Lessons Learned From Real Estate Operator And Educator Joe Anfuso

Joe Anfuso, Chief Financial Officer at MG Properties Group, a private real estate owned company operating about 20,000 units on the west side of the United States.  Joe is responsible for directing the financial and fiscal management of company Operations, including budgeting, treasury, tax, accounting, information technology, risk management, and insurance. He joined us on the podcast to discuss what he’s teaching in college, opportunities for the up and coming real estate graduates, simple steps to learning real estate and how to read the pro forma like a story.

A proven and nationally recognized Financial, Operational, and Customer Centric leader experienced in single and multifamily residential development in California and Nevada.

You can listen to Joe’s second appearance on the show (season2, episode100) here: Joe Anfuso – How Are Big Data and AI Transforming Asset Management?

Transcript:

Hanh Brown: [00:00:00] Welcome, Joe. And thank you for being here.

Joe Anfuso: [00:01:32] Sure. Um, thank you. And, uh, appreciate the opportunity.

Hanh Brown: [00:01:36] Joe tells us about his childhood and being born of a Portuguese mother and Italian father. He grew up on the water, went to college and returned periodically to fish with his father and got interested in real estate during the boom era of the seventies and eighties.

Joe Anfuso: [00:01:52] I am a born and raised here in San Diego, California.

[00:01:57] I’m the son of a commercial fishermen. Mom was Portuguese. Dad was Italian. I grew up on the water. And that happened to you. You were, uh, you grew up to be a fishermen. So that was a crucial tuna fishermen. And I actually left college once for awhile. And. What commercial tuna fishing and spent most of my time growing up on the water, but I was always kind of attracted to real estate as I got older and saw people that when San Diego was booming in the seventies and eighties from a real estate standpoint, the only other people I saw that were making money besides fishermen were people that were building houses, selling houses of brokers.

[00:02:37] All kinds of different areas of real estate.

Hanh Brown: [00:02:40] He tells us about his journey into becoming a real estate investor. First, his college education, studying accounting and CPA, and then getting his MBA then onto developing homes. From there, he moved up the ladder to developing multifamily properties.

Joe Anfuso: [00:02:57] It just started to track me as to my family’s life has been on the water, but thing people are actually paying people that own real estate.

[00:03:07] They use that as a wealth building and a cashflow creation, and it was always something that attracted me. So I, when I went to school and knew, I’d probably end up in the real estate field, I went into accounting. Later I got my MBA and then started in mostly the development side of the business and developing homes, multi-family properties and so forth.

[00:03:27] So I took the time over the years to get general contractors license, a broker’s license. And, you know, I’m also a recovering CPA. So I’ve spent most of my time in the, in the finance and the operations area until. You know, moving on to where I’m analogy, we’re known operator about 20,000 units. We don’t do any ground-up development, but what we do do is a lot of acquisition rehab.

[00:03:50] So I do spend a lot of time yeah. On looking at our records and so forth on underwriting and what we’re going to do to properties. And. Overseeing the financial and also really a lot of, I get to spend a lot of time now on technological improvements on what’s going on in the future of this business. So that’s where I’m at.

Hanh Brown: [00:04:07] He tells us how he transitioned from an operator to a teaching role in those who help make it happen.

Joe Anfuso: [00:04:14] So I was, I have been part of, I graduated from USD a couple of times, and I’ve been part of what they call the Burnham more center of real estate, which is affiliated with the university of San Diego.

[00:04:26] And it’s really for. The development of the real estate program, a man by the name of staph Charisse runs it. And so their academic person, dr. Charles to call me last year and. They were kind of in a little bit of a bind in between teachers going on sabbatical and another teacher not showing up. They needed somebody to teach a commercial real estate finance and investment class to mostly graduating seniors and thought that, uh, you know, having been affiliated with, uh, the organization for so long and knowing what I’ve done, that I might be able to get the, uh, students, uh, perspective.

[00:05:02] And, uh, and you know, we talked about it here. In the office, our president by his name is Mark Lieberman. We’re fairly good benefactor for the program we talked about at the time, my time commitment. And he thought it would be a great way to give back as did I. So I took it upon myself and, uh, you know, tried to become a teacher, but I should know, I need to apologize to any, you know, the really good teachers that are out there that are doing this day in and day out.

[00:05:27] I am. I am not. What I would call a great academic. I’m a, I’m a good operations person and a finance person that kind of transitioned to give the kids a little flavor of what I do for a living and part of the business. But I would say not what those really good teachers do every day.

Hanh Brown: [00:05:44] I see. What kind of curriculum do you have?

Joe Anfuso: [00:05:48] And, you know, it’s basically, it’s kind of all the different facets of the business. I mean, it was everything from, uh, proformer writing to capital markets to real estate investment trust. Uh, the class was really trying to give the students an opportunity to look at all facets of commercial real estate, how it’s valued.

[00:06:08] Uh, how it’s financed all those items of it. So that from an investment standpoint, they can understand what’s going on, whether it was a multifamily property, which is mostly everything that we do here at mg properties, or even an office buildings and retail and so forth.

Hanh Brown: [00:06:24] So what are some of the most important decisions you made as a leader of your organization?

[00:06:29] What technological changes are impacting the real estate industry for now?

Joe Anfuso: [00:06:34] now? I think it’s, and this kind of translates to the students as I do spend a fair amount of time on technology and, you know, the strategic planning for the company. And as I’ve told the students, I just think we’re kind of on the cusp of the new golden age of real estate because of technological changes that are happening.

Hanh Brown: [00:06:56] How have the artificial intelligence, big data business intelligence impact on how you do business.

Joe Anfuso: [00:07:03] You were implementing new things on it on a yearly basis. A couple of years ago. Not only do we have a general ledger packages, and now we’re putting in automated accounts payable packages, you know, we’ve got an automated.

[00:07:17] Investment management system. Just last year, we went into the big data analytics and business intelligence program. So we’re now starting to analyze all this data that’s that we’re receiving from a standpoint of the properties and. From rent and vacancy and expenses and all this data that now you can get and really start to evaluate from your properties, what you can do to enhance revenue or to decrease expenses and start to look at that in much more detail than you ever have been before.

Hanh Brown: [00:07:50] How are the college graduates growing up with cell phones, prepare to take on the job market in terms of digital marketing, social media marketing. How do you think the next generation of graduates will adapt to the real estate role?

Joe Anfuso: [00:08:04] The young people as they come out of school, you know, they grew up with cell phones and, you know, from the time they can read and write and computers and technology, and they’re just going to be well positioned in the future to step into these new roles.

[00:08:18] For example, a couple of years ago, we didn’t have a, a business intelligence analyst or a data analyst. We didn’t have a director of digital marketing. These are all new positions that are coming out in the, uh, that every company. Is going to be needing in the future, which fits really well with the students that are coming out.

[00:08:36] Think about that, the future of our business. And I’ll just take the multifamily business, for example, before, if you were. At the apartment level, the, you had a leasing agent who if they were any good are pretty good, you know, they might want to be into jump into assistant manager. And if you were a little good there, you became a manager and then you can become a regional manager and kind of, that was kind of the basis.

[00:09:01] And then you’ll become a regional, maybe you could get into the corporate office and so forth. And now think about the manager’s position or the regional manager’s position. Now. That person is really looking at data and how they are assessing their properties is through data. So now we have this business intelligence, big data analytics that now they’ve got dashboards where they can see where their vacancy is in their region, what, you know, what’s coming available and so forth.

[00:09:27] So the same job is requiring completely. So very different skillsets on what they’re using. And so what you used to be, how you came up to become a regional manager, might not be the same type of person that you’re looking for anymore. One’s person is you’re going to need still need a customer service person on site and so forth.

[00:09:47] That’s concentrated in that area. Somebody else looking at it, that’s managing that property. Might be having to be a, you know, have more of a data analytics mind as a business analyst rather than a customer service. So I think it’s changing the dynamic of how we’re going to manage properties and how we’re going to affect the outcomes of properties, the financial outcomes of properties.

[00:10:06] Right? Because our job is to make sure that we can run a good property and provide a safe, healthy environment for people while they’re at the property. But it’s also too right. We have investors, we’re trying to get a return on our investment. The. People are trying to ensure that we can increase net operating income that we’re advancing the property so that in the end of the investment period, we’ve had a healthy investment in a healthy return for our investors.

Hanh Brown: [00:10:34] Digital technology is remaking the workforce and changing the job roles. You need new skills from anywhere cloud architecture to social media. There will be more opportunities for entrepreneur and innovation thinking. There are job roles being created that didn’t even exist five years ago. There are new additions being seen in existing job roles.

[00:10:58] You’ll get to know the adjacent roles or blurring of roles. You’ll be able to develop solutions that touch upon all the roles. The digital is blurring the lines between industries. And the activities of one are flowing into adjacent sectors.

Joe Anfuso: [00:11:14] No, you’re absolutely right. I mean, I don’t see how that doesn’t occur and it really is going to change the dynamic of the person you hire from the beginning, which is companies like us start to adopt all these different platforms.

[00:11:29] You really have to start thinking about who is going to be using those platforms and what’s that skillset needed.

Hanh Brown: [00:11:36] Okay. So what are some of the key things let’s say first time, investors or graduates coming into this space who are trying to learn more of how to become a good multifamily investor?

[00:11:49] What qualities make an intelligent investor and what kind of mindset is that person need to have?

Joe Anfuso: [00:11:56] Sure. I think first what we have to remember, I’m a very big proponent of. Keep things simple. And this might be because of my old fishing background days and the people I grew up with. I think you just have to remember that in the end.

[00:12:11] This is all about cashflow. It’s the end of the day. You’ve got revenues coming in. Revenues and expenses going out, you’re going to pay your debt and there’s going to be money left over. And is that enough for you to make an investment? Are you’re getting a return on your investment from that cashflow?

[00:12:29] And sometimes we try to get a little complicated and we’ve got all these crazy Excel spreadsheets or different programs and a lot of smart people doing stuff. But I think sometimes people don’t just take a step back and remember to give you an example. Investors used to do this on back on napkins at lunches.

[00:12:45] Right now we do it on computers, Excel, spreadsheets, and computer. Then models and all that. This used to be done by guys and women just writing down on a back of a napkin going, w w what’s your revenue, what are your expenses? This here’s what I’m going to invest in. Here’s I’m getting a 10% return. Let’s do a deal in its simplest form.

[00:13:02] So I think first thing investors have to realize is that keep it simple with that. I think the next thing for an investor is what I think separates out really good investors and are people that can assess risks. And that can sit and think about the risk reward with any investment. So whether you’re investing in a, the different types of property types, right, you’ve got core plus properties, value, add, and opportunistic, right.

[00:13:30] A good investor is going to know there’s risk and reward to the type of property type investment you’re making and what you should be compensated for that risk. If you’re taking develop at risk from an opportunistic standpoint, you should expect that it’s a riskier and that you should be rewarded for taking that risk and understand that dynamic as opposed to your investing in a core property.

[00:13:55] That could be a brand new building in downtown Seattle and the returns are going to be much less, but for that you’re investing in a newer property that has a much less risk in a bigger metropolitan area that should stand the test of time.

Hanh Brown: [00:14:15] Does that help investors focus on risks? Not only returns. The good returns will come.

[00:14:20] If you manage your risk properly. We only want to take prudent risks, those risks, which offer probabilities that are in our favor.

Joe Anfuso: [00:14:29] Yeah. And I think, you know, for other young investors, the one thing that I think I would say in the world of academia and in the, in the operating world, the other thing that we need to understand, and that young investors should start to learn from the beginning is how that fits in their own risk portfolio.

[00:14:46] Meaning is this amount of money that you’re investing? Is it. 5% of your net worth. Is it 90% of your net worth? A lot of times, young people go, Oh, this person invested in this and made a ton of money. And so they got $10,000 to invest. $20,000 to invest in, put it all in one project, in a high risk project.

[00:15:09] That’s supposed to have a big return in area that they don’t know much about. And haven’t done a lot of due diligence. And then all of a sudden they lose money. And so again, part of the risk reward dynamic that is taking one step further back and saying, okay, what am I investing? How much is it of my net worth?

[00:15:27] And how much of that am I willing to risk going forward, knowing where I am in my stage of life and how much this money means to me.

Hanh Brown: [00:15:36] Regardless of what financial stage of life you’re in, you will have to decide what your needs are and how comfortable you are with those risks. Are you investing in growth or income?

[00:15:47] You need to understand the length of time and you own risk tolerance where you are in your lifecycle, certainly affects how you invest towards your retirement.

Joe Anfuso: [00:15:56] Absolutely know if you’re a younger person and you’ve, you’ve got a little bit of money, maybe taking a big risk on a development deal and $10,000 when you’re at the middle stage of your career.

[00:16:07] If you lose that money, terrible, none of us want that to happen or you get half of it back. You’re still a young person in your, let’s say early thirties, who’s going to be getting salary increases and so forth and building your nest egg. And so it’s a small price to pay, but if you’re in your. Late forties, you put in 50% of your net worth in one property because you’ve had other people tell you this.

[00:16:31] This is a great investment. That’s a risk you’ve got to know you’re willing to take. And is it worth tagging at that stage of your life?

Hanh Brown: [00:16:40] There’s so many different aspects of the deal. There’s the performer, the sponsor, the projection, the tendency, and the value add strategy. Does an investor need to know all of those and are there certain best aspects that they should focus on first?

[00:16:55] How do you discern and filter down to what’s most important components? Since it can be overwhelming with all the information.

Joe Anfuso: [00:17:04] and it is, it can be overwhelming, but again, I think you have to take things from a very simple approach and. He was a couple of acronyms there like that. I think for, for people that are early investors, you know, one I call is real right.

[00:17:18] Are EAL then, and that is look at the revenue. You always want to see the kind of revenue where it’s coming from. Is it a multifamily property? Is it from the rent of 200 apartments? And then you can start to analyze the revenue. The next thing would be, and we can talk more in detail on these, but so it’s revenue expenses.

[00:17:37] The asset itself and then the liabilities, what is real in that property? Those four items are what are going to make and break your investments. So, like I said, the revenue on the expense side, what are the expenses per unit? What are the anticipated expenses? What are the assumptions for both revenue and.

[00:17:56] Expenses. And what are the annual assumptions of increases and how much are revenues expected to grow up? Go up. How much are our revenues going to go up as there any enhancement to the property from a value add standpoint? So revenues are going to be increasing higher than maybe what the market rent is.

[00:18:12] The asset. I think where’s the asset located. Is it in a opportunity zone? Is it in an up and coming neighborhood? Isn’t it in an older neighborhood? And then the liability is I am a one person that really looks at the liabilities at the beginning of the deal. And the big liability obviously is debt. And I think that’s one of those areas that you really want to key on is how much leverage is the deal.

[00:18:38] Is necessary for the deal. Is it something that we’re putting in 40%, the equity and at 60% loan to value? Or is it somebody you might have a sponsor that’s a little more aggressive and that is going, you know, we’re gonna, we’re going to do a 65% loan to value as a first. We’re going to go out and get mezzanine debt at another 10% on there.

[00:18:56] So we’re going to be at 75% to 80% leverage. Let’s say, we’re going to try to juice those returns and have the expectation that we’re going to improve this property. And everything has to work out perfectly. Nor to meet their, their returns and obviously much more risk involved with that because every real estate cycle we’ve had, it’s the, those that have occurred.

[00:19:19] The greatest leverage have been the ones that have failed miserably.

Hanh Brown: [00:19:24] I am an investor seeking properties as sponsor. In meantime, I’m looking to invest with other co-sponsor. I want to learn how cash is coming in, Cassius coming out. What’s the quickest way to get that information.

Joe Anfuso: [00:19:35] information. Well first it’s obviously it’s going to be the proforma that the sponsor provides right before a, we are a sponsor at mg and our job as a sponsor is to do the due diligence necessary to ensure our investors are making a good investment.

[00:19:52] So that causes us to right from the very beginning, we’ve got to go out and we’ve got to recreate the proforma, which is just basically what we think financials are going to look like over the whole period. Of the investment. So, but. To get to that point, but there’s a lot of steps that you start with the first is you’re going to get the sellers financial statements.

[00:20:16] And from there, you’re going to know what are the revenues been? What are the expenses bid, and then start to build the build from there. So that’s kind of the building blocks is you’re going to get that. You’re going to get some information from the broker and none of the ones building blocks. And then really it’s your due diligence.

[00:20:31] I think this is what separates good sponsors from sponsors, that the lack a lot of knowledges. You need to start getting in there and your due diligence and really assessing what the property is. Meaning you’ve got a good sponsor is going to spend a lot of money. Upfront understanding the property. Is it a property built in the eighties that has certain types of electrical works, certain kinds of plumbing work.

[00:20:56] So you need to be getting your engineers out there. We have an MD, we have our own construction department, so we’ve got, our guys are out there when we’re doing the due diligence. We’ve got roofers out there. We’ve got, and we bring in independent inspectors out there. It’s got an elevator. You name it. We spend the resources necessary.

[00:21:15] So we understand, again, is it a property in the eighties or is it a property that was built in 2010? It’s much newer, it’s different type of construction, so forth. So there’s just a lot of that on the due diligence side, which then helps you build the proforma from what you anticipate you’re going to have to spend.

[00:21:34] If it’s an acquisition rehab property, you don’t know if it’s an older property, it’s probably going to cost you a little bit more money because maybe you’ve got to scrape the ceilings from the old popcorn ceilings, and maybe you got to do other things. So these are a good sponsor, walks through all of those items and understands how much you really are going to have to spend or invest in the property in order to put it in a position so that you can meet your goals for revenue and revenue enhancement.

[00:22:04] So that over the long-term you can raise those rents, lower those expenses, raise that net operating income and in time raise the value of that property.

Hanh Brown: [00:22:15] There are several versions, iterations of the performer. Can you elaborate on the distinction, the brokers performer from the seller they perform from the buyer and then the investors internal model.

[00:22:28] And then there’s one that you give to the lender.

Joe Anfuso: [00:22:31] Remember, every one of those that you just mentioned has a specific goal in mind, and the investor needs to understand that each one has a goal, right? The broker, if you see the brokers marketing sheet and their information, right. What’s the broker trying to do the brokers, trying to sell the property.

[00:22:47] So they’re putting things in the best light possible as they should and understand that they’re giving you information. Some of it’s going to be really good. Some of it, you’ve got a question there. So you’ve got your. Sponsors proforma. And as we just talked about having done all that due diligence, having done all the work, you’ve got to have the faith and know that the sponsor has done the due diligence necessary to put a proformer that they believe is accurate for the investment.

[00:23:17] The proformer for the bank. Again, you’re probably going to do a lot of summarization. The bank doesn’t need all the, all the details and so forth. So their pro for the bank is just to get them what they need succinct manner, so that they can approve the loan. And then the investor needs to do their own homework and their own due diligence to make sure that they are comfortable and can come back and ask questions.

[00:23:40] With regard to what the sponsor is saying. You know, for example, in a market where the average rental increase is been, let’s say 3% over a 10 year period. If you’ve got a property that doesn’t require a lot of rehabilitation, but your sponsor is telling you, well, we’re expecting an average of 5%. Does that seem reasonable from an investor standpoint or.

[00:24:05] They’re averaging 5% because the sponsor’s going to invest. Investors are going to put in $15,000 a unit they’re going to be upgraded. And the proof around the market is that that should take you from a, let’s just say a dollar, a square foot to a dollar 10, a square foot. You’re going to get your you’re bumping your increase through that value and rehabilitation.

[00:24:25] Then again, a question that an investor needs to know and be able to ask why there’s a difference between market and the proforma.

Hanh Brown: [00:24:35] Yep. You just answered my next question. And that is, let’s say I’m revealing the proforma, which easily over a hundred pages. What questions should I ask the sponsor to get a better understanding their mindset, their version of the proforma.

Joe Anfuso: [00:24:51] Let’s remember that proforma is. And I think you’ve mentioned this earlier, the performance telling you a story, right? And the story is here’s the financial representation of what we think the property is going to do. And every story has a plot line, has the undercurrents of what it means, and the proform is no different.

[00:25:13] And so the investor investor, while doesn’t have to know everything specific. Should be able to look at a few of the items and see are these reasonable meaning the annual revenue increases, the annual expense increases what the capital investment is going to be. I’ll give you a good one there you can have, let’s say you’re buying an older building and there’s not a lot of money in there for capital expenses or capital improvements, which need to be invested in the property, right?

[00:25:39] Because the one thing you learn over time, as you buy an older building, your expenses should be. They should be somewhat higher than a building that was built in 2015. So an investor, just one of those things that they can just ask a question on is, is the capital expense enough for this building that we’re buying in 1982, compared to other buildings, the debt, the leverage ratios we talked about earlier, be acutely aware of how much leverage is being, where that leverage is coming from and how doing a little bit of homework.

[00:26:12] With regard to how much of those revenues can change so that the debt can still be serviced. And then also to make sure that in the end does do all those assumptions and the questions that the investors asking do they match what the goal of the investment is. And the goal again is, is this a core investment?

[00:26:33] Is it a core plus value add or opportunistic is what’s being proposed for that property? It’s consistent with what the ultimate goal of that property.

Hanh Brown: [00:26:44] Does a 300 unit deal, a hundred times more complex than a three unit deal.

Joe Anfuso: [00:26:50] In this day and age, I say no for my students. Our final exam was really on. We kind of give a lot of system on a number of deals and it wasn’t about 300 unit apartment buildings.

[00:27:01] It wasn’t about large retail buildings. It was, I wanted them to do an analysis. Let’s say a five unit building, do the analysis and show me why this is a worthy investment that I made them act like sponsors and come and ask why I should. Me being the investor, why I should invest in their deal and the numbers just get bigger.

[00:27:24] That’s all you’ve got instead of five units, you’ve got 300 units, but you multiply that times the number and that’s your revenue. And so it’s just a matter of concentrating on those, those items. Like I said before, that are the simple items that meant the cash coming in and the cash going out and that understanding that risk reward, which will make you a much better, a much better investor.

Hanh Brown: [00:27:48] I see, so regardless of the size, no, the cash coming in and cash coming out and the understanding of risk reward, all the woods will make you a better investor.

Joe Anfuso: [00:27:58] There’s a few items I taught in the first four pillars that I, I taught students is jobs, capital supply, and sentiment. I always think those are the four pillars of the investment to know whether you’re.

[00:28:13] You should be in this place and that’s for the market. Right. And for jobs it’s are you investing in a marketplace where there’s increasing jobs? Right? What’s the job picture look like? What’s unemployment. What’s the employment rate, you know, is it a, is it a good area? Is that an up and coming area? So you always want to know the job pitcher in any market you’re investing in capital.

[00:28:36] What is the. Availability of capital and the cost of capital in your investment rate is, are you getting a, a government sponsored loan, a Fannie Mae’s, Fannie Mae loan, a Freddie Mac loan. Is it a insurance loan life co company? Where does the debt, and also within the market itself, our interest rates were interest rates going.

[00:29:00] Uh, his interest available for development, his interest available for purchase, you know, mortgages or how is the capital structure and capital the flow of capital. In the marketplace that you’re working in that’s job capital, the other two are supply and sentiment. I used to just say supply and then with the great recession, I added sentiment because it became clear to me that not just the supply of, you know, in our case, what’s a supply of apartment building is going out there.

[00:29:27] What’s a supply of the, of any of the commercial investment types. But. It’s how much is being built and what’s that competition going to do? How are rents going to be effected if there’s overbuilding? Is there not overbuilding? Give you an example in on the West, we’re primarily on the West and you probably have a better chance of being the starting pitcher for the Dodgers.

[00:29:48] And you do have getting a a hundred apartment building built somewhere in Los Angeles or San Diego or up and down the coast. So. People need to understand, you know, what’s going on with supply. And the last thing I put a sentiment, and that is what is the current sentiment out there? Do people feel like there’s a market that’s available and you know, for us in the multi-family world, I mean, you look at the demographics and you look at millennials, you look at student loan debt, you look at all those things that are in the marketplace.

[00:30:16] And somebody’s got to explain to me how in the longterm, if you’re buying. Multi-family properties. Let’s say, you know, not in your urban cores, but you’re in the 10 or 15 mile radius around your urban cores and in some of those suburbs and you’ve got good apartments out there. I just can’t see over the longterm investment horizon.

[00:30:39] You’re not going to do well. If you, long as you don’t over leverage a property, you can withstand some downturn. And I think that the markets will come back and when you’ve got good debt on the property, you’ll I think you’re just going to be okay over the longterm, because I just can’t see where. That’s going to affect her to the detriment of investors in the multi-family space.

Hanh Brown: [00:31:01] What would you say has been your greatest accomplishment?

Joe Anfuso: [00:31:04] Yeah, that is, I think for me, it’s just been, I honestly thought I was going to be a fishermen. Right. So the, the big accomplishment for me was instead of, you know, my dad spent nine months out of the year on the ocean. Right. And I left San Diego and I stood on the ocean for better part of nine months.

[00:31:21] And so I think personally the most, it was just being able to do something else, not wake up one day and be 45 years old and had spent 30 years on the ocean or something. And just go, where did life go by just being able to participate on land and do things that nobody else in my family was able to do is kind of really what.

[00:31:44] Kind of drives me and, and was always made me feel good. So I think that’s kind of always been something big that I’ve, I’ve always been happy. I was able to achieve.

Hanh Brown: [00:31:53]Who opened the door for you?

Joe Anfuso: [00:31:55] There’s a number for different people. I mean, I think one of the most important things, or we didn’t talk about, but, uh, for a young investor is find a good mentor.

[00:32:03] I can’t tell you how important that is to find people in the business that you want to be in. That have been there before that have done that they’re willing to give your time and, you know, I’m, I’m one of those people that I think it’s almost incumbent upon me to be able to help people when they ask a lot of times, they don’t like to take your advice.

[00:32:24] But I think that you can give them information valuable insight into what you’ve done and what’s happened in certain situations. So I think young people should go out there, find mentors and be able to learn from them. I mean, even to this day, I still go to lunch dinners with people that have helped me along the way that were, that were developers that own their own companies that worked for home builders and so forth so that you can, can you deceive.

[00:32:51] What they were experiencing spirit experiencing in different points of their career. I think that’s a really important thing for, for young people, especially are just starting out and trying to get a feel for what’s going on in the business.

Hanh Brown: [00:33:05] Digital technology has made people more accessible and it’s given us the ability to communicate to the mass audience and learn how to teach and share information so that we all can make intelligent decisions.

Joe Anfuso: [00:33:19] I agree. I think everybody understands that people want to learn and you want people to understand, right? The more intelligent you make people regarding the subject, the better it is for everybody. And so I think you understand, or if you’re with somebody that’s in this business, I can’t see how they wouldn’t want to help you.

[00:33:39] If you’re eager to learn and you want to learn. Right. There’s people that just ask questions. So they think that’s what they’re supposed to do, and then they never call you again. But if you are, if somebody really knows, you’re like a sponge and you want this information, there’ll be more than happy to help you and get you on your way.

Hanh Brown: [00:33:56] That’s great advice. So let’s say if you were considering to partner with another business or a person, what some of the factors that would be a deal breaker for you?

Joe Anfuso: [00:34:07] Integrity I think is a, is a big deal for me, right? Diet. I will say that. I know I have one thing. Catholic grade school, university of San Diego is a Catholic college.

[00:34:17] So I grew up with a lot of, from nuns back in the little days. So go on to school. Someone’s Tegrity is a big deal to me. So if you’re dealing with somebody who’s, who’s telling you something and you find out that it’s incorrect or maybe a little bit misleading. Those are always deal-breakers for me. If somebody says I’ve never lost a property, I’ve never done that.

[00:34:40] And you cause they maybe personally didn’t, but they’re kind of mincing words because it was a property they were involved with under a different partnership. And you knew that went back to the bank. And so things like that, I think people’s integrity. You want to do business with people that are upfront, they’re straight with you.

[00:34:56] Cause either good times or bad, you need somebody with that kind of integrity so that you can go forward and make good decisions with people that you can trust. So I think that’s a, that’s a huge deal. Breaker is somebody is what you say has less than a substantial moral competency. Probably shouldn’t be doing business with them.

Hanh Brown: [00:35:17] Sure. Sure. You truly know a person’s real self when going through the tough times.

Joe Anfuso: [00:35:23] Absolutely. Right. I think, uh, that is a, that is a truth. And I do think over the coming years, we’re going to see that in people, because while I’ve been a somewhat, a supporter of the theory of declining interest rates, I’ve always thought they were going to continue to decline.

[00:35:40] I think they’re, you know, they’re still going to stay low, but we’ve probably hit a secular point where we went through almost a 35 year period of going from high interest rates and continuing to go lower and lower and lower. And I think that. Point of the cycle is over and a lot of problems. And they used to get in trouble for this all the time.

[00:35:58] When I was growing up, a lot of problems get solved in the real estate world by lowering interest by decreasing interest rates. Right? You can have, you can make mistakes, but if interest rates are going down and people can afford more, a lot of problems get buried that way. And I do think your better sponsors, your better investors will show themselves as interest rates probably start to.

[00:36:21] Increase rather than decrease. I still think they’ll stay a little bit low, but if you have a hundred to 200 basis point decrease, and that increases interest rates 50 to 75%, it’s the relative increase that causes the problem. And so I think you’ll start to see who your real good investors are as these things happen over the next five and 10 years.

Hanh Brown: [00:36:41] What has been your greatest failure and what did you learn from it?

Joe Anfuso: [00:36:45] Early in my career, I learned a ton out. I was. With a young development company. And I just come out of as in Oh one and back then one of the big eight CPA firms and got my MBA and went to work for a, an organization. And it was a company that was owned about and was developing about six deals, six apartment buildings.

[00:37:05] And it wasn’t an investment shop, relied wholly on one investor for the majority of its capital. And when times got tough, this was in the, uh, Late eighties, early nineties, the investor, the main investor, just put the hammer down, right. And, and saw an opportunity to squeeze out. The sponsor and so forth because of declining properties and new, and it was fairly substantial downturn during that time, the savings and loan crisis was happening.

[00:37:39] And then there was all kinds of things going on. And what I learned is that’s kind of where the integrity thing is. I think we should, the company should have probably done a little better due diligence because. We found out that that investor had done that before in certain things. So you realize that, you know, you got to diversify, you have to watch your debt and your leverage.

[00:37:59] And then that was the other thing. Because back then, you know, banks were giving, you know, you can get 80% loan to value loans and high leverage. John development deals and so forth. And so our kind of, a lot of those things we talked about earlier are what I learned from the battle scars of early in my career, where you saw those things happen, that you need to be dealing with good people.

[00:38:19] You need to make sure that you watch your leverage, need to make sure you understand your market, that capital and so forth. And so I think that’s, that’s probably one of the, the big failures that lesson learned.

Hanh Brown: [00:38:30] have a health regimen you keep so that you live healthy and longer?

Joe Anfuso: [00:38:35] Neil. I’ve always been from the old way fishing days and just growing up.

[00:38:40] I I’m one of those guys that gets up at like four o’clock in the morning. I’m in the gym early in the morning. I usually do a, I trained for one triathlon a year just to keep myself in shape. And, but I’m always doing some kind of exercise regimen that I it’s just what I do. First thing in the morning.

[00:38:57] Get it out of the way. And you know, I’m a morning person gets me pumped up. I get the office really early, get some work done before everybody gets here and I’m ready to go. So I, uh, that’s kind of my, my regimen play a little golf on the weekends, hang out with family, do all that kinds of stuff. And, uh, but yeah, it’s always been important to me to, to keep exercise and in your life plan to keep the head clear and to keep going.

Hanh Brown: [00:39:21] Yes. Yes. Exercise has helped my mind to think better, stronger, so I can take on those challenges.

Joe Anfuso: [00:39:26] Right. It helps clear all this stuff that happens during the daytime. And what’d you think about at night? So usually that chance to physically search yourself and, and clear everything up so you can get ready to tackle the next day’s issues.

Hanh Brown: [00:39:43] That’s true., that’s very true. So what has real estate allow you to do for your family’s future?

Joe Anfuso: [00:39:49] I never apologize for being a capitalist. Right. And so I think it’s given me the opportunity and I think for your young investors out there, it’s a cashflow business and you’re looking to get a return so that you can one build up a cash flow for the future.

[00:40:05] So that when the day comes, when I retire, I know how the family, you know, myself and, and the family is going to be situated and a wealth building. Mechanisms so that I know that good times and bad over the rest of my life, that there’s going to be something there to help protect the family and be able to live out my life in a decent fashion.

[00:40:25] And I think that’s what every investor should have a goal of what they’re trying to accomplish. You should still have your personal goals and. Your philanthropy, philanthropic goals and where you want to dedicate time. But this business is like a lot of venture capital it’s. You’re trying to make money, and you’re trying to get a return on your money and understand that and work your goals around that.

Hanh Brown: [00:40:48] Absolutely. I believe that I think real estate is a key vehicle in creating multi-generational wealth.

Joe Anfuso: [00:40:57] I couldn’t agree. I mean, I tell people, even though, you know, I’ve gone to school and all that kind of stuff, I’ve taught, there’s still some in rich dad, poor dad. I don’t care if you’ve got a PhD, read that book as you get agents to good understanding of.

[00:41:12] What real estate can do for yourself and what you should be trying to accomplish. And I think that’s a good book. You know, another book I’d recommend your investors out there from a risk standpoint is if you’ve ever read, you know, black Swan to leaves book on risk and what happens and opportunities, you know, once you get through the, how much smarter he is than you are with that, he kind of writes in the book and just start to read the book for events that occur that are never supposed to occur or.

[00:41:41] Not going to occur in a lifetime, but yet happen all the time. It gives you a really good perspective on risk taking that. I tell everybody even the young people in our office and so forth, and they asked me what books are read. Those are just two good books from a real estate standpoint and risk reward standpoint that I think would really help out on interview listeners.

Hanh Brown: [00:42:00] Great. Great. Thank you so much, Joe, for your wealth of knowledge and look forward to next time.

You can follow Joe on LinkedIn at https://www.linkedin.com/in/joseph-c-anfuso-1a734716/

Specialties: Residential and Commercial Construction, Restaurant and Hospitality Industry, Strategic Planning/Goal Setting, Acquisition Analysis & Financing, Operational Overview/Risk Assessment, Cash Management/Budgeting, Sales & Mktg Plan Implementation, Cost Control/Return Analysis, Land Planning and Entitlements, Customer Relations/Legal Review, Motivate & Mentor Team Members, Information Tech. Planning,Proficient use of Existing Tax law, Stakeholder Communication