RG 331 – Building Generational Wealth Through Large Multifamily Assets with David Robinson
About a month ago, David Robinson invited us to his podcast, The Lead Sponsor. Today, David is on the other side of the table and tells us how he built his 18-year-old business from scratch.
David Robinson is the CEO and Founder of Canovo Capital, a multifamily real estate investment firm that helps investors build passive income through multifamily assets. David has participated in over $400 million worth of acquisitions, sales, and brokerage throughout his career.
David pivoted to multifamily with the goal of solving a problem for investors who want to build generational wealth. In this episode, we delve into how David built his business from scratch, including finding operators and partners. David also shares what he sees in the appetite for small multifamily, the shifts in demand throughout the years, the challenges he helps his investors solve, and more.
Interested in becoming an Investor with Reed? Click here to join his Investor email list.
With his two decades’ worth of experience, David is one of the best people to ask about what we can expect with a recession looming. If you want to learn more about buyer and seller behavior expectations amidst a recession and how to play your cards right amidst it all, join us on this week’s episode.
Key Takeaways
Partnering with great operators can be very beneficial in building your business.
When you’re not getting enough return on equity, you can sell, refinance, or sit tight and enjoy what you have.
Some investors are still placing equity that they feel is recession-resistant instead of holding their reserves back.
- It takes to really get to know an operator, including their track record, values, weakness, strengths, etc.
- Take the time to know whom you’re investing with.
LINKS
https://www.canovocapital.com/
https://www.linkedin.com/in/davidtheonrobinson/
Be Bold, Be Brave and Go Give Life a Crack!
Remember to join my Investor Database for the latest Investment Offerings!
Listen to Podcast
Podcast Transcript
Reed Goossens (00:00):
Good day. Good day, guys. Now, before we dive into today’s show, I want to let you know that some of you may aware that over the past eight years, I have built a substantial multifamily real estate portfolio here in the US worth over half a billion dollars. And in that time, my passive investors have received fantastic double digit returns. And now you two can invest directly into my deals for as little as $50,000. So if you’re an interested investor, head over to reedgoossens.com to find out more. That’s reedgoossens.com. Now, back into the show.
David Robinson (00:41):
And another thing to think about is if you can get a deal under contract now, and if there is an adjustment in rates, um, for the benefit dropping lower, that, that could be an opportunity. You may be able to take advantage of pricing as it is, uh, you know, adjustments in pricing down as it as they are today, and then have the benefit of interest rates dropping and really being able to take advantage of things. So again, you know, opportunities are times like this is when, uh, those that are willing to take on some calculated risks can really win in a, in a big way.
Speaker 3 (01:20):
Um,
Speaker 4 (01:27):
Welcome to investing in the US, a podcast for real estate investors, business owners, and aspiring entrepreneurs looking to break into the US market. Join Reed as he interviews go-getters, risk takers, and the best in the business about their journey towards financial freedom and the sheer joy of creating something from nothing.
Reed Goossens (01:47):
Good day, good day, a ladies and gentlemen, and welcome to another cracking edition of investing in the US podcast from Los Angeles. I’m your host, reed goossens. Good as always, Debbie with us on the show. Now, I’m glad that you’ve all tuned into to learn from my incredible guests, and each and every one of them are the cream of the crop here in the United States when it comes to real estate investing, business investing, and entrepreneurship. Each show I try and tease out their incredible stories of how they have successfully created their businesses here in the us, how they’ve created financial freedom, massive amounts of cash flow, and ultimately created extraordinary lives for themselves and their families. Life by design, as I like to say. Hopefully these guests will inspire all of my cracking listeners, which are you guys to get off the couch and go and take massive amounts of action.
Reed Goossens (02:34):
If these guys can do it, so can you. Now, as you know, I’m all about sharing the knowledge with my loyal listeners, which is you guys, and there’s absolutely no BS on this show, just straight into the nuts and bolts. Now, if you do like this show, the easiest way to give back is to give us a review on iTunes, and you can follow me on Facebook and Twitter by searching at Reed Goossenns. You can find the show wherever you podcast on iTunes, SoundCloud, Stitcher, and Google Play. But you can also find these episodes up on my YouTube channel. So head over to reedgoossens.com, click on the video link, and it’ll take you to the video recordings of these podcasts where you can see my ugly mug, but the beautiful faces of my guests each and every week. All right, enough outta me. Let’s get cracking and into today’s show
Reed Goossens (03:22):
And show are the pleasure of speaking with David Robinson. Now David is the CEO and founder of Canovo Capital, and he is an active real estate investor, broker and podcast host. Now as a broker and an investor, David has been directly involved with over 300 million of real estate transactions. He has a top leading producing real estate sales teams and has managed leading national Fran franchise brokerage firms in the state of Utah at Canovo Capital. David oversees all due diligence, acquisitions, capitalizing efforts and investor relationships, uh, to make sure that he is getting the best returns for his investors and making sure he’s introducing investors to the best types of deals. I’m really pumped and excited to have him on the show today to share his incredible knowledge and insight with us, but nothing to me, let’s get him out here. Good. Hey, David, welcome to the show. Hey, to today, mate.
David Robinson (04:08):
Doing great, Reed, welcome. Uh, thank you for having me on the show. I I’m honored to have a chance to chat with you. You know, we had you on the podcast, uh, a month or two ago, and looking forward to our conversation today.
Reed Goossens (04:19):
Yeah, it’s always interesting when the host becomes the guest and you just go back into the mindset of welcome. Oh, no, wait, wait, wait, wait. I’m on someone else’s show,
David Robinson (04:36):
First ever dollar as a kid. Goodness gracious. Wow. I have to think back on that one, but what I will tell you is this, um, when I realized that I was destined for more of an entrepreneurship route, uh, I was, uh, recently graduated from high school and, uh, was working for my dad’s, uh, mechanical engineering firm. And, uh, and I had, was tasked with this pretty simple task of like binding these big calc books that he used back in the day, and I bound like three of them in a row incorrectly. And, uh, we had a, a a one of those moments, those employee and dad moments where he was like, look, this is not working out. He ended up firing me that day. It was more of a mutual firing, but that was the moment I realized, my goodness, I don’t know that I’m employable and I probably have to, uh, go more of an entrepreneurship route. So
Reed Goossens (05:31):
Is that the start of when the entrepreneurship bug beat you?
David Robinson (05:34):
Yeah, that was actually the moment that I decided, you know what, um, I think I’m going to, uh, go get a real estate license. I was still going to school, but, uh, decided to go get a real estate license in Phoenix, Arizona. Uh, ended up getting that real estate license and that really kicked off my real estate
Reed Goossens (05:49):
Career. And you didn’t wanna follow the path of the old man, you know, mechanical engineering mate, I’m sure would’ve that that
David Robinson (05:54):
Was, that was too much math involved in mechanical engineering and, uh, that’s not my jam. So went a different path
Reed Goossens (06:00):
As a former structural engineer, my friend. It’s, uh, it’s, it’s, you know, engineers are cut from a different cloth. I I can definitely tell you that you’ve gotta be really into your numbers to make sure that you are, uh, you like what you do, because ultimately I got out of engineering because of that. It was great with numbers, but I didn’t wanna be a small cog in a big machine, excuse the pun, with, uh, mechanical engineering
David Robinson (06:32):
Yeah. Well, I mean, it’s been 18 years at this point. Um, uh, the first 10 years of my career was really focused in the foreclosure prevention and short sell space. As a real estate broker, I was helping clients that were, you know, uh, in a tough situation leading up to and through the recession. And so built one of the, uh, top, uh, short sell and foreclosure prevention firms here in the state of Utah. And then, uh, as the market started to shift more of a traditional market, I pivoted back to traditional residential resale and built up a real estate sales team, small team that would focus on just helping your typical client. I focused mainly on the sales management side and leading in and managing the sales team and less on the sales side. Um, and then eventually was recruited to run a, a national franchise brokerage, a traditional residential brokerage.
David Robinson (07:23):
Um, what happened after a decade or more of being in that space, I realized I looked back and I realized I had not done nearly enough on the investing side of my life, and I hadn’t built up any significant cash flow or wealth in my world. And so I knew I needed to change that. I had four kids and really wanted to, you know, provide them, uh, or build upon what my parents had built, uh, built for me or, or set me on a path, uh, the foundation that they, they had set for me. And I wanted to build on that and help my kids, uh, in the same way. And so I really decided to pivot. I shut down everything I was doing on the residential side of the business, opened a boutique, uh, brokerage here in Utah that was focused exclusively on serving clients that are looking to buy small scale multifamily property for their own personal portfolios.
David Robinson (08:17):
And by small scale, I’m referring to roughly anything under 5 million all the way down to your typical fourplex. And so that’s what I set out to do, and that’s what we’ve been focused on over the last handful of years. And then, uh, more recently, uh, you know, as I had opportunity to have conversation after conversation after conversation with these investors, or would be investors who thought they wanted to buy those, you know, small scale multis, they, uh, would relay to me that in reality they didn’t want to own that duplex, that fourplex, that 12 plex, that 24 plex. They just wanted the benefits of owning real estate, and they thought that, that that was the best path. And that’s when I started to set out to learn more about passive investing in real estate syndications and how I might be able to help my investors participate in those. So today our business is pretty simple. We still have our brokerage here locally in Utah, and we continue to serve, buy and hold investors that are looking to acquire small scale multifamily property for their own personal portfolios. And then we also, uh, partner with great operators like you, Reed, and, uh, help our investors participate in large scale commercial multifamily syndications, and invest passively in those.
Reed Goossens (09:29):
That’s, that’s incredible. And I love the balance between a brokerage firm don’t go, you know, punch the gifted horse in the mouth, so to speak. It’s probably providing still a really good income for you and your family. You, you built a name for yourself locally, but you’re then coupling it with other conversations that you’re having around the, the water cooler, so to speak, in that, what, how could you help your clients do more with what they want to go out and achieve? And I see so many people in this podcast coming on and combining those, you know, not just brokerage, but, but other facets in life, you know, accounting or it might be legal or it might be, you know, engineering or, you know, whatever it might be that you’re combining the two to create, you know, an investment platform, but also, you know, on the, on the practical side of, of helping people in your local area, you know, just be a service based business, which is what you are. Um, talk to me about how that has, how that has transitioned for you in those conversations. Was it tough in the beginning to, to, to say, Hey, don’t worry about this, you know, this locally, let’s look at a deal in Texas, or let’s look at a deal in Florida?
David Robinson (10:30):
Yeah, that’s a great question. And it really was natural. It was, it was me trying to solve a problem for my investor base. Uh, time after time, I would have a conversation with an investor who would come to me and say, you know, I think I would like to buy this property. And the conversation would go down the road of, all right, well, how much time do you have to manage this? Uh, how much energy do you have to put into this property and oversee it, whether you’re self-managing or whether you’re managing the manager? There’s still active involvement in these type of deals. And many of the conversation I’d have would be with busy professionals, uh, business owners, who in reality, they didn’t have the time nor the desire or the wherewithal to go and buy their own property and manage their own small portfolio.
David Robinson (11:12):
And so naturally as a by product, they would be asking me about, well, could I just partner with you on a deal? And, uh, and the question became, well, how could I do this on a larger scale and help more of my investors to get what they want, which is they want to have some of their investment in real estate and they want to not have to deal with all the headaches and hassles and challenges of personal ownership or personal management. And so, uh, the conversations were actually natural, and it was me trying to solve a problem, uh, for those investors. And that’s when I set out to really explore and build relationships with, you know, uh, operators all across the country and go through a process of trying to get to know them, trying to understand the syndication model that wasn’t even being in the real estate world.
David Robinson (11:57):
You’d be surprised, you know, there’s so many people that have no idea what a real estate syndication is or even how they’re even structured or, or what the benefits are or the drawbacks are. And so for me, I spent about a year just investigating learning, talking to people, interviewing people on the podcast, and, uh, ultimately, um, eventually after sort of testing the waters with my investor network, asking them, you know, I had a thesis early on. A lot of my investors not only wanted to be passive, but they also wanted to be able to participate in cash flow deals or, or deals that would produce a, a better blend of both cash flow and appreciation. Whereas what I was showing them here in Utah, what was available for them to buy was heavy, heavy on, uh, appreciation and really lean on cash flow. And they just wanted to have that, that comfort level of having good solid cash flow that I couldn’t provide them with local small scale multifamily.
David Robinson (12:53):
So that was another aspect. And so my thesis early on was I wanted to be in the Midwest. I wanted to work with an operator that was boots on the ground that had expertise in his local market. And so that’s initially what I set out to look for. I found that. And, uh, after about a year, uh, maybe 18 months of effort and really setting it up and, and meeting the right people and understanding the process myself and partnering with the right person, uh, we did our first deal and, and had many of my, uh, uh, members of my investor network participate in that first deal with
Reed Goossens (13:26):
Us. And an actual question would be, why didn’t you do something locally? But I think you answered it, but I’ve seen some syndicated actually do deals in Utah. So did you ever think to yourself, could you be the operator or did you always just sort of wanted to be that conduit between a good operator and, and, and, and the equity?
David Robinson (13:44):
Yeah, I think eventually that could be the path that I go, uh, at this point I really prefer to partner with specialists in their area. Uh, I’m not an operator naturally. That’s not the,
Reed Goossens (13:57):
You don’t, you, you’re not dad’s engineer, right?
David Robinson (14:01):
I have some of those tendencies, but not at that level. And so I know what my skill set is, and I know what I’m great at and, and staying focused on what I am great at and, and partnering with people that have those operational chops, um, are really where, where I think the blend of, of both skill sets are important. And so that’s what I set out to do. I’m not to say, I’m not gonna say that I’ll never, uh, go on the operation side of things, but, um, you know, I I, I prefer, especially this early in my career as it relates to real estate syndication and large scale commercial, um, partnering with very experienced operators that have a track record of success are on a growth trajectory and have a ton of value to bring to the table in, in, in the form of systems, processes, and, uh, and just, uh, you know, uh, performance, past performance was very, very important to me.
Reed Goossens (14:55):
Yep. No, I, I completely agree. And that’s for a lot of people out there when they’re building this business of capital raising and, you know, understand, trying to teach their investors what to do, you try to do it all, but, you know, doing it all maybe not, may not necessarily be the right path because you, you sort of back to what you’ve built with your local brokerage firm, it’s still a really good source of income. You don’t wanna give that up and you’re good at it, right? So, so why so why, why have to do, wear all the, all the hats, so to speak. And that’s the beauty of syndication is that you can, there’s so many options to wear different hats and, and partner up with different people, um, to, to allow your investor base to your benefits, you know, participate in the benefits of real estate without actually to be an active owner, you know, which is what you’ve experienced firsthand.
Reed Goossens (15:38):
Um, tell me, uh, how have you seen, I want to sort of pivot a little bit to the overall market. You know, what are you seeing, uh, since you’ve been in the business for, since 2000, the late two thousands, um, you, you built it coming outta the recession. Now I wanna ask a couple questions around like, what are you seeing locally for, for, for just your brokerage firm? And then we’ll pivot on to later what you’re seeing in this syndication world, um, and the appetite for that. So let’s just start with your, the local hunger for just small multi-family, and what are you seeing the average investor buying in the Utah market and as it slowed down, as it dried up, and, and how has financing affected that?
David Robinson (16:15):
Yeah, so all great questions. And uh, again, just for context, I wanna reiterate my, my, uh, niche is in the small scale multifamily. So we’re talking under $5 million. So not your typical sy uh, syndication or large scale commercial. So these are usually private investors, individuals that are using their own funds to go and buy their own property for their own personal portfolio. Maybe they’re exchanging out of another asset and getting into multi-family. So just for contexts that that’s what we focus on. Thank you. As it relates to that business and that business model, um, it’s shifted dramatically. You know, uh, we would have a 12 plex that we would put on the market and literally wouldn’t even have to put it to market, and we would have multiple offers just inside of our own network, right? Whereas, uh, more recently since the rate hikes, uh, that’s slowed down dramatically.
David Robinson (17:06):
Now, what I will say is that I don’t have any indication that there’s a, uh, going to see, at least initially a big shift in pricing. I’m not seeing big shifts in pricing. What I am seeing is less demand and less inventory. And so I think what that is resulting in is, uh, lower velocity. So the number of sales and the speed at which these sales are happening has reduced dramatically. Whereas, uh, I haven’t seen a big shift in pricing yet. I will say that there is a discrepancy between what buyers and lenders are willing and able to do and what sellers want. And so that is, you know, still some friction there. And I, I don’t know when that will resolve. Um, I expect that sellers will just have to come to reality and either they won’t be sellers anymore, or they’ll realize, my goodness, the gains that I’ve achieved over the last, you know, five years have been phenomenal.
David Robinson (18:03):
And even though I may not be getting the premium that I would have six to eight to 12 months ago, it still makes sense for me to potentially look at selling. And that’s all circumstantial. It’s like, well, what are they going? The biggest challenge that they face that sellers face is, well, what am I going into? Mm-hmm.
David Robinson (18:58):
So then the question then becomes, well, what should we be doing? And it’s really a course of action of three different potential strategies. The first is you sit tight and you enjoy what you have. Uh, number two is you look to potentially refinance and try to recapitalize that asset and then go take that equity and go redeploy it or reposition it elsewhere. And that’s a challenge right now because, you know, rates where they’re at. And thirdly, it’s, uh, doesn’t make sense to potentially sell and then reposition this equity again. The biggest challenge is what am I going into and can I find an opportunity that’s gonna perform as well as what I currently have? So, uh, overall is I don’t see a big, um, a a, a big correction in pricing yet as it relates to the market. But I am seeing, uh, a discrepancy between buyers and sellers and the velocity of sales.
Reed Goossens (19:54):
For those of you who are interested in staying up to date with all the latest happenings in my business, or to learn more about passively investing directly into my multifamily value add deals, then head over to reedgoossens.com And sign up for my monthly newsletter. By signing up, you will automatically be notified about my new up and coming investment opportunities. You’ll be able to stay up to date with all the latest real estate news here in the United States and much, much more. So head over to reedgoossens.com and sign up to date now, back into the show.
Reed Goossens (20:31):
I, I will echo that. And, um, for everyone who’s listening, you know, I, I keep my finger on the pulse through a couple of masterminds I’m involved with, but also talking to local brokers in my markets. And we’re seeing exactly the same thing in Phoenix in Texas, in South Carolina. And I’ve heard in Florida’s other operators where you’re getting that people are still, sellers are still thinking they’re gonna get prices from six months ago, but then you can’t make it pencil because the debt market where it is, I, I actually, I’m on a best and final deal right now in Greenville, South Carolina. I put my, you know, 30, 40 days ago I put in that, um, the loi, it’s come back around, you know, whatever. Um, or when I first underwriter, I should say, at the time we had mid five interest rates. I just went and got it re-priced.
Reed Goossens (21:16):
I’m now mid sixes going up to sevens. It completely changes my deal in my offer and best and finals next week. I may have to bow out. I might actually just say, look, I’m actually a need to come in lower
David Robinson (22:00):
Well, of course
Reed Goossens (22:01):
That’s the market.
David Robinson (22:03):
Of course, as brokers, um, especially if you’re representing the seller, it’s our job to maximize the sale for the seller, right? And also to get a deal done. And so if we can attach ourselves and have some tangible, uh, you know, data to be able to make our point about pricing, well then we’re definitely going to use that. And so, you know, there’s nothing better that if you’re trying to sell an asset to have a similar asset sell with the 10 31 exchange buyer that was just needing to, to pay whatever the asking price was to get the deal done. Um, and so yeah, that does happen. But I will say that those are few and far between. And what I’m seeing more of is just this stalling between seller and buyer and they’re, the sellers are, are trying to hold out and there’s always a dialogue in the back of their head, well, is this gonna be a short thing?
David Robinson (22:56):
And are, are the feds gonna get this under control? And and maybe six months from now those rates are gonna come back down, or maybe next spring the rates are gonna come back down. Should I just hold on and tell then, so now what’s going to happen is I think those sellers are just gonna sit tight. They’re not gonna take action. And then there’s going to be some sellers that are motivated by other, uh, issues going on in their world. It could be personal issues. And again, we’re talking about my brokerage world, which is personal investors, uh, private investors, not syndications, which they make decisions differently than private investors do. Whereas private investors may be in a scenario where, look, I’ve got, I had a thriving business for the last decade, all of a sudden I’m in a capital crunch and I’ve got this, uh, asset, this 12 plex or 20 fourplex that’s got, you know, a million dollars of equity tied up in it that I could access if I sell this asset. So those are the type of sales that I think will be happening, not necessarily outta distress, just because people want more liquidity in their world going into a recession. And so I think those are the type of sales you happen. And then once that happens, you all it takes is one, and then all of a sudden those prices are gonna start to readjust.
Reed Goossens (24:12):
Right. And, and have you started to see the readjustment yet in
David Robinson (24:16):
Real time? I haven’t. I haven’t
Reed Goossens (24:17):
Yeah. Yeah. Interesting,
David Robinson (24:18):
Interesting. Again, I, I think, I think it will happen. I think, uh, there’s just not enough velocity for that to happen this quickly. Uh, what I mean by that is there’s just not enough sales happening right now in the market to see a quick adjustment in pricing, right. Uh, once they start to happen and maybe this whole recession and, and economic challenges that we’re in, uh, play out, I, I think you’ll see more and more of that.
Reed Goossens (24:44):
And that’s interesting in the space that you are in. And I like your analogy. You mentioned before, you, you, you have those private investors who have a thriving business or something else that’s gonna be a little bit more rocked by, sorry, rocked sooner by higher interest rates or a recession. Thus they need to access capital in a certain, you know, piggy bank that they’ve got, ie. A multi-family complex. Yep. Um, so that’s, that’s very interesting you say, cause I do think that is, you’re right. You, you’re gonna have in that smaller space, probably a little bit more like, oh crap, I need to get this money out real quick and or I’m at a good basis. I can hold, I can survive. Who cares. You know what I mean? Yeah. So now let’s flip to the other side of the kind of syndications. First I wanna ask, how are you seeing the reception from investors, those passive investors, you, you, you, you, you, you, you’re bringing together, how are you seeing their attitude towards investing right now?
David Robinson (25:37):
Yeah, I’ve seen ’em pull back. You know, uh, there, there’s no sugarcoating. It quality is, I think everybody’s feeling this uncertainty and I think investors are just like pausing and trying to read what’s going on in the market. Everybody’s reading and listening and talking to each other and trying to figure out what this thing is gonna look like in the next, you know, uh, 90 to 120 days. And so, um, I def I’ve seen a pullback. Um, I think everybody was playing fast and loose with equity in, in the last, you know, the previous two years. And, uh, that’s been great. Everybody’s won for the most part, right? So it was warranted to be aggressive in placing equity. And now I think everybody’s just being more conservative and rightly so. And so now it’s gonna come down to, again, for me, why it’s most important to be partnering with really high quality operators that have a track record of success, that have operational chops that can deal with, you know, the challenges in the market and turbulence in the market is, I think it’s gonna come down to those that can really find really good deals and, uh, and then aligning yourself with them.
David Robinson (26:48):
And, uh, and I think investors are still anxious to place equity cuz they know it’s just dying if it’s sitting in their bank account. And at the same time, they’re actually being a little bit more conservative and probably not placing as much as they would have, you know, a year ago. That’s, at least that’s sort of high level mm-hmm.
Reed Goossens (27:10):
Have you placed any equity in, in this indication in the last six months? Yeah,
David Robinson (27:14):
You
Reed Goossens (27:15):
Have. Okay.
David Robinson (27:15):
And the most recent raise was the most difficult Yeah. Significantly, you know, yeah. Where, where we, you know, would raise, you know, a million dollars and 24 to 48 hours, uh, that time, you know, definitely lengthened out.
Reed Goossens (27:29):
Mm-hmm.
Reed Goossens (28:11):
You are with your equity stack. So all those things play into making sure the syndication actually comes to fruition. Uh, it’s, it’s, it’s very interesting and I’m, I’m, I’m watching every single day what’s happening with interest rates right now and, and, and that, that, you know, the disconnect between sellers, even in your smaller space, we’re still having that same issue on the side of the fence with bigger guys who are just like, no, I want this from, I want, I want my November pricing from last year. You’re like, we ain’t in November last year, man. Like Right. We’re in a six and a half percent interest rate environment. Well,
David Robinson (28:39):
And I think, I think you’re gonna see just, uh, you’ve probably already seen it reed but I think you’re gonna see re trading become significantly more common based upon the fluctuations that are happening with the rate. Yeah. It’s just, it’s necessary. It’s a necessary component. Before it was looked at as taboo. If you, if you re traded then you know, you were, you were looked down on,
Reed Goossens (29:00):
You
David Robinson (29:01):
Weren’t to get another deal. Yeah. You got that black mark. The reality is re trading’s going to happen moving forward, and I think it’s gonna become more and more common. And so you’ll see, uh, operators or buyers go ahead and, and initially be willing to take a, take a shot at a deal that might be a little bit on the higher end of, of what they can do. Mm-hmm.
Reed Goossens (29:31):
And I’m, they’re also seeing two other things, and I don’t know if you’re seeing this on a smaller scale, hard money’s pulling back. I’m offering less hard money these days because it’s just, I don’t nearly no hard money. And where, where the last two, three years, if you didn’t own offer hard money in some markets up to a million dollars in some markets, you wouldn’t even be in the best and final. Right. Right. And, and I, I have re traded on a deal on a deal that I did this year. I’ve re traded twice actually on that one deal. Um, because interest rates were moving so quickly, uh, you know, I, I got a rate cap at 6% thinking we’ll never hit that. Guess what? We’ve hit it
David Robinson (30:12):
Right.
Reed Goossens (30:13):
You
David Robinson (30:13):
Know, I do wanna go back on one point and Sure. I wanna, um, I don’t wanna overemphasize the fact that people are, are pulling back. I think they are. And rightfully so. And at the same time, there’s also this sense in the conversation I have with my investors, there’s also this sense of urgency of still placing equity because there, there, it’s not doing them any good to just sit on that cash right now. Yes. And so they are going to hold back more reserves than they have in the past, but there’s still this urgency for them to get their equity working for them in a place that they feel is recession resistant. I just
Reed Goossens (30:50):
Wanna emphasize that. No, no, yeah, I completely agree with that. Um, uh, I do also believe that in my opinion is we are in a really good time. If you are diligent and you’re hanging around the hoop in the correct time, you can actually get some pretty good deals to work. Right now there’s less competition. There’s been probably the less the least amount of competition for deals this second where you mentioned it earlier, velocity of, of, of deal flow. So if you have been, if you’re listening out there trying to be an active operator or even an investor, you might actually start to see some, some, some opportunities come around in the next sort of 60 to 120 days. So I, I’m very much looking at that as
David Robinson (31:29):
Well. And another thing to think about is if you can get a deal under contract now, and if there is an adjustment in rates, um, for the benefit dropping lower, that that could be an opportunity. You may be able to take advantage of pricing as it is, uh, you know, adjustments and pricing down as it as they are today. And then have the benefit of interest rates dropping and really being able to take advantage of things. So again, you know, opportunities are times like this is when uh, those that are willing to take on some calculated risks can really win in a, in a big way.
Reed Goossens (32:04):
Right. And, and for those passive investors listening to this show, what you’re really taught at indicating to, and, and one of the things, the rules that I have never done in my underwriting is, is look at a refinance throughout a hold. I’ve never tried to go, I’ll come year three, I’m gonna refinance 40% of your money and that’s gonna juice the iri. I’ve never done that because it’s one, it backs you into a corner. Um, and two people are gonna expect it to happen. If you say, I’m gonna refinancing year three and comes to year three and you can’t, you’ve got a gun against your head. It’s, it’s not model a five to seven year hold with the same debt product. And if it works and you’ve got the refinance up your, up your sleeve, boom. Now to your point, there is a good argument to say, I’m coming in at a fixed 6% interest rate, but in three years time I do want to come back and maybe I’m not replacing, uh, I’m giving you back equity. Maybe I’m just replacing the loan with the lower interest rate stress testing. Obviously no one has a crystal ball, but that is def I could see that being a, a calculated risk to what you’re saying is in the future on a model that you’re modeling today for the next five years, maybe in three years time, I could come in, replace the current loan with instead of a six and a half, maybe I could go down to a five and that that’s gonna change.
David Robinson (33:18):
And to your point, the, and to your point, you’re buying it based upon it performing for the duration of the hold period for the duration of the business plan
Reed Goossens (33:27):
At a higher interest rate.
David Robinson (33:28):
Right. If you are able to refinance down the road, then it will be a boon for the the project. That’s
Reed Goossens (33:36):
Exactly right. That’s exactly, no, I could talk about this all day with you, mate, actually, cuz it’s a very, it’s in real time, right? You, you, you’re seeing it on the small end, but I love that fact you’ve got those boots on the ground real time, uh, anecdotes that are happening, but we’re, I’m seeing it on the big end as well. Yeah. So, um, so, so next question is, we come sitting here at the end of September. What’s the sort of plan, how are you gonna keep the, the syndication truck going, um, and, and the lo and the local business going with what’s happening in the market?
David Robinson (34:05):
Well, um, personally, we’re being really conservative as it relates to the deals that we’re willing to jump on board with mm-hmm.
Reed Goossens (34:43):
Network, fixed still floating. What’s that? Fixed or floating debt?
David Robinson (34:47):
Uh, we’re underwriting both at the moment and it’s, uh, it’s a moving target, so it’s something that
Reed Goossens (34:52):
Is the
David Robinson (34:52):
Hot right now,
Reed Goossens (34:53):
It’s the piece. Yeah.
David Robinson (34:55):
So, um, and then, uh, what I would say on the brokerage side, it’s really helping. I mean, these are, these are just busy professionals, business owners that own small portfolios and they’re really trying to navigate these waters. And so I usually on a daily basis, uh, I have investor calls where we’re just talking about their portfolio, we’re evaluating where they’re at, we’re evaluating their return on equity, um, should they consider trying to reposition their equity in one fashion or another is an opportune time to buy if you can find the right opportunity. So we’re just having conversations with investors and, and trying to help anywhere that we can. That’s
Reed Goossens (35:35):
Awesome. What’s the number one, one piece of advice you can give to a passive investor right now? Uh, given that you’re on both sides of the fence,
David Robinson (35:44):
It takes time to really get to know an operator. So that’s my role for my investors, is spending time to get to know an operator, their weaknesses, their strengths, their past, uh, track record of performance, what their goals are moving forward, what their values are, um, how they’re going to deal with difficult situations. And so the challenge for a passive investor, the, the, the number one piece of advice that I would give to a passive investor is take the time necessary to truly know who you’re investing with. That’s not easy to do. It takes more time than a lot of passive investors want to put in to it. Um, and so many of them will just place small bets with a lot of different operators, and then based upon their experience, they move forward with those operators that they’ve had the best experience with. Thus, most of the capital starts to flow to those operators that are performing at a high level. Um, but if you’re a new passive investor, it’s really taking the time to do your due diligence on the lead sponsor that you plan on investing with. That’s a hard thing to do, but I think it’s important.
Reed Goossens (36:56):
And you’ll, you’ll just purely saying, look at their track record, get to know them, have a few conversations with them, that sort of stuff.
David Robinson (37:03):
Well, the hard part is just, yeah, you can see, I mean, deal decks come through, they look professional, they look authentic, they look, people can attach themselves to someone else’s track record in many cases. And so you may be dealing with the lead sponsor that, you know, says they’ve acquired 500 million of real estate. The reality is they may have done one or two deals and may not have ever even been a lead sponsor on that opportunity. And so it’s important to really dig a little bit deeper than the the higher level stuff. And if you can get to know someone on a personal level even better, because you are never going to know, um, the true values of an operator without spending time with that person. And that’s hard to do.
Reed Goossens (37:49):
Yep. Completely agree. Well mate, uh, at the end of every show we like to dive into the top five investing tips. You ready? Get into it. Let’s
David Robinson (37:56):
Do it
Reed Goossens (37:56):
Mate. Question number one is what is the daily habit you practice to keep on track towards your goals?
David Robinson (38:02):
Uh, the alarm goes off at five 30 every morning. Uh, I know that’s late for some of you guys out there. Um, five 30 every morning, me and my wife get up and together we go and, uh, get a good CrossFit workout in. And that’s the number one thing that I do on my, uh, on a daily basis that helps me just stay on track for things.
Reed Goossens (38:19):
That’s awesome. Question number two is in who’s been the most influential person in your career to date?
David Robinson (38:25):
The most influential person. You know, I would have to, I had a mentor early on. He was the individual. I, I served a church service mission for two years and, uh, the leader of that, uh, that that mission was, uh, a, a very successful real estate broker and investor in his own right. And he was the one that sort of inspired me and pushed me to get into the real estate world. And so, uh, that was a long time ago that he got me going that direction, but I would say that’s probably been, probably had the biggest impact on my life as, as that individual.
Reed Goossens (39:00):
Awesome. Question number three is, what is the most influential tool in your business? When I say tool, it could be a physical tool like a, a phone or a notebook, or it could be a piece of software that’s a tool that you just can’t run the business without. What is it?
David Robinson (39:13):
Hmm. That’s a good question. You know, I would have to say at this point, it’s, uh, I’ll give you two. It’s the CRM that I use, which is geared more towards, uh, the brokerage world, uh, follow up boss. Um, that is a very powerful tool, robust tool for, uh, really for anybody. Um, especially small, small scale business. So, uh, follow A Boss is a fantastic tool that I currently use and, and it literally is the brains behind our business. And then two is the podcast. Um, the podcast uh, has given me an opportunity to network with incredible people like yourself, Reid, and so many other great operators out there that I’ve had a chance to learn from and dialogue with. And so I think that’s the next best tool for me.
Reed Goossens (39:55):
That’s awesome. I completely agree with, uh, with CRM and the podcast. Definitely. Uh, uh, probably mine as well if you, if you ask me the question backwards. Uh, question number four is in one sentence, what’s been the biggest failure in your career and what’d you learn from that failure?
David Robinson (40:08):
The biggest failure? Yep.
David Robinson (40:10):
Uff in one sentence. Um, not investing earlier on in my career. Um, you know, I, I mentioned this earlier and it’s a shame there’s too many brokers and agents that are in this space that actually don’t invest. And I was one of those for a decade, you know, had done some minor stuff here and there, but hadn’t done nearly enough to put myself and my family on the path that I wanted us to be on. Time flies by, you’re doing transactional business, you’re making good money, you’re living a comfortable life, but you’re not really driving your life forward from a wealth and cash flow perspective. And that was the biggest mistake I made was, uh, not investing earlier on in my career.
Reed Goossens (40:51):
Yeah, I completely agree. You always gotta be placing money every single year, good years, bad years, and, and you’ll look back over a long period of time and, you know, be grateful for that mate. Last question. Where can people reach you to continue the conversation that’ll be in your sphere? Where do they want to go?
David Robinson (41:07):
Two things. Um, I’ll give ’em a free resource. We talked a lot about, uh, return on equity, right? If you own investment property and you have a significant amount of equity built up, you may be surprised at how low your return on that equity that’s tied up in that property is performing. And so if they go to returnonequityreport.com, that’s returnonequityreport.com, they can use a free calculator, they can can plug in their numbers and within three minutes have a a report showing what their return on equity is. And then, uh, lastly is just, uh, reach out to me@canovocapital.com, CANOVOCAPITAL.COM, canovocapital.com.
Reed Goossens (41:47):
Awesome stuff, mate. Well, look, I wanna thank you so much for jumping on the show today. I wanna reflect some of the things that I took away from today’s show. I think your ability to keep the business going locally that you’re really good at and, and understand what you are good at, but also then tacking on conversations or seeing an opportunity with those conversations to say, Hey, I can do more with this in, into this indication space and be that conduit between people who may want to have some personal portfolio but also may wanna have just some passive investments. And, and creating that synergy between what you do in every day with, uh, the syndication space. I think that is, is such a, a great synergy of businesses to align together. Uh, I also love the fact that, you know, you just, you just, you just know what you’re good at, right?
Reed Goossens (42:29):
You’re not gonna try and do, wear all the hats and, you know, be the operator and be the, the mechanical engineer. You know, you, you gotta be good at what you, what what you put on this earth to do. Um, and and I I love the conversation around about the velocity in the market right now. Older people. I think rewind this show and listen to what you have to say about the expectations between sellers and buyers and what we’re seeing not only locally in your market, but also what I’m seeing on my end of the end of the spectrum, and then where we’re headed to in the future. Um, mate, did I leave anything out?
David Robinson (42:57):
No, I think that’s great, man. I appreciate you having me on Reed. It’s been great.
Reed Goossens (43:00):
Awesome, brother. Well go on. Thank you so much for jumping on the show. Enjoy the rest of your week and we’ll catch up very, very soon.
David Robinson (43:06):
Thank you very much.
Reed Goossens (43:07):
Well, they have another cracking episode jam pack with some incredible advice from David. If you want to check him out, remember it’s returnon equityreport.com or you can head over to canovocapital.com, check him out. He’s doing some incredible stuff in his local market, but also in the syndication space, connecting passive investors with incredible opportunities. I wanna thank you all again for listening to this show and tuning in each and every week, but to grow your financial iq cause that’s where we’re all about here on this show. If you’d like this show, the easiest way to give back is to give it a five star review, and you’re gonna find all the show notes from today’s show up on my website@reedgoossens.com. We’re gonna do this all again next week. So remember, be bold, be brave, and go give life a crack.
