Why Now Is The Time to Invest in Offices with Dennis Cisterna

Enough lip service from Powell. It doesn't really matter what he says because the number support and why he likes to get this market worked up and down so much, I'm not quite sure. But it's very clear that we have no real reason to lower rates at this point. Inflation is not conquered. The nominal change in most things are still extremely high. Even if we slow down inflation, the damage and done.

Welcome to the Next Level Income show where it's our goal to take your income, your investments and your life to the next level. I'm your host Chris Larson. If you haven't yet, get a copy of our book for free at our website, nextlevelincome.com. that's www.nextlevelincome.com. just click on the book link and I'll even send you a copy if you put your address in. On today's show we have Dennis Cisterna. Dennis is one of the most well known executives in the real estate investing sector. He's the co founder and chief investment officer of Sentinel Net Lease where he guides the firm's investment strategy and growth. Relying on his keen sense of market dynamics, he has built a reputation for being a first mover in many market niches. Over his 25 year career, he's completed nearly $4 billion worth of real estate transactions across the US and Europe. Definitely moving between commercial and residential investments. Dennis is also the founder of Guardian Residential where he was at the forefront of the single family, rental, builder, rent sector. Over his 20 year career, Dennis has held a wide variety of executive positions within the real estate, investment and development sectors, including key roles at notable firms such as Kerberis Capital Management, Lennar and Toll Brothers. A frequent speaker at economic and real estate conferences across the nation, Dennis has given his investment insights to tens of thousands of investors over the past several years and today he's going to give them to you. Dennis, welcome to the show.

Thanks so much. Appreciate you for having me, Chris.

Yeah, this is going to be a fun conversation. I always enjoy talking to people like yourself that have a wide variety of knowledge on different things and know this is a really opportune time for this conversation I feel because there's a lot of investor anxiety out there right now. I just got back from a big conference out in Salt Lake here a few weeks ago and you know, the question on everybody's mind is like what, what's going to happen this year? And some people are saying we're going into a, you know, a recession. Some people are saying, oh, everything's going to Be fine. No one really seems to know. But you and I, I think, share a lot of similarities, kind of being countercyclical in ways. So I'd love to share a little bit about your background, Dennis, or have you share some background with the audience and then talk more about what Sentinel is focused on today.

Sure, yeah, absolutely. So I actually started my career as a housing market analyst 25 years ago. So I think having that background in data and analytics and critical thinking has helped me throughout my career. Pretty substantially worked my way up the corporate ladder, ultimately became CEO of another person's company, or, excuse me, another operations company and realized that I still really worked for other people. Right. I had a board of directors, I had shareholders. At the end of the day, it just wasn't as satisfying as I thought it would be once I got to that mountaintop. So in 2018, I quit that, launched my own investment firm. Another six months later, launched another investment firm with a different strategy. Six months after that, another investment firm strategy. And so the first two were focused on the residential sector, which is, is where more of my background lies. The last one is on that lease, which is, is the current platform. I've actually sold all of our residential investments, which include Build for Rent communities. That was an early. That space. And so now we're, we're focused on the commercial sector and that's mainly office, industrial and retail.

Wow. So let's, let's start with the residential because you have, you have a lot of experience there. And we were chatting before the show talking about kind of where we are. You know, I wrote my book to and, and focused on the value add strategy in the multifamily space, which, you know, we started on about 10 years ago. And the demographics at that point I feel like were undeniable, you know, just the shortage. Builder Rent has really been a shining star over the past several years with that. Tell us a little bit about why you moved into the builder rent sector and why you felt it was a good time to exit.

Yeah, so I had spent the previous 10 years involved in the single asset, single family investment space. So I was one of the first folks to lend, do portfolio lending on single family homes for a company called First Key.

And so, so tell, so tell the audience about that. That may not be familiar with a portfolio. Yeah, loan. So, you know, most of us are familiar with going out. Most listeners are familiar. I'm going to buy a house, whether it's for personal use or for investment use, and get a loan on that home. So how is A portfolio loan different from that?

Yeah. So these, these portfolio loans were basically solving a, a need that wasn't there for investors that were owning larger portfolios that were above the FHA or HUD limits, depending on what kind of loan program you were in. So if you were really starting to amass a larger portfolio, but you weren't a hedge fund that had access to that type of capital, you didn't have anywhere to go. In fact, a lot of folks were financing it through either through recourse loans with the regional bank if they were lucky. But a lot of them were financing with hard money loans which was phenomenal to me because loans aren't really built for long term financing. So, so we created these products that were generally 5 and 10 year loans ultimately ended up being 30 year loans that look a lot more like your traditional primary residence mortgages, but they're all business purpose loans and we would bundle those up and securitize them. So I was actually part of the very first securitization where we, we bundled about $250 million of those loans together. We created a bond we on Wall street. And it worked out for everybody because now we open liquidity to the average investor that was building a rental portfolio that just didn't have access to that capital before. So now they could, they could buy more quickly, their returns were enhanced. It was really a good one, two punch into that. And I think that's when you started to see this was in 2012 when this really got rolling. So you really, that's really I think helped fuel the, the investor market to a greater degree by having access to that capital.

Yeah, without a doubt. And what's typically you know, investors when they hit what's the number like five to 10 properties before they hit those limits and the banks won't lend anymore, what's typically the number that you were seeing?

Yeah, it was. Well some, it would just really depend on the, on the credit of, of the borrower number one. And then yeah, if there was any kind of concentrate limits, if it's going to be an agency loan, it was, you weren't going to see more than 10 properties. But that was a pretty owners process to get through because usually it was a one by one loan. Right. So yeah, and, and when we started our product we're like okay, well this is going to be great for anybody that needs anywhere from, from 5 to you know, 500 because once you're above 500 you're, you're dealing directly with larger lending institutions. But as we Went on. We, we amended the product so at, eventually we were able to do single asset loans as well. 30 year fixed rate mortgages. So. Yeah, I mean it just shows you that, how, how quick the capital markets evolve if they think there's a way to make a buck in something.

Yeah, yeah, that's a good, that's a good way to put it. Yeah. So then you can do those single assets and roll those into the product that you guys were ultimately selling. It sounds like. So. Yeah. Terrific. When did you enter? You mentioned you were early on in the build to rent sector. Again, we've seen, we were just doing a portfolio review a couple of days ago and you know, one of our build, build to rent properties, you know, we saw rent growth over the past year of, of over 11% in that specific property. Those, those consistently are outperforming apartments it seems.

Yeah, well, so I, I bought my first build to rent properties in 2017, which doesn't sound like that long ago, but in the grand, in the grand scheme of things, that was.

A lot has happened right between. Yeah. Then and now. Yeah.

I was featured in Builder magazine at that time and it was like I was a fringe part of society by suggesting that, that you know, residential communities should be purpose built from a single family perspective. So grew that very quickly and there's a ton of overall appeal to build to rent in general where it's lost its way a little bit. And I think it still can perform better than multifamily because to your point, it's a lot stickier than multifamily. The average person in a single family home in general stays in their house for over three years. In an apartment it's less than 18 months. So that reduced turnover is good for single family homes in general. Now when you factor in it's a newly built house, that average duration is estimated to be nearly five years. So when you're.

Oh wow, I didn't realize there was that difference there.

Yeah, yeah, it's. Yeah, because you don't, you don't have any of the maintenance issues that might have someone away. Even if you're a bad landlord in a new house, just less stuff goes wrong and so that tenant is naturally stickier. Keep in mind that there, there's also a quality of life factor in that. Right. A new house is a generally equivalent to a class A apartment with more space. So your tenant is more likely to stay in there for a period of time.

Yeah, no, absolutely. And you know, it's, it's, it's a real Challenge. I mean, we're facing this now and I think this is going to flow nicely into, you know, some of the latter parts of our conversation today. It's, it's more expensive than ever to own versus rent when it comes to, you know, those that are looking to buy, you know, the down payments higher, the payments are now higher with interest rates where they are and it's really, you know, starting to shift the way, the way people are looking at this. I was looking at the Gen Z statistics and you know, Gen Z is generally pessimistic when they're, when they're talking about being able to own a home and I'm sure that'll, that'll change as, as, as we see certain things. What's your take on, on that and kind of where we are in the residential cycle?

Yeah. So I think the macro fundamentals around housing are great because to your point, we're under supplied woefully so.

Yeah. So, you know, millions of millions of units. Yeah.

Million million millions of units. It's a big deal and it's not something that's going to be fixed anytime soon.

Yeah.

What I, some, some kind of pundits say is it's, there's never been a better time to be a renter. I do not think that's true at all. I think there's never been a worse time to be a homeowner and that's, that's a fundamental difference. So the benefit for us, landlord is.

A homeowner or a home, like so sorry to interrupt, Dennis, but I think it's important to clarify. It's no worse time to be a homeowner, a home buyer, or actually owning a home or owning a home that you rent out. Like what would you qualify as a home?

Yeah, I would say, I would say trying to be an actual homeowner. Right. You're looking at one of the worst times in modern history, if not the worst.

Yeah. To buy, to get a loan, all those sorts of things. Yeah, yeah.

And from an affordability perspective, obviously you are at nearly an all time high and if not an all time high, in most of the United States and borrowing is now double to triple depending on when you had your original mortgage.

Yeah.

Prices have not come down and so the problem is you have the nominal change of that inflation that took hold and it hasn't dropped down enough because there's not enough supply. Nobody's selling their house if they're locked into mortgages. So we've, you know, we have essentially created, you know, almost a A bastardized version of rent control in this country where we have the people that have mortgages have absolutely no incentive to sell unless to.

Yeah.

And that's, that's just reduced the supply so much which is of what happens in New York with rent control. These people that are in rent controlled apartment find a way to stay in those units no matter what. Even if their family outgrows the space, they move it on to the next generation, whatever. And so the big problem for us now being an investor in homes right now, it's great because that demand is there. But you also are under a high interest rate environment and elevated prices. So if you are buying a property today that is kind of move in ready, your cash on cash return is going to be pitiful. You earn more money in your high yield savings account.

Yeah, we just, to your point, we just passed on a deal outside of Houston. We own an apartment complex there. Great, great area, you know, great suburb, but builder rent community. And you were looking at cash on cash of 4 to 5% on that best case scenario.

Yeah. Right. And I think where a lot of folks on the residential sector side are, are stuck is that you have a very hard time. I think you would have a very hard time convincing most institutional investors. How exactly are you getting to a certain IRR level? Because.

Right.

For that, for that to happen, you have to, you have to have cap rate compression and you have to have rent growth. And while I agree with you markets that are still succeeding in rent growth, there are a lot of other ones that aren't. And you're starting to see certain markets where we've just reached breaking point of what people can afford.

Right.

And so some of the conventional wisdom that I disagree with is well, there's not enough housing, so people are just going to have to pay for. No, there is always a tipping point where they stop. And what happens at that point is that they actually start to make shifts in the way they live. So now they have roommates if they didn't have roommates before or they live further away from where they need.

Right, Yep. Yeah.

And so things mean that that price, that price or rent growth potential being unlimited is, it's just not true. You're just going to reach a break point certain market. And because of that, that means that you need to be very thoughtful about what your actual rent growth in an investment looks like over the next few years, especially as we're in this elevated interest rate environment that may actually lead to job losses. So factoring in the economy into that as well, and then the, the last part of it is I think you need to really understand what type of cap rate you're going to sell this. Yeah. Because even though you're buying this property at maybe a 5% cap rate and you're borrowing at 6 or 7, that is not the historical norm. Buying investment property with negative leverage does not happen on wide scale. So what's more likely to happen is you're going to hold this thing for three or four years, interest rates come down, and you're going to be lucky if you sell it at the same cap rate. Because at some point we have to go back to the equilibrium where debt is accretive to the deal. Because you shouldn't be taking equity level risks for a lower interest rate or a lower cap rate than what the debt is paying for. 50 or 60 or 70% at risk.

Absolutely. No, that's, that's a fantastic point. The deals that we're seeing make sense, have some sort of extenuating circumstance. Like the deal we did instead in Houston is a partnership where we're, we're converting half the units to affordable housing. We're getting a tax abatement with that situation. So, you know, there to me, it's like, you know, like you said, just going out and buying a single family rental or, you know, a class B, class A apartment and just saying, oh, let's hope, hope it goes up in value and we can grow rents 5% a year. It's going to be very challenging in the environment that we have.

And I think that's a, that's a good point to kind of the operator. You are right, you, you're understanding that it is going to take a lot of work in this environment to generate the return. Because in single family before, you didn't have to do crap. You could have sat on your hands for 10 years and made a fortune. You could have been the worst landlord ever. Landlord ever and still make a 25% IRR. Those days are over. For the single family space and the multifamily space, you have two problems. One, high interest rate environment and all the other issues we're talking about. But you also have more competition than ever. You have, you have more money chasing multifamily and single family space than at any other time. And because of that, you are dealing against sophisticated, rational parties, also highly unsophisticated, highly irrational parties that they don't know what they're doing. They're basing their entire investment strategy on a seminar they, they read on YouTube or maybe they just need to park money to, to make sure the government doesn't get its hands on it. But it makes it very challenging to be an intelligent investor in that market. And I think as, as you're alluding to, deals can be done, but the, but it's so much more work. You got to sift through a lot of the ones that make sense.

Yeah, yeah, four, yeah. At least four times as many, if not more. And one area, I, I'll, one, one other area. Before we shift, I want to, I want to talk more about what you're seeing in the office space, the commercial space out there because it's, you know, there's a lot of, there's a lot of interesting things going on. We Also, we have 20 mobile home parks at this point, Dennis, and it's a little different than, than multif family. We've seen some, you know, some great metrics in terms of affordability and those sorts of things that you just can't, you just can't find. Did you, your research, did you ever incorporate any of that into the residential space? I know some people don't consider it part of like residential or multif family, but I see it almost as a derivation of that.

Yeah, I, I, I don't do any direct research into, into multifamily, but I certainly like some of the fundamentals around it.

Mobile homes.

Yeah, sorry. Mobile home.

Sorry.

And.

Oh, it's all good.

I think, I think, you know, there's a reason that Blackstone and a lot of other PE firms got in that space because the margins are phenomenal. You are dealing with an affordable class and you know, you have this ability to push rents pretty significantly in a lot of these places because they are under managed, underutilized communities. Right. And I think the same thing you see self storage space when we're talking about other kind of niche opportunities where there's a lot of people out there that own a lot of these communities, a lot of stealth source facilities. They don't operate them to their full potential and you have an ability to come in as a sophisticated investor and create a big lift very quickly if you know what you're doing. So yeah, I like a lot of opportunities in that space, especially long term because we know the macro headwinds.

For.

For the supply is not good.

Yeah, yeah, great point. And, and just to, to reiterate something you just said a minute or two ago, what we're seeing there is we have to go after deals and this is really our core strategy that have, have low occupancy. That have been owned by a mom and pop operator for years and they just don't have the capital to take it from 50 or 60% occupancy to stabilize at 80 or 90%. So it's more work. It's a specialized strategy. You know, you don't have a ton of competition in that space, especially if you're buying some of these smaller parks. But it's certainly way different than buying, you know, a brand new single family home and like you said, sticking somebody in there for a few years. Right. But the reason you're on today and kind of a selfish perspective. I'm really excited to talk about, talk to you about commercial office. It's, you know, we've seen a massive shift away from certain, you know, core business areas like San Francisco. We see vacancy rates going up and you know, not a day goes by. If you're following that, there's not a story talking about the cracks in the CRE market. Can we start kind of at a high level, Dennis, and, and talk about like why and when you all got into that space and then talk about where, where you see it today and then ultimately your strategy. Are you ready to elevate your portfolio? Are you looking for a firm that knows how to create value and sees the potential of today's market instability? Let me introduce you to my friends at Sentinel Net Lease. These guys have a great background, are changing the game by bringing Wall street caliber real estate deals to Main street investors like yourself. They've just launched their latest fund where they are focused on stabilized office, retail and industrial properties that generate outsized cash on cash returns from day one. If you're an accredited investor and would like to learn more, visit sentinel opfund.com that's sentinel opp f U-N-D.com and take the next steps towards passive investments with Sentinel.

Yeah, sure, absolutely. So, so I, I've worked in the commercial space throughout my career. I was in investment banking for about 10 years. So I raised a lot of debt and equity in that space for a number of operators. Back after the, after the session. We started Sentinel in late 2019, honestly as a way to deploy some capital for my, my business partner's family trust. And as we were exploring the Net Lease space, which is really just, just, you know, could be office, retail or industrial, but it's really where the, all of the operating costs go onto the, the shoulders of the tenant, not the, the landlord. You know, we were looking at like McDonald's and Starbucks and CVS and, and it was ugly. I didn't like the profile at all. That whole universe is kind of built for 1031 investors that don't really care about the actual returns or what they're paying for. They just need to place their money somewhere to defer taxes. But you know, in these, these things where, you know they're trading for $1,1500 a square foot where the replacement cost is 250, I just didn't. And taking that big risk and buying at a huge premium replacement cost, you were getting a 10, 15, 20 year lease at a 4 or 5% cap rate. I just didn't see that as being a very sexy, sexy opportunity. So we looked up a little bit into the middle market. So we were looking now at assets between 5 and 25 million. And, and it was. The light bulb went off where I said this is the space that used to be dominated by institutions, but as institutions got bigger and bigger and bigger, they left that space. And these assets are generally too big for the 1031 investors who are a little less disciplined. So it's a little bit of the wild, wild west when it comes to valuations. And because I started my career as an analyst in real estate, I feel I'm pretty good at valuing real estate and understanding the risk adjusted turn. So I would look at a grocery store and the grocery store would trade at a very high cap rate. I don't. Why is this? Well, it's a privately held grocery store. You don't know the financials. Okay. I may not know the financials, but I know they have 100 stores that have been open the last 70 years. They're probably not going under in the next few years. And I'm sure I can get enough anecdotal information to kind of support how this company up and, and if they're credit worthy. And then I would, and then I would see another thing where it's a, you know, it's a, a call center and it's, it's T mobile. T mobile's got, you know, great credit. It's a long term lease and it's trading at a, you know, a seven and a half or an eight cap when I can borrow it at three. Why, why is that happening? And it's just a function of the brokers are the primary drivers of some of these valuations. They're not quite sure how to value them because they're in a market with more limited competition. And so you can kind of pick and choose opportunities in that space where I think the risk in return far exceeds what you can find for more commoditized product. And so we, we built Sentinel. We closed on our first deal. It was an Amazon customer service center in Huntington, West Virginia in March of.

2020 in that area.

Yeah, the, the, the. So let me tell you two things. Probably one of the only commercial real estate investors that actually closed a deal in the last two weeks of March 2020 because the entire country was getting shut down. Yeah, I was lucky. My, my title people could actually get to the office to, to, to record things. And what I knew about Huntington, West Virginia was Marshall football and methamphetamines. That's the only thing I knew about that market.

I used to work right. I used to go to an account right down the road from there. I know that area fairly well actually. One of my partners is in Canova which is real close to there. He knows well, yeah, so, so we.

Bought an Amazon customer service during the pandemic. And you know we, we met with the mayor, we got a very, we're very hands on compared to, to the additional larger investor where we are going and putting our hands on the asset. We're talking to the stakeholders in the community. So we met with the mayor, understood the whole backstory about how Amazon ended up in, in Huntington. Much longer story than your podcast needs but it is a cool story and ultimately like hey, you know, these guys are not going anywhere. They're so important in the state of West Virginia. They're going to throw money at them hand over fist to make sure they never leave and they're already in a build suit building. So okay, we feel good about this. And so and we kind of just started building our portfolio of off of that kind of mantra of finding what we thought were outsized opportunities where, where the risk profile was not nearly as great as what the pricing. And so we grew the portfolio to about $300 million and then interest rates went up. We hit the button because before this we were generally buying stuff at a 7 or an 8% cap rate and borrowing at 3 and a half on long term fixed rate debt. Before you know it, rates were, interest rates were and that's kind of printing money right. At that point you're easy easily getting double digit cash on cash returns generally from investment grade, which is, is, is a nice, a nice needle to be able to thread. And so when interest rates went up we hit the pause button. We said let's reest sellers still had this ultra high valuation in mind. Obviously in the commercial side of things we don't really. We. It's, it's a little bit more disciplined than the single family side. It's a lot more reliant on debt. And so commercial risk estimates drop 80% within nine months in 2022. And they basically spend.

Incredible. Got to feel for the brokers.

I have very depressing phone calls on a daily basis where I said, you know, the faster you educate your sellers, the faster we can get through this.

But I'm your friend, let me help you. Yeah.

Yes, yes, exactly. So, so, so now, you know, we basically only bought a handful of assets in 2020, 2023. And I, at the end of 2023, I finally saw a shift where the enough of the sellers to understand that rates were going to be higher for longer. Like enough lip service from Powell. It doesn't really matter what he says because the number support and why he likes to get this market worked up and down so much, I'm not quite sure. But it's very clear that we have no real reason to lower rates at this point. Inflation is not conquered. The nominal change in most things are still extremely high. Even if we slow down inflation, the damage been done, you know, the cost of milk, the cost of eggs, it's not coming back.

It's not, it's not negative. Right. And I think people, yeah, it's like, oh, you hear the administration say, oh, inflation's lower than it was. It's like it's. Prices are still going up and it's locked in at this point. I don't think, I don't think people, I think people inherently appreciate that because they're like, like you said, like, milk's still four bucks. Like, what are you, what are you doing?

Yeah, do I still need a pre authorization just to fill up my gas tank credit card?

A hundred bucks this morning. 100 bucks.

That's right.

So there you go.

Yeah, so, so, so I think that's, that's a big problem. And then as we saw it starting to loosen up at the end of last year, we're like, oh, okay, let's do something strategic here because if we can acquire assets at a higher cap rate and a lower basis with more lease duration, well, now we're kind of hitting it all across the board. And you know, to put it pretty succinctly, most investment strategies right now in the residential sector have some level of cap rate compression. Right. Because if there's not cap rate compression and you're only earning 4 or 5% cash on cash, what are you doing with your money? So philosophy is pretty simple. We want to go buy these commercial assets at 9, 10, 11, 12% cap rates, borrow at 6, create a double cash on cash return. And if the cap rate compression occurs, it occurs across all assets.

Yeah, it's relatively speaking. Yeah.

Right. If it doesn't happen, then I am earning a cash on cash return that is double or triple what my peer other sectors are. And so that is kind of my effective hedge on this contrarian strategy. And so if I'm able to buy assets at a, give you an example, we're buying two, two two fitness centers, credit rated national brand. We're buying them a 9% cap rate, years of lease term remaining. We're borrowing at six and a half percent. It doesn't take a rocket scientist to understand that we are getting a total return of our capital from just lease income. And because I'm buying at a, what I think is a 25% discount from, from even the current market and about a 35% discount from where the market's been historically, I feel like I've got equity in the deal on day one.

Yeah, love that. How do you compare, you mentioned earlier looking at replacement costs, how does that factor into your calculus, Dennis?

Yeah, so you know, I am a, we are a basis buyer above everything else. Right. So I, I think replacement cost is extremely important in the world of commercial real estate because it's, if you're able to do that, especially at a significant level, you are a, you have a natural defensive barrier against new construction. Right. If you're buying a nice building. And so we generally focus on class A building. So if I've got a brand new fitness facility or office building or whatever, and I'm into that for half of replacement cost, I can lower my rent as much as I need, you know, a substantial portion. Even if I need to.

Make sure.

That I'm winning that new business. Right. And if the competition actually breaks ground on something, I'm already priced below them as well to begin with. So it's, it's a nice way to, to kind of play in that in sandbox. And if the new construction does come around and they do get demand, guess what? Now they're setting the new high water mark. So I have more of a rationale to increase my rent.

I love that.

So, so it's a nice, it's a nice little play there. And I think from a worst scenario perspective, let's say your tenant leaves and you have a vacant building and you can't lease it up, maybe you have to sell to an owner operator owning a nice building at a fraction of replacement cost. Companies are gravitating towards cost savings right now. Let's see. Do I go build a new facility for $450 a square foot, or do I want to go move into this one where I could have essentially the same thing after renovations for 250.

Yeah.

And so no brainer. That.

No brainer.

It just. Chris, it just happened. So I have to tell you this story real quickly. So we own A J.

Go ahead, man. I love it.

This is probably one of the coolest stories you'll hear in the office space over the last two years. So right before interest rates went up, closed on a J.P. morgan call center. We bought it. It's almost 300, 000 square feet. Big institutional class A campus in Springfield, Missouri. If you haven't heard of Springfield, Missouri. I understand completely.

There's. There's rumors that that may be where the Springfield from the Simpsons is located.

But that's the rumor. Yeah, it could be. So it was. It's home to Missouri State University. It's a. A metro area of about a half people. But we bought this building with almost eight years of lease term remaining at an 8 cap. And we bought it at $92 a square foot. JP Morgan says, hey, we want to shrink the space a little bit. They had a contractual right to reduce. We're like, okay, no problem. We had already negotiate with the seller that if that happened, money comes out of escrow back to us. So it was kind of a fine. We take it out to market to lease. There's a hospital right next door. Thought all along the hospital would be the likely tenant. And the hospital says, hey, we actually just tied up 30 acres. We're going to build a new campus. But this would work a lot better if we just bought your building and renovated it to our needs, because it's obviously right next door too. Like, great. So let's. Let's make a deal. Sure enough, they were able to pay us a very hefty profit. I was able to generate a 1.9 equity multiple on the deal in 23 months.

Love it. Love it.

Didn't do anything I didn't.

That's a win. For those investors that aren't familiar, that's a win. Double your money in two years. Love that. Yeah.

Yeah, we did.

You did do something, though. You bought it with the right strike strategy. And. And that's where it's important to have downside protection when it comes to these things. And I love that. And I also love starving out your competition. We do that with our car washes. Whenever we have a new car wash open up nearby and they're running, you know, a promo, we just run free car washes until they're done. Their promo, it's like, and why not? Why lose a customer when we could just give away free washes while they're doing it?

You know, the right, the right, the right basis will allow you a lot of flexibility to succeed in any market.

I love that. Dennis. Dennis, this has been fun. Really enjoyed the conversation. I know our audience has gotten a lot out of it from all the different areas that we've touched. If a listener wants to learn more about what you're doing at Sentinel, what's the best way to find out more about yourself, Sentinel and what you guys are doing?

Yeah. So we've just launched Sentinel Opportunity Fund 1. It's a $100 million fund focused on these outsized returns in the office, retail and industrial sector. They can visit sentinel op fund.com and on there you will be able to download our investment summary, get more information about opportunities in investing with us or you can email us@investors sentinel. Net lease.com outstanding.

We will go ahead and make sure we have these in the show notes for everybody that's listening that wants to check it out. Dennis, really appreciate you sharing all your knowledge, experience and what you have going on today with the audience.

Thanks so much, Chris. Great conversation.

Hey Chris, here again. I hope you found this episode valuable. Now I have one more thing to gift you. We have a page for my coaching clients where you can get a free copy of my book as well as much more from previous guests on the show. Just check out nextlevelincome.com coaching to get a free copy of my book audiobook. Much more. I'll send you a copy of my book and cover all the shipping costs as a thank you for listening to the podcast. Also, please like share and take just 90 seconds to give us a rating on Apple podcasts.