Host: Trey Stone
Co-Host: Dan Garrison
We are experiencing a buyer’s market for the first time in a decade due to Coronavirus. Trey Stone is investing again, specifically, in multi-family housing investments. In this episode, Trey introduces us to long-time friend and colleague, Dan Garrison.
Dan and Trey have known each other since 2005. Dan has been investing in commercial real estate for a long time. Dan worked at SCI based in Houston for 40 years. SCI invests in funeral homes, cemeteries, crematoriums and related business. For 3 years, Dan had international oversight in 20 countries as well as oversight in 42 states.
When Dan was looking to exit corporate America and he explored his options, he realized he wanted a passive stream of income and real estate was his best option. He got involved in self-storage and continued on in real-estate by investing into multi-family real estate as well.
Dan’s Top Values that guide his decisions: Family, Faith, Charity, & Integrity
“If you always tell the truth, you don’t have to have a good memory” Dan Garrison
You don’t have to be focused solely on money to see the benefit that money can have in things that actually are more important to you because it gives you freedom and it gives you resources to focus on things that matter. If social causes are more important to you than making money, it’s admirable but you could use the resources from building wealth to help those social causes.
Dan often leverages his financial resources to benefit others. “To whom much is given, much is required.”- Scripture Dan lives by and teaches his kids.
One organization Dan works with is Career Gear Houston. They take clothing donations, sort them properly, and style them for those in need of a second chance. 50% are veterans and about 20% are in need of a second chance from drug addiction, homelessness, etc . They go through interview coaching and styling to assist with securing a job. Additionally, they help with military veterans’ transition from military life back to civilian life. The organization has over 100 partners around Houston that send clients and donors to them.
Dan’s Retirement Transition
Now that Dan has a passive form of income he spends a lot of time on charity work. He set forth three main objectives when he retired from his full-time executive position:
- To continue to learn
- To travel and see new places regularly
- To help people
He also bought a second home near his family in South Carolina to spend more time with his daughters and grandchildren. They spend time out on the lake fishing and really enjoy the area. As much as they appreciated their downtown home, they enjoy nature in South Carolina even more.
Dan’s Overview of his Journey as a Real Estate Investor
For the first 5-7 years, Dan was a passive investor. This means they invested with other partners who form a group and invest in a property where they can add value. As a passive investor, you’re not the one putting the deal together and managing the property. You would write the check and evaluate your partners in the deal, then participate in partner meetings and vote on any decisions that need to be made. As a passive investor, you also have to stay up to date and in tune with all of the financials about the deal.
Dan took a more active role at the end of 2012-2013 as a lead partner in the self-storage business. As an active investor, Dan became one of the people who put the deal together and established the business plan to make a profit
His career journey was initially employee to business owner, then passive investor to active investor/lead partner.
Dan Garrison’s Advice on Real Estate Investing
Trey references his colleague Bobby Duncan who says, “My challenge sometimes with some of these different real estate mentoring programs that are out there is that everybody makes it sound so easy.” When the time really comes to write that check with your life savings and go into a deal, it is very scary and then the idea of then becoming a lead partner is beyond a lot of people’s comprehension.
Dan explains that the part that is “scary” or made him anxious was not just about investing but about doing it the right way and with the right deal. Part of his responsibility at SCI was overseeing the real estate department. He understood the fundamentals of it from a corporate standpoint so it was an easier shift for him to move into real estate investing as a passive investor.
“If you’re going to be a passive investor, you can’t be passive about it.” Dan Garrison
Dan explains that you have to take an active role in choosing your lead investor and do your due diligence. There are two very important things – what’s the quality of the deal and what’s the quality of the lead partnership, management company, etc that you are trusting to make that deal work. Proformas and future projections are easy to make but if you don’t have a knowledge about what the numbers are, you shouldn’t invest until you understand what you’re seeing. You have a real opportunity for it to be a successful investment if you get those things correct. There are no guarantees in real estate investments but if you can focus on the deal and who you’re doing business with, it takes away from that anxiety.
As time goes on, the numbers become easier to understand and the driving factors behind the numbers become easier to understand. The more you get involved in real estate investments, the more you understand the key performance indicators of a deal. These help you understand the performance drivers and the cause/effect of a successful deal. Eventually, you get comfortable enough with it as a passive investor that you’re comfortable to go do it yourself as a lead investor.
Where to Focus Financially When Making a Real Estate Investment
If you’re looking from an investment standpoint, you make money in real estate the day you buy it. The acquisition price needs to be appropriate- you can’t overspend. You also have to make sure that there’s a demand for the product. As far as the money is concerned, you have a certain amount invested so you’re driven by a return and you need to get more money out of it than you put in it.