February 1, 2022
Joe Fairless

JF2709: 5 Tips for Multifamily and Self-Storage Development ft. Dallon Schultz


 
 

Multifamily and self-storage development can be stressful to navigate. For Dallon Schultz, it became even more complicated when he had to juggle both his real estate business and his full-time job in the medical field. In this episode, Dallon shares his success habits for ground-up development and best practices for scaling your business.

Dallon Schultz | Real Estate Background

  • Founder/Owner of REV Equity Group LLC which focuses on investing in apartments and self-storage assets.
  • Portfolio: GP of $6.5M multifamily development in Arizona and a 140 space RV and Self Storage development.
  • Hosts a multi-state monthly meetup to bring those looking to scale their existing portfolio or those interested in learning how to become actively involved.
  • Based in: Phoenix, AZ
  • Say hi to him at: http://investwithrev.com | FB: REV Multifamily Meetup | IG: @revmultifamily | dallon@revequitygroup.com
  • Best Ever Book: Best Ever Apartment Syndication Book by Joe Fairless

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TRANSCRIPTION

Ash Patel: Hello Best Ever listeners. Welcome to The Best Real Estate Investing Advice Ever Show. I’m Ash Patel and I’m with today’s guest, Dallon Schultz. Dallon is joining us from Phoenix, Arizona. He is the founder of Rev Equity Group, which focuses on apartments and self-storage assets. Dallon’s portfolio consists of $6.5 million, and he’s also the host of a multi-state meetup. Dallon, thank you for joining us, and how are you today?

Dallon Schultz: Ash, I’m excited to be on this call. I’m doing great. Thanks for having me.

Ash Patel: It’s our pleasure. Dallon, before we get started, can you give the Best Ever listeners a little bit more about your background and what you’re focused on now?

Dallon Schultz: Yeah. I guess a little bit about my background – I didn’t start in real estate; I don’t think a lot of us have. If you talk to most people that are actively involved, they transition from something. In my case, it was the medical field. I actually have a bachelor’s in nursing, and I worked two years full-time in an emergency room and in a cardiac unit. Long story short, I didn’t find that safe and secure job that I thought I would find in the medical field through some personal things that I went through, and I realized I had to change my path. I wanted something different that could provide me the stability and the ability to really grow. That’s kind of what sparked my desire for real estate.

I listened to podcasts, read that purple book, we’ve all read it, Rich Dad Poor Dad, and two weeks later, we bought our first fourplex without any of our own money. A few months later, we bought our second one, and then it just kind of snowballed from there. About a little over two years ago, I left the medical field completely, and I’ve been doing real estate full time.

Ash Patel: Your very first real estate purchase was a fourplex, with no money out of pocket.

Dallon Schultz: Correct.

Ash Patel: So you took all of that knowledge to the extreme and applied it. How’d you do that? You had no experience, how do you convince somebody to give you money when you have no track record?

Dallon Schultz: In this case, I didn’t have any experience or knowledge, like I’m telling you. I listened to some podcasts, read the book, knew what I wanted, and figured out a way to make it happen. I learned as I went. In this case, we started with friends and family; that’s usually one of the easiest places to start when you’re looking for investor capital, because they know you. Fortunately for me, one of our family members had been involved in real estate for a long time, so he became what I would consider my first mentor. That was my grandfather. At his busiest time, he owned about 300 units, and my father actually managed them. So I grew up around real estate, but I was just doing all the dirty work. I was doing all the maintenance, the roofing, summers in New York, cleaning toilets, sink drains… That was my vision of real estate, and I’m like, “No, this is not for me.” That’s why I transitioned to the medical field.

But coming full circle, when we did gain that interest, I reached out to my grandfather and said, “Hey, there’s this property we’ve found. The seller wants to do a carryback.” We were able to pick it up at 50,000 door, so 200k for the property; the seller only wanted 25,000 down, and then he was going to carry the remaining 175k. That 25,000 down is what we presented to my grandfather at the time.

We worked out a short-term five-year loan that we would pay monthly off onto the side. Looking back, it was kind of scary, because we were 100% leveraged on this deal, and I didn’t know what I was doing. If I knew what I knew now, I don’t know that I would have done it. But you don’t know what you don’t know. I wanted to get into the game, so we made it happen. That deal ended up working out great for us.

Ash Patel: Was your dad and grandfather unhappy when you went into the medical field because they lost their go-to labor guy?

Dallon Schultz: No. It was summer work for me throughout high school. But no, my parents and immediate family have always been supportive of whatever it was I wanted to do. I had these grand visions of specializing in the medical field and becoming a nurse in Ephesus, making a few hundred thousand a year, and then I would start my real estate career. That was my mindset, if you will. After reading Rich Dad Poor Dad, I realized I don’t need to wait; I can start now, and there are creative ways and opportunities, you just need to go out and find him. That first deal, I called up a previous landlord that owned a fourplex. My wife and I when we were first married actually lived in one of the units. I called her up and I said “Hey, are you looking to sell?” She’s like, “I’m not. But the guy next to me is.” She gave me his number, I called him, and a week later we were under contract.

Ash Patel: How did you progress beyond that?

Dallon Schultz: A couple of months later, we bought a second one. We told a local agent there, “Hey, we’re in the game. We’re looking to buy” and purchased it, in a very similar way as the first one. Then we attended a large multifamily conference out in Texas. That was a few months after our first deal. I’d never been to a conference in my life and I attended that. That’s when I was introduced the idea of syndication, buying these larger properties, and coming together as a team. That resonated with me. I remember heading home after that conference, almost in depression. Because at this time I was six to nine months into my nursing career, I spent years and thousands of dollars getting that degree, and I wanted to be done, I wanted to be done with it. So we attended that, and then we pushed pause on purchasing properties, just because at that time I realized I really had to get into the education and build a strong foundation. So it took about a year attending conferences, networking, joining mentorship groups, and I’m so glad I did. The most value I got out of any of that was probably the relationships that I built along the way. That led us into some of our current deals that we’re actively working on, which is some ground-up development of some multifamily and some self-storage assets.

Ash Patel: What area is this in? This is in Phoenix?

Dallon Schultz: Yeah. Just south of Phoenix. It’s about halfway between Tucson and Phoenix, actually.

Ash Patel: How many units are you developing?

Dallon Schultz: It’s a 30 unit, there’s eight existing on the property, and then we have a 140-unit RV and self-storage that sits on about two and a half acres that we’re developing right next door to that. The opportunity just kind of came as a package deal, and we decided to go for it. It is our first development deal, so we didn’t want to take on something too large that we don’t feel like we can handle.

Break: [00:06:55][00:08:33]

Ash Patel: Here, let me play devil’s advocate. So you just bought a couple of fourplexes, you educated yourself for a year, you learned about syndication and now you’re developing. What makes you confident that you’re going to be able to pull this off?

Dallon Schultz: Our team, 100%. Like I said, over that last year – yes, we were reading books, podcasts, attending conferences, but it’s really the relationships that are key and critical. I think anyone can speak to that. Finding the right relationships, people with more experience than you, and then coming together. In this situation, I’ve been doing all the heavy lifting, all the leg work, I’ve been going to the town meetings, planning and zoning, meeting with the City Council, reaching out to the contractors, reaching out to the engineers, architects. That’s kind of been my role. Then some of our partners who are involved in this deal, one of them already owns an RV storage facility, the other one has developed some multifamily. So that’s how we came together.

Ash Patel: How did you build this team? How did you identify your partners?

Dallon Schultz: I guess it started with common interests. Like through our networking, we found out experiences, what each of us was good at, what we were willing to do, what we needed to make it happen, and just kind of presented the idea, and we kind of pieced it together.

Ash Patel: And somebody has development experience on this team…

Dallon Schultz: Correct.

Ash Patel: Awesome. Are you raising money for this deal as well, Dallon?

Dallon Schultz: This one we may not have to, actually. There’s someone we connected with. We were going to go the traditional financing route, but through our network and connecting with people, we have someone that’s open to potentially funding the entire project, which is about a six and a half million-dollar project. We’ll see.

Ash Patel: Would that be a joint venture, or would that be more of a syndication?

Dallon Schultz: Correct. That’d be a JV model.

Ash Patel: Okay. Awesome. What else is on your plate?

Dallon Schultz: Development is great. I don’t know if the listeners will see our video or not, but I don’t have much hair… I did 12 months ago before we started this; I kind of looked like you, Ash. So development – it’s challenging, but there’s a lot to learn from it as well. And it’s a much longer process. There are a lot of things that are out of our control. For example, we were ready to submit one of our major site plans for one of the projects a few months ago, it’s a smaller town. The supervisor that made sure all these things got through the city, quit; he left. They were just being overwhelmed, he was asking for help, they don’t want to give it, so he left.

So the planning and zoning meetings for the next three months were just canceled. We had everything ready to go but it was completely out of our control. Things like that happen, it comes up in development. If you talk to anyone that’s gone through it, they’ll often say, “Yeah, whatever you think it’s going to take you, double it.”

As we’ve been going through this for the last year, it’s been an awesome learning experience. But we need to cover our overhead, we need to generate operating capital, so we decided to pivot and focus more on the value-add play. So we’re currently looking at 100 units plus, Phoenix, New Mexico, we have a couple of LOIs out, and we’re just actively offering on those deals, just to get something moving a little bit quicker. Then the development will work out when it works out.

Ash Patel: RV sales have gone through the roof over the last year or two. You’re in Phoenix, so you’re in a hot weather state. What is it that people are looking for? Just covered RV parking, or do they want indoors?

Dallon Schultz: At this point, they’re looking for anything. There’s not enough out there. The storage development that we’re working on, due to setbacks in the area, we can only do part of it covered. All we’re doing is a large metal canopy. You will find complete enclosed garage storage units here, you’ll find everything in Phoenix. But here, and I’m sure in a lot of places with a lot of subdivisions and cities, the HOAs don’t want you parking campers in your front yard and the backyard. They don’t want that. So RV storage, boat storage, and contractor for park trailers – there’s a huge demand for it just because we all live in these cookie-cutter neighborhood suburb-type homes. Yeah, there’s definitely a demand for it.

Ash Patel: HOAs don’t want RVs in your driveway, but municipalities don’t want RV parks as well, right? How do you get by with that?

Dallon Schultz: So this isn’t an RV park, it’s just storage. There are no hookups, it’s not a campground, it’s nothing like that. This is just, “Hey, we need somewhere to park our RV before we take it out on the weekend.”

Ash Patel: Is that a challenge for zoning, getting that approved?

Dallon Schultz: No. It’s very common. In this particular case, it was already zoned for what we needed, so we don’t have to go through a rezoning process or anything.

Ash Patel: Your ground-up development that you’re doing – what’s your goal when you go to these planning and zoning meetings? What advice would you give the Best Ever listeners? If they’re doing development, how do they efficiently navigate through the zoning process?

Dallon Schultz: One of the best things we did early on is we contacted the city, we contacted the supervisor. In larger cities, you’ll actually do a pre-application, pre-authorization, and you basically present to the city like “Hey, this is what we’re looking to build, this what we’re wanting to do.” They’ll say, “Yeah, that should fit given this information. Let’s move forward with it.” In this case, with a smaller town, they don’t do that. But we went to the planning and zoning meetings a few months prior to us submitting our plans. Because we wanted to get to know the board members, we want to get to know some of the city council, some of the supervisors. So we went there and just shook hands, spoke to them face to face, introduce who we were and what we were looking to do. We were able to build that relationship. Because of that, prior to our meeting, our initial plan, they actually counseled us and helped us be able to maximize the land and actually get more units, which is going to generate more revenue than what we’ve initially projected. I’d say if there’s anything you can do, connect with the city prior to that first meeting; shake hands with the people, and get to know them.

Ash Patel: Great advice. In terms of raising capital, what are some of your best-kept secrets?

Dallon Schultz: That’s a good question, my best-kept secrets. I don’t have any, Ash. I’d say be yourself and be genuine. People want to invest with you because they know, like, and trust you. A quote that I remind myself of quite frequently is “Be yourself, because everyone else is already taken.” There are certain attributes or certain personality traits that you have that are going to enable you to connect with certain people. You have to be okay knowing that not everyone is going to say yes. In fact, most people are probably going to say no. But have confidence in yourself, your personality, your traits, the strengths that you can bring to a team, and get to know people. Be genuine, be yourself, and you’re going to connect with the right people, and you’ll start attracting those types of people that want to do deals with you. Those are the ones that you typically decide to work with.

Ash Patel: Since you left the medical field, what’s the hardest lesson you’ve learned?

Dallon Schultz: Being my own boss. Especially being a registered nurse, you show up to work, you’re assigned the patients that you have for that shift. You have a list of “Here they are, here are their medications, this is when they’re due, here’s your assessment”, and you got to chart all of it. I’m not sitting here saying that you don’t have to critically think, because we absolutely do in the medical field, especially when conditions and people can change so quickly. But all I had to do was show up to work and it was basically spelled out for me. Once I left that, nobody was telling me what I had to do. So learning to prioritize, effectively manage my time, determine what is the best use of my time today or in this hour, and what’s actually going to move the needle – that’s one thing that completely blindsided me when I transitioned into this space. But I have grown to really, really enjoy it, appreciate it and, the challenges, and always trying to fine-tune what it is that I need to do to get to that next level.

Break: [00:16:45][00:19:41]

Ash Patel: What are some of those things that helped you? Because a lot of people are in your shoes where they transition from a career to full-time in real estate. And it’s hard, you have this entire day in front of you, you’ve got a bunch of work to do, but then you also have squirrel syndrome. So how do you stay on track? How do you stay focused? What’s helped you?

Dallon Schultz: That’s hard and we’ll often find ourselves keeping really busy. But then a month goes by and we’re like, “What the hell did we just accomplish over the last month?” That’s what you need to try to avoid. One of the best tools that I’ve implemented, it’s actually the time management matrix from Stephen R. Covey’s book, The Seven Habits of Highly Effective People. I won’t go into depth with it, I’ll introduce it. You basically create these quadrants of things that are important, not important, urgent, non-urgent, and you prioritize your tasks and what you need to do. That’s really helped me focus on “Okay, these are the tasks that are actually going to move the needle. This is the stuff that’s most important.” Quite often, it’s the stuff that we don’t want to do, and that’s why we avoid it, so we do other little tasks because it makes us feel good and we feel productive, but it doesn’t move the needle. So that’s helped a lot. That’s probably one of the biggest things, is just having that time management matrix and just prioritizing your time. If I don’t schedule it, it’s not going to happen. If it’s not in my calendar, it’s not going to happen.

Ash Patel: Another thing that helped me was having that pyramid, where in the top is dark green, then it’s light green, yellow, orange, red. It’s basically a money pyramid; what tasks are going to make you the most money. I shouldn’t be implementing that. In theory, it’s great, but I just need to be a little bit more diligent about it.

Dallon Schultz: I host the largest monthly meetup in Arizona, and we talked about this at our meetup last night, about tools. We have this time management matrix, this pyramid that you’re referring to. There are tons of different apps out there; we have these tools all around us that can help us remain focused and be productive, but they’re only as good as whether you use them or not, and if you use them the right way. So there are a lot of useful things out there but ultimately, it comes down to us taking that action. Things might point us in the right direction, but we’re the ones that have to take the steps forward.

Ash Patel: Yeah. Dallon, what is your best real estate investing advice ever?

Dallon Schultz: Best Ever real estate investing advice? I feel like this is the moment where I should have a really powerful quote prepared or something.

Ash Patel: Just be you remember.

Dallon Schultz: Yeah. You definitely want to be yourself. But I think naturally, I know for me, I am my own worst critic. I’ve realized that typically the only person that we’re in competition with is ourselves. If you can continually work on improving yourself, personally, professionally, mentally, spiritually, physically, the real estate investing, the business aspect, it’s going to follow suit. If you don’t have your personal life on track, if you don’t have yourself together, you’re not going to make it professionally. In this case and on the show, it’s those of us wanting to do real estate investing. So get yourself in check first, I’d say.

Ash Patel: Good advice. Dallon, are you ready for the Best Ever lightning round?

Dallon Schultz: Let’s do it.

Ash Patel: Let’s do it. Dallon, what’s the Best Ever book you recently read?

Dallon Schultz: Hands down, Best Ever Syndication Book. That’s actually what inspired me to start our meetup here. Now we’re taking that meetup to multiple states. I talked about establishing that leadership platform and I know Joe Fairless did the podcast. For me, I don’t feel like I have a radio show host but I love hosting events and having that in-person interaction.

Ash Patel: Dallon, what’s the Best Ever way you like to give back?

Dallon Schultz: Education and inspiring people. I transitioned, I left my W2 transitioning into a kind of an unknown area. Any way I can share my experiences and challenges and help people experience that mindset change, I go after it.

Ash Patel: Dallon, how can the Best Ever listeners reach out to you?

Dallon Schultz: The best way is email. They can reach me at dallon@revequitygroup.com. They can also follow us on Instagram at Rev Multifamily, that’s where we put out some additional content. We have information about our events and it’s just a great place to connect with other like-minded people.

Ash Patel: Awesome. Dallon, thank you so much for taking time out of your day and sharing your story with us. Coming from a family of real estate entrepreneurs, going into the medical field, then coming back into real estate, and being very successful doing it. Thank you for sharing your story with us.

Dallon Schultz: Yeah. I appreciate being on. Thanks for having me.

Ash Patel: Best Ever listeners. Thank you so much for joining us. If you enjoyed this episode, please leave us a five-star review and share this podcast with anyone who you think can benefit from it. Please also follow us, subscribe, and have a Best Ever day.

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