To succeed in real estate investing, It is not enough to be educated about the industry, you must also have a strong network. And how do you do this? That’s exactly what we will learn from today’s episode as David Robinson, the managing partner of Canovo Capital with 17+ years of real estate experience business.
Know the strategies his investment firm implements to build a successful network and thrive in the real estate space. Let’s get it!
[00:01] – [04:15] How It All Started
- From a college drop-out to a successful real estate broker and investor
- Thriving in real estate space in Utah
[04:16] – [16:17] Leverage Your Current Assets to Build Network
- How David avoids conflict of interest with clients
- David talks about his firm’s business model
- The strategy that David’s firm does to attract the right investor
- How you could choose the right investment partner and operator
- How three strategies that helped David source deals
[16:18] – [18:57] Closing Segment
- Something that David is curious about: The Fund of Funds model
- David’s book recommendation
Tweetable Quotes
“I’d much rather have the right operator in the wrong deal than the operator and the right deal.” – Sam Wilson
“Be careful about who you partner with. And spending the time that’s necessary to get to know the operators that we partner with, understand their track record, go through a vetting process that you feel comfortable with and confident in, and then ultimately providing the opportunity for your investor networks to participate in those deals.” – David Robinson
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Connect with David on LinkedIn: https://www.linkedin.com/in/davidtheonrobinson
Resources Mentioned
The ONE Thing by Gary Keller: Key Takeaways, Summary & Analysis Included
Connect with me:
I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!
Email me → sam@brickeninvestmentgroup.com
Want to read the full show notes of the episode? Check it out below:
David Robinson [0:00]
Right now is really being careful about who we partner with. And spending the time that’s necessary to get to know the operators that we partner with, understand their track record, go through a vetting process that we feel comfortable with and confident in, and then ultimately providing the opportunity for our investor networks to participate in those deals. So I think that’s something that we’re doing very well, as well as you know, continuing to build up our investor network.
Intro [0:29]
Welcome to the How to scale commercial real estate show. Whether you are an active or passive investor, we’ll teach you how to scale your real estate investing business into something big.
Sam Wilson
David Robinson, the CEO and founder of Canovo Capital LLC, which is a boutique real estate investment firm. He’s an active investor and also a podcast host. As a broker and an investor, David has been directly involved in over $250 million in real estate transactions. David, welcome to the show.
David Robinson [0:54]
Well, thank you very much, Sam. Glad to be here. Thanks for having me on the show.
Sam Wilson [0:57]
Hey, man, the pleasure is mine. Three questions I ask every guest who comes on the show and 90 seconds or less? Can you tell me where did you start? Where are you now? And how did you get there?
David Robinson [1:04]
I started out, dropped out of college, got fired from my dad’s engineering firm, and got a real estate license at 23 years old and immediately started selling real estate. That’s how I got started. Where am I at today, I have a small boutique brokerage based out of Salt Lake City, Utah. And we serve, buy and hold investors who are looking to acquire small-scale multifamily property for their own personal portfolios. By small scale, I’m referring to anything under roughly $5 million, all the way down to your typical duplex four Plex product. So we help investors that are building up their own small portfolios. And in addition, we also have our syndication business, which is Canovo Capital, where we focus on acquiring large-scale commercial multifamily assets, structuring those as syndications, and then allowing members of our investor network to participate alongside us in those opportunities.
Sam Wilson [2:03]
What happened between getting fired and you know, getting your real estate license, there had to have been like an aha moment when you said, Hey, wait, I’m onto something. And I think I can do something with that. When was that?
David Robinson [2:18]
Well, it actually started a little bit earlier than when I got fired from my dad’s engineering firm. But I had served a church service mission, and one of the mentors in that mission was a very successful real estate broker in his own right. And, you know, in my meetings with him, he said, When you get back home, you should really look into getting into real estate. Outside of that I knew no one in real estate, I knew nothing about real estate. I liked the idea, you know, of being involved in real estate. And so that’s really what sort of spurred it. And I got my real estate license in Phoenix, Arizona, shortly, literally, right after I had been licensed. I never sold a piece of real estate in Arizona, I actually had an opportunity made a connection with a broker that was up here in Utah through a family member who was looking to build his own small brokerage and was looking for young hungry guys to bring on and help build a brokerage. And so I said, Well, I just got my license here in Arizona, how hard could it be to get it in Utah. So I ended up, you know, loading everything I owned into a small little Honda Accord and living in the basement of a buddy’s apartment, or house for a few weeks while I got my feet set, and immediately just worked on getting my license here in Utah and immediately started selling real estate. And with a heavy, heavy focus on foreclosure prevention and short sales, this is you know, 2004. And so I really cut my teeth in the short sale and foreclosure world up to the great recession. And so my business started booming as the market took a dive. And so I built, you know, a big short sale and foreclosure prevention business here in Utah, and ran that for a good five years while the market was trying to recover. And I realized that the market was recovering and Oh, my goodness, my business is going away, because I was so focused on that. So ultimately pivoted from that into traditional residential sales, built up a sales team. And ultimately, you know, managed a national franchise brokerage, built the sales team and ultimately pivoted to investment property about four or five years ago,
Sam Wilson [4:16]
what about the 5 million and under investment property prevents you? Because there’s two things we need in this business money and deals. So you guys have found a way to source deals. I mean, brokers are known. That’s what they do they source opportunity. So what prevents you guys from taking those deals down yourself? sourcing your own deals? And then why not focus on that as opposed to then just going for the bigger multifamily projects?
David Robinson [4:43]
Yes, it’s been an evolution of a business model. We actually started to spend some time in that space and acquired some small multi as we started to focus in that space. And so I wouldn’t say that we haven’t done it in the past although we have adjusted our model and are very clear about what we do today. And there’s a couple of reasons why the first reason why is mainly because we don’t want to overlap. And we want to respect the relationship we have with our clients who are looking to buy that product type. And so today, unless we were partnering with one of our clients, I don’t believe that we would buy anything under $5 million. And we just tried to keep those two businesses separate, so that there’s really no conflict of interest, and we can fully represent the client.
Sam Wilson [5:30]
Yes, that makes a lot of sense. I guess from an outsider’s perspective, I would see, hey, look, you know, there’s an opportunity, there’s meat on the bone, there’s far more meat on the bone on a $5 million deal than maybe even what a brokerage commission would be, right? You guys get paid once the deal is over. It’s great. But there’s got to be some strategic reasons why you haven’t just said, Hey, baguette with all the buyers, we’re gonna go out and buy everything ourselves that we source, why not take that approach?
David Robinson [5:56]
The main reason is because it allows us to build up a pretty significant database of investors that then are interested in not only buying small multifamily for their own personal portfolio, but also investing passively in our syndication deals. And so we’re able to have the benefits of both really have a business where it’s a cashflow, positive business that provides a very valuable service to local investor that allows us to build a very large database. And I believe that I have the largest database, a curated database of small multifamily investors in the state of Utah. Well, a lot of those investors realize I actually don’t want to own that four Plex, right? I would much rather invest passively with you in the next $40- $50 million deal, right. And so we don’t care what the client wants to do, because there’s going to be people that absolutely only want to own their own stuff. They have zero interest in investing passively with us. But by doing both businesses, and allows us to really attract who we’re trying to attract, which is individuals that are generally investor minded, like multifamily, and want to use multifamily as a vehicle to build wealth and cash flow.
Sam Wilson [7:20]
Right, man, that’s brilliant. I love that answer. That’s not the one I would have thought through or thought about that makes a heck of a lot of sense. And yeah, I know, there’s people out there that their dream is to be the active investor, I will tell you a decade from now, my dream is not to be the active investor, I want to be only on the LP side. And there’s reasons for that I had that call yesterday with somebody like, hey, you know, I’m sitting on a pile of money. And they’re like, the last thing I want to do is 1031 this into another property I own. So yeah, I’d love to find a way to 1031 into your next syndication. Yes, of course, that’s where we all absolutely want to go. Tell me about raising money. I mean, you guys, have you just really started doing syndications, what, eight months ago?
David Robinson [7:58]
That’s right. Yeah, we’re just about to close on our fourth deal. And again, I partner with experienced operators in the local market that we’re investing in. So yeah, our fourth deal coming up. And as we were building up our investors and working with our local investors to help them buy small multi, there’s a lot of great reasons to be investing in Utah right now. But cash flow is not necessarily one of those, right? And so I kept having the conversation over and over again, from members of my investor network that would say, hey, look, David, thanks for sending me that, you know, six Plex, that eight Plex, you know, that four Plex that duplex, but the cash on cash return is not what I would like to see. And I say, Well, great. You just can’t invest in Utah. That’s fine. You know, I mean, generally speaking, of course, there’s some caveats to that. But I had so many of those conversations about 18 months, two years ago, that I started to say, Okay, I’ve got to start exploring alternative options to help my investors achieve what they want to achieve, right. And that’s when we started to explore the syndication model, and ultimately started to prep our investors for this concept of investing outside of Utah, in deals that provided them a better blend of both cash flow and appreciation. And so from a raising capital perspective, we had this sort of network of investors built up already, but had to go through a fairly lengthy process of educating our investors on this concept of syndication, why we’re even interested in doing it, the benefits to it, the drawbacks to doing it, and then help them to understand our process for going out and finding deals, betting sponsors and helping them to participate in these deals.
Sam Wilson [9:37]
Yeah, that’s awesome. I love that. So you’re going out you’re participating your general partner on these deals, what have been some things you feel like you’ve done right out of the gate that have helped you scale into larger multifamily?
David Robinson [9:49]
Well, you know, we started the podcast a few years ago, definitely haven’t done what 600 700 Plus episodes like you, but we you know, we’re 200 Plus and or something like that. And so I As you know, it gives me an opportunity to network with really quality people, and just people that I want to do business with, right? Not because there’s a deal thrown at me and thrown into my inbox, and I want to attach myself to it, but because I see something in that operator that causes me to want to do business with them. And so I think something that we’re doing right right now is really being careful about who we partner with. And spending the time that’s necessary to get to know the operators that we partner with, understand their track record, go through a vetting process that we feel comfortable with and confident in, and then ultimately providing the opportunity for our investor networks to participate in those deals. So I think that’s something that we’re doing very well, as well, as, you know, continuing to build up our investor network.
Sam Wilson [10:47]
What were some of the things that you did out of the gate? When you say the words careful on who you picked as a partner? What were some of the things that you said, Hey, must have criteria, and then maybe give me an example of a time when an opportunity presented itself to partner and it just you just knew right away? This is not a good fit?
David Robinson [11:06]
So first and foremost, it’s time, which is unfortunate, because we all want to move quickly. And we want to build our businesses. And I feel that pressure on a daily basis, I’ve investors, I probably have more equity than I do good deals with good sponsors at this point. Correct. And so it’s time unfortunately, which is what I mean by that is, I’ve just got to get to know these people, I need to be able to have enough time with them to understand who they are at their core, and how they’re going to react to tough situations. And are they going to do the right thing, regardless of the circumstance. And so although it’s not perfect, but time is most important to that process. And so for me, it was, you know, connecting with operators, mostly through my podcast, and finding people that I intentionally reached out to many people that request to come on the podcast, but there’s select individuals that I will reach out to and say, hey, I want you to come on the podcast, I want to get to know you, I want to understand your business. And then those are the people that I really foster those relationships with, and build over time. So I think I got a little distracted there. But hopefully that answers your question.
Sam Wilson [12:12]
The thing you picked out there initially was time, what are some of the things you feel like when you get that time that you look for like, Okay, now we’ve got this three month window, where we’re getting to know somebody, yeah,
David Robinson [12:23]
There’s definitely boxes that we check. Number one is we’re looking for a sponsor that has a track record of success. And by track record of success, we mean at least three deals done. And ideally 1000 units under management. Now, both of those don’t have to be, you know, these criteria aren’t pay if they don’t match that they’re out. But ideally, we’re looking for someone that has a track record of success, but they’re on a growth trajectory, I didn’t want to be doing deals with someone who already had, you know, a half a billion dollars under management, and was just really enjoying what they had built over the last 10 to 15 years, I wanted someone that was still hungry to do more deals, because I knew my investors wanted to place their equity. Right. So that was number one, a track record of success. Number two was alignment of core values. And I believe the only way that you can find out if you’re in alignment on core values, is by getting to know somebody at a very high level, that’s a background check and checking over their social media profile. On a more granular level, it’s meeting with them, it’s going out to their office, wherever they’re located, and getting to know them eating some lunch with them, you know, understanding who they are and how they function, how they communicate. So the time factor and getting to know someone, there’s the hard checkboxes that we’re looking for, you know, and also the soft, do I even like this person? Would I want to be in business with them for the next three to five years? Right? Are they going to do what they say they’re going to do? Based on my experience?
Sam Wilson [13:53]
Those are things that I think of that happen in the constraints of time.
David Robinson [13:57]
And it’s frustrating to be honest because you just want to do deals, right? You want to get out there and you want to be active and do deals. But at the same time, I think the best hedge against risk for me and my investors is working with a quality operator.
Sam Wilson [14:13]
Oh, for sure. I’ve said this to you during this space enough. And you’ll hear this said over and over and over that I’d much rather have the right operator in the wrong deal than the operator and the right deal. Hey, so talk to us about the sourcing deals side of things. You guys have figured out how to source smaller multifamily deals things 5 million and under for your investors? Are you using those same principles to go out and source deals on the larger side?
David Robinson [14:43]
So I don’t source deals. on the larger side. My operating partners are generally the ones that are in the local market that are sourcing deals that have the broker relationships there. But as it relates to let’s call it 5 million and below, right, which there’s plenty You have investors out that are looking for that product type right of 5 million doesn’t buy you a whole lot here in Utah, but it can in some of the Midwest markets. So I actually have the silver bullet right that no one’s ever thought of, to help me source my 5 million and below deals. Alright, let’s hear direct mail. You know, everybody wants that silver bullet, they just want to figure out some unique way that they’re going to be able to connect with owners and before anybody else is going to touch them. The reality is, there’s just a few proven ways to connect with and build a relationship with an owner, direct mail being one of those direct phone, we’ve done a lot of that in the past where we’ll skip trace data, and find owners and our team will reach out and call. And then you know, the third one for us, is actually building up our buyer list of investors who actually own other real estate guy, right. And then they know we’re in the market, they know what we do. They know that we’re experts in this space. So when it comes time to them wanting to sell, they’ll reach out and say, Hey, David, I’ve got this, you know, 10 Plex, this 24, Plex, whatever it might be, you know, what do you think would like to explore possibly working with you? That’s how we find our deals, right? Direct Mail, direct phone, and our existing investor network.
Sam Wilson [16:18]
The buyers list is often overlooked. I feel like yeah, that’s, you know, building the buyer’s list is a very efficient way I would imagine to binding a seller’s list. Yeah, absolutely. You get to build and both at the same time, David name something that you are currently curious about
David Robinson [16:35]
The fund of funds model? That’s probably not very valuable to your listeners. Maybe it is, I don’t know. But you know, in the world of syndications, I think it’s evolving as we speak, right. I know that it’s become more popularize and people are becoming more familiar with it more money is being attracted to syndications. And so I’m interested in learning about some of the nuances of structuring deals, and really maintaining a high level of compliance with the rules and regulations that are out there, while also being creative and figuring out ways to best serve my clients.
Sam Wilson [17:08]
Absolutely great. And I know we’ve had plenty of guests on who’ve really gone deep into the fund to funds model. You know, if you’re curious, and you listen to this, and you want to learn more about that reach out to me, and I can’t think of who they are right off the top of my head, but we’ll be happy to point you back to several episodes where we really dissected that terminology down. Tell me something date, what’s the book you’re reading right now?
David Robinson [17:29]
Well, I’m reading a couple right now, one of which I’m rereading The ONE Thing, Gary Keller is author and the concept is very simple. But you know, rereading that to sort of refocus myself and my energy and some of the benefits of… The ONE Thing’s very simple. It’s all about, you know, what’s that one thing that’s going to have the greatest impact on the end result, right? And trying to figure that out and honing down on not only a yearly a monthly but even on a granular level? Like what’s the one thing that I need to be doing right now? That’s going to make everything else easier or unnecessary, and then executing on that one thing?
Sam Wilson [18:06]
Got it? Absolutely love it. David, if our listeners want to get in touch with you, what’s the best way to do that?
David Robinson [18:10]
You can go to Canovocapital.com. That’s CANOVO, canovocapital.com You can reach out to me there and also check out the podcast the apartment investing journey, The Apartment Investing Journey anywhere you’d find your podcast so you can check it out there.
Sam Wilson [18:28]
David, thank you so much. Have a great rest of your day.
David Robinson
Thanks. Bye.
Outro
Hey, thanks for listening to the How to Scale Commercial Real Estate podcast if you can do me a favor and subscribe and leave us a review on Apple podcast, Spotify, Google podcasts, whatever platform it is you use to listen, if you can do that for us. That would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories. So appreciate you listening. Thanks so much and hope to catch you on the next episode.
