Chris Grenzig: The Ups and Downs of a Real Estate Business

Chris Grenzig: The Ups and Downs of a Real Estate Business

Show Video

Constructing. Your life is about much more than just building, a bank account each week, joined real estate entrepreneur, and mindset, coach Austin, Linney as he interviews, guests who are constructing, their dream lives and impacting. The world around them on a daily basis, if you're an entrepreneur or. Wanting to start a business or you just want to hear motivating, stories of how others have overcome, the odds you, are in the right place and now for your host Austin, Lennie. Alright, guys welcome to construct. Your life we've got a special guest here today Christopher, grins wig if. I said that right I apologize probably, not I'm just like 600. Its, my scariest part of the whole interview the rest of the stuffs easy, we've. Got an interesting story here man I've followed this guy on social media for a little bit we actually are meeting him the, zoom whatever you want to call it for the first time so we've never even met so like, I said on my podcast I don't I know a little bit about him I don't do much we're gonna let him tell his story on how. He went from a soccer. Coach and cold calling stocks, to, having. A massive portfolio north, of you know 300 million, dollars of multifamily assets, the. Content he puts out is fantastic, so we're gonna have a great podcast here, and welcome, to the show but Wow, tell us your story and, we'll kind of get rolling perfect, yeah thank you for having me on you, were very close on the name last. Names Grenn's aghh. I go. By Chris not Christopher but no but only only only my, mom and my, all my call me Christopher so you, can if you want but that's, all. But. Yeah my my, story and where I typically start, you. Know I'm born and raised in New York on Long Island I went to school at Hofstra, University for. College from, 2010-2014. I was, a Division one student athlete playing soccer and like. A lot of student. Athletes and kids at that age just had, no idea what. I was gonna do didn't really have a plan in place you. Know at the, probably. The, my. Mom wasn't too big. Of a fan of that let's just say. Probably. Gave her a couple extra. Gray hairs because of that so, but. Luckily enough I have some, pretty, amazing friends, hooked me up with the Division two coaching job up in Massachusetts. In. Worcester, specifically, at Assumption College and moved. Up there decided. To give that a try because I love the sport. I had coach youth soccer for, many many years and greatly, enjoyed it worked, with kids all my life so it was just kind of a natural. Segue, went. Up there for a year tried it absolutely. Loved, college. Coaching, but. There was some major flaws in it that I took. A step back from and decided to change. One the pay is absolutely atrocious unless you're at a bigger, school. That's. Full-time or eventually, you get into you. Know a professional coaching, job -. I. Really. Missed being home as. The first year I had spent the way and you. Know I was, definitely homesick. To a certain degree but it was you know family, friends everything that I knew, and loved was in New York besides, my sister she. Had moved to Florida by that point but, one to move back in three I just saw the writing on the wall that you, know if I wanted to scale, up and progress, quickly in this field I, would have to be doing youth coaching, for. A long long time and I didn't want to do that or work several jobs and. Not have to be willing to move basically anywhere, and everywhere.

In The country, when. It you know demanded, you, know to move up into bigger programs, and to you know head coaching roles and things like that so because. Of those reasons I decided to shift got. Another coaching job back, on Long Island at Queens College did, that for a year and a half and then. Also on the side instead of getting another coaching job decided. To work for a stock, brokerage company, like you mentioned I applied. For tons, of jobs I mean you know as low as you know Starbucks, and you know McDonald's and things like that because. I needed income and, for. Some reason these guys gave, me a shot so it was good but. It was brutal it was you know first, coming in it was your, first. Day they would like run you through some cold calling scenarios, and then they told you to pick up the phone and just start calling people and you. Know you learn, very quickly to get over your embarrassment and, you just start doing and it. Was great it taught me a lot. Also. Though, I knew it also wasn't, for me, the. Misalignment. Of values. Was just there it. Was very much, what. Can I make off my clients, and not what can I make my clients which I feel is not. The way it should be when you're in the investment, space and you were utilizing, other people's money or you're investing, on the behalf of other. People so for, me it just didn't sit right kind. Of came to a point where about I. Got, licensed, in January. Of 2016 which. Is. Coincidentally, when I first learned about real estate but a month. Or two into it when I got licensed, my aunt called me and said hey you, know I know you just got licensed would it be helpful I transferred, my like retirement, account over to you and I. Knew right away the answer was no because. I didn't, trust that my company. Would. Allow. Me to do the things that I thought would be smart for her and, her. Retirement and once. That hit I was like okay that's it like I knew this was it but, this was the you know the final nail so. Luckily. At that time as I mentioned January. Of 2016, I got licensed, and that was also when. My. Mom my cousin bought a flipping course they.

Dragged, Me along to the weekend immersion, seminar, and, that was my first. Introduction as a real estate the, example I always give was, I used to think asbestos, was a type of mold and so. I literally knew nothing I had, rented a house my senior year of college and I, grew up living in a house that. Was my total exposure so it. Was the next couple months nights, and weekends, really. Learning, as much as I could as quick as I could you. Know through. Podcasts. Videos the you know the course that we had bought as well as leaning on my mom and my cousin who were both agents, and had done some other stuff so quick. Learning curve and then for, the next several months just failed to flip a single home in the Long Island area you, know we tried. For you, know several months and just, really couldn't put anything together, it, was, two major reasons. One. Larger, than the other the, first reason, is the, course. We used was based on quick. Calculations. For renovation dollars by square, footage and it. Probably, worked great for most parts of the country high. Cost of living areas, wasn't. Really suited for that however. I, say. You know that's not really the major excuse, the. Major reason. Or I should say reason not excuse it's an excuse really but the major reason was just a lack of execution you know we only did it for several months we, could have easily taken, those systems, and applied. It to, you. Know our area learned. All the new pricing, learned all the new strategies, and changed it around. However, we decided, to instead of trying to make it work on our own find, buddy find, somebody, with a little bit more experience, and partner. With them so we ended up lending money to a. Decently. Experienced, flipper in Pennsylvania. And his. Cousin, ended, up being John. Cohen who's one of the owners for the company I worked for now, so. Met John, they. Were gonna teach us how to buy. Properties. At auction, that were taxed he's down in Philadelphia because we thought that would be interesting, you know buying homes, for pennies, on the dollars flip them and you know you got him in a really good area my. Cousin and I drove down, drove. 50 60 70 houses quickly realized, wasn't, for us it, was just super rough it, was gonna take a ton of time you know it's two and a half three hour drive each way or.

You'd Have to stay over he. Was already working two jobs he, was about to have his first kid or I just had his first kid my. Mom had no desire to drive back and forth so I knew was gonna fall on me and I was just like this isn't gonna work out so came. Back and. Kind. Of regroup, sorry. Okay. And. Was. Sin down with John and he was raising money for this little 8 unit in Covington, Kentucky and, we just started hearing about multifamily, so we thought it was really interesting and. Decided. To do the same thing as we did with the flip invest, passively, and just, pick his brain so started, jumping. On phone calls getting, coffee you know once a week every other week for like a month or two and just very quickly realized, that had. A lot seen values really good synergies, you, know just got on really well and asked. Him if you know he'd be interested in you know letting, us be. A part of the general. Partnership or joint venture on a deal and you. Know take some of the workload off his plate he said sure so we ended up buying another 17, units in the same area, instead. Of being a passive investor we were on the general, partnership, for those and then. We also joined. Mentored on that 82 unit deal down, in Jacksonville Florida, and. Then while we were doing that 17, unit I, was. Still working as a stockbroker and absolutely, hated it and was. Ready to quit with nothing else lined up I'd stayed on like an extra two three months. Just to try to find something, else I can do so while I'm doing all this I'm trying to find new jobs as well and. Just. As luck would have it sitting. Down with John one day by myself and as. We. Were talking just telling, him more about what I'm doing and how I'm thinking acquitting, a name. Popped up and he had actually worked for the same people I was working for about five six years prior so. He got it and just, as we were talking he just said hey look. Why. Don't you come work for me and my partner it's probably, a little too early for us but we'll bring you on as like a trial period you know we'll pay you a little bit but, at least it you know worst case scenario you get a little more experience you make a little bit money you, get out of your job you can throw it on your resume and we'll see what happens and I said sure so sat, down with John and his partner Don, and. Decided. To move over full-time in August, 2016, and. I've been there ever since so we're coming up on almost, four years now and. You. Know it's funny and I'd love to meet you partner one day because, in. Our businesses, that, we have the three or four businesses, that we have the, fourth one is about to launch a lot. Of those businesses are too early in the process as, well to bring on the talent but what I realized, is that in order for us to scale in. Order for me to make. Sure that I'm in the role that I need to be in I had to bring on people like. Earlier, than I thought because you. Know I read a book and it's like dude when you find the talent like you got to grab him and you got to hold on to him so I would, imagine. That's. Crazy, that y'all never met you worked at the same company cuz, that's the synergy to that like he knew exactly how you were feeling he's like I'm gonna give this this. Guy a shot and then here we are now and, you, know y'all are crushing it and but, I would imagine like, in. The, process like my, two questions are how, did you have money to invest in deals, with. It from your job the second question is is like. Everybody. Always ask me all the time like how did you make that decision that like, you. Know there's a lot of people that would've stayed at the coaching job there's, a lot of people that would have stayed, as a stockbroker job, right, how. Did you say like how, did you burn the boats and say like I don't know where this is gonna go mm-hmm. But I'm. Gonna sure give it a shot because I'm that type of guy to like. I'm just gonna go, for in like I just got laid off like, a month ago and like for the first time in my life at 38 years old I'm betting on myself and. It, feels, amazing. I mean it's really hard to describe we. Have like minus-. Ever, knew right now but it's, like you know say like the Airbnb world, is like literally. Destroyed, but you know like that's okay though and so like I guess that's where I want to go with cuz there's a lot about mindset like.

Denial, Stuff like that and we'll talk about real estate too but my. Boss I think I think, those early years are interesting and as you were talking I kept moving, where, I was gonna start the timeline further and further back I think, one thing that I do. That. I like, is. Oftentimes. Not always because I get, lazy and I procrastinate but, often times when I make, decisions and bigger decisions, I try. To think about what Chris in one, year two years five years now would. Look back on and say hey I'm happy I did that hey I'm happy you know I made that decision and I. Try to reverse-engineer what that would be so the first time I ever really saw that play out was. My going into my senior year of college. I wasn't. You know I wasn't like us who you know I had a little bit of scholarship money for playing, but. I wasn't like a you. Know a big recruit, you know I barely played my first years I played a little bit my junior year and you. Know right you know if you're not playing by then you're not going pro you're not really doing anything so. I kind of saw the writing on the walls like yeah this is it like it's. You know you've. Been sitting on the bench for, basically, three years now you're. Gonna do something about it or not so that summer, me, and a few my buddies we, rented a house we did a year-long lease so instead of going home for the summer I said mom, dad I love you I'll still see you but I'm, staying here for the summer and I'm just training like that's it so I spent, that whole summer three. Days eating, super clean barely, drank you know maybe a couple. Times at summer and you, know when, we were at school you know we've drink several times a week so it was like a dress that cut back and. Just. Trained. A ton and. At. The time you know I dropped like 10 pounds over the summer which. Doesn't sound like a lot but when you're already and act like we had to run three miles in 17 30, minutes so like already. A pretty, decent. Athlete that's, a you know a good amount of weight to shed and it. Was like came. Into that preseason and just a lot. Of different benchmarks, I just jumped, up significantly. From other people and. Like that here you know I didn't become a bonafide starter, but I think I started like half or three-quarters of the games played in almost every single one so, it. Was if, I had done that earlier I think it would have led to more, but, it was like okay it was like put. Your head to the grindstone for two, three months and let's. See what happens and the. Results were just very visceral. So. Once I saw that that, was like leading to that process, of like okay what are we gonna do now slowly. But surely everyday so that we'll see the effects in the long term and that's kind of how, I was saying like that's how I started, to think about things like okay let's do it in the future let's. Think about going forward so when you asked how did you make that decision to leave the coaching job it. Was. I took. A long hard look and said okay if I want to be in this, coaching world here's. What I've got to do cuz I was making. $5,000. A year as. That's the coaching, job I got I got free I got free housing on as, well but I, fuckin, with me right no, no I promise you I'll show you my, tax returns for the first years out of college I was below the poverty line oh shit, promise. You I swear to you my mom couldn't believe it I would follow my taxes oh do you what is it you, got it you, got a human meat what is that a month I don't. Know what's five thousand five. Hundred. Bucks so that's, my. Point so but, it's considered a part-time role so I took on a part-time role, knowing. That, I would have to go get other jobs so like I didn't make five thousand dollars for year I think I made like 20. Or 25 or something like that on, paper and. But. That's because I coached youth soccer I did, tournaments, you know over the summer as a coach they do a ton of like camps. And stuff for college kids and you get paid pretty well there so you, can make good money as a college coach but.

You Know your work and tons. Of out you're gonna work 40 plus hours and you're gonna work seven days a week and you're, gonna work during the, quote-unquote best times a year so summer forget, about it your tournaments, and camps and stuff like that you, know your time off is really kind of like the winters. And, then, you know fall in spring you're working seven days a week as well you know Saturdays, and Sundays your youth coaching or you, know you've got games for college so I saw. That I was like I'm gonna work, more. Than a lot of jobs I'm gonna make next to nothing now unless I like start. My own camp or you know do these different things which I thought about but. I said like I want, to go back to New York but. Ultimately. I want to be the head coach of a program like that was if this is what I'm doing that's what I want to do I don't want to be an assistant you. Know I wanted to you know build a program find, somewhere like then build a program that was like if I'm gonna do this that's what I want but. I was like I also want to be in New York and I. Thought about there's like there's like less. Than ten I think, there's like five, or six Division, one schools and there's like another five or six Division two I was, like I wanted to do be Division one if I could but I would do Division two just because the. Rules and you know the money and you know the size of the programs and things like that and I. Was like you. Know it's hard enough to, scale up to that. Role anywhere. In the country itself, quickly but, now I'm gonna constrain myself to you, know one percent of the. Total schools in the country, I, just. Said you know for me, living. Where I wanted to live was more important, than that, job. So. I just kind of said look I can. Do this but I don't want to move down to Florida I don't want to move to West Virginia I don't want to move to Louisiana, to. Go into these schools because I'm not gonna you, know Wooster, is a nice little. City like it's a mini kind, of I don't say mini. Brooklyn I'll say kind of like. It's a nice little city like it's got cool stuff it's, got you know the the bars the coffee shops and everything like it's. A nice little it's like a it's a mini Boston let's say that and it's. Close to Boston's, close to New York it wasn't too far from home, I was like you. Know if I'm gonna move somewhere else in the country it's definitely, not going to be as good. As this. So I just kind of saw the writing on the wall and I just took a step back and I said you've. Got to understand, what this means for. You in the future and does it fit with what you want and ultimately. Being. Back in New York close to my family and friends was more important, than that. Future. Job outlook basically, mm-hmm it's. When. You said it earlier you're certainly not bench for three years what I was thinking about the whole time was, metaphorically. Not, only were you sitting on the bench for your soccer team you were sitting on the bench for life yeah. You know and you weren't you, weren't fully in. You, know and, as. You're talking the whole time all I'm thinking about is that that, Chris is going out to construct his life with multifamily, investing, so. In 10-15. Years you can go coach for the next 20 years of your life that's I literally feel and I'm not saying you never, I've never thought, of doing, that I think. That I think it's that that, thought honestly never occurred to me but it's actually interesting I I think, I enjoy this too much now that, I wouldn't, go back to coaching if it was your kid you, would give I could see I could I could definitely see coach might you know my kids in the future for sure whether it's you, know whether I'm financially. Free or not you know I would think that's something I would make the time for regardless, and then it would be pure passion and not just. You know like oh I got to do this right no but it's a good point right if it's something you really really. Enjoy there's other aspects, of it too that you know I wasn't, I played soccer I loved it I played every much yeah. Yeah I love the game but coaching, I mean you you've got some really high I. Respected I respected, those guys cuz those dudes grind like. It's. Interesting I'd never actually thought of that so I'm definitely over, the next several.

Years Maybe, a couple decades that's. Now gonna start percolating, in the back of our mind of like hey get set up and you just you. Know if you want to coach a program you can that's interesting yeah I mean it's it's. Something that just feels right in my heart right now and I'm not saying it'll ever happen but it's interesting thought you, know one of the things that turned me on to and, we'll start continuing, with the story of your. Company the. The thing that was like holy crap when I saw it was you know and I don't call me because I don't hundred percent remember did, you say that you company walked away from a, 50,000. Or $500,000. Earnest. Money one time that. Was like me how. Much 500. That. Was like the holy what, F like. Cuz a lot of people would have kept going forward so, yes, so, we. We run her country so about, two what happened was about two and a half years ago prior. To that, our. Acquisition. Criteria. Its. Things notice to back when we first bought, deals and this was like the tail end of when I came in so this was like late 2015, early 2016. Jonathan. Started the company they. We bought three deals in the Carolinas, with ten and twelve year debt and that was, like the plan we love the Caroline's whatever but, cap rates just came down crazy so what. We said was we're, gonna go a little bit more opportunistic, and we're gonna buy. Basically. Any good deal in a decent market that. Has, really good risk, adjusted returns in our opinion for that area, anywhere. On the East Coast except you. Know take east side of the country excuse me so split the country in half except for like the, Far North Texas. And the Northeast because we're so kind of like a circle, of like you, know Florida, Georgia, Alabama, Louisiana. Tennessee. Up you know into the Midwest, of like Indiana, and Kansas, and stuff like that and then, come across like Pennsylvania, and down and. We. Did you know we bought the O's in Mobile we bought deals in Jackson, Mississippi we, did a ground up in Clarksville, Tennessee. Where. Else did we do we did it you know we started doing deals in Florida, so. We got and we had deals in the Carolinas, and just, would start happening was we just started getting too spread out and as. We, start having these conversations of, like hey I don't think we can continue to do this like we. Don't have enough scale, yet to be in these many areas we. Went. Under contract for these two properties down in Montgomery Alabama. What. We thought were very good deals at the time just continued to get worse and worse and worse as we went through due. Diligence, and then as our money went hard and through, closing and. One. Of the reasons, we decided to do it was, Don. And a couple close of his friend. Had, a. Good, chunk of change in 1031, money they were going to put into those deals and what. Happened was right as that happened, we. Were saying hey like we, had bought her second deal in Jacksonville, Florida we. Had bought our first deal in Columbus Ohio he said we're gonna focus, on those. Two areas, and surrounding, markets so we only focus on five cities in the Midwest some people don't consider the Midwest and North and Central Florida, and what.

Happened Was we had, four. At the time we only bought three deals. Come up in. Florida. That, we loved that we just fell in love with two, of them were three of them were managed by our property manager already one. Was another one we were going under contract, on and, these. Deals and Alabama just kept, getting worse and worse and we, just kind of looked at ourselves and, said, you. Know why, are we even buying these and we, basically just did a cost analysis and said is, it. Better to give up the 500,000 and buy these or. Is it better to close on these and try to raise extra, you know maybe we can't do all four maybe we can only do two, you, know like the two smaller ones or whatever cuz it was a lot of money I mean it was, yeah. It was like it's a lot of effort money yeah, those, those, four deals were like, sixty, million and more so, it was like 20 million in equity at the time it. Ended up only being like 15. Because we we dropped out of one and. I think the. 1031. Money was like 40% of that and. We just just you know they ultimately, sided and not me I don't wanna say we it's not like it was my money at the time, or. Ever, but. They said yeah we're just gonna walk these deals aren't where we want to be going forward we, want to be in these two areas we don't want to be in Montgomery, the, deals aren't what we thought they were gonna be and you, know we're just gonna strategically, decide to lose. That and go. Buy these and you know we'll recover over the next five years what. Is it what is it like to be I, mean, I lost a bunch of money last year for the first time in real estate and you know whatever, it's. Not nothing five hundred thousand but 25. Grand something like that but. What. Is it like to be in those conversations to, have the discipline. To. See, the bigger picture because. I really, don't think there's. A lot of people that would walk away from 500 grand I mean knows so. It's a little tough for me because I'm not a partner. Editorial. So I didn't lose five hundred thousand dollars but. I did lose out on you. Know income, because I get you, know I get paid both a small base salary and Commission for, when, we buy deals and when we sell deals assuming, when we sell we make money and, the company makes money. So. You, know I didn't, really get hurt besides you, know not, closing on all six deals we only closed on three, of the six because we walked. On those two and walked on the one in Florida. But. Watching it I mean yeah it's it's, tough I mean you're, talking about losing. A significant, chunk of change on, the. Idea. That hey, this is just the this is just the right call like this is the right thing to do, no.

It's Definitely hard I can speak a little bit better to. When. After we bought that 82 unit deal in Jacksonville, Florida which was. Not a Toro deal it was a general partnership deal we were actually going to buy another 86, unit in Jacksonville. As well that. I was going to be a part of the general partnership, of that we walked on right. Before due diligence. We. Didn't lose our deposit but, you know people. Don't realize just because you don't lose your deposit doesn't, mean you don't lose money we lost about between. The four of us or five of us I think again like 30. 35 grand. Or something like that between legal accounting, travel, lender. Etc. And. That you know it's not easy to walk away from deal and it's even, tougher now because that deal crushed. It after we walked because we know the person who bought it our managers. Managing inform and they were thinking, about selling it prior to this but we. Looked at we got a hold of the financials, when they were thinking about selling it and I, mean their cash falling like a motherfucker, like it's. Crazy so I. Can, talk more to that but yeah I mean for five I mean it was. It's. The same conversation it's just you, know what. What resources do, you have so, if you don't have you know several million dollars five, hundred thousand dollars sounds like a lot but. It yeah it's not easy it's. Really. Just what do you value more, you, know do you value. Closing. A deal on not losing money and maybe not making the best decision, or do. You take a step back and say yeah this is gonna hurt today but. We, can survive it and this. Is the right decision not only for, our. Own money but, for, other, people's money as well that we're raising so. Yeah. I mean that was an, interesting period to be a part of it, definitely. Hurt our. Ability. To do, as much business as we could in the short term because obviously ton of lost revenue.

But. You know we're still here we're still kicking so this, house is thousand, percent and one of my things is I as I venture into the multifamily, space for, myself and hang. Out with a lot of multi-family, guys I just like hanging out with the the bigger mindset, and the bigger vision. One. Of the things I can't stand in the multi-family space is that. You know they they might own a percentage of a percentage of, a percentage of, a deal and then they walk around and tell everybody they got 4,000, units and they're. Not making. Shit and so and then, you have people like Tyler, Chester who owns a 50 unit by himself like that's way better than probably your thousand units that you own a percent so like I get. Sick of people like putting, numbers on things and like I think goals are like, kind of for somebody else like intentional. Likewise like when you walk into a deal like you know. Like, it matters like how much money you're actually making right, not just to purchase, the unit right to say you have so you bought an eighty-two unit right and as a company I would, imagine the discipline, on the numbers you, know there's a lot of egos flying around there's a lot of emotions, but, ultimately, it just comes down to what the deal looks like right when you're when you're buying a any. Any unit a single-family and multi-family or, any commercial space yeah. I think, you. Made two really good points and I'll, extrapolate. More on the decision, making for that 86 unit because I think it'll be interesting but, yeah. I mean with, you know online presence, and stuff you know people. Can easily boast, it's you know it's not what. You say it's how you say it right so. For. Me I, do. Like. To put out what, the company has purchased, and done on both $1. And a unit count because. It's, my experience. I don't talk, about 10. Unit properties much because I have very little experience than that I can take. Some from what I know and put it in I don't talk about flips I don't talk about wholesaling like I stay in my lane and that's hey, here's what happens. On you. Know 60 80 hundred, 300 unit properties, and you can take that information and. Do. With it what you can and you know a lot of it is transferable, to other things. Smaller. Multifamily more mobile home parks more self, storage not as much but, you know this syndication, side of it you know you could do that for anything, you can do it you know raising money from people you can do it for, multifamily. I need sort of real estate new, for business you can do it for an idea, you. Know you can take all that stuff and apply it to other things so, it's. Very easy to. Hyper. Inflate, what you've actually done, and. It's. Very. Also, very hard to. Portray. The, full story of people. Because. You're looking at you know when, you're on social, media, or you're on the internet and you're looking at somebody you know unless you spend hours listening to them talk unless. You really take the time to dig in you're, getting a snapshot of. Their. Life and how they portray it and you're, gonna make your own assumptions, based on what they put on paper or in, a video and, you're. Ultimately gonna be wrong like nobody knows me as much, as I do, online. Stuff and things like that and same, thing for you so you. Know ultimately you just got to take what. People put out there with a grain of salt and just. Extrapolate. What you think is important from it and take on board what you think is important and don't you. Know. Don't. Get too hyped up by what people are saying they're doing and actually doing and things like that because at the end of the day. You. Know there's, gonna be a lot of people that have been on paper doing really really well and, they're gonna get caught up in something they weren't supposed to be doing so you. Know we heard about. You. Know somebody that thought they were gonna have to sell two deals because they, had a margin call for stocks I don't. Know if it was legal or illegal but, still, not a good situation happy and had happened to my friend yes. So he'd. A liquidate, like half of his assets yeah. Those things happen right you over leverage shit, hits the fan and that's. What happens. But. You also were asking, about, you. Know the, the mindset, of like buying a deal and you know as things come up you, know. Every. Deal. Basically.

When You're looking at a deal. You're. Trying to do everything in your power to, find a reason not to buy it at least that's how we look at it it's I get a deal why shouldn't I buy this and if I can't find any good reason not to buy it I'm, probably going to buy it, we. Kind of work in humor it's not why should I, it's why shouldn't, I. Too, many people I think focus on why should I and they tend to you. Know push, here and push there and once you push in several different areas well, now the whole thing's a little bit higher than. What maybe it actually should be or you would feel comfortable doing so we. Try to beat it down moreso, than, anything, else sorry. But. Yeah when we were under contract on that, 86. Unit property it, was a, really, interesting opportunity it, was a guy that had bought. It out of receivership he, had gotten, it occupied. It was 100% vacant, spent ton of money got it occupied and, tenants. Had moved in for about like. Nine. To twelve months it was like coming up on that renewal period for the first tenants and we. Had a big problem getting. Information on the actual leases from the current owner so we couldn't verify a lot of people's credit we couldn't verify a lot of people's income and. It. We just didn't feel comfortable with. What was going on so. The conversation. We started having was, okay. Here's. The deal with what the information we were being told and every. Deal has a certain amount of risk and a certain mountain return the, return hasn't. Really changed but. Now the risk has gotten higher because if we go in and we find out, every. Single tenant has a credit score of 200. And you. Know instead of a 3x, multiple, on their, rent to income ratio it's a two. And a half or two that's. Just extra, risk involved, with the deal do. We think it's worth it so we started running scenarios. Of what would happen if occupancy. Dropped and things like that and. It. Was I, mean we went right up until you know the 24th, hour before. Money went hard of what we were gonna do and, ultimately. We just said this. Isn't worth it because we. Were. Still newer at the time you. Know this was within the first year that I'd move to Toro. You. Know we didn't do you, know millions and millions of dollars worth of deals and we said you. Know this is something that's staring, us in the face that, could. Easily burn us and we're. Taking. An extra risk without you, know additional upside, so we just said not screw were out you. Know we. Think this is we think this is probably still a good deal so if I had the money I would have still bought it myself because, I was. Pretty confident, that even, if in the short term there was a problem we, would have done fine in the long term but. It's a different beast, altogether when, you have money. From other investors, and other, people involved in the deal so we. Decide to walk like I said I think we lost like 20. 30 40 grand or so I'm like that for costs I forget and. Yes. Somebody else bought it our. Manager, and Jacksonville manages it and they've, crushed it and that's a deal we could have made a ton of money on and didn't. Lost money so one. Of the one, of the guys I follow that, I really, enjoy his name is Aaron Wagner he's a big commercial developer, in Utah private. Equity fund the whole thing he. Said that he went out and. He interviewed all. The rich families, in America, like the Rockefellers all and, one. Of the greatest things I heard was the only family in the fourth generation that, was still making money was the Rockefellers, and, he, asked the grandson, you know what did your granddad tell you that. You. Know that that y'all, keep making money and he says to sell early and keep. Momentum like. And. I thought that was the greatest thing because I think momentum, and just like making the right choices and not getting yourself in this like massive hole and over-leveraged. You. Know everybody wants to get to where they're going so fast it's like if you just build on small wins right and like then. Then, I, think momentum is a secret, weapon and unlike. Ability, I think to do a deal with somebody and it's it's it's a good deal and you feel good like I just want to do business with people that I enjoy, and, my, mentors are doing. Massive stuff and they're crazy but they're so fun to hang out with and and I. Think people don't talk about that enough and when, you take a 35, grand loss yeah, it could really dial, you down but. Also there's probably a part of you that feels great. That you feel, like you've made a decision and, it's. Not about the money right like when you make a decision it's a it's a business decision and, you're, strapped, elating emotion out of it and when you can get to that point I would imagine that, it, was the launching pad to how y'all gained so many units in such a short period of time.

So. - to. A certain, degree yes to a certain degree no because. That was on the side and it wasn't part, of Toro you. Know I really, don't talk about it much to be perfectly honest I sometimes. Forget we didn't even do the property. Until. Until, until he started talking about selling I was like I forgot. Look. And then the funny thing is when, they started talking about selling we're like wow they're gonna sell for that much man we went back more like where did we even have that under contract we went back and I swear to god I just wanted to go home and cry like. I think. It was something like we had under contract for like 55, ad or the seller ended up buying it for like 57 50 I mean the the new buyer Nana buying it higher like 57 58 and they, were one like high eighties to sell it in like two and a half years and you're just like God. Now. Keep in mind you're not all in for that 57, yeah oh and in the 60s because cAPX. Closing, costs fees etc, but. Still like god damn. It we, could have had 280. Unit, properties in Jax well that would have just absolutely crushed it we just sold the 82 unit and you. Know we absolutely crushed I mean we had a you, know two and a half years it's like a, 22. IRR net to investors, you know the all the journal partners made really good money so, fair everyone's, gonna walk away with that you know very happy, and. That would have just been a like-for-like deal, who. Knows we would have sold it obviously you, know it was six months later so. We may have not have been in a position to sell who. Knows right in my head it went, exactly the same and I would have made, double the money but sure. But. Yeah I think it was just uh you know we cared about a reputation, and I'm not gonna sit here and say we didn't talk about like hey if we walk from Andy lose money we. Can tell people that and people will respect us like yeah that's you know like let's call spade a spade like, that's part, of the emotional, side to you like hey how can we turn this into a positive as well like. I'm not gonna say to me like oh you know we're just Saints, like we do everything for other people like we do for selfish reasons too. So. Like more. I respect, you even more for saying it because it's yeah but I mean like go. Back to the social stuff like come, on if you're sitting on the other side and you're listening to this and you're not thinking wow that motherfucker, didn't do it for selfish reasons to market, himself come. On like you, know I'm, not gonna try to bullshit, it what's clearly obvious but that was only part of the decision like I didn't I didn't lose money just so I can have the marketing for it like yeah I didn't but I didn't lose thirty thousand dollars a week 120. Off of it nobody in, sight but here's what you did, and here's I'm gonna slide into coaching mode for a second sure go for it here's what you did is that, you decided, to how you were gonna perceive it and that's. The fucking game changer, when you when, you make a choice because life is a choice when. You make a choice on how you're gonna perceive it dude, of course you didn't say hey, let's go lose 40 K and we can mark it off of that that, that's to be the dumbest marketing plan on them I'm not a marketing agent and I would go no I don't think that's great yeah, but, instead of playing the victim and calling. In bed you. Said no how we can how can we flip this and and then we'll be better for it and by. The way my. Rule about two years ago was I only hang out with people from New York I fucking love it I mean they, just I, can't. Stand all the tippy-toe BS I can't stand it because, I miss. You too I don't have time of that I don't have time for that shit I'm so busy like I don't have time for that I'm trying to get to my goals and all, that stuff what's, something as I'm interviewing, you something, that strikes me interesting, because I'm not this way I'm very, high-energy I'm, crazy. Like literally, I'll probably have like a hundred businesses, when this is over I just love building businesses, and hiring people and leading, people you're.

Very Cerebral, but. I can tell, there's. There's, a there's, a there's, a fire dean down inside, so do, you show that a lot are you pretty disciplined, in your daily routine. Do you get excited a lot or you kind of like you kind of let your results, what, I'm trying to do is I'm trying to be more like you when, I let my results, speak for me instead of my mouth which my mouth talks a lot you know I think, and, I. Hope, I'm interpreting it right because cerebal, is not a word Heusen. I'm not a walking dictionary but you. Know I'm definitely more of a laid-back person, I'm not like a super. I'm not going to be in your face jumping, and screaming I'm, not the biggest extrovert, in the world I'm definitely more. Introverted, like I know, for sure I've been cooped up alone for 200 1/2 months I'm probably doing better than most people on my own like I'm, okay with that I'm okay with myself I'm, okay with who I am and what I think and do I'm definitely, a you, know actions, speak louder than words and yeah. You may jump and scream today but you know we'll see what happens in six twelve months, or six and twelve years. You. Know I am trying to. Be. More outspoken about. Things. You. Know I know and, I, know can help other people like, I try, very hard not to like step. Outside my Lane you. Know like when you know just even even when we were talking about the Montgomery deals its I, wasn't. A hundred percent comfortable talking about it because it's it's not my money like it's not it wasn't my decision but. I was there so I can share a little bit. So. I really try to just like stick to what I know and you know as you know I'm still young - I'm only 28 I've only been known this for years give or take in the first year and a half I probably suck, royally. At my job I know the first six months I definitely did so you. Know I try. To just keep that in context, but yeah I'm definitely not a you know jump and shout in your face but, you're comfortable, with, sucking, because, you know that you'll put in the work to get higher. Right, and yeah, and I just know over time it's gonna pay out thousand. Percent and, like my mentor oh he says my favorite line is make, sure that your video matches, your audio and. I mean, it's the truth I mean there are a lot of people out there doing deals that I know that, are doing you know 600, million a year and you've never even heard of them like, because they don't need to talk and, you. Know for me what I've done is as I got older and worked on myself and done interesting. Deep, deep. Nasty, work I I was homeless. I had a drug addiction alcoholism. For. 25 years I just got so I've been sober for a year and four months I lost. 50 pounds you know all these things right, I. Think. You're of the same with, me there's limiting beliefs on your message but. Then you I think when you switch it and you say like it's not about me like I'm just trying to help like anybody, I think that the freedom of the art expression, can you. Know go a little. You. Know but you can't control it like just let it be what it is right yeah. I think I, think, it would change for me is I had always thought about doing more and, being. Out there more and in front of people and speaking for years you know ever since I really, got into it and as social media kind of rose and podcasting. Rose and all that stuff. Would, help me back for a long time was it, it's, like the imposter, syndrome that a lot of people talk about still have it today I feel like why, the hell does anybody even listen to me. 20, year old kid that works a job basically. But. I started realizing that. What. Really started hitting me my. Dad. Is very. Intelligent. Picks, things up quick and is, very good at researching and finding things out and.

Not. To say that my mom wasn't but he had not been involved in any of the real estate stuff so he really had very, little. Knowledge and how it worked, my mom had more knowledge but, the the contrast, that really hit me was when I was able to start having. Conversations with him and teaching. Him things I was. Like okay like. I have. The ability to actually communicate. And, teach things to other people even though I don't feel like I even fully, know what I'm doing and it. Was just that ability of like yeah maybe I'm at level. Two of a hundred or two of a thousand, but, there's somebody that's at level one or if I'm at five of ten there's somebody that's at level three and if I can help. Them get up to you know my level even though I've got so many more to go you. Know that's worth in my book and you know it's just gonna help them. Along the way the. Other part too that you know the other selfish aspect, of it is. You've, got to know what the hell you're talking about to be able to teach other people so. It helps me shore up everything I know and I. Have to do a lot of research. And talking about things and making, sure I understand, and it forces me to you. Know I, can. Get by and get deals done with, like our debt guys and our insurance guys because. They're gonna do 90% of the work but. If somebody asks me a question. I've, got to actually kind of understand, more what's going on than what I necessarily need, to be able to answer. Some of those questions and, I'm not always gonna be able to answer those questions because. You. Know there's a limit on how much, I need to know and want to know about the debt world and the insurance world and things, of that nature. But. It does make you kind of shore up some of those weaknesses, in your foundation, and you know those gaps, in your knowledge and, help. You, become. Better and more educated and things like that so thousand. Percent it's. When. I got started in real estate I thought. I wanted like two thousand single-family houses I was like I'm gonna be the biggest thing I'm like fuck all this shit like ah and, I realize like I don't want any of those things I was doing that for somebody else you know for. My dad or whatever you want to call it, but. What I did realize is what I do want to do is I want to show people there's, another way and. Meaning. If that's to Airbnb so, that's you, know a six unit right that allows you to take that extra two vacations, with your family. You. Know III provide, I think experience, is over everything. Is my, thing like I'm obsessed, with traveling, we went to Europe for eight weeks on a one-way ticket like it's, just what I want it's just what I want to do right and and so.

If You can give people that gift right and in, like I know it's cliche, I don't give a shit cuz, you're not allowed to work with me you're. Not allowed to work, for me you're not allowed to anywhere. With, me and the investing world if you have interest at Poor Dad and basically, I got, handed the book at 17 from a friend's dad he said you're different I can, tell you hate school leave, this it'll change your life and it took me seven years to implement it but it did in all that, book is talking about is, trading. Time for assets, and liabilities, and basically, you're, showing them so like what. I'm realizing as, I get deep down the whole of my. Investing, career is that I really don't want to do it like I, really just want to give money to y'all are, like Toro or like Evan or like my mentors and let me go coach like. Let me go impact, people because I've. Had a lot of crazy stuff happened to me and I'm better for it and. It's. Really finding clarity, on your message right and like I think Chris is gonna have multiple. Lifetimes right, I think Chris is gonna you. Know you're only 28 I think you know in 32 that's gonna look different than it was now but but. What I appreciate, it what I appreciate about you and, I and I see from your content, is that you're. Willing to put in the work that's, noted. For sure but, also you're willing to not. I love. The facts and I shoot I could take a little bit from you that you're not willing to speak on shit that you don't know about like. Look. Bro I don't know it like but if you want to talk about this I can talk about this and I think when. You're authentic, in your message I think it comes across a lot, more than just feeling like you have to be right all the time, yeah. I think. That's. Huge it's I don't, know how people, talk. About things they don't know, I just. Don't understand, it like, especially, now with. Everybody's. Talking about. Coronavirus. And what so not as much anymore excuse sick of it I'm very, happy we haven't really talked about it much but I made people I made people call it sunshine I can't talk I can hear that I can't hear the fucking word anymore, I'm over it yeah but it's there's so many people just talking out their ass and it's, fun, to do in like a private setting cuz it's like oh what do you think is gonna happen all I'm, gonna guess this because of this reason and you. Know you get, you know you do get something out of it cuz you try to extrapolate, things, and you, know make guesses and see what happens and you know you test theories and see what happens that's, how you learn but. So many people trying to say you, know this, is what it is or this is what it's not or things, like that I'm just like I just don't understand how you talk. About things that you have no clue about it's. Like the parent at a soccer game trying to tell their kid what to do like just shut. Up let the coach do their thing if, the coach sucks it's not like you're better than them so you, know just deal with it like it's. A that. Is funny there's a there's a really brilliant. Video. Of. Lino. Messi and Luis Suarez and they're, at their kids soccer game and, they're just like they're, just chillin like relaxed. Back so far, now look their kids are probably coached by very. Girl clapping yeah coach isn't they.

Have No coaching experience but it's it's, just funny that those guys who probably know, the game way better than you. Know any coach that's gonna coach six-year-olds. Most, likely that. They're just gonna sit back and hang, out and you know let their kids do their thing and because they, get it right, they understand like asses this, isn't my role it's I figured. Schools like this the something, Kruger, effect I saw it the other day it's like I think I heard it too yeah it's like on the on the bottom axis every forget which one's accident, this, is like. Knowledge. And, that. You actually have and the other ones like how much you. Posture. Or like how much you say you know like. Like. The first, like ten percent it's like people are super hot like when you know absolutely nothing you don't talk about it and you learn very little you talk a ton then. You fall very quickly and like, slowly raised but you're like never as high as the person that knows next, I. Thought, that was varying so you got I gotta get that for it I got put on social media yeah, but, it's it makes a lot of sense but yeah I just I just, don't talk. About things I don't know about one cuz like I don't. Want to look like a fool and two I don't want to steer somebody in the wrong direction either like. I don't even talk I don't talk about debt that much cuz yeah I don't really get it like yeah I'm learning a ton about right now or trying to like. The secondary debt world and how it well, that's how, we. Get loans and what happens it's dude it's so funny that you say that I work. For a private equity fund for a year and a half I just got laid off like a month ago it. Wasn't, until I switched my learning to I stopped learning about real estate and learned about money markets it changed my whole life yes. When you understand, how the second, the, the money markets work you can understand how debt leveraged and how you can get a deal funded it is amazing, to, know the inner workings of how black. You know we sell we've got 16, units are 21, doors 16, houses were trying to sell right now and, we will sell in like a month to a hedge fund just. To know how they per a deal like that and. Just. A regular. Investor doesn't understand how a hedge fund buys a buys, a pro folio because they're not looking at the numbers that you're looking at so. It's, very interesting no, it's, it's, very interesting and I've actually I'm not a big reader I'm, trying to force myself I'm doing audiobooks, now. -. Yeah. I'm listening to Ray Dalio book principle right now I'm about to start it on Saturday it's it's very good it's long though it's definitely well, I got a drive from Florida. To DC so, I'll. Be worth it but, he was talking about how like, they view, he was talking, he talked one crazy thing about he. Was working with. McDonald's. When they were gonna introduce the Chicken McNugget back in like the 80s and, he. Was also working with the supplier, for the. Chicken, to make it and neither. One of them, McDonald's, obviously wanted a fix cost for chicken because they're gonna have a fixed sale price the. Chicken producer didn't want a fixed cost because they don't know what their costs are gonna be so they want a variable and. He said we just like looked at the whole system and we. Found out that the only variable. Really between the price is the. Cost of feed for, the chicken, they. Went all the way down the supply chain he said what we did was they basically put together some sort of a hedge for. The cost of the feed and said hey with. This hedge. Of in place your price will never go over X, it, could actually drop lower, because, I'm sure what happened was it's like if the price was I have no idea what the fucking price feeted yeah let's say it was 2 bucks they, probably said with this hedge we can maximize your cost at $2. 30 cents so, you can afford to sell it at whatever your markup is you can afford to sell for 3 bucks to McDonald's McDonald's can afford to buy for 3 and sell for 4 as this Chicken McNugget whatever the hell it is by. Looking at the whole system. And finding. Out what the actual cog, was that drove, the. Pricing, volatility.

In The machine and I've been thinking that about that a lot lately I'm like damn. Like if you can just take. A little bit of that approach to how. This works, maybe. You can kind of reverse engineer, better, leverage better, deals. So. That's partly, why I was, interested in the debt world beforehand, and the secondary Marco's it was a gap of my knowledge and it was something I thought I can, learn about and start incorporating as, well as it also goes into macroeconomics. Which has been crazy with everything that's going on and understanding, I didn't. Understand where it's all, ties together but now I'm going down a rabbit hole no you're I was trying to understand well have. Another call cuz I could go down that rabbit hole with you here I was, trying to understand how, the, US could afford to just pump all the stimulus money out and we I mean, it's where, I was gonna come from so I started going down that rabbit hole I started another app called secondary, Treasury world secondary, debt world and then. I started listening to this book and it's, just been kind of coming, full, circle a little bit more yeah and it's basically. To your point I think. A big gap in my, knowledge and I think in a lot of people just because most. People probably don't find it interesting and, I'm not like super, passionate about it but I think it's important, for me to get better at what I am passionate about which is the real estate world and, that. There's just a larger, machine and we're just a small component, of it and I'm missing. 70. 80 90 percent of the rest of the Machine that. I don't fully understand, yet and. It's. Actually a risk in. Part. Of the deals that I'm doing that, I could minimize by understanding it better. Which. Is probably why these, massive institutions, can afford to pay less or, pay, more lower cap rates because. They can minimize the risk by doing. Different hedges, seeing the full machine having, money elsewhere etc, yeah, my financial, advisors 27, years always out of Sacramento he's the smartest. Guy I know I mean I've never met, anybody like him he. Manages their company totals like nine billion I think he manages like 1.5, personally. He's. A money manager and then my other buddy runs all the money for UT which, they have like 30 billion and. When. You spend time with them you. You you understand, that it's so much greater than you can even imagine they're. Buying trees, and the Amazon, to supply. Multifamily. I mean that you just don't even understand, the depths of how these numbers Sickler. Go down and down and down and what, he's taught me is that this world is literally. One big transaction, and, so you. Know when they're lending out money to you it's it's merely like they. Got the money at 6% they're lending it to you for 9% you're, paying the points on the front end so that's why they're getting their fee and then, they're, giving their investors, the 8%, it's just it's like you don't it. Just keeps going and going and going no.

And I think that's. Been super parent, with as everything. Basically came to a grinding halt. You. Really it became very apparent how, reliant, on all. Those, cogs, we are that if one, thing breaks down or multiple things break down you. Know there's a trickle, effect to everything else there. Was we haven't even and we haven't even seen it yet like. Because. When, you have an event like what you have in like, okay I'll just use what I know Austin sure South by Southwest brings, in 400. Million, dollars, yep um so what. You don't understand guys is that the, fucking city is gonna have to find the money somewhere and you know where that comes raising. Taxes, they're gonna get their money and so, this is not that, one event getting canceled is a five year problem, it's not that's what people don't understand, or it's just you know removing, expenses, so things they would have spent that money on are gonna get cut whether it's you, know other events, different public works things like that Ness you know at least unless I'm wrong but I mean you can no I mean and we decreased your Noy two different, ways we're income. Or lower in expenses but no, it's a hundred percent and I mean. It makes I mean you've just seen it over and over again different, industries. Being affected. That, you wouldn't, expect by, things that are going on, like. Well people don't talk about because I spent 20 years in the restaurant business high-end, restaurants, bartending, chef it's. Not the restaurant yeah the restaurants, are gonna fail for sure and 40 percent of restaurants are gonna fail guaranteed, 30. 40 whatever yeah, but, you're not even looking at the sick Euler effect of the chicken farmer of the, distribution, company of the, lettuce farmer like I mean this it goes down so, that I don't know if everybody's, here but you've seen, reports, of like people throwing out tons of crops basically, just they've, they that's what happened that's what all my all my buddies working oil and gas all of them they're all either, on the, hedge fund side or they are there they work for a bank do, you want to know why we you want to know why we were having a problem with gas right now if your stupidest, reason in the world we. Have nowhere to put the fucking gas yeah, yeah because nobody's been driving, they, told me there's. Only there's two months ago they said we don't have any we can't make oil yeah. It was like the future contract went is. Basically. Negative so they were gonna pay people to storm if you actually took it but I mean they're like paying ranchers, to like storm. On their land like this is for real dude like they had no room like no it's great a weird problem to have it's. It's, absolutely crazy and. What. I think is. Where. Was I going you, you started down the one path and it went off yeah I guess I lost. It I can't help but it'll, hit me yeah but no I mean it's you, know all the different things that are affected. It's just it's. Mind-blowing oh where I was gonna go with that is when you're talking about 30 40 percent of restaurants closing, what. People don't realize is they, think there was X amount of capital in circulation, before this happened, but, now what's gonna happen is people that had you, know a million dollars on the sidelines ready for real estate now, they might take two hundred thousand to open up a business on the small side so, where, everybody's, thinking oh like where, where markets, gonna be in 6 to 12 months there's, not going to be as much capital so.

People's. Valuation. Of properties, coming out of this could be vastly. Lower than they think because the. Whole argument was. Really interesting before this all happened as. They. Started doing rape what was happening was they, were doing the interest rate hikes for a couple, years and, what. We could borrow commercial. Loans that was going up and up and up cap. Rates weren't really following it as much so the spread was getting tighter and tighter between, what. You could borrow, debt, at and what cap rate you would buy it which if you, don't understand, how that produces cash flow yet

2020-06-09 21:48

Show Video

Other news