Shannon Robnett 0:00
They realize that they don’t want to hold that for five to seven years, because it marginally improves from there. But the main value like you said before we started the show, the original value add was the ground up development, putting the sticks and stones together, creating the value by putting the tenant in and creating that cash flow. And liquidating at that point as soon as you can, because the sooner you can get your your 25% return, the better that looks because if it takes you eight months to do it, versus 12 months to do it versus 16 months to do it, you’re still getting a 25% return but your IRR or your return for the year is substantially affected by the duration of time.
Announcer 0:40
Welcome to CRE PN Radio for influential commercial real estate professionals who work with investors buyers and sellers of commercial real estate coast to coast whether you’re an investor broker, lender, property manager, attorney or accountant We are here to learn from the experts.
J Darrin Gross 0:52
Welcome to Commercial Real Estate Pro Networks. CRE PN Radio. Thanks for joining us. My name is J Darrin Gross. This is the podcast focused on commercial real estate investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio.
Today my guest is Shannon Robnett. And for the last 40 years, he lived in Boise, Idaho. He’s been building and developing there for over 25 years. And two years ago, he moved to Puerto Rico for tax purposes, but still has three companies in Boise. And in just a minute, we’re going to speak with Shannon about the benefits of new multifamily ground up construction.
But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple of things you can do. You can like, share and subscribe. And as always, we would encourage you to leave a comment. We’d love to hear from our listeners. Also, if you’d like to see how handsome our guests are, be sure to check out our YouTube channel. You can find us on youtube at Commercial Real Estate Pro Network. And while you’re there, please subscribe. With that I want to welcome my guest, Shannon, welcome to CRE PN Radio.
Shannon Robnett 2:29
Thanks, Darrin Glad to be here.
J Darrin Gross 2:32
Well, I’m so glad you could join us today. And I’m looking forward to our conversation. Before we get started, if you could share with the listeners a little bit about your background.
Sure. So there and I grew up in a construction and development family my my dad was a general contractor, my mom was a third generation realtor, I had my license for a period of time and I’ve got a 24 year old son who was in real estate as well. And that’s just kind of how I grew up. I just always, you know, I looked at it growing up when I was always working with my dad and working on stuff and and cleaning up job sites as I didn’t really see it as an internship then, but it really turned out to be the backbone of what my experience has been from there. And I just saw, you know, I was I was working on a job site for my dad and I got to know the crane operator. And he was complaining about he didn’t have anywhere to put his stuff and I got to know the little lady next door and she was looking to sell her place and go to a nursing home and all of a sudden the light went on. And I didn’t take my last 500 bucks. Darrin It was my only 500 bucks. I mean, I was you know, I was nuvo broke man, I just decided I was moving out of my parents house. I had no money. I got that property under contract contingent on getting it rezone with the city. I did just that. And I sold it to the crane operator. And I made about double what I was making for my dad working that whole year on a $500 investment. And from then I had no choice I had to be hooked, right? I mean, I was in.
Yeah. No, that’s awesome. And like said kind of a unique kind of a lifetime internship. You know, you get the both ends from your parents and and being around. That’s awesome. So let’s talk a little bit about what you’re doing. Now. You You are now in Puerto Rico. You were in Boise, and you’ve still got some companies in Boise. What are you doing in Boise?
Yeah, so Puerto Rico is they’ve got a great program here is called act 2022. That, that if you’re spending 183 days outside of the continental United States and or in Puerto Rico, you create a residency here that changes your tax status. But I didn’t want to give up my companies in Idaho because after 25 years of building and developing there, I was just getting going things were just starting to get going very well. But as we’ve all figured out with COVID, you don’t actually have to be there every day all day long to get the same things going if you’ve got great people in place. So I was doing zoom calls two years ago, and everybody thought I was just this really cutting edge contractor, right? I mean, that’s almost like the biggest oxymoron out there, cutting edge contractor, right, because we were doing zoom calls. And we were this and we were that, and I could only meet on certain times of the week when I was back in Idaho. But the reality was, I just kept everything going. And I have people that have been with me that are great people that can handle things day to day. And I’m in the development phase of things. So as a development company, we’re building our own product, ground up, whether that’s multifamily or industrial. And then we kick it over to our own property management company that doesn’t really act like a property management company, it acts more like an asset management company who’s more concerned about your noi, because they know what the noi does, when you do it for development proper for investment property, commercial real estate, functions, everything off of a cap rate. And without that without being really cognizant of your noi, you’re likely to get yourself in trouble a little bit by just having a property management company, that’s just managing the tenants.
No, I couldn’t agree more if the property manager and I think some of the best property managers I’ve I’ve gotten to know, or, you know, understand that their philosophy is, they try and keep the property ready for you to sell at any time. And it’s, you know, both physical, but also on all the financial stuff, and that, you know, collecting rent and all that, but they recognize that the value is in that noi. And so that’s, that’s, that’s well said,
Shannon Robnett 6:50
Yeah, you know, something as simple as just turnover, you know, managing your turnover better. You know, trying, I mean, when you’re looking at a property management company, a lot of times they’re concerned with the fees, because they get a higher fee for a new tenant. So they’re going to take the 15 day vacancy, you’re going to clean it, you’re not going to you know, your security deposit is not going to cover, maybe you’ve got to replace carpet in between tenants, and those kind of things cost money, and they affect the noi in a huge way.
J Darrin Gross 7:16
Yeah, no, exactly. So So let’s talk a little bit about your approach. You know, I think a lot of the people I’ve talked to, or had the opportunity to talk to on this podcast have been multifamily investors or in some way shape, whether they’re investing directly themselves as a passive investor, or they’re syndicating. And I think, you know, by and large, a lot of the, the energy is to get in and get out to find something that’s, you know, has room in it, whether it’s, it’s old and tired, maybe it’s poorly managed, but do some sort of a value add. And then upon the, the increase in the value, liquidate and pay everybody and then move on to the next one. The fact that you’re starting from new construction, is your long term objective. Is it more of a, a build and hold? Are you are you building and selling the finished product?
Well, you know, Darrin, I, I built my first building to own for myself at 28 years old. And I didn’t know anything about cap rates at the time. And so once I’d filled the building, I had somebody come and offer me 25%, more than it cost me to build it. For the building with the tenants in there. I look back on that building that I sold back in 2001. And three of the six tenants are still there, right? I mean, you got a guy that rebuilds fuel injectors, you got to gelato ice cream guy, I mean, you know, just salt of the earth, people that have businesses to run. And so I’ve looked at that. And I’ve said, Well, what what kind of investor Are you really encountering, right? And I think that you’re finding two basic kinds of investors, there’s those that want to hold on to the asset because they want the cash flow. And there’s those that want the growth on their money, and they’re looking for the fastest way to get there. And I think what happens a lot of times is we try to put those two together in the same syndication or the same partnership, and you’re trying to accomplish two different objectives. So we have a couple of different strategies that we use with our ground up that fit more the investor. So if you’re looking for, for growth and strictly growth, we have that if you’re looking for some value add, where you want to get in on a deal. We’re going to build a building, we’re going to build some multifamily, we’re going to stabilize it, we’re going to do a refinance, we’re going to hold on to it. We can do that, too. We have that strategy. But what we find that is a lot of times when people really come down to it and they realize that they can make between 25 and 35% with our growth strategy where we build it and we liquidate it. They Realize that they don’t want to hold that for five to seven years, because it marginally improves from there. But the the main value, like you said, before we started the show, the original value add was the ground up development, putting the sticks and stones together, creating the value by putting the tenant in and creating that cash flow. And liquidating at that point as soon as you can, because the sooner you can get your your 25% return, the better that looks. Because if it takes you eight months to do it, versus 12 months to do it versus 16 months to do it, you’re still getting a 25% return, but your IRR or your return for the year is substantially affected by the duration of time.
No, that is it’s so true. I know. There’s a property I’ve got. And I was looking at it and thinking like, wow, we’ve done so well, you know, if you divide by the hold time, that’s pretty impressive return, you know, and then if you start thinking like, well, what if we hold it another year? Or, you know, do this and the returns are marginal? I mean, they they really, you know, it’s kind of a fast hit. And, you know, turn and turn is, I guess the optimal, I guess, get that money back working into another opportunity kind of thing. Yeah. And, but, but I think the, like you said there’s essentially two classes of investors, those that are looking for a steady return versus those who are looking for an equity boost. And let me ask you, because you’ve been in Puerto Rico, I mean, most of the the the people I know that are doing the you know, like the syndication with the the kind of the quick value add or return once you distribute that money in because you’re you’re in a syndication, my understanding is the most are unable to, to take advantage of a 1031. It’s basically it’s, it’s similar to like a stock return from a standpoint of you by yourself, you know, you pay your tax, you move on kind of a thing.
Are you being set up in Puerto Rico? Are you subject to those taxes? Or is that?
Well, the reality is that that the IRS says that the where the money is made is where it’s subject to be taxed. So, but but let’s go back to your question, though. I mean, we’ve all heard the adage that the money is made on the buy, you don’t make money when you sell you make money when you buy. And that couldn’t be truer in what we do. Because it’s not necessarily when you buy, but how you buy. So if you know that you’re going to be in and out of this deal. And it’s going to come to you as ordinary income. What’s the safest way to do that without paying taxes, we’ll use a self directed IRA, right? Whether it’s whether it’s a traditional or non, you know, non conforming IRA, use a self directed IRA, so that your returns go straight back into your IRA, and you’re not subject to the tax penalties that you would face. If you made that 35% and then turn around had to pay Uncle Sam. Right. The other reality is, I mean, if all you’re doing is holding on to something, for a period of time to avoid the tax today, the tax bill is going to come due at some point. Right? So I mean, we all get caught up in the fact that no, I got to do it, I got to do a 1031. But Darrin, you know, you know how to do basic math, if you’re getting a 35% return this year. And next year, you’re getting a six cap. That’s a 6% return, right? You average those two together, you just torpedoed your return? Was it really worth that to not pay Uncle Sam a little bit of money or not think about some advanced tax strategies before you purchase.
Right? No, I think what I what I’ve kind of resigned myself to as far as a the conversation in the line, I think it’s a hold time. If you’re if you’re planning on holding, if you’ve held something for a long time, and you’ve depreciated it down to almost nothing, your motivation to do an exchange is probably greater than if you’ve got something that you’ve got a you know, pile of cash you want to put to work and it’s not it’s not going to encumbered by any kind of real estate or subject any kind of a game you I mean you’re looking to put it to work to me it makes more sense to kind of keep that work and faster. But it’s I think where I I’ve gotten in this a lot of self analysis kind of thing is recognizing that that you know a lot of the properties I’ve got I’ve had them for a long time and it’s either you know, I would need something just you know, I guess I need to sit down really go through it. But I guess I’ve just felt like I’ve gone past that the line of demarcation of easy and easy out based on the whole time the depreciation schedules.
Well then there’s also the the opportunity zone stuff, right. I mean, there’s some great opportunity zone opportunity toonies that we’re dealing with in an Idaho that are brand new product in in a great area, whether that’s multifamily whether that’s industrial, but you know, opportunity’s own provides for that you do pay the tax, but you pay the tax in six years from today.
Right. And if you’re going after you get the in the game, you get the game free.
Yeah, right. Yeah, hold it for 10 years. And so we’re doing a couple of those projects yet this year, where you’re coming into the opportunity zone, you’re getting about a 14 to 16% cash on cash, you get that for about six years that pays about 65 or 70% of the taxes you would owe. We’re also doing a cash out refi at the end of year one was stabilization. So you’re getting returned of most of your money anyway. But just like anything, the IRS believes that when you bought $100,000 of a syndication, and you refinanced it, it doesn’t matter to the IRS, right. It’s just like refinancing something that you’ve depreciated out, they don’t care how far you’ve depreciated it, they’re still looking at it, that you have $100,000 investment in there. So you’re now deferring that, into that, that program into the opportunity zone. And then when you’re extracting your funds at the end of that 10 year period, you’ve essentially washed them you paid you paid for your sins of depreciation. Right, you’ve you’ve done that, and you’re seven, and now you’re you’re off to capture your gains, again, without taxes.
No, it makes a lot of sense. And again, utilizing one of those unique strategy structures available right now. The What is it the opportunity zone opportunity zones? qualified opportunity zones? Yeah.
So, well, let me ask you, so your your primary territory building? Is it Boise? Is that where you?
Yeah, 40 years there. I know the valley? Well, if you look at the last five years in Idaho, last seven years in Idaho, we’ve hit about every top 10 list there is. So I’ve got a really target rich environment, I’ve got a portfolio of about 1000 doors and about 150,000 square feet of industrial to build in the next three years, I really don’t have to look outside of my immediate area. Plus, I gotta admit there, and I’m not that smart. I can’t learn the demographics of Tallahassee, meanwhile, trying to figure out what’s going on in Kansas City, look at another deal over in Santa Monica, California, it’s just beyond my capacity to understand those markets. So I can do what I do, right where I’m at, I can get fantastic returns for myself and my investors. And we get to stay in an environment that I work in and live in. I know I’ve got subcontractor relationships that are two decades old. I mean, I’ve got everything I need. And it puts me in a position where I’m not trying to learn a new market and moving in other areas.
But I think you touched on there just having the I mean, the relationships. I mean, knowing knowing the area and having the people you can count on to get the job done. Right. That’s, that’s huge. That’s great. So and you said you, you have 1000 doors plus industrial space?
Shannon Robnett 18:08
Yeah.
J Darrin Gross 18:09
Okay. And are those a long term kind of portfolio? Or is that more?
Like I said, we’ve got some that’s opportunities on that we’re holding for a minimum of 10 years, we’ve got some other stuff that we’re going to hold for about five, we’ve got some other stuff that we’re building and selling immediately creating a liquidity about on that. So we’ve got just about something for everybody. It just really depends on you know, but then again, back to your statement, the original value add was new construction. So if we’ve made the majority of the money in the first 12 months, why would we continue to hang on to it? Right, right. I mean, it’s not like we’re in New Jersey, where there’s not much ground left to build new. You know, we’re not we’re not like a lot of value, add syndicators that are stuck, looking for the next deal that fits their parameters because I can create a brand new deal tomorrow, with the property next door or the property down the street or the property three blocks over five miles away. We can just create another one.
And what are the current growth? estimates for Boise? Is it I mean, everything I’ve heard, it’s like you said it’s red hot, but it’s a lot of industry coming in there.
Yeah, we’ve got I mean, we’re seeing a lot of jobs move in there. We’re seeing a lot of people move in for quality of life. We’re seeing a huge retirement community move in. So we’re really seeing across the gamut. People looking for an affordable, safe environment to live and work in. And so you know, I just saw some stats from from a realtor friend of mine that came across today that showed that we are anywhere from 15 to 25%. appreciation in home prices so far this year across the valley, we’ve seen an 11% appreciation In a number of units closed, and we’ve seen a 73% reduction in inventory. So we have I mean, I don’t know how else to qualify it red hot. But that’s pretty red high, you know, in one of the one of the biggest worldwide crisis, health crisis, we’re having people flood to our area, because we check a lot of those boxes. I mean, you know, listen, San Francisco is a great place to live. But being in lockdown with 9 million of your closest friends, isn’t everybody’s dream boat.
Right, right. Now, I think, you know, the lot of the I don’t say rural, but more, where there’s room to operate, I think it’d be definitely, definitely a lot more appealing. I know of people that I I, and I’m familiar with that have like even in New York, New York City have sought out upstate, you know, more resort slash rural kind of areas to have a kind of vacation home or, or even, you know, just even with all of the the cost of living, and a lot of the employers have basically realized the cost savings by having their workers work remote. They’ve kind of given the employees the green light to relocate to wherever they want. And a lot of us are looking for a lower cost of living. And I would think that Boise would certainly be a little bit more cost effective than a cost efficient than a coastal. Yeah, well,
you know, even Darrin, look at the conversation we’re having, right, we’re you you would be really hard pressed to be farther apart in the United States, other than you being in Alaska, to have this conversation yet. We’re talking like we’re right next door to each other. And that wasn’t an wasn’t available five years ago, right. So the whole concept of having to show up for work, I think, is, is a thing of the past, and you’re going to see that in multifamily, you’re going to see, you know, we’re already looking at changing some of our floor plans to accommodate work from home situations. You know, in our complexes, we’ve already done that, to a large degree in our clubhouse settings. But we’re really seeing where as a as a nation, we’re able to unplug. I mean, if you work in at a tire shop, or you’re working at a lumber mill, you’re working in a restaurant, you’re you’re not going to be able to call it in, right but but by and large, I mean, you’re an insurance, you can do most of what you’re doing right here in your living room. And, and we can do that. So as we see that happen, I think you’re gonna see a lot of the benefit of being in Silicon Valley fate, a lot of benefit of being in New York in the financial industry, that’s going to fade, you’re going to be able to do the same thing. from Kansas, from Dallas, Texas, from Boise, Idaho.
Yeah, no, I think that a lot of those metro areas, as far as the commercial real estate, there’s going to be a pretty big reset on valuations in that and, and, you know, that’s, that’s kind of the cycle of things. So, right, hope you got in on the right side and got out before, you know, or you’re, you’re prepared to ride it through, I mean, the cycle lap again, I mean, these these have their way. So let’s talk a little bit about just the the strategies that you you know, you look for when when, you know, when you’re working with prospective investors, and you mentioned the IRA accounts, is that primarily the the source of the capital that you you found to be most available and willing to go forward invest with you or,
you know, in our growth scenarios, for sure. In our opportunity zones, we got people that are looking at it going, you know, what, who knows what’s going to happen when this election is finally over? I mean, he, we don’t even know, we don’t, it’s not even over at this point. But But you know, if the 1031 does a go away, is now the time to maybe cash in on some of that. I mean, capital gains is capital gains, right. But there’s a lot of people that did very well in the stock market that are selling that out, they’re moving into a capital gains situation, and they’re looking at it going, Hey, if I cash out now, I can put that capital gains into an opportunity zone. And I can have that benefit of being able to defer that out and not pay the taxes on that for seven years. So for us, we’re using our biggest thing there is to sit down with people that want to be an investor, okay? And to make sure that what they want to do, we’re using the most tax advantaged situation and and scenario to do that so that we don’t wind up in a situation where, hey, we made you 30% returned. But Uncle Sam swinging him for his 37% of that, we want to make sure that we would, we’re doing things right, we’re doing things in a in a fantastic version of the slimmest tax consequences we can do for you to make sure that you’re getting your needs met. And you’re, and you’re making your return the best that can be in an after tax calculation. So if you’ve got an IRA sitting around doing nothing, it’s a Roth from your job from five years ago, and it’s just sitting there, you don’t even know what to do, it’s in a mutual fund, let’s convert that to a self directed. If you’re in a situation where you can put funds away in a non qualified IRA, let’s do that. And let’s use those funds because at least they went in tax paid. And now we’re going to invest them in real estate, it’s going to grow, you’re going to be tax deferred to when you come out of real estate, but you’re growing it without having to cut off a big chunk of it for Uncle Sam every time. And so I think there it’s more about sitting down with people and finding out what they want to do and what avenues and funds they have available. We got people that we use their whole life policies, borrow, borrow against those to put into real estate deals, right. So we’re able to use just about any source of funds that benefit our client, the best that we can figure out how to do to create the scenario that’s optimal for them.
Yeah. So let me ask you this for your development. Schedule. You’ve mentioned a couple different timeframes. 912 18 months? Are you are you doing traditional financing and just raising the capital for the the down payment? Are you doing? are you raising for the entire project? or How are you? How are you structuring your capital?
Shannon Robnett 26:44
Yeah, well, you know, as you know, the bank is a great partner, but they don’t like to cover all of it, right? I mean, if you can pay, if you can pay a 1% loan origination fee, and six and a half percent interest on a construction loan, that’s going to be much cheaper than involving 100% equity. So what we do in a typical situation, let’s talk about this 36 units that were midway through in Nampa, Idaho, the total cost of that was $5.3 million, the appraisal from December of 19 came in at $6.3 million, I went to the bank, the bank said we’ll loan you $3.7 million, so you got to come up with $1.8 million to do this deal. So I went out to LPs, I raised a million and a half bucks. And for that I gave them 35% of the profits. So I was bringing 250,000 of my own money to the table, we are building the project, we’ve already received several unsolicited offers on the project at closer to 7 million than six. And we will be able to liquidate that thing. And out of that the investors will will reap the return. But we use leverage, right we use 60% from the bank, we used the rest of it from the LPS in myself, just depends on what the situation was. But typically on a construction deal, you’re getting between 60 and 65% loan to cost on your original construction. So you have to bring in a little bit more liquidity from your LPs on the upside. But I don’t think it’s really any more than if you bought the apartment complex with an 85% loan to value and then put in another 20%. And in your value add you know, in your cap x this gets it gets dispersed, changing it from the Oasis to the three palms or you know, something like that.
J Darrin Gross 27:52
Right? No new tile and grout? Yeah, um, no so but but I think the the, you know, one of the things that that is always recognized if you’re at the front end of just looking at an investment opportunity in your in your thinking about the value add because the value add strategy makes complete sentence, you know, you can get something that undervalued, you can put a little bit in and based on you know, the metrics of the cap rate, you can increase the value exponentially and, you know, read through words on sale. But what would that doesn’t account for I mean, just on the philosophy is a lot of times a lot of the value and strategies for more about the high polished finishes that you can, you know, you can charge more for they don’t always account for the behind the walls and and, you know, the things that are supposed to work the systems that haven’t been touched and nobody accounted for. And oh, by the way, you’ve got some electrical issues because the you know, the boxes are outdated or the waistline is, you know, crumbling or backing up or just all those systems things were new construction. There’s none of that. I mean, it’s new. It’s exactly what what the the buyer that’s coming after you want.
Yeah, and I think that reflects in our projections, right. So when you’re doing a value add anything that’s over 15 years old, you’re probably estimating somewhere between 45 and 50% expense, right? In New construction, we’re somewhere between 31 and 36%. Right? We’re working, we’re putting away $250 per door a year. Because we know that 10 years from now, we may have Heating and Air issues. But we don’t have to worry about a tree growing through the sewer line, we don’t have to worry about, you know, that pecks pipe that they use a lot of in the 90s, that likes to blow apart in the middle of the night, we don’t need to worry about the mold is growing behind the sheetrock that we never knew about. Those are the things that we don’t have to deal with. And so the reality is, when you’re looking at that, that second group that just want the cash on cash, and they’re willing to take a little bit lower return, if they know that there are no moving parts. Again, that’s where brand new becomes their, their their drug of choice, because they’re able to look at and go, Oh, great, I got all the high polished finishes, I’ve got the brand new floor plans, I’ve got the granite countertops, I’ve got everything I wanted, plus, I know what’s new, so we’re not going to have major expenses that are going to interfere with my cash flow in the next five years.
Yeah, no, and even even with that, I mean, you know, worst case scenario, for whatever reason the market got saturated, or there was a, it wasn’t as appealing of a sale opportunity in your hand to hold it. It’s not your repairs aren’t going to be unexpected, or, you know, eat you up kind of thing, which is, I think the flip side of the whole ground by an old you’re very right there. So well, you know, you’ve certainly made the case for new construction. And, you know, the the self directed IRA, if you’re if you’re going into that kind of investment as an LP and you’ve got debt on it, is, is there any kind of penalty for for using the unrelated debt, finance income, or,
let’s see, since you’re not, you’re never part of the debt solution as an LP, you’re not signing for any of the debt, it’s never your concern, you’re strictly putting in your hundred thousand a year 50,000 or, you know, whatever it is you’re putting in, that’s your only contribution to it. And for that you’re exchanging that for shares that are of the full value of that, that initial deposit, so that none of that plays in really. And so it’s just a straight exchange.
Gotcha. Gotcha. All right. And as far as your your projects going, in Boise, you’ve got a bunch lined up, or what’s your 2020 got?
Like, yeah, we’ve got 191 units that will start before the end of the year, we’ve got about 40,000 square feet of industrial, they’ll start before the end of the year. And then next year, 2021 looks just as cool as this year, we’ve got about 400 doors to build on about 100,000 square feet of industrial to take care of in 2021. So we’ve got a pretty full calendar already. And we haven’t even got there yet.
That’s awesome. And with that, what kind of a lead time do you anticipate for a project like that, just to know that you’ve got, you know, your 2021 calendar lined up? How long have you been working on those? Well, the
reality is Darrin because I am not seller dependent, right. I mean, I I am to some degree, but I’m buying the land. So some of my projects, take some entitlement work. So there’s six to nine months in entitlement work. So I have a longer lead time than most syndicators have because this deal hit the market on Wednesday, we’ve got to get our offer in you know, then there’s a highest and best we go to the second round two weeks, we know if we got the deal done. We got to close in 60 days. You know, all that craziness that happens with normal syndication, none of that happens with us. Right. So we had a we had a building that went under contract last week that left us with a little bit more capital than we thought so we went out we bought on the lot. We’re going to do another syndication other 25,000 square feet of industrial warehouse that will come online before the end of the year. And it’s that simple. You know, so we’re we’re more of a we’re not at the mercy of what’s going on out there in what’s available for sale that’s already built. So we’re, we’re not as Herky jerky as what a lot of people have to deal with where they’re making you know, $100,000 commitments from their from their LPs in a very short period of time. I hope you like it if you don’t, you know, we haven’t seen anything in six months. We don’t know when we’ll see another deal. You know, buy something of mine. I’ll put another deal together and another two weeks. You know, it’s pretty simple where I’m at. Love it.
Curious, you mentioned two projects. You said the you got one currently 36 stores and you’ve got another one 191 and then sounds like 400 doors in 2021. Is there a like a sweet spot As far as the size of project that you, you found that you really like? yeah, we’ll probably we’ll probably do the 3640 unit, you know, infill projects, and just build them out, stabilize them and sell those off.
Gotcha. Hey, Shannon, if we could, I’d like to shift gears here for a second. As I mentioned, before, we started by day I’m an insurance broker. And I work with my clients to assess risk, and determine what to do with the risk. And there’s three strategies we typically work on and and try out. And the first is we ask, can we avoid the risk? If that’s not an option, we look to see if we can minimize the risk. And when we cannot avoid or minimize the risk, we like to transfer the risk. That’s what an insurance policy is, it’s a insurance or excuse me, a risk transfer vehicle. And as such, I like to ask my guests if they can look at their own situation, whether it be their their investments, their clients, investors, tenants, the market, etc. and identify what you consider to be the biggest risk. And for clarity, I just want to make sure we understand that I’m not necessarily looking for an insurance related answer. But if you’re willing, I’d like to ask you, Shannon, Robnett, what is the biggest risk?
I think in my business, the biggest risk is having the wrong people in the right places. You know, you talk about risk transfer. You know, I’ve always found that when I, when I’m looking for a property management solution, I need something that’s customized to me that that is looking after my property like it’s an asset. And so I could do that. And I could make that happen. And I could, I could become a pseudo property manager. But why not go find the best property manager in the valley that I’ve always admired and wanted to hire? And why don’t I hire him and make him an offer, he can’t refuse to make my mind machine run smoothly, and take that risk out of it. Now, I know that I have somebody that’s tied to the bottom line that’s financially responsible to me, for the well management of our assets, that’s doing it in a phenomenal way. And I’ve done that in in several key places in my business. And I think that when you when you aren’t taking care of your people, when you’re not looking at the personnel you have, I think you’re taking some pretty big risks. And so having great people that are in it, to win it that are part of your team, I think is the biggest way to mitigate that risk. And the biggest way to ensure that you’re going to be successful is because you’re partnered with the right people, you’re working with the right people and you’ve hired the right people.
No, that’s well said. The human capital, it’s it’s part of the equation that if you’re not paying attention to, you’re going to spend, I mean, you can spend a lot of time training and retraining and you know, blaming others and all that. But if you have the right people that actually everything seems to work pretty well.
That’s good. And you know what’s funny, most people that lose people lose good people, they don’t lose them over money. There’s this there’s another line underlying issue that’s in there, that if you’re paying attention to your people in your in your and you’re rewarding them in the way that they’re looking to be rewarded. You’re always going to find that you’re able to keep good health because not everybody’s looking for the bottom line being the money. Yeah,
so true. Shannon, Where can the listeners go if they’d like to learn more or connect with you?
Sure, Darrin so the easiest place to find us is at Shannon Robnett Industries.com we’ve got a great website there that’ll hook you up with all of our different subsidiaries. You can find me all over Facebook at Shannon Robnett Instagram. Shannon Robnett. just about anywhere. It’s it’s just my first name. So if you’re going to Shannon Robnett.com. You’re going to find it Shannon Robnett Industries will also take you directly there.
Awesome. Well, Shannon, I
can’t say thanks enough for taking the time to talk today. I’ve been
Shannon Robnett 39:37
Darrin, I appreciate the opportunity. I hope your listeners and you got something out of it.
J Darrin Gross 39:41
Totally. I’ve enjoyed it. And I’ve learned a lot and hope we can do it again soon.
Shannon Robnett 39:47
Look forward to it Darrin.
J Darrin Gross 39:49
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