Todd Dexheimer, C0-Founder & Principal at Enduras Capital, joins us to discuss Multifamily retail, and industrial investments.

Connect with Todd at https://www.enduruscapital.com/

To join the DJE Investor list visit https://www.djetexas.com/access

For multifamily mentoring visit https://www.ApartmentEducators.com



Welcome to the DJE Podcast, where you will learn about real estate investing from real life examples. Here’s your host, Devin Elder.

Hello, hello. Welcome to the show. Thanks for joining us today. My guest is Todd Dexheimer, a friend of mine I’ve known for many years. Now, he’s a multifamily operator in the Midwest out of Minnesota and we’re doing deals up there in Wisconsin. So, we talk about that. But Todd was on the show many, I don’t know, a couple of years ago now. He’s on the DJE Podcast. But we talk about kind of a snapshot of what’s going on for them now.

And so, we ended up spending the episode talking about some of their retail projects, what they like about those, why they got into that, how they structured the deal and some of the challenges in that space. And then also industrial, which is a space that we’ve been getting into lately. Same thing, how they found it, why did they got into it, the pros and cons of industrial. But we really kind of spent the majority of the episode talking about those two asset classes and why they’ve expanded to those even though they’re still multifamily operators.

Same as DJE, we do a lot of multifamily. It’s the biggest part of our portfolio, but we also have done lots of other stuff and branched out and I think that’s helped the company grow and thrive. And so, Todd and I have a lot of kind of similarities on that note and it was fun to dig in and find out what they’re doing under the hood and his thinking behind some of that stuff. He’s been in real estate investing since 2008. So, he’s a veteran at this point and has a lot of good perspective on how he’s running his business.

So, we’ll get into that episode with Todd. Thanks again for listening to the show. A five-star review on Apple helps a ton with the reach of the show. So, if you can go in there and leave a five-star review, I’d appreciate it. If you want to type up a nice review or have ChatGPT do that for you, that’d be great too. But if nothing else, 10 seconds for a five-star review helps the reach. I truly appreciate it. We’ll have a word from our sponsors and then get into the episode with Todd. Thanks.

This episode is brought to you by DJE Texas Management Group, a San Antonio, Texas-based real estate investment firm with a track record of transacting on several hundred million dollars of multifamily, land and industrial deals throughout Texas. DJE has been in business for over a decade and is approaching 100 team members in San Antonio. To learn more about DJE, visit djetexas.com or the link in the show notes of this episode.

This episode is also brought to you by apartmenteducators.com, a complete ecosystem for professionals to learn how to find, finance and operate large multifamily properties for profit. You can get started with a free mini course and learn more at apartmenteducators.com or visit the link in the notes.

Todd, great to see you again, man. How are you?

Hey, I’m doing fantastic, Devin. Thanks for having me.

Awesome. Yeah. Thanks for coming back on the show. It’s been a number of years since we had you on. And so, it’s good to kind of check in and see what the latest is. We’re talking here in tail end into Q1 2023. So, you got bank meltdowns going on. I’ve got some texts from some bankers that are like, “Hey, we’re doing just fine. Don’t worry.”

We’re still hoping.

One of the banks, the bank that has the loan on my office building is First Citizens and they actually just bought SVB. So, SVB was the first one to collapse. And so, my banker over at First Citizens text me this morning, “Hey, just want to assure you that we’re solvent. We just bought SVB.” So, I was like, “Okay, that’s good.”

Anyway, so all that’s going on, it’s kind of a headwind in commercial real estate right now, but then as always, there’s tailwinds with buying stuff, low replacement costs, migration trends, all that stuff. So, anyway, man, what’s going on with you? What’s the latest? What have you been working on? What are you seeing out there?

Yea. Man, what’s the latest? What’s going on? So, we’ve been busy, been buying a lot of different things. So, man, since the last time we talked, which I can’t even recall when that was.

It’s been a minute. Yeah.

We’ve been buying a lot of the same probably since we talked last. So, for your listeners, our Endurus Capital we purchase, kind of what you do. We’re Midwest mainly. So, we’re in Ohio, Kentucky, Tennessee is kind of our main area, and we’re buying a 100 to 300 unit buildings, typically multifamily. But as we were talking before the show, we’ve also explored some other stuff.

So, we purchased industrial office building, 2021, 2022. We purchased a retail. We’ve purchased some assisted living. So, we’ve been busy trying to expand a little bit beyond multifamily. Still multifamily is our bread and butter, our core, but also looking at other various, asset classes, not only spread the risk out for our investors, but we like the idea of getting into different asset classes and trying to create value then.

I consider ourselves a value-add real estate company, not just a multifamily real estate company but a value-add real estate companies. So, I think you got to be careful you don’t want to expand too big too quick and just start buying everything and get that entrepreneur distraction wheel going. But I think we can strategically start getting into a few food groups or we have been strategically getting into a few different food groups and trying to just overall strengthen the core of the business.

So, speaking of the banking, we had one of our accounts, the lender says, “Hey, you have to put your money with this.”

Oh yeah, sure. Yes.

Our bank, it was Signature Bank that we had our money with. So, we just got notice. We emailed them right away like, “Hey, what’s going on? Can we move our money?” I’m like, “Oh, everything’s good.” So, we got a notice, I think it was today that somebody else is taking over now and our money is with this bank. And so, it’s like, okay, great. Because it’s a, what do they call? A lockbox where the money goes in and that goes out.

Yeah. We’ve had those. Sure, sure. Those are pain in the butt.

Pain in the butt. But we also had another bank, interesting enough, so we’re looking at exiting one of our assets and we said, “Hey, would this loan be consumable? Could somebody come in and buy it?” That would really be great because the interest rate’s great and all that kind of stuff. And then like, “Well, yeah, maybe.” And then the banker got back to us and said, “Nope, we’re not doing anything.”

And it was like, “Oh, wait a second now. You’re not doing anything.” They like, “Nope, we wouldn’t allow an assumption. We wouldn’t give them new debt. We wouldn’t do anything.” And I was like, we better look at our accounts there because we’ve got some money in that bank and what’s going on? Are they solving?

So, it starts to dig into the banks because you just kind of assumed, don’t you, that these banks are all good, everybody, all these … Of course, you’re going to get your money out. You got to half a million or a million or 250 or whatever it is, and these banks, you think you’re going to get it out. You don’t look at the performance of the bank usually. Now it’s like, “Let’s dig in a little bit.”

Yeah. Underwriting banks was not really on the bingo card before. It’s like, man, we got a lot of hats to wear as operators and you’re looking at property management companies and vendors and X, Y, Z things. Underwriting the freaking bank was not typically part of the equation. It was like, “Hey, you guys are good.” But kind of is now.

Of course, it’s good.

And I mean, it may be the fed obviously they’ve been kind of squirrely about, “Well, hey, are you going to just backstop all banks or are you being selective?” And they’ve obviously got to be very careful with their words there and this may drive a lot of capital into the too big to fail banks, who knows? But it’s a factor.

Yeah. For sure, for sure.

And for some companies, I mean, we talk about this all day, but if you’ve got a $2 million payroll, that’s not a very big company. I mean, it might be bigger than what we run on a multifamily property, whatever. But in general, in the economy you have two million cash in your operating account for payroll is that’s not huge and that’s not FDIC insured. So, anyway, that’s a whole other ball of wax, but very interesting. We’ll see if that triggers great cut or what this leads to, right?

Yeah. It’ll be interesting to see how everything here plays out. Of course, there’s always something interesting going on in the economy. I think that’s lessons I’ve learned since I’ve been doing this since 2008. I don’t remember a year or was like, just sit back, relax, everything’s perfect. Nobody’s afraid of anything. There’s always something. There’s always something that you’re like, “Whoa, what happens if this happens? The economy’s going to-”

So, everybody run for the hills. There’s always something. And not to take it serious, of course, you want to take it serious and understand, but that’s why we buy with the fundamentals, we buy with and we try to make sure we’re looking at things with eyes wide open, but buying into fundamentally make it through some weird times.

For sure. I was talking with my COO now. We started our property management company three years ago, a little over three years ago, and I was like, “Man, we’ve just been, I mean, just surfing ever since. We started it in COVID and then you got all this money printing and then this inflation and then the rate hikes. It’s just been a nonstop ride for the last three years.”

And you’re right, that’s just going to be the case. You accept it. And you just roll with the punches and keep moving. But I like what you said about fundamentals. I mean, ultimately, it’s kind of go back to the thesis we all have in real estate, which is, it’s bricks and sticks. It’s a real thing. It’s piece of dirt. It’s an income stream.

I follow all these guys that buy small businesses and stuff and I haven’t really gotten into that, but you put a personal guarantee on an SBA loan or a business that could for sure go to zero in value. And to me, I’m sure there’s a million guys that are successful with that stuff, but I’ve always liked the real estate model where we’re going to get some bumps and bruises and scrapes along the way, but it’s probably not going to zero.

Yeah. It’s tangible assets. It’s not going to zero, not probably. I mean, there’s never a time in history where that thing’s gone to zero. Well, it doesn’t mean you’re not going to lose money. You can certainly lose money and we’ve seen it. Obviously, a lot of people saw it during 2006 to whatever, 2012 where a ton of money was lost.

So, it’s not to say that. But yeah, there’s always value there. And real estate always increases in value over time. It just does. No, it doesn’t mean that all the time, but over time it does.

Yeah, 100%. It’s pretty demonstrable. Let’s get into the asset class stuff. And we go on podcasts, we talk about multifamily. We run multifamily deals to the somebody that’s new to the space. That’s all interesting information perhaps. For you and me, we kind of been doing that for a few years, but sounds like both of us have expanded into other asset classes.

And I’m always talking about internally at our company, how do we get new skills? I’m less concerned about this one deal that we might do than how do we get that capability. A number of years ago, we started buying ranches in Texas and subdividing and selling them and that forced depreciation. And I just thought, “Gosh, if we could create a new avenue here and we like it and investors it, that’s just this new skillset that’s going to let us be more adapted to the environment and survive and thrive better.”

So, I want to hear how you guys, what was the first, we talked a little bit before we started here about retail, industrial, assisted living, you mentioned, well, let’s dive in to say the industrial stuff. How did that come about? How did you find it? What was your thought process before, during and after that acquisition?

Yeah. I mean, I think everybody knows, industrial might be even the wrong term because it’s not like your traditional industrial bay. It can be used for that, but it’s got a lot of office aspect to it. Then it’s got the industrial aspect as well. So, it’s kind of the mullet of real estate. Office in the front, industrial in the back.

I haven’t heard that but [inaudible 00:13:13]. I love it.

Yeah, yeah. Mullets are really popular in Minnesota, so we’re talking mullets.

My 13-year-old’s got a mullet and he said all his friends.

Well, it’s hockey hair up here.

Oh, love it. It sure is. Yeah.

But that’s kind of this building. And we ended up renting it, too. So, this is more of a medical area and a lot of medical companies, medical device companies, and this is a medical device company that end up renting it and they’re using a lot of the space for R&D testing, that type of thing. And they’re got certainly their office space and then they’ve got their kind of warehouse in the back as well. So, it’s a perfect setup for them.

So, this was actually brought to me by a partner. These guys have got a decent amount of experience in commercial real estate, a lot of office industrial, and they just hadn’t gone big yet really. Excellent company, great track record, great reputation in the market, but they haven’t really went out and raised a bunch of capital. They haven’t went out and gone big.

So, they came to me and said, “Hey, what do you think?” Ran the analyses. They talked me through it and the deal really, really made a lot of sense. And they knew I had been interested in exploring other asset classes too. Through conversations with them. I’ve talked to them previously about love multifamily, going to always stay in multifamily, but I’m always interested in what you guys are doing. So, if you got a deal that’s too big for you to chew on, just run up by me. I’d love to see what it looks like.

And so, that was how the deal was brought and it was brought to them by a broker deal and they negotiated the deal and then they brought it to me. So, they already had it pre-negotiated. I wasn’t part of that. I was a part of the due diligence and making sure it was an asset we wanted and then helped with the capital raises and kind of help operations too.

Awesome, man. Yeah. So, obviously relationship base. What kind of square footage is that property?

It’s just a hair under 100,000 square feet.

Okay. Yeah. Man, that’s a good size.

Nice size. Yeah. Not huge, but nice-sized building and we’re actually potentially looking to exit it. We’ll see what happens here, but valuations came in and if we were to be able to exit, we’d make our investors a really handsome return. So, we’ll see.

But also willing to keep it too, because we’re also, if we keep it, we’re making our investor double-digit cash on cash return. So, how can you complain with that? So, it’s one of those beautiful scenarios where it’s like, well, we can sell it. We can make amazing IRR for our investors or we can keep it. We can make really, really good cash flow. So, it kind of, hey, let’s see what happens.

Yeah. Heads I win, tails I win. Is that’s the spot to be in. I want to dive a little bit more into that one. What did your capital stack look like on that industrial deal? Pretty straightforward, first lien and equity on top of that or?

Yup, yup. Very, very straightforward. So, there was a tenant in there that was currently there and they had 26,000, I think. I might be wrong on my square foot.

What’s an example of a tenant that’s taken out 26,000 square feet of?

This was a very similar tenant, actually just a smaller version. So, it was a medical company, device company, just a smaller version. And they actually needed more space, but they didn’t need as much space as what we had. And there was another company that wanted this space and they needed like 80,000 square feet.

So, they came in, got the 80,000, the other or 76, but again, forgive me for the numbers, but they got the lion share of the building. And so, this other company basically said, “We can’t stay here because we need more space, but we can’t take this huge space.”

And so fine. So, they went away, and we got this company in there. And so, we were able to get financing based on the new company’s financials. And with that new company’s financials and even that other space being vacant, it’s still cashflow. We’re still buying it like a seven cap. And so, financially, it worked great, even if that stays vacant. So, the lender said, “Okay, we’re going to lend to it.” So, what kind of loan local bank, 25 year amortization. I think it was like 75% LTV.

Nice. Yeah.

And of course, recourse debt. Seven-year fixed-

One glorious thing of multifamily that’s always there. That non-recourse debt. But sorry, go ahead.

Yeah. I think we were fixed for seven years if I recall properly because we have a lease with the main tenant who is actually our only tenant now because they took the rest of the space. So, they ended up taking the whole space. And so, I think they have an eight-year term. And so, the lender was willing to do a seven year with us.


Seven-year fixed. And so, ended up doing that. And then we raised I think it was roughly $3 million for the equity. So, it’s pretty small raise to get the rest of the equity in.

Yeah. The type of deals I know you guys do on the multifamily side, that does feel like a nice kind of smaller project.

It was perfect. Well, you know what I liked about the raise, so I was pretty nervous doing this raise because you’re going, “Hey investors, I know you’re used to multifamily, but here’s this other deal. Are you excited about this?” And that was what I didn’t know because I hadn’t done a lot of groundwork prep work to get the investors into this type of like, “Hey, this is an opportunity. This is where why I like it, blah, blah, blah.” It was like, “Here’s the deal and this is why I like it.” It wasn’t that.

Usually you want to get your investors like, oh, they’re thinking about this asset class for 12 months or whatever it is. And then they got a deal that they come up and you’re already excited about the asset class because we’ve been talking about it for so long and the investors are like, “Oh yeah, I’ve been expecting this industrial deal. Oh, this is it.” And it was also had a big office aspect too, and office of course has not been the darling real estate for the last-

Yeah. Definitely not.

… couple of years. So, I’m like, “Okay, this $3 million raise feels like a big raise right now.” Because I didn’t know the appetite.

Yeah. It’s like think about how much education you’ve done, and I know we’ve done the same. It’s like you have a podcast, you go to conferences, you talk to people about this idea of being a limited partner in a multifamily deal and all the reasons we love and it’s all true. But I feel like when we were starting out, it was a full court press on just education.

So, by the time you actually had a deal, somebody might have been talking to you for a year and seeing sample deal packages and all kind of other educational material, and by the time you actually got around and putting a deal in front of somebody, they’re like, “Oh yeah, you’ve been talking about it.” So, I totally get to look, come out with this new asset class out of nowhere. I mean, you’re leveraging your track record and your market expertise at that point. So, how was it received? Was it all positive? Was it mixed bag? What was the reception on a new product type for you guys?

Yeah. I would say it was a mixed bag. We got the raise done and my partners that I partner with Obsidian, they raised some of the money as well. I can’t recall. I mean, I don’t have it sitting in front of me, but they raised a portion. I mean, I raised a lion share, but they raised a nice portion as well.


But yeah, I mean, it was a lot of conversations. Three million dollar raise would’ve taken me less than 24 hours to do if it was a multifamily deal. But this is a $3 million raise and it took me a couple weeks to do.


And those conversations, it was phone calls, it’s getting its investors calling me or me calling them and them going, “Are you sure about this? What do you like it? I know you said on the webinar this.” It’s just that reassurance and like you said, these investors have gotten to know you. They like you. They trust you. They’ve done deals with you before. They know you got integrity. They know you’re looking out for them.

So, ultimately, they’re trusting you, but they just want to make sure like, “Are you sure about this? Is this something for me?” Yeah, yeah, this is a great deal. And it’s going to end up being a great deal. But yeah, so it was a mixed bag. Some investors are like, “Yup, I’m in.” Others are a little more hesitant. And same thing with any of the other asset classes I’ve done. It’s always been the same.

Yeah. Makes sense, it makes sense. There’s a new dimension there. So, having gone through that experience, are you guys on the hunt for more of these types of deals? Is it kind of take it as they come? Are you actively looking for industrial stuff? What’s your thought process, and what markets are you in on the industrial?

So, everything besides multifamily, believe it or not, so our multifamily is mostly not in Minnesota, but everything else is in Minnesota or Wisconsin. And so, that’s where we’re based out of and that’s where the relationships we’ve built have been in Minnesota.

So, in Minnesota, quite frankly, in my opinion, it’s actually a good market for industrial. It’s a good market for retail. But we don’t love it for multifamily because it’s not very landlord friendly state. And so, they’ve implemented rent control. I just put a social media post, I don’t know if you saw it out there. I got this tax bill, my property tax bill. They raised my property taxes by 14%, but they put rent control in that we can’t raise rents by more than 3%. I’m like, come on, what are you doing here?

Three percent. On the multi?

Yeah. You can’t raise your rents more than 3% no matter what you do to it by the way. If you remodel it, make it beautiful. And so, if you buy from some slum lord who hasn’t kept it up with the property, the only thing you’re going to do is be a slum lord because you can’t remodel it and raise your rents [inaudible 00:24:21].

That’s incredible. It just encourages or…

Even if they’re way under market. So, anyways, not to get off on tangent, but that’s why we’re really not into Minnesota is because of the rent control and just not very landlord friendly. But on the commercial side, it’s got hits all the fundamentals and it is a strong market.

Yeah. And I think it’s a fundamental difference between let’s say an eviction court judge making a judgment on a family’s home versus B2B where they’re just-

Yeah. Totally different.

Hey man, violated the contract. Get out of here. There’s no sympathy.

Yeah, 100%. Totally different. Actually, the court system for residential actually used to be pretty good in Minnesota and now it’s the exact opposite or the COVID and the change of it. I know a lot of states have gotten a lot more friendly to tenants. But in Minnesota, it’s almost impossible to get them out.

Yeah. That’s crazy. In the effects of that, as you and I know, are going to be less affordable housing, so that’s going to rear it said as a result and we could spend all day talking about that. So, you would do those types of deals. How about the management side of it as compared to…

Way easier. Way easier.

Yeah, on the face of it.

So, here’s the cool thing. So, when I’m dealing with residential properties, and I’m going to try to say this to not be too mean because that’s not my point. But when I’m dealing with residential properties, I’m dealing with residents that are looking for a place to live, but they all come from different backgrounds and they all have different mindsets. And most of the residents, their mindset is not a business orientated mindset. Most of them are working a job. And that’s fine. Again, I’m nothing against these people because they’re some amazing people.

But their mindset isn’t a business owner mindset, where if I am dealing with business owners, that’s their mindset. These people are money mindset. They have a business that’s trying to make money. That’s their goal and objective and so they understand it. So, you’ve got a business to B2B relationship with them. It’s a lot more professional relationship. For the most part, there’s some that maybe aren’t, but for the most part, a lot more professional relationship.

These tenants tend to do their own maintenance. That’s the contract. They do their own maintenance. They take care of their unit. So, you’re not going in. I mean, certainly there’s some things, but you’re not going in there and doing little maintenance and painting and stuff like that, replacing appliances. No, that’s their responsibility.

The other thing is you’re signing long-term leases. Now there’s good and bad about a long-term lease. The great thing with the short-term lease on residential is I can raise my rents quickly, I can do renovations, all kinds of stuff can happen. But the bad thing is, that’s a year lease and that tenant can move out in a year. And if they break their lease, even shorter.

With a commercial, a lot of times we’re signing five year, seven year, 10 year plus leases. And so, these are long-term tenants. We’ve got typically a rider in the lease that’s a rent escalation in the lease says, “Hey, your rent’s going up by 3% per year, every single year.” That type of thing. So, now if rents could have gone up by 6% a year for three years in a row or whatever, then you’re like, “Oh, crap.” But at the same time, it’s good when all of a sudden you get into a couple years where rents should be going up by 0%.

Yeah. And the budgeting gets so much easier.

And that’s the beautiful thing. We know what we’re getting. The other thing is most of our leases or all of our leases right now actually are triple net leases.

I was going to ask about that. Okay.

Yeah. And so, for your listeners, don’t know what that means. The tenant is paying all of our expenses. And let’s say we even have a roof repair. We got to do a roof repair and it’s affecting their building that they’re in. And we have to pay for that roof repair upfront. Maybe it’s $100,000 roof repair patch or whatever it is. But then we can take that $100,000 and we can amortize that, and they’ll start paying that off for us. So, I mean, it’s a triple net lease. These guys are paying for really everything for us. So, our expenses, not that they’re not zero, they’re not zero, but they’re very limited.

Yeah. Your ratios, I mean, in multifamily, we’re at a 55% or whatever expense ratio. Your expense ratios are so much lower on the triple net stuff, which is really cool.

Well, the downside, Devin, real quick. I mean, I mentioned a couple downsides, but here’s probably one of the biggest downsides in my opinion. Well, there’s a couple, but this is a big one. A tenant in a commercial space might take me a couple months to find and then a couple months to actually land completely negotiate with the lease, all that kind of stuff. And then they’ve got to build out. And so, we have some Tis, tenant improvements, that we have to pay for. So, that costs us money. And then finally they get in and then they finally pay their rent.

So, by the time from what the day I listed it, and if it was vacant, the day I listed it to the day they move in and actually start paying me money, because it’s usually not paying you day one, by the way, that might be six, nine, even 12 months or longer.

And so, sometimes we’re out of income for a year or more on that unit. And that can hemorrhage money really quickly if you’re not careful what your reserves and how you’re doing things. So, we make sure we have good, good reserves. I mean, we do reserves for multifamily. But for a commercial, you got to be way more careful on those reserves and how you allocate that. Residential man, it’s just like you throw a ad up on online and boom, it’s rented.

Hundred percent. And you lose a tenant and it’s like-

No big deal.

… half a percentage of your occupancy, it’s like whatever and easily replaceable. Yeah. I appreciate you calling that out because it’s obviously not all good, otherwise we’d all just do that [inaudible 00:30:51].

We all do it.

There’s tradeoffs. The recourse debt is one of the tradeoffs. The timing on leasing and your lease pool or your lessee pool is different. So, yeah, certainly trade-offs there, but I think it makes a lot of sense to get good at some different asset classes and different asset classes are going to react differently to different parts of the economic cycle. So, I mean, that’s all plus there.

Well, kind of on that note, what about, I appreciate diving in on the industrial stuff, that’s really cool. What about on the retail side? Definitely some similarities there. Are you guys doing triple net? Is it equally hard to find tenants? Are you doing high TI allowances? What did that look like and specifically, how did you make that jump into retail?

Yeah. So, comparison retail to industrial, I mean, a lot of similarities. Industrial, your typical industrial building’s going to have probably less tenants because most of them are going to use a bigger bay. Not always, depends on where you’re at.

So, industrial, let’s say you’re kind of more out into the suburbs, you’re going to have a big warehouse and there’s going to be maybe one, two, maybe three tenants on this big industrial building. Where if you’re closer into the city, then you might have a lot of smaller bays, you’re the last mile type of thing. You might have a lot more smaller bays, so you’re going to have a lot more tenants in there. But for the most part, you have less tenants. Retail, again, it varies if you’ve got big anchors that they might take out a big space.

But the strip that we have, our tenants, a lot of them have three, five, 10,000 square feet that they’re renting, ends up about 100,000 square feet as well. It’s a little bit over 100,000 square feet. So, yeah, a lot more tenants in that one, where our industrials 100,000 feet, we got one tenant.

Our retail, well, I don’t remember how many tenants we have even right now, but we’ve got 20-ish. So, it’s a lot more, 25 probably. I don’t know. Found that one very similarly, the same company, we partner with them and the broker actually partner with us as well, and they’re the ones managing it. So, they specialize in retail. And it has been awesome to have your partner as owning the brokerage that specializes in retail. These guys are doing fantastic. It’s essentially having inhouse management. We pay them a third party management fee, but it’s essentially inhouse management. So, it’s been great.

Huge advantage there, 100%. And so, as far as the approach on the capital stack, similar approach?

Yeah. Very similar.

The bank and some investor equity?

Yeah. And this one, we did a renovation loan because we’re doing a sizable renovation. So, this is a 1980s built. It’s a great location. By the way, whether it’s industrial, whether it’s office, even multifamily, but you really want to focus on location specifically in my opinion, retail because you’re trying to drive people to go to these stores.

So, the city, it’s got all A and B class, everything, residents, buildings, everything. It’s a fairly new up and coming type city. And where we’re located is major intersection, major traffic. So, we’re doing a renovation to it, taking that ’80s look and turning into a 2023 look. Whole new face, whole new facade on everything, parking lot and then the whole building facade.

And so, we got a construction loan, but great terms, same type of deal, 25 year, definitely recourse. But local bank, actually the bank that finance this is literally looking at our parking lot, looking at our building. Their corporate headquarters is right there. They’re looking over us. So, they’re watching us every day.

Love it. That’s funny.

Yeah. But they’re excited. They’re like, “Hey, this is great.” Because it helps them out. A lot of them go over there. There’s some restaurants and stuff. They’re looking forward to the new restaurants coming in. Yeah. They’re going to go hang out and play golf. We got this X Golf that came in. There’s a golf video simulator so you can smack golf balls at these screens and drink beer. Yeah. So, I’m sure that our bankers aren’t going to get anything done anymore. They’re just going to get you playing golf and drinking beer.

I love it. We’re working on a concept where it’s like private garages or personal warehouse type things and it’s like, “Man, we got 40 of these units.” One of them, we ought to throw up a golf sim and serve beer and just sell a membership.

That’s exactly what this is.

[inaudible 00:36:19] guys that have a freaking man cave. And I’m like, we could totally sell that membership to them.

Hundred percent what this is, they’ve got I think nine bays and they do leagues and guys and gals come in. And Minnesota, it’s perfect because indoors, we’re actually one of the biggest golfing states in the US, but we have the shortest golf season.

Yeah. Exactly. So, everybody’s on a sim. Yeah. It totally makes sense. I love it. I love it. So, you guys would do more retail deals?

Hundred percent. I love retail. I think retail has gotten this bad rap on it and for good reasons, we got all this e-commerce.

Yeah, 100%.

And so, you think, yeah, oh, e-commerce, retail is going away, but that’s not at all what’s happened. Retail is actually growing and you got to look at what your use is. I think that’s the biggest thing is you got to adapt to the use. So, you can’t have only small boutique retail shops, but you do want some specialty shops. And that’s where it’s key is what kind of shops are you having that are coming in.

You want some restaurants. You want entertainment, like the X Golf. We got a liquor store in there. That’s perfect. We got an appliance store in there. That’s perfect. Who’s going online to buy appliances? Very few. I mean, it happens. So, you got to think of what’s going to drive people to the store?

And also, if it is something that you can buy online easily, do they have a website that sells online? Do they have a good online presence? Because if they do, then what happens is people come into their store and they might not even buy at the store, but they’re looking at something online. They go, “Oh yeah, I’m going to go check that out.” They go check it out. They look at it. They might buy it there. They might go home and they might buy it online. But that’s okay because it helps their sales regardless. It doesn’t matter where they buy it, as long as they buy it through their store, online or in person.

So, yeah, that’s cool.

If you’re going to put a boutique shop there, I think make sure that they have an online presence that they’re selling online as well.

I like that.

Or so unique that you can’t [inaudible 00:38:40].

They win either way. Buy it here, buy it online, whatever. It’s coming back to us. I love it. Yeah. That’s such a great approach. I wanted to ask you, Todd, about we’ve both been in this business a little while now and seeing some different stuff, and you’ve been going since 2008. How was your kind of approach to being an owner and managing people and all this stuff changed over time as you’ve just matured as a business owner?

Yeah. I mean, I’ve made business growth a priority. So, when I first started, it was me trying to do everything. I was the guy that would show up with the tools in his truck.

Get to work.

Yeah, yeah, right. So, I’m pounding away. I’m doing things. And even as I started to hire people, I’m still running into Home Depot and picking up materials and just doing everything possible. I’ll tell you one story. And so, I pick up all this material at Menards, which is like Home Depot. Load my car up at a Nissan Altima and I’ve got tons of crap in it, two by fours and concrete bags and all this stuff.

And I drive and I hit this railroad track bed and my car just boom, and the shocks and it’s dragging. I’m going down the road and I limp into this service station and $3,000 later, my car is fixed. But in the meantime, I’m like, what the heck am I doing? And I start researching and I figure out that Home Depot will come to my property. They’ll take a material count of everything in my property. And then they’ll deliver everything to my property and they’ll do that for free.

Come on.

And by the way, if I got a contractor account, I can get discounts if I order everything in bulk. And I wasn’t ordering anything in bulk. I was buying it as needed. So, now if I make a $2,000 plus purchase, I get 10% discount and they deliver it for free. So, I’m saving a ton of money and I’m not doing anything anymore. And I’m like, “Now, what else am I doing wrong?”

So, that right there was the that big paradigm shift that we all go through and that was like smack me in the head. I can’t believe I’m doing this stuff. I got to figure out what else am I doing that’s wrong that I shouldn’t be doing. I mean, I’m always learning. I mean, Devin, I’m sure you’re the same. You start doing things and you’re like, you get it and you’re grinding, you’re grinding. You’re like, “What am I doing this for? I can hire somebody to do this. This is ridiculous.”

So, that’s the biggest change for me is running it … So, my podcast is kind of predicated around that too. Look, real estate, I think most real estate investors think it’s about buying a deal. I think that real estate’s about getting the next best deal. And certainly, we got to find good opportunities. But being a successful real estate investor is about being a successful real estate company. It’s about being a successful company, period. And so, you have to learn how to operate as a company, not as a dude or a gal doing a bunch of deals. And man, that’s been a huge change and big part of us being able to grow and expand.

I love it. Thanks for sharing that. Yeah. It is a big paradigm shift and there’s a lot of things that need to happen from being that journey. A lot of us taken a With-2 to a solopreneur, to a business owner, to a bigger business owner, and there’s new skills that are required at each turn for sure. But I love watching the journey and seeing you guys do new stuff and keep growing. Well, Todd, man, thanks for catching up. Awesome seeing you. Tell people about the podcast and your podcast and where they can find you.

Yeah. So, Pillars of Wealth Creation is the name of the podcast. You were on, what, four or five weeks ago, whatever it was. So, they can check your episode out. And I leave that, man, I think we’re at like 600 episodes now.

Nice. Congrats man. That’s a killer.

Yeah. That’s crazy.

Wow. It’s crazy. It’s wild.

It’s been going since 2017. And so, yeah, so Pillars of Wild Creation. My website is enduruscapital.com, E-N-D-U-R-U-S capital dot com. And then they can get ahold of me to todd@enduruscapital.com. They would just want to reach out and learn more about what we got going on.

Cool. Well, if you’re listening, you can scroll down to the show notes and click straight through. We’ll link to all that in the description. Todd, great catching up, man. Thank you for jumping on and sharing the latest. We got an interesting year going on.

It’ll be fun.

But we got some headwinds and tailwinds like always. So, I wish you guys success in the year ahead, man.

Yeah. Thanks. You as well.


You as well. It’ll be a fun year.

Yes sir. Never a dull moment. We’ll see you soon, man.

See you.

Thank you for listening to the DJE Podcast. For more information, please go to djetexas.com.