[00:00:00] Speaker A: Welcome, listeners. You're listening to the deeds in the desert, where real estate investors tune in for the latest news.
[00:00:08] Speaker B: Welcome to the next episode of Deeds in the desert with your host, Pat Vassar. Today we have Sanjin Chopra with rhino Investments. How are you doing today, Sanjeev?
[00:00:16] Speaker C: I'm doing good, Pat. Thanks for having me.
[00:00:18] Speaker B: Absolutely. Let's jump right in. How did you get started in this business? I mean, everyone talks about being in real eState, and, you know, if you own a home, I guess in theory you're in real eState. But how did it really start for you?
[00:00:28] Speaker C: You know, I started in real estate back when I was in law school. I actually worked for a real estate developer. I trailed him and learned everything, kind of what he was doing. And I fell in love with the business. And a lot of the things I started doing were more of the smaller items that you do in development, paperwork, back end things. And then later on, I started to fell in love with the deal making and the other aspects of the business. And so I've worked in real estate since probably 2002, 2003, and, you know, but really focused on development after 2007 and been doing it ever since.
[00:01:09] Speaker B: Awesome. How did the name Rhino investments kind of take hold? How'd you get that name?
[00:01:13] Speaker C: You know, that's an interesting story. So, in the first time I did real estate development, we were building for a jack in the box operator, and he was the largest jack in the box operator in the. In the country, and we were building for him. And as we were getting sites done, he kind of, you know, he was an older gentleman. He liked me, I was younger. And he would always tell me, you know, here's a site. I haven't been able to get it for ten years, but I'm gonna give you this opportunity. Go get it for me. And we would find ways to get it done. And eventually he started calling me the rhino. And he said, you know what? You put your head down and get things done. And fast forward.
We were in real estate. We got out predominantly to focus on the gym business for a while. We built the gym chain, sold that gym chain, and as we were selling the gym chain, we decided we're going to come back into real estate and focus predominantly 100% in real estate. And back in 2012, when my son was born, my son was born with a blocked tear duct, my son Shaden. And so he was actually delivered by the same doctor that delivered me, older gentleman.
And he brings my son into my wife and says, oh, you gave birth to a baby rhino.
And, you know, my wife being a first time mom, she's insulted. How could you call my baby a rhino? And, you know, she mentioned it like, three, four times, you know, after the fact. And my wife Sheena, is a very laid back individual. And. And so, you know, I just. It just kept hitting me. And so then it kind of, when we decided we're going to start up, it was from the first time we did something in the nickname, and then my son was like, we're rhino investments. Let's go. And ever since then, it's picked up and it's been great. And we're blessed.
[00:03:00] Speaker B: Absolutely. Well, we're blessed to have you here, not only on this podcast, but here at ignite funding. We've been doing deals together for about eight years or so. Yeah, I don't know the last time I looked at the total amounts, but over 200, maybe $300 million during that time with no issues.
What's been your biggest key to success during these crazy economic times?
[00:03:22] Speaker C: Yeah, I mean, we've seen a few different cycles. We always talk about the zero eight cycle, obviously, and then we talk about the COVID cycle where everything was kind of in an uproar, and now we're in another cycle with the interest rates rising. I think a lot of our success has just been our relationships. We only work with a few groups, a few lenders. We don't have 50 lenders. We pick who we like and we really stick to that group. And so I think our relationships with tenants, our relationship with lenders, our relationships with our vendors, we use the same architect group on quite a bit of our stuff, same lawyer.
We're not trying to reinvent the wheel. We're more just trying to figure out how we can do more deals and be profitable. And so I think our success is kind of.
We stay in our lane.
[00:04:06] Speaker B: Absolutely. And what is that lane right now? What type of products are you looking at going forward?
[00:04:12] Speaker C: Yeah, predominantly, we're doing retail. You know, a lot of, you know, we've done it all. We've done hotels, we've done storage, we've done multifamily, we've done office, and, you know, we've done industrial, and even, you know, and we do retail. And the reason why we like retail is because of our relationships and our understanding of the market. And I'm very pro retail for a few reasons, which I'll give you, but really we focus on retail is because of our ability to handle things with speed. We try to keep everything between twelve to 24 month period of getting things done, if not faster. And we're able to do that with retail based on our relationships and based on what we know going into a project.
And we're still bullish on retail because back in 0708, you know, I always laughed because I'd have family members that would come and give me a hug and I said, why are you hugging me? He says, well, when you need a job, come to me, because I've read an article about the retail apocalypse. I don't know if you remember, there used to be article after article about the retail apocalypse and the world. Well, what that did is actually benefited retail because it slowed down the growth. So between zero eight and 2024, there hasn't been that much new build. They're building new pads for Chipotle's and the Starbucks and the fast food stuff that we all, as individuals have now become accustomed to, which is faster service, don't get out of our car, how do we order online?
A lot of the things that we didn't have when we were kids, but now it's an expectation. And so those things have grown, but not a lot of new real retail centers have grown. And in that process, retail is now probably 96% to 97% lease nationwide, and there's just not enough of it for what's required. So you'll see companies, 99 cent recently went bankrupt and left. And there's concepts out there that don't work. It's going to continue to happen. But those 300 and something locations, 90% of them are already leased. It's a matter of months because there's not enough out there. So we're really bullish on retail for that aspect that if you buy something, you couldn't build it today for what it cost you to buy it.
[00:06:24] Speaker B: Yeah, the replacement cost is so high, so it really adds a mode of protection from a new entrant standpoint. Right. When they jump in and want to compete against you, maybe there's a piece of vacant land, but they're not going to be able to build it and therefore lease it for a low enough amount to compete against your product. So that moat around you really enables you to kind of drive rents and drive values. In that same vein, are there markets in which you are specifically looking at, or are you more opportunistic in looking for the right deal, no matter the market?
[00:06:52] Speaker C: Yeah, you know, we like the west coast more only for the reason that we are on the west coast. You know, we're based in Vegas. So it's one of those things where it's easier to get to but we are opportunistic. If anything, we have to hit a profit margin. We're numbers focused, we're revenue focused. And so for us, that's more important than necessarily going into smaller markets. And several tenants for many years took us to smaller markets. And so at one point, we were in 38 different states and, you know, and a lot of that growth was driven by tenant demand. It wasn't driven by rhino saying, hey, I want to go develop in Grafton, Wisconsin. It was, hey, tenant calling us and saying, hey, we want you to help us in Grafton, Wisconsin. And so then we go there and we do something for them and so on and so forth.
[00:07:39] Speaker B: Right?
So with that mindset of being more opportunistic and deal based, looking at the numbers and as opposed to kind of market or macro picture, you want to stick to retail, right? When you say retail, is that all qsrs? Is it drive thrus? Is it power centers, is it inline shops? Retail as a whole has kind of a big umbrella. Is there certain aspects within retail you're either getting into or maybe more importantly, staying away from?
[00:08:10] Speaker C: Yeah, no, I think all of those are an aspect. I think the biggest thing for us is how do we add value? You know, how do we go in and how do we add tenants? Or if there's lower rents than what market rents are, can we add, you know, new buildings? You know, how do we go in and add value in order for us to make a profit? And so, you know, we don't. You know, it's funny because I've had people come and say, hey, you make it look easy. They'll tell me, well, you don't see all the back end stuff that we do in order for us to get it to a place that's actually profitable. Right. And so I think for us, we're focusing on any of those sectors of strip centers. We like bigger centers only for the reason that we can do more in one specific area.
But we also like retail because retail is the only sector that we've seen as of right now that buyers can still get positive leverage. What does that mean? Well, multifamily, for example, right now, you know, the cap rates are. The cap rates and the debt rate are not in the line. Meaning you can't get words. Yeah, you're borrowing at more money than what you're actually buying the cap rate at, or the return at, you know, same thing with storage, same thing with industrial. Those markets have gotten so hot, the office market is just, you know, too risky in our mind. Not that it's a bad play. It's just, you know, there's been a ton of change in the office markets. A lot of my friends, a lot of other CEO's and entrepreneurs, I always ask, you know, hey, guys that were and gals that were so predominant, you have to be in the office now. They have work from home Fridays, work from home Thursdays. I talk to friends of mine who have office developments, and all of their tenants are wanting to stay, but they're going to smaller footprints. So we just stay away from that because that could take us a longer period of time to actually get it done. Now there's profit margin in it. You just got to make sure you pick the right one. And then retail, because we have relationships with tenants and we generally understand what are tenant hop buttons, what's good for them, what's good for us. And we're also not afraid to make moves. You know, sometimes we go into shopping centers and there's a tenant that's been there for a long time, they're struggling, they're not, you know, they're not able to pay the rent, but the market rent is significantly higher. Sometimes it's okay to go to the tenant and say, hey, it's okay. Maybe go to something else that you actually make money on. Go do something with your life that actually is formidable. There's businesses out there. I met one recently where there was a. A food operator who works seven days a week, hasn't had any time with his kids or wife, makes absolutely no money. He's working to keep the business open. And, you know, we went in and we just said, hey, this, you're one third of market. Why don't you go do something else? And he ended up. He ended up selling his restaurant to another concept. He never had the idea that he could do something else, actually made money, and now he's enjoying life with his family, you know, so I think we look at things a little bit differently when we go into a shopping center. It's not just what's there today, it's what can be there as rhino gets involved and what can we do?
[00:11:13] Speaker B: Absolutely. And one of the catchphrases you just brought up with value add, one of the reasons we work with you is the value add aspect of it, whether that's you having tenants in tow, rezoning, doing a parcel split, or just adding value to the property by rehabbing it. Out of those kind of four different generic scenarios, how do you see yourself making the most money? Is it through the parcel splits or the tenants in tow or rehabbing the project or parcel splits going forward.
[00:11:41] Speaker C: You know, we really like the parcel splits because there's. The market has shifted over the last few years in that not as many people are selling and buying. It's almost like the residential market, right? There's less sellers, there's less buyers, but there's still volume. And so what we've realized is that there's still volume at lower price points. There's higher volume. And so if we can break things up and we can give somebody an opportunity to own their own piece or to own, sometimes, a lot of times, our tenants buy our piece from us. They go to SBA or they go other places, and they're able to pay more because they actually own the building themselves or other smaller operators.
You know, a lot of people are more interested these days in those strip centers or smaller things because there's less to manage and there's also less risk for them. And so we often focus on the parcel split play. But, you know, I'd probably say 90% of the time, we have a tenant that we're looking or talking to that could go into a center and could actually, you know, boost occupancy or boost our rents, and we look at all that. So I think it's any of those things that you said, but if you ask me today, I like the parcel split play only for the reason that we can move faster. Right now, there's a lot of volatility in the markets. Sometimes people are still waiting for the election to happen, and people are still waiting for when our interest rate's going to drop.
So everything we're doing, we're forecasting for twelve to 18 months out, because we didn't know what happened twelve to 18 months ago. We don't know what's going to happen twelve to 18 months. But if we can stay within that window, it's positive.
[00:13:20] Speaker B: Got it. In that same vein, you're talking about doing parcel splits. One of the newest loans we have with you, or the newest loan we have with you, is out in Marysville. What is your idea behind that? And is this one of those prototypical parcel split plays?
[00:13:33] Speaker C: Absolutely. Marysville's got five parcels going in. It's a really great opportunity. It's a grocery anchored center. Albertsons is there now. They're doing very well. We've been told that it's going to go to a Safeway, which Safeway is kind of their higher end brand.
And we have some tenant, Lois, and we have some people actually already want to buy pieces from us. So the idea is that we will sell down our basis, end up adding occupancy, and then there's some hidden things in Marysville that are really cool. You've got big lots, which is right now the news is they're struggling, but they're only paying a gross rent. That's very low, below market, you know, and, you know, JC Penney's, they're paying $4 with some nets. It's very low rents. They're one third to one fourth of market. A lot of people look at that as risk. We look at it as opportunity, because if they leave, the best thing that's going to happen for us is that we're going to get three to five x to rent because they're older leases with, you know, with not a lot of space to compete against in the market. So we really like that center.
We'll immediately go out and break some pieces off and sell it and hopefully have a good success.
[00:14:48] Speaker B: This seems like one of those prime examples of what you're talking about earlier, of not necessarily going to a market, but going to an opportunity. I'm sure Marysville wasn't high on your list of places that you had to get into. And the demographics and population growth, although attractive, wasn't the primary driver behind you finding this deal. What probably was, or is the numbers, the numbers behind it and the opportunity with the below market rents for some of the biggest tenants.
Those tenants, although struggling, which precluded a lot of buyers from coming in and acquiring this at kind of market rates, you're able to go in, undercut the market because of this threat of two big boxes moving out. But as you said, it's an opportunity, opportunity to boost noi, boost the amount going in and therefore the value of the project.
On top of those two big boxes and the parcels that exist today, is there any other opportunity in the parking lot to add space?
[00:15:42] Speaker C: Yeah, there's actually a new pad we can add. We can do up to 4000 sqft. We actually have a tenant now excited for it, already ready to go, a national dentistry chain that wants to go in there. And so we're now starting those negotiations. So there is upside also in that, you know, in this deal, there's upside of the parcels way, the opportunity to fill boxes that are under market rents. We have one vacancy box. It's a former rite aid. We actually have an Loi on three lois on the space right now. And then we also have the opportunity to build a new pad. So this was an opportunistic approach. And I wouldn't say, look, Marysville, you know, we love the Pacific Northwest. It's a very expensive market to build in. They have very high standards of, you know, new construction, so a lot of things don't pencil there, but it's still a very good market. And so Marysville also serves several different, you know, areas as a central hub. And so we. We actually like this opportunity.
[00:16:41] Speaker B: Absolutely. And we talked about the ways you add value parcel splits. Marysville has tenant in tow. Marysville has ability to revitalize the site, which you're gonna be doing some capital expenditures out there to boost the noi and retenanting some of the spaces to increase Noi. So everything you're looking for in a deal, it seems as though Marysville has. Is that a safe way to put it?
[00:17:08] Speaker C: Yeah, actually, it's one of the few that hits every box.
[00:17:11] Speaker B: Absolutely. And that's the reason we're so high on it as well. You know, it's a great opportunity for that value add play to get in at an attractive cap rate right now, let alone what it will be if and when those two big boxes move out and you add additional pad. With that said, you have a few lois out there to acquire some of those pads.
Is there a mindset of, you said previously, of reducing your basis? So is it the mindset of selling these smaller QSR out parcels and then holding on to the power center itself or the inline shops? Is that the mindset on this deal? And more importantly, is that kind of your mindset on most projects you get involved in?
[00:17:52] Speaker C: Yeah, I mean, it's the mindset right now, because it's a lot easier to sell things, smaller pieces than they are larger pieces. And, you know, and so I think for us right now, that's the plan. I think, overall, because there's so much upside in the box space, you know, by getting higher rents or by leasing up to new tenants, those things will take a little bit more time. So what we do is we sell the pieces off, we take our basis down, we increase our yield, or even our debt yield, our coverage.
And then from there, it's kind of all gravy as we start adding in more tenants and stabilizing the center. So really, the easier, low hanging fruit is the pads thereafter. It's the heavy lift of, and I wouldn't say heavy, but it's a heavier lift of putting in new tenants and going and get tenants that will fill up the spaces at market rents.
[00:18:45] Speaker B: Absolutely. And speaking of that heavy lift, you made mention of people asking you, how do you do this? And you make it seem so easy. Our investors say the same thing. How is he getting involved in a deal that has this much margin in it? Why was he the only one to be able to get in there and acquire it? Why hasn't anybody else done what he's doing? With those comments or questions in mind, what is your secret sauce? What makes rhino investments? Or maybe Sanjeev specifically tick? Why is it better than most?
[00:19:16] Speaker C: I think it's our underwriting and the way we outlook properties, you know, and a lot of times it's our own money. So it's a little different in that we're looking at things for the upside. And I think a lot of it's just relationships. And we've done this so many times that we understand what tenants can pay, what they're willing to pay. We understand sales of tenants, and so we really look to make a center healthy. And so oftentimes what you find, and a lot of times the deals we find are either from brokers, from personal relationships. The deals we're finding themselves are coming to us. And what I will tell you is that we probably look at several hundred deals before we even pick one. We don't just pick a deal because it came across our desk. There's many deals we turn down that are great yields, but there's something wrong that we're not going to be able to execute our business plan to the fullest extent. So we stay away. So we try to hedge our bets and really get away from the risk. But I would say a lot of our secret sauce is just the relationships and the understanding of how to do what we do. And I would say there's not a lot of developers out there that, and there's surely a handful out there, but there's not a lot of developers out there that understand or look at things as opportunistic more than, oh, well, there's a big lots there and it's $8 gross. Rents like, oh, this is bad. We look at it differently. We look at it as, this is an opportunity. We want big lots to leave because if they leave there, we're going to get $15 triple net. It's a significant amount of upside at the end of the day. And, you know, if you look at big lot stock right now, it's $0.90. So for us, it's actually a positive thing for other people. They're looking at it and saying it's a negative thing. And, you know, and that's also why we work with ignite as a relationship lender because we can go in and we can fix things, and then we go back out and refinance or sell or whatever we're going to end up doing at the end of the project. But we're able to do those things because of the maneuverability of you and your team and the understanding of what we do and how we do it.
[00:21:27] Speaker B: Absolutely. You talk about one of your secret sauce being that relationship. You know, it's a relationship we forged over the past decade or so that, you know, we really appreciate. And because of that, I want to thank you for joining us on this episode of Deeds in the desert. If you're interested of inquiring about Marysville specifically, feel free to give your investment rep a call. But maybe more importantly, stay tuned for the next Rhino Investments podcast as well as the next rhino Investments opportunity. Sanjeev, thanks for joining us.
[00:21:57] Speaker C: Thanks for having us. Thank you everybody out there for your support. We really do appreciate it and we value the relationship.
[00:22:04] Speaker B: Thank you.
[00:22:06] Speaker A: Thanks for joining us this week on deeds in the desert, where short term investments meet long term investors. We hope you enjoyed the content so much that you share it with all your friends. Who doesn't like learning about passive fixed income, right? Still hungry for more education? Visit our
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