Stop Buying Junk: Build Your Way to Financial Freedom with Dusten Hendrickson

The Real Estate Investing Club

Join an active community of RE investors here: https://linktr.ee/gabepetersen  0:00 Welcome to the Real Estate Investing Club 1:25 How Dusten Started Building Duplexes in 2003 5:56 Entitlement Risk in Real Estate Development 11:28 The Copy and Paste Development Strategy 13:21 Phased 14-Unit Workforce Housing Buildings 17:05 Why 14 Units Beats Larger Apartment Buildings 19:07 Floor-to-Ceiling Windows and Apartment Design 20:59 How to Find Land for Development 25:35 Advice for Your Younger Self: Scale vs Growth 26:52 Rochester, Minnesota Real Estate Market 28:51 A $300K Farmland Lesson on Location  🏗️ REAL ESTATE DEVELOPMENT SECRETS FOR BUILDING WEALTH  Ever wonder why so many real estate investors keep buying other people's problems? In this episode of the Real Estate Investing Club podcast, I sit down with Dusten Hendrickson of Mailbox Money, a vertically integrated workforce housing developer, to talk about ground-up multifamily development and why building new can be a smarter path to financial freedom than buying existing properties. 💰  🏡 FROM DUPLEXES TO MULTIFAMILY SYNDICATION  Dusten started in 2003 when his mom wanted a duplex and building one turned out cheaper than buying. From there he built single-family homes, flipped houses, bought apartments, and developed a 30-unit property before discovering the multifamily syndication model and raising private capital. When interest rates climbed, he pivoted into ground-up development of 100-plus unit projects. 📈  ⚠️ ENTITLEMENT RISK AND ZONING IN REAL ESTATE DEVELOPMENT  We break down where the real risk lives in real estate development. Dusten explains why entitlements matter most, why you should never demolish buildings before rezoning is approved, and why you should never close on land until it is fully zoned and titled. Protect your leverage, plan for underground surprises, and understand how government changes can affect your pro forma. 🔍  #RealEstateInvesting #MultifamilyInvesting #RealEstateDevelopment #WorkforceHousing #FinancialFreedom  Want to learn more about our guest? Connect here: https://www.linkedin.com/in/dusten-hendrickson/  Want to learn more about the REI Club Podcast, how to invest with Gabe at Kaizen, or join our community of active real estate investors on Skool? Visit the podcast website at https://www.therealestateinvestingclub.com or click here: https://linktr.ee/gabepetersen

Transcript

00:11All right. Welcome back to another episode of the Real Estate Investing Club. I hope

00:16you guys are having a great day, great week, wherever you are and whatever day it is for

00:21you. We are officially in fall. I actually don't know when the first day of fall was,

00:26but we're officially feeling fall here in Seattle or in Tacoma. So I am super excited because this is

00:31by far my favorite season. It starts to get a little crisp in the air. We get to do Halloween,

00:37all the fun things. And I have a three-year-old daughter, as you guys know. And so this Halloween

00:42is going to be especially fun because she gets to start to enjoy going trick-or-treating. So

00:46it's going to be a good season, but it is a good day for a second reason because we have

00:52Dustin

00:52Hedrickson with us on the show from Mailbox Money. Dustin does workforce housing and they do

00:58from start to finish, you name it, they do the step. They are vertically integrated. So

01:02this is going to be an interesting episode to kind of see the entire process start to finish.

01:07Dustin, thanks for hopping on the show.

01:09Hey, thanks for having me, Gabe. I'm excited. I like fall too. Football starts. That's definitely

01:14when fall starts.

01:15There you go. I told you before we got on the show, we always like to start with stories.

01:20We like to hear how people got to where they are. So why don't you take us

01:24to the beginning of your story in real estate and just tell us how you got here.

01:29Well, my mom wanted to buy a duplex back in 2003 and they were super expensive to buy and we

01:36could

01:36actually build one for cheaper and it would be brand new and in a better neighborhood. So we said,

01:41let's just build one. And we started and we made a bunch of mistakes, but we've created a ton of

01:46value.

01:47And then we just scaled from there and we kept building duplexes. I built a lot of homes,

01:52single family homes, fix and flips, bought some apartments, eventually built a 30 unit apartment,

01:59then ran out of my own money and was wondering how do these guys build these big, massive 100 unit

02:04plus complexes all over the place. And it's the same people doing them over and over.

02:08Found syndication model, realized that it's with other people's money, found out how to do the

02:14syndication model. Learned throughout the Southeast during the 2019s and early 20s. And then when the

02:22interest rates went up, we had realized that we needed to pivot into development. So we took the

02:28same syndication model and applied a 200 unit and up developments.

02:35Nice, man. Yeah, there is something very attractive about developing and especially start to finish

02:44because I got started, I was flipping houses. And the problem, flipping houses is fun and you can

02:50definitely make some good money. But the problem with it is you never really know what the scope of

02:55work is. You have an idea of what needs to happen, but the instant you open those walls,

03:00it, I mean, who knows, maybe all of the plumbing is gone. You probably would have figured that out

03:04beforehand, but there's a lot of things that could go wrong, but development is a little bit different

03:08because you can, you kind of see all of the steps in front of you before you dive in. And

03:14so it's a

03:14lot more predictable. Um, yes. Did you, did you, so it sounds like you started with building ground up

03:22from the very beginning. So you've never kind of, you didn't really go into the rehab, um, you know,

03:29reposition. Oh no, we did. We did it all. Yeah, but we started with development and then we also

03:38along the way did rehab and fix and flip as well. But we came to the same conclusion as you

03:43is that

03:44after buying all this stuff, I always realized that the brand new stuff that I built was way better

03:49because you control it from start to finish and nothing within the process was junk. Every time you

03:55buy something existing, you find out where all the mistakes are and you're like, Oh, this is why

03:59the guy sold it to me. And then you have it back on the market. I mean, we ended up,

04:03we've sold

04:03pretty much all of our existing stuff. We've, most of the stuff that we've kept long-term is the new

04:09development stuff. Yeah. It's funny you say that. Cause, uh, yeah, there, I mean, we buy mobile home

04:14parks, RV parks, self-storage facilities. There's a lot fewer things that can go wrong with those types of

04:19asset classes versus multifamily, like you guys or single family that you guys are doing.

04:23Um, but still, even when we do our due diligence, no matter what happens, we, when we close and we

04:29start actually getting into the nitty gritty of putting our, you know, putting our systems in

04:33place, we find so many things that the previous owner just, you know, cut corners on. And, uh, and

04:40those kinds of things, it's impossible to catch them all. And they always pop up after closing.

04:45And so that is, uh, I mean, that's the reason why I feel like development and, uh, and building

04:50is so attractive as you're, it's new. And so it's not gonna, you know, something might break

04:55just because of whatever reason, but it's still the majority of it is, is going to be lasting

05:01at least 10 years. It's not going to be, uh, breaking on you.

05:04Isn't that funny how, no matter how many times you do a process, you still find something new

05:09that you've never really met. This new issue has never existed before. And somehow a new issue

05:14pops up.

05:17Yeah. Yeah. We're actually going through that right now on a deal that we just bought. Uh,

05:21but you know, lessons we, there's a whole section later in this podcast where we talk about lessons

05:25because every deal gives us new lessons that we get to learn. And, uh, you know, it's, it's

05:31inevitable. You're going to learn them. It's going to happen. And you just bring those lessons onto

05:35the next one. Um, but let's talk, let's go a little bit deeper into, you know, new builds

05:40development. I personally, I've never done it. I've wanted to, I've looked from the outside

05:44and thinking, wow, what, what a beautiful world you guys live in. Tell me about it. Like

05:48what is, um, how does the process go? And what are the things that people from the outside

05:53looking in don't realize are the, um, kind of the, the headaches that, you know, you are

06:00going to be running into with each project. Yeah. So I would say what you alluded to earlier is

06:07accurate is that there is actually less risk in development. Um, because you understand the entire

06:14process and you know exactly how it's been built. So when you buy an existing asset, you don't really

06:20know it. And you have to go through and find out. And there could be some low quality items

06:25throughout and there could be a bunch of issues. And most people actually sell their worst properties

06:29first. That's usually how it works. When you want to sell a property, you sell the worst performing

06:33one. You don't sell your best properties unless you're forced to. Um, but the development process

06:40that people don't, the, the risk that they don't understand is mainly in the entitlement process and

06:47getting the community on board with what you want to do. So if it's all on board and it's zoned

06:53exactly

06:54for what you want to do, it's usually a very painless process. And most of the surprises are

06:59underground where you can't see them. You'll get soil borings and all this stuff, but that you're

07:04not going to, you can't cover everything with a soil, soil borings. Soil could be different over

07:08here than it is over here. And so you try to find everything, but most of your, most of your

07:13unseen

07:14stuff's underground unless you've never done the project. Then there's unseen stuff throughout, but this

07:19is why we do a copy and paste project where we do the same project over and over and over

07:23and over.

07:24And so everything on everything that we run into is surprises underground or it's a government

07:30implementation thing where they come in and say, Hey, we changed this midstream. A lot of times

07:35you're covered still, but sometimes they say, we don't care. It's fire code. So you have to do this.

07:40So then you have to implement that new stuff to get your occupancy permit. Those are the only two

07:44major surprises, um, that we see, but entitlements is where most of the risk is. So if you're entitled

07:52and you are approved to go forward, you're, you usually, it's pretty good. It's a, it's not too

07:58bad. There is some risk for, you know, inflation and skyrocketing prices because no matter what you

08:04say, you can get contracts and you can be, everything can be dialed up in place. But if

08:10things spiral out of control or the prices go way too high, the owner still is responsible.

08:16And when you say entitlement is where the risk lies, um, go like one more level deeper into

08:22that. I mean, I'm, I'm assuming when you're, you start out, you're buying land, um, and you're,

08:28you're entitling it to be, to, to conform to whatever use you're trying to, to put their

08:33multifamily, whatever it is. Um, isn't this generally known before you put ink to paper?

08:39Like you've already, tell me where the risk lies in entitlement. What does that mean?

08:43Yeah. So if you're bringing a piece, say you're annexing a piece into the city or you're going to

08:49raise some buildings down and put some up. Also, a lot of cities will say, Oh yeah, we want multifamily

08:55down there. Just demolish those buildings and then we'll go through the process. Well,

09:00don't ever do that first, go through the process, then demolish the buildings. So what can happen is

09:05you'll demolish the buildings. And this happens all the time. And now you want to zone it. And

09:10they're like, you know what? It's probably better if you just did single family homes in there and

09:15then you're, well, that doesn't work for a pro forma. They're like, yeah, we're not going to zone

09:19at R3, but had you not raised the buildings, they would have zoned at R3 for you to raise the

09:24buildings. So never give up your leverage. We don't ever impose on anything until it's fully zoned

09:29and ready to go titled. So that, that, that's, that's the piece where people say, well, they told

09:38me that they wanted to do it. Well, was it in writing? Was it actually done? Did it go through

09:43all these formal processes? Because there's very, very little account accountability in the government

09:49sector. And even if it's put in writing, that doesn't mean anything. It needs to actually go through

09:55all the steps and all the processes because also someone could get fired or their position could

10:01be, you know, they could run out of their term or whatever happens in the government. And now a new

10:07guy comes in and he's got a different idea. And he's like, well, that other guy didn't know what

10:09he's talking about. We don't want that there anymore. And it's not in writing and it's not,

10:14it's not processed through. It's not passed through the, all the different hoops you got to jump through.

10:19Other thing is too, is that a bunch of neighbors can start complaining about it. And now the city

10:25changes their mind because of a few noisy neighbors. Got it.

10:29There's that, there's all these different pressures that can occur. And then you're

10:33also the rich developer. So no matter, no matter what, if you have money or not, you're the rich

10:39developer and you're going to make a fortune off this project. And so then they think that you

10:43should foot the bill for all this stuff. Oh, which is also not true.

10:49True. But that's just the, because developers, you have to have money developed. They think

10:53developers are making a fortune off every development.

10:57Right. But they don't see the full, the true P&L, the full picture. So to kind of mitigate

11:03those risks, it sounds like one solution is I'm sure an extremely long DD period where

11:08you're, you get to kind of take it through as many, as, as much of the process as you can

11:14and get as much approval as you can before you close. Um, and then also do you guys have,

11:21you know, you use the example of, of multifamily. Um, do you generally only have one build use that

11:29you, that you go forward with, or is there a backup plan? Like, you know, instead of say

11:34that again, no, there's no backup plan. If we cannot do exactly what we want to do, we move

11:40on. We used to do that, but then we were switch tasking too much. So you're either good at doing

11:46single family or you're good at doing row houses or you're good at doing apartments or you're good

11:51at doing skyscrapers. You're usually not good at doing everything. Got it. Okay. It's every single,

11:57every single thing is a different niche and you need to bring in different subs and there's a

12:01different method of doing things. So we, we have got the deeper into our niche. We go, we do one

12:07style, one plan and that's it. The better that we are at it. Uh, when I, uh, when I was

12:14first

12:14learning real estate, like back in 2014, um, there was this one big flipper in our area and I would

12:20go

12:20to his meetups and his, he used the exact, uh, thing where he had every single flip that he did

12:26looked the exact same because he had a, he had basically a template that he would just come in

12:30and just apply to every single flip. It doesn't matter what the house is. You know, they're all kind

12:34of in this there. He's not going luxury to work for us, but they're all kind of the same brand

12:38of

12:38house, but he would use the exact same template for every single one. So because of the efficiencies

12:44that you get, um, you don't have to come up with a new solution every single time. You're just

12:48applying the same paint, the same, you know, water fixtures, whatever it is. Right. And then you can

12:55tweak that as you go. Right. So as soon as you're like, Oh, this is a little bit better. This

12:59is,

13:00this solves some problems. It saves me some money and it's saves me some maintenance.

13:04Boom. Implement that going forward throughout. And that's exactly what we do. And it's more,

13:09the more you can put it on a conveyor belt, the more it's more like manufacturing and less like

13:14custom home building, the better you're going to be. Makes sense. So take us to like the product

13:19that you guys, um, specialize in yourself. Um, you mentioned workforce housing, go, go into that.

13:25What does that mean for you? So we build boutique apartment buildings and they're all copy and paste

13:31in its phased approach. Meaning we put one 14 unit building in and we put another 14 unit building

13:37in, put another 14 unit building in, but it's in succession. So you're, you start with your first

13:43one and that one opens in nine months after groundbreaking. So within nine months, you've

13:48got tenants moving in because we fence off that area. And then we move to the next building.

13:53That building is ready in one to two months. Next building is ready in one to two months.

13:59Next building is ready in one to two months. So we, and we normally build anywhere from five

14:04of these buildings to 15 of these buildings. So, and they're all 14 units, well, 12 to 14,

14:12depending on if we have to put in a ADA units on the main floor. And so as it's going,

14:20it's,

14:20so the subs move from building to building. So the subs are not on top of each other and

14:24they can each just work in their own building without having to worry about each other.

14:28It makes it super nice. Yeah. Interesting delay in one building. It's siloed into that one

14:34building. It doesn't cascade into the whole project. And then you can also bring in more

14:39crews. So if your electrical crew gets behind, they can be like, bring another crew over and

14:43put them on the next building so we can get ahead. So you can, your plumbers kind of skip,

14:48skip the electricians, start doing the plumbing. Yeah. So, so you can just stay ahead of things

14:53as you can just bring another crew in. And then if you have an extra two foundations sitting there,

14:58you can bring in two framing crews if you want, and you can do things like that. But we make

15:02sure

15:03that they get the parking lot ready right away. Cause it's really hard to lease without a parking

15:07lot. So once the parking lot's in, that's usually when the pre-leasing can start. But then every

15:12month, boom, next one's done. When we get those, everything done, when the construction crew pulls

15:17off, we're usually about 80 to a hundred percent pre-leased. And then within two months, all those

15:24people move in. One other thing that's good about this is the lease up. So when that first building

15:29is done, it's easy to bring people through that unit and show them. And if they want to lease this

15:34building in six months, they can just pick the unit that's going to be ready in six months,

15:38sign the lease where that's really hard. If the building's not done because people don't really

15:42want to pre-lease something that they can't see the carpets not in or so that they're looking at a

15:49finished product and they know exactly what they're going to move into. They just, it's in a different

15:53building over there. So, so it makes the lease up super easy. It relieves the stress for every single

15:59part of the thing, part of the, uh, project. The GC releases stress on them cause they, it's easier

16:06to manage their subs. It's easier to get occupancy permit on 14 units versus 150 units. Um, the bank

16:13likes it better cause they're seeing income come in right away. The asset manager, it's easier for

16:18them, for the investors. They get to see income a lot sooner. The project stabilizes faster. It's just

16:24the lease up is much better for the property manager. There's less stress cause you're only

16:28releasing 14 units at a time versus having the pressure of a hundred units coming online at once.

16:34It's better for the tenants cause they get a little bit better discount on the first rent and it's

16:40actually better. We found it's better to, for the first renters to move in on a construction site

16:45than an empty desolate building. There's a real weird feeling living in a building that you're kind

16:51of the first one that moves in. Yeah. That makes sense. It's better to have people kind of milling

16:55about. Yeah. Yeah. It's very, very creepy to be the one of the first tenants in a big building.

17:02Yeah. Yeah. So make sense. Why, uh, why 12 to 14 units? I'm curious what kind of got you to

17:07that

17:07number. So there's a code requirements under 16 units where it's much better. And then we only

17:15need one stairwell. We do not need an elevator and we found that the fort and then there's more

17:21outside walls so we can fit more units in there. We found that the 14 unit building, we've done it

17:28where we squished them together. Right. So we've done a, and it ends up being two, two 14s turns

17:33into a 25. And then if you go to three of them, it's 36 because of the way everything works

17:39out.

17:40So we found that the 36 units way more expensive because you got these big corridors, the 25 unit,

17:46you can squeeze them together and you can, and you don't connect the hallway. There's no corridor,

17:50but there's two hallways, but you only get 25 units pulling them apart and getting 28 units

17:56on that same footprint, 14 and 14. It's cheaper per unit and it's more efficient overall.

18:03And it's a little bit higher quality product. People, when they show up to the 14 unit, they

18:08almost think it's more of a townhome because it doesn't feel like an apartment because it's

18:13not that big. Once you start putting them together, it feels more apartment-y. And so there's just

18:17this, renters do not rent on logic. They're renting on emotion. Right. Because they're not

18:24making an actual purchase. They're just rent. So I, uh, and on square footage. And so there's

18:29all these emotional reasons why it just works better, but it's, it's just, you're picking

18:33up nickels in this industry. And so there's just a couple more nickels for the 14 unit over

18:37the 25 unit. Yeah, that makes sense. I, you know, I know nothing about, um, well, I don't

18:43know enough about development really to have a good opinion, but I always thought that every

18:49apartment developer should, should give their units, not essentially vaulted ceilings, like

18:56higher ceilings. I don't know how much that actually plays into the, to the cost of the

18:59unit, but it makes such a big impact on the, the feel of the unit when you have a higher

19:05ceiling. Um, that's something, am I like completely off base? Like that increases the cost a lot

19:10or? Yeah, it's very expensive. And it also increases the utilities. Now, if you're doing

19:16a luxury, yes. But so what we found is that we, we do something a little different, but

19:22similar. So we give floor to ceiling windows. Ah, that's our main, that's the main thing

19:27we do different than anyone else. We do floor to ceiling windows and the whole living room

19:31is basically glass. So when you walk into your unit, you walk in through the kitchen

19:36and then you, your sight line goes right to the floor to ceiling glass. That's pretty

19:40much the whole living room wall. And you're like, wow, this is amazing. So it makes it

19:44feel big, but it's only eight foot ceilings. Okay. So we've have apartments that are nine

19:50foot ceilings with shorter windows. We get just as much rent from eight foot ceilings

19:55with floor to ceiling glass. And it's much cheaper to build and it's much cheaper to

20:01maintain, operate. Utilities are cheaper. So I do understand you're saying, yes, that's

20:07great, but the cost is so much. And then also there's a lot of rules about how tall you

20:13can go with your buildings. So you start putting in 10, 12 foot ceilings times three, some three

20:19levels. Yeah. You got four stairs to walk up and you got the height requirements get exceeded

20:25because a lot of times it's only like 34 feet. Oh wow. So even nine foot ceilings sometimes

20:31make your building too tall in certain locations. Yeah. Yeah. Well, there you go. That, that makes,

20:36that makes more, that makes logical sense. Um, we are crushing the time we've already hit the 20

20:41minute mark. So we do have to move on. But before we do move on, um, I did, I do

20:46have to ask about

20:47finding the land because that is where all of this starts. You got to have a place to build.

20:51Um, and it's probably one of the most important pieces for you guys to, to get right. Um, so how,

20:58what is the process that you guys use to find, um, land for development?

21:02Well, location's the most important part. So all we do is we just go into the, whatever area we're

21:07searching for. And we've tried to find the local landowners in the path of progress in the growth

21:12corridors. The best way to do it is to partner with someone that's local that knows everybody

21:19and that liked your product. So then when they like your product, it's easy for them to say,

21:24Hey, you got to meet this guy. I think he'd be awesome for your product. If you close on a

21:28bunch

21:28of land that take you seriously and they'll introduce you to everybody. And then you just build a

21:33relationship with the landowner and you make it work for them. So if they want to bring them on,

21:37the plan and the deal, great. If they want us to buy them out, great. However you want to do

21:41it,

21:41we'll make it work for you. Um, and then, and we just have certain due diligence. And if they don't

21:45want to work with our due diligence, we say, all right, that's fine. You can sell it to someone else.

21:49We'll find someone else. Makes sense. Awesome, man.

21:54Location is the most important thing in a project.

21:57Yeah. In all of real estate, you can't get away from location. You can't, uh, buying in the wrong spot.

22:02I've learned too many times is, is not, you just can't, you can't, you can't fix that. You can't

22:07fix where you build or you can't fix it once you, once you have built. So, um, I got to

22:12move us on

22:13to the quick question round. Are you ready? Yes. All right. Starts with education. It could be any

22:20form, could be a book you've read, movie you've seen, conference you've been to, mentorship program

22:23you've been a part of, anything like that. I just need two recommendations, one for general life

22:28wisdom and then one for real estate. Holy Bible. Um, but if you are, you know, if you're not, if

22:36you

22:36already read the Bible, I would say, uh, meditations by Marcus Aurelius was a really good book for me to

22:42understand that everything is my fault or your fault and you can, you can kind of control whatever

22:48you want. Nice. That is reality. That is my favorite recommendation. Is it really? Yeah. I

22:55absolutely love meditations. I have, I have like tons of copies. That's the only book that I ever

22:59pass out. Um, yeah, that's a really good one. Yeah. And I, that's the first real book I read

23:04about philosophy and that intrigued me to, that's what actually led me to start reading the Bible

23:08all the time. Um, and then I would say, uh, you need to get into, I don't know, any, just

23:16start going

23:17to the conferences, networking events or whatever to, if you don't understand, no one's ever going to

23:24mentor you didn't give you all the knowledge. People say, Oh, I can be your mentor. It's just

23:27not really true. You need to go and find the knowledge and then bounce it off of a mentor you

23:33have. So you need to go to conferences and then you'll eventually find whatever conference you

23:37think is the best, but there's so many out there and they're always, you know, growing and dying and

23:43stuff. So you just have to, you got to network, you got to research your topic. And so just get

23:48out

23:49there and start going to these events. There's so much knowledge in the events and then they'll steer

23:52you to a book, to a thing, to whatever you need to do. Um, do you have a specific event

23:59that you

23:59could recommend people go, people start with? Um, not really. Cause they've just, I don't really go

24:06to events anymore. Cause I kind of understand all the knowledge now. And I'm, I just, I'm more of the,

24:11I go only go if I like speak at them and stuff because I've been to so many, I've just

24:17been to so

24:18many and I think that they all ebb and flow. I don't really know if a good one, the one

24:23that I

24:24went to was the Jake and Gino conference. That's what got me into it. But that one, they're done

24:28now. Oh really? I've had, uh, I've had Gino on a few times on the podcast and I didn't know

24:33they

24:33stopped their, um, their conference. Yeah. That's what I was told anyways, that they don't,

24:38they don't do it anymore. Uh, I mean, there's the best ever conference. There's so many of them.

24:42I don't really, I don't go to them anymore, so I don't know which one is which, but they're kind

24:46of

24:46all the same in my opinion. There's also the national multifamily conference, I think in

24:52Houston that they do every year. I think that's a good one. Okay. MHIC. I don't know. Okay.

24:58Yeah. No, um, those are all, I mean, uh, and if you guys do need recordation, it's just go on,

25:04you know, put it in me and AI, put it in, um, in whatever you need. Oops. Uh, we have

25:09somebody

25:09just stopping on max. I got to kick you off, buddy. I don't know. Oh, sorry. Sorry about

25:16that guys. Oh, it's good to meet max. All right. Uh, moving us on to the next question. This is

25:26for

25:26your younger self. If you can go back to the, uh, Dustin who is just getting started, I think you

25:31said 2009 or something like that. Um, go back to him, look him in the eye, give him one piece

25:37of

25:37advice moving forward. Um, learn that there's been scale and growth. So instead of just growing and

25:44buying every single deal, you can buy scale, meaning find what you really love to do and

25:51only concentrate on that and learn how to do that really good. And it's fine if you switch it, right?

25:57But when you think, when you figure out what you want to do, go deep into it and then progress

26:02from

26:02there. Yeah. But don't do every single thing thinking this is a deal. That's a deal. This is a

26:07deal. This is a deal. Yeah. Shiny object syndrome is, it is a hard one to beat, but it, you

26:14definitely

26:14got to beat it. Cause, uh, the more you focus in on an asset, on a strategy, the better you

26:19get at

26:19that strategy. I learned that the hard way I've bought so many different types of things. And,

26:24uh, but the more I focus in just on mobile home RV, the better I get at mobile home RV.

26:29Um,

26:29and that goes for every single strategy that you can apply. So, um, and that, that sentiment has been

26:34echoed across so many episodes. So if you guys take one thing, it is that choose one strategy,

26:39one asset class and go deep. Switch tasking is a killer. Yeah, absolutely. Next question

26:46is about the U S it's a big place. There is a lot of opportunity out there. Give me the

26:51single Metro you're most excited about investing in today. Uh, Rochester, Minnesota. Like

26:58wow. First Minnesota recommendation we've ever had on the podcast. That's because that's also

27:03because Southeast Minnesota has been, they have all this bad publicity because of Minneapolis.

27:08And there's so much capital there and there's not very much people. There's not that many people

27:14building, but there's a lot of population and a lot of capital. It's super clean, nice, friendly,

27:19and it's not what the news makes it out to be. And Mayo clinic in specifically in Rochester is doing

27:26like a $7 billion expansion. Oh wow. And they have the best housing study I've ever seen.

27:32There you go. So, so the first, uh, we'll chalk that one up to, uh, to Minnesota. First Minnesota,

27:38one, we usually get Texas. Uh, we get Florida, we get Georgia, we get South Carolina all the time.

27:43But, um, I love hearing new States that people are excited to invest in. Um, next question is

27:48about finding deals. It all starts with getting in contact with the seller and pending that purchase

27:53agreement. So what is your favorite way to generate leads and find new deals?

27:59Um, geez, favorite way to find new leads on land deals. I've talked about what you're doing all the

28:06time and get a really good, get a really good intro. I found that it's really hard to generate

28:14land by leads. If you get an introduction from somebody, it's so much more powerful than if you

28:22are reaching out cold to people. Um, so I don't know. My favorite way is to go and find the

28:29local

28:30expert and get him to introduce you to everyone. He knows it's so much more powerful that you're

28:36reaching out. Yeah. Makes sense. All right. Next question is about lessons learned. Not every deal

28:42we get into goes the way we expect it. In fact, pretty much every time something's going to go wrong

28:47and that's when we get to learn a lesson. So what was the deal that went a little bit sideways

28:51for

28:51you? And then what was the lesson you pulled from it? Well, this is a pretty simple one, but we,

28:58I lost my personal money and my dad's money on a farmland deal. The lesson was location, location,

29:05location. That piece of farmland was too far away from all the wealthy farmers and it didn't get quite

29:11as much rain as a few miles to the, to the east. And it was worth a lot less. And

29:19oh, it was, it was a

29:21down market too. So nobody, nobody wanted to buy it. Had we been able to hold it for a little

29:25longer,

29:25we probably would have been fine, but location was terrible. If it was just a few miles to the east,

29:30it would have sold, but it wasn't. Is this for, was this for development or for actual use as farmland?

29:35So this was farmland. It's too far out to be development, but farmland is, is great if you

29:41can buy it and flip it. But if you don't buy in the right location, there's no buyers. This is

29:47a huge

29:47chunk of land, thousands of acres. And, uh, we did a risky deal. That was a contract for Dave. We

29:53knew

29:53it was risky and that one flopped, but I didn't have any investors. It was just me and my dad.

29:59And yeah,

29:59we, we, we lost, we lost 300 K on that deal, but it was strictly location based.

30:05Yeah. And so the lesson there is location. You can talk about location. Location is by far the

30:13most important thing. You're way better to overpay for a great location and it's easy to buy is hard

30:19to sell and hard to buy is easy to sell. Yep. A hundred percent. All right. That leads us to

30:25the

30:25very last question. This is for the listeners. You've given us a lot to think about.

30:29I'm sure people want to reach out, get in contact with you. Is it two parter? Where can they find

30:33you? And then what can they expect when they reach out? You can find me at mailbox money,

30:38re.com. That's our website. You can get everything there. What to expect is that we will, uh, educate

30:46you on multifamily and why we do what we do. And hopefully after that, you understand why our

30:51products actually different than most departments out there. Perfect. I'll put that link in the show

30:58notes. So if you guys want to reach out, all you got to do is click the little more in

31:01the

31:01description. It'll pull down that full description and in there you can find Dustin's links.

31:07All right, man, that wraps it up. Thank you very much for hopping on the show.

31:11Thanks a lot, Gabe.

31:13Absolutely. Everybody is with us today. Thank you guys for showing up. You are the reason we do this.

31:18So if you guys have any questions, reach out to me, Gabe with the real estate investing club.com.

31:22If you guys want to support the show, just leave us a comment, review, anything like that. Other

31:26than that, I hope you guys have a great week. Keep rocking real estate. And I look forward to

31:31seeing you on the next episode.

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