Real Estate Investments For Ultra High Net Worth Investors, With DJ Van Keuren

Alts are a key component in the portfolios of virtually every family office and UHNW investor. With patient capital on hand, these types of investors are likely to benefit from the diversification and sometimes outsized returns that private real estate investments can deliver.

DJ Van Keuren, co-managing member of Evergreen Property Partners, joins the show to discuss how family offices are investing in real estate, plus the alternative investment trends that may unfold over the next several years.

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Episode Highlights

  • The surprising definition for “Ultra High Net Worth”, updated for 2022 (hint: it’s higher than you think).
  • How UHNW investors and family offices prefer to invest in real estate.
  • The single real estate sector that’s more popular than any other with UHNW investors.
  • The shocking truth on tax-advantaged wrapper like OZs, and why family offices need to “spread the word” about them.
  • An update on the Van Keuren Institute for Family Office Real Estate, and the important work that the organization is doing to further education in the industry.

About The Alternative Investment Podcast

The Alternative Investment Podcast covers new trends in the alternate investment landscape. Hosts Jimmy Atkinson and Andy Hagans discuss tax-advantaged investment strategies to help you grow your wealth.

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Show Transcript

Jimmy Atkinson: Welcome to the Alternative Investment podcast i’m Jimmy atkinson.

Andy Hagans: And I’m Andy Hagans.

Jimmy Atkinson: Andy today’s episode is going to focus on real estate investing for family offices and other ultra high net worth investors and joining us today to discuss that topic is DJ Van Keuren.

DJ is a top 10 family office investor and co-managing member of evergreen property partners a family office real estate investing platform and he comes to us today from Denver, Colorado. DJ how you doing, welcome to the show.

DJ Van Keuren: Good I’m doing good Jimmy thanks so much for you and Andy having me.

Jimmy Atkinson: Absolutely, DJ was great catching up with you in Datapoint earlier this month at the IMN conference that both of us were in attendance for.

You know just a fun note for our listeners and viewers that DJ was one of my very first guests ever on my opportunity zones podcast way back in 2018, so it’s great to have you now on the Alternative Investment podcast today, DJ. Hey to start us off today, I wanted to you answer a big macro question here.

How much our family offices and other ultra high net worth investing in real estate, can you characterize that for us, and how is real estate typically incorporated into a family’s overall investment portfolio?

DJ Van Keuren: Sure um so the average allocation to from a portfolio from a family offices 24 and a half percent and that’s actually been increasing a little bit over the last number of years.

And so we’re able to we’re in our fourth year the largest family office real estate investing study in the world, actually and that’s something that we definitely track. It’s really become a large part of a portfolio for families and outside of the area where their wealth was created, whatever business that they were in real estate is the second largest area of wealth creation after that.

Andy Hagans: Wow so 24 and a half percent and you know that’s that’s pretty darn close I just had met favor on the show last week and we talked about you know used to have the 6040 and now it’s it’s more like the the.

And he wrote a book about David swensen and the the Yale portfolio and you know that idea of that increase allocation to illiquid alternatives.

Up you know you mentioned that that 24 and a half percent is going up, do you think that’s that’s going to continue to increase over time, it is some of that right now, like short term driven and the search for yield or is that a larger macro trend.

DJ Van Keuren: You know it’s gonna it on the market does well right there’s a lot of applications in that area and and there’s a lot of demographic components what’s happening in the market right now.

That will continue to have capital, as is flowing into that space, you know, right now, with the rising of interest rates and.

cosmic construction, you know there’s a lot of pause on the institutional side waiting for the repricing of a lot of assets, however, with families they’re continuing to invest there you know being careful a little bit, but they still long term.

they’re continuing to allocate toward that and.

The time periods of which they’ve been investing has come down a little bit so you still have a lot of families that because of the patient capital can continue to invest and stay in the market.

But they’re also know that Okay, things have been going well for an awful long time so let’s be aware of that, but the hard asset component, especially in rising interest rates are extremely favorable and so real estates at the top of the list.

Andy Hagans: yeah I mean what goes up must come down right, the law of gravity, on the other hand, I think a lot of investors.

With this market cycle, you know we see just everything inflates right and once inflation goes higher I think some of that the interest in real assets is.

Even if CAP rates compress down to virtually zero you know we can still have some capital appreciation.

As opposed to you know, being in the bond market where we’re going to lose our principal you know the interest is payments are not going to keep up with inflation but we’re also.

going to lose some of our principal so you know when a family office or an ultra high net worth investors looking at portfolio construction.

And and they’re looking at including alter their wealth managers, is looking at including all its.

How does that fit in so I mean is real estate, is it is it meant to increase returns is it meant to lower risk or have a lower correlation to the traditional asset classes, you know where does it fit in I guess strategically or conceptually.

DJ Van Keuren: um well, let me go back and sort, I want to address, something that you just said, you know whether it’s CAP rate, I mean we’re we’re expecting some capital expansion to actually happen.

And you’re going to see some prices coming down, just as the CAP rates go up and we have possible negative leverage around the corner.

But the one thing that you have to understand about real estate, especially when you have patient capital is as long as your cash flowing and.

It doesn’t matter if the value goes to zero, because you can hold on to that asset, you can make those debt payments, and you can have extra money is available if you got to make you know certain.

expense that you’ve got to attend to but it’s all about how much that you have on the property which was a big issue that happened at the last recession, where there’s a lot of people that were over leveraged right.

And as long as and more people are a little bit more conservative than they were before the last recession but as long as you’ve got that gap and you really need to make sure that you stress test so, for example in multifamily historically vacancy has never gone below 11% and you know that’s on a national basis, and so, if you go through, and say alright, can this property if it’s multifamily, for example.

absorb only an 85% occupancy rate and you’re still cash flowing well it doesn’t matter what happens to the market.

Because you can hold on and that’s one thing with patient capital family office capital lot of the capital that are a’s have where they can just hold on to it, but it does you know real estate back to your your last question, it is.

An important part of the portfolio one because of it, it is a hard asset, but it also helps in the type of asset class that it is in relation to your other investments that you have whether it’s stocks bonds, etc.

Andy Hagans: Do you keep mentioning that the phrase patient capital and I love that phrase I think some of our listeners and viewers may not be totally familiar with that.

Could you just kind of walk us through what that means to you and how patient capital, you know really what’s the difference between that and an everyday retail investor.

DJ Van Keuren: Well, it really let’s first off going is a number of different types of investors right, you do have the retail investor, those are going to be your.

You know your average person that might have a financial planner etc right when you move up to the next level, based upon your wealth you usually get into a registered investment advisor.

Right and that’s because now what you’re paying fees based upon performance and your assets and instead of Commission base and then you have.

You know the family office area and institutions so anytime you have institutional capital which are investing on behalf of foundations and endowments.

You know if they have if they invest into a fund then there’s usually a time frame on that fund, it could be seven years, it could be 10 years right.

And where they have to sell so imagine that, based upon your legal documents back in you know.

Oh 809 you had to sell well you just wrote in all of your games right, whereas that family office that high very high net worth family, etc, they don’t have to sell.

They have no requirements that say oh i’ve got to get out now and because of that they were able to ride through that downturn and just hold tight and wait until things come out on the other end which inevitably it will.

And so you know that’s that’s really important for to be able to have that, and you know the retail investors can do that as well.

Because, at the end of the day, you know when you look at institutional capital that they’re investing on behalf of others money’s right which could be from an endowment insurance company, etc.

there’s no personal relationship right there they have a box that they invest into this is what our parameters are, and this is where we’re investing whereas families, just like retail investors.

it’s their own money there’s emotion involved they’re making their own decisions and so that’s you know that’s the biggest thing, and I was an advisor in the 90s.

i’ve worked with our as I build out a national distribution channel throughout the broker dealer area worked with institutions, you know car LAU Goldman Sachs and then for the last seven years family so.

You know i’ve got a very good understanding of all the different channels and it’s a lot of people think families are more institutional and actually they’re more retail way.

Andy Hagans: Oh that’s interesting and actually I think it’d be a good juncture to just go over a couple definitions and I know a lot of our audience are already familiar with these terms.

But but, honestly, I see them defined differently by different organizations or different people so typically adults db or the Alternative Investment podcast.

Our normal audience is very high net worth investors, you know accredited investors who are self directed, as well as wealth managers.

are a few family offices, you know in that more professional side but i’ve heard very high net worth defined as 5 million and up and ultra high net worth.

defined as 30 million net worth and up and honestly i’m i’m thinking those figures are out of date, especially I mean shoot even over the past 12 months.

They seem out of date tonight you know I also understand the just the economics of a family office that it’s really only appropriate.

You know, once an investor reaches a certain threshold of net worth for the economics to really work for them to have their own family office or even a shared family office.

So, I guess, can you walk us through your your current thinking, even just definition, really, what do you consider ultra high net worth and when is it appropriate, economically or feasible economically for an investor to look into a family office.

DJ Van Keuren: yeah so my definition of family office first off is worth 250 million or more so, and you’re usually not going to have your own CIO chief investment officer, a lot of times until you hit the 750 million mark to a billion to really where really starts making sense.

You know a lot of people will have what’s called virtual family offices which is can be done by a third party where they’re there to oversee there’s no brick and mortars it’s just an individual that’s helping a numerous people and then.

You know, once you get to 250, mark you can really start looking at what the family office setup would look like from a legal perspective for sure, so that would put the ultra high net worth in the probably about $100 million range from my perspective.

And, but there’s a lot of people that have a lot of money between you know 25 $200 million, in fact, a couple years back.

He somebody told me that there was just in the Houston area, I think it was about 100 1500 people that were worth 100 million.

or more, which I thought was very considerable the number of family offices in the US it’s about 7000 and when you look at a global basis it’s about 15,000.

And so you know can people start you know the definition or the use of family office there’s two sides of it there’s what I call the hard side and the soft side the hard side is.

Is the investment side right where you’re investing what time of alternative asset you’re investing into real estate stocks bonds private equity, etc, and then the soft side is really dealing.

With the issues of tax planning or how do you how do you put in place for the next generation of how you’re going to transfer those generation governance.

making sure that they have a full plan of how everything’s going to operate and investment committee sometimes there’s a psychiatrist involved because of the families.

Which is funny but it’s true actually more than you think and either the more money that people have the more challenges that they have you know.

Money is great, and you cannot do an awful lot with it, both you know, for your family and enjoy yourself, but also on the giving side.

But there is a lot more that you have to deal with definitely as you get bigger.

there’s still a need for planning, even under that 250 mark for sure it just varies on where you are in that process right, if you want to pass along monies to the future generations, then you definitely need to.

be taken in consideration proper planning in order to maximize what you can transfer to the next gens.

Andy Hagans: Absolutely, so I guess that being said, and I appreciate that your definition and sort of framing what a family office is what, what do you what does evergreen property partners offer to family offices or how do you and your company fit into this overall picture.

DJ Van Keuren: So about seven years ago I fell into the family office space and about 95% of the people fall into the space.

And that’s because there’s a big exit from the sale of business i’d say and they’re like what am I going to do now.

You know I just like Sam walton I was driving his truck around and now i’ve got all this money right well I trust my.

accountant my advisor I trust my neighbor who’s ran up is sick and so those people come into the business and they don’t necessarily understand all the different investments right, and so I fell into the space, and when I started three months in.

I asked somebody who’s very seasoned in the business, I went to my first event I said so, you know I wanted to learn from her I only knew two families at the time, and I said so tell me.

You know what are you doing and she’ll die we just had a conference 60 families in Israel, I said, really, what do you talk about and she looked at me and she goes I you know hedge funds, one on one.

Thinking myself hedge funds, one on one, these are people that are obviously smart talented wealthy if you’re telling me hedge funds, one on one well, the reality is is that.

You know you spend your whole career in chemicals in tires in technology and now all sudden you’ve got this money.

And you don’t know hedge funds, you don’t know real estate to the degree you don’t understand private equity venture capital.

In fact there’s people that will spend their whole life and venture capital, not just venture capital but healthcare venture capital and then you know types of healthcare certain sizes and their whole career so there’s no way that the cios that come in to help those families or.

Or the the families himself understand all that So my first family that I worked for was a billionaire that’s out of Denver created as wealth and real estate.

But he also we’re putting 100 million in oil and gas we had three people actively trading equities, we had seven different.

Solar parts as a foundation right so there’s a lot of different components involved in that, and then I got.

headhunted by the hammond family Giorgio perfume Georgia beverly hills he came up with a an office boutique brand strategy, so we sold off some assets we bought some new assets.

wrote out the strategy, and then we brought in an asset managers have stabilized wasn’t much more to do.

And then I did some work with a family down one of professional baseball teams and over the years, I had been asked from various families about the real estate that I got one today from a very, very large families and DJ, what do you think.

Well, in five minutes I can look at it, and I can give them an idea to say what’s going on with that so because I had been asked by a lot of families over the year but I had been employed by one.

We put together evergreen property partners with a friend of mine that i’ve known for over a decade that has significant amount of institutional experience and.

has had his only fully held his own fully integrated company, where he was investing on behalf of American realty advisors and.

Paolo global management, so we combined my family office real estate experience of over 23 years his institutional experience.

Over 25 years so we’ve got about 50 years combined 15 billion in transactions of US, Canada across the table.

And we really formed evergreen for a real estate platform for families to invest together.

Families love investing with other families high net worth love investing with other high net worth.

Because they talk about other things and, quite honestly, depending on the wealth they’ll talk about things that we can’t relate to.

Just because we don’t have hundreds of millions of dollars or never so we really provide the due diligence we go through everything and we bring families together to invest in the opportunities that has been screened identified thoroughly due diligence and.

You know, invest with other families.

Andy Hagans: So, right now, it looks to me at least like what we’re in a bear market for sure technical bear market we’re talking now on June 14 I think this episode is going to air maybe in a week or two, and it also looks to me like our economy is probably entering the recession.

What impact does a bear market have on all of these real estate deals because I mean, on the one hand, it seems like in these.

Times of trouble all correlations go to one right, it seems like these assets kind of rise and fall.

Together, on the other hand, I think that the you know the the thirst for yield is pushing people out of the bond market.

And we’re seeing continued inflows into all really throughout 2022, at least according to the data that Jimmy and I have reviewed, so it is this having any impact on the arts landscape from you know the perspective of a family office.

DJ Van Keuren: yeah well The short answer is yes, you know and the real estate side, actually, you know it can thrive through through periods of time right now and there’s been talks about recession, I just read the other day stagflation has come up as well.

I think there’s a greater potential for the stagflation for a lot of things have happened in the past, which we can go to you know into if you want to, but.

You know the.

Andy Hagans: Well, so.

sorry to interrupt DJ do you think we are entering a recession or do you think that that’s sort of over and overblown fear.

DJ Van Keuren: Well you’ve got a couple of variables now I I.

You know and Jimmy I think heard this, the other day and i’ve gone on the record for the last three or four years and I just did it last year, where.

You know, we shouldn’t be entering recession till 26 or 2728 and the real reason why is because you can go back 250 years in the US and UK and Australia and real estate runs an at&t and happier cycles, so when you look at that that’s where we should be hitting to have an actual recession.

And if you take encoded into effect, you know it’s sort of like we lost a year and a half, everything was it was really a weird year so that’s why things got pushed ahead another year year and a half.

it’s going to be interesting, I think we’re definitely in waters that we haven’t been before because we had a lot of that money’s coming from the government government that were put into the marketplace, you know we also they’ve cut back on student.

student loans, which is, I don’t think people realize but there’s a significant amount of money that’s going into the economy that typically was being paid toward the student loans right.

So that’s helped as well we’re seeing rising of interest rates for sure gas prices are out of control and so.

You know the the issue that we have, and so my short answer is, I don’t really see us going into recession, personally, right now, and the real estate side you have so many fundamentals that are continuing to play out.

And so you’ve got people that are moving to a higher quality of life cost of living, I mean we’ve had a lot of people, we continue to in Denver.

People moving here right they’re moving out of California Chicago out of New York, if you go down to Florida, I think, half the state is proud populations, probably from New York or you know, one of those other two states.

And there’s still a huge demand even though CAP rates are ridiculously low in multifamily which would be willing to later, but you still have that demand of.

Housing that’s needed, and so the fundamentals have.

Andy Hagans: Always yeah yeah like in Florida, some of these metro areas have had 30% 40% running increases year over year.

But they’re fully leased up right so.

It seems like the but, as you said, the fundamentals are supporting it.

DJ Van Keuren: Well, I had a I had a conversation with Professor Glenn Miller, of the.

who’s a professor at the University dinner I consider him the grandfather market cycles he’s also the.

Academic director at the family office real estate Institute.

And I told him I said i’m really nervous about the small tight family and he started to going into is like well DJ you have to understand that there’s still.

A lot of support and backing that shows there’s that demand.

So if you’ve got people that are moving, especially if we go into a recession and things you know prices are going up or whatever the case is they’re going to want to go into.

Even more so, a lower cost area right, and then the jobs are going to go into those areas as well, and so that’s going to continue to fuel that demand, so I think we’ll you know it’s not know won’t be personally a full blown recession, they talk about it but.

You know i’ll still hold my 2728 to hit a recession.

Andy Hagans: We might be in that little mini recession right Jimmy.

Jimmy Atkinson: I think I think so yeah I know we’ve talked about that, on the past couple of episodes of this podcast at least Andy maybe we’ve already entered one maybe we haven’t I guess only time.

DJ Van Keuren: will tell what what’s the definition of recessions like two quarters.

Andy Hagans: two consecutive quarters of negative.

GDP growth, I think.

DJ Van Keuren: I think, so I mean.

that’s real I mean that’s not that long right, so you could go into you technically would go into a recession, if it was two quarters, just like you said.

But is that really gonna you know upset the apple cart I don’t think so, I think that when you’re looking at later on, so, even if we do have a dip it’ll be just that we a blip on the screen, whereas in 2728 and it could be 18 months, it can be you know 24 months.

Jimmy Atkinson: And that’s your prediction for next full blown.

DJ Van Keuren: Whole session yeah.

Jimmy Atkinson: gotcha and do, do you think that whether we’re in a mini recession now or maybe that one in 2728 that you’re predicting does that create an opportunity for ultra high net worth and family offices that that have patient capital.

With regards to real estate investing specifically.

DJ Van Keuren: hundred percent now what happened in the first recession families were sitting on the sideline.

waiting to see if things were going to start up again right, so they were waiting started seeing up turn and then they started to investing, whereas we went into co bed.

This time, and we did some studies on this, they were literally start know save up cash to take advantage of discounts right.

which never really happened and everybody thought it was going to, and it did it so where the real wealth is created real estate is during times of recession.

it’s when so you should start hoarding cash right around 2526 at high net worth I mean I don’t care how much money you have you should start courting cash to get ready at that time because that’s when you truly will buy low and have the ability to sell high.

And so you know that’s that’s where you need to take advantage of that if you if you get in and you’re into a development at that time you have to sit on the money, you have to wait it out, but if you can plan for it and be ready, then.

Then that’s where like I said a lot of wealth is created.

Jimmy Atkinson: that’s great yeah so make sure you’ve got some dry powder all of our viewers and listeners out there in about what would you say.

DJ Van Keuren: 2728 2728 and.

And that’s why i’ve been saying it actually for years now.

Is because I want families and other people to know that you’re hearing it that this is going to happen, so that when you start getting toward that and you’re like it’s coming it’s coming here we go start stockpiling cash there it’s it’s in their mind.

And they’re like okay.

All right, well, that makes sense, and then they can actually start doing that because that’s that’s when they’re really going to need to invest.

Jimmy Atkinson: Right Andy we got to set a calendar reminder or cash and 2627 a DJ getting back to.

Real Estate investing with families how our families typically doing these real estate investing deals.

What have you seen be most common are they are they investing directly into deep deals and and managing.

themselves, or are they doing joint ventures, or are they investing through third party managed real estate funds, what do you see it as being the most common and what are some of the pros and cons of each of those methods.

DJ Van Keuren: will personally be categorized the different five characteristics of real estate investing when it comes to fans, so you have families that created the wealth in real estate.

And that could be trump’s a good example, I mean his family was all real estate and that’s where they created their wealth right the next level, you have somebody like Michael Dell a Bill Gates that actually hire institutional type.

employees that have managed quite a bit of money they bring them in house and they make all those decisions themselves they’re usually allocating 20 million plus in these deals.

The third type of family office real estate investors are those that say hey I want to build my own platform i’m going to buy my own properties and so i’m going to.

You know I might hire a person to oversee the properties right and to make sure the property management or whatever the case is and they usually on those direct.

For type of family are the ones that invest with operators, the average amount that sponsors operators.

That they work with is anywhere between four to six because they like to build a relationship get to know them.

and continuing to invest so they’ve been successful they’ll keep investing with those operators sponsors, etc.

And so they’ll go direct and then the fifth kind are families that just don’t have any infrastructure any know how and they go into two funds now when you look overall where what families like 70% like to go direct they like to go directly into.

Investing directly with an operator, or in the one specific property rather than a fund.

that’s easy way to explain that, and then you know 45% or so like to co invest with other families.

And you know the funds families will invest in the funds when one they don’t have the expertise in House just like I said.

Or the funds provide an opportunity to do direct investments by being an investor into the fund so there’s sidecar examples of, say, you know.

ready to check for X amount and will also give you direct deal flow so that happens as well.

The number one property type, which has been the same over the last three years going into the fourth year if you can guess what that is it’s.

multifamily 70% of the families like to invest into multi families and, secondly, this year it’s industrial about 55% like to go into industrial.

Last year office had replaced industrial and so now, you know industrials taking that leap, there is good appetite and the single family Rentals.

What you don’t see investing which I think it’s very interesting is that you get very little family offices that invest in two weeks it’s less than 5% now their foundations it’s more like 20 to 25%.

But when it’s talking about their own portfolio it’s very small and crowd fundings you know under 2% and there’s reasons for that.

But you know families definitely like to go direct and and.

But the optimal portfolio, I was talking to Joe paglia who’s the head of real estate at the Chicago.

University booth school, he said that the proper allocation to real estate is 15 properties.

And the only way, you can really get that is if you’re going to go into a fun so there’s a lot of benefits to funds but families, like the transparency.

And they don’t like the fees that are involved with funds because there is a double promote I mean you there’s fee level funds and then you’ve also got fees down at the property level and so.

So that’s why they like to go direct majority of time.

Jimmy Atkinson: yeah and if you can go direct if you have the expertise to go direct or if you’re a.

Bill Gates or Michael Dell and can afford to hire the institutional type experts to go direct that’s that’s clearly the way to go, but I would imagine for some families that’s that’s not an option.

A lot of times you touched upon you actually answered my next question I was going to ask you about the most popular real estate sectors only you mentioned multifamily being the favored.

Asset class within real estate among families, maybe you could paint a little more about around that why, why is that Why is multifamily so popular and.

Has it always been popular do you anticipate it’ll continue to remain a particular sector or might it fall out of favor and maybe get replaced with some other sectors down the road, what are your thoughts there.

DJ Van Keuren: Well, you know, the thing about multifamily and it’s my favorite property type personally.

But one, you had the diversification of a lot of different tenants right, so you can have 102 hundred different tenants So if you lose one it’s okay right.

Use 10 it’s Okay, you still have a low vacancy rate and so that’s one reason why that’s that’s preferred a lot and also it’s very easy to understand right it’s it’s.

plate people need a place to stay and if they’re not going to buy a house, then you know you’re going to go into an apartment and.

You know and there’s a significant demand, especially when you start going down if we change into the workforce, housing, where there’s a huge demand for that, and then the story, it is a big story, I mean you’ve got people are waiting later to get married.

And you’ve also have the younger population that don’t necessarily want to house, a lot of a lot of people moved out from the city Center to the suburbs.

And then they realize the cheese I gotta take care of the lawn I got issues with the House I gotta take care of and so they’re starting to migrate back into the cities.

And so it’s more of a lifestyle, but the you know we’ve got more people people talked about the baby boomers all the time we’re in 10,000 are turning 60 every day.

When you look at the next wave is actually greater than the baby boomers they’re coming through and that’s why the demand for housing is going to continue on for the multifamily over the next five you know six years, etc.

Jimmy Atkinson: Are there any other trends within any other sectors that you have your eye on like hotels, for instance, obviously, took a little bit of a downturn during Kobe is that rebounding.

Maybe the same thing for office, maybe industrial has some structural trends and its favor due to you know retail taking a hit and the rise of E commerce I don’t know just just some fodder there.

What are your thoughts on some other sectors that are.

experiencing some trends.

DJ Van Keuren: yeah so we’re very, very bullish on industrial and there’s going to be an industrial matt demand over the next five years, where you know needed additional supply or or what.

we’re very bullish on to specific type of industrial which is cold storage where 70% of the cold storage facilities were on a date, the average age is about 47 years old.

there’s seven year demand for that, not only in the US, but globally it’s about 200 million square feet that’s needed over the next couple years there’s only like 30 million square feet in the pipeline.

So that’s a great area it’s more of an expertise area, and then the other is small be industrial small be industrial is about.

Where self storage was about 1012 years ago, so it was under the radar a little bit institutions are starting to realize you’ve got multiple tenants in a facility in the usually infill locations.

And a lot of mom and pop so there’s a lot of opportunity for roll ups so we’ve been really.

keen in that area, and you can buy him a great CAP rates, you know when you.

Which when you’re looking at multifamily yes there’s a demand but you’re some people are buying a three and a half for caps where we can buy at a.

seven eight camp that’s a pretty significant difference right and then you’re selling at a five five and a half CAP, you know if you’re going to turn it around a little bit office um you know if you’re contrary and now is the time to buy, however.

we’re in a period of time that has never ever happened before in history because of COPA right people started working from home you got a lot of people that are.

I don’t want to go back to the office or the company sand will come in twice a week or whatever the case is and so that’s going to have a significant effect on office, and we really don’t know where that’s going to go.

i’ve got some good friends that are investing in the office, and if they hit it right they’re going to make a ton of money.

If it doesn’t come back then, you know they’re going to be a situation where you’re sitting on a lot of buildings and there’s been a lot of conversation about converting some of these offices or even the floor, the offices into multifamily.

You know, to hit some of those demands, you know retail is actually done it did it’s done very well when you look at the stats retails done really well.

But you know the malls or another story that big boxes are a whole nother issue, but the small strip malls you know they’ve done pretty well, especially because people have stayed within their areas of communities, and so they frequented these and went to him so.

You know, hotels, we had during the risk coven we actually were the largest investor from our investors.

To invest with the Marriott family, and so we were buying and looking to buy distressed and there was some distress, but not to the degree that people thought and the amount of people that went to the you know started going to resort was pretty significant.

But it’s that starting to come back around you still have a lot of people that are going back to you know work in general, which is a whole nother topic which I don’t know where all these people are working if there’s such demand.

But you know the two biggest opportunities that we see is.

Industrial for sure, like we said also mobile home parks if there’s you know the affordable housing issue and that’s one of them.

And so there’s some groups that are using modular homes 600 square foot homes in these communities and it’s filling a demand and there’s actually backlog as well, so we like that space to.

Andy Hagans: awesome DJ I know we’re running short on time here, but I had one more question from my end that I wanted to ask, and this is top of mind for myself and Jimmy.

Tax mitigation and tax advantage strategies obviously jimmy’s the founder of opportunity db and is a real guru on the opportunity zones.

tax incentive and of course in our listenership lot of interest in DST is Dolores statutory trusts and other tax advantage investment structures.

You know, and you mentioned that a lot of families, they like to invest directly to avoid fees, I mean to me it all comes down to triple net returns.

When you’re looking at you know stacked fees when you’re looking at inflation running at 8%.

um you have whether you’re an advisor or an investor, you have to look at that triple net, so my question for you our families are they putting tax advantage strategies is that, like at the top of the list.

In terms of or is that more something that you look at once you’ve made your investment selection.

DJ Van Keuren: it’s not to the degree that you would expect, so the DST, which is part of the 1031 exchanges for the fourth year in a row 80% of families don’t utilize 1031 exchanges.

wow and we were looking at the opportunities zones, I think we’re up to maybe high 20s of families that go into them that’s it, you know, everybody thought families were going to go into those because of the you know all the advantages and i’ll need to go.

Andy Hagans: Well, DJ they should I mean you got to spread the word here.

DJ Van Keuren: I listen I.

don’t.

The reason why they did is initially waiting on the rooms, so they had no idea about the room and they’re like what’s happening what’s happening.

Another reason is they don’t understand really how they work, believe it or not, they don’t so it seems to me, and you guys would know better than.

A lot of a high net worth has really been taken advantage of these opportunities oh so I mean you’ll get an occasional family that are at a $50 million check or $25 million jack.

but not to the degree that you’d expect and so there’s another example of a tax benefit that’s not taken advantage of cost segregation, I sent out an email a couple years ago just talking about it and I had.

I cannot believe how many families called me to say, DJ can you introduce me to you know somebody that can explain this to me and help with it that’s a huge benefit and then, of course, you get the interest rate deductions you get the.

You get the benefits of the you know from the amortization and from the depreciation and whatnot so real estate has a tremendous amount of benefits we ironically.

Over the last five and a half years i’ve been working on a structure that deals with 1031 exchanges that doesn’t exist in the market, so what happens is that, rather than an average of a half percent return historically in these D estes.

you’re able to get 12 15% because we can do, evaluate opportunistic and development, whereas you can’t do those in the DST and actually they’re quite heavy on expenses to so and that was all created through.

just seen figuring out that there’s got to be an opportunity to really crack that code, but tax wise, I mean, believe me.

I think that what you guys are doing on the opportunities on site, I mean we do need to discuss a way to really get that information out because it’s not you know it’s not really being discussed, and in fact we’ve already listed it as one of our.

Part of our classes with the family office real estate institute that we hold at the University of Denver to talk just two hours about options hey studies, the whole deal.

Andy Hagans: Well, DJ I think I have been the victim of misinformation, because from everything I read in the New York Times and hearing the media.

Ultra high net worth they don’t pay any taxes at all, and from what i’m hearing from you, which does check out is there’s just a ton of low hanging fruit, with just basic tax advantage strategy, especially.

In the world of real estate just doing acquisitions doing deals inside the right rapper inside the right legal structure and, like, for instance with the opportunity zones Program.

it’s an opportunity to make an incredible impact on a local community that needs investment.

While also receiving that tax benefits so it’s win, win but that’s part of our mission here at the Alternative Investment podcast and it all CB.

it’s just to spread the word on a lot of these tax advantaged investment strategies that again I think they really are low hanging fruit isn’t that right Jimmy.

Jimmy Atkinson: that’s exactly right Andy I mean that’s that was actually why I founded opportunity db when I did, four years ago, and I was really glad to have DJ on is one of my first guests, because I.

For heard about the opportunity zones program and I went to the Internet and googled opportunities zones, there was hardly any information so that’s why.

that’s why I found it, it was I thought there was an opportunity to you know get some more education out there and help spread the word and and I hope we’re doing that the right way and opportunity db and here at all stevie as well just.

DJ just to wrap up really quickly you touched upon the Van cure and institute for family office real estate was wondering if you could spend the last couple minutes of our interview today telling folks about.

What the mission of that Institute is and and in the the work that you’re doing there.

DJ Van Keuren: So when you look at families 90% or 70% of families loser wealth by the second gen 90% by the third generation.

And and that’s I mean that’s a significant amount of money right.

And so, a lot of that around that has to do with education, so in my first year after I talked to that person about you know said hedge funds, one on one.

I started with a website, you know just to educate people that I wrote a book on family office real estate investing and started doing some podcasts speaking at events videos.

ended up starting the family office real estate magazine, which is a quarterly issue and.

And that ended up ultimately growing the where the University of Denver had initially asked to start the family office real estate Institute and.

You know, we had we spun out we’re now it’s we’re doing it ourselves we’ve got institutional real estate in handling all the.

back office operational and they’ve been around for 3040 years, and yet publications in three continents as conferences, etc.

But it’s all focused around executive education, and so we do have some virtual classes, but we had our first one on campus at the University of Denver, and we have professors from hardware from work from.

University of Chicago Business School from university of Denver.

And we’ve also have industry experts that deal and work with hundreds of families and high net worth and stuff like that so.

it’s an executive education program that we have and then we’re supporting it with.

Case studies we got approved for the journal family office real estate, which will be an academic Journal and universities around the world.

we’re going to create the family office real estate index the for index to monitor how families are investing in within cities and other families can look at that.

And then, of course, will have educational information which Jimmy I told you will have to get you on a.

podcast to interview, you have you read an article or whatnot and maybe even have you teach your class because it’s important to get this information out that’s it for Fr E.

institute COM, but that Institute, where you can find more information, and you know my mission is to really to me real estate, is the best investment in the world.

You have tax benefits that we talked about you’ve got a hard asset, and you can see it it’s physical right and historically it’s got great returns so.

As part of that mission to get that word out and help families not have to lose that and and maintain well not only maintain but also create wealth.

Through real estate, is how the US to to really came about, to help with that so that more people can understand opportunities zones and take advantage of them.

or 1031 exchanges or portfolio diversification, the whole thing so that’s what we’re doing and and you know our board just to finish up.

families that are represented on their include Panda express best by.

Paul Tudor Jones Johnson and Johnson, we got a major beer family.

we’ve got Chicago cubs you know so we’ve got quite a number of families there to help with the direction and the content for what we’re doing and then we’ll have our first family office real estate Conference in March of next year.

Jimmy Atkinson: Well that’s great I love what you’re doing there and sure i’d love to help any way I can come on the podcast and and teach a course that at the Institute, they just let me know when and where and.

i’ll try to make it work for you, DJ i’d love to help any way I can do before we go where can our listeners and viewers go to learn more about you and evergreen property partners and maybe you can give that institute URL one more time.

DJ Van Keuren: yeah so if you’re looking at evergreen, which is that consortium platform it’s evergreen property partners COM.

For the Institute it’s for which stands for family office real estate dot institute so not calm, but for that is to do.

And then, more information about me, you can go to DJ and Karen calm and and find information for me and anything I can ever do to be of help or provide information or or whatnot and happy to help in any way.

Jimmy Atkinson: terrific and for our viewers and listeners, if you want links to all of the resources we discussed on today’s episode, you can access the show notes at all db.com slash podcast.

And don’t forget to subscribe to the show on YouTube and on your favorite podcast platform so you’ll be sure to receive new episodes as we release them DJ it’s been a pleasure speaking with you today thanks so much for being here.