Danny Randazzo is a man of many trades. With over half a decade of financial consulting experience advising multi-billion-dollar companies, Danny and his wife, Caitlyn, also a highly successful entrepreneur, sought out a future where they didn’t need to trade time for money anymore. Thus they invested everything they had and bought a commercial building and continued to grow their real estate portfolio eventually partnering with two other business professionals to form the company they now operate today which currently holds a $146 million portfolio value.
On this episode of Multifamily Real Estate Investments with Don and Eden, Danny and Don discuss the importance of a partnership both in personal life and business. Danny will also talk about raising money, finding good deals in today’s market and some off-market strategies.
Highlights:
- Danny’s Beginnings in Real Estate
- His Partnership with Caitlyn
- How His Business Partnership Was Formed
- How They Find Deals
- Why They Use Brokers To Typically Find Their Deals
- Current Projects and Monetary Goals
How to Connect with Danny
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TRANSCRIPTION
Hey, guys welcome to the show. Today I am going to interview real estate syndicator and entrepreneur, Danny Randazzo. Danny and I will discuss the importance of a partnership both in personal life and business. We will also talk about raising money, finding good deals in today’s market and some off-market strategies. Stay tuned because this one is very powerful.
Welcome to the real estate investing podcast with Don and Eden where we cover all aspects of real estate investing with special attention to multi-family apartment buildings and off-market strategies.
Hey Danny, welcome to the show. Don, thank you so much for having me on, I appreciate being here with your followers, the audience and just participating with what you and Eden have going on-I’m happy to be apart of it, thank you again.
Of course. So tell us a little bit about your day. What did you do today? What does your day look like?
The first thing I do in the morning is I go for a walk with my dog George. Today we had a little bit later of a start I had a very busy weekend and I was catching up on sleep. Usually, I’m out of the house by about six o’clock in the morning and we’re out walking. Today we got started at about 7:30 am. So a little bit behind schedule, but we got our walk and my wife Caitlin joined us on our walk. I use that time to mentally prepare for the day and figure out the major activities that I need to get done for the morning ahead. I try to plan my schedule where eight o’clock until noon. I do the things that I need to get done and then I use the time from 1 to 5 o’clock in the afternoon to follow up with people or reach out and make phone calls and things like that. And so that’s been a good thing for me to be productive. And it allows me to focus on cleaning out my emails following up on any sort of deal information or underwriting and things like that as a priority when I’m at my absolute best which is in the morning. I learned an interesting tidbit the other day that the male setup is to have the peak performance, usually, we’re peaking in the morning from 6:00 a.m. until noon and so I’ve kind of taken that to heart and really built my schedule around when my physiology and also body feels the best.
That’s a great idea. Actually, my partner even says the same and he’s really a morning person and I’m not really a morning person, but I’m trying to become a morning person because recently I started to go to sleep much earlier and then I figured out that I’m so much more productive in the morning. So I know you guys are living in South Carolina?
Correct. Yep.
My wife and I live in Charleston, South Carolina and that is where you primarily invest in real estate or you’re investing all over the United States.
We invest primarily all over the Southeast US. So we have multi-family properties from Texas to Florida up to North Carolina. And we definitely invest in South Carolina as well.
I see. So tell us a little bit about how you first started doing real estate and the process that you went through to get to the point where you are right now?
The first time that we started doing real estate and when I use we I’m talking about my wife and I, at the time several years ago she is my girlfriend and we were sitting down having serious life conversations about what we want to do in life and how we want to live. We were just evaluating our situation. I was working as a corporate consultant helping multi-billion dollar companies improve their financial performance which that job took me all over the world and all over the country. I traveled most days out of the week- Monday to Thursday, Monday to Wednesday whatever this schedule demanded of me. I didn’t really have control of my time. And Caitlin was an entrepreneur, she had her own wellness and yoga business where she would work with corporate clients in the Bay Area like Nike or Uber or LinkedIn and private wellness and yoga classes, as well as she, would work with private clients or even teach public classes in the Bay Area. And so our life at the time was this constant demand away from home working really hard and trading our time for money. And so we had a serious conversation about it and just said this lifestyle is not sustainable and it’s not what we want long term. I could hit the fast forward button and see 20 years into our future of how much time we would spend exchange or a paycheck. And so I had kind of brought up the idea I said, I know some things about real estate I owned my own house and house hack and got started that way. And we decided to up and sell everything California. We moved across the country to Charleston, South Carolina and started to build a real estate portfolio that generated monthly cash flow to replace our previous income.
I was still working as a traveling consultant at the time, but building a portfolio that generated income to replace that W-2 salary and so we alternately wanted to achieve financial freedom where our investments generate enough money for us to live on. And then how do we continue to grow that. And so for us, we are very highly motivated individuals and people and as we evolve we change our income number and we continually strive to grow that number. And so that’s really how we got started. It was out of a not want, but an absolute need to change our environment, where we live, who we surround ourselves with and that took us across the country to Charleston where we started building a portfolio and we worked very hard. I would work 8-10 hours a day as a consultant. And then in the evening evaluate real estate deals, call property managers, called brokers, build relationships, talk to investors and really grind very hard to get to where we’re at today where we now have over one hundred and fifty million dollars worth of real estate under management.
That is amazing. And what I find even more amazing is that you had your life partner your wife with you through the journey and you guys were on the same page and that is rare and it shows me, I had this debate with my friends- how you should pick your wife and it shows me that the way that I saw things was right because you got to pick the person that’s going to be your partner for life you’re going to pick the person that has the same mindset and share the same goals. And I bet you feel this way right? I mean you are very grateful for the opportunities that you guys have together.
Oh absolutely. I mean that personal decision has turned into the absolute best decision I’ve made not only from a personal perspective but from a business perspective to have your partner in your corner supporting you above all else is the most important thing to be successful and stay on track. And so I think finding the right person is imperative to your success. You can certainly do it alone it’s just a little bit harder because you don’t have someone there to pick you up on a daily basis. If your down, or struggling or may not know the next move they can be there to support you and that’s just great for every day that I have Caitlyn there in my corner doing that and keeping me going and seeing things that I don’t see because again there’s strength in numbers. When you are just one individual person, I am still Danny Randazzo and kind of see things and believe things the way that my mind and life experience has shaped me. But I’ve got an equally beneficial and powerful individual that’s on my team who has a different way of seeing things or a different way of thinking about things. And it just makes for that extra level of opportunity or success or just the ability to perform having two people instead of one.
So from one personal partnership, I want to move to a more of a business partnership because I know that you are in a partnership and you have two partners. And I’m also in a partnership which is why I’m asking you this question. So tell us a little bit about your partnership. How was it formed and what is the role of each person in the partnership and do you guys share an office and do you have employees together?
Well, the most important thing to finding the right partner I get this question a lot is you as an individual doing the right things to meet enough people to find the right opportunity. I don’t think you can go even if you went to a networking event with 100 people and you had this you had to pick one person to be a partner with. I just don’t think it’s reasonable to do it in a forced situation. And so the way that I met my partners was just a natural evolution. The three of us as individuals.
We’re building our individual experience, our individual real estate resume. And my one partner Dan and I; we connected through a mutual friend. We stayed in touch for a little over a year of just what he was working on what I was working on and then the stars kind of aligned and it made a lot of sense. We were going to look at a deal in Charleston a multi-family property about two hundred units. And so our third partner Brandon actually came down and Caitlin and I went and toured the property with Brandon and we were just talking about this one specific deal and if we may be one the team up on it and we actually ended up passing on doing that deal. But at that time it was the perfect timing for us as three individuals. Dan, Brandon and myself to come together and say ‘hey look if we want to take this multifamily syndication business seriously we have so much more power working together with the three of us than we do as individuals.’ We’re going to get way more deals done. We’re going to be way more successful. And the reason for that is the different areas that we cover within the business. And so again the most important thing about meeting the right partner is just being open to different opportunities. Networking with a lot of different people to figure out who may be the right fit. So within our business once that kind of timing worked out naturally. We didn’t say hey we need to start doing multi-family right now. It was just a natural evolution. The three individuals coming together, we really broke out our company into three distinct areas that each of us are very skilled and very passionate about. So for example, Brandon is our renovation material and due diligence expert he has ten years of custom home building and another 10 years of insurance adjusting experience. He knows every single construction material type their useful life and a great idea on pricing. And so he oversees all of our kind of property tours he’ll work with the brokers to talk about what types of value add opportunities there may or may not be at certain properties. He comes up with renovation budgets and oversees the renovation implementation, once we close on a deal and have that value add strategy he loves it and he’s very good at it. Dan and I lack the ability and probably lack the desire to learn about construction materials and deal with contractors, but Brandon lives for it and we love him for it.
Yeah. So the minute you guys get a deal. So you guys do the underwriting? You guys go over the deal and you actually work to get the deal in the first place and then you just give it out to Brandon and you don’t need to worry about it anymore and you can go ahead and find the next deal. And that is how you guys grow and that is the synergy that you guys develop between the three of you. Am I right?
Yeah. All three of us are involved along the way. But the way that we think about it the renovation scope is Brandon’s ownership. He’s the final decision maker in that capacity. But when it comes to the dollars and the cost of it that’s my lane from a finance perspective. So I oversee all the underwriting and so that’s where Brandon and I work together and it’s great to have those different responsibilities because if he says ‘hey we need this material for our value add renovation’ I say ‘if it’s in the budget.’ And if it’s not in the budget – Brandon I have conversations about what can we adjust to make sure that it’s in the budget. But ultimately having a distinct decision-maker for each major process is a great way that we’ve been able to keep the partnership moving and make decisions as we go. So there’s no lack of decision making because one person is the final decision maker in each category but we’re able to bring in two other opinions to help finalize that decision. Yes.
So, Dan, you can be more sure of yourself and the decisions that you’re making because you have two other partners that are telling you that you’re doing it right and they think that it’s going to work and it’s going to play well. So yeah I like that I know exactly how that feels because like I said I’m in a partnership. And so I know exactly how a partnership works and what are the benefits and the advantages there are also disadvantages, but I think that they are not, I mean I think the advantages are just way bigger. So you guys are still focused on multi-family nowadays when the market is a little bit more difficult than what you used to be?
Yeah, I think difficult is a relative term because at the end of the day there are deals in every market and deals at any time. It’s about timing and luck plays a part in it but I always believe that if you’re doing the right things. If you’re having calls with brokers or property managers or attorneys or appraisers that there’s always going to be an opportunity that comes up that makes a good deal. And so sometimes you have to work a little bit harder. Like you said today’s market is probably a little bit more competitive in the multi-family space but we’re still finding deals out there and we’re doing all of these things to make sure that we have the ability to have a first look at a property or that we stay very competitive in the offer process by having good referrals from sellers or brokers that say ‘hey this group passive investing dot.com made up of Brandon, Dan and Danny are the best buyers for your asset and so trust them to get to know them and let’s work together to sell them our asset and sell’ – that’s what we continue to do. It is a little bit harder but like I said there are opportunities in every market at every time. You just have to work.
I see. How do you guys go about finding deals so what is your secret sauce or strategy?
Well for the multifamily space there is a smaller community I would say of brokers and sellers and so the best way to find deals within the multifamily space is building a good relationship with an active broker who sells or brings a lot of multi-family deals to market.
And so we focus a lot of attention on building those relationships. Again we’re not in it to buy one deal this year. We want to buy over a billion and probably a few billion in assets over the next 10-20 years. So we’re in this business for the long haul and we want to invest in those relationships and continue to use those relationships as we grow and as we age throughout this process and so we focus a lot on the relationship aspect of the business. And then whenever we’re talking to people whether it’s an investor who maybe a friend of theirs is invested in an apartment community that someone else is looking to sell it’s just about having those candid conversations with people about things that matter.
Personally, I’m not one to sit down and have a very basic conversation with a person about the weather outside. I would rather talk about real estate, money, mindset, multifamily. Those are things that are important. Those are real-life critical items and it makes for a much better conversation, at least in my opinion. And so whenever I’m surrounded by people again those things naturally come up and it’s always someone knows someone who is involved in real estate or involved in multifamily or invested and so you just meet more people and have more opportunities come your way as a result of just having fun interactions with people.
Yeah, that’s great. So have you ever considered contacting the sellers directly instead of going through the broker? Because I know a lot of multifamily investors are doing that right now. They’re just skipping the broker so they could find a better deal and so have you ever considered doing that maybe sending letters or called calling sellers directly?
Yes, I have and for the criteria of property that we target we look for a hundred and fifty units plus community. For those sized assets, the seller is definitely a sophisticated buyer. They didn’t happen to just stumble into buying one hundred and fifty units. And so the seller in most cases 99 percent of those sales they’re going to want to take it to market or. They’re going to use their broker who they always use who sold the last 20 properties for them. I just believe that those size assets the best way to get those deals is through the broker because guess what? The broker knows the seller way better than you do. And so if I can meet the broker, have a good relationship with them that the broker is going to introduce me to 10 more sellers as opposed to just one. So if you’re looking for smaller multi-family deals I would say less than 50 units, you may want to go directly to the sellers because they may be first-time multifamily owners or maybe a little bit smaller time where they’re willing to come in a wheel and deal with you without a broker being involved. But for us our business at PassiveInvesting.com where we look at properties one hundred and fifty units plus in size built between 1985 and 2010 that have a value add opportunity.
We’re working with brokers I see and that only makes sense because I noticed that when I targeted a few sellers that had multiple families that were less than 50 units then I found people that actually inherited these properties and that’s something that you would not find with somebody that has one hundred and fifty units because you typically don’t inherit that.
So I could totally understand what you’re talking about. And I also notice that it’s more efficient on the smaller scale. But when you’re going to look for the hundred units 150 units then I notice that it’s just easier to create the relationship. So tell us a little bit about the first time that you had to raise money to buy one of these deals since they’re gigantic and what was the raise and how did you go about it?
Yeah. Throughout my real estate resumé I started very similarly to a little bit different, but on a smaller scale like the rest of the folks start out.
And so the first asset that Caitlin and I bought we invested in 100 percent on our own to prove the concept that we are real estate investors and we’re in it for the long haul.
We started by buying one million dollar office building because we work backward from the outcome that we want to find the solution that we need. And so we were targeting a specific cash flow number per month. At the time we wanted to buy an asset that generated five thousand dollars a month. And so we looked at if we had to do that we would need to buy like 10 single-family rentals in the area. And that just didn’t make a lot of sense to me or we could buy one million dollars commercial asset and that generated five thousand dollars in cash flow each month for us. And so we bought that property and shortly after that we bought another office building and I had two investors that invested with me. And it took a lot of work to get those first investors onboard and the raise was only one hundred thousand dollars but when you’re starting out raising money is very difficult because people want to know that you have experience and that you’ve done it before. So you need to either have real estate experience or another type of experience that leads to your ability to own and manage real estate assets. So fast-forwarding to today work closing on a property and a couple of weeks. It’s a 17 and a half plus million dollar asset. We’re raising eight point five million dollars for it and again we have evolved to this level you don’t probably start out buying your first property and trying to raise eight-plus million dollars for it. But as you grow and as you kind of build that track record, that following, that investor based naturally more people become attracted to you and want to know what you’re doing and how you’re doing it and how they could be involved in it. And so if that answers the question, otherwise I’m happy to expand on it.
No that definitely answers the question.
So what are your plans right now and what are your plans for the future as far as your business – where are you planning to be in the next 10 years?
So our plan for the future, this year we’re going to close on our goal of one hundred million in assets acquired in 2019 we’re a little over halfway there. We’re past the 50 million marks and sell for us. We’re going to be buying two to three more assets this year. Our goal next year will likely be about three hundred million and we’re going to stay focused and on track to get to over a billion in assets in the next few years.
Wow. So yeah I was just saying that’s amazing that you guys got to the place where you’re doing so well and you’re making such progress from starting with just buying one office building with your wife to a point where you’re thinking about buying properties in the millions and get to the billions one day. So that’s amazing. What is one of the best ways to connect with you for our audience if anybody wants to get in touch?
The best way for people to connect if you’re interested in investing with us in multi-family value add opportunities. Go to PassiveInvesting.com and you can get everything you need to know there. If you want to learn more about me personally just go to DannyRandazzo.com and you can get everything that you need to know about me there.
Wonderful. So thank you very much for being on the show today. We really appreciate it. I hope you’re going to have a great rest of your day and I hope to hear from you in the future. So good luck in whatever it is that you guys are going to do.
Don thank you so much for having me on. As always have yourself your team or even the listeners go ahead and reach out to me if there’s anything I can do to help them.
Thank you very much, Danny, you have a great day. Thank you.
Thanks for listening to the real estate investing podcast with Don and Eden. Stay tuned for more episodes. Till next time.
