The Beyond Multifamily series is hosted by non-residential commercial real estate investor and Best Ever Show host, Ash Patel. Ash’s goal for this series is to introduce you to the world of non-residential commercial real estate investing and teach you how to look at and underwrite different commercial asset classes.
In this episode, Ash discusses four common limiting beliefs that keep investors from accomplishing their goals and provides solutions to overcome them based on his personal experiences:
1. Limiting Belief #1: You should wait to look for deals until the market changes.
While other investors are out there hustling, hiding behind excuses will get you nowhere. If you’re having a hard time finding deals, Ash recommends focusing on marketing yourself. Tell everyone you know about what you’re doing in real estate, share your projects on social media, and focus on building your network. Deals will start to materialize.
2. Limiting Belief #2: You need to stay within your comfort zone when it comes to your price range.
For a long time, Ash stayed in his comfort zone, only taking on deals with downside he knew he could afford. However, it was just an excuse not to take on larger deals. He overcame this belief by growing more comfortable with using other people’s money. He also learned how to define his failures by addressing his “what-ifs.”
“If you identify each fear and play that out, define it step by step,” Ash explains. “Okay, if we lose a tenant, here’s what’s going to happen to the cash flow. Can you absorb that? Is your property still stabilized? Could you sell the property and find a way to make it up to investors? Whatever it may be, don’t let those what-ifs become overwhelming space in your mind.”
3. Limiting Belief #3: You have to scale slowly.
When Ash’s friend Nate asked him why he couldn't do $100M in a year, he rattled off a long list of excuses. Ash soon realized, however, that each of these excuses had simple solutions. There really wasn’t anything keeping him from achieving that $100M goal.
“If you have a great deal and you can’t find a way to make money off of it, it means your network is not big enough,” Ash says. “Or you don't know all the channels that you can pursue to find ways to make money on that deal.”
4. Limiting Belief #4: If you want to protect your credibility, you should avoid taking risks.
Taking someone else’s money when you could fail might seem like a pretty big risk to take when your credibility is on the line. However, Ash says it all comes down to communicating with your investors about any hint of risk.
“Your credibility will be impacted if you don’t communicate effectively to all the people involved,” he says. “But if you do your absolute best to mitigate these situations and they’re just out of your hands, communicate that to your investors and salvage your credibility.”
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Ash Patel: Hello Best Ever listeners. Welcome to the Best Real Estate Investing Advice Ever Show. I'm Ash Patel and this is an episode of Beyond Multifamily, where we will dive into topics other than multifamily investing. On this episode, we're going to dive into mindset and limiting beliefs, and I'm going to share with you some of my own limiting beliefs and how I overcame them.
I remember back in 2015, I had already been a full-time commercial real estate investor for a number of years, and all of a sudden, the deals were not as easy to find. So I stood behind some excuses. I said, "There's too much coastal money coming into the Midwest. There's people overpaying for deals, I'm just going to wait until the economy cools down a little bit, wait for the next downturn so I can find more great deals." And in reality, I was hiding behind those excuses, because the market was getting a little bit more difficult. I actually sat out on the sidelines for about six months, and only invested passively in other people's deals. If I remember correctly, I think I just gave up on looking for properties, because I actually believe that excuse, that I was doing the right thing by waiting.
Over time on social media I kept seeing other people, mostly in the residential and multifamily space - they were still killing it, their teams were getting bigger, they were posting about deals that they were taking down. And I thought to myself, "What were they doing that I wasn't?" Granted, I'm in a different asset class, I do non-residential, commercial. But what I realized is these people were still out there hustling and I was hiding behind excuses. When it came upon that realization, I knew I had to get back out there. I had to work just as hard as everybody else is working, if not harder, and I needed to market myself.
At this time, I had already been in commercial real estate full-time for a number of years, and it's amazing how many people didn't know that I was in real estate. I came from a 15-year corporate IT career, and when we would go out to dinner with friends or people that we haven't seen in a while, they would ask me, "Ash, how's IT stuff going?", and I wouldn't even correct them. I got so tired of explaining to people that I was in real estate; I would just, "Yeah, everything's well. How are you?" And that was a fault of mine. So I changed that, I made sure everybody knew what it was that I did.
I started posting on social media, deals that I've done, things that I'm working on, construction sites that I visited, and I also offered to mentor anyone wanting to learn more about commercial real estate. I wanted to network more with people, so I scheduled lunches with people. I just put myself out there as much as I possibly could, and all of a sudden, the deals started coming in. I started to get linked up with a lot of people that were looking for someone like me to do deals with, or brokers that were looking to sell commercial real estate.
Fast-forward a number of years, we're now midway through 2022 and the market is way more competitive. And I've got more deals now in the pipeline than I've ever had. So the moral of that story was I hid behind excuses, because things became difficult. Instead, just work harder, get out there, hustle, use your network, build your network. Interact with people, market yourself on social media, and good things will come out of that.
Another limiting belief that I had, which also comes with an excuse that I hid behind, was that there was a sweet spot of commercial real estate between $300,000 and $800,000, $900,000 because I said, "A lot of the new people coming into the market are probably going to take down deals that are on the lower end of that scale; a lot of out-of-state or institutional-type investors are looking for much larger deals." And in reality, it was just my comfort zone. That was where I wanted to stay, that's where I knew I can afford deals, I can afford downside, and it was an excuse to not take down larger deals.
I ended up passing on a couple of deals that were $1.5 million-$2 million, and they were great deals, but they were out of my comfort zone because of my limiting belief. All of the what-ifs. "What if something doesn't go right?" "What if I lose a couple of tenants?" And in reality, I should have had enough confidence in what I'm doing to take those deals down, and possibly even partner with people. But at the time, I didn't feel comfortable using other people's money. So what changed that allowed me to start taking down $10 million, $12 million deals? It was a combination of a couple of things.
One, I realized that by me taking on other people's money, having investors into my deals, I'm actually doing a lot of these people favors. A lot of these are high-net-worth friends that spend money on things that give them bragging rights. Investing in bars, marijuana companies, restaurants, things that they can brag about, and most of them were not making any returns on those investments. So I realized, by them coming into my deals, these guys are actually getting passive returns, the deals are going well, and I'm doing them a favor.
The other fear - and I'm going to quote Tim Ferriss on this... He's got a great podcast where he talked about defining your failures. So all of these what-ifs can become overwhelming if I think, "Okay, what if I lose people's money? What if I lose tenants? What if we have negative cashflow?" Well, if you identify each fear, and play that out, define it step by step... "Okay, if we lose a tenant, here's what's going to happen to the cash flow. Can you absorb that? Is your property still stabilized? Could you sell the property and find a way to make it up to investors?" Whatever it may be. But don't let those what-ifs become overwhelming space in your mind. Define each what-if and that'll help you more clearly make decisions, more clearly explain the investment to your investors.
Speaking of other people's money, I've got a commercial mastermind, and a lot of people will say, "I don't run in those circles. I can't raise money from people," until they try. Put yourself out there, again, on social media. When you have a deal, even if you don't need to raise investor capital, try it. Put yourself out there and say, "Hey, taking on partners for this deal, taking on investors." Get a syndication attorney and do a syndication. You'll be amazed at how many people believe in you and want to do deals with you, want to invest with you if you put yourself out there. And if you truly don't run in those circles where there's people with discretionary income to invest with you, you need to change that. You need to get out there and network a lot more.
Break: [00:08:43] - [00:10:30]
Ash Patel: Another limiting belief that I had was to scale slowly, or not scale up to my potential. A good example of that is I had a phone call this morning with somebody, and they told me they've been buying one building per year, and that's their goal, is just to continue. And at some point, they can get out of their nine-to-five. And I thought, "Why can't you buy four or five buildings a year if you could buy one?" And I didn't have that conversation with them at this point, but I will in the future. Nonetheless, I was in the same mindset where I closed on a $5 million building, and I thought, "Wow, what a win. Let's sit back, manage this properly, and look for the next deal."
Nate Barger, a good friend of mine, a previous guest a couple of times on this podcast, and just an absolute killer on social media and what he does... But Nate said to me, "Okay, why can't you do $100 million this year?" And I thought he was nuts, and I started giving him excuses. "Well, listen, it takes me four, five, six months sometimes to find a deal." "Alright, what's your deal-finding process?" "Well, I get out there and spend hours and hours, and I train other people in spending hours looking for deals." "Okay, hire a bigger team to look for deals." "Yeah, okay. I could do that." "What's your next bottleneck?" I just kept giving him excuse after excuse, until I realized there's no reason why you can't do $100 million this year.
For some of the Best Ever listeners that are maybe starting out or haven't done a deal yet, this one's for you. I saw a Facebook post years ago and it said, "Does anybody else believe it's a bunch of crap when people say, 'If you have the deal, the money will come"? There were hundreds of people that replied to this post, saying, "Yeah, only people with money say that" or "Yeah, I've never found that to be true." And I so wanted to chime in, but this was a group of a couple of 100,000 people. I probably would have gotten slaughtered. Nonetheless, that post still resonates with me, because people should not believe that.
Now, if you have a great deal, and you can't find a way to make money off of it, it means your network is not big enough or you don't know all the channels that you can pursue to find ways to make money on that deal. If you have the right network, you can pitch it to anybody and say, "Hey guys, I've got this great deal. Do you want to cut me in for 5% finder's fee? Or how about you just take the deal and put me on the back end, the front end, whatever?" But you could find a way to benefit from it. And if you don't benefit the first time, "Hey, here's a great deal for free. If I find another one, I would love a finder's fee of this percent," whatever it may be. You can get on BiggerPockets and try to get investors wanting to get into your deal or to sell the deal, too.
There's just a lot of different ways to make money once you find the deal. There's a ton of people out there and their bottleneck is deal flow. It's not capital, it's not management overhead. It's legit, people don't have enough deals. So if you don't have a lot of capital yourself, but you have a lot of time, and you're willing to learn, get the knowledge on how to find deals, you can literally make money on finding deals. The young guy who found our last deal will benefit very, very well from his finder's fee, and he's got no money into the deal.
Another fear that a lot of people have, including me, is loss of credibility, and even loss of identity if something goes wrong. So for the last 10+ years, I've been a full-time commercial real estate investor, and that is my identity. Everything I do, it seems, revolves around real estate in one way or another. And if I were to take someone else's money and I failed, I would lose a lot of credibility and I would lose my identity.
And a lot of us are probably in the same boat, where you may have had a 10-year run. Well, now the markets changing a little bit and that fear starts creeping up. Interest rates are going up. What if this deal doesn't go as well as the last 10? Again, walk through that. Make sure you're communicating effectively with all of your investors. If there's any hints of risk coming to fruition, you want to communicate that to your investors. As soon as you have bad news, let your investors now, let your team know. Your credibility will be impacted if you don't communicate effectively to all the people involved. But if you do your absolute best to mitigate these situations and they're just out of your hands, communicate that to your investors and salvage your credibility, and I think they'll appreciate that.
Best Ever listeners, I hope you got some benefit out of this podcast. I want to let you know that everybody has some limitations, some struggles with mindset, no matter what level they're at. I know people at the top of different industries and they still have mindset struggles or limiting beliefs that they're working on. The difference is they try to work through them and find solutions until they find the next one.
But you're not alone. Everybody has these limitations. Just surround yourself with great people. Share your limiting beliefs and mindset struggles with other people just like I shared some of my stories with you guys today. So I really encourage you get out there and figure out why you can't accomplish something. Figure out how you're going to accomplish your goals. And I wish you all the very best.
Best Ever listeners, thank you so much for joining me today. If you enjoyed this podcast, please leave us a five-star review. Share this podcast with somebody you think can benefit from it. And as always, like, subscribe, and have a Best Ever day.
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