Jun 15, 2022
Dan Kryzanowski is a serial revenue driver and active alternative asset investor. Prior to joining Rocket Dollar, Kryzanowski led new initiatives, partners, and teams across multiple startups and Fortune 50 companies, including General Electric and Merrill Lynch.
He also serves as an advisor to entrepreneurs and executives across the FinTech worldand self-storage industry. In addition, Kryzanowski is a certified Project Management Professional, and a graduate of GE's exclusive Experienced Commercial Leadership Program. He also serves as the Corporate Board President of Hugh O'Brian Youth Texas Capital Area.
Kryzanowski graduated from the Wharton School of the University of Pennsylvania and has an MBA from Thunderbird, graduating with distinction (top honors). He resides in Austin with his wife and son.
Stay tuned and listen to how Dan Kryzanowski shares his knowledge on Why Industrial and Self-Storage Will Remain Strong For The Next 5+ years!
[00:00 - 05:26] Sponsors Get 20% on Raise if You Use Your Retirement Dollars in My Next Deal
- using your retirement dollars in your next deal. This can help sponsors get about 10-20% of their raise.
- The solo 401k is a powerful tool for sponsors because it allows them to defer taxes and generate high yields.
- Sponsors should go talk to a lot of people before investing in a deal, as the market has changed and preferences have shifted.
- Investors still want some appreciation in their investments, even in an inflationary environment. Classing a class B can provide this
[05:26 - 10:54] Delaware Statutory Trusts Can Help You defer taxes
- The benefits of a Delaware statutory trust (DST), which is a type of trust that allows property owners to sell and take the appreciation without paying taxes on the gain.
- Many DSTs are portfolios that contain different properties, which can provide diversification and low-to-mid single-digit returns.
- As an LP, it's important to be aware of when a DST expires and to get moving on selling the property as soon as possible in order to avoid paying taxes.
[10:54 - 16:11] Storage Industry Continues to Grow
- The industrial fund closed on four properties in four Q last year, allowing the company to enter the California student housing market at a favorable cap rate
- Storage is now a natural extension of the housing experience, with demand for RV and boat storage increasing
- Specialized storage is becoming more popular, with high-end facilities catering to those with high incomes and multiple properties"
[16:12 - 19:34] Closing Segment
- Reach out to Dan
See links below - Final words
Tweetable Quotes
"Once again, you on property, You own and operate today. So what's your options. You can keep on owning and operating or you can sell. Now, if you sell, you generally have two options.A of course you pay your taxes or you own and operate property. B pretty much the same. It's just a different property. Now in the middle. I like to say per se as well, I don't want to own an operate, but I want to maintain the tax benefits. - Dan Kryzanowski
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Want to read the full show notes of the episode? Check it out below:
[00:00:00] Dan Kryzonowski: My suggestion I've seen this play out time and time again, is that in your communication to your investors, to your prospects, one sentence saying, did you know, you can use your retirement dollars in my next deal? That alone from my experience sponsors tend to get about 10 to 20% of their raise.
[00:00:17] Dan Kryzonowski: Whether it's through an STI rate with the legacy custodian or solo 401k. And of course that ties to rocket dollar very powerful, especially as more folks are moving self-employed for better or worse. The solo 401k is pretty exciting
[00:00:29]
[00:00:40] Sam Wilson: Dan Kryzanowski is a capital raiser equity owner and LP investor generating double digit yields and lower taxes, but via commercial real estate, he's currently bullish on Texas commercial real estate, industrial self storage, and 10 31 and Delaware statutory trust.
[00:00:56] Sam Wilson: Dan, you're a wicked smart dude. I'm lucky to have you on the show. Thanks for coming on.
[00:01:00] Dan Kryzonowski: Sam. It's great to be here. And if the calendar's right, I think I was originally a number 44. So thank you for bringing me back. And I think today may actually be my 44th birthday. So, Hey, how about that? Hopefully there's something.
[00:01:11] Dan Kryzonowski: Well, look
[00:01:11] Sam Wilson: at that number 44 on your 44th birthday. That's right. Yeah. You came on the show January 12th, 2021. So it's been, yeah, that was 500 and something episodes ago. Tell me, what's happened here in the last, almost year now.
[00:01:27] Dan Kryzonowski: Yeah. I think high-level, and I was at a CEO conference here in Austin and one of the gentlemen on stage so that, Hey, in 2021, people were buying and in 2022 people are shopping and this extends everything from going to the supermarket cause inflation to I think our world.
[00:01:44] Dan Kryzonowski: And I think it's, in some ways it's a great thing. In some ways it's a challenge. So for fellow sponsors and hybrids on this call, realize. You're not the only game in town and somebody, if they are interested, your buddy that you worked with for 20 years at corporate, he or she is now listening to multiple podcasts, going to a few shows, talking to multiple sponsors, doing the diligence.
[00:02:03] Dan Kryzonowski: So just throwing a deal out there and thinking, ah, if you build it, they will come. Not as much. So, I always think it's what education, what can you play into, are you, have you listened to your audience? Your investors in the past, year and a half. And then what are you bringing them down to fulfill their needs?
[00:02:18] Dan Kryzonowski: So I feel this in all walks of life, but especially here in our real estate of passive investing world,
[00:02:24] Sam Wilson: man, I'd say it's absolutely true. The number. I feel like the investor conversation has changed. For me, I don't know, I probably have 15 investor calls. And it's changing, the preferences are changing.
[00:02:36] Sam Wilson: You're right. I'm hearing that more and more. It's like, oh, Hey, I've talked to X, Y, Z. You're like, they're shopping, I'll hear, eight to 10, we're talking to eight to 10 sponsors figuring out what's out there as well. They should, as limited partner, I encourage that. Go talk to a whole bunch of people.
[00:02:47] Sam Wilson: You may find you hate what I do. And I don't want you in my deals. If you hate what I do, you may find that I have bringing something unique to the table that you really find valuable. So I want you to, I want this to be a win-win, but they are shocked. And the other thing I think I've seen here recently, maybe you can attest to this is people are shying away from the appreciation play and really hunting for just cashflow go in.
[00:03:08] Sam Wilson: And I hear that across the board. Have you seen that?
[00:03:10] Dan Kryzonowski: I have, and we in that spirit at the, we recognize that, especially with inflation, creeping up, A lot of folks said, Hey boy, I'd love to get, I love to know I'm going to get a win for a year and then let's see where the world plays out.
[00:03:23] Dan Kryzonowski: So, typically a development multi-family is three to five, three to seven years through this feedback we have DV said, Hey, how about we chop it up to a stage one and stage two. And as a thank you to our current investors, we paid upwards up to 20% on money for up to a year on the stage. The, once again, listening to your investors, this is what was valued.
[00:03:43] Dan Kryzonowski: Now that said that we feel a lot of them are going to roll the principal and interest into the second stage. But I giving folks, Hey guys, you want to hop off the train or you want to wait a year and come on the train. I think investors prefer the sort of optionality. And once again, if you have the scale and you do your diligence to legal, et cetera, it's something you can provide your initial.
[00:04:01] Sam Wilson: Now stage one versus stage two, or are you talking about on a development deal where there may be no potential cashflow early?
[00:04:10] Dan Kryzonowski: Yeah. So think of generically called stage one, the land, almost a land loan per se age, two's going to be your typical development. And this can be your, development multi-family or maybe it's lots.
[00:04:21] Dan Kryzonowski: And you're say you're putting the pipes underground and the people come and purchase a lot. Both of these we've seen pretty attractive at least here in time.
[00:04:29] Sam Wilson: Right. Yeah. That's really intriguing. Yeah, you're absolutely right. I think that's something that providing that options, providing those options for your investors.
[00:04:36] Sam Wilson: And we've seen that also just in class shares. That's become a big thing is to class a class B do you want to clip the coupon? Do you want to clip the coupon with upside, but take a smaller clip? What's that look like? Tell me, what are you guys investing in right now in BV cap?
[00:04:51] Sam Wilson: And then maybe if you can give me a, some color to that as to what you guys are doing to protect against inflation, but also just protecting us market risk.
[00:04:59] Dan Kryzonowski: Yeah. So one thing, kind of in the spirit of our parents stock bond portfolio, we at BV feel. There's still a similar want and need that folks want some appreciation.
[00:05:11] Dan Kryzonowski: And that at times folks want a portion of their portfolio. That's a little more predictable. So, for example, and frankly, we haven't even market this. We have a triple net industrial portfolio that pays a monthly distribution. I like to say it's wonderfully boring. Cause guess what? You write a check.
[00:05:26] Dan Kryzonowski: And every month the check comes in the mail and it's a great way to also mutually know. Right. To the point that we have up to, close more than a half dozen investment advisors have actually trusts us with their client money. If you've ever been through that route, it's a hell of a lot of due diligence and everything else, just even have that conversation.
[00:05:43] Dan Kryzonowski: So that was a pretty good proof point. Yeah. Separately. We've had some stuff with sizzle on the multifamily side that we feel is going to be a good historically has been a 20 plus IRR, whether it's in student housing, Of course housing. And what I think is unique is I call it the mid point between doing a 10 31 and just painful taxes today.
[00:06:03] Dan Kryzonowski: There's many folks. In all stages of life, that own a few properties, whether it's inherited, they've had it forever and they want to probably get rid of some of that. Why as well, they want to cash in, or they're just like, Hey, this is a 1940s build. It's just tired of operating it. There's turnover. Or my time tenant is moving out.
[00:06:23] Dan Kryzonowski: Now's a good time to break Frank's. I don't want to pay high taxes in a place like Texas. So, one thing I think that's unique that we're looking into is. DST. So a Delaware statutory trust and lay person's terms is think if you have a property called property a is probably at a gain, you can sell, take the appreciation, move it to property B.
[00:06:42] Dan Kryzonowski: Okay. It's kind of the same logic that you're owning enough. Or you can pay the taxes, pay a pretty heavy tax. Now in the middle, if your goal is to defer, you can do that. So there's a saying called swap tea drops. Some people they say, ah, they never going to pay and I'm going to take it to the grave.
[00:06:57] Dan Kryzonowski: And part of my legacy, part of my planning for the next generation, that's what a DST can provide. Now that said. What rubs me a little bit wrong as an LP is a lot of these DSTs are only four or 5%. This is all in, not just a prep and I'm like, something just doesn't smell, right. It seems like pretty high in fees and everything else.
[00:07:14] Dan Kryzonowski: Not saying this isn't good product. But , in good faith, I think an operator could pay double digit returns on a DST and still have a healthy return for them for the time and effort to go into it. So, summing up on that, and this is all feedback from our investor base is folks ahead, I'm selling something.
[00:07:30] Dan Kryzonowski: I don't still want to own it. I might take out a little, a few hundred thousand for myself, but the rest I want to defer, let me think about a bit more three to five years. I think at DST particularly a property with double digit returns is going to be a pretty solid niche for the second half of this year.
[00:07:44] Dan Kryzonowski: In the next few years.
[00:07:45] Sam Wilson: How does a DST differ from a 10 31?
[00:07:50] Dan Kryzonowski: And I'm not the all I'm at, I'm not the CPA, the lawyer expert, but the as explained to me is that once again, you on property, You own and operate today. So what's your options. You can keep on owning and operating or you can sell. Now, if you sell, you generally have two options.
[00:08:07] Dan Kryzonowski: One of course you pay your taxes or you own an operate property. B pretty much the same. It's just a different property. Now in the middle. I like to say per se as well, I don't want to own an operate, but I want to maintain the tax benefits. Right? You could go into a DST, many DSTs are a. Usually a portfolio and there's different reasons behind that that generally pay low single digits or mid single digits overall.
[00:08:35] Dan Kryzonowski: But once again, what they are selling is, Hey, here's a diversified portfolio and you're not paying taxes. So, folks that main goal is I want to defer taxes. That's the attraction of the DST now also. What I think is cool historic. They said it's been a portfolio. There's a lot of fees baked into it.
[00:08:51] Dan Kryzonowski: Like anything, the curtains getting pulled off the wizard of Oz per se. And I think it's becoming time like, Hey, here's a pretty slick property that frankly, if I just had cash on the side, I may even consider, it might be a mid-teens IRR for example. So anyways just cool little niches, I think are out there for as, going full circle as folks continue to shop per se.
[00:09:09] Dan Kryzonowski: This is something I think too, not just us, but you know, investment advisors folks that play that role for their families should become a little more aware of
[00:09:17] Sam Wilson: is the DST set up by your firm and then multiple people can in pin roll their properties into the single DST, or is it a DST, each individual sets up and they then roll into your
[00:09:32] Dan Kryzonowski: there's some paperwork and there's folks that are.
[00:09:34] Dan Kryzonowski: Experts that have been around the block a few times , for example, if we at BB go down this route, we're going to partner with there is some paperwork, probably for a different discussion of, for today's call. It has to be completed. But one thing I would be aware of there is a timeline, there is kind of these windows.
[00:09:49] Dan Kryzonowski: That it's much like a 10 31 where it can't be, Hey, we sold the property and X days ago, and there's three days to go before I have to pay taxes. You have to get moving a little bit sooner. So, as I just spitball this in conversation, folks are saying, well, yeah, I'd like to sell maybe may, maybe June.
[00:10:05] Dan Kryzonowski: These are conversations I had back in April and March, even. So people are, I think they're aware at least that if they want to defer taxes, you really have to start thinking a good few months ahead. So I compliment, you and our community for sharing this on the podcast. So this is now kind of something that people do in their mental checklist as they look at their.
[00:10:25] Sam Wilson: Right. No, I think that's great. That's absolutely great. Tell me, what are you guys? What are you guys investing in? I know you, you do industrial multifamily and you even mentioned student housing. What are you guys doing right now to find opportunity at BV?
[00:10:38] Dan Kryzonowski: Yeah. So, the benefit being boots on the ground in Texas for many years, particularly in the two largest cities Dallas, Houston is we tend to find some pretty good off market opportunities and I get it, it's a buy high, sell higher, but I think it would be shown over the decades is certainty of execution.
[00:10:54] Dan Kryzonowski: For example, our industrial fund we closed on four properties in four Q last year. So we also have that ability. Something a little unique I think we can all pick on our California friends here. They weren't as versed in student housing. Let's just say occupancy was comically low.
[00:11:10] Dan Kryzonowski: We have the ability to come in at a great, very favorable cap rate. Which in turn we share those benefits. So those are a few things, sorry. That was my I, they call it my birthday buzzer that went off, sorry to scare you there on the backend. Otherwise it's something you didn't mention, but you know, folks that know me I'm still extremely bullish on self storage and why is that?
[00:11:29] Dan Kryzonowski: I feel storage is now it's a natural extension of the housing experience. So when I say housing, living, living in the 21st century, a few things on that. So, historically we can joke storage was for stuff that we really didn't need or, kind of the crap as they would say, what it's changed into.
[00:11:49] Dan Kryzonowski: I think in COVID show this as folks know, like, Hey, if I can even find an extra bedroom, I'm paying at least a grand in rent or sitting in Austin, it could be in the hundreds of thousands of a house. So with that in case I don't want to feel like a truly hoarding, I want to use storage. And it's not just for the Christmas tree it's it could be for your kids.
[00:12:07] Dan Kryzonowski: Winter clothes can be for your tax documents, some pretty important stuff here. That's becoming whether it's literally at a storage facility or onsite, say I have an apartment complex or something that you consciously build that. In your garage, but most people aren't going to go through that effort.
[00:12:19] Dan Kryzonowski: They're going to defer cause it's still a pretty favorable cost. So with that, I still think there's a very healthy appetite for storage. There's also specialized storage for folks of higher income. Think of the Tesla crowd pick your zip code. With six figure income plus there's many of these.
[00:12:33] Dan Kryzonowski: So they call it a very exclusive man-cave. One of my buddies said he couldn't say that his lawyer said he couldn't say that, but, frankly, there's some of that out there. So there's a whole bunch of types of storage that go into it. And, I think it really comes down to, is folks want to declutter even today, some folks might say shit, I can't have.
[00:12:49] Dan Kryzonowski: A crib in the background. Cause my, my newborns and I was six years old, things like that. So it leads into storage. So I think it's kind of a natural extension of especially as cultures are emerging too, folks want to do this. Not just even climate controls, you're talking for boat are B, we talked about the Tesla, the fun storage, a lot of folks are refurbing.
[00:13:08] Dan Kryzonowski: Think of the Kmarts, the Woolworths of the world. They're being referred to the storage project being in the middle of the country. So, yeah, a lot of folks it's becoming a natural, I think, way of life in the 21st century. And I don't think people are already crazy stuff that some of the stories, as I said, it's just folks get used to it.
[00:13:23] Dan Kryzonowski: They get used to it at a price point. You check in every three to six months to move some inventory for your personal and you go from there.
[00:13:31] Sam Wilson: Yeah. And I think you bring up some really interesting nuances. I think the storage space that most people aren't considering, and you call it specialized storage.
[00:13:40] Sam Wilson: And certainly we're seeing that demand on the RV and boat storage side of things. It's. It's insane. Just from the delivery side alone, they had no place to put them, but I also think it's interesting how you clearly said look the days of just storing piles of useless clothes in general.
[00:13:57] Sam Wilson: I think those are not behind us. Cause everybody there's still going to be days of piles of useless junk, but it's also it's changing. It is becoming smaller homes. People move into the tight, tighter spaces. And like you said, if it's a few hundred grand for an extra bedroom that you're not going to use, why not just get a rough storage unit for a hundred bucks a month?
[00:14:15] Sam Wilson: Okay. We can put all our tax documents and our Christmas trees and all our other random stuff in there. One of the, one of the storage, specialized storage things that I've looked at and obviously not invested in, but I think it's really interesting. Have you seen those like high class, like you call a man-cave, but they also make them, they make them for boat and RV storage where they're actually selling the.
[00:14:35] Sam Wilson: So they, they build this super swanky facility, with wash bays and clean out this and detailed crews and everything else. And they sell you your man-cave. So they'll maybe build 200 units and sell them each off their, the parcel amount and make actually sell them by the unit, create an HOA, basically for the storage facility.
[00:14:51] Sam Wilson: That's specialized storage
[00:14:53] Dan Kryzonowski: is definitely specialized storage. Yeah. I know it's out there and it'll continue to be in, certain zip codes for sure. Yeah, for
[00:14:59] Sam Wilson: sure. And I think that's a really, just a a neat way to look at that know there's lots of runway there for a variety of reasons.
[00:15:06] Sam Wilson: I think that's the other thing that people have said in the storage market all along is that no matter what the economy, there's reasons that people want stories. So it's either up-sizing downsizing, changing life, changing careers, moving it's always in fashion. What are you guys doing right now to take advantage of the the kind of the market dynamics that surrounds.
[00:15:27] Sam Wilson: Yeah.
[00:15:27] Dan Kryzonowski: For me, like a lot of us on the call, I'm a hybrid. I have a, fortunately I've built up a pretty sizeable retirement accounts, self-directed accounts, solo, 401k, food storage. We've had some myself as an LPN investor and those that I've introduced over the years. So I've had some, I'd say pretty sizable and attractive exits and like anything, every few years I call it the next generation of storage, whether somebody is up and coming or they're coming from some recent exits in multi-family.
[00:15:53] Dan Kryzonowski: Folks that are long, maybe, call it two to six facilities, but their goal is to get to 20. So, so far, so good. I've probably invested with four, I'd say newer folks to the semen storage and whether it's development, we're on track for development, or if it's a value add, it's pane out as it's supposed to be at the moment.
[00:16:11] Dan Kryzonowski: So, I'm excited and it varies, some folks are doing strictly. Everything's automated from when you book there's no humans in any way, shape or form. Are there folks are a little more old school. And then as we talked about kind of the luxury storage, that's just kind of a really unique fund model that I still think has tremendous upside.
[00:16:29] Dan Kryzonowski: Yeah,
[00:16:30] Sam Wilson: absolutely. Now BB capital also invest in multifamily is that. Yeah. The backbone
[00:16:35] Dan Kryzonowski: of BV historically isn't multifamily is a bit more DFW total exits of over 250 million to date. So, and it's been a good mix of, as I alluded to before our student housing, workforce housing, some development, some value add I think the new thing once again, just Texas is still real boots on the ground state.
[00:16:54] Dan Kryzonowski: We do have a lot of folks with the BD logo. So we found. Even in this market, the needle in the haystack of a piece of land that's, I don't want to say pennies on the dollar, but less than a dollar, which is a minor miracle these days. Right. We can do stuff with it. We found a track over a hundred acres in Galveston there.
[00:17:11] Dan Kryzonowski: I think the only one out there, a lot of folks want a second house. I want a beach. So it's a little things like, Hey, as an investor, in addition to getting double digit returns, how about you on first look at buying one of these plots. That's very important to some folks. So, we've done some really strong surveys.
[00:17:25] Dan Kryzonowski: Obviously a lot of one-on-one some more exclusive events with 20 or so folks and. We're going to hop across the states of the large cities for that to really get feedback. And that's what we'll, that's, what's kind of led outside of the fund to our our single asset offerings over the past year.
[00:17:42] Sam Wilson: Got it, man. That's fantastic. Dan, we're almost out of time here, but I've got one last question for you for people that know you well, they know that you've got extensive background in the self-directed IRA space. What do you see as the number one opportunity for capital raisers in the self directed IRA?
[00:17:59] Dan Kryzonowski: My suggestion I've seen this play out time and time again, is that in your communication to your investors, to your prospects, one sentence saying, did you know, you can use your retirement dollars in my next deal? That alone from my experience sponsors tend to get about 10 to 20% of their raise.
[00:18:16] Dan Kryzonowski: Whether it's through an STI rate with the legacy custodian or solo 401k. And of course that ties to rocket dollar very powerful, especially as more folks are moving self-employed for better or worse. The solo 401k is pretty exciting. So yeah, I just think that, and also for folks that are thinking of JV and Koji pain with.
[00:18:34] Dan Kryzonowski: Your old corporate money. This is a great pocket of money that frankly you can't touch anyways without paying taxes for a while. So take advantage of it now. Anybody with any questions just ping me on LinkedIn. LinkedIn is great. Say you heard it here and we'll have a chat.
[00:18:50] Sam Wilson: Awesome, Dan, and that's my last question here for the show is if we do want to get in touch with you, what's the best way to do.
[00:18:55] Dan Kryzonowski: Yeah, LinkedIn is great. And then I joke, if you can spell it, you can get it. And we'll get you a few pennies off of your rocket dollar. And for fellow sponsors out there I'm happy to share my VIP code, so, please reach out one alone.
[00:19:06] Sam Wilson: Awesome, Dan, thanks again for your time today. It was great to have you back on the show.
[00:19:09] Dan Kryzonowski: great seeing you brother.