Note: transcription provided by Otter.AI, which is a technology company that develops speech-to text transcription and translation applications using artificial intelligence and machine learning.
Christopher H. Loo, MD-PhD: His name is Dan Kryzanowski, from BV capital. And he was a recent speaker at this year's FinCon in Austin. And we're going to talk all about real estate syndicates, private equity. I'm going to bring up his bio. So Dan is an active capital raiser, equity owner and passive investor generating double digit yields and lower taxes via commercial real estate. His investment portfolio is extensive, including 2600+ storage units, 1500+ multifamily, and dozens of industrial infrastructure and residential properties. He's personally raised millions of dollars from accredited investors and family offices and empowered his partners to raise seven figures on multiple occasions. He's the founding Vice President at Rocket Dollar, unlocking the $10 trillion pool of untapped retirement assets for the alternative investment community. He previously led commercial real estate initiatives for GE Capital in Mexico and South America. And his superpowers include self storage, self directed accounts, and through solo 401K's self directed IRAs. So without much ado, welcome, Dan.
Dan Kryzanowski: Awesome, Chris. So great to be here. And thank you for reading the whole bio. I just think that means that I'm pretty old. So hopefully there’s value to folks out there. Thank you.
Christopher H. Loo, MD-PhD: Yeah, yeah, no, we were connected a couple weeks ago in Austin at FinCon, both you and me were speakers there. And I thought it'd be good to do a podcast collaboration. So, yeah. Tell us more about your story. And we'll get down into the nitty gritty of BV Capital and all of the services and products you offer.
Dan Kryzanowski: Sure, yeah. I'm originally from Scranton, PA, a child of the 80s. Dad was a high school principal, mom was a social worker. Half my family was in education. The other half was basically medical. So you know, with that as background, like many folks on the call. It was heads down, study hard, get the job, maybe pension, maybe get an IRA. I did my undergrad at Wharton with a lot of smart folks. That's that was the continuing message, and I think collectively, particularly say up until 2008, I think everybody was heads down with life and there was never a second thought like hey, This is great, we'll have our 60/40 stock bond allocation and everything will be good. That said, the benefit of having a wife from Mexico, you don't want to be in the cold too long. So we made a conscious decision to leave the northeast, to leave GE Capital over a decade ago to come to Austin. So well before the rest of everybody moved here. And since then, I decided to realize, Hey, you, you can take back control of your dollars and really work to make them how you want to, in a very tax advantaged way.
So we'll talk a little bit later about the difference between liking and trusting somebody. It's great to be liked, it's great to have 100 likes on Facebook, but trust comes down to when money moves. Or frankly, if you want real world experience, I'm sure a lot of doctors say anytime there, especially that were in the military, I really got some real world experience when the bombs were dropped. So in a similar sort of sentiment, I started investing passively here in Austin, a mix of bars, restaurants, and then also more so real estate. And then my lightbulb moment was learning that I can use my retirement dollars to invest passively in real estate. So this enabled me to invest across a bunch of multiple asset classes, all throughout real estate. And ultimately, I found myself becoming a guru, as you kindly shared in the intro, in the worlds of niches such as self storage, industrial, and maybe how to unlock a lot of these great deals here in Texas. So kind of partnering with the best of breed across Texas to offer what I feel are truly fantastic passive investment opportunities for accredited investors.
Christopher H. Loo, MD-PhD: Yeah, that's a great introduction. And I want to point out to the guests that you started out your career in Wall Street, and now you're doing private equity and you are doing self-directed space. So what's what led you to the self-directed space? And what are some of the similarities or even differences between what you experienced on Wall Street and what you're doing now?
Dan Kryzanowski: Yeah, great question. I mean, I grew up on the trading floor of Wall Street. And in hindsight, I joke that if what I did would be on the debt side, we'd be talking on my island right now as a multi millionaire. But I would have literally caused a financial crisis. So probably a good for the soul, not as much the pocketbook, as they say. What I learned looking back from this experience is that you don't have to be the smartest, I do think hard work, and grit, helps. Street smarts, helps. Grit helps, which once again, the longer you're in school, or kind of the smarter we are, the more letters we have, at the end of our name, it's not as apparent and frankly, sometimes not as easy to get back to kind of the street smarts and using your, your God given talent to, frankly, have abundance for you and everybody else in your community.
So I think my antenna was probably up a little bit more. And I refer to the 2008 point. Because I also think, by extension, GE Capital was an extension of Wall Street where frankly, you had a big company name, every sales call was easy to at least get, you had to, you had obviously the slickest marketing at the time, you had some sort of sales or marketing budget. In hindsight, especially for a lot of us solopreneurs, like, wow, that was very easy. But at the same time, you wanted to invest in something, you had to go through your compliance team. Especially I know, social media wasn't big back then. But the equivalent thereof, you had to be a little more cautious about what you would share, what your opinion was, what education you wanted to push out there. So you were very limited, which I think culturally also, I think, was probably a decent move. And it was a comfortable life up until 2008.
That said I was fortunate to maintain a, I think a very healthy career but my antenna was up for what else was out there. And a lot of this frankly, was based on lifestyle and did for those of us that are familiar with New York, did you want to do the commute or reverse commute every day? Or did you want to get your hands dirty and be very tangible with folks that may not have the benefit of having a war in our pick your fancy school on their resume. So, Austin, especially Texas, you'll get humbled really quickly. Nobody heard of UPenn; everybody thought it was Penn State football. Down here if you're not UT or A&M, you might as well not have gone to school. So a little bit of Humble Pie never hurts with that.
But yeah, I mean, that was my sort of backdrop and my big moment here was, we were co-best men in a wedding. And I was the gentleman that I was with. He said, hey we're shooting the sh a little bit, what do you do? And he said, I flip houses. And I'm like, Okay, interesting. And he said, 15%, I'm like, Whoa, that's really interesting. Then he said, Did you know you can use your retirement dollars?'' And for me, this was a lightbulb moment. Learning what was out there, meaning in the world of private real estate, the huge total available market, which is, frankly, 10 trillion with a T. And then over a relatively short time, I got to learn how this world played out. And I've since probably invested in as you alluded to 20 Plus, deals raised X million. And I think what's most valuable, I'm sure you feel this in the medical community, at least in my corporate world, I've at least made X 1000s of people aware of this world of private real estate. So now it's just the point to nudge some people that never made the first deal or to really, for folks that are a little more versed, say, Okay, now let's really start talking asset classes, different tax benefits, such as return of capital and how to really get a true diverse, as I like to call 21st century diversified portfolio.
Christopher H. Loo, MD-PhD: Yeah, I like that. That's a very good answer. And so now you've worked on Wall Street, you've started your own company, you've built that up, very successful. And now you work with a lot of accredited investors, and a lot of accredited investors, they have access to a lot of types of investment vehicles that the general population doesn't. So how do you show accredited investors how to invest their IRAs, once they have the freedom to invest in anything they want?
Dan Kryzanowski: Yeah, great, great question. And so when I was at Rocket Dollar, and for folks who may not be familiar with Rocket Dollar, it’s a checkbook control, self directed account provider. So this can mean the self directed IRA, the SD IRA, or it can also mean a solo 401k. So anybody that is self-employed, or husband, wife team, I would strongly consider learning more about the solo 401k, which I'm happy to have one on one conversations with anybody offline from here. It goes down to education. My big premise at Rocket Dollar was standing up the media and marketing side, was to bring on a variety of sponsors, and also a variety of investors how they built out this book, so whether it was self storage, obviously multifamily is pretty vanilla of a transaction across the country, showing the benefits of industrial and literally drawing it out for hey, here's what an industrial property or an industrial portfolio can look like. And then matchmaking back talking about duration, whether this is a one year hard money loan, whether this is a seven year development, whether this is a three year quick value added flip, like in workforce housing or something down the fairway, like a five year industrial. It was just kind of fun conversations with hey, here's what I'm doing. show me mine, I'll show you yours. And we kind of went from there.
Christopher H. Loo, MD-PhD: Yeah, so sounds like you're very experienced in investing in alternative assets. You also do a lot of things like, niche commercial real estate land, industrial self storage, and I know a lot of physicians are interested in multifamily. But in terms of the land, give us a general overview of the land, industrial and self storage. How are the benefits? How's it different from multifamily apartment investing?
Dan Kryzanowski: Yeah, and I appreciate your order of land, industrial, self storage, that's probably the order of my expertise, what I would comment on land as Mark Twain said, buy land, they're not making any more of it. But I think that holds true because you can do a lot and I would preface a few things you want to think about, is the land connected to water, can you literally plug in? Is the land permitted already, which might seem like something as simple Okay, I'm going to put up a little building? Well, that may or may not work and depending on where that land is, you might run into small town politics. So these are things just to be. I would say at least speak with somebody before you do just blindly purchase a piece of land.
Industrial is great, because industrial, I like to say, is kind of everything else that is not land or an easy to identify asset class. So it's not an office building. It's not a retail strip mall. It's not a hotel. A few other obvious ones. Industrial is kind of everything else, so you can stretch from your typical industrial park that makes widgets. It can be a paper Supply Company, last mile industrial is very common, so think Amazon, that the final kind of warehouse it goes to and then you get something big like Fort Knox that guards money that's Department of Defense certified. And then on the flip side in an industrial showroom, which I purposely don't call retail because it's not a retail shop, it's a place where the tradesmen go to look to decide what they're going to purchase. So industrial is actually a beautiful asset class. And it's probably the quietest one out there.
When it comes to these top five or top 10 lists in terms of growth, so take Texas. I know a fair amount of your audience is here in Texas. I mean, we have Mexico, we have the port, we have everybody moving here, things are not going to go away, meaning the movement of goods. across, frankly, North America. So we're in a really great position here in Texas. And particularly folks that have been boots on the ground here for multiple decades. That is very advantageous. Like in any market, you want to learn things off market, but industrial sometimes is a little bit more of a conversation, talking to a well respected billion dollar plus revenue tenant, that's going to be your single tenant on a triple net lease, which means the tenant is going to pay for taxes, insurance, etc.
And what I like about industrial, especially with a single tenant, it's like a bond: you know what rent you're getting now, what rent you're gonna get, say, on the five year renewal, on the 10 year renewal. It's pretty simple from that standpoint. So I love this, because I consider industrial bond cash replacement, and coincidentally not to knock my multifamily buddies, but the yields and the IRR on industrial, I think, is finally crossing multifamily. Which is kind of comical, but I think you know what that means, is that it's going to hit the headlines pretty soon, that industrial is hot. Trust me, I know.
Self storage, and I can talk for hours on storage. Because the big reason is, I think it was, I think it was a need to have. And now it's becoming a must have. So what do I mean by that? 20 years ago, about 3-5% of Americans used storage, it's been up to about 1 of 10 recently. And quite frankly, it was nice to have, it wasn't a super need for a lot of people. What we've seen, I think, post COVID. And the things that are slowly creeping into headlines are called the Wall Streetization of our residential landscape, whether it's private money, Wall Street, they realize there's frankly an unlimited money supply. And if you really step back to see who really owns everything, and it rolls up, it's a very small collection of families and private foundations. So with that said, somebody that has a 2/2 and needs that extra bedroom, you're not going to find a three bedroom apartment, you're not going to find a three bedroom house.
So what does that mean? In case you want to feel like you're a hoarder, you're going to have to move stuff into storage. And I'm not talking about like the Christmas tree that you don't want to look at the other 11 months of the year, I'm talking about your kids winter clothes, I'm talking about tax documents, a lot of folks are gonna be space burden have to decide to pay an extra 1000 For an extra bedroom that they probably can't even find or an extra 100 for storage. And it's just going to become one of your expenses going forward. So with that said, there's a lot of meat on the bone. I think even with the 10,000 ish properties that the publicly traded REITs and the large guys own, but on top of that four out of five storage units are owned by mom and pop that may not have the level of business sophistication as some of the larger guys out there. So to find a storage deal off market. And once again, who are the folks that have been educating their audiences for decades who've been boots on the ground, say, for example, here in Texas, these are the folks you want to partner with just a final side note. And a good friend of mine, he, he did that, he led with education with experience, and he just sold his portfolio, I won't share the exact number. But nine figures is probably a good estimate, here in the world of storage. So, yeah, there's still opportunity here, for those that want to be involved.
Christopher H. Loo, MD-PhD: Nice. Yeah, I know. Because I know, with the Fed the interest rates, and they're printing money. And then I know a lot of investors, they're watching real estate because they're watching the market go. It's hot in a lot of areas and is skyrocketing. And they're they have FOMO, fear of missing out and then but then also you have COVID, and they’re thinking, oh how does this change the real estate market? So I know a lot of investors are going to self storage and looking at different alternative real estate classes to get some more stability and more returns. And I also know that, for someone who's interested in sponsors and syndicators. I know you did a lot of work over that. So what did you learn from Speaking to over 500 sponsors and syndicators in the last 18 months?
Dan Kryzanowski: Yeah, I mean, the benefit here, and I truly was blessed to be kind of in the right place at the right time talking to anybody that follows on LinkedIn the best that gets their 1000 plus likes, anytime they share a piece of advice. What I learned is once again, it's boots on the ground and kind of selecting an area. And sometimes this may not be in your backyard, once again, very convenient, but particularly multifamily, you're probably going back to your home area, you might have I'll just throw this out of there kind of spit on the wall, but like a Louisville, Kentucky, somewhere I know, in the Rust Belt, there could be some opportunity.
So some folks have the benefit of, you grew up there, you know some local management companies. Other ones, you just saw this great need. So this is where we're gonna really focus. That's, that's one very common piece of advice, as opposed to it kind of spreading throughout the country so that I can do stuff everywhere, you're going to get crushed, you do need some local expertise, you need a little bit of, obviously, the contacts and somewhat of a gut feel. And just say, Okay, this is my sandbox, and I’m playing in it. So I think from there, obviously we have the capital we call Texas Real Estate, we have the ability to go to the Sunbelt, but we feel that we have focused on Texas for multiple decades, and there's no reason to change that at the moment. So we're going to continue to do that going forward.
A second thing I'd say is, the education. So even if you don't have the deal, what value add do you provide to your audience? For example, on the tech side, do you have a good platform where they can check in? Or is everything still done on spreadsheets, particularly when you get a certain size? You kind of have a game as you go through it. And the other thing is, what's something tangible that may never directly benefit you. So as we talked earlier, my big takeaway is always: did you know you can use your retirement dollars to invest in real estate? And Hello, my investors Did you know you can also use your retirement dollars to invest in my next deal, or a startup, or crypto or gold, etc. And I think you're going to differentiate by sharing a piece of credibility, say, Listen, obviously, I'm going to pitch you my deal. But in terms of you being a truly 21st century diversified investor, and having the knowledge and having something that's probably Country Club, cool, when you're with the other doctors on the golf course, or in the surgery room, this is something cool that you can share. And so that's something that I've always prided myself on. I feel myself, and also a lot of other great sponsors always have something they're super powerful. They're very deep domain expertise. And it could be something that leads with the tax law, it could be something with a procuring for these ground up builds, keep on sharing that with your audience. A lot of folks are gonna appreciate that.
Christopher H. Loo, MD-PhD: Nice. Yeah. So you've gone through a lot of interesting topics, and a lot of interesting questions. And thanks for sharing all of your knowledge and your expertise. I know a lot of people are interested in getting in touch with you. So what are the best ways to get a hold of you?
Dan Kryzanowski: Yeah, absolutely. So LinkedIn is always great. That's always my easy answer, especially for folks on the road. Next, I'm sure it'll be in the show notes. But my email, Dan.Kryzanowski[at]bvcapitaltx.com. That's probably the best way to reach out.
Christopher H. Loo, MD-PhD: Yeah. And for all the listeners, we’ll get all of those in the show notes. So the final question for you, Dan, is what is the most surprising investment you've heard of someone making? And do you think it's going to pay off?
Dan Kryzanowski: So let's talk about the maybe not so greatest investment. That's really, and I invested in a comedy tour. And I remember sitting there with my wife saying, hey you better enjoy tonight because he's made $1,000 write offs. And well, hey, so, like anything, it's once again real estate's a physical asset of comedy tours, just YouTube these days. It was one of our early customers at Rocket Dollar. And what's funny about pilots, and I'm sure there's a certain level in the medical field, but what's very unique particularly for the legacy, the larger Airlines is, when you're 59 years old, it's kind of like being a senior in high school. You're a cool kid, and then after that you're kind of out of sight out of mind, because you're hitting your pension, you're about to retire.
You can tap into your IRA or 401k without penalty. It's a really exciting time. So obviously these pilots have flown the world and one gentleman said, I'm gonna buy a condo in the Caymans, great idea, and he said, I have a million dollars in my 401k. I'm gonna do it, I'm gonna buy four other condos. So I can walk up and down the street. I just think that that's just wildly successful, tangible. And if we think back over the course of history, that's probably what a lot of people have done in one aspect or another. And then of course, being able to pass it down as a legacy through family. So that's just something I heard that's like, very cool, it's very tangible. And I think it's also going to be wildly profitable particularly as this person is going plus 60. Doesn't have to worry about early withdrawal, etc. It's such a great, I think, mutual situation for both him and the folks that are gonna be coming with rent. Right.
Christopher H. Loo, MD-PhD: I think that's wise advice. Thanks so much for coming on the show and for dropping those gems. I know you have another meeting to go to. So we hope to have you back in the future as another guest.
Dan Kryzanowski: Anytime, my friend. Thanks so much.
Christopher H. Loo, MD-PhD: Many thanks again for being here. If you’re new, you can find me online at Christopher H. Loo, MD-PhD, where I have links to other episodes or links to online resources that will support you on your financial literacy journey. I’ll see you there in on next week’s show. While I bring you thoroughly vetted information on this show regarding a variety of financial topics, I cannot promise you a one size fits all solution. This is why I caution you to continue to learn. Educate yourself and seek professional advice unique to your situation. If you want to talk to me, I welcome it. Please reach out via my website or email at Chris@drchrisloomdphd.com. I read and personally respond to all of my emails. Talk soon!
Editor's note: This transcript has been edited for brevity and clarity.