Connect with my guest Chris Hanson below:
Website: https://hansonre.com
Investor Resources: https://hansonre.com/resources/
Watch his recent webinar on buying industrial real estate: https://invest.hansonre.com/hubfs/Video%20Clips/2.17.2026%20Webinar/2.17.2026%20Webinar.mp4
Part 1 recorded Feb 19, 2026
Watch the Video Version of the 2-Part Interview
Part One Episode Summary
Chris J Snook and Chris Hanson of Hansen Capital Group discussed Chris Hanson’s entrepreneurial background, which included being influenced by their father’s sales career, focusing on entrepreneurship in college, and early exposure to financial literacy through Rich Dad Poor Dad and its emphasis on cash flow. Chris Hanson detailed the formation of Hansen Capital Group, which evolved from house flipping to hard money lending and real estate investing, leveraging their banking background to gain a competitive advantage and focusing on a strategy of buying assets below replacement cost with strong cash flow, particularly in the small bay industrial sector. They also discussed their decision to sell eight properties from their first industrial fund to a JP Morgan subsidiary for a significant return, and Chris J Snook proposed a follow-up discussion on the small bay industrial asset class.
Details
Introduction and Shared Background: Chris J Snook welcomed Chris Hanson of Hansen Capital Group, noting the serendipitous connection of their oldest children attending the same elementary school, which immediately established rapport (00:00:00). The initial segment focused on understanding Chris Hanson’s journey and background that influenced the foundation of Hansen Capital Group (00:01:05).
Early Life and Entrepreneurial Influence: Chris Hanson grew up in the Oregon area, where their father, a sales-driven hired gun in technology, heavily involved them in business principles and the dynamics of watching companies get bought and sold. This upbringing led Chris Hanson to focus on entrepreneurship in college, driven by their father’s advice to build something for themself rather than being a hired gun (00:01:47).
College Education and Entrepreneurship Programs: Chris Hanson started college in 2001 and focused on entrepreneurship, a program that was beginning to gain traction in universities around the turn of the century (00:02:40). They mentioned that the University of Arizona in Tucson was the top school nationally for entrepreneurship at that time, topping Babson in the Northeast (00:03:32).
Mentorship and Real-World Education: Chris Hanson’s program at U of A was unique because it was taught by business community members with real-world track records, rather than traditional teachers, providing meaningful knowledge transfer (00:07:56). Chris Hanson eventually graduated solely with an entrepreneurship degree, which was considered unusual at the time, as it was often a required dual major (00:09:05).
Early Exposure to Financial Literacy: Chris Hanson highlighted the impact of the book Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechter, who brought Kiyosaki’s Cash Flow game to the entrepreneurship program. This exposure steered Chris Hanson toward a focus on cash flow and laid the groundwork for their eventual drive in real estate (00:11:49).
Importance of Cash Flow and Financial Fundamentals: Both hosts discussed the crucial nature of cash flow, which Chris J Snook described as the “oxygen” of a business (00:16:19). Chris Hanson noted that tough times remind people of this lesson, as focusing solely on growth during “free money” eras can lead to neglecting financial fundamentals (00:17:08).
Entry into the Financial Sector: After college, Chris Hanson found it difficult to get into commercial real estate due to the lack of connections and low pay (00:18:00). They instead went into a banking career at Wells Fargo’s mortgage bank, specifically in wholesale mortgage, starting in late 2005 (00:19:00).
Early Banking Lessons and Transition: Chris Hanson started at Wells Fargo as a customer service representative and was later given inactive accounts to work on, which they built into the most productive territory in the region. This territory was quickly taken away and given to a top account executive, which served as an early corporate lesson (00:19:45).
The Pre-2008 Mortgage Market Environment: Chris J Snook shared a quick story about their brief but highly profitable 90-day stint in the wholesale mortgage business around 2002, noting the prevalence of non-prime loans and the high volume focus of the industry (00:23:23) (00:26:37). Chris Hanson, also in residential prime paper, confirmed the existence of creative financing options like 80/20s, 90/10s, and option arms that facilitated over-leveraged home purchases (00:20:47) (00:28:58).
Shift to Real Estate Investing and the Birth of Hansen Capital Group: Chris Hanson left the mortgage business, which collapsed in May 2008, and began buying foreclosures at auction, including their first house for $36,000 using a credit card cash advance. Chris Hanson’s first commercial property was a 7-unit apartment complex in Buckeye, bought for $72,000 in March 2009, which had been purchased for $630,000 just months earlier (00:30:53).
Evolution of the Business Model: Hansen Capital Group began as a house flipping business that quickly evolved into an auction bidding service, charging $1,500 for bidding services compared to the common $3,000 fee (00:33:50). Chris Hanson established this service out of necessity to generate seed capital, exhibiting a DNA-level entrepreneurial tendency to find arbitrage and scale through others (00:34:51) (00:37:43).
Hard Money Lending and Asset-Based Strategy: The company launched a hard money lending business, securing a mortgage banking license in Arizona in 2009. This lending arm serves as a high-yield savings account, focusing on asset-based lending with high default interest rates (e.g., 18% to 36% in Arizona), which provides financial upside if a borrower defaults and the company acquires the property at a discount (00:36:47) (00:41:06).
Investment Allocation and Asset Preference: Chris Hanson views the hard money lending business as their “bond” or high-yield segment, where they park funds not deployed into real estate deals. In a high inflation environment, Chris Hanson prefers owning assets over holding paper, sticking primarily to real estate where they have established expertise (00:43:56) (00:46:03).
Competitive Advantage through Banking Sophistication: Chris Hanson believes their banking background and mindset provide a material competitive advantage, as they understand the banking side and can secure better debt structures for deals, such as obtaining commercial real estate loans at favorable rates (00:46:03). Strong banking relationships and a history of never missing a payment are critical to their outcomes (00:47:07).
Current Business Structure and Investor Focus: Hansen Capital Group is structured as a series limited partnership, or a fund, where they syndicate individual series focused on one or two identified assets (00:48:08). This structure allows high-net-worth individuals and family offices to choose which assets they participate in, avoiding blind contributions (00:49:07).
Client Acquisition and Investment Philosophy: The firm targets high-net-worth families with investable assets typically between $2 million and $40 million (00:50:20). Chris Hanson leads with investment, stating they are the largest single check writer on nearly every deal and maintain a significant portion of their total assets under management in their own funds. They have avoided institutional capital to better serve the families and individuals who seek direct investment fulfillment (00:53:55).
Market Outlook and Real Estate Decisions: Chris J Snook and Chris Hanson agreed that the current real estate market, particularly in Arizona, shows signs of having peaked, drawing parallels to the 2005 bubble. Chris J Snook and their partner exited their hard asset real estate in Arizona in 2022 due to these concerns (00:55:58) (00:58:19). Chris Hanson’s current focus has shifted to industrial real estate and regional diversification, including assets in Houston (00:49:07) (00:58:19).
Current Market Outlook and Investment Strategy: Chris Hanson discussed the volatility in the current economic landscape, noting a 50/50 chance of either massive inflation due to continued devaluation of the dollar or a weak consumer environment marked by more debt and lower savings. To hedge against this uncertainty, the core strategy revolves around prioritizing cash flow and purchasing properties below replacement cost with below-market rents, which was the main lesson derived from the 2008 financial crisis. This thesis ensures defense against potential economic downturns and avoids the risk associated with overpaying for assets that could be built for less (00:59:20) (01:02:28).
Performance of First Industrial Fund and Recent Sale: Chris Hanson reported successfully selling eight properties from their first industrial fund to a JP Morgan subsidiary, Zenith iOS, which were bought between January 2020 and December 2021 (00:59:20). The fund produced greater than a four multiple return to their Limited Partners (LPs) in that time period (01:00:28). The decision to sell was based on receiving an offer that the speaker could not justify holding onto, even though they fear missing the next market run-up (01:01:30).
JP Morgan’s Long-Term Market Outlook: Chris Hanson noted that JP Morgan’s 10-year capital markets outlook, according to an AI analysis, suggests that industrial and logistics real estate is the best place to invest money (01:00:28). The properties sold were not Class A but were infill covered land plays bought at half replacement cost with below-market rent, and the purchasing group paid a price that made holding the assets unjustifiable (01:01:30).
Investment Strategy: Below Replacement Cost and Cash Flow: Chris J Snook summarized that the strategy of buying below replacement cost means an investor is still protected if the replacement cost drops due to deflation, provided the cash flow works out. In contrast, paying double replacement cost and experiencing a decline in replacement cost makes selling difficult, and necessitates holding the asset for a much longer time, especially if tenant situations change (01:03:20).
Anecdote on a Tough Real Estate Deal: Chris J Snook shared a past experience from 2005 involving a complex deal for 40 multi-family units in Phoenix, which was heavily section 8 and had serious physical issues in some units, including dog feces on the wall (01:04:28) (01:06:14). Although the math and rent rolls checked out, they ultimately flipped the deal for a small profit because they realized they would have needed to put 40% to 45% down to buy it for themself, indicating it would be a tough sale to another buyer. This led to the conclusion that if they cannot buy the property for themself, they should not own it (01:06:59).
Modern Investment Strategy Example: Small Bay Industrial: Chris Hanson shared details about a recently purchased deal for 340,000 square feet at $101 per foot, emphasizing that this cost is significantly below the current replacement cost of $140 per foot just for the structure (01:08:37). This product is defined as “small bay” industrial (under 25,000 square feet) which supports local service residential customers like HVAC and flooring vendors, making it essential infill real estate (01:10:01). The property was purchased with an in-place 6.61 cap rate and is targeting only 60% LTV debt, which is the institutional standard (01:08:37).
Small Bay Industrial Market Dynamics: The small bay industrial product is inherently low-density and therefore backward compared to typical development strategies that maximize land coverage for maximum revenue. Chris Hanson notes that nationally, supply stock growth in this sector has only grown 2% in the last five years, indicating a strong supply-demand imbalance. This persistent lack of supply combined with continued rent growth is the core economic principle driving the investment thesis in this sector (01:11:26) (01:13:21).
Future Content and Contact Information: Chris J Snook proposed a part two of the discussion to specifically unpack the small bay industrial asset class, focusing on the supply constraints and cost replacement arbitrage, which Chris Hanson agreed to (01:13:21). Chris Hanson directed high-net-worth individuals and family offices interested in connecting to the Hansen Real Estate website, hansenre.com, as they are not a large user of LinkedIn (01:15:26).
Recorded Mar 4, 2026
Part 2 Episode Summary
The discussion, featuring Chris Hanson and Chris J Snook, focused on Hansen Capital’s strategy in small bay multi-tenant industrial real estate, which targets infill properties for acquisition and development, leveraging the asset class’s favorable economics and high-touch operational complexity as a competitive advantage. Chris Hanson detailed the process of stabilizing an acquired property from an initial 6.6 “in-place” cap rate to a mid-8s stabilized cap rate within 24 months, noting that seller motivation often relates to estate planning or fund sunset dates, and explained the conservative underwriting with a 6.75 exit cap rate projecting a 20.07% IRR. Furthermore, they discussed the firm’s vertical integration, selective acquisition strategy in core markets like Texas and Arizona, and the investment structure involving an 8% preferred return for the institutional class, with Chris J Snook clarifying the capital deployment process and the importance of investor commitment.
Details
Focus on Small Bay Multi-Tenant Industrial Real Estate: The discussion centered on the unique focus of Hansen Capital on small bay multi-tenant industrial real estate, particularly infill properties. They target this specific area through both acquisitions and ground-up development, currently favoring acquisition to avoid development cycle risk when possible. This strategy is driven by the perceived favorable economics of the asset class (00:01:10).
Defining Inflll Strategy in Commercial Real Estate: Chris Hanson explained that infill strategy involves buying and developing parcels located within or close to city centers, potentially repurposing existing buildings like tearing down an office to build small bay units. This approach contrasts with speculative land development at the city’s outskirts, which relies on the path of development (00:03:13). Chris J Snook visualized infill as looking at dirt lots or tear-downs on the way into a city center (00:04:14).
Understanding and Stabilizing Cap Rates: Chris Hanson detailed an acquisition of a property with an initial “in-place” cap rate of 6.6, which is the cash flow return at the time of closing (00:01:10) (00:05:21). The goal is to stabilize this property to a mid-8s cap rate within 24 months, which involves executing a plan that includes renovation and lease-up of vacant units. The in-place 6.6 cap rate is considered better than most deals currently trading (00:02:20) (00:06:56).
Path to Stabilized Cap Rate: The process of stabilizing the cap rate from 6.6 to mid-8s involves completing unfinished renovation plans from the prior owner (00:06:56). Specifically, the property was 82% occupied at closing, and the remaining 18% vacancy consists of suites that are not “rent ready” and require light construction work. Leasing up these units, bringing the occupancy to the submarket average of 96%, materially raises the income and drives the stabilized cap rate to the mid-8s (00:08:05).
Targeted Exit Cap Rate for Resale: In the context of potential resale for the acquired property, Chris Hanson specified that their underwriting handicaps the deal with an exit cap rate of 6.75. This conservative figure is above their going-in cap rate and aims to stress-test the deal, projecting a multiple of 1.42 (42% return) and an internal rate of return (IRR) of 20.07% on a two-year execution (00:10:59). They may eventually hold the asset as they assemble more of them, anticipating that a larger package will attract institutional buyers at a higher valuation (00:09:13).
Seller Motivation and Market Dynamics: The primary motivation for sellers of small bay industrial assets is often related to estate planning and liquidating assets, as the average seller is older and often a “mom and pop” owner who has held the property for a long time (00:12:59). In one specific case, the seller was a fund with a sunset date that chose to sell rather than execute a capital call to complete unfinished renovations caused by unexpected fire and life safety issues (00:14:08). This highlights that successful acquisitions often depend on understanding the seller’s specific, human-driven motivations (00:16:17).
Operational Complexity as a Competitive Advantage: The operational complexity of small bay industrial, which involves managing many smaller tenants (averaging about 4,000 square feet per bay) and higher tenant turnover, typically keeps large institutions out of the market (00:17:56) (00:35:07). This high touch management requirement has been turned into a competitive advantage by Hansen, who is built around managing this complexity (00:14:08) (00:17:56).
Defining and Differentiating Small Bay Industrial: Small bay industrial is defined by individual units that are 25,000 square feet or smaller (00:20:09). This product is inherently low-density because of the many small buildings and drive lanes, which means it does not maximize lot coverage, but this low-density component contributes to scarcity and offers future redevelopment optionality (00:21:15).
Demand and Supply Imbalance in Small Bay: Demand for small bay industrial is driven by local businesses, such as contractors, plumbers, and delivery services, that need proximity to their customer base (rooftops), especially in large metros (00:22:32). The supply side is constrained because developers prioritize higher-density, large-format industrial projects to maximize revenue per square foot, or because properties are being demolished for high-density multifamily projects (00:21:15) (00:25:49).
Tenant Sensitivity to Rent in Industrial Use: Unlike retail, where rent is a major P\&L line item, the occupancy cost in industrial use averages under 5% of a business’s P\&L, meaning tenants have less sensitivity to rent increases (00:32:10). Tenants are business owners, which typically brings a higher level of professionalism and fewer non-payment issues compared to residential tenants (00:36:17). Value creation involves inexpensive external curb appeal upgrades (paint, landscaping, fencing) that enable rent increases, which are more tolerable to industrial tenants (00:31:20).
Vertical Integration and Use of Technology: Hansen maintains a high degree of vertical integration, with internal asset management, property management, legal, and accounting teams. They outsource leasing, opting to hire the best local leasing team in each market (00:37:27) (00:39:27). They use agentic AI, developed by their internal counsel, for tasks like designing leases quickly, amplifying efficiency and operating at a lower cost (00:40:25).
Market Focus and Selective Acquisition Strategy: The firm focuses on core markets like Texas and Arizona but is actively seeking foundational assets in other markets, including California (San Diego and Inland Empire), Vegas, and Colorado (00:41:44). They maintain a highly selective acquisition strategy, prioritizing high-confidence deals over deploying capital for the sake of it, as evidenced by not buying a single deal that met their guidelines in 2023 or 2024 (00:43:55) (00:48:51).
Current Status of Commercial Real Estate Distress: The problem of CMBS rollover and loan distress is not resolved, as evidenced by recent data showing that multifamily delinquencies and bank-reported multifamily losses have hit levels not seen since the Global Financial Crisis (00:44:57). Specifically, bank losses climbed to $911 million in Q4 of 2025, which represents a faster compression than seen during the GFC (00:46:04). Chris Hanson continues to be opportunistic with capital, placing more money into hard money lending when acquisition deal flow is slow (00:48:51).
Investment Requirements and Preferred Returns: The investment structure involves two classes: an investor class (minimum check size $50k) and an institutional class (minimum check size $500k) (00:54:39). For the institutional class, the hurdle rate is an 8% preferred return, above which the distribution structure is 70/30, moving to 60/40 and 50/50 at higher internal rate of returns (00:55:32). Distributions are paid monthly, and the fund has a 10-year life, though the firm actively works to provide liquidity accommodations if partners need to exit early (00:56:34).
Capital Deployment and Deal Exposure: Chris J Snook discussed that for them to gain exposure to performance metrics like cash flows and potential Internal Rate of Return (IRR), their money must be deployed into a specific syndicated deal within the fund, as they are not exposed to all fund assets. Chris Hanson explained that capital is generally not called for until they are ready to deploy it, emphasizing that investors are exposed to the syndicated deal. They noted that a recently launched deal requires about four million dollars, and another deal to launch soon will require about seven million dollars (00:59:28).
The Role of Commitment and Opportunity Window: Chris Hanson described the purpose of commitment as saving a person’s spot, while Chris J Snook acknowledged that this represents an opportunity with a closing window. Chris J Snook clarified that making a commitment provides certainty that the investor will receive a call to deploy capital once all preparation is complete (01:00:20). Chris J Snook concluded that the process is straightforward and that investors, as adults, must make their own decisions (01:01:02).
Small Bay Discussion and Educational Resources: Chris J Snook expressed satisfaction with the discussion, stating they learned a lot about Small Bay and believe the audience did as well. They confirmed that show links would be provided, and they plan to help refer people to the educational side of Chris Hanson’s work. Chris J Snook encouraged the audience to check out the webinars Hansen Capital is hosting, with links included in the show notes (01:01:02).
