This Thrill-Seeking Billionaire Made a Fortune in Luxury Apartments

Forbes

Larry Connor made a fortune in luxury apartments by obsessing over the smallest transaction. His strategy has paid off for years, but now that the market has shifted, how close to the edge is he willing to go?   “You’ve got to be willing to take calculate risk, not stupid risk,” Connor says. That has been a winning strategy for him and his real estate firm, the Connor Group, which has led to three decades of astronomical returns and a $2 billion personal fortune.        Since he cofounded the business in 1991, its investments in luxury apartments have generated an annual rate of return of 30.4%. That’s almost unheard of in an industry in which titans such as Blackstone and Brookfield have posted returns of 16% and 18% in real estate, respectively, since inception.   0:00 Intro 0:52 Who is Larry Connor? 1:15 Entrepreneurial Journey 4:11 Formation of The Connor, Murphy and Berman Group 5:25 Methodology for Success  6:52 Thrill-seeking Adventures  8:11 Philanthropic Pursuits 11:01 The Greater Dayton School 13:44 Larry the Leader  Read the full story on Forbes: https://www.forbes.com/sites/giacomotognini/2024/04/17/meet-the-skydiving-billionaire-with-sky-high-returns/?sh=48136b3f8dfa  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00 When we started, we said, "Who are we?

00:05 And what do we believe we're good at?"

00:07 We'd done a bit of real estate investing,

00:09 but our real strength, our real forte,

00:13 was as business owners.

00:14 So we said, "We're gonna focus on apartments

00:17 because they act like an operating business."

00:20 We were gonna pay absolutely no attention

00:23 to what the industry was doing.

00:27 You know, people talk about, "Well, I tore up the rule book."

00:30 We never actually even picked the rule book up.

00:33 And so we built all of our own systems,

00:36 processes, strategies, and beliefs.

00:39 We quickly found out that what we were doing

00:42 was radically different than the industry.

00:45 I'm Larry Connor, and I'm the managing partner

00:50 of the Connor Group.

00:52 - Larry Connor is a real estate investor

00:54 based in Dayton, Ohio.

00:56 His transactional approach to real estate investing

00:58 at his firm, the Connor Group, has made him a billionaire,

01:02 worth an estimated $2 billion.

01:03 A self-described C student in high school,

01:07 Connor went on to become an entrepreneur

01:09 who built one of the best-performing

01:11 real estate funds in the country.

01:13 - There are certain personality traits

01:18 that are common to most entrepreneurs.

01:21 I mean, you gotta have what we call grit,

01:26 passion, and perseverance.

01:28 Some people wear the moniker of entrepreneur,

01:32 but they're not.

01:33 They're people like, wanna be entrepreneurs.

01:38 To be a real entrepreneur is exceptionally hard to do.

01:43 - The son of a World War II vet father

01:45 and a Red Cross volunteer mother,

01:47 he went to high school in Dayton

01:49 and graduated with a 2.0 GPA,

01:52 painting houses on the side with a friend.

01:54 After graduation, he started buying used cars

01:57 and packing them with damaged label lines in Dayton,

02:00 selling them on for a profit

02:02 to college students in Athens,

02:04 where he attended Ohio University.

02:06 On weekends, he'd pick up dead bodies

02:09 and bring them to a local funeral home for $5 apiece.

02:13 After school came a sales gig at a Volkswagen dealership,

02:17 followed by a stint as a travel advisor,

02:19 which took him to Morocco, Mexico, and Europe.

02:22 - I had an opportunity to be exposed to a lot of,

02:26 I guess today what you call C-level executives.

02:29 And you kind of got to see both sides,

02:32 some immensely talented,

02:35 and other people that I wondered

02:37 how they ever got in that position.

02:39 - And then, by the time he was 27,

02:42 he went back to Dayton to start his own business.

02:45 - Here in Dayton, there was a new historical district

02:48 called the Oregon District.

02:50 And I and a partner thought

02:52 that we could start a bar restaurant.

02:55 And so we took an old movie theater, converted it.

02:58 By the way, we had no money and no experience.

03:02 And we went out and got 21 investors.

03:05 We raised a grand total of $52,500.

03:09 We started a called Newcomb's Tavern.

03:12 It was phenomenally successful.

03:14 We sold it two years later,

03:16 and the investors got a 300% return.

03:19 - He took the proceeds and bought and sold homes in Dayton.

03:22 Then, in the 1980s, he moved to Orlando,

03:25 setting up a company that reportedly was once

03:28 the second largest reseller

03:29 of IBM microcomputers in Florida.

03:32 But the success didn't last,

03:34 and the firm shut its doors in 1990.

03:36 - I'm age 40.

03:38 I'm broke.

03:39 I have a wife, two kids, and a farm.

03:42 Actually, the problem is I'm worse than broke,

03:46 because I have borrowed $900,000

03:49 on what they call signature loans.

03:51 Well, even though I was broke,

03:52 I was bound and determined

03:54 I was gonna pay every dime back.

03:55 I just thought that was the right thing to do.

03:58 If you said, "Did you have a plan?"

03:59 No, but I had a commitment to do it anyway.

04:03 Three years later, through a lot of hard work,

04:06 dedication, and a bit of luck,

04:08 I ended up paying back every one of the lenders.

04:11 - He turned again to real estate,

04:13 recruiting two partners and a single investor

04:15 to form the Connor, Murphy, and Berman Group,

04:18 which invested in apartment buildings.

04:21 - There were three apartment communities in Dayton

04:23 that had gone back to this Kansas City savings alone

04:28 through a foreclosure.

04:30 We started negotiating with them.

04:33 It went on for, oh, I don't remember, six months.

04:38 We were getting ready to close.

04:42 We called them on a Friday.

04:46 The government had come in that morning and seized the S&M.

04:50 We were back to ground zero, starting over.

04:54 That's not good when you're trying

04:55 to do your first acquisitions.

04:57 We just didn't know how to quit.

05:00 So literally, almost a year after that, to the day,

05:06 we bought those three apartment communities,

05:10 and we actually bought them at a million dollars

05:14 less than we had agreed to pay,

05:15 yet the operations had improved.

05:18 And so that was the launching pad,

05:20 and those three apartment communities

05:21 turned out to be huge successes.

05:23 - 10 years later, he bought out his partners

05:26 and took over the firm.

05:28 Connor seeks quick returns in an illiquid market,

05:32 trying to profitably sell properties as quickly as possible,

05:36 constantly analyzing each one

05:38 to juice income and minimize costs.

05:41 On average, the firm keeps a property

05:43 for five and a half years.

05:45 - You've gotta be willing to take calculated risk,

05:48 not stupid risk.

05:49 You know, you gotta be an achiever,

05:51 but you also have to have some understanding

05:55 and appreciation that people really matter

05:58 and that you can't do it alone

05:59 and that you've gotta build the right group of people.

06:03 We tried to hire some people from the industry

06:06 in the first two years.

06:07 It never worked out.

06:09 So by strategy, we built a business

06:13 all with people who've never done it before.

06:15 And it was one of the smartest things we did

06:17 'cause we're not encumbered

06:19 by industry or conventional thinking.

06:23 - The Connor Group currently owns and operates

06:25 a $5 billion portfolio of 51 apartment buildings

06:29 across 12 states, from Colorado to Florida.

06:33 Since it was founded in 1991,

06:35 its investments in luxury apartments

06:37 have generated an annual rate of return of 30.4%.

06:42 Many of those buildings were sold less than three years

06:45 after they were acquired,

06:47 with returns ranging from 17 to 159%.

06:51 That risk isn't limited to his investments.

06:54 Connor's personal adventures include skydiving

06:57 out of an air balloon at a record-breaking 38,139 feet,

07:02 a pioneering plunge to the bottom of the Mariana Trench

07:05 at 35,856 feet below sea level,

07:09 and a mission to the International Space Station

07:12 as one of the world's first private astronauts.

07:15 - There's never been a private crew

07:17 that's ever gone to the International Space Station.

07:19 We were the first.

07:20 The 10 months of almost full-time training,

07:23 extremely difficult and humbling.

07:27 Just keep in mind, all the NASA astronauts,

07:32 mega-talented, all have advanced STEM degrees.

07:36 I have none of the above.

07:37 We did not good, but groundbreaking research

07:44 across 25-plus different experiments.

07:50 There have been few weeks in the history

07:54 of the International Space Station

07:56 that that much research was conducted

07:59 in that compressed period of time.

08:01 So, immensely proud of the AX-1 team.

08:06 Yes, I would go again.

08:08 Yes, I may go again.

08:10 - His ambition extends to philanthropy as well.

08:13 - There's huge turmoil in March of 2020.

08:16 We thought, for a multitude of reasons,

08:20 we had both the obligation and the opportunity

08:24 to stay engaged, to keep operating,

08:27 but with that became a huge responsibility

08:31 to take not good, but phenomenal care

08:33 of the people who are gonna get us there,

08:35 which is all the associates,

08:37 especially the people at the front lines.

08:39 - Early in the pandemic in 2020,

08:41 Conor invested in a handful of stocks

08:43 and the investment gained $1.6 million in 10 days.

08:47 - I felt great, but a little bit wrong about,

08:52 hey, it's great you did that,

08:55 but look at all these other people

08:58 who are out there suffering or working or things like that.

09:02 So I called then the director of communications, Ryan Ertz.

09:07 - I was leaving the office and he called

09:09 and I picked up and I said, "What's going on?"

09:12 And he said, "You know how I had recently made

09:14 "some of those trades that we had talked about

09:16 "on the stock market and made that money, 1.6 million?"

09:20 He said, "What would you think

09:22 "if we just gave it to all frontline workers?"

09:27 Any employee who does two things,

09:30 works here for the next six months

09:33 and does a good job on their job,

09:36 we're gonna take that 1.6 million

09:39 and spread it out over roughly,

09:41 I think 400 associates we had at the time.

09:44 - And I said, "This is why I love working here

09:48 "'cause you do crazy shit like this.

09:50 "I think that you should sleep on it

09:53 "and let's talk in the morning."

09:55 But I love the idea.

09:57 - In April of 2020, Larry broadcasted a video message

10:00 to his employees to share the news.

10:02 - I'm taking the entire 1.6 million

10:07 and dividing up amongst all of you.

10:11 - Why?

10:12 - In my view, this is not a gift.

10:16 You've earned it.

10:18 - Oh my God.

10:19 - So again, I wanna thank each and every one of you

10:24 for staying in the game and doing your part.

10:28 - It really showed, he put his money where his mouth is.

10:32 Like people count and I don't think he could have picked

10:36 a better way to show us how we counted.

10:38 Like it's not everything, but just that gesture,

10:43 like it meant a lot, especially during that time

10:46 for a lot of people.

10:47 - People were wildly appreciative.

10:49 People did a phenomenal job.

10:52 And so in my mind, you just invested in

10:55 the most important thing you can invest in

10:59 and that's in people.

11:00 - The Conner Group has a nonprofit arm

11:03 called Kids and Community Partners,

11:05 which includes the Greater Dayton School.

11:08 And it recently opened the doors

11:09 of its new location in Dayton.

11:12 - It takes a tremendous amount of people

11:15 to try to do the impossible,

11:17 which is what we're trying to do here.

11:20 And so the hope is, and the belief is,

11:25 is that we can build a revolutionary model

11:30 that can transform kids' lives.

11:37 Kids who are under-resourced,

11:38 we believe that if we equip these kids,

11:43 not only academics, but the total person,

11:46 what we call the wraparound services,

11:49 that these kids can do as well, if not better,

11:52 than any other child from any other environment.

11:56 - We know from research that if you're able

12:00 to teach individually and at a child's own pace,

12:03 they can grow from the 10th percentile

12:06 to the 76th percentile in one year,

12:09 which is unheard of.

12:10 We saw upwards of 20% growth in our students

12:14 because we teach this way.

12:16 It's not easy, but it's super impactful.

12:19 And that's just on the academic side.

12:22 We had, last year, 96% of our kids

12:25 passed the presidential fitness test,

12:28 and that's super important to us.

12:31 We had 98% of our kids get preventative care,

12:35 so their annual doctor's visits, two dental cleanings.

12:38 It's unlike anything that I could have imagined

12:42 that I would have as a principal

12:43 in terms of the resources that we could provide

12:46 our students.

12:48 - Our gut is telling us that this thing works,

12:50 and the early data is telling us that this thing works.

12:52 We really started looking at it more like

12:55 non-profit activist investing as opposed to philanthropy

12:58 or charity or just writing checks.

13:01 How are we really gonna make a difference

13:03 and help pull people out of generational poverty?

13:07 - I've seen kids in the public school system

13:10 slip through the cracks because of the lack of resources

13:12 that our country provides kids from under-resourced areas.

13:16 To have the resources to really give our students

13:20 what they deserve, what every kid deserves, it hits home.

13:24 - It's great that we did this in Dayton, Ohio,

13:27 but it's just one city.

13:30 This is a national crisis, but also a national opportunity

13:35 that it would be a shame we didn't take advantage of it.

13:38 The kids are our future of America.

13:40 We need to give them the opportunities, right?

13:44 - No matter what he's involved in,

13:45 Connor runs a tight ship.

13:47 At the Connor Group, every employee is rated

13:50 on a 10-point scale, where a seven equates to a C grade.

13:54 - The reality is this place is not for most people,

13:57 but it's a phenomenal place for the right person.

14:01 - I tell people all the time,

14:02 he's not an easy person to work for,

14:05 but it's never not interesting.

14:07 And he really, at his core, likes to help people.

14:10 I mean, he really, really does.

14:12 His baseline motivation for doing this stuff

14:14 is not headlines, it's not financially driven.

14:17 There's so many things that he does for people

14:20 that never make it out of this building,

14:23 or that never make it out of his office,

14:24 that he just enjoys doing.

14:26 - There's a much higher standard

14:28 than being financially successful, period.

14:32 Everybody knows what the right thing is.

14:36 Some people just choose not to follow it.

14:40 Well, that doesn't work for us.

14:42 We don't care who you are.

14:43 To us, it's never been about sizing.

14:46 It's always been about excellence.

14:50 We will sacrifice sizing, success,

14:55 financial gain for excellence.

14:57 (upbeat music)

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15:10 you

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