Anthony Vicino got involved in real estate as a college student with his roommate and his dad, although he quickly realized sometimes it’s best to keep work and play separate. Anthony emphasizes the importance of cultivating and preserving relationships in the industry by adding unique value. He discusses some hard lessons learned while working with investors, and how to ensure a committed investor every time.
Anthony Vicino Real Estate Background:
- Full-time investor/entrepreneur
- Co-Founding Partner at Invictus Capital, a multifamily acquisition firm
- Portfolio consists of 150+ units/12 properties
- 10+ years experience
- Based in Minneapolis, MN
- Say hi to him at: www.invictusmultifamily.com & www.anthonyvicino.com
- Best Ever Book: Meditations
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Ash Patel: Hello, Best Ever listeners, welcome to the Best Real Estate Investing Advice Ever Show. I’m Ash Patel and I’m with our guest today, Anthony Vicino. Anthony is joining us from Minneapolis, Minnesota. He’s a full-time entrepreneur/investor and co-founding partner of Invictus Capital, a multifamily acquisition firm. Anthony has 10 years of experience and his portfolio consists of 150+ units and 12 properties.
Anthony, thank you for joining us. How are you today?
Anthony Vicino: I’m doing fabulous. Thanks for having me. It’s good to be here.
Ash Patel: Good. Before we get started, can you tell us a little bit more about your background and what you’re focused on now?
Anthony Vicino: Yes, so my background is multifamily up here specifically in the Twin Cities; this is our backyard. We’re vertically integrated, so we focus a lot on controlling as many aspects of the machinery as possible. We want to be able to deliver the best product for our residents, for our investors and at the end of the day, for our employees as well. And so we’d like to keep that all in-house. And we focus up here on, I would say, 20-80 unit apartment complexes, things that need some love, we can go in there, add some value and then execute a cash-out refinance, usually in years two or three, and just keep it rolling forward. And it’s been a tried and true approach for us. We’ve been doing it for a while now, and I don’t see any reason to deviate from that game plan.
Ash Patel: How did you get started in real estate?
Anthony Vicino: So that’s funny… In college, my roommate and his dad were doing fix and flips, so I got kind of pulled along on that. And all I learned from that experience is that I can swing a hammer, but I can’t hit a nail. I am not cut out for construction. So fix and flips weren’t going to do it for me.
About a decade later, a buddy comes to me and he says, “Hey, I’m buying these quads. Do you want to do that together?” And I was like,” Nope, that doesn’t sound interesting.” For whatever reason at that time in my life, it just wasn’t interesting. But I passively invested as he went and started acquiring stuff. And a couple years later from that, I was like, “Oh, this was actually pretty cool.”
And what’s really awesome about multifamily investing is that it’s a lot like LEGOS – they only go together in so many different ways. And once you understand how they click together, you can build pretty much anything with it. They have Death Star LEGOs and they have tractor LEGOs… You can do anything with it. And that’s what really attracted me specifically to multifamily.
So on the active side, my very first acquisition on my own was a triplex that I house-hacked, did it with an FHA loan where I put $7,500 in and then about nine months later, it caught this massive wave of appreciation, and we refinanced it for $125,000 more than what we paid for it. And you would think you’d hear that and be like, “That’s cool. That’s a great return in a short period of time.” But all it did for me was reinforced that I had no control over that; it was just based on comparables. Got really lucky, caught an appreciation wave, and it could have easily gone the other way. So that was the moment where we started transitioning into larger multifamily assets, where the value of the property is derived from the value that we can add and how well we operate them. So that’s kind of the long answer to how I got started, but I think it’s interesting how real estate has tried to intersect my life at a couple different points, and I never really bit on it until later in life.
Ash Patel: Interesting. So you mentioned you bring all aspects of your business in-house. What are some of the things that help you vertically integrate?
Anthony Vicino: I think it’s really keeping the end in mind, starting with the desired outcome pinned to the front of your brain. And for us, we always knew that we wanted to be in control, that we wanted to be able to look our investors in the eyes and our residents in the eyes and say that we’re doing right by them and doing the best that we can. But that means that at the beginning, things are going to be a little bit harder than they would otherwise. If you were just scaling and hiring third-party property managers, well, that’s going to be a quicker way to build something big. But for us, it’s slow going in the early days, because you’re really focusing on getting the right people into the right seeds, building the right systems that can scale with you. So for us, the big key there was just understanding what’s the desired outcome and then working towards that methodically.
Ash Patel: You were a passive investor first. What did you learn from being a passive investor that you’ve been able to apply on the syndication side?
Anthony Vicino: I think with passive investing, it’s hard in the sense that you give up full control. You don’t really have much of a say in what’s happening with the investment. For me, that first passive investment really just drove home that I don’t like being passive, that I do need to have a little bit more control. And it’s not to say that one path is right or wrong, it’s key to understand your personality and which one is in better alignment. So if you’re like me and you just can’t sit on your hands and not be involved, it’s going to be hard to go passive, so maybe the active route is for you. Whereas if you’re really not interested in dealing with tenants and toilets, and all the things that come with owning and operating real estate, then the passive route can be really good for you. So the biggest thing I learned was that there is no one size fits all answer, that it’s a little bit different for everybody, given their context.
Ash Patel: And have you implemented anything to accommodate those investors who want to be a little bit more active?
Anthony Vicino: That’s a good question. And we get a lot of people that come to us because we put out a lot of educational content; a lot of people coming to us wanting to learn how to actively invest, and that’s really not our jam. We’re not interested necessarily in teaching others how to do what we do, but we do occasionally take somebody under the wing and allow them to peek under the hood of our operation, so they can kind of see how the machinery works.
But the other way that we really contribute with passive investors is – and they’re not passive in this case – is when we do joint ventures. So a lot of our investors, they are coming from having previously been active investors, they have their portfolio, and now they’re doing 1031 exchanges. And so those are really good opportunities for us to use our skills in conjunction with potential partners’ 1031 needs, to be able to go into something together.
And so syndication is a really cool, sexy word everybody throws around these days, like, “I want to be a syndicator.” But majority of our deals have actually been joint ventures with really great partners that we’ve been able to learn and grow alongside.
Ash Patel: Can you explain the difference between syndications and JVs?
Anthony Vicino: Yes. Pretty much in SEC’s eyes they’re almost identical, with the exception of in a syndication there is the expectation of making passive income solely by the efforts of some third-party. In a joint venture, everybody needs to have some active role in the partnership. Otherwise, they function very similarly otherwise.
Now, a lot of people, depending on how small their operation is, where they are in their career, they might do a joint venture, when in reality one of the partners is purely passive and should actually be registered as a syndication. But because they’re so small or they don’t know better, they fly under the radar and nothing really comes of it. But stay on the right side of the SEC, which you definitely always should.
If you’re going the joint venture route, then nobody in that partnership can be entirely passive; they have to have some active role. That could be signing on the loan, that could be putting up earnest money, that could be participating the underwriting, the asset management, the property management. There’s a lot of ways to be active, but you have to have some meaningful role in the general partnership for it to count as a JV, not a pure passive syndication.
Ash Patel: That’s a great answer. Thank you for explaining that to us.
Ash Patel: What’s an example of a hard lesson that you’ve learned in dealing with investors?
Anthony Vicino: It’s not even in dealing with investors, as much as it is just dealing with people in general. Because at the end of the day, investors are just people. And when you go to do your first or your second or your third capital raise, you’ll get a lot of people that will express interest and like, “Oh, yes, I want to invest with you guys. I’m excited to do this.” And then they won’t come through in the 11th hour. And that’s something to be really aware of if you’re about to step into your first capital raise, is that a lot of the people that are telling you, “We’re going to fund this deal with you” they’re probably not going to. And that might hurt a little bit, you might take it personally, “What did I do? Is there something wrong with the deal? Is there something wrong with me?” And it’s not any of that. It’s just, understand that people’s contexts are constantly changing. So one week, it might be, “I’m ready to invest,” and then suddenly somebody dies in the family or something happens, and now they’re not in that position anymore.
So just being aware that people are people, and they’re multivariate creatures that live in the gray, there’s no black and white, and that what they say they want now might not be what they want in a month or two months when you actually have a deal.
Ash Patel: What advice would you give other people doing a raise early in their investing career to help mitigate that risk of potential investors not coming through at the 11th hour?
Anthony Vicino: That is a great question. I am first not a fan of jumping into syndication and taking people’s money until you have a proven track record with your own portfolio, maybe doing some joint ventures with partners who also have their own skin in the game. So there’s a lot of people that will jump into it,” I’m going to do a 200 unit apartment syndication” as the first real estate transaction they’ve ever done and they’re taking people’s money. And I’m not judging, that’s different strokes for different folks. But I do think, taking people’s money is a really sacred commitment, because they exchanged their life for that money, and they’re not getting that time back, and so you need to do right by it, and I think you have to be in a position to really execute to the best of your ability to deliver good returns.
Now, on your very first capital raise, there’s going to be a lot of anxiety, because who knows, maybe you won’t actually be able to get the money together. So this is where having partners can be really, really helpful. People who have a track record, that have done that before, they’ve raised capital, that can be one route. Or to make sure that you’re not overstepping what you’re confident you can achieve. So that might mean starting a little bit smaller than that 200 unit complex. Everybody says scale, go big, big. But there’s also a lot to be said about starting small with a 20 unit, a 30 unit and proving out the concepts and the systems that are just one or two steps beyond your comfort zone rather than just doing a standing long jump outside your comfort zone and finding yourself maybe a little overextended.
Ash Patel: Thank you for that. Anthony, what are some tactics that you’ve used, creativity to land deals?
Anthony Vicino: I think in this market, it’s all about relationships for us. We’ve had deals come to us from brokers that we’ve never met before, but because we’re putting out educational content online, they know that we are a local here in the Twin Cities, they reach out and say, “Hey, I have this deal here. Are you interested?” And we actually landed a unicorn deal last year because of that very scenario, somebody just cold-called us and said, “I have this thing,” and it felt too good to be true. And then we got the numbers and did the due diligence and it was like, “Oh, this is real.” So that’s one way, is just putting yourself out there in the universe so people are aware of what you do and how you can help them.
Other ways, is actually just having really good relationships with the people that you’re currently transacting with. So a lot of the guys and girls that we work with here in the Twin Cities – they’ve been doing this for 20-30 years; they’ve owned a lot of properties and they’re kind of part of that old “Good boy, good girl club.” And if you go into that relationship and you are easy to work with, you do what you say, and the other side walks away going, “I like working with them”, they start recommending you to the rest of the people in their network. And we’ve actually had, I would say, the two deals that we currently have under contract, came more or less through that type of word of mouth, where there was an older gentleman looking to sell his portfolio, and he reached out to a buddy who we had also just bought something from six months ago; the buddy said, “You should work with these guys, they’re great.” And next thing you know, they’re coming to us with a deal.
So I would say focus on the relationships, focus on doing what you say and following through. Don’t overpromise, certainly don’t underdeliver and in a long enough timeframe. Be patient because real estate’s a slow game. It’s not a get-rich-quick scheme. It’s the best get-rich-slowly-but-surely scheme out there. But you have to be willing to be patient.
Ash Patel: Give me an example of a deal that you lost money on, and your lessons learned from that.
Anthony Vicino: When I first started thinking about actively investing in real estate, I was going to do it with a really good friend, actually my best friend. We were going to go in on this quad together, and we got to the very last minute before closing. The day before closing, there was so much friction already and tension in the relationship, between him and myself, because one, we were both trying to play to our strengths, and we had the same exact strengths, and we had the same exact weaknesses, so our relationship wasn’t complimentary, and we were experiencing a lot of tension because of that. And I realized that this isn’t going to work long-term; if we’re already struggling this much in just getting this under contract, it’s going to be a bumpy relationship. And this is the thing with real estate – it’s a lot like a marriage, it’s easy to get into, really hard to get out of. So I pretty much left them at the altar and said, “I’ve got to back out, I can’t do this.” So we lost a lot of money on the due diligence period, the earnest money, and it did a lot of damage to the friendship as well, because there was a lot of hurt feelings in it, and that’s hard to heal.
But at the end of the day, business is one of those things that you really have to be careful about mixing emotions into it, because that’s where, long-term, you’re going to ruin the relationship in an irreconcilable way, and you’re going to lose a lot more money in the process.
Ash Patel: That’s a tough and courageous decision that not a lot of people would have made easily. How does that friendship stand today?
Anthony Vicino: Good. We actually just played frisbee golf this morning. My birthday was on Sunday and he bought me a putter, and that was awesome. But that was many, many years ago. And there was some really rough patches in there. So again, this goes back to building relationships. This took a lot of effort on both of our parts to forgive and overcome those hurt feelings, because we’re humans, and we don’t heal our emotions very quickly; they take time. So it took us a long ways to get back to this place.
Ash Patel: I’m glad to hear that. And thank you for sharing that. What’s an example of some pain points that you have today, that you need systems for?
Anthony Vicino: I’m a systems guy, first of all. I think everybody needs systems. Before you ever think you need them, you should document them, because otherwise, you’re going to be in a situation down the road where you’re stuck working in the business; you can’t work on it, because you’re the only one who knows how to do everything.
For us, I’ve always had this thesis that whoever is closest to the consumer wins, and you do that by controlling as many different aspects of their experience as possible, and not outsourcing to middle people as much as possible. But with that, that then relies on your ability to hire and train people effectively. And that is really, really difficult, because you might have a vision for how you want something executed or the culture that you want to instill. But if you don’t have a system in place for onboarding and to teach them or show them the culture, then you’re going to find yourself hiring a lot of people and then six months later scratching your head being like, “I don’t get it, why isn’t this working out?” And I’ve had many other businesses and that has always been the trickiest part, is figuring out how to hire and train and really get the culture piece instilled from day one.
Ash Patel: What’s the bottleneck that you’re working on applying systems for right now?
Anthony Vicino: To be successful in real estate, you need two things; you need deal flow and you need capital flow. If you have too much of one or the other, it doesn’t do you any good. It’s like having an overpowered engine that’s not firing correctly. So you always need to get those two things figured out. I would say right now, for a long time, we had more capital than we had deals. And now we have a good mix of the two, but the deals in 2020 were few and far between, because we really tightened up on our underwriting parameters, what we were looking for in deals became very much narrower, what the banks were willing to lend on, the number of people coming to market with deals – that really dried up. But that was a good opportunity, actually, to start building the team and the system that would allow us to organically turn up deals without relying on a broker. So in every downside, there’s a silver lining.
Ash Patel: Interesting. What advice would you give somebody who lacks investor capital, capital flow? What’s the best way to increase that?
Anthony Vicino: Good question. You’re going to be in that position early on in your career, most likely. But every deal needs three things, right? You need somebody who has experience, somebody who has time, and somebody who has capital. All three could be the same person, or it could be one person fills out each one of those buckets. But if you’re early in your career and you don’t have the capital – well, you have the time and you should be building up your education, the experience. And the solution then is partnership. Go and find partners, people that you can work with. But the problem is, in the early days if all you have is time; that’s not very super valuable to anybody. But if you have time and you’re bringing deals to somebody that has the capital and the experience – well, that’s actually pretty valuable.
So I would say, figure out where you can add value to people that you want to be around. It’s not good enough just to go to a networking event and saying, “Hey, do you want to partner?” It’s like going to a bar and asking the first woman if she’ll marry you; that is not a winning strategy, generally. So you have to first go and work on yourself to make yourself into a desirable partner, a desirable mate. So part of that is figuring out what is it that you can uniquely bring to the relationship; if that’s deal flow or—figure out what that is and then lean into that thing.
Ash Patel: Good answer. Anthony, what is the best real estate investing advice ever?
Anthony Vicino: I don’t even know if this is specific to real estate, but it served me well in life and in business, is that “play long term games with long term people” and that comes from Naval Ravikant. And at its core, we’ve all heard that you need to start investing as early as possible in life; we’ve heard that a million times. But what nobody really took me aside when I was young and said was that applies to social capital as well. Invest in the relationships and the people around you, because one, success in life is really dictated by your relationships and happiness. It’s not enough just to have a ton of money if you don’t have people around you that you love and love being around; it’s all for naught.
So when you’re young, really focus on those relationships. If you’re going to go to college, get your education, but also use that as the best networking event of all time. And really find the people that are going to push you further in life, that you want to be around, and then be intentional about staying involved and active in their life, so that, who knows, 15-20 years from now, there might be an opportunity to work together. If so, that’s great. But don’t go into relationships thinking, “What’s the down the line transactional value of this?” Just go into it thinking in terms of return on karma. Do good and do right by other people, and it will pay itself forward in the end.
Ash Patel: That is great advice. Anthony, are you ready for the Lightning Round?
Anthony Vicino: Yes, hit me.
Ash Patel: Let’s do it. Anthony, what’s the best ever book you recently read?
Anthony Vicino: I’m going to cite a book, it’s not one that I’ve just recently read. It’s one I read every year – it’s Meditations by Marcus Aurelius. It’s just his personal journal to himself as the emperor of the known world at that point, trying to figure out how to be a better person. And I think the things that he struggled with all those years ago, they’re still pertinent today, and I find that really relatable and kind of cathartic to know that you’re not alone struggling with the things that you’re struggling with.
Ash Patel: Thank you for that. Anthony, what’s the best ever way you like to give back?
Anthony Vicino: My biggest thing is that, before you can help anybody else, you have to be in a position to help yourself. So I focus a lot on how can I be the best version of me possible? And that might seem like a really weird answer, but at the end of the day, I think by focusing on you, you suddenly open the door for other people around you to also say, “Oh, maybe I could try to be a little bit better, too.” And I picked this up because I had these great mentors who were just helping so many people get so far in their own personal development, and it generally stemmed from just looking at them and being like, “I want to be more like you.” That guy, that girl, they’re out there struggling, they’re in the arena, they’re in the battle, and there’s something inspiring about that. So that’s a weird answer, but that’s the one that I got.
Ash Patel: Anthony, how can the Best Ever Listeners reach out to you?
Anthony Vicino: You can find us at https://invictusmultifamily.com/. We have a podcast called Multifamily Investing Made Simple. If you just want to learn that this real estate thing it’s not super complicated –it’s not easy by any means, but it’s fairly simple – then come check us out over there.
Ash Patel: Awesome. Anthony, thank you so much for being on the show and sharing your great advice and some personal stories about relationships. And in that theme, it seems like you’ve really built your business based on relationships with your investors and with deal-making. So thank you for joining us.
Best Ever listeners, thank you, have a best ever day.
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