How to Invest in Commercial Real Estate

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Episode #020 - Get Comfortable Being Uncomfortable and Start Taking Action!

by Criterion, Braden Cheek, Brian Duck
February 14th 2021
00:19:11
Description

On today's episode we have Brian Duck and Braden Cheek from The Criterion Fund, & Joel Thompson from Precision Equity reviewing why you need to be taking action today! Knowledge without applica... More

I mean, it's just, there's always gonna be something one of my favorites is business and I used to be a busy guy, you know, hey Brayden, how's it going? Oh, busy, I literally answered busy for years of my life until I just decided that I didn't want to be busy even longer. Mhm Master how's it going guys? Welcome back to how to invest in commercial, real estate. Welcome back, Come back, go tom brady. Yeah, no, it's too soon. Too soon. Way too soon. Today is all about taking action. So, you know, a lot of people can educate themselves and even by listening to this podcast, hopefully by listening this podcast, watching the video, you're learning something, we're teaching something. Um but at the end of the day, you know, knowledge without application is meaningless. You've got to do something, you've got to take first step, you've got to dive in, whether that's investing money, you know, you can delay that forever. You can find a million reasons not to do it, you can start buying property yourself. Like eventually you've got to take the first step. And um I think the biggest thing is, is people get, you know scared or wrapped up in something that's wrong in the deal maybe, and there's probably gonna be something wrong on almost everything you're going to have to get comfortable with.

I mean, Yeah, I think, I think a good point for people to appreciate uh that we've been doing this now. I've been doing it now for 18, 17 years or something, is that you're, you're never going to be comfortable? Uh people may think, well Joel you you're so comfortable, you buy a lot of deals. Absolutely not right. I'm always second guessing myself. I'm always saying, is this gonna make as much money, what if these tenants move out, what if the market shifts, interest rates go up? All of those factors are always going to be in play? And so this motivational monday and we're trying to teach you guys how do you get yourself to take that action and what we want you to understand is you you will feel uncomfortable, but you're not going to get rid of that. Um You can keep reading books and you can keep going over the material, but at some point you're going to have to go for it. Yeah, I mean, you're raising money, you're standing on debt. You know, it can be scary, you got to get comfortable with it. Um but I think one of the biggest things is getting comfortable being uncomfortable and getting comfortable with the knowledge it takes to your underwriting. You know, you're gonna have to get comfortable somehow with the problems.

I think if people get comfortable underwriting, so maybe they look at a few properties and maybe they go into it thinking they're not even gonna make offers. Maybe, maybe they think, well, okay, I just want to get some information, I'm going to underwrite it myself as I go through and I underwrite it. I'm gonna come up with questions and uh, maybe that's where I start. Yeah. Uh, and then, and then make some offers. I mean, once you start doing this over a few times you can get more and more comfortable. Absolutely, absolutely. But people are gonna ask you questions, um, and late at night when you're trying to go to sleep, your mind is going to talk to you right? And, and you're, there's always gonna be reasons or a reason not to do it. The little heartburn on the deal, it seems like every deal has that little hair. You know, we had a closing and the deal was almost own too good. You know, it needed something. So, you know, you've, you've just got to, you know, a problem isn't a problem. Now, you know, when we get these problems that come up, it's just like I was, I was expecting that, you know, that, that was about due for a little fire that we had put out, but it's just the idea that, hey, this is what I'm doing.

These things are gonna come up. You know, nothing is going to be perfect. Um, you know, whether it's your accounting of your management company, your properties or your tenants, you know, shit's gonna happen and I don't know who said it, but you know, everybody's got a plan until they get knocked in the mouth. What does that, Mayweather? No. Mike Tyson. Mike Tyson a little better than Mayweather. But, you know, I want to encourage people um that you're the only way you're gonna change your life is to go and take a risk and and make the change and it doesn't have to be real estate. It can apply to anything uh taking a job or making a move. Uh, and I think back about uh those big moves for me and each time uh life demanded more than I wanted to give in that instance. It felt scary. Um, but life required me to go all in and I think I've said it before. Life requires payment up front and in advance. Who you know? Yeah. So you, you've got to put the work in and you've got to, you got to put it all on the line ahead of when the rewards come.

I don't know brian you've had a couple of those instances in your life. Yeah. Well, um One is just making me change from, I was at a company for like 22 years and so trying to change jobs from that. It's, it's, it's, it's a little frightening. A little intimidating. I'm sure lots of people that are listening have gone through that. Um, but then also um, back when I was involved in the purchase of our company, we had um, a few of the partners, but we put all the money that we had into it. We signed our name and we were, we had, I don't remember how much it was, but it was millions and millions of dollars of debt that we signed on to and basically all my money was put into the down payment essentially of that business. And you know the reason we were able to buy the company was because the company was on its way down. I mean we were, we were losing business and so trying to buy a company that's, that's kind of losing revenue and on its way down is pretty frightening and uh our idea was to to turn it around and sell it a few years later and unfortunately that's what we did not too, not too different than real estate, right?

Yeah. Yeah. But I mean that, that sounds insane when you put it like that, I mean just getting comfortable with all those problems. I mean I, I almost lost you when you said your money went to the down payment and there was millions of dollars of debt which means your money's gone essentially. It was, yeah, I mean it's just, there's always gonna be something one of my favorites is business and I used to be a busy guy, you know, hey Brayden, how's it going? Oh busy. I literally answered busy for years of my life until I just decided that I didn't want to be busy any longer. Um but it's funny because on every single deal, almost every single deal um somebody reaches out to me or you know whoever and says, hey can I still get in on that deal? It's like now close, that was, it was a month ago, bro, and it's on every single one and every single time somebody wants, and somebody likes the idea and it's just with anything, right, whether you're buying the deal, whether you're investing in the deal, you got to do it, you got, you got to sit down, you gotta, you gotta read through the material, you gotta make sure it's comfortable and then you have to accept the fact of, wow, I'm doing something big, you know, taking a risk. And yeah, you know, one thing that's helped me is, uh, partnering with someone, so you kind of hold yourself or each other accountable and maybe maybe, uh, you have strengths and weaknesses between the two of you and, and, or, or more like when I bought the company here, you know, quite a while back, we had multiple partners in on that and we all knew something different.

We all brought our strengths to the table and then when you and I, uh, partnered together than, um, you know, we hold each other accountable to do certain things. And so, you know, if you have somebody there to bounce ideas off of, and you guys are going at it together than, um, that, that gives a little bit of comfort to me personally, great, great point. I, I appreciate that victor and I had a really strong partnership early on and there's just something about doing it with somebody, you're going to tackle it together. Yeah, it's gonna be scary. There's gonna be risks, but that really is a motivator and I would definitely encourage people, uh you know, in my case, neither Vicar I had any experience. It's better if you find a partner that has experience. But even if you, if you don't just going through that process together, uh can help motivate you to keep going when it gets tough, definitely. Yeah, it's like a, you know, semi quasi marriage in a sense, you know, it helps knowing somebody else believes in the same vision. Um but another thing is, you know, you can't really ever stop, you know, it's not like the thing that you learn and you just stop, that's why I refer to it as getting comfortable being uncomfortable because it's it's something you're always going to have to do for the rest of your life.

And as soon as you stop, you're going to get comfortable and you're going to stop taking risks. Just, it's, it just, you have, you have to be in there, you have to know, okay, I'm I could wake up today and, and shit could hit the fan, you know, everything, all these problems could start happening, but you just deal with them because that's what you're doing. You're just, you're just nice and comfy knowing that everything could go haywire tomorrow and you're going to deal with it. Well that's good. You know, we, we have had a lot of success on, on a lot of deals, but you know, it is, I always have to challenge myself to take the next risk because every time it's just easier to do nothing. So I want people to hear that, like the people that don't invest in your deal and they tell you afterwards, I wish I'd have done that. I have investors that tell me that all the time. Oh, I knew that deal was gonna be a good deal. I wish I'd invested in that. I could have, I would have, I should have. But the difference is, you know, I did it or investors were, you know, they invested and, and so it's just important to understand that. And I also want to say that we've passed on a lot of really good opportunities because even me having bought a bunch of deals, it was a little afraid of the risk and didn't want to put myself out there too much.

Uh, and so I don't think we're just, we're just trying to encourage people that, that they've got a battle that and that's the difference between, uh, winning at this game and not doing anything or never never even starting is being able to deal with the risk. Yeah. And going back to your thing on partnerships. Um, we did a deal here locally and it was a deal. We, you know, it's a little weirder than a typical deal. It was colonial, right? And having a partner that doesn't want to be a part of that deal like this yin and yang of like no, I don't want to do that. And yes, I want to do that. It's awesome because the guy who wants to do it wants to do it so bad that every reason the guy who doesn't want to do it gives him, he's going to prove him wrong, right? So like when you're being faced with all these obstacles of like, oh what about that? What if this tenant leaves? I thought about that and here's what we do. Well, what about the, what about the roof? Oh man, I gotta, we figured that out, don't worry about it. What about this? What about that? And the partner or whoever you're partnering with or you know, could be your broker, could be your seller, could be your mortgage banker. Like all these people are going to bring up problems potentially in the deal that you have to have to explain what could happen if that happens.

And it's, it's really healthy to surround yourself with people looking at it and, and just, you know, different set of eyes, fresh set of eyes. Um could really help totally agree. One of the other things I want to talk about uh is a big reason why people aren't going to do this, they're not gonna invest in commercial real estate, they're not going to be a sponsor is the fear of losing money? Well, you were talking about risk before. Risk really, the real uh problem with risk is it's the fear, right? And and in this case when you're investing, it's it's like you're saying it's the fear of losing money and and it's, I want to be real, uh I don't know, um specific that we're talking about the loss of money and how how emotional that is for people culturally. I think everybody could agree is we're embarrassed to talk about losing money. We can we can talk about failing at a lot of different stuff. Uh but when it comes to like I tried this job I did, that I failed, you know, this, this guy beat me at bats, whatever you can fail.

But when it comes to money, we like to keep that secret. And the reason we do it because of how embarrassing it is and how much shame culture puts on people that are dumb enough to lose money. And so for those that are listening, I know that this is going to ring true to you because it did for me is that you have to get comfortable and you have to be okay with losing money to be successful at this game. Now I don't want to lose money more than anybody else. But that was the big thing that even my wife and I both had to get over was to say we're gonna do this and it's most likely that we're going to lose money, okay. How do we feel? And emotionally it's just so scary. It's so hard and and that that itself is what keeps people trapped in the life that they're in more than pretty much anything else is I don't I don't want to lose money. I'm afraid of losing money, I'm afraid of how it's gonna make me feel how I'm going to look to my relatives who's who's gonna judge me. So I don't know about you guys if you have some thoughts on that, I think it's a big one. Well especially with a with a spouse or something, right?

I mean you go out and convince your spouse um that you're gonna do this thing and and it's gonna return great things for your family and and uh you can imagine if you if you did something like that and you lost money, how how humbling that would be. But you know to me if in this deal or any deal when you lose money, you you learn a lesson you learn why you lost the money and the next time you you don't make that same mistake, maybe you make a different mistake the next time. But pretty soon you're gonna learn all these lessons and you're gonna become successful and so that's why yeah I'm I'm right with Joel that you gotta you gotta overcome that fear of losing money, it's the most expensive education potentially, but it's the best education because um learning from other people's losses is the best way to do it. If you can pay attention and hopefully learn and don't make those same mistakes, but you don't have that emotional attachment to it, you don't have that emotional version. And after you lose money doing something that's emotionally ingrained in you more than, you know, that's a lesson you'll never forget.

Uh and you're not gonna you're not going to do it again. And it's so important because no matter what sum of money, you know, there's a lesson to be learned, there has to be or else you're just, and I mean, yeah, in life, uh it typically goes like this with money is that as soon as you lose money, I'll never do that again. Um where other things in life we keep trying and trying and trying and we learn from our mistakes and we get better. But with money we don't tend to want to do that. Now, I'm not saying that everybody's gonna lose money. That's not what I'm saying, think about it. It's being okay with losing money. So uh you can watch us learn from our mistakes, watch the podcast and you can go uh and know everything about the deal, but when it comes to signing on the dotted line and putting down $50,000 of your hard earned savings, maybe it's not even yours, right? What I'm saying, if you, yeah, if you still have a fear of losing money and holding onto every dollar, you're not going to take the steps to buy and then you're never gonna have the reward, you may not have, you may not have lost money on that deal, but that fear will keep you frozen in time and it'll keep you from taking a chance on a deal that, you know, deep down is or could be a really good deal.

I used to sell shoes. This is gonna sound insane because this way off topic, but the number one trick to selling shoes, let's get the customer to try on the shoes. Because two thirds of people who put on the shoes are not going to take them off, they're literally going to walk out of the store with the shoes on and the fear of loss is that one of the best sales tactics around? Because it's true, once you have something us humans, we don't want to lose it, that's mine. I collect it. It's the same thing with money. People have this idea that saving money gets them rich. It's it's insane saving, just not doing anything. You're you're stuck in complete stagnation. You're not gonna do anything, you're not getting comfortable taking on new risks. You're not, you know, investing in deals, because investing literally implies that it could go horribly wrong, right? So if you're not okay with the fact, like you just said, you have to be okay with that. And if you're not, you're an idiot who thinks everything is going to go right and you just haven't lost yet. Um, or you, you just, you're, you're not ever going to get comfortable with the risk, right? But when you're, when you're sending money out the door, you have to accept the fact that it's, it could not come back.

And most of the time when you're spending it, like just swiping the card, it's definitely not going to come back. You just, you swipe it and it never comes back. But people are fine doing that, swipe, swipe, swipe, never coming back, it's fine. But when you have to invest it, what if I lose it? I had a good point. I have to say my next point then, because I was thinking about this when you were talking, it always amazes me when I see political donations. And, uh, people are giving, uh, decently large sums of money, uh, maybe direct to the candidate or maybe even larger sums to a super pac. And to think about it in an investment terms, they're literally promised to lose 100% of the capital with no return on investment or very little return. Maybe they think that that politician might win. I happen to think these, all the money spent doesn't really change a lot of people's minds. But so think about it, you have $100,000 to a super pac and you're you're guaranteed 100% loss of capital. Now flip it around. I go to somebody and I said hey would you like to invest $100,000 on this deal that I think is gonna compound 20% a year for the next five years or they're like whoa, whoa what are you scamming me?

Are you gonna lose my money? What if what if I don't what if I don't make enough that if I don't make 20% return will finally make 15. Yeah. What or you know it's just it's very interesting because in the one scenario like you were saying is they decided to give the money and so it's ok that the money's gone but in my case there's a potential for loss. Uh and they're freaked out and they think why is Joel trying to get my money? Uh And yet we're delivering return after return every year to them. Now there is a chance that they could lose the capital or some of the capital or I don't make the numbers but people give all the time to various things with no expectation but as soon as they are they're at risk of losing a dollar by investing emotionally. It takes over and they don't they don't want to part with it. Yeah I mean it kind of brings me to one of my last things here is you know maybe the difference between an asset and a liability. I mean assets probably something that's paying you and liability is something that you have no expectation of the return of money, it's not paying you. If anything, you're having to pay to upkeep it. And I mean, people are just okay with spending money and gaining tons of liabilities, massive cars, houses, houses could arguably be considered an asset maybe.

But Yeah, there's no risk in buying a car, uh, $1,800,000 car. You get to drive it. And it's, even though you're losing money immediately, uh, it's okay because you know, you bought the car, but investing is scarier than than buying the car for some reason. And one is gonna pay off financially and, and one is going to cost you financially. Yeah, I don't know what it is. I don't know if it's what you said Uh, as its, you know, is it just as simple as I decided to buy the car? So it's, it's okay because I decided that, but when I decided to invest $100,000, I didn't decide to lose it right. It was that person's fault and then maybe they were victimized. Maybe that was the mindset of anyway. We don't have to dive too deep into that. No, it's a real emotion though and I wanted to talk about it today just so so people understand that that getting over that emotion is what's going to be required to be successful in this game. Well, get comfortable being uncomfortable. It's required to invest in commercial real estate. Make sure to like subscribe checks out on how to invest in CRE dot com. If you haven't already, make sure to download your free letter of intent on invest, how to invest in CRE.

And we will be back in a few days with another except. Thanks. Yeah.

Episode #020 - Get Comfortable Being Uncomfortable and Start Taking Action!
Episode #020 - Get Comfortable Being Uncomfortable and Start Taking Action!
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