November 29, 2021
Joe Fairless

JF2645: How This Mindset Change Turned a $41 Million Loss into a $100+ Million Success with Cowboy Joe Marques


 
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When he set out to make his first deal on a 472-house subdivision, Joe Marques — better known as Cowboy Joe — thought he’d selected the right team for the development. As it turned out, the group was using him with the end result costing him $41 million. Today, Cowboy Joe shares with us how that first deal actually set him up for success, discussing the importance of building good relationships and how your self-worth affects your net worth.

Cowboy Joe Marques Real Estate Background

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TRANSCRIPTION

Ash Patel: Hello Best Ever listeners. Welcome to the Best Real Estate Investing Advice Ever Show. I’m Ash Patel and I’m with today’s guest, Cowboy Joe Marques. Joe is joining us from Gulf Shores, Alabama. He has invested in numerous development projects across the US, ranging from resorts, commercial buildings, multifamily, and full subdivisions. Joe is currently involved in unique projects in the Caribbean, ranging from 1.2 million to $100 million. Joe, thank you for joining us, and how are you today?

Joe Marques: I’m doing well, Ash. Thank you for inviting me on the show. Looking forward to it and hoping to add some value to your listeners as we go through.

Ash Patel: Joe, it’s our pleasure. But I have to ask you, why do they call you Cowboy Joe?

Joe Marques: You know, Ash, people have been calling me that for 20 years and I’m still trying to figure out. I don’t know if it’s the hat and the boots or what. But, in all seriousness, I was raised on a ranch. I pretty much have been a cowboy most of my life. I think the first five years of my life I wasn’t. A lot of the wisdom I have comes from my grandfather, who was a true almost like off-TV Western cowboys. He built multiple ranches, and a lot of my wisdom comes from that. When I started branding, Cowboy Joe was what stuck. People said I was already that, no sense trying to brand something that I wasn’t, and brand what I was, so that’s what I did.

Ash Patel: Best Ever listeners, if you see a picture of Cowboy Joe, he looks the part. Joe, before we get started, can you give the Best Ever listeners a little bit more about your background and what you’re focused on now?

Joe Marques: My background is I was a big government contractor, I did a ton of different government projects, I’ve always loved working with dirt. My granddaddy was constantly improving pastures, improving timber, things like that, so I had a love for working with dirt at a young age, and just basically came back to it.

As far as my real estate experience, I’ve been involved in real estate investing for right about 35 years now. I started with the traditional fix and flip. Our original mentor was Charles J. Givens; that’s a name not too many people know because that’s way back. He had the whole subject to how to do owner financing and the fix and flips. So I started doing fix and flip, but just truly enjoyed the bigger projects from the government contracting side, enjoyed the bigger project, so just naturally gravitated back to land development. And I’ve done some absolutely amazing projects over the years.

Ash Patel: You said government contracts – is it for ground-up development?

Joe Marques: The government contracts I did were in Saudi Arabia, [unintelligible [00:03:15]. I did a lot of environmental remediation. I did also emergency watershed protection, which is basically going in after storms and making waterways whole again. For example, when New Orleans had Katrina and levies broke, emergency watershed protection was fixing those levies, clearing out waterways… I did a very interesting project with the Coast Guard and FEMA combined, getting all of the vessels and everything that ended up in the waterways and [unintelligible [00:03:45] surrounding New Orleans after the storm literally removing those vessels. One was a barge with paraquat drums sunk in it, and paraquat is a pretty nasty agent that isn’t used anymore.

I love challenges, I love solving problems. Basically, when I got out of government contracting and went back into development – that’s what I love to do, see how can I solve problems. It’s also why I love consulting and coaching people in land development, and mindset of high-performance thinking as well. It’s because our biggest problems are caused by that real estate right there – the six inches of space between your ears, that real estate there is the most important real estate you’ll ever develop. That’s why I work a lot with mindset and high performance thinking with my students.

Ash Patel: Joe, what kind of development did you start out with after your government contracts?

Joe Marques: The very first development that I did after government contracts was a 472-house subdivision turnkey. That’s from knocking the trees down to turning over the keys. I learned a very valuable lesson on that. The reason I focus on building relationships, knowing the people that I’m involved with, and not just chasing money, is because that project –a lot of people would say it broke me, but it actually made me. It’s what gave me the knowledge and the drive to teach others to dodge some of the mistakes I’ve made. I was in that project strictly for the money. Long story short, there were people that didn’t have the best of intentions, that cost me a little over $41 million on that one project alone, which was a cascade effect that bankrupted me. It didn’t bankrupt me, but it broke me. I didn’t file bankruptcy, I paid every bill; it just took a while. I went from being worth –depending on whose number to use– between 77 million and 98 million dollars to worth about negative 450,000 overnight, and have started building back from there.

But that project was valuable, because I learned a ton of lessons, and learned how to use capital structures, which are critical. It’s also what tested my mindset, because I thought I had a good mindset, but if you get hit hard enough, then that’s where you find out what your true mindset is. There’s an old cowboy saying – you only know how good a watermelon or a man is until they’ve been thumped. I got thumped, and I learned a whole lot about myself in the course of rebuilding back.

Ash Patel: Joe, what was it that went wrong on that deal?

Joe Marques: People got greedy. We worked a deal that was basically third partnerships. The other two thought that they could do my part, because they were the money people; I wasn’t involved in it money-wise. But I was furnishing all the equipment, all the labor, and actually building out the project. They figured that they could approach my material suppliers, my subcontractors, and basically cut my percentage out of it, which it didn’t work out really well for them. That’s neither here nor there, because it really didn’t work out well for me at that particular point in time. It cost me literally everything I had. But then again, the universe is always in balance. What I thought was the worst thing that ever happened to me, was the best thing ever happened to me. Because I had relationships that were pretty much in it for what I could do for them. I was in a very bad marital relationship that basically I was staying around for the kids, and once I went broke, all of that went away.

Now I’ve got a circle of friends that truly inspire me; I’m just grateful every morning I wake up that I get to hang out with people I hang out with. I’ve got an awesome wife that – I scare the hell out of her because I’m an entrepreneur. I make the joke of the entrepreneur mindset, employee mindset… Well, she was way worse. She was a high-level government employee mindset. That’s a whole other level. Two different brain wirings entirely. But she loves me, she supports me, and on the flip side of that, if I get too far off my rocker, she will challenge me as well. So she’s a perfect balance for me.

Break: [00:08:15][00:10:07]

Ash Patel: Joe, what were some of the hard lessons that you still carry with you today? What are some of those learning lessons from that deal?

Joe Marques: The biggest lessons from that deal are number one, the value of relationships, and knowing who you’re in business with. Number two is capital structures. There’s a ton of, I’ll call them gurus –for lack of a better word– out there that are teaching people that you’ve got to deploy every cent. If your money is not working, it’s dead money, you’re not doing anything. But one of my mentors, George Anton, has taught me the value of capital structures, and the value of reserves, and what opportunity cost is. The biggest reason I went broke is that I was over-leveraged, I had credit lines, I had over half a million dollars of credit lines available and able to use. This is also along the same time when the bubble burst, and banks just closed credit lines. Credit lines are not reserves, because a bank can close them for any reason at any time.

So here I was, saying I had a half-million dollars to work with, and didn’t. Factoring in debt, equity partners, and reserves… Relationships are the key to life. If you’re building relationships, you can pretty much accomplish anything you want to. If you’re trying to do it all alone, you may get away, you may be able to get there fast, but if you want to get somewhere a long way and it lasts, build relationships, build up equity partners, do things together, and don’t try to be a tower for yourself.

Ash Patel: Joe, you’ve mentioned capital structures a few times. What does that mean?

Joe Marques: A capital structure is how you structure the underlying capital around any asset. You have debt, you have equity, and you have reserves. To tell you the value of it, you can take two investors, each one of them buys a 100-unit apartment complex right next to each other, side by side. Exact same areas, exact same resources, but one of them financed it with too much debt, and the other one has it balanced properly between equity, debt, and reserves. When you do have something like what happened in 2008, the one that has too much debt will lose it; not only will the other investor be in good shape and keep his building, he’ll probably be in a position to buy that one building that other investor lost.

If you structure your capital properly, you can pretty much survive anything. And as we know, real estate over the long term is going to do well. Short-term dips, if you’re over-leveraged and have all your capital deployed, where you don’t have reserves to handle those downturns, is when you lose everything. Kind of like when people talk about losing money on a stock. Well, if they bought it high and sold it low, then they lost money on it.

Amazon’s a classic example. Amazon had some 90% drops during the course of its climb. People have lost money on Amazon, only because they bought it at one point and sold it at a lower point. If they’d held on to it long-term, then it would have made them money. The same thing with real estate, that capital structure is critical on being able to number one, grow your wealth, number two, preserve your wealth.

That’s another thing that most investors don’t focus on; they focus on returns. The first thing you focus on is the protection of your investment. Your return of investment, versus your return on investment. You want to make sure that you’re having the best odds possible of getting your money back first; then next you focus on what is the return on your investment, and how much money is that money going to make me. Kind of like Warren Buffett. Warren Buffett says rule number one, never lose money.

Ash Patel: Joe, after this apocalypse, how did you rebuild?

Joe Marques: To be quite honest with you, I had about a year and a half there that I was in a tailspin. That’s why I said about getting thumped and testing my mindset. I was actually homeless. I probably wasn’t homeless, I like to say that was my couch surfing years, because I did have a few true friends. Basically, I’d stay on one couch for a while, then go to another couch for a while. After about a year and a half, I said “Alright, enough feeling sorry for yourself. You built all this once; you can build it again.”

I started out and was doing the exact same thing that I did the first time I became a multimillionaire. And it was like I was beating my head against the wall or hitting the glass ceiling. That’s when I met another mentor of mine, Dr. Trivedi. That’s where I truly learned the importance of mindset. But more important about mindset is people call it mindset, but it’s one thing to intellectualize it up here, but none of that counts until you get it in here. Until you believe it in your heart, none of that up here helps you. And I didn’t believe it in my heart until doing Dr. Trivedi’s processes. The minute that I started believing in my heart, I went from a net worth of negative 50,000 to a net worth over a million dollars in just a little over a year and three months.

Ash Patel: What was it that you did to earn that net worth?

Joe Marques: Doing the same thing I was already doing. It’s just things started working for me, because I believed that I was worth it. I didn’t look at everything as being in the way, I looked at it as on the way, and knowing that everything works for you, nothing happens to you. Happening to you – that’s a victim mindset. I can look back over the worst periods of my life – at the time I was going through it, I thought that’s the worst thing ever happened to me, things like that. But when you look back over and see what all you learn from it, what it helps you to achieve, it’s the best thing that ever happened to me.

Ash Patel: What were some examples of asset purchases or partnerships? Because you didn’t have any money at this time.

Joe Marques: No, I had no money. I partnered with actually a friend of mine from high school that was a GC and a builder, and then we used equity partners; and we still use equity partners. We’ve got money now and could do a lot of these projects that we do without bringing on equity partners. But if you hold on to that money as reserves, and you keep that money, you can do multiple projects… Versus being tied up in one and you’re locked down. If it gets marked down, then you’re stuck, you can’t grow it. Whereas if you use equity partners, you still have money tied out there to where you can invest in other projects, you can have multiple projects all at once. That’s what’s called opportunity cost. That was something I had no clue about until George Anton. It’s that money sitting in a checking account is not dead money. When that’s on your balance sheet, and when that’s on your personal financial statement, you can qualify for multiple projects.

Let’s just use $100,000. If you put $100,000 in a million-dollar project, then you can get that project done. But if it drags out six to nine months and you could have done three other projects in that timeframe with that 100,000 sitting in the bank account, then your opportunity cost was the profit on $3 million worth of additional projects, versus that one profit on the million dollars. I’d much rather create a pie factory where I’m only getting 50 to 60% of each pie, versus owning 100% of one pie. It’s basically using the velocity of money in multiple projects and keeping the money working in multiple areas, is the reason why we were able to build up that fast.

Ash Patel: On your bio, I see a resort. What did you do with that?

Joe Marques: We have built out several waterfront properties in Gulf Shores, Alabama. I also consulted on the Silver Sun Gallery in the Dominican Republic, which is a big, huge –I don’t know who’s got the flag on it now, but it’s a resort, hotel, and casino, with retail space. I’ve consulted on projects in St. Lucia, as well as Tulum. One of my clients currently is in Puerto Rico, that we’re consulting on some stuff with.

Break: [00:18:16][00:21:37]

Ash Patel: What are you today? Are you primarily a consultant, a developer, an investor?

Joe Marques: Primarily, I am a coaching consultant and investor. I still do hands-on development, but I’ve stepped away from the actual doing part. I work more on the business than in the business. I help qualify the properties and I help get them approved entitlements. But as far as hands-on development, I’ve stepped back from that. I’ve got one project that I’ve still got some hands-on development that I’m involved in. But once that one’s done, it’s pretty much on the other side of it.

Ash Patel: What have you learned in all of your years of coaching and consulting? What’s the biggest hindrance to people moving forward? You’re going to say mindset, but what is it about the mindset that keeps it from moving forward?

Joe Marques: The biggest thing is self-worth. People don’t think they’re worthy of having that kind of money. People will argue when I make this statement, but you can do empirical data and pull it up. Your net worth will equal your self-worth. If your self-worth is down, your net worth will go down. Now, can somebody temporarily make a lot of money? Yes. But if their self-worth is not up there, they won’t keep it. They’ll give it away to things that they feel guilty toward. They feel guilty toward the children and wife because they’ve taken too much time business-wise – they’ll spend money that they really don’t have to cure their guilt toward them.

It’s something that until you truly buy yourself, it’s hard to have long-term wealth. And wealth is a whole nother thing; wealth is not money. Wealth is all seven areas in your life where you live an inspired life. If you’re chasing money, you’re not going to have a wealthy life, because you’re going to destroy other areas of your life chasing money. One thing my granddaddy said that took me years to catch on to was, he said “Money is a lot like cats. Have you ever chased a cat? They’re kind of hard to catch. Whereas if you start doing something that the cat’s interested in, it won’t leave you alone. It’ll get in your way. Money is a lot like that. If you’re chasing money, it’s hard to catch. But if you start providing service to the universe, start doing what you enjoy, what’s in your values, and you’re providing service to the universe, the money’s the easy part.”

Ash Patel: Joe, what is your best real estate investing advice ever?

Joe Marques: Well, that’s going to be two parts. First, don’t do real estate investing if that’s what somebody told you to do because that’s the way to make money. Do real estate investing because that’s what you want to do and you enjoy doing it. Some people won’t enjoy land development, some people enjoy fixing and flipping. If that’s what you enjoy, do it. If you enjoy wholesale and you like the art of the deal, getting things under contract, and then somebody else that wants to do the work, do that. If you like land development, do that. But figure out what it is you truly enjoy and become the best that you can at it. The second part is to take action. You can read, you can study, you can take nine million courses, but if you don’t act on it, you’re not going anywhere. Coaches and mentors are very valuable. They help you short-circuit the timeline drastically but you still have to take action. Because you can spend money on a coach and mentor but if you’re not going to take action on what they tell you to do, you’re still not going anywhere.

Ash Patel: Do you use a coach now?

Joe Marques: I have five coaches right now. I will pretty much invest in coaching and mentorship pretty much till the day I die because we’re all living beings. Every living being is either growing or dying, there is no in-between. I do everything I can to challenge myself in the seven areas of life to where I am growing. For example, you’ve seen people I’m sure that within a year of them retiring, if they’re not dead, they’re out of shape, despondent, and not accomplishing anything. But a lot of people die right after retiring because they don’t have anything to live for, they don’t have anything to challenge them. I’m not going to be in that position. Einstein said, “A problem cannot be solved from the same level that was created at.” I pay for mentors that are higher level so when I create a problem, I’ve got higher level people that can help me solve it.

Ash Patel: Joe, are you ready for the Best Ever lightning round?

Joe Marques: Definitely.

Ash Patel: Let’s do it. Joe, what’s the Best Ever book you recently read?

Joe Marques: Best Ever book I’ve read recently is Chasing Success by one of my mentors, Dr. Alok Trivedi. Because it truly helps you figure out that it’s not about chasing money or success, it’s about figuring out what you want out of life and living your life.

Ash Patel: What’s the Best Ever way you like to give back?

Joe Marques: I love doing impact investing, that’s where you’re giving. Most people listening to the language give back. I don’t give back. I give because I’m truly grateful. When you say give back, a lot of people give out of guilt. That’s the same thing. I give because I truly am grateful for everything I have. I have the ability to make money, and I give because I’m grateful and I believe in that cause. I truly love helping single women and children. I help with one of my students who has an excellent cause for battered women, I help with that. Then impact investing is where, not only are you doing good for the community, such as building foreign student housing on different campuses, to where foreign students have other foreign students from the same country, to where they feel like they’re at home and they’re not alone, and can assimilate into the university life. But not only are you doing good, but you’re also making money in the process. Residential assisted living is another thing. You’re able to help families take care of their loved ones without being in full-blown nursing homes to where they can have a little bit more of independent life. A lot of the residential assisted living facilities, those little communities become like family, there are friends that play cards, they actually have a connection to where they can develop relationships, and not feel alone versus an institutional nursing home type thing.

Ash Patel: Joe, how can the Best Ever listeners reach out to you,

Joe Marques: The best way to reach me is www.cowboyjoe.me. You can learn more about me and you can schedule a 20-minute call. I do a 20-minute consultation call to help you see if it’s something interesting. You want to learn land development or if you have a project that you need some help on. I give 20 minutes of consulting for free to determine whether or not we’re a fit and I solve your problem. I did a 20-minute call recently that I actually saved you two ladies for making a $600,000 mistake and didn’t charge them anything. Now, of course, they took that knowledge, they’re looking for additional projects, and the minute that they’ve got them lined out, they’ll be calling me back. But I truly do love teaching people about this.

Ash Patel: Awesome. Joe, I got to thank you for being on the show today, sharing that tough story about your downfall, all the lessons that you learn from it, and how you bounce back. Thank you again for your time today.

Joe Marques: Ash, it was an absolute pleasure. Again, I hope I added some value to your listeners because I truly do love reaching out and connecting with people.

Ash Patel: Thank you again. Best Ever listeners, thank you so much for joining us and have a Best Ever day.

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