Posts tagged "property"

JC 010: How to Identify the Perfect Insurance Agent with John Mark Tichar

May 10th, 2017 | no comments

You want an insurance agent with real estate investing experience

Insurance is a business expense but not all agents are created equal. Learn what skills and experience you want your real estate insurance agent to contribute to your team and portfolio.

John Mark Tichar joins us in the locker room this week to share his real estate story and pro tips for success in the competitive business of real estate and insurance.

When you shop for insurance are you seeking an agent who has the relevant expertise and knowledge of what it’s like to have skin in the game? Before settling into his roll with the Oswald Companies as a full time commercial real estate insurance agent John Mark worked for a real estate developer, multifamily property manager, single family home fix n flip investor and financial services provider.

“There is no silver bullet for success” John Mark attributes his success to showing up every day and working hard. He distinguishes himself from other insurance agents with his history as a real estate investor, property manager and project manager. John Mark’s experience of getting his “hands dirty” allows him to identify with the emotions and risk of his clients.

John Mark earned the real estate game by being proactive and doing the hard work. Find a mentor, get hand on experience and create your own opportunity.

Real Estate is a Team Sport

The fundamentals of investing are the same at all levels of real estate. The team is the same for 20 properties or 200 properties. The quality of the investment, your team and the experiences is what matters. The volume of property you own is second compared to quality of the investment.

Insurance

You don’t want a generalist insurance agent. You want to have an insurance agent who has invested in real estate at some point in time. Insurance is a line item in your operating budget. However, as an owner you must have a serious approach to mitigating risk.

Favorite athlete – Mike Piazz

Recommended reading –

  • The Millionaire Next Door by Thomas Stanley & Willima Danko
  • Talent is Overrated by Geoff Colvin

5 Key Points:

  1. Be consistent day in and day out
  2. Get up, go to work and learn on the fly
  3. To be successful you have to focus on a niche
  4. It takes time and persistence to be successful
  5. Understand the costs & risks up front

Success tip – “Duplicate your success and learn from your failures “

Thank you for taking the time to sharing your story with us today John Mark.

John Mark works at Oswald Companies in Cleveland, Ohio http://www.oswaldcompanies.com

You can connect with John Mark on LinkedIn or email him direct at john.mark.tichar@gmail.com

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonlie.com

POST GAME REPORT: Episode Transcript

The Real Estate Locker Room Show with John Carney

JC 010: How to Identify the Perfect Insurance Agent with John Mark Tichar

[00:00]

(Music Intro)

Announcer: Welcome to the real estate locker room show with John Carney. Did you know that investing in real estate is a team sport? Join John and his guests as they explore the intersection of the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the Real Estate Locker Room show, we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve on-going success. Now it’s time to kick-off and level up, with new ways to grow your real estate business.

 

John Carney: Welcome back to “The Real Estate Locker Room Show.” I’m your host, John Carney, coming at you today from Cleveland, Ohio. Today on the line, we’ve got a great guest, John Mark Tichar. He is the Vice President, Real Estate Sales Leader and shareholder at the Oswald Company’s headquarters in downtown Cleveland, Ohio. So, this is a valuable team member we’re going to be talking to. We’re going to be talking about insurance: John Mark works on the high commercial end, multi-family and commercial projects.

John Mark graduated from John Carrol University in 2005 and began his working career for a real estate developer and contractor called Woodfield Homes, West of Chicago, in a town called Rockford, Illinois. There he managed a construction schedule and subcontractors of five to ten projects every six months, valued between three and five million.

John Mark also provided property management and asset management services to investment property. During his time with Woodfield Homes, John Mark spent his off time looking for his own investment properties and focused on distressed and foreclosed single-family homes in the Rockford area. His first two deals yielded 25K and 20K in equity respectively, while providing cash flow: positive cash flow. It was during his time on construction projects, managing investment property and eventually owning investment property, where John Mark found his passion and true calling for real estate development and real estate investing.

Prior to joining Oswald Companies, John Mark worked in financial services, both in insurance and wealth management, so he has a lot of experience there. And over the last seven years at the Oswald Companies, he’s had the opportunity to apply his real estate background skills to service the unique risk management and insurance needs of his clients, established real estate developers and investors.

Welcome to the show John Mark, and thank you for taking the time out of your day to share your story with our audience and join me. How are you doing today?

John Mark.: I’m doing great John, thanks for your time and thanks for the invitation to be on your show. I’m looking forward to it.

 

John Carney.: Perfect. Well let’s kick this off. I like to ask our guests a question to kind of get the conversation going. This is the Real Estate Locker Room Show, so we’re going to ask you a sports related question and tie that into the business of real estate. Growing up, was there one particular athlete that you admired? A professional athlete or an amateur athlete that you looked up to?

 

John Mark: There was. My first love in sports is baseball. I’ve played basketball and football as well, but baseball my first true love from a sports perspective. And I was a catcher basically my whole entire young career as a baseball player. Mike Piazza from the Los Angeles Badgers was my favorite player. A little-known fact about Mike Piazza is that he wasn’t even drafted into major-league baseball. He was identified outside of the draft by a scout and was invited to try out for a team. So he basically came up through the ranks of baseball to become one of the baseball greats. It’s just a great story of persistence and never giving up on your dreams. Those are some of the characteristics that I liked about Mike Piazza.

 

John Carney.: Looking back at that particular athlete, I remember Mike Piazza’s playing days. He really put catchers on the map, so to speak, especially in the national league. Was that story inspiring to you as a young athlete, looking up to Mike?

 

John Mark.: It was inspiring. He’s a guy that just did a great job. His job day-in and day-out was very consistent, and as I was growing up he was the catcher to emulate. He was just a great role model that I thought would be good for me to portray myself against and emulate to the best of my abilities.

 

John Carney.: We’re going to now jump over to the nuts and bolts in the real estate side. But I like to draw the comparison between the business of real estate and the business of the team aspect, and just go back to what we learned in our younger years competing on teams. Because it’s very much a team-driven industry, and you have insight into how commercial developers and property owners and operators work at a very high level, and you’re a valuable player on their team by offering the insurance solution, would you give us a little bit of the background on how you settled into that niche in the real estate game?

 

John Mark.: Yea, part of the bio that you read discusses my, or shows my early involvement right after college. As a college graduate, I didn’t really know what I wanted to do exactly after college, and I had started to read books in my spare time about business. One of the themes that kept on hitting me, just kind of in my gut, and just a thought that I could never shake, was real estate. At that time, I didn’t know what that meant or what that looked like, but it was just a concept that I thought really resonated with me.

And so, during my years working at Woodfield Homes, I learned a lot on the fly, through just consistent application: getting up out of bed and going to your job, and doing to the best of your abilities, and learning on the fly, and just through that time I really came to enjoy and loved the game of real estate. And after that, when I came to Oswald, in the insurance base, it’s just such a niche driven industry.

 

If you want to be very successful you’ve got to focus in on a niche. Or firm is the fiftieth largest insurance broker in the country, so we have a lot of niches in private equity, construction, manufacturing and whatnot. We didn’t have a big presence in real estate, so I just decided to put to use my experience, both with the job at Woodfield, managing investment property and then eventually owning my own investment property. The foundation I think of any real estate operation in the country really, is what I experienced, and understanding the fundamentals and the foundation of what those operations look like. I feel this has really set me apart against my peers. And basically, I would contribute my success to just getting out of bed every day and hustling for business. There’s no silver lining or silver bullet that I think puts people on the map right away. It takes time and consistent persistence. So it’s just the daily application of using the work ethic that I’ve been blessed with, and going out and developing relationships and being a trusted advisor, and just over time being able to win over clients based upon my attitude and the extra things that I bring to the table that’s different than my competitors.

 

John Carney.: So, showing up and consistency is what is driving your success at the moment. Do you look back at when you made a change? In your down time when you were working in your first job for the construction company, you could have sat around on the weekends and gone to baseball games and hung out with your friends, but you chose to go out and dig up properties, and then put in the time and energy and money, your own time energy and money, those three precious resources, into fixing up these homes and running them as a business. So, do you believe that that experience just helps you identify with your clients better, especially on the insurance side?

 

John Mark.: Absolutely. I think one is: I get respect from my clients, having known my background and the fact that I got my hands dirty and have actually gone through the act of real estate investing versus standing on the sidelines like maybe other advisors and talking about the philosophy of real estate and of investing and how it should look which is a lot different than getting your hands dirty and having done it.

Understanding the ups and downs of real estate investing and the cycles and the challenges that everybody faces on a daily basis is what really sets me apart.

It was really when I started managing my boss’s investment properties. It was a small company, Woodfield Homes, and I worked with the owner on a daily basis. I got the manager’s investment property, and I applied the financials to an Excel spreadsheet and just looked at projected expenses. I applied projected appreciation over a period of time, and the math was just a compounding effect and was just a powerful calculation for me. And it just really gave me a very deep impression, a very good impression of real estate. I think that was the visual that I needed to really have the lightbulb go off and say “I know I like this business, but now I get to see the power of real estate financially and what it can mean from a lifestyle perspective.” That really made me come to just really love the business.

 

John Carney: So, that’s a great experience early on, and it sounds like the principle of Woodfield Homes was there as a sounding board and a mentor, if I’m reading between the lines, is that correct?

 

John Mark.: Correct, yes. I mean, he basically had this investment property and I went out and it was sitting vacant, just because it wasn’t part of his core business. I saw an opportunity to collect an additional six or seven thousand bucks a month in rental income. It was a multi-family property. So in my hours working for him, I would hire his subcontractors, and we would go fix up this property and get it rented and then I would sign leases with the tenants; I would manage the cash flow and the expenses; I would handle tenant issues; any move outs I would get them re-leased, so it was just a very hands-on experience for me. I didn’t read a book about it, I didn’t go to class for it, but it was just an example, or an experience that was the best way for me to learn. That’s the best way for me to learn, is just by doing it on a daily basis. And every day you learn something new and you apply little nuggets of learning experiences, and you apply those going forward and slowly things continue to get better and better, and you get better at your job.

 

Your right, that was spot on. He was a great mentor, it was a great opportunity for me to even get into that, have that experience. So for that I’m grateful for his willingness to let me run with those projects.

 

John Carney: Yes, that’s a unique opportunity that, now that we’ve dug into it a little bit more, sounds like you created your own opportunity: you created the opportunity and ran with it. It wasn’t given, it was created. I love stories like that, it’s very entrepreneurial. What I’m interested in sharing with our listeners right now is that you have that story, and you mentioned it’s kind of a smaller scale investment property. You have the opportunity every week to meet with your clients who own much larger operations on the commercial side. Can you talk a little bit about the parallels you see between an investor starting out with a few small, single family homes or a multi-family, and scaling that into something large? And do you see the team players that the larger operators have as identical, similar, different? Could you give us a little bit of insight into what you’ve learned just by playing at such a high level?

 

John Mark.: Yes, I think you kind of hit it on the head there: the team is the same. The actions are the same and the only difference is the number of zeros after the comma. If it’s six zeros, or nine zeros, or twelve zeros or what have you, that’s the only difference. But the fundamentals of property management: tending to tenant needs; having an attorney draft up a solid lease agreement that promotes tenant flexibility throughout a term of the lease; working with a local banker, or if you’re a more sophisticated operator, working with friends and family and or other sources of equity and debt to achieve the financial results.

 

Having a good team around you: a property management team and contractors that you trust, that you know do quality work, that don’t cut corners and that you understand the costs up front, so that way you’re not looking at a job after the fact and racked up an extra ten thousand dollars in costs or what have you.

 

Working with an insurance advisor to help you understand the multitude of risks that you face on a daily basis. Some of which can be mitigated through daily best practices in your operations. Others tend to be much larger that you want to have financed by an insurance company.

 

And so, whether you’re starting on two properties or two hundred properties, you hear a lot of stories about people getting into it just all of a sudden acquiring 100 hundred over the course of a year, or stories like that, which I think is great. But the number doesn’t really matter, it’s the quality of the investment that matters, and it’s the quality of the team that you have around you. It’s the quality of your experiences that if you have those, that allows you to scale quicker and better. And you get through that learning curve quicker with a better team.

 

If you don’t have a good team around you, you’re going to be struggling with your experiences, wondering why you’re experiencing what you’re experiencing, without a good team.

 

And so, to your point: it’s a team sport, whether you’re just starting out with a trusted banker, like I said before, or trusted attorneys and contractors, or taking those resources and creating an in-house department encompassing all those various needs as a real estate investor. So, in my opinion, the difference is, as I’ve said it in the beginning, the number of zeros.

 

John Carney: And to get to the larger number of zeros, everyone starts somewhere. And the nice thing about this industry that I like, or the business of investing, is that it’s unlimited based on everybody’s personal motivation. Give us a brief summary of the importance of understanding your own risk profile, and then why having the right insurance agent who understands that risk profile is critical. I’ve had experiences where, early on in my investing career, insurance was a business expense, but it’s one that you always look to minimize, right. It’s very important but people always try to minimize that because it’s a business expense, it affects the bottom line. So, give us a little bit of professional advice on the best approach to insuring your real estate portfolio.

 

John Mark.: Yes, I’m certainly happy to do that. Let’s just be honest, insurance is not the most exciting topic to talk about, right? You don’t sit around the cocktail parties talking about your insurance agent or insurance policy. I totally understand that. But you’ve hit it right on, insurance is a line item in your operating budget, right? Just like legal is, and just like your interest rates are on your loans. You can argue the same thing from a lender perspective or your accountant or your attorney. But from the insurance side of things, I think the number one thing for an owner to do is to take the topic seriously, first off, and then secondly, shortly after that, is to really take the time to stop for a moment and think that these risks out there, that they could happen to you.

A lot of people sit back and say, “that’s never going to happen to me, that won’t happen to me.” I think a really true statistical investor will actually take the time to help you understand how that might happen to him or her and what they could do to mitigate that from even happening in the beginning. So, I think the best way to do that is to team up with an advisor who knows real estate.

 

When I started looking at houses in Rockford, Illinois, the first thing I asked my mortgage broker, or banker, as well as real estate agent is, “Have you worked in real estate before?” And the only key members that I chose to work with in those areas are people that have invested in real estate before. Whether they owned real estate at the time was irrelevant, but the fact that they actually took the time and invested their time and their money into real estate told me that I’m dealing with somebody who absolutely understands each step of the process. And so that should be the same thing with your insurance advisor.

 

Whether your insurance advisor invests as a private or silent investor in deals, or has a small portfolio on their own, I think you need to take time to interview them and understand their experience in real estate, because you’ll come across a lot of insurance agents that are generalists. They’ll walk into a manufacturing company and act like they know manufacturing, and they’ll turn around and walk into a non-profit and act like they know the intricacies of a health and human services organization, and then private equity, and so on. You just want to make sure that, while it’s understandable to have a diverse book of business, you want to make sure you’re working with someone who has the majority of their book in real estate. That way they can bring to you the information that is meaningful for you, and making you aware of things that you may not even be thinking of in the first place. Because you don’t know, and that’s the job of advisors, to inform people of what they don’t know, to better educate them on how to manage those risks going forward.

 

So I think, as an investor, capital is very intensive, a capital-intensive business. You’re constantly leveraging your dollars, so the financial risks that you take, and risks that might come about with your lenders, investors, financial loss to the organization, then you have your physical loss from the properties, with acts of god that just – wind and fire and hail and so on.

 

And then you have the operations risk of property management and tenant risk and understanding how the tenants are taking care of the property. And that boils down to your lease that you have with the tenant and ensuring that they’re carrying their own insurance that will indemnify you and protect you based upon their negligence. So, there’s a number of risks that an owner has, and has to manage on a daily basis.

And the insurance advisor just becomes much more valuable than just a broker. Somebody who’s going out into the insurance marketplace. You know, you fill out an application, you get a bunch of quotes, that’s not statistics. That’s not complex. It doesn’t really show any expertise, it just shows that you can go through a process. But then turning that information into business conversation, specific to real estate investing – that’s the piece where I think there’s true value of an insurance advisor.

 

So I would just encourage all the owners out there to work with an insurance advisor that is in the real estate investment business, and take it as seriously as you would your accountant. Because the last thing that you want to happen is a 50, 75, 100 thousand, one million dollar claim situation that is totally unforeseen, that kind of hits you out of nowhere. And you go to your insurance agent, they haven’t talked to you in two years, and you say, “Hey I got a claim.” And they say, “Hey, it’s not covered.” Then you have a bigger problem than you would have originally. So, that’s just my perspective when it comes to insurance and it doesn’t have to be time consuming, you don’t have to spend hours and hours and hours on it. You have to find the right person who can understand and be that advisor.

 

John Carney: John Mark, that’s great. That’s a great summary of why investors need to put some time and effort into sourcing the right insurance provider and advisor for their team. Important stuff. Alright, before we wrap this up, I’ve got a couple more questions for you, we’re kind of getting down to our two-minute drill here at the end. You’re a motivated, hard-charging person, and you manage to get a lot done with the same 24 hours we all have. Are you a big reader? Are there any books on business, or books on sports that you’ve read that you’d refer people to?

 

John Mark.: Yes, I think a couple of books come to mind that I have read in the past. I mean, I think we all know the book ‘Rich Dad Poor Dad’ is a popular book that people mention. But there’s a couple other books.

 

‘The Millionaire Next Door’ is a great book, it just talks about daily application of financial discipline and the notion of cutting up your credit cards; that’s kind of an extreme example, but it’s applying due discipline to your financial situation and ‘The Millionaire Next Door’ is a great example of that.
Another great book that I really like, that really resonated with me (I kind of view myself as an underdog in a way) is a book called ‘Talent is Overrated’, I think Jeffrey Colban is the author. He mentions Tiger Woods in his book. About how, in order to be the best at your game, it takes time in that arena. So, in Tiger Woods’ situation, really quick, he racked up more hours by the time he was ten years old than most golfers racked up by the time they were 23 or 24. And that allowed him to be that much more dominant in the field, because at the age of ten or twelve, he was light years ahead of everybody else. In part because of his dad and then just his personal drive. So there’s a lot of ways to make up for talent and the book called ‘Talent is Overrated’ is I think just a great read.

 

John Carney: Thanks for sharing those, I haven’t read either one of those. I’m an avid reader, and I’m compiling a list, especially through talking to all the guests that I’m very fortunate to interview on this show. So, that will be included on the show notes of my website.

 

John Mark.: Nice.

 

John Carney: Is there anything that you do: a daily habit or a practice that allows you to train to be successful in your business and in your life, that you can share with our audience?

 

John Mark.: Yes, a couple of things. I have to be able to work out at some point during the week, or on a somewhat consistent basis. I think with the pressures of business, and the high-pressure sales environment that I work in, you want to have broad shoulders and you have big goals ahead of you that the company depends on you for. And so you’ve got to be able to de-stress, think through the day, process the day and just get it all out, so that way when you start the day the next morning, you’re kind of starting it somewhat from a fresh perspective.

 

And then I’m actually an introvert. So the way I recover and reenergize is by actually being by myself and just taking a few minutes to sit and process my day. I’m a scotch guy and a bourbon guy, so I’ll have a glass of that and maybe write in a journal of some kind and just reflect. The other tip is just to duplicate my successes, but more importantly, learn from my failures going forward.

 

John Carney: Thank you for sharing that. That’s good, sound advice for everybody who’s working on journaling, or a little bit of quiet time to meditate or reflect on the day. Well thank you for joining me in the Locker Room today John Mark. Where can the audience find you to carry on the conversation? Tell us a little bit of where you live online.

 

John Mark.: Actually I’m not a big Facebook person, although if you go on my profile there’s some pictures that I posted of me and my girlfriend recently. But I don’t spend time commenting on other people’s posts or looking at the feed there. I am active on LinkedIn and my full name is John Mark Tichar. So you can look me up on LinkedIn. You can also shoot me an email at john.mark.tichar@gmail.com. I would be happy to connect with folks and network if anybody is interested.

 

John Carney: Alright, there you have it folks. I truly hope that you picked up some actionable advice regarding insurance for real estate from John Mark Tichar. Make sure to check out the Real Estate Locker Room Show on iTunes, Stitcher or Google Play and hit that subscribe button to ensure that you never miss out on all the pro-tips from our guests.

The mission here is to help you elevate your real estate game. And if you like what this show is all about, I’d be really grateful if you would leave us a five-star review on iTunes or your preferred podcast platform, wherever you get your podcast every week, so that other like-minded real estate investors just like yourself will be able to find us easily. The post-game report show-notes, links and additional content related to today’s episode will be available on my website: johncarneyonline.com/podcast, and while you’re there, feel free to drop your email into the newsletter signup form so that you can receive the monthly newsletter and other tips, tricks, hacks and good stuff related to the business of real estate. Remember to stay focused on your goals, have fun and stay in the game. I’m your host John Carney and until next week, work hard, play hard and profit hard. Thanks again for joining us again John Mark.

 

John Mark.: John Carney it was a pleasure thanks for having me.

 

John Carney: Perfect take care, thank you.

(Music Out)

End Audio

[31.54]

 

Connect with John Carney
Facebook: www.facebook.com/JohnCarneyOnline
Twitter: @John_M_Carney
Instagram: @johnm_carney

© John Carney 2017

JC 009: Developing real estate and the AirBnB test with Mark Ebner

May 3rd, 2017 | no comments

The AirBnB Game Changer

Mark Ebner - The Real Estate Locker Room ShowMark Ebner is a Cleveland resident with 10 years of experience in the real estate development world. After earning his Master’s degree in Urban Planning Design and Development, Mark began work at a nonprofit organization before setting out on his own as the Principal Developer at True North Living.

Mark followed in his family’s footsteps of working in real estate and began his real estate development career by purchasing, demolishing and rebuilding a home in 2007, purchasing and remodeling his own home in 2011 and building new single family houses surrounding.

Mark and his wife began testing AirBnB with a home that was for sale and immediately realized enough success that they choose to keep a house as a short-term rental.

Five Key Points:

  • It’s important to learn how to teach and deconstruct everything that you do. “You don’t really think about your foot position when you’re skating until you need to describe that to someone else…”
  • Learn how to delegate more, speed the process up and hire the right subcontractors.
  • Real estate development takes a lot of work, a lot of planning, and you also have to make it fit in with the surrounding community.
  • Remind yourself to look at the projects, at what you’ve accomplished and bring yourself back to that when you get frustrated.
  • You must know the numbers. Make sure your margins are good and what they should be.

Favorite book: How Soccer Explains the World by Franklin Foer.

You can learn more about Mark and his city development work at www.TrueNorthLiving.com.

Thank you Mark for taking the time to share your story with us.

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at www.johncarneyonline.com

POST GAME REPORT: Episode Transcript

 

PODCAST:            009 – Developing Real Estate and the AirBnB Test with Mark Ebner

Introduction:            Welcome to the Real Estate Locker Room Show with John Carney. Did you know that investing in real estate is a team sport? Join John and his guests as they explore the intersection of the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the Real Estate Locker Room Show we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve ongoing success. Now it’s time to kick off and level up with new ways to grow your real estate business.

John Carney:            Welcome back to the Real Estate Locker Room, folks. My name is John Carney coming at you today from Cleveland, Ohio, and joining me in the locker room is another Clevelander real estate developer, Mark Ebner, and we’re going to talk about how to become a real estate developer. Mark lives down in Tremont and is the Principal Developer at True North Living. TNL specializes in modern single family homes for the urban environment, with each home being carefully designed to fit in with its surroundings. Mark is especially interested in traveling and the role of tourism in cities. With the first houses he built in Cleveland, he decided to test the AirBNB market for top of the line short term rentals and has been blown away with its success. Mark has a Master’s degree in Urban Planning Design and Development from Cleveland State, and while obtaining his degree he was a manager of research and engagement for CEOs for Cities, which is a civic innovation lab and network for city progress and success, and connects cross-border, cross-sector, cross-generational civic CEOs and change makers to one another as well as to smart ideas and practices. Welcome to the show, Mark. Thank you so much for taking the time out of your busy schedule to join us and our audience.

Mark Ebner:            No problem, thanks for having me.

John Carney:            Cool, well we’re going to talk about real estate development in a little bit, sports as well. So to warm up here and get this interview kicked off, we like to ask a sports question. Who is your favorite athlete of all time and why?

Mark Ebner:            That would have to be Kenny Lofton. He was a big part of my childhood for my older brothers and my family in the 1990’s when he was playing for the Indians. Actually he was traded from Houston to Cleveland at the same time that my family moved from Houston to Cleveland, so he’s kind of been a part of my life. I still remember where I was the day we traded him after the ’95 World Series, and then was happy when we signed him back a year later, and then when we traded for him again in 2007 when we made another magical playoff run. So it would have to be Kenny Lofton.

John Carney:           Great, and you got to see Kenny Lofton throw out the first pitch at game one of the World Series, correct?

Mark Ebner:            Yes I did.

John Carney:           And did you make it to all seven games this year?

Mark Ebner:            I made it to six of the seven. It was game four in Chicago that I didn’t make it.

John Carney:            That’s a pretty strong showing.

Mark Ebner:            It’s a pretty shocking showing. Originally I went to Chicago and I just wanted to be a part of the atmosphere, and I was with a family friend who encouraged me to just go to the game because I had never been to Wrigley Field and it’d be an experience. And then for game five in Wrigley, my brother from Portland had flown in to Chicago to see us. Hopefully a win, but that didn’t happen as you may know, but both of my brothers and I were able to go to that game together and it was a lot of fun.

John Carney:            Fantastic. Alright Mark, so we’re talking about real estate development, and I look at developing real estate as another form of investing because you’ve got to put your money and your reputation on the line. Can you tell us a quick story about how you chose to get involved in the development side of real estate?

Mark Ebner:            So my family has been in some sort of real estate or another my whole life. My dad’s a general contractor who when I was young, when we moved back to Cleveland, bought an apartment building that he began renovating and then subsequently managing, and then also started flipping some houses. In 2007 my parents were fortunate enough to give me a house that we demolished and then had to build a new house on it down in Sandusky, Ohio. So that was my first foray into new construction, it was also my dad’s first house that he bought which was a lifelong dream of his. And then in 2011 I purchased a house that was built in 1890 in Tremont and we remodeled that. The house itself had three vacant lots around it; just the houses had burned down at different times, the previous owners who raised a family of five in the house over the years had just accumulated all the land around them. So after I remodeled that house we began building some new single family houses around it. And in 2012 I quit my job at a nonprofit to really get a hands-on feel for everything. I wanted to see every aspect of the real estate development, especially before my dad needed to quit because he’s now 66 years old. So I thought it was a good time to grab it by the horns.

John Carney:            Great. So you have a mentor and a sounding board with your father, and then were you learning a lot with your degree at Cleveland State- your Master’s degree in Urban Planning? Was that a part of just an all-around interest, or was it also a push in the direction that, ‘this is my career path.’

Mark Ebner:            You know I studied mostly city management and economic development when I was there, I thought I was going to work for a city and help them on a larger scale. But as I was working before a nonprofit and then as I was working for the nonprofit, I began becoming frustrated just talking about what other people were doing, and I was sitting with my land and saying, “You know I can go make a difference. I can go do what I’m talking about telling other people to do,” and I think that was what really motivated me to start it.

John Carney:            Cool so I’m looking at your timeline here and my notes that I’m taking. In 2007 you and your dad build a new construction house from the ground up. No doubt you could write a book about all the lessons you learned doing that. And then you get into a purchase in 2011, so four years later, you got a house to renovate, to rehab, and you own three or four blocks around that. And then when did you start building? Because I guess we’re coming up on 2017, right? So there’s your ten years right there to become an overnight success, but you’ve been slowly chipping away at it and learning- building your team which we want to talk about here in a second. But give me a little bit of a synopsis of those ten years, and how overnight you became a real estate developer.

Mark Ebner:            So in 2007 it was right when I graduated college. I’d studied Political Science with minors in History and Social Justice, so I didn’t really know what I wanted to do when I became an adult. We worked on the house in 2007, that gave me a great opportunity to do something with my hands. I still didn’t quite know what I wanted to do so I actually moved to Vail, Colorado and I was a ski instructor for two years, which was really important for my development [Inaudible [00:08:47] because- bringing this back to sports, it was really what taught me how to teach and really deconstruct everything that you do and be able to communicate that with other people. You play sports your whole life, you’re taught how to skate, but you don’t really think about your foot position as you’re skating until you need to describe that to someone else, and when you really have to describe the most miniscule detail that’s really important, and I carried that through my whole career. But I then worked some office jobs and eventually decided to study the urban planning. And it wasn’t until 2014 that we started building the second new house, and when we started building that house is when I left my job at the nonprofit. And after that we started slowly- we did one house, I did almost all of the construction on it with help of my dad and a few other people working for us. The next house I subcontracted out a lot more, the last house that I built I subcontracted out even more. My happy point on that one is I’m building 35-foot tall houses, I never even stepped foot on the roof of that house. So learning how to delegate more, learning how to speed the process up, and select the right subcontractors.

John Carney:            So from the ground up on new construction on your lots in Tremont, you’re at four completed projects?

Mark Ebner:            That’s correct. Four completed if you include the renovated one.

John Carney:            Right.

Mark Ebner:            And then I have plans to build two more starting next spring, and I have a couple more lots that we’re trying to figure out the best way to build on them. They are in an area that hasn’t seen a ton of development yet, so we’re trying to come up with something a little more affordable, and maybe be able to get a little more density on my lot, and still fit in with the neighborhood characteristics.

John Carney:            So for our audience that’s not Cleveland-based and unfamiliar with the Tremont area, in some respects just becoming familiar with the area and checking out your awesome project when I moved back to the US, you were almost a pioneer there and really everyone built up around you while you were getting your degree. Is that a good way to put it?

Mark Ebner:            Yeah when I bought my house, directly across the street from me, it was a weed forest of just weed trees, and there were two houses that were around 1900 circa, and then since I bought it that forest has been torn down and there are now twelve new units of housing across the street from me.

John Carney:            And for our audience that- there’s a few movies that we can bring it back to this area. It’s the Deer Hunter, the church that they filmed in Deer Hunter, it was just down the street from Mark. And then the Christmas Story house is just around the corner, correct?

Mark Ebner:            Correct. Yeah the first house that we built, there are windows overlooking the St. Theodosius which was the church featured in Deer Hunter quite a bit. So that was- my brother was the architect and he had me getting up on ladders in the yard taking pictures so he could figure out the best way to orient the windows.

John Carney:            Right. So that would lead me into the team. But what’s the bare bones team to someone out there who has a passion for creating something new in their market, or has their eye set on improving an up and coming area in their city but just doesn’t know how to get started? And you had a father who had a lot of the skills, you guys worked together, it’s like a storybook father son project. But what would the bare bones team you’d recommend someone recruit to get started in something like this?

Mark Ebner:            You know I think it’s very important to work with an architect, maybe not so much if you’re building out on farmland where you aren’t limited by your lot restrictions, but my lots are 33 feet by 54 feet. In order to put a 2,000 square foot house on it, it takes a lot of work, a lot of planning, and you also have to make it fit in with the surrounding community so that the neighbors don’t feel like you’re trying to overshadow their house. I can’t put a three story house next to a one and a half story house like my old house, the one that was built in 1890. We actually started stepping that house up when we put an addition on it. We made it two stories, a little bit more modern with the additions so that we knew we could go up to three stories on the next house. So the very first person I would work with would be some kind of architect or some planner that you can map out the property and think about, ‘Well how does this fit in with the character of the neighborhood?’ And then you would need a really strong general contractor, someone that knows the business, knows how to find subcontractors or knows how to do the work, and that role would be my dad. I’m definitely starting to learn more of that role. But then you can start relying on your trades and let them do what they do best.

John Carney:            Like do you see now after having a few projects- I mean for lack of a better term, you’re almost a custom home builder in building your own product, right? But I mean would you say all those critical trades, is there a little bit of a loyalty there, and trust, and a rapport that’s been built up now over four projects?

Mark Ebner:            Yeah definitely. I think one of the most important things for me is being able to communicate easily with them. If I have a problem on the jobsite then I need them to come out and take a look at it, or if I need to schedule them so that I remain on my timeline. I just want to be able to get ahold of them, and if they say they’re going to be out on Tuesday, and they show up on Tuesday. Definitely it’s important to build those relationships.

John Carney:            Alright I got side-tracked here. Alright so we’ve got our team and we are talking about figuring out the best use for a lot, how dense you can make it, what type of architects you can- your creative boundaries so to speak for fitting into a neighborhood character, which is all important. So you’ve got a few of these you’ve sold to new home buyers, and then you’ve kept a couple that you’re having outstanding success in the AirBNB market. Can you talk to us a little bit about that?

Mark Ebner:            Yeah so I’m fortunate that my wife is very flexible because starting in January- which our house was completed in June, so six months after we moved into our house, she’s a nurse who doesn’t work Saturday, Sunday, or Monday ever. She allowed me to experiment with putting our primary residence on AirBNB just for weekends, and we were going to use it- I had been interested in a website called HomeExchange for a number of years where you trade houses with someone and you go to their house, they come to yours. That didn’t quite work out with us, we didn’t have all the flexibility that you might have when you’re retired and you can literally just go for long periods of time. So we decided to put it on AirBNB and we were going to use the money to go travel, and I just really wanted to see if I could build one of these houses and keep it, and do AirBNB rentals on it in say Cleveland. That first house we built in 2007 is down the street from an amusement park so that one’s been rented out on VRBO and HomeAway for as long as the house has existed, and it did tremendously well but we didn’t know how it would do in Cleveland. Cleveland’s not exactly the number one tourist market in the country, but I figured there was going to be enough demand for something cool, modern, and high end. And people when they’re travelling don’t necessarily want to stay in a downtown sterile hotel, they want to be out in the community, and Cleveland is truly a city of neighborhoods, so a blessing there. My house has been rented just about every single weekend all year, it’s getting a little taxing on us now, but in July Cleveland was fortunate to host the Republican National Convention, and that was right after I had finished building the next house. So when we were starting to think about selling it, we decided to furnish it and it was furnished in time to rent that one out for the Republican Convention, and once I did that and we said we already have the furniture, we’ve already paid down enough of our debt that we feel safe if we are able to sell one of the other houses that we just built. So we decided to keep that house and we’re renting it out full time now, and it’s definitely able to cover a mortgage, and it’s been an interesting experience seeing who’s coming to Cleveland, talking to people and getting to know what they’re here for.

John Carney:            So are you going to scale back on moving every weekend with you and your week and just focus on managing the house next door? And can you give the audience- just give us an idea in numbers how many dollars. I mean it wasn’t just the RNC that came to Cleveland, I mean that’s huge and we’re really only talking about from January until November. But you have the RNC, you have the World Series, and then you just have people that want to come downtown during the summer, you had the Cavaliers in their playoff run. What kind of money are we talking about these two houses generating in less than a year?

Mark Ebner:            So my house in this year, if I exclude the Republican Convention, which I view it as an anomaly, we are expecting to ring in $25,000 just from renting it Friday night, Saturday night mostly, and sometimes Sunday night. The other house I’m projecting $50,000 on it if it’s rented every week or rented seven days a week. And I’m assuming that’s going to probably be about 40% occupancy, 50% occupancy, I don’t expect it to be rented much more than one week a month during the week and then most weekends. But I’m starting to see some business travellers coming in, they’re using the house either for meetings, or it’s three co-workers that don’t want to share a hotel room, and they want a little more privacy. So I’m starting to get those weeklong rentals. And I actually have someone coming for two weeks that just got married in London, she’s from Cleveland and she’s coming back to celebrate with her family. So I’m hopeful that we’ll pull in $50,000 or more on it in a year.

John Carney:            So that’s an amazing- would you say that you stumbled upon this? You convinced your wife to test something, right? I’m big on testing and measuring, we talk about it in just about every episode. That’s the only way you really know. And then you’re looking at an extra $75,000 just on- as the Ozzys would say, on a punt, on a bet. And that’s a phenomenal, phenomenal story in and of itself. Do you see yourself as you look at new areas of the city to pioneer and figure out, keeping this model there? Build three houses, keep one. I’ve got another.

Mark Ebner:            Yeah I do see it. I had joked around that it was build one, get one free if I’m able to rent it. But building three, keeping one of them is definitely doable and something that I’m really interested in doing moving forward.

John Carney:            That would be a great- I’d be interested in seeing those numbers on a spreadsheet when you’re trying to nut out exactly how the numbers fall into place.

Mark Ebner:            Exactly.

John Carney:            Alright so we’ve talked a lot about points that we usually cover, but what advice do you have for someone starting out? You mentioned an architect as being one of your key team players in the development side of the business, but you want to become a real estate developer, it’s daunting, you don’t have to start out by building a massive shopping center, right? You can start out by just doing a two lot subdivision like I did. But what’s your advice for the people that have a burning desire to do this?

Mark Ebner:            You’ve got to know the numbers. It’s so important to know what land costs should be, because if you overpay for land you’re shooting yourself in the foot right from the beginning and that’s going to be something that’s going to be hard to overcome. And I see that in some projects around here that land prices are starting to climb, and people are still buying hoping to make some money on it, but everything else is going to be fixed. You’re not going to be able to push the ceiling of the house up too much in the neighborhood because the appraisers need to have comparables to compare it to, and your construction costs are going to cost a certain amount, so you need to make sure your margins are good and know what they should be.

John Carney:            Right. Sound advice. Start learning the market, knowing the cost of- well your time and energy but also the fixed costs that go along with it. Alright cool. So we’re going to get into our two minute drill here and wrap this up. What sport did you love playing as a kid?

Mark Ebner:            Baseball, hockey, and skiing are my favorite sports. I used to joke around that baseball was my favorite sport in the summer and hockey was my favorite sport in the winter just because I can shift.

John Carney:            And then today? Which of those three sports are you still actively participating in or what else have you added to the mix?

Mark Ebner:            You know I still ski, I’ve gotten twenty plus days of skiing my last several years. This is going to be my first time not having a ski pass in a long time because we’re going to try to go travel this winter. So definitely skiing I keep up with the most.

John Carney:            Perfect and one of my favorites as well. Alright so when you’re travelling, when you’re on planes or in the car, waiting around, is there a particular sports or business book that you’ve read recently that really stands out and would be something that you would recommend our audience pick up and read?

Mark Ebner:            One of my favorite books I’ve ever read, and I think it ties into this sports theme and business theme is, ‘How Soccer Explains the World.’ It’s a concept hard for a lot of Americans to understand, but how important soccer is in globalization, and how a lot of it’s tied to a city’s economy, or a country’s economy, and how there’s just so much pride around their team and how that can unify people.

John Carney:            So did I hear ‘explains’ or ‘expands’ the world?

Mark Ebner:            Explains.

John Carney:            ‘How Soccer Explains the World.’ Interesting, I’ve never heard of that one. Is there a motivational quote that kind of you fall back on when you’re at a city planning meeting and they’re not really liking your design, or the contractor who was supposed to show up on Tuesday decides to go on vacation? Is there something that keeps you going that you fall back to?

Mark Ebner:            No I’ve definitely had some problems dealing with other people having their opinions, or not wanting things in their backyard, and it can be a frustrating experience. I just try to remind myself and like look at the projects, and look at what we’ve accomplished, and just try to bring myself back to that when I get frustrated.

John Carney:            Got it. And when you’re playing ice hockey and you’re on a break-away and you get in that zone, it’s a one-on-one scenario, or you’re up on the mountain and it’s an epic powder day and you’re off on your own absolutely killing it on your favorite run, getting to that flow state, is there a way when you- in business that you have found that helps you get into that flow state? To get your work done and be laser focused?

Mark Ebner:            It’s very hard. I come back to that as I said, finances are the most important thing, but they’re also one of the easiest things to overlook when I’m out in the field every day. So I have to set aside time, I go up to my office and basically lock the door and try to take care of all my distractions. So I force myself once a week to go through the checkbook, make sure everything’s right, make sure all the bills are paid, make sure everything’s put into Quickbooks. And I’ve found it’s easiest to do that in the morning when your brain is fresh as opposed to the end of the day when you’ve been working all day and all you want to do is sit down and relax.

John Carney:            That’s interesting. So you’re setting aside a certain amount of time every week to study your numbers and make sure that you’re on track. That’s why you’re able to just like whip out your house one and house number two AirBNB so quickly, right? Because we didn’t prep that, that just came out of the loop, and right there at the tip of your tongue. And for real estate investors out there, that is how it has to be. Alright cool, so I think that just about wraps it up, we’re coming up here on the thirty minute mark, but what is your number one tip for training for success in the real estate game based on all your experience?

Mark Ebner:            Well other than knowing your numbers, I can’t preach that one enough is know your numbers. And also just being able to find the right employees, knowing how to train them, knowing how to work with them, or knowing- just knowing how to trust them. That’s important.

John Carney:            Cool. Alright building your team, knowing your numbers, and scaling up. Well thank you for joining me in the locker room today, Mark. Where can the audience find you if they’re interested on carrying on a conversation with you offline? Do you have a website? Social media? Places like that?

Mark Ebner:            Our website is www.TrueNorthLiving.com and my contact information is on there.

John Carney:            Perfect so look up www.TrueNorthLiving.com and you can connect with Mark directly there if you have any questions for how to get started in the development game. Alright there you have it folks, I truly hope that you’ve picked up some actionable advice from Mark Ebner today. Make sure to check out the Post Game Report on iTunes, and while you’re there please click on the subscribe to the Real Estate Locker Room Show button to make sure you don’t miss out on any of our future interviews and pro tips from our guests. The mission here is to help you elevate your real estate game. If you like what this show is all about, I’d be grateful if you would leave a review for us so that other likeminded real estate investors like yourself can find it. It just becomes easier in the iTunes search engine. You can also visit www.JohnCarneyOnline.com for links and additional content associated with today’s show, and while you’re there, drop your email into the newsletter form and you won’t miss out on other real estate investing insight, tips, tricks, hacks, and other great stuff. Remember to stay focused on your goals, have fun, and stay in the game. I’m your host John Carney, until next week, work hard, play hard, and profit hard. Thanks again for joining us today, Mark. It’s been great.

Mark Ebner:            Thank you.

 

[End of Audio [00:30:56]

 

Connect with John Carney
Facebook: www.facebook.com/JohnCarneyOnline
Twitter: @John_M_Carney
Instagram: @johnm_carney

© John Carney 2017

JC 008: How to maximize cash flow with Tyler Sheff

April 26th, 2017 | no comments

Want More Mailbox Money?

Real Estate is a Team SportMeet Tyler Sheff who is the founder of CashFlowGuys.com, a licensed real estate agent, problem solver, educator, inventor and syndicator.

Want more mailbox money? Stop paying retail for your investment properties and boost your cash flow. Tyler shares his strategies for deal structure and offers advice on how to adjust your mindset in order to scale your business.

The mission of The Cash Flow Guys is to create successful real estate investors. Tyler teaches investor how to do the math associated with vetting a deal and how to interoperate the results.

Tyler’s the host of the Cash Flow Guys Podcast and a Master Facilitator of Robert Kiyosaki’s Cash Flow 101 Game.

5 Key Points:

  1. Put people on your team who own rental property
  2. You need an education to invest in real estate
  3. Lean how to receive mail box money
  4. Learn how to do the math
  5. There are different ways to structure a deal

 

Favorite book, Equity Happens by Robert Helms and Russell Gray

Favorite quote, “you can be fired from your job but you can’t be fired from you investments”

The Power Hour – Tyler’s parting advice for ongoing success is to tune out and think for an hour every day.

Reach out to Tyler by visiting his website, http://www.Cashflowguys.com

Facebook – https://www.facebook.com/tylersheff

Twitter – https://twitter.com/tyler_sheff

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonlie.com

POST GAME REPORT: Episode Transcript

PODCAST:                        008 – How to Maximize Cash Flow with Tyler Sheff

Introduction:            Welcome to the Real Estate Locker Room Show with John Carney. Did you know that investing in real estate is a team sport? Join John and his guests as they explore the intersection of the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the Real Estate Locker Room Show we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve ongoing success. Now it’s time to kick off and level up with new ways to grow your real estate business.

 

John Carney:            Welcome back to the Real Estate Locker Room Show. I’m your host, John Carney coming at you today from Cleveland, Ohio. We’ve got another great guest on the line from the Tampa area down in Florida, and that’s Mr. Tyler Sheff, and we are going to talk about the importance of cash flow. Tyler is the founder the www.CashFlowGuys.com and a licensed real estate problem solver, educator, investor, and syndicator. Tyler has been involved in the real estate game for over sixteen years and now maintains a 100% laser focus on investing for cash flow and helping others do the same. As a master facilitator of Robert Kiyosaki’s Cashflow 101 game, Tyler hosts workshops to teach the busy people how to use what they have to obtain what they need in order to build passive income and escape the rat race. Welcome to the show, Tyler.

 

Tyler Sheff:            Thanks, John.

 

John Carney:            The Real Estate Locker Room is all about having the casual locker room conversation about real estate. I’m really interested in the intersection of sports and the business of real estate. To get kicked off, I like to stretch out a little bit with just a warm-up question about sports. Do you have a favorite athlete that you can share with our audience?

 

Tyler Sheff:            Oh let me think. A favorite athlete? Maybe Wayne Gretzky. There was a time that I watched hockey when I was a kid, and I was a big fan of Wayne Gretzky back at the time.

 

John Carney:            Fantastic. I had number 99 on my bedroom door in the Oilers jersey.

 

Tyler Sheff:            There you go.

 

John Carney:            Coming from up here in Cleveland, he was a guy we loved. So you’re all about cash flow (cash flow is king), but before we talk about some of those strategies that you love and implement, can you let me know how or why real estate ended up as your career path?

 

Tyler Sheff:            It’s interesting. I like to tell people this is my second act in real estate. My first act went good, don’t get me wrong. I got involved, I started flipping houses and of course I got my real estate license, it’s going back to the year 2000. And that was all fine and dandy. I learned how to make money, but I never learned necessarily how to. That’s why I went into real estate initially, to answer your question, for money. I wanted to make lots of money, but what I didn’t take the time to learn is how to keep the money. So it took unfortunately a second act for me to figure out how to actually keep the money and have the money working for me instead of me working for it. That was a big revelation.

 

John Carney:            So if you’re in sales, we’re talking about real estate sales, you’re finding a buyer or a seller and then you’re getting a commission check, and then you’re onto the next one.

 

Tyler Sheff:            Hopefully.

 

John Carney:            Hopefully. If you’re a good agent you’re on to the next one. You have multiple deals cooking. But what you’re saying is we’ve got to get that income producing more income through assets, correct?

 

Tyler Sheff:            I call it mailbox money. I love it when I open the mailbox the last couple days of the month and the first few days of the following month, and I’ve got all these checks rolling in. It’s just beautiful every time that happens. And here’s what’s cool, John. I also get this mailbox money from properties that I’ve never owned, and just serving as an agent. Because what I’ve figured out I learned from one of my mentors, is I can take my real estate commissions as a promissory note instead of taking it as a lump sum at closing. Now by doing that I found myself putting together a lot more deals because the realtor commission no longer became an issue. ,You would think that the buyer would be paying the real estate commission if it’s after closing, right? But what we found is that with rental property it wasn’t really the buyer that was paying the commission, it was the tenants because they’re paying to live there. So once you adjust your mindset a little bit, I was able to carry my commission back as a note, make a decent little bit of interest, and then receive monthly payments of my real estate commission over time so I could take that payday and I could stretch that payday out over three years, five years, ten years, whatever the buyer decides they want.

 

John Carney:            I’m unfamiliar with this strategy, but believe me I will become familiar with this strategy quickly. So you’re getting a principle plus interest type arrangement with the new buyer on the promissory note, right?

 

Tyler Sheff:            Correct. So let’s say for example I sell a house for you and my commission on that house would be $10,000. Now normally in most markets the seller pays the real estate commission. I run across a lot of buyers that are not skilled at negotiating, so what happens is they wind up buying what I call off-the-shelf or they wind up paying retail. Well that’s really not going to help them if they can’t structure deals that make sense based on their investor identity. So instead the service that I offer to buyers in my market and actually across the country because we have buyers from all over the place that buy in my market, is I go in and negotiate for them on their behalf. Yes believe it or not, there’s a real estate agent out there that can negotiate, there are a few of us. And in exchange for me negotiating, the buyer pays my fee. That way in negotiations the seller is not concerned with having to pay a ‘realtor commission’ because it’s not coming out of their proceeds. That allows us to focus on the true negotiation that which the seller, or the buyer, is really going to pay, and what the seller is really going to receive. And now when I do that, I can talk to the seller about what their walk-away money is. I don’t have to talk in hypotheticals, ‘Well if I give you $100,000 for this house, that really means you’re going to net $80,000.’ No if I say we’re going to give you $100,000 for the house, you’re going to net $100,000 and here’s how we’re going to do it.

 

John Carney:            So that is really removing the elephant from the room on both sides in getting down into the negotiations, deal structure, and all the other fun stuff, huh?

 

Tyler Sheff:            Absolutely. Absolutely, I find that most investors are just like realtors. They’re not skilled at negotiating and they don’t enjoy negotiating. So if you’re not skilled at something and you don’t like doing it, well do you really- what’s the chances of being successful while you’re doing it?

 

John Carney:            So for all the listeners out there, when we’re talking about sourcing a real estate agent and how important they are in most markets, and looking for that extra value, now you have another tool, another question you can ask, another way of thinking about generating a better cash flow right from day one. Not only that, by removing the commission you’re also lowering the tax basis of the property.

 

Tyler Sheff:            Yup.

 

John Carney:            I’m not an accountant but I believe that that’s how that works because I’ve asked- in the past I’ve asked for the commission to be separated and paid separately out of escrow so that- this was for a property I bought as a primary residence, and that was basically to lower my tax basis on the public record, which is legal in the state where I did that. So that is a strategy that I’ve not heard of, and I’m going to be looking into. Alright, well cool. When you’re out there working for yourself on your own cash flow investments, you have- you’re representing your partnerships, and your family interest. Talk to me about the team you have and how you went about finding those people.

 

Tyler Sheff:            My team is very diverse, and as is my business. I’ve got several different classes or different legs of the business and I was probably the last person to get on board with the team concept. I thought one of two things depending on what time in my life it was. It was either nobody could do it as good as I do, or I can’t afford to hire somebody because I thought to myself, ‘If I hire an employee, that’s going to cost me $40,000 a year.’ I didn’t sit there and think- my mindset was off, that’s a big problem. If your mindset’s not right then it’s going to keep you from doing things. When you hire somebody for $40,000 a year, you’re not writing them a check for $40,000 a year on the first day they show up to work. What you owe them is $769 for this week, and then if they’re good, next week there will be another $769. So I was stuck in this mindset and one of my mentors, Jay Massey, helped me get unstuck in that regard. It’s like you’re not paying them in advance. I mean they do a job, they do a good job, you keep paying them and they’re valuable. If they don’t do a good job, then you don’t have to pay them anymore. That’s kind of how it works. So that was a game changer for me.

 

John Carney:            Finding the mentors to help you get a business structure that would allow you to help more people and to scale up, right?

 

Tyler Sheff:            Absolutely.

 

John Carney:            So with the Cash Flow Guys, I love the name because cash flow is what real estate investment should be all about, and if it’s ticking along and well-structured in advance, and everything works out, that’s what you should be receiving, mailbox money. Talk to me a little bit about how your business helps people get in that right mindset and get that first deal, or that third deal, or that obstacle deal in the portfolio.

 

Tyler Sheff:            Robert Helms from the Real Estate Guys Podcast, Real Estate Guys Radio, he said do the math and the math will tell you what to do. And I heard that a few years back at one of his seminars, and it really rung true. Like Cash Flow Guys is about educating people on the right way to do the math on the real estate investments, to do the due diligence, to do their homework, to understand what they’re investing in because our mission is to create successful real estate investors. People say, “What do you do?” I say, “I make billionaires,” and essentially that’s what we do. I teach people the steps that they need with no gimmicks, no hype, no extra up-sell to be successful as a real estate investor. And that’s the real crux of the service that we bring to the community. We’re not in it to sell courses, we’re in it to sell real estate. So there’s a big difference there and if I sell somebody one property and they get nuked, do you really think they’re going to buy another property from my team?

 

John Carney:            Succession follows success, and you would want your clients to be successful, that is just Business 101, right?

 

Tyler Sheff:            Absolutely right.

 

John Carney:            But not everybody subscribes to that, but that sounds great and I mean right out of the bat whether you’re a client of the Cash Flow Guys or not, if Tyler or one of his agents is working on a deal with you, it sounds like he’s got a system right out of the gate that helps you maximize your cash on cash return.

 

Tyler Sheff:            Absolutely right. For us, John, it’s not a rush, we’re not in a race. And a lot of investors, they go to some weekend seminar, and that’s great because everybody needs education. I’m not anti-education, I’m actually very pro-education. But they come out and they’re ill-prepared to make buying decisions. What we do, what separates us- and then they get with some regular real estate agent who’s just dying to make a commission. And it really to some degree, you really can’t blame them because they’ve got to eat, right?

 

John Carney:            Absolutely.

 

Tyler Sheff:            And so you’ve got a person that’s overly anxious to get into a property, and then you’ve got somebody who’s overly anxious to sell one because they don’t have a passive income themselves; that creates a potentially volatile and riddled with failure type situation, where I don’t need to sell real estate to make a living because I can do nothing. I can spend my days on my kayak, I am retired at 46, I don’t have to work. So I’m able to take the time to get my clients on board with the right mindset, the right skills and tools to allow them to be successful, because I’m not in this for the money. Money’s nice, yes, but it’s a byproduct of the service that we provide.

 

John Carney:            Correct, you are an entrepreneur at heart solving problems, and the income is just the natural byproduct of having happy clients is what it sounds like to me, Tyler. But along with being an entrepreneur, like real estate investing to me is bare bones entrepreneurship, whether people want to call it investing or being an entrepreneur, I look at them to be somewhat interchangeable because if you want to have multiple properties and scale up so that you can be fishing when you want to be fishing, when the fish are in town so to speak, and running at the right spot, you have to get started and then you have to have sound strategies, cash flow strategies, and it takes the average entrepreneur or small business ten years to be successful. What have you seen? What timelines have you seen, kind of an average from the people you’ve been able to help who said, “I understand real estate, I just don’t have the confidence to do it all by myself. Give me a hand.” How many years are you seeing before people are really able to sit back and say, “You know what? I can double this now.”

 

Tyler Sheff:            You know it depends on the person. We meet lots of different people, and the big part of what we do with coaching is we take the time to interview people and really get to know them and try to get to the bottom line of what they’re trying to accomplish. You’ve got the engineer types that have to know every single bit of information because that’s how they process thought, that’s how they think. Engineers are going to have a more difficult time, in other words their success gap is going to be much larger, it’s going to take them longer to accomplish the same thing as somebody who is a little less conservative so to speak, who is not as analytical to get to where they need to be. The engineer is a very risk averse type person, so it’s just going to take them a heck of a lot longer than it would the average person per say. Now I am very concerned about risk, and I’m cautious when I do things, I’m far more conservative than my wife is. And she’s not careless by any means, I’m just more conservative than she is, and we were able to get our first couple dozen doors within our first year of getting out there and doing it. Now with that process, as far as a timeline, I was in a big rush. I thought there was a badge of honor by the number of units that I had under my belt. I took a financial bath to some degree, or at least a dip in the pond that gave me an invaluable education, so we’ll call that tuition.

 

John Carney:            Okay, I mean that is a great analogy because that’s maybe skipping a valuable step.

 

Tyler Sheff:            Yeah.

 

John Carney:            But you didn’t make the same mistake twice, right?

 

Tyler Sheff:            Well actually I’ve got to say, I actually have made the same mistake more than once. I’m not going to lie, I couldn’t say otherwise. But the best thing I try to tell people whether they listen to my podcast or at any one of our events is that take the time to understand what we’re doing. In America we go out and buy stocks and mutual funds, we don’t understand what we’re investing in, we trust somebody else, a complete stranger on Wall Street to bargain with our retirement fund. It’s kind of illogical if you think about it. I used to play the stock market and now I look at the two, it’s like real estate is not rocket science. You don’t have to have a PhD to invest in real estate. Although I do have a PhD technically, I’ve got a Public Highschool Diploma, PhD, but it’s not hard, it’s not difficult to invest in real estate, but it does take some education and whatnot. And the faster you’re willing to take action, I think the faster you’ll see it.

 

John Carney:            I agree. A big proponent of taking action because results only follow action as opposed to planning I suppose. You’ve got to have that action step in there. Well great, so I mean we are talking about cash flow, and you’ve brought up some great points and some great tips for helping investors get started with cash flow. So before we get into our two minute drill and conclude this, what is your number one piece of advice for a rookie real estate investor who is after the cash flow? I might be repeating myself but know the numbers, is there something other than the math that you find to be a critical piece of the puzzle?

 

Tyler Sheff:            Put people on your team that own rental properties. Whether that be an attorney, especially a tax professional, a real estate agent. Insist that your team members in those roles own rental property because if they own rental property, they should be able to teach you how to maximize your efficiency in that regard.

 

John Carney:            There you go. We could end on that note because that is great advice, but we won’t. We’re going to now tie the sports aspect into this show. So are you ready for the two minute drill?

 

Tyler Sheff:            I’m ready, bring it.

 

John Carney:            Perfect. When you were growing up did you love playing sports or did you participate in any sports that made you realize ‘Wow I learned a few lessons there and I’m applying that to my business’?

 

Tyler Sheff:            I played a lot of sports, and I’ve got to be honest with you, I was terrible in most of them. But I did enjoy baseball and I learned quickly that I enjoy being part of a team. I absolutely enjoy being part of a team.

 

John Carney:            Okay, that’s great. I think that I learned the same thing. And are you still playing softball, or playing any team sports today, or is it fishing and-?

 

Tyler Sheff:            Well I got a little older John, and then I got a little fatter, and things don’t work the way they used to, and I’ve fallen down and gone boom a few times, and now I unfortunately don’t play sports anymore. I am an avid kayaker and fisherman and whatnot. I do some diving and that type of thing, and spear fishing. I’m an outdoorsman, a sportsman.

 

John Carney:            Don’t discount that though, like I think the outdoor solo athlete is just as much of a sportsman as the team guy playing the branded sports.

 

Tyler Sheff:            I agree.

 

John Carney:            And I’ve been fortunate enough to reel in a big game fish, and it wasn’t easy.

 

Tyler Sheff:            That’s for sure.

 

John Carney:            The fish made it easy for me being a rookie, he just swam right up and we pulled him in, but it’s supposed to be harder than that and the people on the boat were blown away. But it’s a tough sport.

 

Tyler Sheff:            Well hey, get a swordfish on the line and then tell me if that’s easy.

 

John Carney:            I doubt it, it was by no means a swordfish and that doesn’t look easy, not at all. Have you caught a few of those?

 

Tyler Sheff:            I have actually, I caught a few out in the Gulf of Mexico, and let me tell you that was an experience.

 

John Carney:            That is, that’s pretty cool. I’d love to see the photo.

 

Tyler Sheff:            Yeah I’ve got them somewhere around here, I’ve got to dig them out.

 

John Carney:            Look I know that a lot of our guests and a lot of our audience are avid readers, or their avid podcast listeners. Is there a favorite book that you have whether it’s related to sports or to business or to just something that supports being better at business that you can recommend?

 

Tyler Sheff:            I’ve got to say, the best book- and I’ll say this before I even give the title, and it’s about- they’re hopefully supposed to be releasing an updated edition. Not that the old edition is necessarily outdated, but these two guys put out so much value when they put out a piece of product that they’re just going to add more value to it. It’s called ‘Equity Happens,’ and it’s been written by The Real Estate Guys which are Robert Helms and Russell Gray. You cannot- it’s no longer in print but it’s still available from time to time on Amazon and I see the price fluctuating between $20 and $150. I love that book, I learned so much from that thing. It’s a big thick read, but I absolutely love it.

 

John Carney:            ‘Equity Happens,’ that’s good. We’ll get that up on the show notes for sure. Alright, is there a quote that keeps you motivated when things aren’t going your way? When the chips aren’t falling your way?

 

Tyler Sheff:            That keeps me motivated? Yeah what keeps me motivated, and sometimes I tend to be a little over-conservative, and it’s actually a quote that I use quite often and people have- I feel people now using it, so I guess I originated this. You can be fired from your job but you cannot be fired from your investments. So I’m having a down day, and I’m thinking, ‘Ah jeez.’ At the end of the day I think to myself- listen I have a stream of income that will remain uninterrupted for a lifetime the way I’ve structured it. So whatever’s bothering me, whatever’s bumming me out, I don’t really have anything to complain about because there’s always someone else that’s worse off than me, and at the end of the day my stream of income is never going to stop. So really I just need to put on my big boy pants, and buck up, and get back to work because I’ll be okay.

 

John Carney:            The gratefulness practice. It could always be worse.

 

Tyler Sheff:            That’s right.

 

John Carney:            Cool. Do you mind sharing one come from behind victory in real estate that you’ve had in the last ten years?

 

Tyler Sheff:            I had some properties under contract when I was first starting out in real estate. I had 22 houses under contract as a lister, or one investor. And apparently there was a riot in the neighborhood where all these houses were located, it was not in a friendly neighborhood. So long story short is on that Friday night, every one of those houses was burned to the ground. There was nothing but literally charred remains. But it turns out that after it was all said and done, the seller kind of thought about trying to figure everything out, and we wound up selling the lots for much more than we wound up getting for- that we had the houses listed for because the houses were in pretty bad condition. So it turned out that the riot actually helped the situation, it made it better because it just cleared all that rubble out of the way and he didn’t have to pay $10,000 a house to have them torn down.

 

John Carney:            That’s a good story. You have to be in it to win it, don’t you?

 

Tyler Sheff:            Amen.

 

John Carney:            Cool. Before I let you go, is there anything you do on a daily basis to train for success or to get into a flow state?

 

Tyler Sheff:            I have my power hour in the morning. I tune out. No Facebook, no email, no cell phone, no nothing. I sit back, I do absolutely nothing. I don’t read, I just sit back and think, and I do that for an hour every morning before anything else happens in the morning, even before my coffee happens in the morning, I just sit back for an hour and I guess some would call it meditating but I just call it thinking. I just sit back and think.

 

John Carney:            That is a great success tip, and it gets you into the flow state, and then you’re ready to tackle the day, right?

 

Tyler Sheff:            Amen.

 

John Carney:            Perfect. Well thank you for joining me in the Locker Room today, Tyler. Where can the audience find you to carry on the conversation if they have any questions or want to get ahold of you through the Cash Flow Guys?

 

Tyler Sheff:            I’m kind of everywhere but I guess the best way to reach out to me is through my website, go to www.CashFlowGuys.com. Of course you’ve got my podcast and all of our content information, my contact information is right on there. So feel free to reach out if you have questions or if there’s anything I can do to help you.

 

John Carney:            Perfect and we’ll have all of that on iTunes and on my website in the show notes. Alright, there you have it folks. Cash flow, cash flow is king. I truly hope that you picked up some actionable advice today from Mr. Tyler Sheff, and we thank him for taking the time to share those gems with us. Make sure to check out the Post Game Report on iTunes. Again we’ll have links to all the great places you can connect and interact with Tyler there. And while you’re there please subscribe to the Real Estate Locker Room Show to ensure that you don’t miss another episode, but also to help other likeminded real estate investors find us when they’re looking for real estate related content. If you like what we’re about, I’d be grateful if you’d tell a couple of your friends so that they can also share in the learning. If you visit www.JohnCarneyOnline.com you will see the additional content and links, and while you’re there you can sign up for our newsletter and keep in touch with me for other real estate investing insights, and tricks, and hacks, and other great stuff. So remember to stay focused on your goals, have fun, and stay in the game. I’m your host, John Carney, and until next week work hard, play hard, and profit hard. Thank you Mr. Tyler Sheff.

[End of Audio [00:28:12]

Connect with John Carney
Facebook: www.facebook.com/JohnCarneyOnline
Twitter: @John_M_Carney
Instagram: @johnm_carney

© John Carney 2017

JC 007: How to Scale Fast and Connect Opportunity with Andrew Lanoie

April 19th, 2017 | no comments

How a music industry talent agent pivoted to a career as a fulltime real estate investor

The Real Estate Locker Room ShowAndrew Lanoie pops the hood on the business of investing in mobile home parks and manufactured homes. After leaving his job as a music industry talent agent, Andrew committed to a new career as a full time real estate investor. He quickly learned the importance of affordable housing, focused his attention on mobile home parks and worked on building his business Park Place Communities.

Diligent research led Andrew to the Dallas, Texas real estate market where he jumped into single family home investing. He quickly expanded his business to Memphis, Tennessee and then Atlanta, Georgia. Andrew shares his method for how he researches new markets, builds amazing teams and deals with the tight timelines associated within his niche market.

Five Key Points:

  • The overall competition, whether it’s on a sporting field or performing music on a stage, are both businesses and so is real estate.
  • Identify the market first and build your team second.
  • When you’re investing out of state the most critical player is your property manager
  • Choose what you’re going to do and become an expert in it. Then surround yourself with other people who are doing it successfully.
  • When working with other investors, you’re working with other people’s money, which adds an additional layer of pressure.

Favorite book: Scrum by Jeff Sutherland.

You can find out more about Park Place Communities at www.ParkPlaceCommunities.com and become even more informed mobile home park investing at their educational website, www.MobileHomeInvestors.com.

Thank you, Andrew, for taking the time to share your story with us.

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at www.johncarneyonlie.com

POST GAME REPORT: Episode Transcript

The Real Estate Locker Room Show Podcast

PODCAST:            007 – How to Scale Fast and Connect Opportunity with Andrew Lanoie

Introduction:            Welcome to the Real Estate Locker Room Show with John Carney. Did you know that investing in real estate is a team sport? Join John and his guests as they explore the intersection of the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the Real Estate Locker Room Show we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve ongoing success. Now it’s time to kick off and level up with new ways to grow your real estate business.

 

John Carney:            Welcome back to the Real Estate Locker Room Show. I’m your host, John Carney, coming at you today with another exciting episode here in Cleveland, Ohio. Joining me from California and on the line in the locker room is Mr. Andrew Lanoie. He is the Principal and Chief Executive Officer of Park Place Communities. A little bit about Andrew here, is an expert in building teams and connecting people with opportunity. He was formerly a talent agent at William Morris for sixteen years, and Andrew represented some of the world’s biggest celebrities including Tim Allen, Sheryl Crow, Barry Manilow, and Peter Frampton. In 2009 Andrew began investing in single family residences. After acquiring over 100 houses in less than four years, Andrew made the decision to leave the agency and to focus his attention on investing in real estate full time. He discovered manufactured housing in early 2015 and realized the massive demand for affordable housing in America. Andrew created the vision for Park Place Communities and its other companies all to focus on the future of the housing market here in the USA. Since April of 2015, Andrew and his team have closed on fifteen manufactured housing communities across seven states with over 1,000 lots, quickly making Park Place Communities a Top 100 Owner / Operator in the US. Andrew focuses on scaling the company, day-to-day operations, and investor relations. Wow Andrew, you’ve been busy lately. Can’t wait to get into this story with you, welcome to the show and thank you so much for taking the time out to join us.

 

Andrew Lanoie:            Hey John, thanks so much for having me, and looking forward to spending some time with you today.

 

John Carney:            This is going to be a great locker room conversation here. To kick off the show, I usually ask our guests a sports-related question, keeping in line with the theme of the title. Who is your favorite all-time athlete?

 

Andrew Lanoie:            When I was a kid I definitely played some sports, I played a little bit of baseball, and soccer and things like that. I didn’t really follow sports as much as some of my other friends, and I really was a music guy playing music at a pretty young age, so I think there’s a lot of interesting comparisons with sports and music. I grew up on the East coast in New Hampshire, so we love the Patriots, and the Red Sox, and guys like Pete Rose, but I really kind of took more of the music angle when I was younger than got into the sports arena.

 

John Carney:            I will say that’s also a team sport. Who was your influence in music?

 

Andrew Lanoie:            I think it was pretty varied. I mean I definitely when I was in high school listened to all the classic rock stuff whether it was Jethro Tull, or Led Zeppelin, or Pink Floyd, and all of that stuff. When I was in early high school, my friends and I had put a band together and we ended up recording a twelve song demo, and this was still when cassettes were out. I don’t think CDs were ever really even out at this time. And young kid, sophomore in high school, and we ended up winning this rock wars contest which was a little regional contest in the area, and one radio station which was a 50,000 watt commercial radio station started playing one song from that ‘record,’ the twelve song demo, and we ended up selling about 100,000 cassettes in a relatively short period of time in the early nineties. With all the grunge, and Pearl Jam, and Nirvana, it was an interesting time. We were a little grungy so we kind of saw all those artists come up together, which was a pretty interesting thing to see.

 

John Carney:            So from high school you were passionate about music, and you turned that passion into a career, correct?

 

Andrew Lanoie:            Yes, it started in high school and that band really took off and that’s what I had done most of high school, and then got out. We had twelve major labels come to see us over time, and we were selling a lot of records. And I guess one of the interesting analogies with sports and being on a team is you’re in a band, you kind of have to make up some of the rules as you go along, but it’s really it’s you against the world, you against another team, you against whoever the competition is, you against the record label. So there’s a lot of bonding and I think that’s certainly a big part of when you’re on a team in a competitive sport. I mean you’re the one who sells the most records, the one who sells the most tickets, whatever that is, there’s a lot of comparisons to sports teams I think.

 

John Carney:            Are the bands keeping score?

 

Andrew Lanoie:            Well the band is definitely keeping score. They’re keeping score on who’s playing the bigger venues, and certainly ticket sales and record sales. I mean not as much anymore with record sales because everything is digital and distribution has kind of been turned on its ear, but certainly tickets in the market, absolutely.

 

John Carney:            Yes, so competition, the overall competition whether it’s on a sporting field or on a stage in music, both are businesses at the end of the day, and so is real estate. We talk about the business of real estate on this show, so I mean you had a lot of experience in that competitive world. I don’t know much about the music industry, but I’m assuming it’s some type of friendly competition amongst the bands, maybe sometimes not so friendly, but I mean then you get a record deal and you’ve got to- then you’re competing in the real world market for market share. And did that experience kind of rev you up and prepare you for sticking your toe into the real estate market back in ’09?

 

Andrew Lanoie:            Yes. There are so many things and skillsets that you learn as you’re growing up and you’re a young adult and you’re doing all that. You’re playing on a team and you have the comradery of the guys that you’re playing with, or whether you’re in a band. In the music industry, and I think that we’ve all seen it, there’s artists that are really talented but there may be things missing in their business whether it’s a bad manager or a record label. You and I were chatting a little bit about this before, but the marketing might be off, the timing might not be right, they may be five years past something that was bubbling up and was hot. So there’s so many things that can go wrong, it’s almost the same thing as being an actor or an actress. There are so many people that are trying to be in that world, and just don’t make it. It’s a crazy number like 1% that actually make money, never mind the U2s and the massive acts of the world. There are so many things that you can pull from it. You know you have someone in the band that’s not pulling their weight, or they’re drunk, or they’re whatever. They’re the weakest link, and that’s your downfall potentially.

 

John Carney:            Right, right, I’ve got you. It’s a good analogy and one that we haven’t discussed before on the show. I mean I would imagine that being in a band is- the good bands that really manage to stick around, I’m thinking of like the Rolling Stones. I mean these guys are still out there doing that, and then you’ve got Paul McCartney. Paul McCartney was just in town, and so my parents went and saw him and re-lived their younger days. But I mean these guys have been around, hitting the road, and creating new content, and in the business for so many years now, and they’ve had to adapt. It was just a different landscape when they started.

 

Andrew Lanoie:            Yes it’s that. McCartney is such a great example. I’m friendly with the guitar player in Def Leppard and those guys have been together forty years and 100-something million records sold, and there certainly is a common thread of there’s something creative that’s going on that they’re putting out that people resonate with. But they’re also, generally, like McCartney. He works a lot, he works really hard, and he’s a really smart guy. He’s also surrounded by very smart people on his team whether it’s a manager, or a label, or whoever it is. We can get into that a little bit later, but having the A team around you is a huge part of success in my opinion.

 

John Carney:            We believe in the A team. So let’s get into it right now about your real estate A team. You were working at an agency, you got into real estate, you bought a significant amount of single family homes, and then you saw a trend in the manufactured homes. Tell us a little bit about how you got started with home number one, how that turned into home number 101, and how did you get to where you are today?

 

Andrew Lanoie:            I was born and raised in New Hampshire, had moved out to Los Angeles. I wanted to work in the music industry, got the job at William Morris, ended up there for about a total of sixteen years. During the subprime crash, my folks had retired and moved to Fort Myers, my dad was a plumbing inspector, my mom was a nurse, raised three kids, lower-middle class, everything was great, put all their money into the market and did all the things that they ‘should have’ done as far as literally with financial advisors. Market crashes, they lose a significant amount of their portfolio, and here I am at arguably the largest talent agency in the world making a lot of money, and I didn’t understand what happened. So I started reading a lot of books, one of the books I read was ‘Rich Dad, Poor Dad’ by Robert Kiyosaki, and just went down this rabbit hole of reading books on economics. Ultimately it all pointed me towards real estate and I started going to events in town, I met a couple of guys who have a show called ‘The Real Estate Guys’ Radio Show,’ became good friends with them and just started surrounding myself with really smart people who have been doing real estate for a long time. I realized that I was really interested in cash flow as far as what my investment strategy was, so being in Los Angeles you typically start looking in your backyard. Even though it was after the crash, and crisis were an all-time low in certain markets, the deals in Los Angeles, in California in general just weren’t great. Didn’t cash flow, or didn’t cash flow very much. Because of that I started to look outside of Los Angeles and California, and I ended up landing on Dallas, Texas as a market and got in there pretty early, and the price points were great, and the strength of the market was good, and there were a lot of things that checked the boxes- the price to rent ratios and all those things that you look at as an investor when you’re looking for buy and hold real estate for cash flow. I wasn’t really looking to go in and flip. I had a very full time job, so Dallas was really the first market that I stumbled on and I ended up basically building a team there. I think what happens a lot of the time is someone will find a deal in some market that may or may not make sense, the deal may or may not make sense, but they kind of back into it the wrong way. I was taught that you find the market, that’s arguably one of the most important things, and that’s the first thing on your list, and the second thing is well build a really good team there. And that’s what you spend your initial time doing. It’s not even really looking at the deals necessarily, it’s market, and then it’s your team whether it’s your property manager, or insurance, or if you’re going to go build a rehab team yourself, or whatever it is. So that goes back to teamwork. That was absolutely crucial in all of the markets I went in— was having a really good core team on the ground.

 

John Carney:            Do you mind elaborating just a little bit? We’re in California. We’ve identified Dallas and it’s ticking all the boxes. Obviously, you can look up a lot of people and do a lot of research online, but I mean so you book a plane ticket, or you pick up the phone and start talking to property managers, and real estate agents, and accountants, and lawyers. Do you just make a decision based on who you feel you gel with, and who you wouldn’t mind watching a baseball game with type of thing?

 

Andrew Lanoie:            Yes there’s certainly part of that. When I went into the market for the first few times as far as real estate goes, there was a bus tour I went on with The Real Estate Guys, so there were property managers and people that were there, I found people who were already in that market through going to events and seminars and I got referrals, and I think that’s huge. Let’s say you’re looking at a property manager. Try to find five referrals, or three, or six, or whatever the number is and interview all of them, and try to have some consistency with questions you’re asking, and how they do business. Ultimately by meeting them and interviewing enough you’re going to find one or two that you feel you gel with, and if they’re referrals and if they have a successful company or a book of business or whatever it is, then that’s kind of how you weed through everything and land on one.

 

John Carney:            Am I correct in saying that Dallas was sort of your first out-of-town market, and then now with that experience you were able to kind of draw on that and replicate it. Let’s fast forward seven years or eight years and we’re looking at mobile home parks in different states and different areas, so you’ve got that kind of way of zeroing in on management and all the support that you’re going to need in a new market?

 

Andrew Lanoie:            Yes so Dallas was absolutely the first market, then I bought some property in Memphis, and that was another great cash flow market, checked all the boxes with jobs, and market drivers, and things like that, and then Atlanta was the third market that I invested in, and same thing across the board, you have to have a great team built in every single market. I knew a lot of people who were buying real estate in a lot more markets than that, so they either had more time to do it, or they just had different parameters, but as far as what I’m doing right now in the affordable housing space, there are some similarities but there’s definitely a lot of differences. When I was buying in those three market single families, it was very specific. Very specific zip codes, if it didn’t fit the box it was on to the next, if the ratios weren’t there or whatever it was, it was on to the next where now when I analyze markets it’s I still use some of those parameters but we’re in seven states now, we’re contracted on our eighth, we’ve got another fifteen parks that we’re looking at right now that are in another three or four states that we haven’t been in. It’s a different asset class and you have to put different filters on it, but certainly using a lot of the same ways to analyze markets that I did with single family.

 

John Carney:            Thatm is what’s interesting. I’m back after living in a foreign country for seven years, in the States and in my hometown where it’s easy to scale up and find that team. But it’s been awhile since I’ve had conversations with people and it’s almost if you know who to look for and what questions to ask, that just takes some time and testing I suppose. You really do develop the sense that you can go into any market with confidence, and if the numbers work out you can build a team alongside looking for the property. What would you say when you’re talking about single family homes, who the critical player is; the person that you put the most time and energy into finding that right person. Who is that?

 

Andrew Lanoie:            Well if you’re investing out of state it’s hands down got to be your property manager. Most states, certainly in the states that I’m investing in or was investing in for single family, the property managers are all brokers so they have sales folks in their office, that means they can help you on the sale, the acquisition, and also on the sale of it on the exit in addition to managing it. You find the right company, and that’s of course in addition to helping you put together a renovation team, or doing that themselves depending on the kind of company they are. But hands down, finding a property manager is probably your biggest part of your team. The insurance folks and things like that, I think that can be swapped out a little bit more easily, but property management is huge.

 

John Carney:            I agree with that sound advice, Andrew. So then a transition happens. Talk to me about what led to the transition. Now you’re buying multiple units in a park for the first time. Was that a little nerve-wracking, or did you have a mentor, a group of people that had done this before? How did you get into that?

 

Andrew Lanoie:            The further away we get from the crash and subprime, the prices have been going up, up, up. Dallas has seen this crazy appreciation in the market that’s almost unheard of. Obviously, California is up and down, up and down, up and down. But across the board since the subprime crash, real estate prices have been increasing in markets. So we were still looking for single family properties and I was also starting to look around at other projects to start working on. I was looking at multi-family, everyone was chasing multi-family, really hard to find good deals, and I had a friend who had been buying mobile home parks. We sat down and looked at numbers together and thought it was a good idea to put a partnership together, and that was the first quarter of 2015 was we kind of sat down and penciled out some ideas, and that’s really how it started. We had our first investors came in with a large amount of money through a 1031, and ultimately bought a lot of parks with them in a very short period of time. I don’t think there was as much apprehension about all of a sudden buying parks with 50 or 100 or 200 units as it was just- it became really busy very, very, very quickly, so I think it was just going through the growing pains of being right in the middle of companies that were scaling very, very, very fast.

 

John Carney:            So between your first mobile home park acquisition, am I right that they’re manufactured home parks? Before the first one, how many units was that? And then how much time did you have to figure out how this thing works before the next deal lands on your plate and you’re like, ‘Oh yeah, we want that too.’

 

Andrew Lanoie:            Well it was a 1031 so if you know how that process works, you have 45 days to identify a property or a short list of properties and you have X amount of time to close on them. I think that we closed on somewhere around ten parks in about four months. There wasn’t any time to sit and analyze anything other than just getting the acquisitions done. That was the first thing, we were building up processes a little bit, but when you’re doing that kind of volume in a very short period of time and looking in multiple states, that was playing to keep everyone busy and it was just really trying to be as hyper focused on is this a good deal, is there enough upside? We could put together an initial plan for each park but that wasn’t the best time spent, it was just making sure that the deals were going to be ones that we wanted to close on.

 

John Carney:            You guys were charging pretty hard but confidently.

 

Andrew Lanoie:            Absolutely, absolutely.

 

John Carney:            Was the 1031 exchange part of your existing portfolio of single family homes, or was that through another investor?

 

Andrew Lanoie:            That was through other investors.

 

John Carney:            Okay so you had a pool of funds, and you guys were looking to place that. So it’s not just your money. You’re working with other people’s money, and you’ve got to do that. That’s added pressure, right?

 

Andrew Lanoie:            Absolutely, yeah. Yeah there’s a lot of pressures and I guess what the point was to try to answer that question was there were so many moving pieces but the goal was to execute the 1031, which we did, and it wasn’t just one deal. It was a large investment that came in, and it would have been easy to say, “Let’s buy one massive park in wherever,” but that’s not what the market handed us. The market handed us whatever, almost ten parks, right? So that’s what we got, and it was just making sure that those were good deals.

 

John Carney:            So you’ve got a team. You and a couple people are analyzing the deal. You’ve got the clock running on you so to speak, and then you also have the added pressure to perform motivating you. And then at what point are you getting right into the management side and the system side of it to bring it right into Park Place Communities? You’re also building a brand and a business alongside all of this. The way I look at this, is that it’s amazing and it’s a job well done, but on the business side of it, that there’s a lot going on. So when did you sleep?

 

Andrew Lanoie:            Well I appreciate that, I really didn’t unfortunately, and I don’t sleep too much these days. But you know, looking at affordable housing, and looking at manufactured homes and this as an investment, I realized that if you’re going to be in multiple markets, you’re investing in single family, it’s easier to say, “Hey I’m going to go into this market, I’m going to find the best property manager,” and they’re going to be a huge part of your team. But managing multiple assets in multiple states, and most of the parks that we were purchasing were below 40% occupancy so they were just massive turnaround projects, I realized we needed to build out a construction company, we needed to build out a management company, we had our core investment company, and so all of those things were happening at once. You acquire a park, you figure out is the manager going to stay? Do we replace them? Who else do we need to staff up? And then it’s just putting a plan together about how to turn these parks around. And a lot of the things that you can do, you can do across all of the parks as far as systems, and processes, and property management software, and one person who oversees the managers, and all of those things. So the vision was how do we start from I guess nothing and build something where we can scale it using all of the functionality of the processes and the team that we’re putting together. Does that make sense?

 

John Carney:            Oh yeah it makes sense to me. I suppose for the listeners out there, this is a monumental. It’s a big project but it’s managed correctly, right? And I suppose that the core group that was helping you out were all focused on the goal, right? And it’s whatever it takes. Can you just shed a little bit more light on how many other people were helping you do this, and how did you guys all kind of come together, and with that driving determination? Because I mean it sounds like a lot of work in a short period of time, and I think it’s an amazing accomplishment and a great story to share with the listeners out there that might say, “I’m happy with fourplexes, and twelveplexes, but I’m really nervous about going after the hundred-unit building, or that hundred unit park because it’s just too big.”

 

Andrew Lanoie:            I’ll give another example. There’s a difference between someone who wants to open a restaurant and someone who wants to become a restauranteur, right? It’s a different psychology. The person who wants to open a restaurant may say, “Hey I’ve got one site, it’s a brick and mortar, it’s going to be this, here’s the cuisine, I’m going to staff it up, whatever, I’m going to market it.” But if you’re thinking, ‘How can I take this restaurant, and how can I franchise it, or how can I open other ones in different markets,’ it’s a different mindset because you have to start thinking six steps down the road of, ‘If I do this here can I do this everywhere? Or what are the moving pieces in that?’ As far as the team and everything, it’s literally one person at a time. You’re finding who’s going to do the day-to-day operations. You go find that person and you have to kiss a lot of frogs to get through until you’ve got a good staff. We grew as quickly as we could. We’ve had employees come and go, we’ve had people that have been here really from the beginning of all of this. I’m invested because I’m a principal, which is very different than someone coming in as a W2 employee, right? It’s a hard process but you’ve just got to keep looking for either people that you can partner with that share the same vision, or get what you’re doing, or can come in and add value in some other way, or it’s just getting through, “Hey I need to interview 25 people in order to find one person that’s going to fit the bill.”

 

John Carney:            That’s good advice on growth and scaling. So what one piece of advice do you have in addition to that for a newbie, rookie, real estate investor that is sitting there saying, “I just have to be a multi-family or mobile home park investor.” You’re a mobile home park guy, so there’s people out there listening that want to crack into this niche, what’s your one piece of advice for them?

 

Andrew Lanoie:            Well I guess the simplest thing is pick what you’re going to do and become an expert in it, or at least get yourself around other people that are doing it to some success. If you want to be a big multi-family investor, don’t spend time on things that take you away from that. Read every book you can on multi-family, go to every event you can on multi-family, make new friends who are in multi-family, find ways to get into relationships, and that’s how you find mentors, that’s how you find partners. If you can talk to someone and take someone out to lunch who’s got ten years of experience doing something, and that’s going to collapse some timeframes or give you one nugget that you take away that’s going to save you a year or save you a million dollars or whatever, but that’s priceless, right? So that to me is probably the number one thing.

 

John Carney:            Right you’ve got to be obsessed and always keep on learning. Look we’re going to get into our final quarter here, two-minute drill. Are you ready?

 

Andrew Lanoie:            I am ready.

 

John Carney:            Cool. Well we’ve been talking a lot about sports and music. Is there a favorite book on business, sports, music that you’ve read where you keep coming back to it time and time again and saying, “I’ve got to check in again and have a read of that”?

 

Andrew Lanoie:            Yes absolutely. One of my favorite book is called, ‘Scrum.’ It’s S-C-R-U-M and a guy named Jeff Sutherland wrote it. It’s really essential. He’s got a very corporate background but his whole theory is that the 9-5 corporate process is flawed and you’re not getting the most from your employees or how that’s structured, so he has a completely different mindset. It’s really great for companies that are scaling, and it’s just all systems and processes. I mean there’s a million really great takeaways from that, so that’s a really great read.

 

John Carney:            Thanks for recommending that. I will definitely make sure that that makes it to the show notes, and the link, and I’m going to check that out. Is there a motivational quote out there from the business world or entrepreneur world that keeps you motivated when you’re facing that- staring down that obstacle?

 

Andrew Lanoie:            I think one of the things as a real estate investor, is to become a connector and find ways of helping people. There’s a guy by the name of Zig Zigler, one of my favorite quotes, it’s on my computer, it’s the only quote that I have on my computer and it says, ‘You can have everything in life you want, if you will just help enough other people get what they want,’ and that’s Zig Zigler.

 

John Carney:            Perfect, he’s awesome. What’s your number one come from behind victory in the real estate game that you’d want to share with us?

 

Andrew Lanoie:            Well I think from being around very, very, very successful people and mentors that are in this business, there’s a common thread that you don’t have to start with any money or a lot of money. I grew up in New Hampshire, I came from a very just normal lower-middle class upbringing, my parents weren’t into real estate, they weren’t entrepreneurs really. You can really do anything you set your mind to. You just have to be very clear and focused on what that is. I think there’s a lot of people who may get frustrated and say, “Well I’m not sitting on a pile of cash,” or “I’ve never done that,” or whatever it is, and I think that you look at- especially you look at the profile of a lot of billionaires, and there’s that common thread too. They literally come from nothing and turn nothing into whatever their empire is.

 

John Carney:            Right motivation, focus will keep you ahead. Is there any practice that you participate in daily like a ritual that gets you into a flow state, or puts you in that zone so to speak that helps you train for success?

 

Andrew Lanoie:            Well I guess the best ritual is that I am up early. I tend to go to bed at [11:00] or [12:00]. I try to get up at [6:00], [7:00] and meditate and do a little bit of cardio. I try to get a few things knocked out early in the day along with time blocking. I’m trying to not do as many meetings in the mornings and I have time to work on big picture stuff or whatever and then I shove all my meetings towards the back end of the day, I think that there’s ways that you can control your calendar and your time so you can get these blocks to work on- you know this hour of the day I’m going to work on this. I’m going to re-write this or I’m going to put together my business plan for this, or whatever. Because you know it, and I’m sure a lot of people can relate. I mean time goes by really quick and you realize four hours will go by and you’re like, “Well what did I do? I took some calls, I did a bunch of emails, and I was looking at this with the Internet, and blah, blah, blah.” So having control of your blocks of time, and time blocking things are just so huge in my opinion.

 

John Carney:            Yes that is also really good. We find that that’s a common thread amongst a lot of successful entrepreneurs and investors; to stay focused you schedule your focus time and tweak and test and measure what works for you. Well Andrew, I want to thank you again for joining me today on the Locker Room Show. Where can our audience find you to carry on the conversation offline?

 

Andrew Lanoie:            Absolutely, I appreciate you having me on, John. I guess a few of the websites are kind of our core investment company is www.ParkPlaceCommunities.com and we also rolled out an education site on affordable housing, and specifically investing in mobile home parks, and that’s www.MobileHomeInvestors.com.

 

John Carney:            Perfect, there you have it folks. I truly hope that you picked up some actionable advice today from Andrew Lanoie, and it sounds like if you follow the links that we’ll post on the show notes, he’s got some information to help you connect with him, and his business, and help you get started if you want to be a mobile home park investor. Check out the Post Game Report on iTunes and while you’re there please subscribe to The Real Estate Locker Room Show to ensure that you never miss out on the pro tips from our guests. The mission here is to help you elevate your real estate game. And if you like what this show is about, I’d be grateful if you would leave a five-star review on iTunes so that other like-minded real estate investors can find us. That helps people know that we’re out there, and helps them find the show. So for the Post Game Report, check out www.JohnCarneyOnline.com and there you’ll see links to Andrew’s businesses and to the book ‘Scrum’ that he recommended for us all to have a look at. Remember to stay focused on your goals, have fun, and stay in the game. I am your host, John Carney. Until next week work hard, play hard, and profit hard. Thank you one more time, Mr. Andrew Lanoie.

 

Andrew Lanoie:            Thank you, John. Really appreciate you having me on, it’s been awesome.

 

John Carney:            Alright buddy, take care.

 

[End of Audio [00:39:15]

 

 

Connect with John Carney
Facebook: www.facebook.com/JohnCarneyOnline
Twitter: @John_M_Carney
Instagram: @johnm_carney

 

© John Carney 2017

JC 005: How to reposition the Sleeping Giant with Nat Mundy

April 5th, 2017 | no comments

Learn how a Rolling Stones concert in London changed Nat Mundy’s life.

The Real Estate Locker Room ShowNat is an international entrepreneur who capitalized on his childhood passion for go-carts. Nat’s business plan received a D in business school but he was undeterred in pursuit of his goal.

Nat leveraged the skills that he learned on Wall Street to build an entertainment brand that started out by repositioning the “Sleeping Giant” – a massive industrial campus that was the perfect fit for his unique vision.

Nat credits his success to leaning strong work ethic from his father and having the right team of people onboard that believed in his vision.

Favorite athlete – Wayne Gretzky, “The Great one” – NHL Hockey player

Nat recommends reading all of Richard Branson’s books.

Must read – Losing My Virginity – How I survived, Had Fun and Made Fortune Doing It

Key Points:

  • Nat draws his inspiration from courage and loyalty
  • Lead by example, be willing to mob the bathroom floor
  • Make sure everybody is healthy and happy

 Thanks again Nat for taking the time to share your story with us.

You can connect with Nat online at Grand Prix New York, www.gpny.com or http://www.spinsbowl.com

 

POST GAME REPORT: Episode Transcript

The Real Estate Locker Room Show Podcast

JC 005: How to reposition the Sleeping Giant with Nat Mundy

Announcer: Welcome to the, “Real Estate Locker Room Show” with John Carney. Did you know investing in real estate is a team sport? Join John and his team as they explore the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the “Real Estate Locker Room Show” we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve on-going success. Now it’s time to kick-off and level up with new place to grow your real estate business.

 

John Carney: Hello and welcome back to the Real Estate Locker Room Show.

I’m your host, John Carney, coming at you from Cleveland Ohio. Joining me in the

Locker Room, on the line from West Chester County New York, is Nat Mundy. Nat is a

36-year-old entrepreneur and graduate of Hobart College, after a brief stint on Wall Street he decided to pivot and pursue his thesis project which is Grand Prix New York that he subsequently received a “D” on in school. But that was not a deterrent for Nat. He hit the ground running, raised the money and started build out in December 2006 and opened the doors to Grand Prix New York in February 2007. Nat grew the business by adding “Spin Bowl” in 2010 and an arcade in 2011. To grow he and his partners began acquiring bowling alleys and launched the multi-store brand “Spin Bowls” in 2015. How ya doing today Nat? We’re really interested in hearing how this entrepreneurial business turned into a real estate business so welcome to the show.

Nat Mundy: Yeah, thank you very much for having me, I appreciate it.

John Carney: No worries buddy. We’d like to start out with a little bit of

a sports related question here to kinda get the show kicked off and get the creative juices flowing. In all of the professional sports, who is your favorite athlete of all time?

Nat Mundy: I think my favorite athlete of all time, I’m going to go with The Great One, Wayne Gretzky.

John Carney: Nice, nice. Where you a hockey player growing up?

Nat Mundy : Hockey player growing up. Hockey fan my whole life. And just a guy that made a career and became untouchable. And to the point where rookies wouldn’t even touch him. And from what I can tell, decent family guy, attractive daughter, even more attractive family. And never got into any trouble, or did anything stupid, in elevators or night clubs. Ya, can’t hate him.

John Carney: No, not at all. He was a little guy. So, I mean, he had to adapt.

Nat Mundy: Right exactly. Wasn’t there when the 6ft 5in. mile 41 Saskatchewan players. So, when those guys came on the scene, he’d already been in the ice for 15 years, or something. So, he stayed and he ended up becoming “The Great One.” So why not?

John Carney: #99 folks. I had a poster of “The Great One” in his original Oilers uniform on my door when I was a kid growing up.

Nat Mundy: Awesome, great! That’s so good.

John Carney: Well,Nat you have an interesting story I’d like to jump into because you’re an entrepreneur, started a business, you started a business after a professor said it was no good, right? It was a rubbish idea and you had a little bit of a pivot, started a business and that business also became a real estate business. So, could you tell us the story. How did you get started?

Nat Mundy: Yeah. So basically I was at a “Rolling Stones” concert in Wembley Stadium, in the U.K. when I was I’d say, 18, 19 years old. And I went to an indoor go-kart track in London. And there was this very cool Honda powered go-karts, Italian chassis. And they were running in an old abandoned warehouse. I didn’t even look like a warehouse, which was like a Brooklyn New York warehouse. I though that we would have to have this in the states. I’m stupid, I’m sitting there, I’m watching corporate events do their thing there. In stead of playing golf or going to a big dinner, they were going go-karting, you know, why not? So, when I got back to the states, I had realized they had opened one in Boston, called, “F1 Boston.” I reached out to R.J. Valentine, who is a real estate insurance guy, who’s based out of Boston, owns F1 in Boston, and F1 Outdoor which are the two, first indoor-outdoor tracks that were served European inspired circuits in America. He wanted nothing to do with me so I said, “Fine.” I wrote this business plan based on the remaining places, reviewing DMV lists, looking for places where cost of rent would be low or obviously at the time couldn’t even think about buying a building to put on 125,000 sqft business into and that was the plan. And I consequently got a “D-” on it. And he told me that, I guess it wasn’t in line with the assignment as to thinking what he wanted. He wanted to talk more about franchises and he was focused more on. I still see it as a franchise and like I said, with multiple stores in the state thing it’s proven we can build something that’s high-end entertainment based, in multiple locations. But he gave me a “D” on it anyway. I was going to school for architecture and ended up getting a job on Wall Street. At the time they were hiring engineers and architects in the sales trading world. We were spreadsheet guys. Still got that whole thing but put models together. Got dragged into there for about 2 ½ – 3 years. I was doing private placement, straddling the wall to a degree. Everything from Shiriah funds to private placements, by backs of private companies, and just really didn’t like it to tell the truth. But the money was great. It was a fun career, fast paced, challenging, very transactional, I don’t think I was bad at it. I just don’t feel like I was going to love it. My father had been at Citibank for 35 years and went through a heart attack at age 60. And the bank retired him virtually 8 months, 9 months later. I then left the firm I was at. I just wanted to do my own thing and take the risk while I still could. So, I did one more private placement. We raised $6.8 million dollars on our first round, broke escrow signed a lease with Diamond Properties in 2006, September. Started construction, going for town approvals and this is a town that had a sleeping giant 36-acre campus that was the grand union distribution center, based in Westchester County. They were off of a railroad spur that was a slaughterhouse and banana ripening and avocado ripening, you name it. This 600,000 sqft. building on 36 acres, in Mt. Kisco. And we were the first tenant to move in. And Diamond went with us to town to go ahead and get it changed to multi-tenant zoning. And about a year later we opened to the public. And since then, the center has grown, our neighbors on this building are a high-end athletic club with a pool, as well as MMA Center, a training and trampoline park and numerous other, you know, tenants. So, it’s gone from a single tenant use building, to a

multi-use. We have really changed the overall campus provided a bunch of jobs to the area, etc…

In 2008, obviously, a rough year to start any business, especially a pipe dream and we saw some hardship. And with that the landlord Diamond Properties, Jim Diamond came on as a partner in the business. We then pushed to open Spin Bowl, which took part of our track space, for indoor go-kart track and built 18 bowling lanes. And bowling was a great feature, it actually made our restaurant food and beverage business profit. As opposed to lose money. So having this restaurant in a go-kart track indoors didn’t prove itself to be a place if you wanted to come and linger longer and drink beers but with bowling it gave us that sort of product. And then we extended it to all ages, which brought in a 3-track set-up, as opposed to a 2-track set-up when we first opened. So, ages 8 and up, or 40 inches with proper mental faculties could drive a go-kart and then we put the arcade in. So it ended up being this 7 day a week, Monday through Thursday corporate event venue. Friday, Saturday, social event venue and family fun, on Friday afternoon through Sunday night. And so far, so good. In 2015 the Diamonds, our partner bought the real estate that included 3 more bowling centers, one in Carmel New York, one in Poughkeepsie New York, and one in Wappingers Falls New York. And they have censured them as “Spin Centers” in those depending upon the site have assets accessories such as: Laser tag, arcade, and our marina properties will end up having outdoor climbing, indoor climbing, ropes courses, as well as shuffle board, and even a Captain Lawrence Brewery. So, it’s really you know, sort of expanded on it. Again, the only way to make a distinct business successful was to spread the call centers, establish a sales department, and the accounting department and all those things across a number of properties and come up with a hospitality brand as opposed to a stand-alone business. So, it’s one of those kinds of go big or go home situations. And the Diamonds were able to fund a lot of these projects on their own. So Grand Prix, the only one that has a bunch of partners in it because it was a private placement. But, the ones moving forward have just basically been themselves and have been for their real estate portfolio. They are a large company with half a billion-dollars worth of real estate that ranges from warehouses, to offices, to medical. So, they are pretty well diversified as well.

John Carney: Yeah, so that is a great entrepreneurial story. I mean, all of the good ones finally get to a point, a line in the sand where they say, go big or go home. And that’s how it generally works. It sounds like an incredible success that’s just going to be gaining momentum. You know, when you say, “Found a sleeping giant.” You basically re-position a dirty, old, I’m picturing a dirty old slaughter house, off the side of some railroad tracks with a bunch of overgrown, you know literally over grown weeds and the terrible parking lot and you know, signs falling down, and all that stuff?

Nat: Correct and an old water tower. I mean it became economically viable as well because it brought taxes back. Karl owned the property back when he owned TWA and the Diamonds had bought it from whoever bought it from him. And there it just sort of sat. And this was a major repurpose, I mean, we’re talking about a hundred bay loading depot turned into call it 15 mixed-use style tenants. A lot of them entertainment, and club based and membership based. So we can go ahead and get special use permits to do it. I went ahead and took it over. The nice part too is it’s got about 180 parking spots. And has two entrances, two, to three entrances. It has a town park, play field, ball field end of it. We do give back to the community. We all employ at this location alone just surround 120 people depending on the time of year. That’s pretty significant for the area considering the only other large employers in the area are Target and the hospital.

John Carney: So, yeah, I mean, just going back, just taking a step back. Because I’ve got a hundred questions? Now, that we’re into it. I mean, it’s for the listeners out there who are in the industrial space, I mean, have some vision. It’s about looking at these opportunities that people who have a headache and don’t want these industrial properties. That you know, it is, beauty is in the eye of the beholder, right.

Nat: Right.

John: But this is called the sleeping giant. But, you run across people that just say to themselves “Why did I buy this? Take it.” And you guys took it and turned it into something magical. So, that’s a great story.

Nat: Yeah, I looked around for two years for landlord that would let me ruin 3 acres of warehouse. And I couldn’t find one. I looked in Connecticut because I had demographics studies that were more promising and lower taxes per sqft. So, it was a better positioning. But I couldn’t find any in Connecticut people to do it. I saw this property in the New York Times and said let’s try it. And then when I approached them I was actually one of two people that had approached it for a go-kart track. And I had the private placement background and I had written to PPM already. And this gentleman, who I did this with was no longer a partner in it but I was part of it originally. He was still an equity shareholder of some sort but he’s no longer an operating partner. He had sort of the age appropriateness, he was 36 I was 25. So what landlord in there right mind was going to write 30 year, or 20 year lease with a 10 year option for a 120,000 sqft. And I was going to pave 65,000 sqft. of the interior space so you can never really reuse it for anything ever again in the warehouse world. So, it was a big leap for them. And the great part is they became essentially the managing partners of this business. And also the future ones for the expansion, so great timing. Especially because they were in the buying mode during this crisis we were all in. They were acquiring more space, and able to live through it and survive. There’s a lot of firms like that that did not based upon on their portfolios.

 

John Carney: Right, alright. Let’s go back and re-visit growing-up. Did you play team sports? Or what type of competitive athletic sports did you play?

 

Nat Mundy: Well, I grew-up hockey, football, lacrosse. Went to West Minster, I was never a varsity athlete when I went to boarding school. But just had a good time with it. And I really enjoyed it obviously. My closest friends were the ones I had on those teams, the boys that I lived with. And dorms basically age 15 on. And I’ve always been mechanical. I remember going to the dump and getting tube TV’s and old typewriters, and taking them apart and seeing how they worked. I’d say I was, probably 10, or so 11? My hockey coach Mr. Breckwald had gone to a Yankee game and won a Yankee go-kart with the Yankee F1 shell with stickers on it. And obviously he didn’t want a kid’s go-kart. So, I was one of the first people in the locker room that day and he said, you know, if you I want it, he just wanted the shell for his wall. So I could have the actual functioning go-kart portion. And he traded me two cases of Coors. And

Coors Banquet Long neck Bottles as payment. So, when I went out to the locker room and asked my dad after practice he went to Bedford Beverage, picked-up a cold case, a warm case and went to Mr. Brekwald’s house and parked outside a Peugeot station wagon and loaded up the go cart. And the nice part, he was on a cult-a-sac so I was wearing basically a hockey helmet and driving around his cult-a-sac with my go-kart. brand new go-kart while my dad finished probably half the case with Mr. Breckwald, while watching me do this. So everyone had a good time that afternoon. I rapidly modified the thing, had a great time with it. Every time I broke it, I made it better. And even went as far as crashing the go-kart into the back of my parents car while it was parked during brake failure. I broke my wrist and waited about 5 days to tell my parents I broke my wrist so they wouldn’t think it happened on the go-kart and take it away.

John Carney: There ya go, so like a hockey player you didn’t let that injury get in the way of a good time. So, the seed was really planted 8 years before the Rolling Stones concert, right?

Nat Mundy: Yeah, I’d say, that was my real eye-opener, that I could sort of obviously say I always loved watching racing things on TV. And we didn’t live in this part of the area, West Chester Town doesn’t have a go-kart track that kids are competing at. You know, it’s not near Lime Rock is the nearest track back then. And it wasn’t what was going on there either. And I think it got me the bug. And you know, the people like Paul Newman, for example, who he didn’t love acting as much as he loved racing. He spent time acting to pay for racing. And I wanted to find a way to basically break into this sport and enjoy it. But, had to turn it into a business to pay the mortgage, for me, that you could raise a family on. And you know, it took about 10 years for us to really, 8 years of the 10’s so far for us to really figure out how to position it and how to expand how to do it properly. We just opened the Carmel Spin’s Bowl location on Tuesday. And that’s 5 of the 9 that are completely up now and under the new Spins name tag.

John Carney: Congratulations for the new edition. So, it sounds like you’re scaling your business and the real estate, owning the real estate, I imagine is part of, is a segment of that overall operation, am I correct?

Nat Mundy: Yes, so the Diamonds will acquire the real estate and bowling alleys they essentially trade for what the building is worth. They don’t really trade for the business value or anything. These centers need some major rehab. So Jim and Bill will acquire a building that has a bowling alley in it and they will keep it as a bowling center.

And then our hospitality group. “Diamond Hospitality” comes in, post-renovation, some of our guys will be on the ground working on it. The ceiling tile this color, the paint this way, use the old lanes as bar tops, sub-tile here, you know, they really have a great D & A set-up. The centers all look similar because of that. Setting up a proper arcade with a redemption which is huge. The arcade is about 16-20% costs of goods sold, it’s amazing business. And go ahead and work with the new locations to figure out how to fill it 7 days a week. And for them, it’s about getting the four days after they’ve closed on a building, they’ve got a lease signed by their sister company that’s leasing out the space. And we set rent to where we know it can be an affordable thing for the center. And then go for it from there. And all it’s been so far is growth and knock on wood we’ll keep on going. We closed on a bowling center in Independence in Ohio. And then there’s one by Kent State also Ohio, that’s one. Hopefully, we’ll be wrapped up fairly soon, to open as a Spins Center location as well. So, we’re going as far as Ohio now, if you think about it.

John Carney: Wow, I mean, Independence, Kent State, that’s right around the corner from where I am.

Nat Mundy: Well, there ya go.

John Carney: You’re getting in the neighborhood. When you come out for a second inspection. We’ll have to have a…

Nat Mundy: Definitely.

John Carney: A cold beer.

Nat Mundy: I just met the gentleman manager for Independence via email yesterday. And that was our first contact. But, you know, it’s going to take a little bit of training. Get him up to speed. And at that point change their name tags and their shirts and then they become part of our team and we continue going.

John Carney: Right, and I mean, at the end of the day we are talking about real estate and business, they are both team sports. I like to say if you’re scaling up a real estate investment portfolio within any of the niches, that’s a team effort. Or you can be selling a doughnut, that’s a team effort with either one. When you are talking about your team, I mean, there’s obviously people in your team, that you could have, that have stuck with you a number of years now, over a decade. But is there one specifically, a specific advisor that you turn to for advice? Or when you were just starting out? Because this is about helping people start out and scale.

Nat Mundy: You know, I think a couple of great things. I grew up in an area where you know, a lot of people had sort of the last, my parent’s generation was the last of the generation that kept jobs for 35 years in the same place, right? And meanwhile, there was already some sort of movers and shakers in the area. I worked at a deli from the age of 12 and up folding newspapers and stocking shelves. And I actually drive my four-wheeler from my parent’s house to the deli. And that was back in the town, back in the day when no one cared. It wasn’t like it was rural America. This was West Chester County, its Bedford New York. But it was a lot less people then. I learned just sort of, I think from my father overall, you just had to have a work ethic and just go with it. And he was a lot more conservative in his approach to career and work. Whereas for me, this is sort of how I manage my ADHD. This is my self-medication. Where I focus my scatteredness onto a productive platform of opening a businesses and finding really great partners. You know, Jim Diamond, who founded Diamond Properties is a great guy as well. He typically can analyze what I’m showing him as long as it’s a spreadsheet or written down in a constructive manner and give some great points, very entrepreneurial as well. They didn’t start in real estate. They started in the technology world and then transitioned into real estate. So when their technology company, one of many sold and when the business sold, they were left standing with their real estate portfolio. They have partners like Princeton Realty, which was from an Albright family which was in the same office as us and that’s on the brokerage side. They are also partners in other building stuff. Again, they’ve also sort of filtered things into a real estate play. I mean we even have an auto storage, they have self-storage in a bunch of locations, currently three now, they got one out in Connecticut, one in Elmsford, and one in Mount Kisco. But at the Mount Kisco location we took the second floor of an old body shop that’s on this campus and turned it into an auto storage. And you know we’re talking about 6500 square feet of space that’s producing about $100,000 a year in revenue at very little cost. Just taxes and whatever debt service there is, There’s no employees for it. There’s just insurance for it and a very small utility bill. So, you know, that’s the kind of thing they are good about. And when I came to them with that idea they said, “Yeah, do it!” And we took about 3 years to fill it and now that it’s full, it’s full, and it’s an annuity. When they’ve had tenants in the past have any issues they’ve also been able to pull them in and use their, you know, so they have a HVAC company or an electrical supply company. You know, what landlord with you know 3 million square feet does not need one of those, you know, in their back pocket. So, they’ve been able to get through by being like wonderful over all landlords and expanding into other market segments because they own the real estate those market segments comes from. It’s a very dynamic group. I’d say, meeting them, sort of took my cowboy business person nature from Wall Street and really reformed it and shaped it into a more sustainable, entrepreneurial scenario where it’s just backed up by real estate. I mean, if cash is backed up by gold sitting in a box somewhere on this continent, if your business is at the end of the day backed up by a real estate play, I think that a you can have less issues going forward. Me, I’m a very small landlord. One of the hardest things, you know, I have to look at. Is that, if you go ahead and you look at the market, I watch my friend from the hedge fund world and we’ve all had separate jobs since college. I’ve had a friend who’s done everything from a FCC to Bridgewater Capital smaller funds and they have all bounced around and a lot of them spent a lot of money on grad school and business school and they necessarily didn’t need to, if they just sort of found the right partners early on, they sure could have avoided all of the skipping around. And it all goes back to real estate. I think in that we would never rent any space to then go ahead and put a go-kart track and a bowling alley into. The Diamond’s rule is they will buy and own this real estate and then we’ll create entertainment space within it. And that approach has worked for them over 9 centers by this time next year. They are already in the hopper purchased and then the goal will be closer to 20 in year 4 years from now.

John Carney: Yeah, I mean, I just love hearing stories like this. Like about the gritty start about the personalities that come together, about the team, I’m big on team, it’s about the team and the gels. I mean, I would say, the to the listeners out there if you have a fire in you, an entrepreneurial fire in you and you find people that you can partner with, that understand the vision and have the experience. I mean, that sounds like what you did Nat, what you did in the past. It’s a play it forward to, I mean, you get to a position where the young guns are going to come knocking on your door and you’ll get that opportunity. Well, that is truly a great story. You know, on the real estate side, re-positioning the industrial to fit this need and to scale up and move west, is cool. I’m looking forward to checking out your brand once it’s up and running here in Ohio. Let’s get into our “2-minute drill” here. Are there any sports you are still playing today?

Nat Mundy: Ah, yeah I still play pick-up hockey and I’m actually racing most every weekend, in one format or another, whether it be in a go-kart or a car. So, that’s sort of been my activity at this point. My boat has turned into a place to listen to music and drink beer.

John Carney: That’s good stuff. Are you a reader? Is there a favorite book related to an athlete or sports or business that you keep coming back to?

Nat: You know, it’s funny. I frequent, you know, you remember the movie “Cocktail” where Tom Cruise is the bartender? And there’s a success manual behind the bar?

John Carney: I do, I do.

Nat: So, my success manual has been reading and re-reading any of Richard Branson’s stuff.

John Carney: “Losing My Virginity” I would say, that book was an instrumental part in my decision to work for myself.

Nat Mundy: I mean, he’s had the ups and downs. But the specific thing about, he’s kinda stayed classy the entire time. You know where as we see a bunch of entrepreneurs that aren’t as good about their sort of public eye. You know, Richard Branson has worked the entire time for $4.9 billion and I believe every cent of it. You know, versus a lot of other billionaires out there that are supposedly self-made. Anyway, for him it was all about the hustle and I love reading how he changes with, one of his book, I forget which one, but some of the copyright laws and how some of those are changing and how he then figured out a way to make money still, you know, in that space in the music world. And then obviously on the phones, and airlines and you know the “Space X” project. I take it he’s just a very, an entrepreneurial hero. And the cool part is that he was able to do it in London as his kind of home base as opposed to I feel everyone else just runs to New York or L.A. to become an entrepreneur.

John Carney: Yeah, we like Richard. I mean I was living in Australia for 7 years, the Virgin brand is very present there. He’s in town promoting various, whether it’s the airlines, or something else you know, enough that he gets a lot of press outside of America. I agree he’s an entrepreneurial hero.

Is there a quote from someone that keeps you motivated in the morning? Because we all know that you’re running a real estate business or scaling up a franchise in go-karts that there’s too many obstacles that are going to knock you back and is there anything that you like, nope I’ve got to keep going?

Nat Mundy: I don’t think I have so much of an inspiration she won’t quote as much as just sort of. And I went to this summer camp and it was an all-boys camp for three years in the summer and they always talked about courage and loyalty. And that might sound a tad cliché and cheesy. But number one, you have to have the courage to step out and do something. I could have stayed at my firm and probably would have probably still been there today if I had never left Wall Street. Or I would have moved onto something else. I’d probably be a director of some level of this point. Sure, but I also have a lot less hair. I’d be a much bigger stress case I’d also be commuting via train. Have you ever see the zombies get on the train at [5:30] in the morning and come back at [7:30] in the morning. They give up a huge part of their life, their family life for that roll. And that’s why you’ll never hear me complain about a Wall Street executive getting paid millions in bonuses because they basically become, their family basically becomes the firm. Their priorities become their job over their families and they miss a lot. And then you know comes the loyalty. I think family comes first and if you can stay loyal to your family and friends, you have the best part of business for the rest of your life. I mean, money aside, really all businesses are doing is helping to create money. But, if it provides for your family the way you were brought up or better, I think that’s success. So my goal would be to be able to send my kids to good-schools and not have to struggle week to week to make ends meet. Have them with a good life style, to get good educations, and then enter into business one day or expand it for which one is better and newer. It’s not a phrase so much, two-traits; courage and loyalty. Step out, step in the way and keep the people that keep you going as close as possible. Make sure that everyone is healthy and happy.

John Carney: Yep, that’s good advice. And I just want to build on that a little bit. Is there a daily practice, how do you train for success, how do you personally train for success? Different people do it in different ways, they get into a flow state or they get into their own zone. Is there a ritual or habit that you have?

Nat Mundy: Yeah. I can’t live without a calendar in my phone. I mean, part of my learning disability are I need things to be very organized and everything has to be in writing. So I start my day by having to review the calendar the night before for the next day. So when I get up I know what time to set the alarm. So basically it starts at bed time and then when I get up in the morning I make coffee at home, I watch the news. I have an awareness of what’s going on in the world and clearly now a days there’s a myriad of news to watch. I feed my dog, take her outside and do a certain morning ritual of showering and get to work before anyone else. That way I don’t have to have any distractions and any loose ends that came up after I left work the day before I have completely tidied up for start of business officially for the rest of the office. And then because of that I can say to myself that when I leave for 4-5 days at a time because everything is tidied up and there’s overall communication. I have update email that I probably send out 3-4 times a day to keep the ball rolling. That could be anything from a last minute event being booked at one of our centers to a decision on furniture. But it’s a great chain email so all the ideas are in one place and I think the ritual there is to start that chain of creativity every single day and not forget a single day to do it because it keeps people in the know and it gets the cheering section going too.

John Carney: We’re running a little long but I wanted to just ask based on that, getting to the office, turning on the lights. Is the CEO per say, did you find that, that sets the precedent, you set the bar here and your employees coming in notice that and that expectation is set and you’re leading by example.

Nat Mundy: You know, I think what we really done is a great job of weeding out the rift-raft. And getting rid of sort of no department has a, it’s pretty linier company. Okay, so no department has crazy hierarchy, there is clear seniority at places in fact, there’s no feeling of animosity ever or like you’re not equal. I mean we all said the same table to lunch, there’s no crazy separation. But meanwhile, if I walk into the men’s room at one of those centers and it’s dirty, I’m mopping the floor. And you know, I expect them to do the same thing when they walk in. If the track marshal walks into a bathroom or sees like a cup on the ground while walking to get some food they should pick it up. They see me do it. As long as you’re willing to help set-up chairs you get the respect of other people that are there for a little bit.

John Carney: Yeah, that’s, that is powerful leading by example. Hey, look Nat I want to thank you very much for joining me today in the Locker Room. Where can the members of the audience find you if they want to carry on this conversation and learn more about the business.

Nat Mundy: I mean, www.gpny.com is the website for the indoor track at Mount Kisco which is the mother ship. And the rest of the locations are under www.spinsbowl.com.

And the real estate arm is – d-i-a-m-o-n-d-p-r-o-p-e-r-t-y-m-g-m-n-t dot com. And you know if anyone has any questions or wants to invest in centers or is looking for advice I’m always available for phone conversation or a quick email. Not a problem.

John Carney: Alright, perfect. There ya have it folks I truly hoped you picked up some actionable advice today from Nat Mundy. Make sure to check out The Post Game Report on iTunes and while you’re there please subscribe to the Real Estate Locker Room Show to ensure that you never miss out on the pro tips from our guests. The mission here is to help you elevate your real estate game and your business. If you like what this show is about I’d be grateful if you would leave us a 5 Star review here on iTunes and that way other like-minded people and investors like yourself will be able to find us when they search for “real estate.” You can visit John Carney online – www.johncarneyonline.com for links and additional content associated with today’s show. So we will post all of those links that Nat just mentioned there for you to click through so you guys can get connected. And while you’re there drop your email in to get your newsletter. This is so you don’t miss out on any insight, tips, tricks, hacks, and other great stuff. So, remember to stay focused on your goals everybody, have fun, and stay in the game, I’m your host-John Carney, until next week, work hard, play hard, and profit hard. Thanks Nat.

Nat Mundy: Thank you, be good bud.

End Audio.

[39:48]

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonlie.com

Connect with John Carney
Facebook: www.facebook.com/JohnCarneyOnline
Twitter: @John_M_Carney
Instagram: @johnm_carney

© John Carney 2017

 

JC 004: Reed Goossens is the Australian dominating the US multifamily market

April 3rd, 2017 | no comments

Meet the Australian real estate investor who’s living the American Dream

In 2012 Reed Goossens packed his bags and left Australia to pursue his dream of living in New York City. He hit the ground in the Big Apple hustling and networking.

Today Reed is living the American Dream and pursuing financial independence as real estate entrepreneur who syndicated multifamily deals across the county.

Learn how horse jumping, rugby and surfing provided the Reed the confidence and discipline to successfully pursue any goal.

Reed attributes his rapid success in the apartment syndication business to having a mentor, a coach and partnering with investors who already had a successful track record.

Now Reed helps investors get started in US multifamily real estate and hosts the podcast, “Investing in the U.S. – An Aussies Guide to U.S. Real Estate”

Favorite quote, “Don’t give up” – Winston Churchill

Reed’s recommended reading list;

  1. How to Win Friends and Influence People by Dale Carnegie
  2. Rich Dad, Poor Dad by Robert Kiyosaki – www.richdad.com
  3. The 4 Hour Work Week by Tim Ferris – http://www.fourhourworkweek.com

Favorite Athletes

  1. Favorite U.S. athlete – Michael Phelps – Swimmer, multiple world record holder
  2. Favorite Australian athlete – Steven Bradbury Speed Skater
  3. Favorite athlete – Usain Bolt – Sprinter

Reed’s #1 tip for success is to get a mentor and surround yourself with successful people.

Thank you Reed for taking the time to share your story with my audience.

Visit Reed’s website www.rsnpropertygroup.com  or email him direct Reed@rmspropertygroup.com

Follow Reed on Facebook and Twitter

 

POST GAME REPORT: Episode Transcript

The Real Estate Locker Room Show Podcast

JC 004: Reed Goossens is the Australian dominating the US multifamily market

Announcer: Welcome to the, “Real Estate Locker Room Show” with John Carney. Did you know investing in real estate is a team sport? Join John and his guests as they explore the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the “Real Estate Locker Room Show” we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve on-going success. Now it’s time to kick-off and level up with new ways to grow your real estate business.

John Carney: Welcome to the Real Estate Locker Room Show. I’m your host John Carney and today we have lined up another great episode. We’re talking to international real estate investor Reed Goossens. Reed is an Australian currently living in Los Angeles California. He’s going to tell us his story f
rom going from no American real estate ownership to an interest in over 866 doors. He’s a multi-family investor. He’s the host of the podcasts Investing In The U.S. and An Aussie’s Guide to U.S. Real Estate. and all around good bloke. Reed moved to the U.S. in 2012 to pursue a career in structural engineering. However, he discovered a passion for real estate investing. With limited funds, and zero credit Reed went from purchasing a small duplex to growing his own real estate investing firm, RSN Property Group. Since 2012 Reed has been involved in over $50 million worth of multi-family syndication. That is excellent. Reed lives up to a never say die Aussie attitude when it comes to being a successful entrepreneur. So, Reed you are sitting in the Real Estate Locker Room. Before we get into your awesome story we’re going to offer you up a stretching question. A sports related question of course. Who is your favorite American athlete?

Reed Goossens: Oooohhhh, that’s a good one. My favorite American athlete? I think I would have to go with Michael Phelps. I’m a pretty big swimmer myself, growing up in Australia. You know, as you know mate, we all like swim and get wet in the pool. And yeah, just incredible, what? Won 22 gold medals was it? I can even, I lost count. The last Olympics was pretty incredible to watch and get back in the pool. So, Michael Phelps would be my #1 U.S. athlete.

John Carney: Yep. He’s had an amazing career of ups and downs. He definitely has that never quit mentality that champions have.

Reed Goossens: Exactly, exactly.

John Carney: Just so, you know, I lived in Australia, as you know, for seven years. Just recently moved back to the U.S.A. and when I was over there I was introduced to all of your sports. The one guy that I fell in love with is Steven Brandary, Bradbury.
Only because for listeners out there. I’m going to put in the show notes. A note here to put in the show notes, is a link to who this guy is. But, I mean, he’s an Australian speed skater that is not a popular sport in Australia, by the way.

Reed Goossens: There’s a ton of ice in Australia right?

John Carney: Yeah, right, there’s no ice in Australia. Talk about being put in a position to be successful. It was the winter games back in 2012, if I’m correct? Hopefully. There was a Winter Games in 2012. But anyways, he was in the gold medal final round and I believe there were four other competitors. And the lead skater on the last lap beat it in. And took out the two trailing ones. So, the fourth-place guy, you know, was in it to win it. And he crossed the finish line first, gold medal. It’s an amazing success story. So, any comment on that Reed?

Reed Goossens: Right. He is. I remember watching it. I don’t think it was 2012? I think it was earlier. Because I was a little bit younger. And 2012 was the Olympic Game is London, I think it was? So the funny thing was, he did that, that same thing happened in the heats. If you read into the story like. It wasn’t just in the final, flipped over and he skated across the finish line. Coming dead last and then all of a sudden then coming in first. He did it in one of the heats as well. Which is, it’s incredible. He won the gold and a lot of people were not very happy about it. Well hey, you got to be in it to win it right?

John Carney: Absolutely. With that being said, let’s get into this interview. Let me ask ya, why real estate Reed? And how’d you get started?

Reed Goossens: Sure thing, and you know, I want to say, this is awesome and well done for putting on this show. The Real Estate Locker Room is a really, really, cool concept. And I think you’re going to get a lot of awesome listeners and the name is so catchy. So, well done to you. The reason why I got involved in real estate? Was two fold. One, was I just graduated from the University in 2007 and I’d been backpacking around the world for about 18 months I looked at myself and said, I can’t be sitting in this cubical for the rest of my life. I just can’t be 40 years, 50 years. Get a retirement package, and then retire. I felt like a very small cog, a part of a very big machine, which was corporate Australia at the time. So, I really was felt like I wanted to give, like I had more to give. I was very entrepreneurial. But I didn’t know where to place my energy. I remember attending a Amway pyramid scheme sort of thing and that just wasn’t for me. And it was my dad that said to me, you should try and place some capital in some real estate. You’re in engineering, you’re a civil engineer. You surround yourself with real estate every day. And that right there was the little trigger that got it started. Making me look at things a little differently from that point on. In 2009 I picked up a book, “Rich Dad, Poor Dad.” by Robert Kiyosaki. I’m sure a lot of your listeners will be influenced by that particular gentleman. He has influenced a lot of my guest on my show. And has had some huge success. In that book really, you know, materialized what it meant to be a real estate investor. And I just, you know, took that book with, you know, it was with both arms and went forward leaps and bounds I was attending as much real estate investing networking classes as I could. And it was really understanding the asset that is real estate investing. And for all our listeners out there the reason I love real estate is because there is no other investment across the world anywhere across the world that offers the four ways to make money. And that is, that real estate has cash flow. And amortization, which is the pay down of the principle in a particular property because your tenants are paying down the debt. You have appreciation, and there are five forms of appreciation, I won’t get into those. But, there are five forms. And you have the tax benefits. So comparing that to a stock investment, it just makes so much more sense. I have control over my asset. That really is the power to me and why I love investing in real estate.

John Carney: “Rich Dad, Poor Dad” obviously a book that I read and I keep it close by. Because it’s still has notes in it. I haven’t looked at it for a few years, but I mean, you know, it’s one of my. I’ve got a stack of books in my office sitting behind that I keep as references. They have notes and everything. You just never know when you’re going to have to return to that. Look, I like to draw the comparison between what it takes to be a professional elite athlete because there’s a certain amount of dedication. You touched on that, you were educating yourself, became dedicated to learning how to become a real estate investor. And so, on this show, we’re exploring that crossroads where we have the intersection, sports and real estate. Growing-up did you have an athletic background? Was there anything you learned playing sports as a kid or participating in any sports now as an adult that helps you? That helps you along the way in real estate?

Reed Goossens: Yeah, that’s actually quite a good question? And a lot of people don’t know, this about me, that when I was growing-up, I was hugely into horses. I was riding show jumping actually. My parents, who were actually teachers. I don’t know how they afforded it, but we had a team of horses, we went around the country. Being in show jumping, it’s a very, it takes a lot of dedication and time. Getting up at [5:30]AM every morning. Dealing with horses, mucking out stables, feedings, grooming, all that sort of stuff. And having an animal that is your responsibility to them essentially. If it’s not working at it’s peak you’re not going to be able to jump as best you can. Because the horse is whatever, feeling tired or lethargic. And so that there, for me, a young age it was very much instilled in me to have dedication, to have drive, to have passion, for what you do. And I think that if you put your mind to anything especially particularly real estate. And how does this related to real estate investing? Not everyone is born with ten years worth of credibility in real estate investing. I certainly wasn’t. But I actively was wanting a goal to achieve, and that was the financial freedom. And I wasn’t going to give up until I got there. And I actively pursued educating myself on real estate. In life with my show jumping you know, I was actively trying to become a better horse rider, every single day in and day out. And if you continue to put your mindset to that, and have a goal and you’re laser focused on that goal, that I think it’s very, very, likely that you’re going to achieve that goal. So sporting was definitely a huge part of my growing up. I played Rugby, I swam, I surfed. I went to Nippers. And for all of the Americans, out there who don’t know what Nippers is, it’s just sort of surf like savings for kids. Sports had a huge impact on me growing up and it has shaped me into the adult that I am today. And it has definitely shaped me into the person that is you very driven about what I do. And I thank God for the goals I set and how I achieve them.

John Carney: We have young children now. It’s really, really interesting watching them play and develop. I can’t wait until they fall into. We want to expose them to a lot of sports. Because I believe that, that does instill a certain amount of, discipline that’s required and you kinda carry through school and through life. So can you tell our audience what you’re working on right now that’s getting you out of bed in the morning excited and you are laser focused on. And bring us up to date. You arrived in the United States. You own no property, right. Now, you have an interest in a substantial portfolio. Can you give us a little bit of that story and the time line. You know, we kind of kick this off in 2012. You know, we’re ¾ of the way through 2016 now, close the gap for us.

Reed Goossens: Sure thing. So to rewind a little bit more than that. It was 2009 and I educating myself for a couple of years in Australia. Very, very, close to pulling the trigger in Australia. It was a flip or something in Aussie that I wanted to invest in, maybe split a block and I was very close to pulling the trigger and saved a bit of money. At the time, my girlfriend who was American, was studying in Australia. She had finished up her studies and I really, really, wanted to move to New York City. Because I felt New York City, is in terms of business, in terms of growth, it just had this feel to me when I was backpacking through there in ’08. That I just had to live in this particular city for a period of time. Early in 2012, we packed up all our stuff and we moved across the world. We rocked up in the United States and I didn’t have a job and I was on a tourist visa. And I just pounded the streets, untill I found one. I found one as a structural engineer and up until a year ago, 18 months ago I was a structural engineer. And within the first two weeks of me being boots on the ground in the United States in 2012 I was at my first real estate networking event. And John, I thought Australia had some awesome networking events! By gosh, the United States in the heart of New York City, in Time Square, it was like networking on steroids. I had not experienced anything like this before. And I was just so, you know, invigorated to go out and learn a lot about real estate here in the United States. You know, people don’t realize that in the U.S.A. when I first came to the United States, that the barriers to entry are a lot lower compared with Australia. You know, maybe is Aussie, I can pick-up 150 maybe 200 thousand dollar absolute heap, and try and flip it, and make a little bit of profit. Well, in the United States here, I saw that you can pick-up places for $50, 60 thousand dollars that would cashflow for you know, $200, $300, $400, dollars a month. Which was incredible. And I was just like, hang-on, this is something awesome here. And so, 2012, educating myself. And as I said, I picked up my book in ’09, and so I had been educating myself for a period of time now and I was very, very getting to the point where I was just chomping at the bit like there is only so much to learn, there’s only so much you can read. Actually get your feet wet in a deal. So, I think I had a little deal in Up State New York. It was within driving distance from New York City, Syracuse New York, is about 4 ½ hours. It was a duplex and the cash flow side of it. So, I went and purchased it. And I purchased it all in cash. When I first moved to the United States, I didn’t have any credit. You know, anyone who moves here will understand that credit is king in this country. And I couldn’t borrow. I had to pay for things all with my own cash. So, then I slowly over a period of time. I developed relationships with the local bank and I was able to refinance some money out of that deal and buy a second deal. And through that time when I bought the first deal I rearranged to the property. And we did, I spruced it up, nice new counter tops, and nothing crazy that you and I would approve of and appreciate. But something that was affordable for my tenants. And in doing so, I was able to increase the cash flow of that particular property and it was quite powerful. I increased the rent about $60-$70 bucks on the two individual units. So, it had a Gross over effect of $126.00 a month. Which was really nice, in terms of cash flow. I had done that deal and I did a second deal. I did a separate deal, it was a flip in Philadelphia and I was slowly, slowly building credit and building these little portfolios. Then it came to a point when I ran out of my own money. I just couldn’t do any more real estate. I had 3 or 4 properties. You know, very cheap properties under my belt. It in deed, maybe the portfolio was worth then $200,000 maybe $250,000. What I started to realize was hey, I need to up my game here. I saw the power of multi- family real estate. A buddy came down from Canada at the end of 2013, and we had dinner. Hey guess what I am doing? These duplexes in upstate New York. Look how good I’m Killin’ it! Reed, that’s awesome. I closed on a 70-unit apartment building in Canada. I was like, what?! How did you do that? What does that even mean? And he went on to explain the power of “The cap rate theory.” That if you force the net operating income, you can increase the cash flow for one unit. You can also force the value of the property. That was really, really, powerful for me. Because I started to see that on my smaller duplexes, even if I wasn’t forcing value, I was increasing cash flow. And the key was commercial real estate. You have to get involved in commercial real estate. But, you know, commercial real estate is a lot more expensive. Instead of buying two duplex, you might be buying a hundred units or 50 units, or whatever it might be? But I saw the economy as scale there. That if I could apply what I was doing on the duplexes to the large multi-families then I would be able to build a huge wealth and crate a lot of passive income, a lot of cash flow at the time. So, that was sort of started my journey from 2012 to 2013. In 2014 I started RSN Property Group and I got a coach/mentor, and we definitely were on personal branding. And getting into the day, people will invest in your deal because they invest in you. The deal might not necessarily matter than much. They actually invest in you because they trust you. You have credibility with them. So, how do you build credibility without being born with it? Well, there’s a number of ways. I know John, you’re an expert at it, as well, writing a book. Or being a key person of influence in your sphere. And there are those difficult things that you can do to brand yourself in a certain way that will attract real estate investors. And over a period of the last 18 months I’ve been able to get involved in I think 866 units and I have an equity stake in all those. And I’ve been able to raise a bunch of capital. And I’m slowly building towards something awesome. And you know, my journey is not over, by no means, it’s only just getting started. And I want to continue to grow my portfolio and continue to buy as many multi-family real estate properties as I possibly can. So, that’s caught everyone up to date a little. It’s a bit of a journey, but it’s certainly a lot of fun along the way.

John Carney: Yeah, that’s a great story. And I believe it’s common at least from my experience. In surrounding yourself with the right people, right? I mean, you’re the average of the people you meet and choose to hang out with. And with the common interest you’re with these real estate people now, through networking, right? And you’ve grown into the investor you are today and with the sights on growing more. You know, I talk to a lot of first time investors and help people get started in the game. I always start by recruiting the team when I go to new markets. I want to touch on your team. But, I think it’s an important to note what you just said, starting zero properties. That first rental which you had to drive 8 hours round trip to get to and then you just turn the clock forward a few years, all the blood, sweat, and tears turns into 866 doors. So, I mean, that’s just a great story. You know, that is the American dream isn’t it, Reed?

Reed Goossens: Right,

John Carney: you’re living it.

Reed Goossens: Exactly.

John: Leading by example. So, you know, I’m a big believer in growing into who you are today, it doesn’t happen overnight and if you set your sights, continue to set your sights higher and raise that bar you will continue to grow. So, awesome, thank you for sharing that part of your story. So, you know, I just moved back from Australia to Cleveland. I haven’t lived in Cleveland for 19 years. It’s a completely different city and we won’t go on about how expensive real estate is in Australia. I had to get the lay of the land here and I was able to do it pretty quickly. For the last 120 days I’ve really been figuring it out and running the numbers and doing the math to define where my next acquisition is going to be. But, you know, it also requires putting together the right team.

Reed Goossens: Exactly.

John Carney: So I want you to talk a little bit about how you went about assembling your team that supports you. What it means to you, and you know, aside from you who’s driving this, you’re the quarterback. Who’s the key-player?

Reed Goossens: Yeah, that’s a good question. I think, you know, I had you on my show, a while ago. I was very taken. Very impressed by what your show produced. Enjoying you book about real estate is a team sport. That really resonated with me, that is completely true. The key-players on my team are a couple of other syndicators. I can name, names, I don’t have to name, names, it doesn’t really matter. But, the power of understanding that you not, in real estate you can’t do it by yourself. And on particularly on large multi-family units you can’t go and raise all the capital. You can’t go and find the deal. You can’t do the PPM. You can’t go and do the financing all by yourself. So, splitting it up amongst people who are capable of raising the capital. Capable of getting financing. Capable of finding deals. That’s really, really, important. And you know, if yes, I have an equity stake in 866 units. But, we all do. And so without the team we wouldn’t have gotten to that amount of units so quickly. If it was just me, Reed Goossens doing it by myself, I wouldn’t have been able to scale as quickly. And that’s really important to the listeners out there. Surround yourself with the right credible people, get a mentor, get a coach. Then work on your personal brand and understand that you’re not going to be able to do this by yourself. And it’s okay to use other people and leverage other people’s skills and abilities to help you scale your portfolio. So, I think that is really important, in my investing career, having a coach and getting a mentor is, without them I was, first started leveraging their ability. They had done some deals. And I leveraged their experience to then go and show my investors. To say, “Hey, I’m partnering with these awesome guys. They’ve done “X,Y & Z” or have done a couple of deals and they’re looking to grow like I am And then all of a sudden I’ve got mentees who I mentor. And then they’re leveraging my ability to and they’re raising capital. Because I’ve been involved in 866 units in the 18 to 24 months. So the cycle goes around. I’ve got high hopes on that. I’m helping other people and continue to help other people where I can because the power of your team is very, very important.

John Carney: It definitely is and I suppose you just feel obligated, don’t ya to pay it forward, when someone comes to you. And you see the fire in their eyes and say, “Hey, you know, I’ve learned this, I can help you out.”

Reed Goossens: Sure.

John Carney: And it’s not always, you know, a lot of the times, you know, I’m always opened to directing people to the right advice. So, I mean, I think you’ve touched on it.
If you’re a rookie real estate investor who wants to break out, who wants to go, tapped out with cash and bank loans and wants to elevate their game to another level, you’re advising that they go out and find a mentor or a coach, and has the same vision as they do, and ask for help. Would you say that’s?

Reed Goossens: 100%, John. That is key, and as I touched on before, leverage a mentor or a coach helped me to get where I am today and I was able to leverage their skills and abilities. The number one thing that I like to talk about when you’re presenting a deal to an investor, a potential investor. They’re going to go say, “Well, how much experience do you have?” Well, then you’re not going to have any experience because you might not have done this before. So having a team, showing the investor that you have a team around you and that you have a great team, and a great package, and a great deal. And that goes to the core of, I trust you, I trust your credibility, I trust the team you’ve got established around you that you’re going to invest. And raising that first $100,000.00 or $150,000.00 or whatever it might be in syndication, that’s what I do, can be tough. And once you do that, it’s a little bit of a snowball effect. Like people start referring you to other clients. You start building a track record and things become a little easier. But it does take a little bit of time and effort to get that first deal done and I always like to say, that you don’t get to deal 15 without deal number 1. So, that’s my little motto.

John Carney: Right, loads of action in between. You’ve shared an incredible story. And before we get into the “2 minute drill” here. Think back really, quickly, certainly there’s a recent obstacle that had you banging your head against the locker door, so to speak. Can you share one of those stories with us?

Reed Goossens: Yeah,

John Carney: I always learn and so I’m listening with opened ears because, they are just obstacles in the way when you a real estate investor. I really enjoy learning from how others navigate those obstacles. To find their way to crush it.

Reed Goossens: Sure thing yeah so. I think the biggest one recently. And I’m going to get pretty in depth now. It’s a little bit more advanced. But, I don’t really care. Your listeners will learn a lot from this. On some recent deals that I was involved in I had raised a bunch of money and what had happened was that the deal sponsor, who was the person who comes along and essentially puts their neck on the debt, they sign on the dotted line,
didn’t want to have what was called “sophisticated investors.” And for all those people who are listening understand the FCC rules. Sophisticated investor means they are not accredited, non-credited means, you don’t earn $200,000.00 or more a year. Or you’re not worth a million bucks. So that meant a lot of my investors in the deal were walked off the table to leave a good portion of money. Like, I’m talking $500,000.00 to $600,000.00 off the table. Now, I didn’t know this till like D-Day, so it really frustrated me, that I couldn’t one, perform on what I was going to sell what I was going to do. And two, I, communication wasn’t there to say, okay, we’re only going to take accredited investors. Lesson learned. But, in saying that, I can’t then leave those investors out in the cold because you know there’s other rules in the FCC Laws that you can use on the sophisticated investors in your capital raising abilities it just meant for me as a business owner and RSN Property Group to start finding some smaller deals. I needed to start getting my other non accredited investors involved in some smaller deals and that’s why I went to Kansas City, just recently to check out a 48 unit, a 50 unit. I want to be in a place in my business where I can if someone comes to me and says, “Hey, Reed I really want to invest with you.” I love what you’re doing. I need to be able to put them in a deal and that’s just me as a business owner and to find the right deal to help them navigate the world of multi-family investing in the United States. So that’s definitely one thing that I recently had me banging my head against the wall. Lesson learned. I understood where the deal response was coming from. That meant I had to change my action in my own business and say, “hey” I need to start going out and increase my deal flow on some slightly smaller sized deals to get my sophisticated investors involved. So, that’s definitely one of them recently.

John Carney: Yeah, sounds like it’s one of those cases where you’re insanely frustrated in the moment but then it turns you’ve learned a lesson. You’ve built a system into your business and then almost, you know, the obstacle becomes the way, and you have almost come up with a solution to handle a different investor classes

Reed Goossens: Yeah, it’s definitely lesson learned as I said. I haven’t executed all on a smaller deal with my sophisticated investors yet. But I will be ready to go by the year’s end. I should have 4 or 5 or 6 of them involved in a sale of a smaller deal in the Mid-West somewhere? Just trying to find that deal right now.

John Carney: Right, you’re on a hunt. That’s the part I like.

Reed Goossens: Exactly.

John Carney: Before we wrap up the show here with a “Two-minute drill.” I’ve got ten questions and they are coming at ya starting right, now! What sport did you love playing as a kid, and the lesson, one lesson.

Reed Goossens: It probably would have been Rugby. I think the biggest lesson is that, I like my show jumping and then being in the equestrian world, that was a very individualist sport. I think being on the Rugby field, there’s 14 other guys out there slogging in the trenches. It’s a team sport, you know and that was really powerful.
My dad always said, “You got to be involved in team sports. It helps with leadership. It helps in just understanding the dynamics of other people at work.” And that is really powerful and that was a really good lesson learned over the years coming in now into my adult life.

John Carney: Number 2. What sport are you currently participating in today that you’re enjoying and lessons from that?

Reed Goossens: I still get out in the water for a surf every now and then. I really love surfing. It’s a great way to just, you know, life can be go, go, go, go and it’s just a great way to get out on a Saturday or Sunday, early before…as the sun is rising and just take a great big breath and let all the worries and stresses of the world just drift away. You know catch a few waves and just enjoy the morning. I love getting out and in particular a nice fresh still winter’s morning which is a bit more crisp and just get in the water and getting some nice waves. It always makes me feel good.

John Carney: Yeah, the cold salt water, love it and miss it. Other than Robert Kiyosaki’s “Rich Dad, Poor Dad”, do you have a favorite sports book or business book that you’ve just finished that’s on your list?

Reed Goossens: Yeah, I have one, by Dale Carnegie “How to Influence People” that one? I’ll have to send you to it? “How to talk and Influence People” something along those lines? I’ll have to send you to it? Dale Carnegie, very important book in my career. The other one I love is, “The Four Hour Work Week” by Tim Ferriss. Very, very good book. I really enjoy that book.

John Carney: What a great title.

Reed Goossens: It is, it is.

John Carney: What a way to sell books.

Reed Goossens: The four-hour work week. I mean, what I sign up?

John Carney: I know, I know. I read it. I can’t imagine that there’s an entrepreneur out there that has not read that book unless you’re well established before it was published. But, even then, I mean that is a great book. He does great work. I’m a big fan of Tim Ferris. One quote that keeps you motivated? And this can be something that doesn’t have to be from a person. It can be something that you came up with.

Reed Goossens: Yeah, one quote Winston Churchill says, “Never give up.” And that is just never, ever, give up. It doesn’t matter if the chips are down. Don’t give up, have belief in yourself as I said earlier in the show. If you continue to be laser focused on your goal, whatever that might be. It might be real estate investing or something completely different, then do it and don’t let anyone tell you otherwise until you achieve that goal. And anyone can literally achieve anything you put your mind it. So, I’m a huge believer in mindset. And if you are so motivated in it and dogged it about your approach, you’ll achieve those goals, you’ll get there.

John Carney: Thank you. What is your number one come from behind victory in real state and what did you learn from that?

Reed Goossens: Come from behind victory? I don’t know if I’ve had one yet? I had an issue with a flip in Philadelphia with the contractor. Definitely at one stage I thought the chips were down. I had done a couple of flips in Philly. I’m not going to get into the weeds but, it was some issues with the city and trying to get this thing on line and I was constantly just pouring money into it. And we did, we ended up getting it over the line. It was probably six months later than scheduled but we got it done and we got it sold for a small profit. We got our money back and I definitely thought six months earlier, geez this is going to you know, the explicit excrement is going to hit the fan. So, I definitely go to lesson’s learned on that. Flipping is not my business, it’s not my job, it was hard to manage from out of state and I definitely just needed to focus on my multi-family investments of which I have had lots of success in.

John Carney: Perfect. Alright, now we’re asking who’s your favorite athlete of all time is?

Reed Goossens: Favorite athlete of all time? I think, Usain Bolt, would have to be my favorite athlete of all time. I love his poses that he does that he does. Just the sort of grin as he’s running across the finish line, you know, ten yards in front of the next person. I think he’s a real inspirational guy. He comes from Jamaica, I just love his attitude. I just love the way he leads his life. So, really, really, inspirational for me.

John Carney: Yeah, you watch him run and blow everyone out of the water and it doesn’t even look like he’s breathing hard. I

Reed Goossens: Or he’s even trying hard. It’s like, this guy’s a freak.

John Carney: Yeah, he doesn’t sweat.

Reed Goossens: Yeah, exactly.

John Carney: What gets you into your flow state or if you need to get into the zone and focus on something? Do you have a practice that you can share?

Reed Goossens: Yeah, if I have to really focus on something and I’m sitting at home. I like to get out of my. If I have to really hit something on the head. As I say, eat the green frog” or whatever it is? You know, the first thing you don’t want to do is? First thing in the morning, I like to get up, go for an exercise and then have my breakfast and then get out of the house and go somewhere where you can concentrate. It might be a coffee shop, it might be the library and I get so much more work done when I get out of the house. Because being in the house can distract you a little bit. So, you can’t get work done as much. So, it’s just like turning off your phone, turning off your Internet and doing whatever you need to get done, done. And it’s surprising how quickly it does get done and then you’ve got that thing done and out of the way that you’re sort of regretting to do. So, it’s definitely one of those things that changing up your environment a little bit that way you’re working to be more productive.

John Carney: And would that lead into the next question? Which is, do you train for success?

Reed Goossens: Yeah. definitely, I’m a huge believer of in meditation. I love going and trying to do yoga once a week. Just to try and it’s very much like surfing, it’s therapeutic. Just like to get away from everything for a little bit and I also like to work out a lot as well because it’s another way that I can go and just a great way to start the day. It’s a great way to be energized. But it’s also a great way to keep your mind set focused, keep focused. People, there have been studies shown other people that workout live longer, they’re more healthy, they are more active and have better mindset. Being an entrepreneur you want to have all those things and you want to continue to do what you do, which is the business of real estate investing.

John Carney: Yeah, I agree with you on the working out part. My wife will see if I haven’t been to the gym in a couple of days tell me to go lift something heavy. That’s why I love her so much. All right, finally, what is your number one tip for winning more?

Reed Goossens: The number one tip for winning more? I think it would have to be is taking a page out of your book mate and as you said earlier in the show already you are only as successful as the people you surround yourself with. So, going back to what I the underlining theme of this particular episode was, get a mentor, surround yourself with successful people. That’s all, that’s my number one tip for winning.

John Carney: Awesome, can you tell me how our guest can find you if they want to continue the conversation?

Reed Goossens: Let’s do it. So, you can hit me up at – Reed@rmspropertygroup.com, or you can hit me up at my, I’m also have a Podcast, which is, as John mentioned, Investing in the U.S. Aussie. U.S. Guide to Real Estate. Educating international investors about the awesomeness of the investing in and cash flow property here in the United States. Check it out on iTunes and if you’re ever coming through L.A. please hit me up. I love hanging out for beer, or coffee, or going out for lunch. Whatever it might be, just hit me up at – Reed@rmspropertygroup.com.

John Carney: Awesome. Well there ya have it folks. I truly hope that you picked up some useful tips by tuning into today’s show. Thank you, Reed it was a pleasure having you on the show today. And I’m sure our listeners have some actionable tips that they can implement immediately. You can check out the show notes on iTunes and while you’re there, please subscribe to the podcast and we will continue to deliver awesome guests like Reed, who are crushing it, and hitting home runs here in the real estate game. You can also visit – www.johncarneyonline.com for a more comprehensive review of today’s show, in the show notes. And we look forward to bringing you another episode next week. I’m your host – John Carney and tune in next week, until then, work hard, play hard, and profit hard, thank you Reed.

Reed Goossens: Thanks mate.

John: Alright, have a good one.

[38:37]

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonlie.com

Connect with John Carney
Facebook: www.facebook.com/JohnCarneyOnline
Twitter: @John_M_Carney
Instagram: @johnm_carney

© John Carney 2017

JC 003: How to drive by your retirement fund with Richard Desich

March 30th, 2017 | no comments

Take control of your retirement by investing your IRA and 401K in real estate 

The Real Estate Locker Room Show EP 003Richard Desich joins John in the Locker Room this week and shares his pro tips for success in real estate, business and life.

Richard is the co founder of the Equity Trust Company. The Equity Trust Company provides the platform for people to self direct their IRA and 401K retirement savings into main street investment s such as real estate, small business and start-ups.

“The more you learn, the more you earn.” is the Warren Buffet quote that kept coming up throughout our conversation.

Are you an avid reader? There are days when Rich is buying multiple books on his Amazon App. A few books that Rich suggests are;

A Few Lessons for Investors & Managers  by Warren Buffet
A Fire to Win: The Life and Times of Woody Hayes by John Lombardo
The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone
Made in America by Sam Walton

Rich attributes his success to a thirst for learning, having great mentors, reading every day and understanding that he doesn’t know all of the answers.

He advises us to learn how to add value to all of our professional relationships and be willing to give at all time.

Richards’ second favorite quote is from investor superstar Charlie Munger who says,

“Go to bed a little bit smarter and a little bit wiser than when you woke up.”

Thanks again Richard for taking the time to share your story with us.

To connect with Rich Desich visit www.trustetc.com

POST GAME REPORT: Episode Transcript

The Locker Room Real Estate Show Podcast

JC 003: How to drive by your retirement fund with Rich Desich

 

Announcer:  Welcome to the, “Real Estate Locker Room Show” with John Carney. Did you know investing in real estate is a team sport? Join John and his guests as they explore the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the “Real Estate Locker Room Show” we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve on-going success. Now it’s time to kick-off and level up with new ways to grow your real estate business.

 

John Carney:  Welcome to the Real Estate Locker Room Show. I’m your host, John Carney and we’ve got another great episode coming your way today. We are going to discuss, using your 401K or IRA Retirement Savings to invest in real estate, and potentially other assets. So, if you’re a real estate person, which I hope you are, and not so much of a stock market person, you are going to love this podcast. Our guest today is, Richard Desich. He is a real estate investor and Co-Founder of The Equity Trust Company. Mr. Desich helped form The Equity Trust Company, which allows Americans to self-direct their IRA and 401K Funds into main stream investments, such as real estate small business and start-ups. Equity Trust now provides custodial services to approximately 300,000 clients. And has $28 billion in retirement assets.  Richard is a noted lecturer and trainer, and has traveled all across the U.S.A. educating Americans on the advantages of self-directed retirement plans which he is going to get into with us today. You may even come across Richard quoted in the popular publication such as – The “Wall Street Journal”, “Investor’s Business Daily”, and “Fortune Magazine.” Mr. Desich is a graduate of Culvert Military Academy, and the Ohio State University. He currently serves on the Board of the Girls and Boys Club, and Baldwin Wallace University. Welcome to “The Locker Room”. Richard, my friend, how are you doing today?

 

Richard Desich:  I’m doing great John, thanks for having me.

 

John Carney:  Cool, thanks for taking the time out to talk with me and share some insight with our audience. I like to kick things off here by warming up with a little bit of a stretching exercise. It’s just one question to get the conversation going. We are going to be exploring the intersection of sports and real estate and talking about the similarities. So,  who is your favorite athlete of all time?

 

Richard Desich:  Well, I think that kind of changes over the year, but as of right now, I’d have to go with LeBron James, and it’s a hometown answer because I am just a hometown guy. There are just so many great components of his story and arcs of coming back home and winning a championship—being down 3-1 and being the first team to ever do that and comeback in the NBA Finals. That’s so compelling. So, right now it’s LeBron James.

 

John Carney:  Perfect. I’m just going to add that if you’re looking for athlete quotes. “Nothing is given, everything is earned.” Something along those lines, which is an absolutely fantastic quote by LeBron James. So, let’s get into it. Rich, tell me why real estate and how did you get started in real estate and let us know a little bit about how that rolled into Equity Trust Company.

 

Richard Desich:  Absolutely. You know, everything for me revolves around my family and in particular my dad. You know my family came to the country and I am very proud because my family are steel workers. They came into the Cleveland area first. The only thing outside of the Cleveland area, West of Cleveland, about 30-40 miles, is Steeltown. So, he came in and grew-up in that area. He came from a humble background and wanted to make a better life for himself. After being in the service and graduating from college (he was the first in the family to do that) he got into investments, finance and wanted to diversify portfolios for folks who he was helping as a financial planner. Real estate was a real class that he just knew and he understood that it was one of the greatest wealth creators in the country. So, he learned his journey through apartment complexes and some of the family homes and went on to some commercial properties. He had that breath of experience and all the challenges for each one of those classes of real estate. He learned from that. My dad is an entrepreneur. He was always willing to try and not afraid to fail and learned from his mistakes. So, I had known real estate for my entire life, and that’s kind of how everything that I look through right now is through the lens of what I learned from my dad. And then I’ve had some great mentors along the way, folks I’ve learned even more from. So it’s all starts with him and my family.

 

John Carney:  Perfect. So, when you were growing-up what sports did you play? Were you involved in team sports and did you see any carry-over from the sports you played growing-up into your professional life, specifically, real estate?

 

Richard Desich:  Yes, I think it did. John your book has a great title, it’s a real team effort. I think that idea does carry over from sports and athletics into any type of investment. If you are an entrepreneur, you need to have a team. I mean you can be a leader, just like LeBron on the Cavs. He is a leader on the team. But, you know, you don’t win a championship just by yourself. It’s in some ways, sort of cliché, it really is the absolute truth. So, when you are looking at small business or real estate. Which is what real estate is if you are starting out. And you do it, as a form of small business. And as you grow, you have to have a good team around you. I think that’s part of the number one correlation between your sports and the business world.

 

John Carney:  Yes, I agree. So now, I want to learn a little bit more to share with our audience. It’s a little more about your business. Let’s say that I have a hundred grand in my retirement fund. Now’s a good time to be talking about this. We’ve got an election year, right. The market’s up and down. You know, chaos in other parts of the world. Brexit, all these things are happening. So, you know I’m not a stock market guy. I’m a real estate person, but I have an IRA. I’ve worked for public companies in the past and I still have a small amount sitting in a 401K plan. It shouldn’t be there. It should probably be with Equity Trust. Tell me how you walk clients through the type of service that you can provide for them, especially if you’re a busy professional who understands real estate but doesn’t really have all the time at the moment to really get into it. What kind of services do you provide for these folks?

 

Richard Desich:  Absolutely. So, you know, naturally our company Equity Trust actually started out as an accident. It was really based around real estate. You know my father put together commercial real estate investment deals and he wanted to let his clients diversify outside of the stock market. Just to the kind of point you were talking about, the markets being up and down and kind of being out of their control. You know, something that couldn’t affect whether the markets were going up or down. He wanted to diversify a portion of their portfolio and he had his clients invest a portion of their IRA fund into an investment with Drug Mart. He got a license for that, just for his clients and they had a great investment. They made 10% of their money for 20 some plus years and then they ended up selling it and they carried the profit of a sale into another great property, so they won. What happened from that deal was that someone had heard about it and said, “can my clients do that?” So, it’s almost by accident the company began. And so, to a person who has $100,000.00, for example. Those who know, or understands or think that real things is a good active class to be in, that’s who we deal with, a good portion of our clients are real life, real estate investors. They may look down the street, or see a market they think is good for an investment. If they like it, they can drive by a good portion of their investments and become involved directly. Depending on their comfort level of what they are looking for. But, they can see their retirement portfolio as they drive by and they are not looking at something and going up and down. So, the mechanics of it is someone has a $100,000 and says, I can go buy a piece of property here for $50,000.00 and they transfer their account to us. And what we do is the paperwork and the reporting and all of the compliance items, all the registration things you need to do to keep that account with a tax advantage in it. So, that’s what we do as a custodian. We facilitate transactions every day. I’m really proud of what we do. Over the last 9 months our company, our clients, through our company, placed a billion dollars in capital, into the economy here, and into investments, and a lot of real estate. A good portion of that is real estate. Which improves community. So, that’s kind of it in a nutshell as to what we do as an organization.

 

John Carney:  Let me ask you a few more questions that just drill into that a little bit. For instance, single family homes—okay we buy one of those. I’ve got a little bit of money left over. I like office buildings for some reason. I work in an office building. But, the average person on the street just can’t go out and purchase an office building, right? So, if that’s my burning desire, do you help people put funds together to invest in apartments, or office buildings? I’m just using that as an example. Is that a service that’s available? Or by self-directed does that mean you are 100% in charge of sourcing and securing your own deals?

 

Richard Desich:  Yes. The self-directed component means that we are a passive custodian. The folks that come to us have a deal in mind and are working with someone or come to us with putting theirs into syndication. You know, they can buy into a limited partnership or tenants in common, a portion of. There’s a portion of commercial building I want to buy 10% of it. You know, 5 or 6 of their friends come together. Or their person who’s syndicating an investment can buy a portion of that too. Or they can do the single-family homes, they can do raw land, apartments, duplexes, mobile homes. It really is the whole range of the real estate market. That’s what we do. It depends on the person coming in and what the flavors are that they want to do.

 

John Carney: I think that’s pretty-clear. Let’s talk a little bit about what you’re working on that’s real estate related? One of your first projects in real estate was building a commercial center, is that correct?

 

Richard Desich:  Yes. I worked and helped manage that early on in my career. In a commercial center and then single-family homes. Now we have our building here which is a large project. In the real estate world our headquarters is here in Westlake, Ohio. I’ve just been surrounded by good people and I can attribute to what Buffett says, “The more you learn the more you earn.” I always liked that quote. So, in addition to real estate reading, and listening to podcasts, I have been going to real estate investing seminars, since I was 10, 11, 12 years old. And have just been around real estate investors. So, I was always learning. I don’t think I know, I know what I don’t know. Just with anything, just constantly being around really sharp people who have different ways of accomplishing their goals and being successful. I’m as far as real estate, always, always learning.

 

John Carney:  That is fantastic advice. And you know, maybe that’s something that comes with a little bit of age, and the aging process. I mean, I sometimes wish I could turn the clock back. Some of the first real estate deals I did when I thought I knew more than I actually knew. There are plenty of lessons that I learned the hard way. But you know, checking your ego at the door as you get into real estate and listening to what those who have been playing the game for a while have to say is definitely good advice. In surrounding yourself with people who have the experience. Is that sort of where you’re going?

 

Richard Desich: Absolutely. I love Charlie Munger. I read a lot of his stuff and Warren Buffett of course. You know, what Warren Buffet said, “Learning from mistakes is probably one of the greatest lessons in life. But you don’t have to learn from your mistakes. You know, it’s much better to learn from someone else.” I think that’s such a powerful way to look at things. Anything you are trying to do in life. So many very successful people who know the pitfalls. The things you look back to and say, oh wow, I wish I had gone 10, 15, years ago I had done that. Those are great questions to ask mentors that you can seek out. Say, “Hey, where do you wish you could have done things differently?” And that’s what will get you such a wealth of information and help you out. Like you said, checking your ego at the door and understanding operating considerably, a sense of humility. I think that’s really key to being successful.

 

John Carney: Yes, the Warren Buffett, Charlie Munger relationship, I’ve read a little bit about that.  I read Warren’s rather large lengthy books, and I think I wrote an article about him a few years ago. I was talking about exercising your investor muscle—one of the lessons I learned from Warren Buffett. He went out and actively pursued Charlie Munger, right? You might know this story a little bit better than me. So, jump in and correct me if I’m wrong, but, when he was young, he wanted to have a mentor?

 

Richard Desich : Yes, go ahead.

 

John Carney: When he graduated and decided, this is what I want to do, I want to trade shares and be a stock market person. He just determined he was going to go and work for the guy who was doing it the best. And didn’t get the job right away. He moved from Nebraska to New York. And then he had to kind of keep beating on the door to get in. And then he was kind of given all the not so glamorous work, right? But I mean, that’s how he started. And if you don’t want to read an 800-page book, there’s the lesson in finding a mentor.

 

Richard Desich:  Finding mentors is so important. I was actually, Benjamin Graham in New York. And, but that’s absolutely right. He read the book and it was great, because Graham wrote two kind of seminal books on investing and he learned from going through “The Crash.” You know, “The Depression.” So, he took those lessons and Warren Buffett and a value investor. Hey, you know what? I want to learn from that. So, you can, I always like to try to find the more successful person that you. In whatever field you’re trying to get into. And look at real estate, there’s plenty of amazing real estate investors out there. But always look at ideas, and saying, “How can I spend a little bit of my time every day. Charlie Munger says, “I want to go to bed a little bit smarter each day.” And this idea of constantly learning proving yourself. I always think, you know, when I talk to the kids. I work The Boys & Girls Club, I talk to them. I say, the greatest investment you can make is $7.99 in a book. Then you can interact with some like Warren Buffet, or Charlie Munger, you can learn from them. Or Sam Walton, these are on Amazon. These are all amazing people, just take lessons from them. And for a very small cost, you can. You can learn from reading a book, or listening to a Podcast, or seeking out a mentor too. You can, the books allow you to access people like that. See what you normally have access to. But, people in your community, who have done real things, those lessons. I would think, you would want to, or are you where you want to be? Reaching out to them. So many people do like to give back. I think just having mentors is a really powerful thing.

 

John Carney:  Right. And so, when, you know, I have, when I went and reached out for help. I never asked someone, “Hey, will you be my mentor?” But when I was living in Australia, on a real estate development I had to ask somebody for help. I was because I wanted to get financing. I needed someone who could guarantee finance. I didn’t have any assets at the time in Australia. And you know, when I later asked him, hey, why did you help me out? He said, “Oh, you know, because you were already proven to be motivated. And I’m just paying it forward, this is how I got my start.” I find that a lot with people who are playing at the elite level of real estate. You know, that they have been in this game for their entire life and are more than happy to sit down and share their knowledge with young people. Would you say that’s accurate?

 

Richard Desich:  Absolutely, just by asking, just by picking up the phone, and asking. I think that’s a huge thing. But also you have to be respectful. I think a universal law, and you want to give before you receive, and so. You know, to the extent that you can try to provide value to that person. And maybe, it’s not, you’re going to tell them things about real estate that they might not know? But, maybe there’s something else you bring to the table. Maybe you know about marketing, and you could help them out that way. Always be looking to give. That’s another kind of universal success trait. Is just give and not necessarily give till you get something back. It’s just the way the universe works. It’s the more you put out, it does come back. So, I think that’s a you know, a combination of mentorship. But also trying to be respectful amongst where they’re at. And in their career, and if you can help them out. Or start off a relationship by a connection. Or however you can provide value to that person. I think that’s important too.

 

John Carney:  Yes, that is great advice, you know, givers gain and I suppose we’re talking about there’s going to be listeners to this show who were, who are doing it, doing their due diligence that want to get into the real estate game, you know. Meet people, who hopefully want to have a chat with them and with a trust company about putting their 401K Retirement Savings into tangible assets that they can drive by. But, they don’t know how to get started? So, a lot of getting started is taking the right action. What advice do you have based on all of your experience? And especially, working with hundreds of thousands of investors in real estate. You know, what is your number one tip that you can give to someone who is just starting out?

 

Richard Desich:  Well, that’s a great question? I feel blessed because I’ve been around so many amazing, creative, real estate investors my entire life. And they really run the gambit from every type of thing you can think of, from commercial, to mobile homes, to single family homes, to developers. I think the kind of commonality is, it’s two things. One, is to learn as much as you can. And that kind of comes back to what Warren Buffett says, “The more you learn, the more you earn.” Get as much information as you can: Podcasts, books, mentors, learn. The on the other side of the coin is? You know, take in all that education and knowledge. But, if you don’t put it into action, then it’s just a thought in your head. So, you have to execute on a plan. But if you have a good balance between those two then that’s where you get success. If you get all the knowledge and learn, make mistakes, and stand on the shoulders of people who have come before you, but also, be able to say, I’m ready to go, and pull up your sleeves and do the work and execute. So, I think those are two key points there.

 

John Carney:  I agree. You see, I think we already talked about that, we’re going to cover that. I mean, again, back to the guy, back to the kids that are out there that want to become professional athletes. Or the young adults that want to take it to the next level. It’s sort of the same thing isn’t it? I mean, you’ve got to decide that you’re dedicated to this activity and then surround yourself with the people that can teach you the skills to get started the right way.

 

Richard Desich:  Excellent. I love the title of your book, “Real Estate is a Team Sport” it really is. It is, you do need to have a team of, a great team around you. It’s very rare for something to be built that’s really great right now, really great that it was just one person. It’s almost impossible. You have to realize you job. You have to be able to fill-in the blanks with all of these great organizations. People will have to test the business and other endeavors. You have to have a great team on it. So, putting that team together and building, and then being able to execute on a plan that’s truly what it’s all about. So, it’s your knowledge and work too. Everything comes back to what LeBron said. He has a post and videos about what he does, as far as his work ethic. And he’s saying, here I am 5:00 a.m. I’m in the gym. Even though he’s the biggest star in the world, he’s out there working. If you Google, you can find him. His work out, just like an hour and a half, doing it every day. And so, there’s part of it. You know, to be successful, you have to roll-up your sleeves. And do the repetition. And do what is necessary, to win, and to succeed. You have to put the work in. And you have to enjoy it, too. If you enjoy what you’re doing, you enjoy the process, and you enjoy the people around you that you are surrounding yourself with. Then, there’s that quote that says, “That if you love what you’re doing, you’ll never work a day in your life.” And I think really what people can aspire to be that. If they are going to really inspire to that, then they’re going to be really, really, successful.

 

John Carney:  Yes, that’s fantastic advice, thanks for that. Richard, are you ready for it? For “The 2 Minute Drill?”

 

Richard Desich:  I am, absolutely.

 

John Carney:  Alright, perfect. Just so you know, perfectly goes a little bit longer than 2 minutes. But, here we go. What sport do you love playing as a kid? And what lessons did you learn?

 

Richard Desich:  I always liked soccer. I played soccer. And it’s something about the sport; it seems certain components of it. You put the training in, the commitment. And then, you go out and you win as a team, and you lose as a team. So, I always liked team sports, all of them.

 

John Carney:  Cool. What do you participate in today? What activities, or sports do you still compete in, as an adult.

 

Richard Desich:  Actually, you know, I got into running. Which I love. I’ve done The Cleveland Marathon. And I think that’s also a good, great aspirational goal. I never ran growing-up. I would encourage folks to, I never thought about, one of the great life goals. I ran a marathon before that, just to kind of do it. And I really got into running. I think it’s a great discipline, and it allows you time to think as well. When you’re putting in those miles, train up for, not necessarily for a marathon, half-marathon, or 10K, 5K, or whatever it is. I think running is just a great, you can do it anywhere. And do so much while doing it. So, I love running a race, I’m a big runner.

 

John Carney:  What’s your favorite sports or business book. You’re a big reader, so we’ll let you pull out one from each category, sports and business.

 

Richard Desich:  There’s a book about Woody Hayes, two fold, a real famous coach at Ohio State University. And you know, Woody was, he was a guy who had challenges. He wasn’t always the best temperament sometimes. But, he had a great commencement speech. Where he talked about how he might not be the smartest guy in the entire world, but no one could out work him. And he’d just worked, and it was a great work ethic. I always loved that quote, I loved that speech. And being an Ohio State guy. One of the things about Woody Hayes. Just growing-up I was just a big fan. So, such a good sports book right now.

 

John Carney:  Cool. And then you have a business book to read?

 

Richard Desich:  Yes.

 

John Carney:  If everybody listening has to go out and buy one business book to put on their shelf so when they bump into you, you guys can discuss it—what is that?

 

Richard Desich:  You know what? And this I’d tell you to do. I showed this to my nephew to keep in mind. So, my Amazon account, my Kindle Amazon app. And showed him, literally, me buying books. I’m reading all the time, and buying a couple of books a day sometimes. And I’m always learning and reading. For business, that would be a habit, read, always read. A book that I am reading right now. my favorite business book is always changing, because I’m always reading so much. But, there’s a great one coming back to, “Warren Buffett.” It’s called, “A Few Lessons For Investors and Managers.” That’s a great book that can kind of teach you some general lessons that can apply to anything that you’re doing. As far as there is directly upon real estate. Although, it’s not tactical in real estate. I think they’re good core principals. So, anything that you can read, that would be a great book. I’d say, “Made in America” which is the book I’m reading by Sam Walton, is one of my favorites. Same Walton on his deathbed wrote that book. And there’s just amazing references that you can pull out of there, great stories. I also love Jeff Bezos book on Amazon. And it talks about, it’s called, I’m drawing a blank on it? I’ll get it to you for the show notes. But, there’s a great book that Jeff Bezos was the author of. It’s one of my top 3 right now.

 

John Carney:  Alright, tell us about one come from behind victory you’ve had, in either business, or hopefully real estate? Where, you know, had a deal and everything was going right. Then a big ole’ obstacle appeared in your way. Then you got side tracked. How did you get back on track, get that victory. Anything pop into your head?

 

Richard Desich:  Yes, absolutely. Our corporate headquarters here in Westlake. John you have to come out here. You know, this is a massive project. It took several years. And was kind of my night-night job. And there’s so many moving parts. You know what it really taught me and I took this from the marathon training is that you have to understand, that certain things are their processes. You have to take your time. You’re going to have set-backs and I think if you are going to understand that there are always going to be set-backs. It’s not really a matter of if there will be, it’s how you react to them, the set-backs. So, I think if you understand patience and you get creative and you innovate, out of almost any challenge, you really have to keep things in perspective. But, yeah, it taught me so much. I learned so much from that transaction.

 

John Carney:  Cool, let me ask you this? How do you get into your flow state, or “The Zone?” Is there a practice or a ritual habit that you have that allows you to get that laser like focus on it, on a task?

 

Richard Desich:  I suggest to you and everyone out there to read on productivity as much as they can. I’ve read so many of them, learned so much. So, what I do is I chunk my day out. So, I have you know, certain parts of my day are for strategic planning. Certain parts are meetings. Certain parts are for phone calls. And so, I don’t get distracted, and I, everyone has, depending on their own psychology, and who they are 3-4 hours a day where I call them, “Magic Time.” If you can focus in on and find your magic and for me my magic time is from [10:00] to [12:00], that’s, where you allow, a lot of great thinking. And so, I schedule my day around those 2-3 hours, and focus on strategy. Then in the afternoons, I do phone calls, eating, but it’s set up that way for me to be successful. And I plan my morning, you know, I have a ritual, you know, as a wake-up. I drink down 24 ounces of water with sour vinegar, lemons, a squeeze of lemon. And that’s a ritual every morning. Then I feel hydrated, I have a clear mind, and I exercise most days. And then I get in my morning by doing certain things prior to even starting work. So, I think having a morning ritual and having what works for you. Maybe you’re a night owl and “The Magic Hours” are you know, later at night, that’s okay too. Just figure out, what your rhythms are? And work to those rhythms and work to your strength too.

 

John Carney:  Alright, one last question? What is your number one tip for winning more in the real estate game.

 

Richard Desich:  I think it comes back to that quote, “The more you learn, the more you earn.” So, the number one tip for winning more is? Just always have a sense of humility, understand that there are people who know way more than you, no matter how good you are. You can always learn something from someone. You can always give back and help them out too, if that’s from a mentorship perspective. But, always try every day, try like Charlie Munger says, “Go to bed a little bit smarter, a little bit wiser.” How ever you do that, A Podcast, a book, a mentor, helping someone else out. And you’re learning from helping them out. Anyone of those things. “Go to bed a little bit smarter, a little bit wiser.” That’s the winning tip.

 

John Carney:  That is a great tip. Go to bed, a little bit better than when you woke-up in the morning, I like it. Well, Rich, thank you for joining me today in the Locker Room. I definitely, learned a lot from this conversation, some books I’ve written down here in my notes, to jump on Amazon – www.amazon.com, and put in my “Shopping Cart” Hey, where can members of our audience who might want to contact you be able to find you online? Do you have social media accounts? Or an email address you want to share? How do people get in touch with you?

 

Richard Desich:  The best way to get in touch with me is through our company website. Which is – www.trustetc.com, and the company is – Equity Trust. And so – www.trustetc.com, it has all the information there and lots of great content—free content. Kind of our core value of our company provide lots of education and help you become successful.

 

John Carney:  So, is there a specific place on your website, if people just visit your website? We’ll have that up on the show notes, and the extras both on ITunes and the website. Is that a lot of free information to get people, you know, to have a better understanding of the opportunities, and self directed IRA.

 

Richard Desich:  Absolutely, our goal is to write tons of information so that people can become better educated on the opportunities. Then they can make a decision that’s good for them. And what we want to do is have a long term relationship with all our clients and have them do well and everyone wins.
John Carney:  Everyone’s happy, happy clients, we love them. Alright, there ya have it, folks. I truly hope you picked up some actionable advice from Mr. Desich today relating to a number of things. We talked about investing your retirement savings into real estate. You can drive by and have a look at. We talked about great books that everyone should be reading. And you know, the power of learning to earn more. So, make sure you check-out “The Post-Game Report.” on iTunes and while you’re there please subscribe to the Real Estate Locker Room Show to ensure that you never miss out on the pro tips that our guests have shared with audience. The mission here is to help you elevate your real estate game. Now, if you like what this show is all about. I’d be grateful if you would leave a nice 5-star review in iTunes so that other like-minded people in the real estate world can find us easily when they’re looking for free content to listen to when they are training for their next marathon. Please visit – www.johncarnionline.com, because there will be links, and additional content associated with today’s show posted there. And while you’re on the website feel free to drop your Email in the newsletter sign up form to receive more real estate investing insight, tips, tricks, hacks, and other great insight, great stuff, all related to plan the real estate game. Remember to stay focused, work on your goals, have fun, stay in the game. I’m your host – John Carney, and until next week. Work hard, play hard, and profit hard.

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonlie.com

Connect with John Carney
Facebook: www.facebook.com/JohnCarneyOnline
Twitter: @John_M_Carney
Instagram: @johnm_carney

JC 002: Multifamily Syndication, Teams and Giving More with Joe Fairless

March 29th, 2017 | no comments
Meet Joe Fairless; real estate investor, multifamily syndicator, philanthropist, author and host of the world’s longest running daily real estate podcast, The Best Real Estate Investing Advice Ever Show.

 

Joe started his career in advertising on Madison Avenue in New York City. He began researching real estate as a way to achieve financial independence.

In 2009 Joe began investing in single-family homes. Joe wanted to scale his real estate investment business and focused his attention on multifamily buildings and syndications as a strategy to grow bigger, faster. Now Joe controls over $85 Million in multifamily real estate.

Joe competed in baseball and football growing up and played football in college. The lesson that he learned sports that he applies to real estate every day is that when something bad happens, learn form it quickly and move on quickly.

Favorite quote, “the secret to living is giving”

Check out Joe’s book, The Best Real Estate Investing Advice Ever. Volume I

Tune in and subscribe to Joe’s podcast, Best Real Estate Investing Advice Ever Show

You can reach out to Joe directly by email to info@joefairless.com Don’t forget to mention that you heard him on John Carney’s podcast and receive your FREE APARTMENT RESOURCES GUIDE.

Thanks again Joe for taking the time to share your story with us.

POST GAME REPORT: Episode Transcript

The Real Estate Locker Room Podcast

JC 002 Multifamily Syndication, Teams and Giving More with Joe Fairless

 

Announcer:  Welcome to the, “Real Estate Locker Room Show” with John Carney. Did you know investing in real estate is a team sport? Join John and his team as they explore the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the “Real Estate Locker Room Show” we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve on-going success. Now it’s time to kick-off and level off with new place to grow your real estate business.

 

John Carney:  Hello and welcome back to the Real Estate Locker Room Show. I’m your host, John Carney, coming at you from Cleveland Ohio. Joining me today in the locker room, from Cincinnati Ohio, is Joe Fairless. Joe is a real estate investor, a podcast host, a philanthropist, and author. If you’re not familiar with Joe’s show on iTunes, it is the world’s longest running daily podcast for real estate. It’s the Best Real Estate Investing Advice Show. Joe has interviewed Barbara Corcoran, the author we all know so well in the real estate world, Robert Kiyosaki, as well as hundreds of other high profile and influential real estate investors. His podcast has over 4000 daily downloads, and 140,000 each month. And we’re up to episode #771, so check that out. Along with being a Podcast Host, Joe is also the author of, “Best Real Estate Investing Advice – Volume 1.” which we can talk about. I remember seeing that release, it blew-up Amazon. So, check out his book as well. Klout considers Joe the top 5% online influencer. Joe is an active, full-time real estate investor, who controls over $54 million in real estate at the moment. His focus is on multiple family. How are you doing Joe? Thanks for taking the time to share your experience with our audience.  

 

Joe Fairless:  My pleasure. Nice to be on the show. I know that you are a little under the weather. So, I will try to talk as much as I can. That way you don’t have to talk. I am really looking forward to our conversation.

 

John Carney:  An all-around good guy, thanks for that Joe. All right, we’re here to explore the intersection between elite sports and elite real estate investing. I like to stretch out, as with a sports related question? Who is your favorite athlete of all time? And why?

 

Joe Fairless:  Well, I’d say, the first person that comes to mind and it’s a little ridiculous, but Mickey Tettleton. He was baseball player who played for the Detroit Tigers, the Texas Rangers and probably others. He just had a funky batting stance and I just really enjoy how he approached the game a little bit differently. Because he had a batting stance where you know, you typically hold the bat upright, right before the pitcher throws. But, instead he had it just parallel to the ground. And then he would bring it upright, right before the pitch came. And what I liked about that is, it’s different. But, yet he was effective non-the-less. I think applying that in our real estate business is certainly noteworthy. Where we can approach things differently but then be just as effective, or more effective as before anyone else.

 

John Carney: I’m not familiar with this player and his batting stance, but I will look that up here shortly. You transitioned from the advertising world in New York City, to full time real estate investing. I’m interested in that journey, how people make that transition. Do you mind sharing your story about, “why real estate?”

 

Joe Fairless:  Yes. I am from Texas, where I graduated from college in 2005 from Texas Tech. as an advertising major and then went to New York City. I went from, cows and cotton, to concrete and I guess, no sun and lived in New York City for ten years. I worked on Madison Avenue after college, which is very prestigious, but it is also code for, I didn’t make any money at all because I was in a very competitive environment. I climbed the corporate ladder, became the youngest Vice President of a New York City advertisement agency and then, at the tail end of my advertising career, I started investing in real estate. The reason why is because I knew that I had to invest, I had to learn about investing, but I didn’t know quite what to do? So, I ended up reading a bunch of books, went to online forums, talked to people I knew and found real estate investment the choice that I wanted to pursue. Once I did that I started looking at what I wanted to invest in. Initially I bought single family homes and in 2009 I bought my first house. Not because I had a crystal ball, and I knew it was what the right time to buy. But, because I didn’t have any money. So, in 2009, I was very fortunate, I didn’t have any money until 2009. And once I bought in 2009, I bought my first house, $76,000.00 that rented for about $1100.00 or so. Rent is around $1200.00 now. Went for $1100.00 to $1200.00 now. I bought three more houses, and then realized that it just wasn’t happening fast enough. I would make $250.00 a month, on a house. And then a tenant would move out and I would have to pay, meaning me, would have to pay $5000.00 for move-in ready costs, the carpet, painting, and misc. fixes. There would be my profit that was going to be wiped out for a year and a half. I thought, wait a second; this isn’t going to make me financially independent. I’ve got to think of a different approach. I started studying multi-family investing, learned the process, bought a lot of books, started talking to a bunch of people. I ended up leaving my full-time job while I was still studying, multi-family investing. Well, after I left, I left because I just wasn’t digging it anymore and life is too short not to do stuff you enjoy and let it go by. Therefore, I started looking at syndication where I raise money from investors in my apartments and share in the profits. Because I couldn’t get approved for a mortgage for a house. And I couldn’t get approved for a mortgage for an apartment building. Because I didn’t have a W2 income. I was kind of forced to find creative ways to buy apartments, and that’s what I did, I wrote and learned how to raise money from investors. By getting something together, and share in the profits and now, you mentioned $54 million, it has actually increased, to $85 million, since the last buy out. So, now I control $85 million-dollars-worth of real estate. That is, apartment communities, that’s like 99% of it, apartment communities. I still have three homes but most of it is apartment communities and they are in Dallas, Fort Worth, and Houston, Texas.

 

John Carney:  Congratulations. So, you got into the single-family home game. Which is where, I don’t know? I’ve never really made this comparison before. But right now, up in Cleveland we’re in the ALS, so I’m thinking baseball right?

Yes, in order to get to the ALCS, all these guys started in Little League right? So you have to start somewhere. Would you say, the single-family home experience taught you what you needed to know to raise the bar to the next step because that’s part of the progression of being a real estate investor?

 

Joe Fairless:  Yes, I’d say it taught me what I needed to know and to learn more about it. It taught me that real estate is the way to go, for my own purposes. And it taught me that what I was doing at the time wasn’t going to be scalable and wasn’t going to help me become financially independent. I created a spreadsheet for my homes that included a home, I think it was like a home a year, 3 homes a year that I was going to buy. And over ten years it was like, oh, my god, stop the madness. Because I bought four homes, I was having a hard time keeping track of all the paperwork that’s involved with the property management, the insurance, the taxes. I was like, I do not want to scale this at all. And, I want to pause, by saying you can make money doing that approach by the way. People have and they do. I just didn’t want to set myself up with single-family homes. So, it inspired me. And gave me some perspective for what I did want to do.

 

John Carney:  Right. We both know people who have enormous single-family home portfolios. And a big key to that is, a big key to everything is management. You decided that your niche was going to move and we come across that all of the time too. You know, we are talking about sports, what athletic competition were you involved in, when you were growing-up?

 

Joe Fairless:  Well, I primarily played baseball and football. I played a little bit of football in college at a small Division III school. I primarily played baseball and football.

 

John Carney:  To be a collegian athlete, in any division, requires a certain amount of discipline. When you left the competitive sports arena of college did you see that it helped you apply what you learned through the discipline of sports and in your first job, and translate that right into real estate.

 

Joe Fairless:  I think what it taught me the most is that when something bad happens, learn from it quickly and move on quickly. That’s what so many people get caught up in. I’m on a softball team right now and I see people on my softball team and they make an error, or they strike out and when they strike out, they should kick themselves off the team… it’s soft pitch, when they pop-up, or hit a grounder…and they’re pissed off for four innings. It’s like, dude, get over it! Immediately, learn from it and get over it, immediately. Otherwise, you’re going to let that influence the rest of the game and they’re going to be compounding negative consequences. And that’s what I apply in business too. When stuff goes down, which happens weekly. Something goes wrong weekly. Sometimes daily depending on what’s happening but at least once a week. We got to learn from it quickly, and then move on.

 

John Carney:  I agree, it’s a team effort, real estate or business. And whether you’re buying apartments or selling doughnuts you need a whole team of people to help you be successful. .

 

Joe Fairless:  Yes, I read that in a book somewhere too, but I forget which book?

 

John Carney: It’s really the same.

 

Joe Fairless:  I’m kidding, it’s your book.

 

John Carney:  I know. Doughnuts—that’s what got me, I just can’t come up with the doughnuts. I just moved back to the states. Now we have a Dunkin’ Doughnuts around the corner. So, of course I had to try that. But, along the lines of what you just said is something that I learned recently. And maybe it’s something we’ll, it was the way it was phrased? “A bad decision made quickly is better than a good decision that takes a long time to plan.” And this can be applied to when you have to make a decision quickly. If you don’t have all the time in the world, make a decision and if it isn’t the best decision at that time, you still have time to adjust.

 

Joe Fairless:  Yup. I agree with that for the most part. It depends on how high the stakes are? Sometimes it takes a little bit more. But, one of my favorite books, is, “Blink” by Malcom Gladwell. He talks about how he can a split decision, an informed decision in the blink of an eye. That is just as informed as if we’d spent months, years, pondering what we would or should do? Our eyes very much embrace that philosophy for the most part.

 

John Carney:  Malcom Gladwell’s fantastic. I like all his stuff. What are you working on right now? I think you might want to share with us, I guess?

 

Joe Fairless:  I’m working on a couple of things. I mean, the three ways I make money. Because let’s start there, and then we’ll talk about a couple of projects. Three ways I make money –

 

  1. By doing multi-families syndications. Where I raise money from investors and invest and put up a little bit of my own money on the deals. And then we share in the profits. We are under-writing multiple deals. Well, more than multiple. Lots of deals right now. My business partner is in Dallas, as we speak, literally as we speak. He’s in Dallas touring properties that we’re in the final found on. And so, I’m focused on that and getting my investors prepared for the next deal.

 

  1. The second way I make money is through my Podcasts. And really, when I say make money it’s pretty much break even, depending on my staff salaries. But, it is, a way for me to provide thought leadership, to learn by interviewing people like yourself and others who are very experienced, or doing something very interesting. And just keeping my mind sharp. So, working on continuing to optimize the Podcast, and getting the word out there.

 

  1. And then the third way, I make money is through my client consulting program. I have private group of clients that I walk, hand by hand through the multi-family syndication process. It’s a major amount of my time. So, I also am working on new content to continue to keep that program refreshed. My team and I upload a new piece of content each week to the resources site that my clients have access to.

 

Those three revenue streams are what I use to guide my months, my weeks, my days. In terms of what I focus on. Those are some of the projects.

 

John Carney:  Okay. And in each project, or each income stream I would imagine has a unique team allocated to that right? So, I mean, what they’re investing in, in real estate. Where you’re providing a service, like consulting service. Or you have to surround yourself with a group of people, correct? And would you look at those teams, as one big team, or individual teams, or how do you manage that?

 

Joe Fairless:  There’s overlap, for the most part. I have my administrative assistant, Samantha and I have my content creator, who helps me with the content and thought leadership, that’s Theo. He’s a Co-Author of the book with me. And we’re writing another one right now together. He and I and she and I, all three of us, overlap on all three of those revenue streams. As far as other team members go. I have team member who finds interview guests for my podcasts, as well as does the show notes and does the promotional efforts. And I have a team member who does all the editing of the podcasts. So, those are the four team members that are on my payroll every month. And then misc. contractors. Like, someone in India, who does SEO for me through UpWork.com. And some social media company that handles social media and things like that.

 

John Carney:  Got it. And I mean today, in today’s world, stay on track with real estate. You look at it like a business, the business of real estate, and being an investor. And you want to grow and attract money, right. Because everyone runs out of money. As someone put it recently, you have your internal/external team. The external team being your professionals, like, your accountants, and your local lawyers, your internal team being like, partners, mentors, and assistants. So where do you go when you have profile. How do you fit a profile into the mix if you’re starting out as a real estate investor and you want to raise the bar, build your portfolio, in whatever niche you’re in and take it to the next level? Would you recommend that raising your profile in your community is something you ought to look into doing?

 

Joe Fairless:  Yes. Help me understand what you’re asking?

 

John Carney:  You’ve got your team, and you’ve got your businesses up and running, but you’ve also built a great profile in the industry. When it comes to people who are investing in real estate, investors who are new or wanting to scale up. I just wanted you to touch on adding to your profile. You spoke about social media management and some content creation.

 

Joe Firless:  I think the most important thing when you talk about building your profile. Or building your brand, or creating awareness for yourself and your company is to find one platform that comes natural to you, that you enjoy posting on and own that one platform. One of the mistakes people make, is try to be everything to everyone all of the time. That’s huge mistake, because any one of these platforms, Instagram, Twitter, Facebook, a blog community, YouTube, iTunes, Amazon, has millions, upon millions of people to speak to and to connect with. The mistake people make is that they want to be everywhere at once. They water down their message and don’t focus on one thing. Just focus on one thing, on one platform that you enjoy posting on. Provide thought and leadership to your audience once you define them, and you’re going to over time, build a following. That’s going to translate into the direct business results.

 

John Fairless:  That is great business advice. So, I guess that’s what carries us onto the next question that I have. If you’re a rookie real estate investor, or a newbie that might have one deal or two deals under their belt and are just thinking of doing exactly what you did in your career—and that is, they may burn out on the corporate ladder side or just need a change of pace or might be wanting a move from a warm climate to a cold climate, or visa-versa—what advice would you have for them to kick-off and get started?

 

Joe:  For someone starting out? I’d say, make sure that you know the basics of what you’re looking to do. Whether it’s a single family, or multi-family, or storage units, or office retail, industrial parking, or whatever? Learn the basics through books, and online forums. Then, once you know the basics. Identify people in your area who are doing what you want to do, reach out to him or her, or them, attend meetings. Speak to them, and get to know them. Buy them lunch, buy them dinner, buy them whatever, a book, or whatever. Add value, be very grateful and appreciative for their time in meeting them, the time they are spending with you. Be respectful of their time and go with an agenda. Have a focused conversation, make sure, if the meeting is for 30 minutes, you meet for 30 minutes. If they can stay longer, then by all means do it. But, be respectful of their time and say, “I know we scheduled for 30 minutes, are we good? Do we need to wrap this up?” Stay in touch with them. That’s probably the best way to get things going. I think 98% of the people who hear this, won’t do that. Instead they’ll read some books, do some online forums, listen to Podcasts. Then maybe reach out to one or two people at most. And not be respectful of their time, not buy them lunch. Not go in with an agenda. And that’s what happens and how the herd gets thinned. That’s how some people go to the top, some stay in the middle, some kind of float in between, and some sink to the bottom. So, I’d say fortunately you have an audience who is taking the time out of their day, to listen to this Podcast. So, I’m going to take that into consideration. In what I said earlier, I think a majority of the people listening will do that advice. But, in general the real estate investors who hear this advice, or where told this through some other channel, they won’t act on it. And it’s a shame, but it makes everyone who does that stand out, and be more successful.

 

John Carney:  Right and joining a community that’s actually not as large as people think it is. Or would you agree with that? I mean, that is also sound advice for the people that do listen to Podcasts, your Podcast, this show and the other good real estate Podcasts out there. What a great way to be in a conversation with people and learning something during that commute to work, or when you’re jogging. I quit radio probably two years ago when I was first told about Podcasts and started looking them up. The day I listened to my first Podcast I thought this is awesome! There’s more in it, and it just became a habit. So, when I moved back to the states, they were trying to sell me every subscription possible for radio. I told them I don’t listen to the radio and the guy couldn’t believe it. I listen to Podcasts, man and that’s how I continued to educate myself. Well, cool. That’s great advice Joe. Can we get into our two-minute drill here?

 

Joe Fairless:  Let’s do it!  And we’ll get to the rhythm and point of this interview.

 

John Carney:  What is your favorite sport? Or business book? That you’ve read recently?

 

Joe Fairless:  My favorite sport is, well recently, my favorite sport right now is softball.

 

John Carney:  Softball, okay, perfect, that’s a lot of fun. What about like books? Like, that might not have come up? Correct.

 

Joe Fairless:  Okay.

 

John Carney:  What is your favorite book related to either business, or for instance, sports.

 

Joe Fairless:  Okay, favorite book about business, sports, would be, “Crucial Conversations” and the whole point of the book is that they help you create a mutual purpose when the stakes are high, and opinions vary. And that’s the key, create mutual person and build up from there.  

 

John Carney:  Cool, I’m going to check that out. Is there one quote that keeps you motivated when things get tough? Like that one quote?

 

Joe Fairless:  Yeah, “The secret to living, is giving.” Another cousin of that quote is, “Help enough people get everything they want, you’ll get everything you want.”

 

John Carney:  Perfect. So, when the chips are down. Think about what you can do to give a little bit more.

 

Joe Fairless:  Yep.

 

John Carney:  Got it. Awesome. Do you have your #1 come from behind victory in real estate, and what did you learn from that?  

 

Joe Fairless:  The come from behind victory would be when my first syndication deal, it was about 2 and half weeks before we were supposed to close. We had over $200,000 worth of investor dollars go away for various reasons. And it was last minute. But, I got my one of my existing investors to go and bid what he had originally asked. And it ended up closing.

 

John Carney:  Did that translate into a happy investor at the end of the day.

 

Joe Fairless:  Yes, absolutely, certainly.

 

John Carney:  Going big. Is there any training for success? Like, your number one, maybe habit that you do on a daily basis. That would put you in a flow-state, or is it training for success habit?

 

Joe Fairless:  I have a liter of water with a scoop of wheat grass every single morning. I’ve been doing that every single morning for the last 3 years and it helps me stay healthy.

 

John Carney:  Fantastic. And then the #1 tip for winning more?

 

Joe Fairless: Would be, don’t focus on winning the score. Focus on winning the battle within how good you can be. Because the competition is in others. The competition is how good you can be within yourself.

 

John Carney:  Perfect, alright, that’s great! Well, thanks again for joining me today Joe. We want to be able to let our audience know exactly what, where they might be able to find you if they want to hook up on some social media, or carry on a conversation with you, where are you these days online?

 

Joe Fairless:  You can go to the App Store and just put my name – Joe Fairless, and you’ll find my Podcast, “The Best Real Estate Investing Advice Ever.”

 

John Carney:  And I highly recommend that all of you out there put that on your show list. So, when you’re in the car you can listen to great advice and the great guests that Joe has on his Podcast as well.

 

Joe Fairless:  I also say that if you Email me at info@joefairless.com I have a department resource guide that has all the websites and research places I go to when I’m researching markets, as well as books I wrote and recommend. So, email me at info@joefairless.com and mention that you heard me on John’s Podcast, and I’ll be happy to get that to you.

 

John Carney:  All right, perfect. So, there you have it folks. I truly hope that you picked up some actionable advice today, from Mr. Joe Fairless. Make sure to check-out this program – Post Game Report on iTunes. And while you’re there, please subscribe to the – Real Estate Locker Room Show to ensure that you never miss out on the pro tips from our guests. The mission here is to help you elevate your real estate game. If you like what this show is about, I’d be grateful if you would leave us a five star review on iTunes so that other like-minded real estate investors can find us easily. You can also visit John Carney online at www.johncarneyonline.com, for links and additional content associated with today’s show. And while you’re there please drop your Email into the newsletter sign-up form, to receive more real estate investing insight, tips and tricks, and other great stuff. Remember to stay focused on your goals, have fun, and stay in the game. I’m your host John Carney, and until next week, work hard, play hard, and profit hard. That’s a wrap Joe. Thanks again for taking some time out to share your story with us.
Joe Fairless:  Hey, I enjoyed it, thank you.

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonlie.com

Connect with John Carney
Facebook: www.facebook.com/JohnCarneyOnline
Twitter: @John_M_Carney
Instagram: @johnm_carney

JC 001: Confessions of a Deal Junkie with John Williams

March 22nd, 2017 | 1 comment

.

Learn how to become a real estate deal junkie with Phoenix, Arizona based real estate investor John Williams.

 

The Real Estate Locker Room Show with John CarneyJohn Williams doesn’t believe that you have to be the most talented guy to be successful as a real estate investor. You have to leverage the talent that you do have and work hard.

Investing in real estate is commutative and John’s advice is to learn from doing. Don’t be afraid to get you hands dirty and learn the business of fixing property from doing it.

Finding deals is hard work and requires the fine art of hustling. First, carve out a niche in your market and learn how to source off market deals.

J&J Real Estate Holdings is always looking to achieve a win, win for both buyers and sellers.

Real estate investing is not a “get rich quick” enterprise. You have to be willing to learn something new everyday and stay hungry. Cash flow is the name of the game

John started with one single family home in 2001 and has scaled to managing over 1200 tenants and multiple mobile home parks.

Grow into the investor that you want to become in a manageable level.

Having a team and a good partner is invaluable in the real estate game. John advice is to look for a partner who has the same core values, set some outrageous goals and go for it!

You must have two teams: Team 1 – The Outer Team or the licensed professionals and 2) Team 2 – The Inner Circle – all of the people who support your real estate investing business.

You have to be an early riser to get the deals and be successful. Work hard, be fair and have integrity.

John Williams / J&J Real Estate Holdings
www.jjrealestateholdings.com

The Real Estate Locker Room Show EP 001 John Williams

 

 


POST GAME REPORT: Episode Transcript

The Real Estate Locker Room Show Podcast

JC 001: Confessions of a deal junkie with John Williams

 

Announcer:  Welcome to the, “Real Estate Locker Room Show” with John Carney. Did you know investing in real estate is a team sport? Join John and his team as they explore the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the “Real Estate Locker Room Show” we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve on-going success. Now it’s time to kick-off and level off with new place to grow your real estate business.

 

John Carney: Welcome back to the Real Estate Locker Room Show.  I’m your host John Carney coming at you from Cleveland, Ohio and today on the line from Phoenix, Arizona we have joining us in the Locker Room John Williams. John Williams is one of the founders of J & J Real Estate Holdings. J & J is a Phoenix based owner operated real estate company specializing in long-term cash flow properties. They acquire and manage single-family homes, mobile home parks and apartment buildings.  Through a proven acquisition strategy and sound management, J & J locates and transforms undervalued and distressed properties into rehabilitated assets generating recurring income for its partners. J & J’s strategy is designed to succeed despite an ever-changing real estate landscape generating maximum revenues in both up and down market cycles. Managing everything in-house from acquisition to operation, J & J builds equity and generates revenues for their company and their partners.  With a proven track record of improving the communities where they invest, J & J continually increases the value of their portfolio. John Williams was born and raised in La Canada California, and he graduated from Loyola High School in Los Angeles where he played football and then at the college level he played for Cal Poly in San Luis Obispo. After graduating from Cal Poly, Johnny moved to Phoenix to work with his partner’s father, who had a pre-existing property management in real estate investment business. John learned how to manage and acquire houses, apartments, office buildings, industrial buildings and mobile home parks in the 2-1/2 years he was working there. He also witnessed just about every scenario that you could possible imagine in the property management business and, with this new found knowledge, Johnny set off on his own to get wholesaling houses and opened up one of the largest wholesaling operations in Phoenix. John has been involved in more than 1,500 sales/purchases of houses (he bought his first investment property in 2001) and has been a licensed real estate agent in Arizona for 7 years and in 2008 Johnny and Joe partnered up and they opened the door to J & J Real Estate LLC. So, John, welcome to the Real Estate Locker Room. How are you doing today?

 

John Williams: Great John. Thank you for having me. I tell you this is actually going to be an exciting show. For one, just how far you and I have come since we first met and I started. It is really exciting for me to see you come full circle and achieve the success you have and for us to both be here today swapping stories about our times.

 

John Carney: So, we can dive right into that. You know, just like before you get into any type of exercises scenario, I like to ask a stretching question just to warm up here. It is sports related of course, because we are going to explore that intersection of sports and real estate today. Who is your favorite athlete of all times?

 

John Williams: I’m going to have to say, Dick Butkus. Like myself, he was just a hard-nosed linebacker. He didn’t have the best talent, but he made the best of what he had. He wasn’t from a winning Super Bowl regime, but he took what he had. And he certainly was an unstoppable force the years that he played. I’m the kind of guy who likes people that make the most of their talents, and not those who don’t always have the most God given talent.

John Carney : Right. I mean you can’t always be the fastest strongest guy in any competition, but you can definitely work as hard as you possible can with what you have. Right?

 

John Williams: Absolutely. It is all about making the best of what you have.

 

John Carney: Sound advice. Can you tell our listeners how did you get started and why real estate? What turned you onto that?

 

John Williams: I always like to build things as a kid. Building was tangible and I could see the process from start to finish—whether it was building blocks or model kits. I knew I wanted to do something that would be hands-on but still retain that competitive nature with a team environment. Most of my friends and a lot of family members were in the brokerage business. Getting out of college I asked myself what I wanted to do and who I wanted to be? I didn’t want to trade time for dollars selling stuff for other people even though that’s a great business to be in. I just knew that I wanted to go where I thought the masses weren’t. I was fortunate enough to get an opportunity and was hired right out of college by one of my greatest mentors, “Big John.” Who moved to Phoenix to run his operation. Eventually he had a real estate company with approximately 2000 units. And just threw me into the fire, and it was trial and error, and then doing. So, it’s been a, really how I got started.

 

John Carney: You learned by doing. From some of our past conversations, I think it is great. I love the story that he had you working with the workers so that you learn the business from the ground up. Can you elaborate on that just a little bit?

 

John Williams: Yeah. You know, I tell a lot of people today that I contribute my success to those 2-1/2 to 3 years working with Big John and Ben and really learning everything from the ground up, as you say. I spent at least a day a week coming in in work clothes and working side by side with the maintenance crews, you know, turning apartments, turning mobiles. You name it, it has happened to me. From walking into an apartment that has been vacant for a month and having, I don’t know, 5,000 cockroaches fall on top of me in my hair and down my shirt. The not so pretty side to the business—I have seen it and done it. But really I needed to know all those things for me to be a better manager, owner, etc. I needed to know how many gallons of paint it took to turn an apartment. I needed to know how much time it would take these laborers and managers to do something. So, you know, I jumped right in and luckily was there the way that they kind of taught me was—you are going to learn everything about this business. And, really that is what I owe a lot of my credit to today.

 

John Carney: So when you were a young guns coming out of school, you were a linebacker playing at the college level and there is a certain amount of discipline that comes with maintaining your spot on the team. Did you tap into that—that discipline that you had growing up, playing sports, and, especially the college athlete once they put you to task in their business in Phoenix? Did you see a correlation between that sort of training—that physical and mental training and how you were able to thrive and grow a business that you have today?

 

John Williams: Yes, absolutely John. I think being in competitive sports, especially in college, but even more especially being a linebacker, it is one of those things where get a task and I turn it into a game to see how quickly, how good, I can finish the task and really just kind of be veracious out there. I would be on the field back in my glory days, which was a long, long time ago. But I find a lot of the real estate investors that I rub shoulders with are also former athletes themselves, because just have that competitive nature that really helps us thrive in this business.

 

John Carney: I think that you almost need to have that competitive edge right now, I would say, in this market. I just moved back to Cleveland as you know and everybody wants the same thing. Right? What is the brief when you talk to an investor? Does it go something like this. “I want the lowest priced property in the best area with the highest return for cash flow and capital growth.” Right?

 

John Williams: Oh yeah.

 

John Carney And so everybody wants that. And I mean it is a battlefield out there trying to get deals, at least here in Ohio.

 

John Williams: Oh I will tell you that is a dog-eat-dog world. But I will say that Maricopa County is probably one of the most cutthroat counties in the country as far as real estate. We have got some of the savviest investors. We also have probably the most sophisticated tax and data recording systems available, which also makes it the cutthroat market that it is. So, absolutely, everybody wants the best of the best of the best. In this business if you are not hustling, you are not getting the deals.

 

John Carney: So, what are a couple of good hustling tips We have some listeners out there that might be listening to the podcast, driving in their car or going for a jog and saying I want to get into this game. I am educating myself. Or they are already looking for that next deal and they have noticed that their market is now way more competitive than when they started out. What are some recent tips that you have? What are any strategies that you have come up with that are helping find those deals that your business and your investors love?

 

John Williams: I was fortunate early on to get a few good mentors that taught me the foreclosure, pre-foreclosure, distress seller and various others, including trusting salesmen. The typical investor is going to find a real estate agent, say go find me a good deal. They are going to go search online and figure out what they think is a good deal even though they may not be an investor themselves. And, really, it depends on the market you know. For example, right now, if you want to find a good deal on the MLS in Phoenix, you are really not going to find one. If you do, they are few and far between and they are being swept up by guys like me or even guys better than me who that is what they do all day long. So my advice is to really carve out a niche and that is going to be in the way you market yourself and to find these sellers off market. So, everything we do is off market direct to seller. Meaning I am not waiting for a seller to call an agent to list it to go on the MLS so I am free to serve everybody else. Most of our deals that we do are direct marketing to sellers direct. So we don’t have any competition or very little and we are able to negotiate much better that way and find the deals that make sense for us.

 

John Carney: To elaborate on that, talk about how that is sort of a win, win for everybody.

 

John Williams: It is a win, win for everybody. Going through the traditional selling of using agents, there is definitely ups and downs. But in those cases, there is a reason why the property is going to be below market value. And that is because it is either in need of repairs, the seller is in distress and needs money or there is a timeline involved. Because we are able to offer cash and that may seem pretty shaky because everybody says they are a cash buyer these days. But we offer them some other options besides just a low-ball cash offer. But in the end they are not paying real estate commissions, building cost repairs. We are not paying that either and we have a nice happy medium where we meet and able to get deals going much quicker because there are less people involved.

 

John Carney: Yes, and that is a good system that you have at J & J. Now, it didn’t evolve overnight. You touched on the fact that you had great mentors. But, let’s talk about the timeline. You went from working to your own wholesaling operations, owning your own investment shop with partners. For people starting out or just new to the business, you have to give them a timeline. When I talk to investors, people want immediate gratification. I say you can have a little bit at a time, but you have got to map out a ten-year plan and be consistent and be dedicated. So, could you shed a little bit of light on that?

 

John Williams: Yes. First of all, this is not a get rich quick business to be in. I moved here in November of 2001. So that took me almost 16 years of being in the Valley. I think I bought my very first house, which was a HUD repo, probably 60 days from moving here. So I was kind of just eager to get into it and, hopefully, had the partners that would provide the capital and I provide the knowledge, know-how (or so-called know-how as I was learning as I was going) and provide the blood, sweat and tears to get some deals done. And along the way I have learned a lot of things. You know there has been highs and lows. I have lost everything almost twice. Which really I figure was somewhat necessary. Failing to learn what you are not good at to fix it. So, yes, 16 years later I am here. We are still hungry and learning every day. And yes, it takes bumps along the way before you can really find out your niche and what you are good at and, yes, that is kind of the story there.

 

John Carney: So, what is J & J working on right now? What is the jump out of bed in the morning project that you guys have in your sights?

 

John Williams: You know, the funny thing is, my partner and I are both deal junkies and that is kind of what we live, eat and sleep is deals. So we look at everything. We are very fortunate that now we are to a point where we have a healthy base of over 1,200 tenants that we own and manage, so it gives us a little bit of flexibility to not—like in the early years, we were begging and borrowing just to pay mortgages, etc., to buy new stuff. So we have the flexibility there, but really we are looking for taxable properties. Our favorite asset class right now is mobile home parks. And that is probably just because what I started out in. My partner Joe, his father is huge in that and owns over 65 parks in Maricopa County and Pima County and Canal. And that is kind of what he was raised on and myself and we love it. We are good at it. Our team is good at it. We really just look for those and then everything else makes sense. A 150 house package came my way and, oh my God, that actually looks like it might work. So, you know, we get excited about deals when it makes sense.

 

John Carney: I understand on a basic level the mobile home park model. I am more through our family business understand multifamily apartment buildings. So that is what I am on the hunt for. But mobile home parks—it can’t be something where you wake up in the morning and say: “You know what? I think I am going to be a real estate investor. I want to buy a mobile home park”. You had mentors, but I am now hearing from more and more people about the mobile home park business. How would you get started in something like that—safely I suppose?

 

John Williams: Yes John. It is definitely not a business you want to wake up and just dive right into. There are certainly ways for people to get involved in mobile home parks right off the bat. And that is going to be your cleaner, nicer, probably age restricted parks, where really you are just buying a cap rate, not equipment. I am kind of putting a quarter in a gumball machine you are going to get out of return. Once again, we go with the masses that and we buy distressed parks, typically family parks. And these parks need work. A lot of time we become developers because we have to go in and rearrange the entire layout of the park—bathroom utilities, mixed tenants, which a lot of times half the park could be that. In our eyes, one rotten apple could spoil the whole bunch. It is really fun and no park is the same, but I can tell you that ours were just huge projects. My partner and I now still have two parks that we have never been paid a dime on because they are still in the rehab phase and some of these we have owned for 3-4 years and that is just the name of the game. We are willing to sacrifice now and not make a penny for years to know that someday that is going to be stabilized and that is going to be paying a monthly check to our mailbox no matter what.

 

John Carney: Just throwing off to cash flow.

 

John Williams: Absolutely. You know, just to go back to your question about how would somebody get started? I would suggest breaking it down to a micro level and just buying a single manufactured home. There are deals out there. One of the first videos I ever watched back in 2002 was a guy, Monty Scruggs, Deals on Wheels. You can buy homes that are in existing parks and you can basically sell those to new owners, create some paper, get a few of those, collect down payments on each, get a few of those and then get yourself an income stream. You can even go on further to buying your own lots and putting a manufactured home on it and either keep it is a rental or sell it on terms. But I would say those are two good ways to get started at the micro level and then kind of build from there. Looking back at our experience, everyone we started from was one house or one condo and then turning it for one 4-plex and selling that and moving up to an 8-plex and then a 32-plex. I just recently sold a 32-plex for a $900,000 mobile home park. So, really it is just a natural progression and once you feel like you have mastered a certain area of expertise or at least got really good at it, they you move onto the next. And you keep growing and just building your game.

 

John Carney: Sound advice. Growing into the investor that you want to be at a manageable level. Something I talk about and that comes up in just about every episode. We talk about the team and critical players, but would you say, you talk about your mentor and you have a business partner, Joe, and you guys both work well together. Would you guys say that it is the two of you working together? Can you talk a little bit about the value of partnership and shouldering the responsibility with someone who has a little bit different skill set but the same passion for the same mission.

 

John Williams: Absolutely. Having a team and a good partner is invaluable. I would not suggest anybody going out there and trying to do this on your own. While you may feel that you are making the entire pie, I can tell you that you will be left out on opportunities, as well as, who wants to be on top of the mountain by themselves. So, yes, I have had numerous partners over the years. Without really giving much thought about why we are getting into partnership with that person, just to find out whether it was eight months or a year later that it didn’t work. My advice is that you really have to look hard at the person who is going to be your partner and make sure that you both have your core values and both of your expectations are on the same page. And if you can find a partner that does work well with you, then stick with it and set some really assume crazy goals and just go for it.

 

John Carney: Absolutely. And I think that part of the experience, part of the real estate game, so to speak, is about fine-tuning your team over time and finding good partners. You have got to have them. I can’t say that anything you do in life, especially in real estate is going to work out the first time. But once you do find those people that you can build long-term relationships, my experience is that it has been golden. I always like to sit back and review any type of business relationship that didn’t go to plans. Those are lessons that you take with you and, obviously, apply as you move forward. I don’t expect it to happen, but I have got a better system personally for evaluating who you are going to be spending a lot of time with. Right?

 

John Williams: Yes. And there are two teams. The first team is going to be all your license professional vendors that you need to have in your corner to make you successful, which is your title agency, your contractors, your realtors, etc.  And then there is your inner team which is even more important and finding out what everybody’s core competency is. I can tell you right now that we have been able to develop this great relationship with people who we have done business with for years and, for example, the new partnership we have for our wholesaling business is a guy I have known for many years. You have met him John. He works and he sells properties. So, good. Partner, you take over that side of the business and we will fill this in on acquisitions. We get deals giving you sell and we are back out there looking for more deals. Strategic relationships like that really allows us to leverage our time and knowledge and really exponentially grow.

 

John Carney: That is sound advice John and thank you for pointing that out. It is combining skill sets. I have never thought of that in my notes here. You kind of have your first team, the licensed professionals, and the outer team, the second team, the inner circle. That is a great way of looking at it. I have never thought of that before. Gold! All right, let’s get into what we are calling the fourth quarter questions. What sport did you love playing as a kid and what lesson did you learn from playing that sport?

 

John Williams: My siblings and I were very fortunate that we played all the sports growing and nail it down to football, basketball and volleyball in high school and track. And then to football in college. I would say football was my favorite and the lesson I learned is I wasn’t very good when I first started and I was timid and shy and I got the crap kicked out of me a few times. The lesson there was to get the heck up and get after it. You know what, it doesn’t matter if your opponent is bigger, stronger, and faster, you can always find a way to overcome and that was part of the biggest lesson for me.

 

John Carney: Love it. What sports do you participate in today? What are you doing right now? You are not padding up and going and playing tackle football on the weekends are you?

 

John Williams: No, far from that. I am lucky if I can do much these days. I have a pretty beat up body from my years of sports. So really, I like work with a personal trainer, which has really gotten me in better shape so that I can lead a normal life. Definitely coed sports and weekend sports is out for me and I spend my time playing a little bit of golf, swimming, and I am really enjoying the outdoors more so than sports these days just because of all my former injuries.

 

John Carney: Gotcha. What is your favorite book—what book do you keep coming back to. Or have you read something recently that you are telling everybody about. What is on your shelf?

 

John Williams: I am not a huge reader. What can I say, I love pictures. I have read all the classic real estate books, Think and Grow Rich, The Richest Man in Babylon. I will tell you a few that I just recently bought and I just got into. I am pretty excited about them just because they were referred to me by some other real estate entrepreneur real estate friends of mine. One is “Secrets of the Millionaire Mind” by T.R. Becker, and that is really just kind of mastering the inner Zen as well. I like it so far. I just got into it. The second book I am reading is called “Flection” and this is basically a book for improving your systems in business and really getting a grip on your business. That is kind of what I feel, where we are today. Now it is time to look at all of our systems and strategies and team and figure out how to get us to the next level.

 

John Carney: We are all about the next level. Leveling up. So, real estate is a business where they have one or ten thousand doors. That is how I look at it and I know you look at it. Whether you are looking at entrepreneurs for motivation or athletes for motivation or anyone for motivation is there one quote that resonates with you that you look to for motivation. Especially when you get that call that the new house you just renovated is flooded. What are you thinking?

 

John Williams: I just read a quote yesterday that said something like that. Some people wait for quotes to get them motivated. The rest of us just go out and do it. I love quotes. I get a thought of the day every morning and those just get me going. One of the quotes that I would say epitomizes what we do in real estate is “Good things come to those who wait, but only things that are left by those who hustle.” [Abraham Lincoln]  Right there, you can sit back and wait to get some stuff, but only after the stuff that I left behind because I was hustling.  That motivates me because the sky’s the limit in real estate and it is just a matter of how hard you want to push yourself, how hard you want to work, how many deals you want to do, how many houses, how many properties do you want to own? You just get to go out and hustle. As much as we want or as little as we want, depending on what we are up to.

 

John Carney: So, just like playing a team sport or individual sport, I personally love the come from behind victory story. Could you share a quick one of those?

 

John Williams: Yes, this wasn’t so much as a come from behind as thinking it was going to be a disaster to turning into a huge success. In 2009 when the bottom dropped out of the market and Phoenix, the apartment market truly failed the day after. And the first 4-plex I ever bought, John, was a boarded up 4-plex in downtown Phoenix. Not a very good area, was boarded up and I bought it for $24,000, which was $6,000 per door, which was ridiculous. I am sure it was probably one of the cheapest 4-plexes I bought that year. I bought it thinking the building was great, it was so cheap, and then coming to realize you get what you pay for. We unscrewed the plywood, broke into the thing, there were no keys, it was uninhabitable and realized the cost that it would take us to get where it needed to be to rent it out. The funny part is once we got this place rented out, the type of tenants we were attracting were the worse of the worse. We were actually threatened to be killed by our tenants, which is kind of a funny story. We didn’t get hurt, and we ended up buying the next three contiguous 4-plexes, packaged them all up, put a wall around them, kicked out everybody bad and what we thought would be a quick flip we just sold this last year and we made a huge profit and exchanged that into a new mobile home park which is going to net us thousands of dollars a month. It was a great story where we thought we picked a lemon, stuck with it and it turned out to be one of our huge successes.

 

John Carney: There you go. That is a great story. Thanks for sharing that. We have to stick with it to get across the finish line. Lots of obstacles in the race. Do you have any habits or anything you do to train for success? We have talked about reading books or listening to books on tape, but is there anything that you think is important when you are running a business and you are investing in real estate to kind of check out for yourself and/or get into that flow state where you are really focused.

 

John Williams: That is one of those questions John that we could talk for hours on and what is going to help in your success. But, as far as habits go, it is the little things that you do day in and day out that is going to bring you success. And that is getting up before the competition because I don’t care who you are and where you are, there is always somebody that is getting up earlier, sending out more letters, and going house to house knocking on doors. Someone is going to be doing something bigger, better more of them than you and trying to steal your success and your deals. So, it is really the little things you do. Really, we try to be fair and try to be very interested in our team, in our co-workers and even our tenants. We want to make sure that everyone is happy, and this goes back to the more you give, the more you get back. So, really always be willing to have a vested interest in others and their success and that will come right back to you tenfold.

 

John Carney: Perfect. More great advice from John Williams—waking up early. You have to be an early riser to get the deals and get your hustle on. We have said it before, it givers gain. Be willing to give something to others and not expect immediate gratification from that. Be an all-around good guy, right Johnny.

 

John Williams: Absolutely. You have got to be a good guy. I would say integrity is the number one thing you need in this business starting out. As you know, relationships are what all this is about. If I didn’t have all of my contacts through all the years I wouldn’t be where I am. All you have in this business, especially starting out when you have nothing, is your word and integrity and that is what helps you build those relationships.

 

John Carney: Alright. Well, thanks so much John for taking the time to join me in the Locker Room today and share those gold nuggets of advice with our audience. Where can people in the audience find you to carry on the conversation online, social media, website. Where can we connect with you if there is someone interested in learning more from John Williams.

 

John Williams: We do have a website, jjrealestateholdings.com. Don’t judge us by our website. It is really not finished. But, now that you mention it, we probably should get on that and seek out some other relationships to help us with that business that we are week in. So, I would say jjrealstateholdings.com. We have a bunch of other exciting new things we are working on in building a new company with some new partners, with real sale houses and Chris Simon which we will eventually have on the website.

 

John Carney: There you have it, to connect with Johnny and J & J Real Estate, look up there website which will be listed on the show notes, iTunes and my website. There you have it folks. I truly hope you picked some actionable advice from Mr. John Williams today. Make sure to check out the post-game report on I-Tunes and while you are there, please subscribe to the Real Estate Locker Room show to insure that you never miss out on the pro tips from our guests. The mission here is to help you elevate your real estate game. If you like what this show is about, I would be grateful if you would leave a 5-star review on iTunes so that other like-minded real estate investors can find us easier. Visit johncarneyonline.com for links and additional content associated with today’s show. While you are there drop your name into our e-newsletter sign up form so you can keep in touch with us and receive more real estate investing insight, tips, tricks, hacks and other good stuff. Remember to stay focused on your goals, have fun, stay in the game. I am your host John Carney. Until next week, work hard, play hard and profit hard. Thank you.

 

Listen to all of The Real Estate Locker Room Show episodes and sign up for my FREE monthly newsletter at www.johncarneyonline.com

Connect with John Carney
Facebook: www.facebook.com/JohnCarneyOnline
Twitter: @John_M_Carney
Instagram: @johnm_carney