.” And you basically said that like, “I’m interested in buying whole, which will allow me to ultimately replace my income. I’m going to be looking to BiggerPockets for networking opportunities.”

Brandon:
What’s cool about that is like going back and you can do that with almost anybody on the site. You go back and look at my first post or David’s. It’s funny where we all come from to go back in time a little bit and be like, “Oh yeah, you are brand new.” You’re just saying, hey, I’m excited about real estate. And a lot of people listening to show right now are exactly where you were five years ago. They’re leaving posts just like that.

Kris:
And I remember distinctly listening to the first few series, I think I started listening in the double digits of BiggerPockets podcast. When it was you and-

Brandon:
Me and Josh.

Kris:
And Josh. I distinctly remember thinking, “Wow, it’d be great if I was on the BiggerPockets podcast.” Things would’ve gotten-

Brandon:
That’s awesome.

Kris:
… really good. So, yeah. I’m super happy and grateful to be here. Look it’s been six years. I’m 39, I’ll be 40 upcoming in … Man. It’s incredible when you take the perspective of where you were just that short time ago. It sounds like a long time, but in the span of your lifetime, man, it’s a blink of the eye.

Brandon:
Yeah, yeah. That’s cool. Anyway, I love to see that. So, let’s walk through from that point where you’re listening to the podcast, you’re asking questions, you’re in the forums to where you are today. So, what came next? You bought that duplex and then you decided, “Wow, I love rental properties, I’m going to buy hundreds of them.” Right?

Kris:
Kind of.

Brandon:
Okay. Walk us through that.

Kris:
What essentially happened was I was naive and dumb. And so, I think maybe you said at Brandon, maybe you’re the guy I should have given credit to all this time. Somewhere along the way I heard or read if I could have a net income number. Right? So, it was a net income per unit. And basically for me it was 200 bucks. I said, “Okay, if I can make 200 bucks net per unit per door that I was buying, 50 units, make 10 grand a month, I’m pretty close. That’ll give me enough to at least walk away kind of from my job.” Now, fortunately I was making more money from that, but my lifestyle was fairly … we live fairly modestly. So, we could make that work.

Kris:
So, that was the beginning. And so, Brandon, that is what I started to do was by some duplexes in the area. When I got pretty close to about 20 units, I realized that it was awful and I hated every bit of it. We had put together a pretty good management team in regards to plumbing, landscaping, bad things going wrong. But the piece that I still controlled was the people part. All of the tenant issues, big boy issues came to us and I realized very quickly that I hated it. And we were dealing with honestly class B. minus C plus type properties, which cash flowed pretty well, but I don’t mean to sound elitist, but the clientele that we were putting in these facilities wasn’t awesome.

Kris:
So, what happened next was, and again, I don’t remember who said it, otherwise I’d give them credit. I heard or read big deals and small deals are the same amount of work. You just make less money on small deals. And I thought to myself, “Oh, that’s the problem is I just need to go bigger.” And so what happened was, then I started doing homework into commercial real estate and commercial multifamily made sense to me, right? It got rid of all the issues that I was running into in the manner in that I could get a large facility with high class tenants and essentially mitigate that risk for myself.

Kris:
So, what ended up happening was we sold the portfolio. I have one duplex left, my brother actually still lives in it, so that’s why I still own it. But that time may be ticking away soon. but we have one duplex left. We sold all that. And how I got started commercial multifamily was, I called a guy that I went to church with when I was a kid. He owned a construction company. His name’s Steve Buck. I’ll give him a little plug. Buck Construction of Whitesboro New York. And I said to him, “Steve, I want to build an apartment complex. What do you got?” And it was cold call. I literally hadn’t talked to Steve in 15 years and he said, “Hey, interesting. You called. There’s a piece of land in a town not too far from where I grew up in. The municipality wants to do something there come have dinner with me.”

Kris:
And so, a long, long story short, that became our first commercial multifamily project. We built from the ground up a 64 unit-

Brandon:
Wow.

Kris:
… complex in Rome, New York, which is in central New York. And it was the beginning of the light bulb for me. When that happened, then I realized, “Oh, okay, this is how you scale a real estate business.” That was the beginning of the big boy real estate.

Brandon:
All right. All right. So, I want to dig into this. I don’t think, unless David, you can maybe think of them, but I can’t think of any person we’ve had on the podcast ever who built an apartment complex. Maybe there was, but I can’t think of anybody.

David Greene:
It’s always people that buy something and then fix it up later. You’d be the first one who built one.

Brandon:
All right. So-

Kris:
I didn’t build anything. I solely relied on Steve’s expertise. I mean, honestly, and this is something for everybody listening is the partnership thing for me has been unbelievably valuable. I know what my skill set is and the details that go along with a development project, that’s not me. So, I had honestly, Brandon, I went in naive, that’s the first thing. And then secondly, Steve and their company have been a fantastic partner for me. My role was really the equity in the deal and I had a wife who was a very risk tolerant and was willing to risk our life savings on doing this. But, yeah, it was an incredible journey, incredible learning experience. Still, to this day, we own it and it’s still an incredible learning experience.

Brandon:
Okay. So, let’s walk through some of this. What does it cost to build a 64 unit apartment complex?

Kris:
Yeah. It was an interesting town. So, Rome, New York used to have an air force base there. It was called Griffiss Air Force Base. And then in the late ’80s, the air force base went away. And so the town got decimated. I mean 40% occupancy rates, rent growth obviously went down the tubes. There’s been no new development there in 20 plus years. So, when Steve told me, “Hey, it’s in Rome,” I said, “You’re on your mind. I just listened to Brandon Turner tell me about all the good metrics I need to have. This is not where I was going.”

Kris:
And what ultimately happened was, the land was dirt cheap. We literally bought a corn field. There’s 104 acres. We have option on 52 of them. And it’s a corn field essentially in the middle of the city. Like it’s surrounded on all side by residential. You’re a mile and a half from where the air force base used to be. And the air force base is now a tech park. So, they have almost 6,000 employees there. And they’ve done all kinds of tax incentives to bring tech people in high paying jobs and nobody lives in Rome because there was no housing.

Kris:
So, our pitch for the original business plan was we were going to build class A or in that market, you can call it luxury housing. Think hardwood floors, granite countertops, steel appliances, two bed, two baths. And we were going to be the only game in town because from a rent comp perspective, we’re 40% more than what the market was sustaining. But if you wanted to live in Rome and have an apartment that had granite countertops and stainless steel appliances, there was only one place to go. So, we built it in 16 unit phases.

Brandon:
How many? 16?

Kris:
Yeah. Four 16 unite phases to make sure that our hypothesis was correct, because-

Brandon:
That’s smart.

David Greene:
I have one question about that. When you’re going to build 16 at a time, it does make sense because you’re basically saying, “Well, I’m only taking one quarter of the risk if it doesn’t work.” The problem is, you have to read in the infrastructure for that entire thing and develop the land. Did you develop all at once and then just build the 16 units at a time? Or did you run the infrastructure for 16 of them and have to do that every single time?

Kris:
So, how the land was set up, basically without drawing you a picture, there are essentially two phases on the front part piece of the parcel. We ran the infrastructure to there. Built the first two phases and then ran the infrastructure to the second part of the parcel and then ran the infrastructure, sewer, water, electricity there. When we started doing phase three, the infrastructure was there for phase four. And when we started phase one, the infrastructure was there for phase two, so split that in half, David, where the risk was still there, but we were almost a hundred percent confident we could fill 16 units. When we got to 32, we were like, “Ah, I don’t know, let’s see what happens.” And we kind of rolled the dice and it’s worked out really well.

Brandon:
So, one thing I like about this is that it confirms or gives evidence to something I’ve said many times on the show before. I’m a big believer that, and what I like to say is that even C class tenants watched Chip and Joanna Gaines or like C class tenants, D class … I mean, people who live in a D class area still watch HDTV. And so what I mean by that is, if you can provide “luxury housing,” in other words better than what’s offered in an area that usually doesn’t get that because everyone ignores that, I tell the story often in my fourplex that I’ve offered my daughter Rosie, it’s in the worst neighborhood of my town, but it’s my best performing rental, never has vacancy, I get way higher than everybody else because some people just want to live there and they are good people that live in those neighborhoods.

Brandon:
So, when you can provide that better than average or better than what everybody else has, because again, yeah, if you live in San Francisco or New York City or whatever, you’re going to have your pick of nice places that have a butler at the door. But yeah, when you can provide those things … I mean, it’s cool that it works for you. So, what went right, what went wrong? Well, go ahead.

Kris:
One more thing about that. I think it a critical point, is, the risk is everybody wants to go in with comps, right?

Brandon:
Yes.

Kris:
There’s something to be said for being first to market. You can only be first to market once. And so, you go on apartments.com and search apartments in Rome, New York, well, our pictures look a lot different than everybody else’s, right? So, if you are in that market looking forward to your point, whether it’s, you’re in a class C/D or you’re moving into the area, which is what we were counting on, right? You have this big churn of employees. When you’re moving in the area, you don’t want to live 25 minutes away, you want to live five minutes away. And so, that’s what we’re betting on. I would give people, being first to market in anything, it happened with us with Intuitive Surgical, my last corporate job. And with this real estate project, there’s huge market share to be had if you can be first to market and do it well.

Brandon:
That’s cool. So, walk us through. I mean, how much did it totally cost to do for the entire project and then what went right, what went wrong, what lessons did you learn?

Kris:
So, I would say that each phase, construction costs went up because we did them basically year by year, right? We would do a year, we’d get them leased up to a point we said, “Okay, we feel like this will support itself cashflow wise, let’s build the next phase.” I would say each phase, somewhere between 2.2 and 2.4 phase-ish. And it depends a little bit. And so, that was the total cost all in.

Kris:
I think the piece of what went right and what went wrong, what went right part is the lease up. We picked the right market and there was the demand that we thought and I’ll give Steve all the credit in the world because I didn’t go along dragging and kicking, but certainly he said, “Hey, there’s people here.” And I was like, “I’m going to trust you. Been in the business for 30 years, I’m going to trust your judgment here.” And he was absolutely right. So, that’s the good part. Right?

Kris:
The bad part just with any construction, I will tell you that knowing what I know now, if I had known what I know now, I probably wouldn’t have done the deal the way that we did it, because I went in naive, right? I knew nothing about development and I was really on Steve’s coattails and Buck Construction’s, and his son Chris, who was the project manager the whole way. And I didn’t understand how contingency budgets should be formulated. I didn’t understand how project managers should be managed. Right? And there was some things that, we were over budget on the second phase by a pretty good chunk. Fortunately we made up for it in phase three. On a two point $2 million project, you’re over budget by five, 6%. That’s a big number, you know?

Brandon:
Yeah.

Kris:
And for a single guy, for one equity source. So, those are things that you learn along the way. But I wouldn’t have done it any other way. There’s something to be said about just jumping in, and you have to have great partners you can trust along the way. And for me, that was it, right? Is, I was willing to jump in and I had a partner who I could trust and kind of put his arm around me and said, “Hey, this is going to be okay. We’ll make it through.” But knowing what I know now just in real estate and development, I probably would have looked at the deal a lot differently.

David Greene:
So, when you are building 64 units in the middle of a corn field, how many times did your partners have to say, “If you build it, they will come” for you to feel comfortable?

Kris:
When you say it like that? It makes me feel bad. I’m not going to lie to you. I was feeling pretty good about myself, but when you say like what you just said, I kind of want to be like, “Yeah, that was dumb.”

David Greene:
Hey, if it worked for Kevin Costner. Right? You just got to believe. That’s the moral of the story.

Kris:
Field of Dreams.

David Greene:
What do you know? Right? Your favorite movie and you ended up doing the exact same thing. That’s awesome. I would think anybody who would take on a project of this size for their first time would go over budget. That’d almost be impossible not to. So, five or 6%, I was expecting like 20% that you were going to tell us it went over budget.

Kris:
If it was just me, David, I absolutely would have.

David Greene:
There you go.

Kris:
I had a construction guy who’s been in the business 30 plus years. He’s built thousands of units and his family has a pretty substantial portfolio as well. So, yeah, I was really trusting the expertise of him. If he would have trusted me, I’m pretty sure I would have been bankrupt.

David Greene:
Nice. Well, but that’s a part of it. Having a good business. Just having the right people in the right seat on the bus. Okay. So, what came next? Where did you end up doing after that and where are you now with your portfolio?

Kris:
All right, so in the middle of building that, I had a friend that I grew up with, who syndicated a condo project in South Boston. Now, I didn’t even know what syndication was. He called me one day and said, “Hey, I need to raise $900,000. I’m going to flip this row house in Southie.” And I said to him, “Where did you get the 900 grand? I’s not your money. Where are you going to get it?” And he’s like, “Oh, you can syndicate it.” I was like, “What’s that?”

Kris:
And so, when he told me how syndication worked that, and I’ll give him a quick plug too, because he’s loaded. I don’t know if you guys know about South Boston, but that market has been unbelievable for the last-

David Greene:
Ever since Good Will Hunting came out, right? Everybody wants a piece of it.

Kris:
A little bit of after that. Good Will Hunting is pretty rough. But he owns a company called City Point Capital and they’re doing huge commercial development deals now. But when I saw syndication, that’s where I said, “Oh, I’m a salesperson.” That’s what I do. Right? That’s what I know. That’s what my skill set is. And, when I realized that people wanted access to this asset class, that’s when I said, “Ah, that’s what I’m going to go do. I’m going to go raise other people’s money that will allow me to accelerate much quicker and I’m going to just build my own apartment complexes.”

Kris:
That was my first step, David. And what ultimately happened was as the 64 units came online and I saw the operations, which, originally, we were doing it ourselves. We were our own management company because I wanted to understand and see how the business worked. And then we very quickly, we third party managed that out. When I did that, I realized I hated operations. I wanted nothing to do with that either. Not too dissimilar than what we did in our duplexes that we had owned earlier.

Kris:
So, when I realized that there was one more light bulb that hit for me, and it was, I met Joe Fairless on a BiggerPockets.

Brandon:
Nice.

Kris:
I realized what he was doing. And I said, “Oh, there are commercial operators out there who will take equity and in return give you back end ownership on their projects.” So, I had accumulated a fair enough size group that wanted to invest alongside of me. A lot of my peers who knew what I was doing and said, “Hey, next deal, I want to be involved.” And that’s where it really came together for me was, then I realized I don’t want to be the operator and I’m going to make mistakes, but I can go partner with a professional real estate operator, whether that be multifamily. And that’s where we started was in multifamily and they’ve already made the mistakes.

Kris:
I’m a professional sales person. That’s what I’ve done for the last 20 years. They’ve done multifamily for the last 20 years. And so for me, David, that was my next was I said, “I’m going to go find two or three operators that I really like operating in markets that I love and I’m going to raise money for their deals and earn back end ownership and in turn cashflow off of that. And so that’s what we did. And we invested in quite a few multifamily projects in, Atlanta, Phoenix, Dallas, the Fort Worth metroplex. And that was really the start of what I was scaling, why I left my job was I realized that people wanted access to an asset class that was non correlated to the stock market, and I was playing to my skillset. I knew enough from an underwriting perspective where I could underwrite an operator and then I could bring that to myself. And I was investing alongside in every deal and also my peers who wanted a piece of that asset class as well.

Brandon:
Yeah. So, just shows this tremendous self-awareness that you have. In other words, you were like, “I don’t like,” I mean, your whole story, is, right? “I don’t like owning these duplexes or these small properties. Okay. I know that about myself. I’m going to make a change.” And a lot of people live in their garbage life that they don’t like for decades. Right? It’s like, “Oh, I hate doing these rentals. I better keep owning them” or “I hate this job, I’m going to keep working this job forever,” or whatever it is. Right?

Brandon:
So, you were like, “I don’t like this. I’m going to change it.” So, you tried something else. “Okay. That was all right. I learned stuff. I don’t like that. I’m going to try something else.” And so you’re constantly, and then you said, “Hey, I’m, I’m a sales guy. I’m good at the sales side of stuff. Well, how can I use my skill and put that into practice so I can start earning cashflow without that?”

Brandon:
So, recently a similar story. So, one of the best wholesalers we’ve ever had on the show, Lance Wakefield, and I started talking and he’s got this tremendous good skill set at finding good deal. He’s one of the best ever buying deals. So, basically, I just said, “Well, why don’t you find deals for me and that’s all you do. You bring me deals.” And so that’s how we kind of formed this mobile home park thing that we’re doing right now together. It’s because he recognized what he’s good at it. I already know what I’m good at and I know what you’re good at. You know what you’re good at. I understand what you’re good at, it actually makes work fun. It makes things enjoyable because you’re doing what you’re good at. If you’re constantly doing what you’re not good at it, you’re just never having fun and then what’s the point? So, anyway, I love that about your story.

Kris:
Ah, Brandon, that’s the whole pint, right? Why not do what you love to do? There are people do what you don’t want to, right? I mean, Upwork is a great example. You can go on Upwork and hire anybody for anything. Those people exist in real estate too. And, for me, that’s been my whole journey and to where I am today and the storage piece, it was, I did something really well and that skill is translatable.

David Greene:
What you did differently than other people is others are waiting to find what they think their skill is before they start. And you jumped in and did it and were like, “Well, I didn’t like that part. How do I leverage that off? Or how do I find a partner?” You knew what needed to be replaced because you took action. And that’s the scary part. Nobody wants to jump in until they feel like they know what they’re doing, but you’re not going to figure it out until you do that.

Kris:
David, you learn nothing until you’re in it. Right?

David Greene:
Yep.

Kris:
If you wait until you know everything, you’ll never do anything. It’s just the game.

David Greene:
It’s like waiting to be strong before you go to the gym.

Kris:
Right, right.

David Greene:
Yeah.

Kris:
Same idea. And I can tell Brandon’s pumping iron.

David Greene:
Oh, yes, he is. That’s because we’re holding each other accountable to that. But anyways, you’re still right.

Kris:
You’re so right. I think it’s something that when you talk to people like, “Hey, how did you do that?” That’s that’s the thing I tell them and it’s not easy. Let me be the first to say, I don’t want to sound like I didn’t have second guesses and I wasn’t anxious and I wasn’t fearful. That’s not my personality. I am okay with risk, but I don’t like not knowing what the outcome is. For me, I was okay taking the risk, but what really bothered me and to this day still bothers me, I don’t know how this ends and that’s the part from me that still eats at me, and it is a thing you have to be comfortable with if you’re going to grow and change or to your point, Brandon, 10 years from now you’re going to be looking at yourself in the mirror saying, “Crap, I should’ve done that.”

David Greene:
Yeah. I’ll let me say this, Brandon, and I’ll let you jump in. I think that’s a piece of life that people have to understand is you don’t usually know where you’re going to end up. You’re exactly right. The way it works in practical terms is you start out a path and that path opens doors and then you go those doors and your path changes in another direction and then it branches off from there and as long as you continue moving, it’s like you’re part of a tree that the branches keep growing and you’re making more money, but there’s no way that you can know what opportunities are going to come once you start. So, you started with a phone call to a friend and you said, “Hey, I want to build an apartment complex.” You had no idea he was going to say, “Well, I’ve got the land and it’s in a cornfield and I know what I’m doing.”

David Greene:
That was an awesome opportunity and you take advantage of it. Then things went wrong and you said, “Okay, I want to do this again, but I want to do it in a different way where we’re not going to go over budget. I met another guy, he did this way, I jumped in with him.” You had this track record so he was likely to work with you. Then that opened up doors to the next thing and that ability to move forward, not knowing where you’re going to end up, but knowing it’ll be something good is really what separates the people that find success from the ones that are just always frustrated.

Kris:
Let me give you one more Brandon, before … I know you want to say something and I’m sure it’s-

Brandon:
No, it’s okay. Take it. No, no.

Kris:
Do you guys know who T. Boone Pickens is? He’s a natural gas baron. I think he’s still alive. You got to read some of his books. He made a bunch of money in natural gas and he has a quote in his book that I loved and it was deals create deals. He’s like, I walked into so many things thinking I was going to do one thing and it went a completely different direction. Another opportunity presented itself.

Kris:
And so, I have a son who just graduated high school a couple of weeks ago. We had his graduation party last Saturday. So, he’s in a part in his life where he’s trying to figure out what the next step is. His name is Noah. I said, “Noah, look, you don’t need to know what you’re going to do. You just need to know what’s next and then go do that. And other things will present themselves and be opportunistic. Don’t be afraid to jump at what the next thing is. It may work, it may not work, but it’s okay. You’re going to learn and you’re going to figure out,” David, to your point, “you’re going to find out what you like to do and you’re going to find that next opportunity or that next partner. You’re going to find that person who thinks like you, but maybe has a different skillset and that’s it.” Right? I mean, if you want a change, that’s how you got to do it.

Brandon:
That’s so good.

David Greene:
Brandon, you’re kind of going through that now. Do you want to elaborate on kind of how that experience has been for you?

Brandon:
I mean, yeah, just shortly. Yeah. I mean, my goal was to buy like 50 units and now I’m up to, what, 300 and I got another 700 possibly that are coming through. I might 10x my goal in, crazy, three months instead of three years. I always say you can like try to push your way through to the next level, right? You can walk your way there. You could try to get there on your own or you can get pulled there. And I’m a bigger fan of getting pulled there. And you do that by doing something that’s extra and then now that’s working.

Brandon:
For example, I put a job description out today for a job I’m hiring for, and by the time this goes live, I’m sure it will be filled, but we’re looking for an asset manager. Anyway, I’m a little bit nervous. I’ve never hired like that kind of that level of role before. But you know what? Now applications are coming in. Now I’ve got to do something. Now I’m getting pulled to that next level. I’m a big fan of being pulled to the next level rather than trying to forge your way there slowly cause then people-

David Greene:
It’s willpower.

Brandon:
With willpower. Yeah. Nobody ever will get there. I hired a personal trainer, I’m meeting with them in like three hours from now and at the gym because I’m like, “Well, I want to build some muscle so I can just go try to do it on my own or I can actually schedule an appointment now I have to show up because I’m getting pulled there.”

Brandon:
So, anyway, to use one more analogy because I’m going to take David’s analogy king ability today. What you guys are talking about, I use the analogy often on webinars where I say, if you’re driving down the road, I was in the Pacific Northwest for years, right? So, you’re driving down the road and the Pacific Northwest, it’s always foggy in the mornings especially. And so you’re driving your car and you can’t see a half mile up the road because it’s too much fog. You can’t see if there’s a deer in the road, you can’t see if the road turns. You can’t see anything.I mean, the world could be exploding up there. You just don’t know. Right?

Brandon:
So, you have two choices. You can just pull over to the side of the road and complain that you can’t see a half mile down the road or a mile down the road. Or you can just keep driving because in a fog bank you can always see a little bit in front of you. And so the only thing you shouldn’t do is stop. But that’s what most people do, right? Most people in the world-

Kris:
Great analogy.

Brandon:
… they’re driving. Thanks. Yeah, they’re driving through the fog and then they pull over. Oh, there might be a deer up there on the road. I don’t know. I can’t see that. But literally, no. Everybody has a zone of clarity around them. And as long as you keep moving forward or get pulled forward, that zone of clarity continues to move with you.

David Greene:
Oh, that’s so good.

Kris:
That’s a great way to think about it.

David Greene:
Thanks.

Kris:
David, I don’t know if you were the analogy king before, but he’s taken the cake on that one.

David Greene:
I’m taking it.

Brandon:
He’s taking it. That’s how Brandon is. He does other people’s quotes. Other people’s quotes, he takes them, he takes your ability as the analogy person. It’s all right.

Kris:
What I always say is I wish I could remember who I could give credit to. I know who it is. I just don’t say it.

David Greene:
It’s out. Brandon’s going to steal that too. Now it’s going to be how you know a quote bite is coming. He’s going to be, “I wish I could remember who said this, but” …

Brandon:
Yeah, but … A wise man once gave an analogy about a fog bank and driving through it. All right. Yeah. All right. So, walk us through, Kris. Where are you at today? What is your focus today? What have you been working on? Are you still doing the raising money primarily? Where are you at?

Kris:
So, I made a huge turn about a year ago. Let’s use the fog analogy. So, about three years ago. Was it three years ago? About three years ago. One of the operators that I had raised money for came back and said, “Hey, we’re done buying multifamily.” And I said, “What?” They said, “Market cap’s too tight, everything’s dropped too much. We’re not comfortable with the value we’ve created.” And I think they’ve only bought one deal since then. Now the company has over a billion dollars under management so they can afford to wait. Right?

Kris:
And so for me that was a big catalyst to say, “Oh, maybe I should be thinking about other asset classes.” And so I started going out and doing some homework on other asset classes that I wanted to be a part of. There were two that I focused in on. One was self storage and the other was senior housing. I think the runway in senior housing is a little longer because there’s a lot of demographic information supporting it. There’s 10,000 people turning 65 a day, there’s a little bit more of a runway.

Kris:
But what I fell in love with was storage. And I’m going to give you my three pillars for storage. A lot of our investors asked this question is like, “Why storage?” And these were literally the three things that I wrote down and said, “This is the reason I want to be a part of self storage.” And one is the returns. And I can send you the link to where I got this data. It’s the National Association of REIT data. I don’t know if you guys have ever looked at N-A-R-E-I-T.

Brandon:
Yeah, I have.

Kris:
Okay. It’s an incredible database. They have 25 years worth of data of all the publicly traded REITs. And you can look asset class by asset class, you can look at timber REITs, healthcare. Anybody who’s got a publicly traded REIT is in this data set. So, I looked there, and storage in the last 25 years did just under 17%. When I saw that number and then compared it to apartments, apartments was just over 13, which is still fantastic. But I always thought multifamily was sort of the end all be all. And so that was my first, oh wow. And then the second one was what I always look at what happened in the last recession.

Kris:
So, I believe that the markets are cyclical. Everything that’s going to happen has already happened. You just have to look back far enough to see it. And so for me it was looking at what happened in the last recession. 2007 eight, nine, storage lost less than 4% and so, apartments, it was close to seven the S&P 500 for a little bit of baseline was down 22% so for me, that was the big aha moment. I said, “Okay, returns were fantastic, did really well in the last recession.” And then the third piece, and this is why I am where I am today, and this is where I think the biggest opportunity is in storage, less than 25% of the market is owned by six REITs. Well, it’s five rates and one publicly traded company called U-Haul. Everybody knows them.

Kris:
So, they own about 20, 25% of the market. The rest is all over the board. Well, it’s not all mom and pops. There’s regional operators. I’m a partner in Reliant and we’re a regional operator. We have 48 properties, but there are still a ton of mom and pops, Brandon, to your point, which provides, as you guys know, huge opportunities just to run the facilities like a business. So, that was for me why I made the jump into storage was I knew there was a runway and my belief is that institutional capital is always going to find yield.

Kris:
And right now they are pouring money into multifamily. The cap rates that you see in multifamily deals are embarrassing. I don’t know how anybody’s making any money, but just like you Brandon with mobile home parks, you’re hoping the same thing, right? That institutional money is slowly coming into mobile home parks and the same thing happening in storage. So, I believe that there’s this window of, three to five years, which is based solely on gut, where we can build a monster portfolio in storage and be there for the exit on the back end as more institutional capital pores into the space. So, that’s really how I got to storage.

Kris:
How I got to Reliant, David, is an even better story than the first cold call. My best opportunities in my life have come from cold calls. And so what happened was I was an investor first with this company and how I got to them was I started calling the list of the top hundred self storage operators. I didn’t call the six REITs because they probably didn’t need my money. But I just started calling people and saying, “Hey, I have a little bit of equity, I’m interested in the space, will you guys need cash?” And, so I met a bunch of self storage operators and one of them was Reliant, and I fell in love with the team that runs Reliant. And so I was an investor first.

Kris:
And then about a year ago, one of the principals and I sat down to dinner, we were going and looking at a property and he needed help raising money. And I had quit my job and I said, “Oh, I raise money.” And so we worked long, long, long, long story short. We worked out a partnership where I came in as somebody at Reliant Investments and my job now is essentially to raise capital to fund our portfolio acquisition.

Brandon:
That’s so cool. Yeah, and again, it goes back to what you do best. You recognize the cold call thing and building the connections with people. That’s what a sales guy kind of does. Right? I think that’s awesome. Very, very cool, I guess how you shifted that as well as how you move from one to the next, to the next, getting involved with people, learning you invested with them first, then became actually part of their company and now you’re doing self storage. So, how many units total does Reliant have now, do you know?

Kris:
Yeah. We have just under 30,000. Just under 4 million square feet. It’s 48 properties primarily in the Southeast. So, Florida, Georgia, Carolinas, Arkansas, Alabama. We’ve got a little portfolio out in Colorado, but we’re just third party managers there.

Brandon:
Yeah, yeah. That’s fantastic. Again, I love the stories on the podcast here because you just hear no two stories are the same, right? Everyone’s got their unique journey and they’re figuring out based on what they like, what their skills are. You figured out you fit in really well there and now you’re doing that. And by the way, all those reasons you shared on why you like self storage, it’s exactly what I’ve been thinking with mobile home parks. I’m invested in multifamily funds as well. I like multifamily, but I look at them and I’m like, “There’s so many operators out there that are relying on aggressive rent raising at a time in the market where I’m not sure we can aggressively rent. Right? And maybe we can, I don’t know. Aggressive cap rates staying super low forever and they’re always things that are like …

Brandon:
Every deal I look at it from these large multifamily, everything has to go right in order for them to make a lot of money, which it very well might and that’s what they’re claiming. Everything’s going to go just fine, but if not, if the market does start to shift, how do we hedge against that? And that’s exactly why I am getting so heavily in the mobile home parks and I’m creating a fun there because I got a hedge against that with something that’s going to do well no matter what happens. I think you’re thinking the same thing.

Kris:
Yeah, Brandon, I mean you bring up a great point, right? With mobile home parks, people don’t leave, right?

Brandon:
Yeah.

Kris:
It doesn’t matter. It doesn’t matter what happens in storage, and it’ll be interesting to see what happens in this next correction, but the hypothesis is Americans don’t get rid of stuff-

Brandon:
Yeah, they don’t.

Kris:
You catch them on the way up. They’re buying things, they put it in storage and then when they downsize, they don’t get rid of their stuff. I can’t tell you how many units I’ve been to where the things in the units are worth less than a month’s worth of rent.

Brandon:
Yeah. Yeah.

Kris:
They continue to pay us rent. It’s crazy.

Brandon:
Yeah. I know.

David Greene:
That’s the same way that gym owners make money is they just start taking the money every month and you don’t even realize it’s happening.

Kris:
So, David, my wife owns a gym.

David Greene:
Look at this.

Kris:
Maybe having a theme here. It’s about 15% right? 15% of the people who pay you every month actually come to the gym. It’s crazy. Crazy to me.

David Greene:
Well, I want to point out something that I think is really smart about what you’re doing other than the stuff you just mentioned, just the psychology side. You and Brandon are both investing in conservative asset classes comparatively speaking, in an aggressive market, which is what Warren Buffet says to do, is, you want to be fearful when others are greedy and greedy when they’re fearful. When you’re in it in a market where everybody else wants conservative assets like recession, where everybody’s afraid, that’s really when you want to be really aggressive. Yes. And most people, they just get the backwards way because it’s easier to follow the herd, but what you guys are doing is you’re recognizing cap rates are so compressed. How is anyone making money? It’s really just all this institutional money that is like-

Kris:
It’s pushing down.

David Greene:
Yes. It has to have somewhere to go and it’s just taking over like the blob, just getting bigger and bigger. Right? And you guys are like, “Well, let me get out of the way of this train that could be coming right down the pike at me” and you’re buying in conservative asset classes that other people are ignoring. Well, I can almost guarantee you that when we have a recession and all of these companies that bought at a three cap, now they have some vacancy they weren’t expecting or their investors want to pull their money out because interest rates went back up and they could go get a CD in a bank for 6% instead of the 4% return they’re getting on whatever, you’re going to go buy those assets.

David Greene:
That’s when you’re going to make your aggressive moves. And it’s really so much more simple than all of us want to make it when trying to make these decisions. It’s just, you cannot follow the herd. You can’t say, “Well, everyone else is doing it, so I’m going to do it too.” That’s why people bought houses in 2005 and six when they shouldn’t have been because everyone was doing it. It’s why people let their houses go to short sales in 2010 when they shouldn’t have. They should have held onto it and it would have come up. It’s just making that mistake of thinking, “Because everyone else is doing it, I should do it too.” Rather than understanding the fundamentals.

Kris:
That’s human nature, right? I mean not just real estate. That is everything in the world, right? I mean it’s the reason why there are high performers and their aren’t, is there are people who are willing to say, “That doesn’t make any sense.” What I say to my son, I have a younger son, 13, his name’s Luke. And I say “Luke, just because all the dogs are barking at the same tree doesn’t mean it’s the right tree.” Right?

David Greene:
Mm-hmm (affirmative).

Kris:
Just because everybody goes that direction, it’s probably wrong. Because most of the time, everybody’s wrong.

Brandon:
Yeah, that’s really good.

Kris:
You can use that one, Brandon. A wise man once said.

Brandon:
A wise man once … Well, I think it was Edison that said like … I can’t remember. It something like, “When I wake up too many days in a row realizing that I’m following the herd I got to change.” I don’t know. Some quote like that. But anyway-

David Greene:
It’s funny, when he quotes himself, he knows the exact thing he said. When he actually tries to give someone credit for a quote, “Something that was smart. I don’t remember.”

Brandon:
A wise man once said … All right. Let me go here. All right. Raising money. This is your skill. This is your superpower. This is something that I’m fairly new at. I mean, I just built my very first fund. I’m trying to figure this part out. I’m raising money. And what tips can you give people, including myself? This is total selfish question here, but hopefully help others as well. They want to raise money, whether it’s they want to get a private lender on one deal, just to give them 50 grand for a cheap house or they want to raise $5 million in a syndication. What’s your best tips for raising private capital from investors?

Kris:
Man, I would say it depends at what level you’re trying to do it, right?

Brandon:
Mm-hmm (affirmative).

Kris:
The first thing you have to realize, and this was something that took me a while to get comfortable with, is, money is time. So, when you take other people’s money, you’re taking their time, right? It’s taken them effort, time, energy, to be able to accumulate that wealth to give to you. So, you have to be very thoughtful and understand the responsibility that you have. And it’s not for everybody. There are many sleepless nights, especially when I first started where I was like, “These people are just trusting me. They don’t know the deal. They don’t know how to underwrite the deal. They know me. They know I’ve had a marginal level of success and so they’re saying, Well, if Kris is doing it, I’ll invest with him.'”

Kris:
That’s a hard thing to come to terms with, and you’ve seen Brandon and David, I’m sure on BiggerPockets, this explosion of syndication coaching, right?

Brandon:
Yes.

Kris:
The mini Joe Fairless’ that exist all over within the real estate world.

David Greene:
It’s the new timeshare. Everybody wants to do it.

Kris:
It is. And it’s very scary to hear about how people are investing with people. Here’s the advice I could give you is, if you are raising money, make sure you know what you’re doing before you take other people’s checks, right? Don’t do it because someone said, “Hey, I can make an acquisition fee on this and in turn I’ll be able to pay my mortgage this month.” My big thing is track record. I used my own money first, literally life savings to build 64 units and didn’t do anything until I saw that it worked. Right? And realized how the levers behind the curtain worked. And then I said, “Okay, I can recreate that,” or “I can go find someone who is doing what we did.”

Kris:
For me, it was having a track record where I could point to, by the time I started raising capital, a significant number of transactions that I could say, “Look, I’m not an expert, but I know more than you. I know enough to be dangerous and I’m partnering with people who are the experts.” That’s my whole stick, right? Was, I’m partnering with people who’ve been doing 25 years and so they’ve already made the mistakes, we hope, and they know where the sharks are in the water, so they’ll tell us where not to swim, and so that was a big piece for me.

Kris:
And Brandon, for you, you have significant experience. It’s all about trust. If you’re raising money from individual accredited investors, the guys who are going to guys and gals will throw 50, a hundred grand, they’re not underwriting the deal. Right?

Brandon:
Yeah.

Kris:
They’re calling Brandon Turner and saying, “Hey, this guy’s got 300 units. He runs BiggerPockets. He’s a brand. I’m going to trust him,” you know?

Brandon:
Yeah.

Kris:
And so, I think a big part of this is trust. Unfortunately, I think there’s a lot of people who are just spraying and praying and it’s working, right? There’s so much capital out there looking for investment right now. And that benefits me for sure. But, I want there to be at an appropriate level of cautiousness as you’re taking people’s life savings or big chunks of their money and putting it into things that you may or may not know what you’re getting into. So, Brandon, I don’t have that concern with you. I know your mentality is conservative, but as far as for guys who have a track record, man, go preach, you have a huge platform here with the podcast, right? It’s a thought leadership platform.

Kris:
You guys had Joe Fairless on the podcast. His entire business is built on his podcast, right?

Brandon:
Yep.

Kris:
He’s got a real estate partner who really, really knows real estate. And then he’s built a platform in which to go out and speak to people who want to understand more about investing. Those may be passive investors like guys who will put money with you or people who want to learn from him. And so, I think having that thought leadership platform that you can build some knowledge and give away as much as you know to people, that’s how you create that trust and in turn, those people trust you, they see you and they say, “Okay, I’m comfortable raising money that way.”

Kris:
Fortunately, I’ve had a group that’s grown organically over many, many years and when I joined Reliant, now I have a platform with a 10 plus year track record that is unbelievable. Which, as a salesperson, it would be like when Todd told me that one of the founders of Reliant said, “I can’t raise money.” I looked at him and I was like, “That’s like selling gum in an elementary school,” right? Every kid wants to buy gum. So, I looked at him, I was like, “How can you have trouble doing this when your track record is so good?” And so that’s kind of how, if you have that track record, man, preach, tell people what you’re doing and why and give them the good and bad because nobody bats a thousand/ I mean I’ve invested in stuff in the equities market that I have no idea how I lost money on it. It’s irrational to me. So, you’re not held to any different standard.

Brandon:
People sometimes wonder, and I’ve been asked, “Why do people take time to answer so many questions on the BiggerPockets forums or write blog posts or do all this work? They’re not paid for.” Well, when we talked to them about writing for the BiggerPockets blog, they’re like, “Well, why would I do that? I’m not getting paid.” And I’m like, “You don’t understand. If you look at almost every writer on the blog, almost everybody who is really involved in the forums that are like answering questions all the time, they’re not doing it just out of the generosity of their heart. Yes, they’re helping, they’re giving back, but they’re giving information, they’re becoming thought leaders and those people are raising money like hand over fist.”

Brandon:
I’ve said the story about the one investor that we had, I talked to a while ago said, he just by helping on the forums occasionally, he doesn’t do it that much, but just being helpful in the forums, somebody was reading a forum post, contacted him and said they wanted to make a initial test investment with them of just a small $20 million. They wanted to start, just stupid money because he was clearly a thought leader and they found him through the forums, which … Anyway, so I just encourage people who are out there, if you’re not sure how to get out there and start helping, just get out there and start talking with people on the forums if nothing else, it’s totally free to do and use your skills for what you can do it. So, Kris-

Kris:
Can I give an interesting … Oh, sorry. Go ahead, Brad.

Brandon:
Please, go ahead. No, I was going to move us to the next section, but go ahead.

Kris:
All right, so just capital raising on a whole, we’re about to go into a whole new world. We’ve done a lot of capital raising with individual investors, right? And we still are. But I recently started my new cold calling campaign in a new world, university endowments.

Brandon:
Really?

Kris:
You know how much money the top 20 universities in the United States manage in their endowments? Just 20.

Brandon:
A lot. I don’t know.

Kris:
Guess.

Brandon:
A billion dollars.

Kris:
Guess.

David Greene:
10 billion.

Kris:
$500 billion. One half a trillion dollars is at 20 universities.

Brandon:
Crazy.

Kris:
When I saw that, I said, “Oh, those guys need to get into real estate.” Interestingly, they already have, so one of the leaders in the endowment space is Yale, and almost 12% of their portfolio is in direct real estate and they’re kind of thought leaders in university endowments. So, what I would say to you, Brandon, as you go out and start to raise, I’m happy to have this discussion offline with you as well.

Brandon:
Oh yeah. Oh yeah.

Kris:
There’s so much capital out there looking. We’ve talked to Yale, they will not deploy less than 75 to a hundred million dollars per investment because they manage 30 plus billion of capital. Anything less than that isn’t worth their time. Think of that as just like, that’s insane. So, anyways, there’s plenty of capital about there to be had if you’ve got a great product.

Brandon:
Yeah, that’s so cool. That’s really cool. Yeah. This came at such a good opportune time for me right now talking with you about this because this is exactly where I’m at in my business. I know David Greene’s been thinking the same stuff lately. What are we good at? What’s our strength? Where are we at in the market? What should we do next? This has been really, really good.

Brandon:
But before we get out of here, I do want to shift over to the next segment of the show called our deal-

David Greene:
Deal deep dive.

Brandon:
All right. The deal deep dive. This is the part of the show where we dive deep into one particular deal that you’ve done. That’s a lot of D’s. Let’s go into it. Number one, Kris, what kind of deal was this? What kind of properties are these?

Kris:
Is it’s a self storage property. We’ll continue the theme of self storage. It was a commercial self storage property, a ground up development deal in Naples, Florida.

David Greene:
And how did you find this deal?

Kris:
So, interestingly, one of the partners that Reliant had dinner with a guy in Naples, and the land was his or he controlled an option on the land and they made a connection over dinner, talked about what we did. And so, the land came to us, he was a JV partner in the deal. And once we saw the land and went through our underwriting process, we knew it was going to be a home run.

Brandon:
All right. How much was it. What did the numbers look like?

Kris:
Yeah, so we purchased the original land and all in cost was just over $9 million to do the construction of the building and the land and he actually threw the land in the deal as equity. So, that helped us with the debt side because we had to raise less equity. We raised just over $3 million for that development deal. And essentially the business plan was built around getting this facility up and out of the ground. We were going to make this sort of our flagship property because it’s in a great spot in Naples and there was no way, there was a competitive threat being built in four mile radius because of where it was placed.

Brandon:
All right.

Kris:
Okay.

David Greene:
Well, I was going to say, did you negotiate that? But was there any negotiating that was done? Was it just the land price you had to negotiate?

Kris:
Yeah. I mean it was really around the equity that we gave him in the deal as the land owner, because ultimately he’s relying on our intellectual property to essentially build the property successfully and manage it. We manage all our own properties as well. So, it was our management company that was going to run it. So, really the negotiation was built around how do we get him in it. And interestingly, for the equity side, we had a letter of credit that allowed us to raise the equity from one source and that worked out phenomenally because it was a short term, term. The original plan was to build it, get it leased up and refinance it into a permanent debt, and then it was going to be a six to eight year hold.

Brandon:
Okay. So, kind of answer the funding thing. So, what did you end up doing with it? You built the thing and you’re still holding it or what’s up?

Kris:
No. So, this is one of those home runs that, I don’t mean to just throw this out as a great story because I like the bad stories on podcast too. But this one’s too good for not to tell. And this is back to where I think the strategy is from the institutional capital. So, we built it, we ran it for about eight months. It was just over 20% occupied when we got an unsolicited offer from one of the publicly traded REITs. I can’t tell you who it is because we signed a nondisclosure agreement, but we sold it last year in April. And essentially they gave us the value we had projected in year six and they gave it to us in just over 18 months.

Brandon:
Wow.

Kris:
So, we owned the property for less than two years and essentially tripled investors’ money. So, it was a huge home run for us, a huge home run for our investors, and obviously our goal is to turn that money so investors want to come back and do another project with us. And so, basically their equity multiple was a three. So, if you invested a hundred grand, just over two years, we gave them 300 grand back.

Brandon:
That’s awesome.

Kris:
Everybody was very happy with that one.

Brandon:
Do you ever worry about spoiling investors on a rockstar deal like that? They’re going to come back, they’re going to be like, “Well, last time you got me, way better”?

Kris:
Yeah. Brandon, the investor expectation is a huge challenge in this market specifically because the last 10 years of real estate had been so good, right?

Brandon:
Yep.

Kris:
Our average deal, we’re underwriting an IRR in that mid-teens, right? So, our investors see those mid teens, we have investors come back and be like, “Well, I want to see mid 20s.” I’m like, “Well, yeah, me too. I can say that if you want me to. But that’s not where we think the market is right now.”

Kris:
And there’s something to be said for this next correction will recalibrate investors’ mindset, where right now, they put money in anything, they make money. That’s the next correction and it’s going to-

David Greene:
It was a lot like ’05 and ’06 when regular Joe would just buy a house and the next year it was worth 150 grand more. I’m not trying to say that we’re in the same kind of a bubble as we were before, but that mindset that it should be easy is what it should cause caution, if that makes sense. And yeah, there’s a lot of pressure on you if you tripled returns in two years to come back at an even better deal or to repeat that and then that puts pressure on you to start to make riskier moves, which is really what you’re trying to avoid when you’re using other people’s money.

Kris:
Fortunately, David, we’re in a position where the track records long enough and we’re not underwriting to those numbers ever. Right?

David Greene:
Yeah. Totally.

Kris:
I mean, we’ve been the beneficiary of a compressing cap rate in the asset class. Right? So, our average IRR on the 20 deals we’ve sold is just over 45. Well, we’re never underwriting that number.

David Greene:
Correct.

Kris:
Anything we’re putting out now is 12, 14-

David Greene:
I guess, I meant more for not maybe your company, but for syndicators in general.

Kris:
Oh, absolutely.

David Greene:
When people start saying, “I’m expecting a 25% IRR,” then you’re more likely to get an experienced underwriter who’s going to say, “Okay, well let’s find a way to get them that because that’s what they want.” That’s how people lose money. I have similar pressure on me with coming up with analogies, right? You hit a home run and then they want an even better one the next time, I hear you man. We’re in the same level there.

Kris:
Or, Brandon drops one on you like the fog-

Brandon:
Yeah, now I got to take it.

Kris:
… and then you’re up against it.

David Greene:
Exactly. I have an identity crisis. Why am I here if he can do this too? This is the only thing I was bringing. All right, awesome. Last question. What lesson did you learn from this deal?

Kris:
Be opportunistic. This was a deal that the land part was a huge pain in the butt because it was a challenging negotiation. There were a lot of times that we were about to walk away, but we were steadfast in the opportunity that existed in this particular space. Right? I was trusting that, Todd operationally knew that storage was going to work here, but I knew market wise there was nowhere else to go. It was kind of similar pitch to the apartments. If you wanted storage in this corridor and there was a ton of residential development, it was right here.

Kris:
And for us, we look at everything opportunistically, David, where people ask like, “Well, what’s the plan? Are you going to hold six years, eight years?” Well, we’re going to hold until we can create the value we told you we would.” Right? So, if we can turn it sooner and get your money back to you, then we’re happy and you’re happy. Right? So, I think for us, we’re an opportunistic operator where we’ll look at anything. And like I said before, deals create deals. You never know where you’re going to go, as long as you’re open minded and say, “Hey, let’s look at it. We’ll turn the rock over and see what’s under.”

Brandon:
Yeah. Yeah, that’s good. That’s good. All right dude. Awesome deal deep dive. Yeah. Self storage is fascinating to me. If I wasn’t so focused on the mobile home park thing right now, I would definitely go more into there because I think it’s a fantastic model. I think it’s good at this time in the market, and I don’t think people are getting less junky in their lives. They’re just getting more and more crap.

Kris:
We hope so.

Brandon:
All right. Very cool. Yeah. So, I’m going to skip actually the fire round today, the questions from the BiggerPockets forums, because actually half the questions we had pulled we’ve already covered today like, what are the best tips for approaching private lenders? Anyway, so we’re going to skip that for now and just had read over to the next segment, which is the world famous, famous four.

David Greene:
Famous four.

Brandon:
All right. With that, let’s get to the famous four. Number one. What is your favorite real estate related book?

Kris:
Is it a cop out to say Rich Dad Poor Dad?

Brandon:
It is not a cop out. That’s what I answer too. If it is, then we’re both cop outs.

Kris:
That’s the quintessential, I wish my dad had given it to me when I was 15 book.

Brandon:
Yup. Yup.

Kris:
Sorry.

Brandon:
I’m right there with you. It’s all right.

Kris:
Okay.

Brandon:
The only thing better would have been to say my book, but whatever. I don’t care. Oh, whatever. I don’t care. Move on.

David Greene:
He may have a chance to redeem himself. What is your favorite business book?

Kris:
Brandon Turner … No.

Brandon:
There we go. Look at that. That’s all right.

Kris:
I would say, I just read and it’s just because it’s top of mind, the Trillion Dollar Coach, Eric Schmidt, the Google CEO talked about, the coach that they had at Apple and Google. And it’s a really fascinating story about how he impacted the business both at Apple and Google, and some great tidbits to take any aspect of your business.

Brandon:
Wow. Very cool. I saw it in the Amazon bookstore, but I didn’t get it, but I’ll check it out. Number three, David Greene.

David Greene:
Tell me about some of your hobbies.

Kris:
Oh, man. We have two boys. We’re very outdoorsy. If I had to pick, skiing would probably be my one if I could live out West. Jackson Hole would probably be one. I’m not quite there to take the kids out of society yet. But, skiing is probably my one. I love to mountain bike. We have a pretty beautiful lake right by our house. Lake George, which is unbelievably gorgeous. so anything outdoors is usually where we’ll lean.

Brandon:
All right. Very cool. And by my final question, Kris, what do you think sets apart successful real estate investors from all those who give up, fail, or just never get started?

Kris:
Man, I think we went over it. I don’t mean to beat a dead horse, but it’s just jumping. You have to do something. And look, I appreciate you reading my first post. I was there too, right? You sit in bed and you read forums, you’re like, “Oh my God, look at this guy and look what they’re doing.” And there’s so much information and it’s overwhelming, but you have to jump. And I’m not saying do it stupidly. Do you most education as you can on what you’re trying to do, but then the only way you’re really going to learn is to jump in and see what happens. And, it’s not always going to be good, there’s no question that you’ll take something out of that experience.

Brandon:
There you go. So, true. Very cool. Well, Kris, this has been fantastic. Thank you for being on the show. It’s cool again to see your journey over the last five or six years, going from new, wanting to get into real estate, understand the power of it, to just crushing it and making things happen. It’s been fantastic.

Brandon:
So, final question I’ll give to David Greene to ask and then you can take us out.

David Greene:
Tell us where people can find out more about you.

Kris:
Yeah, for sure. I have a education website with a lot of free content on real estate investing krisbenson.com. It’s with a K. K-R-I-S B-E-N-S-O-N. I’m fairly active on LinkedIn, so if you follow my profile there. And then, if you go to Reliant Investments plural dot com. So R-E-L-I-A-N-T Investments plural. There’s a ton of stuff about Reliant and our platform there. And, by all means, please reach out. Would love to chat more with your listeners.

Brandon:
Awesome. Awesome dude. Thank you very much. And we’ll see you around. David Green, take us out.

David Greene:
That was amazing. Thank you, Kris. This is David Greene for Brandon my analogy sidekick Turner, signing off.

Kris:
Thanks guys.

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In This Episode We Cover:

  • Why he transitioned out of a successful sales career
  • How he got started with a duplex and built up to a large commercial real estate portfolio
  • How he acquired 20 small multifamily units—and hated it
  • How he built a 64-unit apartment complex from the ground up
  • How he got involved in a condo syndication project
  • How he began finding the right partners to build multifamily projects with
  • His theory on “deals create deals”
  • Why he now invests in self-storage
  • Where to find data on self-storage and REIT’s
  • Why he believes self-storage is recession-proof
  • How the best opportunities in his life have come from cold calls to property owners or friends
  • How he learned his skillset and why he sticks to it
  • His advice for raising money from others
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

  • “Big deals and small deals are the same amount of work.” (Tweet This!)
  • “If you wait until you know everything, you’ll never do anything.” (Tweet This!)
  • “Deals create deals.” (Tweet This!)
  • “Most of the time, everybody’s wrong.” (Tweet This!)
  • “Money is time.” (Tweet This!)
  • “If you are raising money, make sure you know what you’re doing before you take other people’s checks.” (Tweet This!)

Connect with Kris

Real strategies that work for real people seeking to build wealth through real estate investments. Co-hosted by Brandon Turner and David Greene, this podcast provides actionable advice from investors and other real estate professionals, who chat about failures, successes, motivations, and lessons learned.

    Andrew Syrios Residential Real Estate Investor from Kansas City, Missouri
    Replied about 1 month ago
    Great podcast Kris!
    Dorothy Young
    Replied about 1 month ago
    Very good podcast. One additional thought: we spend tons of time bemoaning our “defects”. We may even spend time trying to “fix” them. “I’m not good with numbers.” “I’m not good managing projects.” Sure, we all need basic skills. But I think that, instead of pouring all our effort tryin to “fix” our “problems” we should spend more time honing our best skills. Develop your network! There’s always someone who loves doing the stuff you don’t like!
    Alan Hayden
    Replied about 1 month ago
    Hey guys, I had a question on some numbers that Kris mentioned. When Kris was talking about the historical performance of self storage he said that self storage performed at an average of about 17% He then went on to say that during the recession of 07-09 that self storage was down about 4% Is he meaning that self storage performed at a negative 4% during the recession or was he meaning that it was 4% less than the historical average ? (17%-4%=13%) Thanks, - Alan
    Jose Velez from Bothell, WA
    Replied 9 days ago
    Great episode!! I have a question about the topic of institutional money that they touch on during the interview. What do they mean when they say that institutional money is coming into an asset class (he specifically says mobile home parks and small multi-family)? Does it mean that big companies are investing in these asset class and reducing opportunities for smaller investors?