Self-Storage, RV Parks, and Major Exit Deals with Ian Burnstein – EP 82

Interview with Ian Burnstein

Self-Storage, RV Parks, and Major Exit Deals with Ian Burnstein

Today, I’m talking with Ian Burnstein, an entrepreneur and investor with an extraordinary real estate track record, specializing in acquisitions, development, management, and more.

He is the co-founder and principal at SPM Advisors LLC., which invests in multi-family, RV parks, self-storage, cannabis dispensary sale-leasebacks, and other sectors. They have been a part of more than $500M in transactions since 2015.

He’s also the co-founder and COO of Storage Pros Management LLC, the co-founder and President of the Storage Business Owners Alliance, and has been an active principal in more than $2B of real estate investments.

The list of other businesses, advisory roles, and real estate deals that Ian’s been a part of goes on and on, but today, you’ll get a chance to hear his inspiring story.

We talk about his comeback from 2 major life-threatening setbacks, how he built and scaled a self-storage empire, and the pandemic-proof real estate asset class that’s crushing it in 2022. That and a whole lot more!

Featured on This Episode: Ian Burnstein

✅ What he does: Ian Burnstein is a husband, father, Entrepreneur, President of the Storage Business Owners Alliance (SBOA) COO of Storage Pros, founder and principal at Equitable Advisors

💬 Words of wisdom: We’re destroying projections all over the place. The RV parks that we’re doing, we’re buying them and we’re renovating them. We have owned them for two full seasons. We’re refinancing, sending back all of the equity. And then after you get back the equity, you’re still making 15% to 20% on your initial investment. There’s no reason to sell. We’ll sell eventually for a ridiculous amount of money, but the returns are insanely good. This is by far the heaviest concentration of investment dollars that I have in my portfolio.

🔎 Where to find Ian Burnstein: Email | LinkedIn | Twitter

Key Takeaways with Ian Burnstein

  • Born for entrepreneurship. Hear how Ian made $20k as a college freshman, among other entrepreneurial endeavors.
  • The story of how he got into self-storage—and the big shift that’s happened in that industry.
  • Scaling to 100 investment properties and making multiple exits.
  • How Ian persevered through 2 life-threatening situations and how they gave him a newfound perspective on life.
  • The difficulties and benefits to starting your own bank – and how this move will allow Ian to serve entrepreneurs in his community.
  • How to unlock the value of your real estate using leasebacks, and how Ian is doing this in the Cannabis space.
  • Investing in RV Parks—pandemic-proof real estate that’s crushing it in 2022!

Ian Burnstein – Recession Proof Real Estate

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Read the Full Transcript with Ian Burnstein

Justin Donald: What’s up, Ian? So glad to have you on the show.

 

Ian Burnstein: Great to be here. Thanks, Justin. Always a pleasure.

 

Justin Donald: This is awesome. Well, you and I have had a chance to work together quite a bit. First, we really met each other through our investment community, through TIGER 21, and have just kind of developed a friendship from there. Your reputation, as I vet people, your reputation just preceded you on so many levels. And it was cool having the president of TIGER 21 saying, “Wow, Ian’s an amazing guy. You got to get to know him better.” And I had several people in my vetting process that just had nothing but great things to say about you. So, I just wanted to share that with you.

 

Ian Burnstein: They’re very kind. They’re all lying but very kind.

 

Justin Donald: So, I’m excited to talk to you today about really an incredible life journey that you’ve had. You have done so many cool things from a professional standpoint as an entrepreneur, as an investor. You’ve reinvented yourself many times. You’ve also had some near-death experiences, and I know those have shaped and defined kind of who you are and where you’re going, and how you view life from a different lens. But I’d love to start just at the beginning with how you knew, how you figured out that you were going to be an entrepreneur and an investor.

 

Ian Burnstein: If you ask my parents, I knew ever since I was a kid. I mean, just literally lemonade stands, paper route. I would go, in high school, I would buy Michigan hats, gloves, and shirts, and go sell them before the games in the parking lot. And I was always looking to make money. Loved it. I had a car washing business for a summer. And then in college, I did really well making t-shirts and posters. In fact, I made a t-shirt when Michigan won the national basketball championship in ’89 and here I was a freshman in college and sold almost 20,000 shirts and made just over $20,000. And as an 18-year-old kid in college, it felt like it was $10 million today. And I just always knew I want to do it. And then going to college always had some kind of business going. And then I got to the end of college and it is different than it is today. Like, you didn’t really necessarily think about starting your own business. It wasn’t near as common and none of the jobs interested me. And as a backup, I had prepared to go to law school, and really for lack of anything better to do, I went. I figured it would always help me. And then I got into real estate law and that’s where I met a bunch of people in that space. And I really liked real estate and I ended up going to work for a client.

 

Justin Donald: That’s awesome. And I just loved this whole idea of earning $20,000 as a college student. And what’s interesting is I was in the same boat because in college I sold Cutco and I hustled really hard and I was paying for my own education as well. And so, for several summers, I had in that summer break earned close to or in one summer over $20,000, and you did it before me. So, inflated value, you’ve got me beat but what an incredible feeling to just know that in college you got your education covered. You can do all the fun stuff that you want to do. You’re not limited. You get this taste of freedom at an early age that I think really has an impact later on where you want those same choices, that same freedom. You don’t want to be put in a box where you can’t have that. Am I right?

 

Ian Burnstein: Yeah. I mean, listen, I was a little more fortunate. I had my parents actually paying for my education, which is very lucky. But they always, you know, they made me work, right? Like, I went to a private school in high school and I had a lot of after-school activities. My father actually was completely self-made, made me petition the school to get out of some after-school activities so I could work. And that really taught me unbelievable lessons. And most importantly, I think it just taught me how to get along with everybody. You know, I had a couple of jobs where I was the only one that had a car when everybody else took the bus to work. It taught me discipline, hard work, and just really appreciate what it takes to earn a dollar and really just appreciate how you’ve got to get along with everyone out there, whether it’s your boss, whether it’s a fellow person at a fruit market you’re working with or you got to be able to work with the waiters and waitresses just when you’re busting tables so you can maximize tips. Like, you just got to find a way to ingratiate yourself with people.

 

Justin Donald: Yeah. There’s no doubt about that. And I think you have become a master in that space because you don’t just have friends, you have raving fans, people you know are just such loyal supporters, advocates. They’re just endeared, this endearment to you, and I think that your character, your reputation, that’s really the lens that they look through. And so, for you, what happened where you started getting into, I guess, what was your first? I know your first big thing was storage, self-storage, but was there something that was a segue before you got into that and how did you get into it?

 

Ian Burnstein: So, it’s a great story. I mean, it’s not a great story but it’s an interesting story. So, almost everybody here in storage, especially back when I got into it, nobody, you know, you don’t grow up wanting to be in storage, right? Like, you don’t grow up as a kid saying, “I can’t wait to store stuff.” Right? So, when I left, I hated being a lawyer. I mean, I hate it. I was really good at bringing in business. I love negotiating deals but when it came to sitting down and drafting documents, I don’t have the attention span. I know that very much about myself now. As much as I would try at the time, I’m just a big picture guy. If you use the Gino Wickman EOS philosophy, I’m the visionary, I’m not the integrator. And so, a couple of years in, I was bringing in a ton of business and I wasn’t being compensated for it. I realized I needed to control my own destiny. And so, I had a bunch of clients at a young age, which I was very lucky to have, and I started talking to a bunch of them about what’s next. And luckily one of them who was in the paving trucking business of all things, who they actually had a big real estate business on the side, and they were developing subdivisions and industrial buildings and we contacted one another almost at the same time. I was looking, they were looking, and they brought me in. And literally, I left the law on a Friday, showed up on Monday for the new job.

 

And while I was transitioning from the job to the new career, I was helping these guys with a building they were going to put a new trucking facility on. And while I was still acting as their lawyer, another partner/employee, we started talking about what else we could do with the land and they actually said to me, “We’re paving trucking for all these storage properties. There’s got to be something to it. Ian, why don’t you go figure it out?” And so, literally, first day on the job, called a consultant or two, signed up to go to some trade shows, and instantly realized this is a real business, something we should be doing, and got into it right away. This is back in 2000. It was a great time to be getting into that business. You know, it’s a very challenging business now relative to where it was. Still a great industry. I mean, don’t get me wrong, it’s probably still one of the better performing, if not the best performing real estate asset class. But when we got into it, very few people went into it, very little sophistication, very little institutional money, only a couple of REITs, very fragmented. And now it’s very difficult to buy at a competitive price because you’ve got all these institutions and private equity firms bidding against you in every deal. So, the likelihood of finding a good deal is becoming much more remote.

 

Justin Donald: Yeah. And it kind of is the, I guess, the lineage of what happens with all these different real estate asset classes where it starts out really unconsolidated. You have some mom and pops that own it. You’ve got a few people that come in that try and buy it. Eventually, when you have the big enough portfolios, your institutional owners and investors want to come in and gobble it up. They don’t want to do the heavy lifting of like one at a time. They want to be buying portfolios of good size. And so, that’s…

 

Ian Burnstein: That’s exactly what we did. That’s exactly what we did. Yeah.

 

Justin Donald: Right? And so, it’s interesting because I look at, as you know, I have had a lot of success in mobile home parks and RV parks and that’s really my bread and butter. But along the way, self-storage was really that like back in the day, it was an eyesore. There was a stigma, maybe not as great of a stigma but it wasn’t a sexy asset class but it eventually became a very sexy asset class, as is the mobile home park and RV industry because now you’re looking at the numbers. You’re not just looking at like, “Oh, I’ve got four walls, a door, a lock. I’m storing stuff,” or, “I’ve got a rundown mobile home that’s in maybe a bad part of town.” And it’s totally shifted. So, you’re still at a point. So, basically where self-storage is today is where I believe that mobile home parks and RV parks are going to be headed. They’re not quite there. It’s still the least consolidated asset class but it’s going to follow the path of self-storage, in my opinion. And that’s what happened. Self-storage became more and more commercialized and more and more institutionalized. And you have these big players that came in that basically bought it all up. I mean, it’s predominantly institutionally owned today, right?

 

Ian Burnstein: Way more than it was. You know, you still have a lot of mom and pop operators out there but I haven’t looked at the most recent data. But at one point, it was only 4% owned institutional. Now, last I checked, it was in the high teens. So, it’s definitely made a big shift and getting more so there every day.

 

Justin Donald: Yeah, no doubt. So, how long did you kind of put together, I guess, how long did you stay with those guys? Did you stay there the whole time? Did you break off and do your own thing? How big did you build your portfolio before your exit? I’m curious on all the details.

 

Ian Burnstein: Yeah. So, it was great. I mean, these guys were really good partners. You know, they’re still good friends to this day. One of them is in my Tiger group, actually, very close friend, and we built. We developed, built, and managed three properties. And then actually I started third-party managing for quite a few others. We got into some other asset classes and then in 2006 negotiated a sale of the properties we had. Did unbelievably well with those.

 

Justin Donald: Nice timing, ’06? Nicely done.

 

Ian Burnstein: It was good. Well, even better for me and not for them but we also at the same time, I almost moved to Charlotte. We were doing, we had eight developments, residential developments in Charlotte. It must be close to 2,000 lots in a contract. And then when I decided kind of what they offered and what I was looking forward to align, so I decided to leave. And then one of the partners didn’t. He said, “If you’re leaving, you got to sell us all your interests in the residential as well,” which I was very upset about. I mean, we negotiated with lawyers for a long time and finally just decided to just get out. And in January of ’07, I assigned my interest over. I got a decent check and took my name off all the personal guarantees. You can imagine what happened after that. Not pretty. And I was out. And so, I met my new partner at the very end of ’06 and we started in ’07 and bought ten properties and the crash hit. We were in great shape. I like to believe that I’m one of the very few guys out there that did not renegotiate a single loan and get any discounts on any loan. We were doing too well. I would have taken it at the time but we couldn’t even get in through too well. So, I paid back every dollar I ever borrowed ever. And all of a sudden, a year goes by and we ended up getting a… The bank started contacting us because we were the only guys without a black mark on us.

 

And so, we started going crazy from end of ’09, began at ’13, we bought just shy of 70 assets, probably $0.20 on the dollar. And we manage everything ourselves. I mean, I was on a plane four or five times a week probably going all around the country. And we ended up, all of a sudden, things started settling down. We refinanced everything. And long story short, we grew a portfolio to right around 100 properties and we’ve since sold them all.

 

Justin Donald: Hey, congratulations on yet again another exit. So, that’s three now that I’m counting without…

 

Ian Burnstein: So, we actually had a decent exit in ’14, another one in ’15, and then we had a couple of decent ones along the way, and then we had another big deal going right before COVID. We signed a huge contract and then they walked when COVID started. And then by October, we actually got an offer for 5 million more than we were offered back in February, and we sold those. And so, then we had a couple more left and we just sold those in the last six months.

 

Justin Donald: Wow. So, you’re just totally out of that game with multiple exits. That’s really exciting. I feel like most people, number one, most people never even get to scale. Number two, those that get to scale generally don’t sell. They often don’t sell at the price they want and sometimes they’re sold at a discount because they didn’t structure things the right way. They use too much bridge loans and financing and maybe just timing was off but you were able to have multiple exits. Good timing. Great timing. And you know, ’06, ’07, great timing pre- or mid-COVID, I mean, just incredible to hear. And so, in the process of doing all of this, you had not one but two, let’s start with the first one, life-threatening situations, a total scare where you are almost wiped off the planet.

 

Ian Burnstein: Yeah. Back in 2003, it was actually right after I lost my father end of September, which was a rough go. He’s a best friend, best man at my wedding. And then Thanksgiving, I had this weird thing happen. I had this flu I couldn’t kick and it was going on for a long time. We went to the doctor and like, “You got the flu. Nothing you could do. Just rest.” Of course, I didn’t. And December 9, this carried on for like three weeks, December 9th, actually the day before I went to go meet my wife for dinner and I was really in one of the bookstores. I literally I couldn’t read. I couldn’t comprehend words. I figured I’m tired. Next day, a terrible headache. We were eight weeks pregnant with our first and had just told my partners, you know, paving truck guys, Dan and Bruce, I just told them that we were pregnant. They were really the only ones that knew other than our family. And yeah, we drove home. I don’t remember driving home. I guess I made myself to dinner. I don’t remember doing that. And I’m always was up late working and she comes home. She was at a book club with friends of all things and comes home and I’m in bed. She thought it was weird. I left a mess in the kitchen, which I’d never done before. And she woke up at night, I had a grand mal seizure. And still, they put me in a drug-induced coma for eight days. I don’t remember being awake the first four of them.

 

When I got to the hospital, they had no idea what’s going on. They told my wife, this is very serious. For days, they were like, “Well, if he makes it through, he’s going to be here a long time learning how to walk, talk, read, write, tie shoes, and it’s going to be bad. And so, the first thing I remember coming to was, “Okay. You’re going to be here a long time.” And I’m like, “I want to go home.” And they’re like, “You can’t even sit up. You can’t feed yourself. You can’t walk.” And minutes later, I literally sat up, fed myself lunch, walked up and down the hall and they’re like, “Oh my God.” The doctors that I see today that saw the case, they couldn’t believe that I survived, let alone kind of be able to come back in the way I have today. But for a year, it was a really tough go. I was still having seizures. I couldn’t handle a lot of sensory-type items. And literally, six months later, I worked my tail off in occupational therapy, and six, seven months later I’m doing third-grade workbooks and I’m not getting answers right. So, I mean, I couldn’t do my job. My wife’s meeting with my partners. They’re like, “All you can do is shout.” I’m like, “No kidding, can’t do anything at home either.” So, it was very, very depressing too and you’re trying to hide it. It was a really, really tough year but I made it through somehow.

 

Justin Donald: That’s incredible. And I just can’t believe the progress that you were able to have. The doctors, the medical staff thought that you were going to die. They never thought you’d recover. You started recovering. It was not a fast recovery, right? You’re talking seven months in and you’re still doing third-grade work and not getting it. And that had to be incredibly frustrating for a guy that overachieved and was an attorney and a real estate guy. And so, how long until you felt like back to yourself?

 

Ian Burnstein: I mean, my wife would tell you it was 18 months.

 

Justin Donald: Okay.

 

Ian Burnstein: I was in great physical health before that. I just run a marathon. I was very committed to exercise and health like now, and I was in great shape. So, they think that was very much a factor that saved me.

 

Justin Donald: Oh, I’m sure it was. And what are some of like the ahas that you had these, I would imagine, that life forever changed? You make it through this. You make it through, for a while, it’s probably just survival. But once you get beyond that, what’s the new perspective that you have? I feel like life has to become a lot more cherished and family has to become a lot more important through this process because you’re doing this as you had your first child.

 

Ian Burnstein: Yeah. No. I mean, there were nights I’d do the night feeding and I’ll be holding my kid thinking, “Holy sh*t, I almost didn’t get to meet you.” My daughter wouldn’t have existed. It takes you to a whole nother place. And so, sometimes I’d be disappointed in myself, where I feel like maybe I don’t even appreciate the severity of it, and then other times I feel like I really do and it’s really kind of guided me and put me in a good position. But one of my main philosophies is to live without regret. And so, that was one thing my father said to me when he told me about his diagnosis and said, at this point, he was to not meet my kids and leaving this world too early but he doesn’t have a single regret. So, that really resonated to me and then you got to do a lot to bother me now. And so, you talk about don’t sweat the small stuff. I mean, that’s like I don’t use those words but that’s how I live. And if it’s a question of should I do something or should I not, like screw it. I’m going to do it. I may not have that chance again. And so, I would think that that was a very important principle of how I’ve been with my family, my friends, and definitely in business, right? Like, okay, if something doesn’t necessarily work out in business, okay, that’s okay. No one died, right?

 

In fact, I own several different businesses and one of them is a marketing business within the storage industry. And I remember an employee who still works with me ten years ago. She sent out the wrong email to our entire database and came to me in tears and I said, “It’s okay. Are we out of business now?” She’s like, “No.” I said, “Anybody call or complain?” “No.” “Anyone got hurt?” “No.” “Anyone lose any money?” “No.” I said, “Okay. Don’t do it again.” And she’s like, “That’s it? You’re not mad?” I’m like, “What’s that going to do? Did you mean to do it?” “No.” I said, “Okay. Well, now you won’t make that mistake again.” And it’s not a huge deal. So, something like that before, I probably would have lost my mind.

 

Justin Donald: Yeah. It’s really refreshing to hear kind of the relaxed, laissez-faire type of attitude and just way of living. I think your team just has to really enjoy that. It’s powerful. It’s easy. You become very easy to be around because there aren’t these triggers and you kind of get what you know. You get what you expect, which is nice. So, inside of this, we’ve got kind of a life-changing situation, trying to figure out what next steps are, a team that stayed with you through it, right, your partners, which is great. You eventually move on. Hopefully, this is all in the rearview mirror but it’s not necessarily, right? So, give us the next portion of the story.

 

Ian Burnstein: Yeah. So, I knew this actually. So, everyone always asks, were the two things connected? I would say, “Nah.” The brain thing was a form of encephalitis. It was all viral. It was just a fluke thing but I knew it before that. When I was 32, my mom had a disease called polycystic kidney disease. And so, she told us that kind of right before she needed a transplant and we had a 50/50 chance of having it as well. So, I knew it was out there and I got tested. It turned out I had it and I just never – there’s really nothing you can do, right? Polycystic, many cysts growing in your kidney so eventually it kills your kidney and you need a transplant and it goes undiagnosed for a lot of people. So, I knew I had it and I did everything you could do. I ate right, I kept my weight down, I exercise, I quit eating meat, and I was doing everything right. Then at age 46, I was really hoping and I was on a drug trial too, which was not easy to handle but I figured I’m going to make it into my 60s. My mom made it until she was like 50s so I’m going to make it until my mid-60s and that way I can just kind of have a normal life until then. And all of a sudden at age 46, health went pfft and every month I had to start going to the doctor every month. Every month my numbers went down.

 

September of 2016, I ended up having bad enough results. I got on the list and then all of a sudden, like within a year, it got real serious. They want to give me a port to maybe start doing dialysis. My wife got tested. She was a perfect match. And I said, “I can’t take it. Not right now with the kids this young. I said, “Something happens to you, I would literally rather be dead.” And so, she said, “You got to promise you won’t go on dialysis. You’ll take it first.” And I said okay. So, I literally went home. I fairly googled shortest waitlist for a kidney. And luckily, the two, one was in Madison, Wisconsin. The other one was Toledo, Ohio. I got right to the finish line with Madison. I thought it was just logistically too difficult. Toledo was only an hour and 20-minute drive from me. And I got on their list on a Tuesday, July 24th. And on the 26th, Friday, they called me with a kidney.

 

Justin Donald: Wow.

 

Ian Burnstein: And I told myself, literally, for the last two years leading up to it, I wake up every morning, I would literally say this out loud. I said, “You’re a good, nice person. The universe is going to reward you with a kidney.” And sure enough, I did. Actually, right here, this is my donor and he’s my angel. And he was a 26-year-old kid from Fairborn, Ohio. I’ve become real good friends with the family. He had an unfortunate early death at age 26. The family made the brave decision to donate his organs and the first thing I do in the morning is thank Tyler.

 

Justin Donald: That is a powerful story and what a great way to let his legacy live on with the picture right there in your office. And what a great way to just be reminded of the blessing that you have and just people that are willing to just think about more so than just in that immediate situation and the benefit, the good that donating organs can do. It’s incredible.

 

Ian Burnstein: It was amazing. I mean, the whole process, the whole community I give back. I mean, I’ve joined the board of the hospital. I’m on the Organ Donation Institute. I’m on another national board in Denver. Just want people to have the same good fortune that I had.

 

Justin Donald: Yeah. That’s incredible. And it’s neat seeing you be able to pay it forward as well. I just think that that’s such a cool story and there’s going to be so many ripples of positive healing and blessing that come from that. Very cool.

 

Ian Burnstein: I hope so.

 

Justin Donald: So, you’ve got this new outlook on life. Life is this cherished commodity that you can lose. It can be over at any point in time. You’re a young guy in your late 40s. You’ve got the second half of your life in front of you. So, I’m curious, what are you up to today? I know you’ve got…

 

Ian Burnstein: Well, I’d like to say late 40s. I’m 52. So, a lot. I mean, a little too much. You know, I joined the board of a lot of companies. I’m on the advisory board for four. I’m in the actual board for two. I am heavily committed to – we run a free medical clinic in my father’s memory. We’re giving away about $10 million to free health care a year. We’ll do about 8,000, 9,000 patient visits this year between dental, medical, free licensed pharmacy. We’re now doing COVID vaccines and mental health visits as well. So, amazing, amazing place. And so, I’m serving my time now. So, the thing I loved about storage was kind of building up a portfolio and getting economies of scale, putting together the good teams. I don’t plan on ever being the guy upfront anymore but I like to be the advisor and bringing in the equity and having a seat at the table but we’re doing a couple of things. Number one, we started a business with we sell these backside cannabis dispensaries, which has been great. We’ve deployed about 80 million of equity. One of the things I’ve got most involved with is an RV park business and to me, that’s been amazing. It’s storage, you know, 25 years ago. Very fragmented, very little institutional money. Banks don’t necessarily get it. Not a lot of sophisticated players, very, very, very fragmented with mom and pop owners. And the challenges with management are intense. Love that business.

 

We bought 18 parks in ten states. And then I’m on a founding member of a bank board, which has been really exciting to work on. And then lastly, with a very good childhood friend and somebody who is in my Tiger group with me, we’re buying a minority share in Amazon Accelerator and it’s going to be a great business. We’re just finalizing all the docs now. Really fun, great business with some guys who really understand the space.

 

Justin Donald: Wow. Yeah. You’ve got a ton going on, Ian. So, let’s start first with the bank. I mean, it’s incredibly difficult to start a bank. It’s much easier to buy a charter but to start a bank and if you’re starting, it’s a de novo bank. I’d love to hear your explanation, what that is, what that means, why you’re going the route that you are of starting versus buying a license.

 

Ian Burnstein: Yeah. So, it’s a great question.

 

Justin Donald: Buying a charter rather.

 

Ian Burnstein: So, all of the de novo banks that have been started here at the community-based banks have done very well. A lot of them are grown and then merged to other banks. And so, now there’s really not much of a presence for that kind of institution here locally. We’ve got a great board of phenomenal people who are very connected within the community and very diverse. And I think there’s a definitive need for this. You know, we’ll do the traditional mortgages and lines of credit for local businesses but I hope that we become a really top-notch service-oriented institution that can help like family offices or businesses be a good aid and partner rather than being a hindrance. I mean, up until the recession, I mean, banks were – the relationships were incredible, right? You knew your banker. They would do things for you they wouldn’t normally do for people because of the relationship. And that’s really evaporated a lot. It’s a little bit coming back. And I have one nice relationship with a larger institution here that definitely goes above and beyond for me. But this is a little different. And so, the guy who’s starting at the CEO is a good guy by the name of Andy Meisner. Andy was a former attorney as well. Our moms were best friends.

 

He’s a special guy, politician. He was actually in the Michigan Senate and actually brought the film tax credits here to Detroit, Michigan. He’s a really great, talented guy, a really good relationship maker. And last 12 years, he was the Oakland County treasurer. Oakland County is one of the wealthiest counties in the country. He was the treasurer and did some really innovative things. And when he came to me with this idea and he said, “You name whatever you need, I’ll do it.” And so, I joined the board. We’re at the tail end of getting our approvals. All looks good. You know, I had my FDIC interview the other day. Everything looks very good to go. And then now we’re at the phase of we’re going to raise doing $25 million raise for equity to start our seed capital for the bank. And I’m hoping that we raise significantly more than we need.

 

Justin Donald: Well, it’s interesting. The space, the banking space is just fascinating in general because, number one, it operates a lot like what we’ve already been talking about where you’re having institutional players, the larger groups gobbling up the small group. So, never in, you know, I guess in the last century have we been at a place where there’s as few banks as there are today because the big banks have gobbled up the small banks. And so, it’s a handful of them that really kind of control things. So, the number of banks is at an absolute minimum but then you have all these new banks that are starting that you’ve got a lot of these fintech banks that don’t even have a physical location. This is all online, which is a fascinating concept. I mean, I’ve probably vetted six different bank deals here like deep dive on six. I have seen probably 15, 20 but like six that I really got into. And I love the idea of it with the right team, with the right scale. And so, it’s cool seeing that you’re getting into it but this is not for the faint of heart. This is a battle. This is tough, this is long, this takes four-plus years. I mean, this is…

 

Ian Burnstein: It’s going to be much quicker than that. It should be much quicker than that. But I’ve kind of been battle-tested. You know, about ten years ago, I started an insurance company in the storage space where we do content insurance for renters. And we’ve been the largest player in the space now for a long time. We created it from scratch, the largest competitor at the time. You know, I just try to work with them. Instead, they didn’t want to interview with us so we ended up starting our own and now we’re selling over 500,000 policies a month. So, reasonably bringing that up as we obviously have 50 jurisdictions we’ve got to deal with on these laws. And it is not easy and you got to stay with it and you’ve got to make sure you’re not breaking any of the rules because if you do, they will not have compassion as they should not and your business could be in jeopardy. So, it’s really important to have a good, solid team around you that will keep you on the straight and narrow and make sure that you’re in compliance every step of the way.

 

Justin Donald: Yeah. I’m excited for this project. I think this is going to be a home run. You’ve got a couple of others, though, that I’m also very excited about and I’m going to say even more excited about because just of my knowledge in this space and the things that I’ve already done from an investment standpoint, a diligent standpoint, and just my level of expertise in general. So, you have created two funds, I mean, a series of funds but currently two different kind of groupings. You’ve got Koach Capital, which specializes in kind of at least back to cannabis companies, dispensaries, whatever it might be, where you have this investment in the real estate. So, you don’t own the dispensary, you don’t own the cannabis company, but you have collateral that really protects your investment and you own the real estate that you then lease back to these companies. And we all know that there’s kind of the wild, wild west right now in the cannabis space until it becomes federally legal. So, that would be a fascinating one to talk about. And then after that, let’s get into the other one because, I mean, you have such unique niches of where your time and investment dollars and expertise is being spent.

 

Ian Burnstein: And, listen, it all comes down to partners, right? It’s really if you have good partners, you feel good and comfortable about working together, right? It’s that simple. So, starting with the cannabis, guys who I have known for a while around town came to me with this concept and at first, I was a little hesitant because, number one, I did not want to be in the cannabis space for a long time. But then when I kind of understood that it was really just the real estate and they had come up with a really smart way to collateralize our debt. And so, we took a security interest in the license. And so, God forbid, somebody defaults, we can insert somebody else into the same terms of the lease. There would be plenty of people waiting in line to come in right into the spaces that we’ve allocated. So, it’s got to be well-located. We do it with vertically integrated owners because, for example, in Michigan, it wasn’t that long ago, it was 5,000 plus a pound for the flower. Now, it’s under 1,000, right? So, if you’re just growing and selling, that’s a bad place to be. On the flip side, if you’re just a dispensary and you don’t grow, there’s a tax law called 280e from the IRS code, which does not allow you to deduct any expenses. And so, it’s killing these guys, right? You can’t deduct anything.

 

However, if you’re vertically integrated, you have both, it’s the best of all worlds, right? You’re growing for yourself. If it costs less, the prices aren’t going down that much. They’re going down for the end product but not as much. And so, you’re able to be successful in many ways if you’re vertically integrated. So, that’s why we stick with vertically integrated companies. So, it’s been great. In fact, you and your investors would be happy. We’re just initially aware today where the lifestyle investors are going to get back half their equity and fund too so we just sold a property on Thursday or Friday and we’re sending the money back to them.

 

Justin Donald: Oh, it’s fantastic. I love that. I always love it when you’ve got good things that happen and a lot sooner than what was presented. So, I like the under-promise, over-deliver model so I think that’s really cool. Something else to note is in this cannabis space, these licenses are worth $10 million to $100 million per license, depending on if you’re in a state where they restrict the licenses. So, it’s a very powerful kind of hammer, if you will, to get your claws into that as collateral. You’re really mitigating that default. And if you do have a default, you’re in a much better position like these are incredibly valuable. So, I love that the way that you protect your investment. So, it’s not just about the upside, it’s how do I not lose money and then still have good upside.

 

Ian Burnstein: No, it’s great. And by the way, I will applaud my partners. You know, we thought we would deploy the money in 920 days. And it’s been far longer. It’s been – it probably take three times that, right? And so, we had to call our investors, let them know, the pace is kind of slow down. We deployed about 13 assets in a period of like two months. And then the last ten have taken us a long time and we’ve got a nice pipeline now. Finally, we’re going to finish the fund but our patience was absolutely rewarded because people who we lost deals to we’re seeing defaults and they did loans, not sell leasebacks. So, these defaults on their loans are going to be a problem. And so, well, we stayed disciplined and we didn’t give anything away and we just stayed true to our mission and I think we’re going to be handsomely rewarded for that.

 

Justin Donald: Oh, that’s great. Well, congratulations there. I think you’ve got a new fund that just opened. Maybe it closed already, I don’t know, but excited for the future and the next opportunity. Let’s talk a little bit about your RV fund, Great Escapes, because this has been kind of the surprise. Like I wasn’t surprised that the leaseback in the cannabis industry would do well, makes tons of sense. And I’m also not surprised that RV parks are doing well. But the surprise of what COVID did to the RV community and to people buying RVs and living off the grid a little bit more is just incredible. And so, the returns, the valuations have gone through the roof. So, I’d love to hear your thoughts on why RV parks, why did you get involved, and what does that look like.

 

Ian Burnstein: Yeah. RV parks are, again, they’re storage 25 years ago, right? There is just such amazing upside and there’s a ton of unsophistication in the space. And so, you find like in storage right now, if you have money, you can buy a property, there’s a million people will manage it for you. That does not exist here. And it is way more expensive to build on RV parks than it would be to build a self-storage facility for the most part. Also, there’s a lack of sophistication. A lot of owners don’t even have websites. They certainly don’t do anything with dynamic pricing. They don’t put money into the park because they’re making enough. And there’s a lot of mom and pops who own the parks and just they do not want to do it anymore. They just don’t. And so, we were able to step in there, take over the park. We buy below replacement costs. Sometimes we pay more than we should probably but it doesn’t matter to us because we used to go in and we will double, triple, quadruple the size of the park. We added in water parks. We added golf cart rentals and all kinds of activities. And generally speaking, we usually raise revenue in the first year on average by over 70%.

 

Justin Donald: That’s incredible. And having a lot of expertise in this space myself, I just love this industry. I think it’s going to continue to boom. It was going to boom without COVID. Now, COVID was like steroids and fuel being put on the flame. And it’s cool seeing people just wanting this as part of their regular life. It’s not just, hey, let me do this one time so I can act like I got a chance to do it. People are regularly doing this.

 

Ian Burnstein: You know, it is two things. I would totally agree. And so, we were great before COVID. There’s no question, everything was great. We were in this before COVID. COVID put some wind behind our sail but also it exposed a lot of people to this type of travel which they’re enjoying and they’re continuing it. The second thing which has been enormous is there’s a new technology. Once again, there is a website called Outdoorsy, which is just like Airbnb for RVs. And so, people who usually had these RVs that we’re sending them out going a couple of times a year, are now leasing them out. I mean, basically, paying for their RV in almost the first year, certainly in the second year. And the same RV that was going out a couple of times a summer is now going out 15, 20 times a summer. So, the demand was already way higher than the supply. Now, if you’re not booking these places far in advance for a weekend, you’re going to be in trouble finding a location.

 

Justin Donald: That’s right. And a lot of people are now just buying the RVs to rent them whenever they’re not using them to cover the cost of what it is. It’s an incredible place. And then with all the shortages going on, you’ve got this used market. That’s incredible, right?

 

Ian Burnstein: Yes.

 

Justin Donald: It’s fascinating.

 

Ian Burnstein: We’re destroying projections all over the place. We actually are doing the parks that we’re doing with the model and we’re buying them and we’re renovating them. We have absolutely owned them for two full seasons. We’re refinancing, sending back all of the equity. And then after you’ve backed the equity, you’re still making 15% to 20% on your initial investment. There’s no reason to sell. If we sell, people will hurt us. So, we’ll sell eventually for a ridiculous amount of money but the returns are insanely good. And this is by far the heaviest concentration of investment dollars that I have in my portfolio.

 

Justin Donald: Yeah. And this is just one of those things where I talk a lot with my network, my community about recession-proof assets. You don’t want to be in as much – you want some cash but you don’t want to be in all cash. You want to be in assets and you specifically want to be in assets where there is an underlying scarcity to it. It’s hard to build them, hard to get the zoning, but then you also want it to be recession-proof. And we have found now that in the greatest economic displacement that most of us, many of us have seen, that this has been a very strong industry and just getting stronger. So, and I know you just opened up a new fund for this that probably is going to close here within, I think you said this month. So, very…

 

Ian Burnstein: We’re doing 100 million in that fund. It’s over 50 of it in about 90 days but we’ll – that should be around a little bit longer. Yeah.

 

Justin Donald: Well, I’m thankful that you’ve been able to figure out how to not let anything keep you down, embattled back. It’s been great having the privilege and opportunity to invest with you. And for me, that’s important because I like to invest with my friends. And so, I consider you a friend first and a partner second. I’m really excited for more people to learn from you, to learn your story. So, where is the best place that people can learn more about you or contact you if they have any interest in anything you’re doing?

 

Ian Burnstein: Yeah. They could just email me at ian@spmadvisorsllc.com.

 

Justin Donald: Perfect. We’ll get that in the show notes. But, Ian, this has just been an absolute blast. I love catching up with you. I love all the cool stuff that you’re doing.

 

Ian Burnstein: Appreciate it. Thanks for having me. It’s always great talking to you. Always great.

 

Justin Donald: This is awesome. Well, I’m going to end our show today, as I always do, and that’s with one question. What is the one step you can take today to move towards financial freedom and living a life that’s truly on your terms, a life that you desire, one that is not by default but rather by design? Looking forward to catching you next week. Have a great one.

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