The Good Stewards Real Estate Podcast

Developing Or Pivoting Your Business Strategy

Episode Summary

It’s critical you have a strategy in place that acts as the guiding principles for your business and helps you make decisions. Given the current market conditions and in business in general, there are always a lot of caveats and you might need to pivot your strategy slightly to flow with the market. But generally speaking, you want to have a niche in mind, narrow it down, and make systematic changes while avoiding the “shiny object syndrome”.

Episode Notes

COVID-19 And Your Strategy:

2:00: Things change, and you may need to change at this time. There’s a common saying, the only constant is change.

3:30: You might be in Seattle, or a market similar where they’ve recently extended the eviction ban by 6 months after the stay-at-home order has lifted. You should contact your lender on the properties that you're having difficulty collecting rent, they likely will be pretty understanding if they’re local.

7:22: The general rule of thumb is you want to focus, you want to stay focused on your niche, master that niche and be a master of one trade and not a jack of all.

Developing Your Strategy:

10:54: It’s critical to have your business built on a firm foundation and your strategy should guide you. Not to say that you can’t add additional strategies, just shoot bullets, not cannonballs as Jim Collins would say.  

15:20: When developing the strategy at the beginning, it will be something that you have to build and work towards and create as you go along. General business mindset in general, nothing is ever complete, you're always working towards something.

When Opportunities Arise:

17:34: Say COVID is really impacting you right now, you still don’t want to radically change things. Do your due diligence and execute with excellence as best you can.

20:50: After you’ve niched way down, you’re now an expert and can start to niche up. We’ve got a solid financial base after 31 years. 

24:47: Ryan found a 12-plex that looked to be a great opportunity, but ended up being his most expensive lesson he’s made. Always verify deposits.

27:45: Buying other people’s problem is not Amanda’s favorite

29:40: Part of your strategy is really building up to it. And then part of it is making sure you're in the position to cover all the bases.

When Things Go Bad, Which They Will:

32:10: Even if things do go bad, knowing your exit strategy is less stressful when you have options.

35:00: Ryan looks at it, kind of like a race car. Things are going to run great, then something explodes and then you rebuild that piece. You're going to get further down the track, you're going to get faster, but something else is going to break.

If You’re Starting The Process:

36:44: Realize it’s a process and there’s a lot of trial and error. At the same time, be conscious of who you’re taking advice from and that they’re people who are where you want to be.

Books mentioned:

Good to Great, by Jim Collins

Connect with the Good Stewards:

Episode Transcription

Bill: (00:00) I realized I couldn't buy things where I could see campus from them because they were just too freaking expensive. Concurrently, I also realized that if I could add to the number of bedrooms, I could increase rental value. So, my strategy was to start focusing on the B and C ring around campus and forget about the A ring and move out a little farther and then only focus on properties that had an upside of square footage.

INTRO: (00:30) Welcome to The Good Stewards podcast, the only podcast dedicated to seasoned real estate investors who want to maximize the cashflow potential in their business. We are “buy and hold” investors with a thousand plus properties and markets across the U.S. who bring an insider's view into the nitty gritty details of real estate investing. If you're looking to develop the mindset teams and systems that can dramatically build your real estate business and network, you're in the right place.

Ryan: (01:02) Welcome to this episode of The Good Stewards podcast. I'm Ryan Dossey.

Amanda: (01:06) I’m Amanda Perkins.

Bill: (01:08) I'm Bill Syrios.

Andrew: (01:09) And I'm Andrew Syrios.

Andrew: (01:10) Hello everyone. Welcome to The Good Stewards podcast. Again, please check out our website, thegoodstewards.com. Download our free eBook and share our content. We very much appreciate it. Today we're going into strategy, business strategy, adjusting your strategy, doing all those sorts of things. So, there's all the ins and outs of the how to do this, how to do rehab, how to do property management, but it all comes together in one cohesive business strategy, or at least it should. In theory it should and it kind of needs to. In addition, there's the shiny object syndrome wanting to do all sorts of things because they're new and exciting whereas what you're doing now is old and boring. And so, that can lead you astray. Shiny objects are often fool's gold. But at the same point, that doesn't mean that you should stick with the same thing forever.

(01:56) You might know typewriters extraordinarily well, but at some point it's time to adjust your strategy. Things change, things move on. You need to change at the time. The only constant is change as they say. Right now, we are dealing with this whole Covid situation, the economic lockdown. There's a lot of uncertainty. A lot of people are upset, people yelling at each other and all sorts of legal things going into place as well. Restrictions. Seattle has just announced that for example, after the lockdown ends, whenever that is, I think it would probably be in May, maybe they'll push it back into June. Evictions will be postponed or banned for at least six months after the band is ended. So, Seattle is already a very, very difficult market to rent in to begin with that makes it all the work more tricky.

(02:45) So these legal issues, they might not make it so that you have to change strategy, but certainly you have to adjust tactics. Perhaps they get so arduous that you do want to change strategies and move perhaps to a different market or move to flipping or something like that if you live in Seattle. But that is a problem that we all face and we all have to weigh these pros and cons of different strategies and moving to different niches very carefully. But we do have to do it.

Amanda: (03:13) I hadn't heard that about Seattle, but it sounds like something that Portland, Oregon would also adopt. Say you are an investor in that market and you can't deal with… What is your strategy for dealing with a ban on evictions if people decide not to pay? On the fly like you're in this market, what would you do?

Bill: (03:40) I think the first thing to do would be to contact your lender on the properties that you're having difficulty collecting rent. I think there'd probably be a lot of understanding in a specific market by a lender who realizes that residents are not being required to pay rent for six months. So, I think that is about the only strategy you have. You are kind of locked into the properties you own and what you're doing with them. I mean, I think we're talking about strategy on a little different level when we talk about pivoting into a different niche. In that case, it's all about communication with the lender and being very conscious of the fact that you need to have a relation or you need to build a relationship that will help you get through whatever you need to get through.

Amanda: (04:29) I mean, I think if you were thinking about, if we were trying to tie that into sort of like a pivot, this would be something that you'd be looking at in, I mean say seven or eight months and we're talking about when we're back out in the world. Basically, that sounds like an eviction band through the end of 2020. So does that mean in 202 in a market like that. I mean, would that be a market that seems viable for you to figure out? There's got to be in there that could change things. That could be an opportunity there. But is that something that…

Andrew: (05:04) I mean there's probably going to be a lot of landlords. Probably it’s going to be a lot of landlords going bankrupt so that could be an opportunity to purchase there unfortunately. But that is something to look into as well.

Amanda: (05:15) I guess. And then you just think like, okay, if this was a market that did it one time, are you going to get yourself into this market because it seems like they'll just probably continue coming in and trying to make things, muddy the waters for an investor. Because putting an eviction ban has a lot of unintended consequences that I feel like people aren't… When they're legislating to try to make a rule to save a few, there's a lot of unintended consequences there that trickle down to everything else because maybe there were only 5% of people that were struggling with their rents and they put this in effect over 100% of people. Like is this a market you would want to get into knowing that this is how their city is going to respond?

Bill: (06:07) But in general, it seems like a landlord friendly states, counties are superior to ones that aren't in the sense that if you're always having to both, fight city hall because there's increasingly restrictive laws coming down on landlords that might change your strategy somewhat. Where are you going to direct your attention? Where are you going to direct your efforts at investing? I know people who pulled out of states, pulled out of cities because of this very reason that had just gotten too onerous. I mean, Oregon for instance, is the first state to put in a restrictive law that allows landlords to only raise rent, certain amount kind of thing now. Of course, there are Eastern cities like New York that have those kinds of laws in place, but those are increasingly becoming true in a number of states. And so, I think you just got to look at what you've got in front of you and make those kinds of determinations.

Andrew: (07:16) So there might be instances where it gets too arduous, too difficult in city hall’s Basically, made it impossible for landlords to make any money or something else has happened that makes that possible. In that case, it makes sense to switch, but regardless of the general, it makes sense to switch some times. Most of the time, the general rule of thumb is you want to focus, you want to stay focused on your niche, master that niche and be a master of one trade and not a jack of all.

Bill: (07:45) I think of Jim Collins' book. By the way, I've got laryngitis for those of you that think I normally talk this way. But he has the hedgehog concept. His book “Good to Great” is really worth reading at this point because it's the intersection of three circles that should drive your business strategy. And those three areWhat am I passionate about? What could I be the best in the world at? And what drives my economic engine?” And that applied to real estate, I think will set you on a course that makes a lot of sense. I just remember early on when I was finding tremendous success with student rental properties, I ended up buying a whole street of houses in a little community about nearly 20 miles away. And that killed my moral lucrative strategy for about a year because it took my eye off the ball of what was really driving my economic engine. It was a bad call on my part. I made decent money but it was definitely a flier in the wrong direction. So those three circles have kind of kept me pointed in the right direction since I really got a hold of Jim Collins methodology.

Andrew: (08:57) And Jim Collins is definitely worth reading. Basically, the sum of this podcast is we're going over “What kills a business?”. And the first thing is sort of a combination of two and one is not having a clear strategy or having too many. And this is sort of an iterative process because a lot of it you can build up a great strategy and then the shiny object syndrome takes over. And all of a sudden, it's like, “Oh, this is boring. I've actually learned how to do it well and let's do this and then let's do that and let's do this and let's do that”. And again, every time you start over, you might not start back at square one. We start back at the very beginning of that slow, but sure exponential growth path. And you have 10 businesses at the very beginning versus one that's really taking off.

(09:49) 10 businesses making $10,000 or not 10 businesses, but 10 strategies each making $10,000 a year isn't going to do anything compared to one business that’s growing, exponentially growing, doubling every year or thereabout. So really these kinds of come together. The first two mistakes are one, not having a clear strategy. And the second one is having too many strategies. And that's not to say you can never, I guess this needs a major caveat. It's not to say you can never add a new strategy. You can never add a new department, a division, a new plan, but you have to really get the first one locked down. You never master anything. You can always get better, but really have it down. And then you can start a new one perhaps, particularly to take advantage of a particular opportunity. But if you start to take your focus off, like all of a sudden one gets a little bit boring, you've kind of gotten a handle of it and then the new shiny object comes, you move over to the next one. You really starting back long ways. And it's something that really has been the bane of a lot of entrepreneurs and real estate investors.

Amanda: (10:54) And one thing I always say is it's really important for us to have our foundation really strong so that foundation company, we really know what we're doing. We spend most of our energy making sure that company that is the foundation really hits the nail on the head with all of it and then build the strategies from there. And if you want to go in another direction, and this is another Jim Collins, “Shoot bullets, not missiles”. Or what does he say?

Bill: (11:23) Cannonballs.

Amanda: (11:23) Cannonballs meaning, “Okay, you do want to try something else out. Try it out in a small way and don't just stop what you're doing”.

Ryan: (11:32) Don’t convert the entire hundred-unit portfolio to Airbnb’s overnight.

Amanda: (11:38) Right.

Ryan: (11:39) I think it's a matter of, at least in my experience, you want to have a business that pulls in “now” cash that allows you to fund kind of the “buy and hold” stuff as well. So, whether that's looking at the most successful “buy and hold” investors I know, they either flip to fund, “buy and hold”, they're wholesaling to fund, “buy and hold”. They're a large successful high-end real estate agent taking that cash to put it into “buy and hold”. So, I think it's a matter of like you have to be able to make money while deals are in the process. But I also think there's a reason I don't really do flips, right? I'm not great at them.

Bill: (12:28) You're talking retail flips to homeowners, aren't you? So, you don't do the rehab is what you're saying, right?

Ryan: (12:35) Correct. We're not doing like retail flips very often. Occasionally we will if something kind of falls in our lap, but my kind of thought process is if I'm going to do that much work, I want to keep it forever, not turn around and flip it in 30 days. So, I think that's part of having a clear business strategy comes back to “How are you going to make money” and then “What are you going to do with that money?” And if you're a real estate investor, well, you're probably going to put the money into “buy and hold”. But you've got to have something else that's pulling in cash as well.

Andrew: (13:11) There's a bit of a myth that with the BRRRR investing model, it's a little bit of a tangent, but the BRRRR the Buy, Rehab, Rent, Refinance, Repeat strategy, which is basically flipping to yourself, refinancing out all of your original investment. I think a lot of people think that you can basically do that without any cash. If you have a flip and you don't do that well and you're onto it for 85% and you excel, you still make a profit, not a great one, but you make something. BRRRR, there will be cases like that, there will be bad appraisal. So, it is something that it's pretty much not something you can do or consistently do without any sort of either cash coming in or cash on hand. If you have some savings, that's great, if you have a partner or something like that. But just going right off the bat with virtually nothing or very little is kind of doomed to failure with BRRRR.

Ryan: (14:05) No, even if let's say you execute one where you get back all kinds of cash back, right? You have to pay for utilities, you have to pay for insurance, you have to pay for the marketing typically to get that deal up front. You are going to have some like exposure here. And that is if everything goes perfectly, you don't leave anything into the deal. But again, we’re people, not every deal is not going to be perfect. We're going to miss stuff. We're going to think we fixed something and then like we ran into an Indianapolis we had a GC we had to let go of because we had to go back and redo a bunch of this stuff. So, yeah, we budgeted for it and it was done but not to our standards. So now we're having to put more money into deals we haven’t planned for.

(14:54) In theory maybe if you're doing one at a time and you're being extremely cautious and you're doing one or two a year, yeah, you may be able to get away with never putting any cash into a deal. Maybe you have a really good banking relationship.

Andrew: (15:05) or house hacking.

Ryan: (15:07) Yeah. But I think you're setting yourself up for failure if you kind of have this pie in the sky dream of like, “Oh, I'm going to buy 500 units and never have to put in a single dollar and everything's going to go according to plan”. That's not how real estate investing works.

Andrew: (15:20) No, it's not. When developing the strategy at the beginning, I guess the only thing that just might be that you sit down on paper and pad and you come up with this incredible business plan right off the bat and then you start. It will be something that you have to build and work towards and create as you go along. It's sort of sort of a mindset to get into in business in general is nothing is ever complete. You're never done. And so, it's always working towards something. Perhaps you start off as a flipper and then like Ryan moved more towards wholesaling and trying to hold or something like that. And so, your strategy develops, sort of evolves. But all the long, you shouldn't be just doing things.

(16:11) There is a great Bill Walton quote, “Never mistake activity for achievement”. Just doing something is not accomplishing something necessarily.

Ryan: (16:20) It feels good.

Andrew: (16:25) So far as that is the case you want to be looking for, “Okay, what's my niche?” And we've had a podcast on this. You can check out niches, you can check out. You want to really hone in on that, what area do you want to buy in or what types of areas, what price point are you flipping or are you wholesaling, are you holding, are you doing a mix of them. Develop that strategy from there and really hone in on it and you're sort of narrowing your funnel as you work this through. You should have an idea going in. You shouldn't just go in blind.

(16:57) Like, I think I want to wholesale properties and also hold a couple of them. And then look at the areas and you kind of find one and this is pretty good. “Oh, maybe it's not the best. I'm going to switch over and go a little bit nicer because this one's hard to find quality residents in”. And so, you kind of hone in on that strategy. Once you've honed in on it, then you want to maintain it, build off of it and move in sort of like, “Okay, you're going to need to change things”, but you don't want to radically shift something. Generally speaking, maybe in very rare circumstances. But generally, you want to like, “Okay, I want to add some. I want to start adding swell multis or something like that.

(17:34) Every once in a while an incredible opportunity will come along and you might need to be ready to make a major shift, but that should not be something you do lightly because you're going to feel the difference would be like a deal comes by, that's just obviously the deal of the century, not quite your niche. You're going to want to do actual research and due diligence in that, but if you just go to a seminar and they're talking about this great new thing, that's the best thing ever. That's when the shiny object syndrome kind of comes into play. I know that's kind of a lot of different things. A lot of caveats. Unfortunately, in business there are a lot of caveats but generally speaking, you want to sort of have a niche in mind. Start to narrow it down, make your changes sort of systematically and not radically and try to avoid the shiny objects as best as possible.

Bill: (18:28) Well, yeah, I would encourage you if you're listening to this to rewind Andrew's last two and a half minutes of talking and listen to that again because that is the most critical thing you can do in starting out. And I would consider niching down. So, you niche down. I'll give you an example. When I finally did, I kind of fell into the student rental market. It became very lucrative. I realized this was a tremendous niche, but I realized I couldn't buy things where I could see campus from them because they were just too freaking expensive. The most expensive real estate in our area is something that is close across the street from campus. Concurrently, I also realized that if I could add to the number of bedrooms, I could increase rental value. So, my strategy was to start focusing on the B and C ring around campus and forget about the A ring and move out a little farther and then only focus on properties that had an upside of square footage that you could add bedrooms to and bathrooms as well.

(19:37) And so, that even got me into the C ring around concentric circles around campus. But in my mind that was niching down and the three circles of what I was passionate about, I had a campus ministry background and I liked students. The fact that I figured out how to do it well and that it really drove our economic engine as a company kind of came together. And the shiny object syndrome did come my way, way too often. Like I bought into a trucking business. I have five belly dump trucks if you can imagine during this period where I was having such great success.

Ryan: (20:15) That was pre Amanda, wasn't it?

Bill: (20:17) Yeah, that was when I was losing my mind.

Amanda: (20:22) Amanda does not have the power to curtail shiny objects syndrome. So, you can say you're recovering shiny objects chaser but I would say you're still deep in the addiction.

Ryan: (20:38) Bill’s like yeah, just like lease-optioning ponds.

Bill: (20:41) So, then, you can now erase what Amanda just said, but…

Amanda: (20:47) Leave it in.

Bill: (20:50) What I would say is that at some point, and Andrew did mention this, you can start to niche up after you've niched way down and have extreme expertise in what you're doing. You can start to find other opportunities coming your way. And as you niche up, we started getting into multifamily, we started getting into regular single family. And we began to niche up in a way that gave us other geographical locations eventually. Now we're talking years here. But now we're even into some really crazy stuff where we niched up and do affordable housing on multi-families. That's not something I ever thought I'd get into, but it just kind of opportunity lead to opportunity. But we have a financial base that allows us to niche up at this point. If that's not where you're at you might want to niche down.

Andrew: (21:46) And so I guess again, if only we could give binary solutions like in this case, yes, do it and this case don't. But I guess I'd give a few guidelines. Generally speaking, you want to have an idea of what you're wanting to do, get your education, and then have an idea of what you want to accomplish. Have an idea of what your strategy is and then start to try to narrow down that niche. And try to avoid the shiny objects. Once you've started to master that niche and that of course you never master it, but once you've started to, then you can start looking for adding another niche. You're going to need employees or partners to do that. You don't want to be involved in two niches at the same time, just yourself.

(22:31) And then the other point is if you are going to go into another niche, fire bullets, not cannonballs. Do it small, don't go big. The only exception is the absolute killer, deal of the century that comes your way. And this has happened, “The Black Swans”, that just don't seem to make sense but are not in your category. And when that happens, it's not a bad idea, you're going to need to do extra research, extra due diligence, be very careful, making sure you've got all your I’s cross all your T's. Maybe even bring somebody in who's more of an expert in that. Make sure you've got like a nondisclosure agreement so they don't steal the deal from you. But you want to be very cautious because there are a lot of deals that they look good on the surface, but because you aren't familiar with that type of strategy, they end up coming back to bite you very bad.

(23:22) And I've seen A deals go to F deals. We've had deals in Kansas City here where we thought it was a great deal and then later like, nah. I mean we bought a 12-unit apartment complex that we thought was a great deal. It had a hap contract basically. It was kind of like section eight except it was stuck with the building. People with section eight vouchers coming, they were coming in and then they'd get a hud payments to the building. And it turned out to be incredibly hard to manage. We had a hard time with the manager to kind of find another manager because those buildings are usually a hundred units, no one wants to manage 12. So, we had to opt out of the contract.

(24:02) The people moved out, the units were in terrible shape. We had to do a very major rehab. We have a good property now, but it wasn't worth the cost and effort that went into it. And so, that deal seemed like an incredible deal at the beginning and it turned out to be not such a good, alternative to probably a bad deal in the long run. And that's because we probably jumped into a type of investment that we were not experts in just because it looks good.

(24:24) And so those deals can be great. I'm not saying if you got the deal of the century just because it's not in your area, I'm not saying to avoid it. Just be extra cautious, doing extra research, extra due diligence and trying to find somebody who is an expert and getting their feedback.

Ryan: (24:37) So, Andrew was brave enough to talk about his 12 unit faux pa. So, it's my turn. I think like most investors that have primarily done single family or like duplexes, triplexes and quads was like, grass is greener, cap rate, force appreciation. Let's kind of get in this whole multifamily thing. That bit us in the rear quite a bit. So, we bought this 12 unit that I'm not convinced that fraud didn't go on at this point. Rent rolls, everything looked great. Biggest, very expensive lesson I learned on this thing was we checked everything but we didn't verify deposits. And I think had we done that, we probably either would've never bought this deal, gotten a significantly better deal or we would have found out the guy really did commit a fraud in selling it to us.

(25:32) Long story short, we tried treating a multifamily like a house. And if you buy a house that's tenant occupied, you kind of plan on at some point they're going to leave and you're going to have stuff to fix. Well, we had that but 12-fold. It seemed like in the first 30 days everybody just invited cockroaches in as tenants and started smoking meth. It made like no sense how quickly this building just kind of imploded on itself. And we ended up with 10 or 11 evictions within 45 days. So, we had all of this capex that we knew we were going to have to do, but we thought we were going to get to ride the gravy train a little bit before this came out. We went into it woefully under prepared.

(26:23) I think the biggest lesson we learned was our property management wasn't nearly as dialed in as it should have been. Honestly, we bought like 70-units in 2019 and that was in like the first four or five months. We didn't buy anything else for the portfolio for the rest of the year because we had to get our property management figured out. So, on that deal, we ended up what we thought was going to be cash, we'd get to just kind of gleefully put in as people naturally left…

Amanda: (26:55) Your mailbox money wasn't coming into the mailbox.

Ryan: (26:59) Totally passive.

Amanda: (27:00) Totally passive.

Ryan: (27:01) Yeah. No, it was like the most dramatic evictions, CPS calls. I mean all kinds of just junk to get everybody out. And then all of this cash that we thought we were going to get to do over a year or two was like, “Okay, cool, we need this in 45 days”. I think that is one of the things with having a business plan is looking back at it. Prior to that we'd done extremely well. Our economic vacancy was pretty solid. We didn't really have many evictions or much stuff outstanding. And then it was kind of like, that was kind of the straw that broke the camel's back of “Okay, we have some growing to do here”.

Amanda: (27:45) And I think the big difference there is that you were doing the onesie, twosie, threesie’s, and oftentimes rehabbing and then putting your own resident into the situation and buying other people's problems is not my favorite.

Andrew: (28:04) The moral of the story is clear. Don't ever buy a 12-plex.

Amanda: (28:07) That's right.

Andrew: (28:08) 13, 11, perfect.

Bill: (28:12) I would say one thing is that this can torpedo your business. If you make a mistake on the front end of your business strategy, you've got to kind of live with that mistake and try to correct it and that can really pull you down. The nice thing about single family, and I do like multifamily, I have to tell you for many reasons, economic scale that you can do. But the nice thing about a single family is you can sell them so much easier to homeowners or whoever and you can get out of a problem. When you get a multifamily, you're talking about a whole different kind of buyer if you need to sell it. And in this property for instance, we can't sell, we have to correct the problems. I'd love to just put this on the market, let it be somebody hopefully kind of make what we have into it and let it be somebody else's problem. But you can't do that at this point. We have to take this all the way through, which means it's going to soak up a lot of our time and energy to correct this. So, if you're right there, again, be careful about taking the next step into a niche.

Amanda: (29:16) And biting off more than you can chew because honestly, if you're just a solopreneur and you don't have reserves in the bank to cover this, we'll call it a mistake or maybe just a learning experience or a learning process. If you don't have that to cover that, you're sunk. 12 people that weren't ever really paying rent that you were counting on paying rent, you don't receive any rent, you're on the hook for mortgage, insurance, repairs, everything. Utilities, all of it, it's on you. And if you don't have the money to pay for that, you're going in foreclosure right off the bat. Part of that strategy really is building up to it. And then part of your strategy is making sure you're in the position to cover all the bases. And we've said this a lot and it's obviously not something we coined ourselves, but always plan for the worst and hope for the best, but plan for the absolute worst. Plan for 0% occupancy and evicting every single resident because that could possibly happen.

Ryan: (30:27) I think that's part of having a good business strategy. I own a couple of companies that aren't real estate investment portfolios. And one of the biggest lessons I've learned is there's times where you're putting out fires and you're realizing, “I should've seen this coming down the pipeline, but I didn't”. Right? So, I think as an investor looking at those, “Okay, if you buy one house, what do you do if that person doesn't pay? What do you do if they cause $10,000 worth of damage on their way out?” Because in my experience, good luck getting that money out of them ever. Right? What do you do if you have an insurance claim and you have to put them up in a hotel and you don't have reserves or something like that? So, I think it's one of those things to try to foresee, like Amanda mentioned, what are the ways this could go sideways and how would we handle that?

(31:24) I mean, I think that's super smart in life in general, right? If you go through it. I think it's a Bill quote of expectations or kind of just pre planned resentments.

Bill: (31:35) Premeditated resentments. Expectations are premeditated resentments.

Andrew: (31:41) Unspoken expectations. You should have some expectations. I expect you to not punch me in the face right now.

Ryan: (31:49) You're never disappointed that way. But no, I think you can build resentment towards your business if you go into it with these rose-colored glasses and part of your business strategy when you're setting up is having some contingency plans. And on that 12-unit, for instance, we're fortunate that we own some really nice single families that we've been able to liquidate to pull in cash to help offset some of the capital needs there. If all I owned was that 12 unit, it would be like, “Well, okay, real estate investing doesn't work. It's a scam. You sell it for a loss”. So, I think knowing your potential exits where you can pull cash from if you need to and kind of trying to expect the unexpected is never a bad attitude or even something to have in writing for your business plans. Way less stressful if you have options.

Amanda: (32:44) And then another thing about it is, say you come up with a plan and that's just what you want to do because that was the plan you came up with. But the plan isn't working. It's okay to decide that you need to do something different and make a change or come up with a new plan. You can't just say, “That's the plan. That's what I said I was going to do. So that's what I'm going to do. I'm just going to keep doing it, banging my head against this brick wall. Eventually I'll get what I want”. At some point, yes, the plan was just an idea when you were coming up with it. You tried to implement it. Maybe it worked, maybe it didn't work. And maybe there's something that has to change along the way. That doesn't mean like Andrew talked about, you just go do something completely the opposite, but maybe you look for something complimentary that's maybe a better fit for your market or you as an entrepreneur or you as a person. You find a place to be.

Ryan: (33:41) As the four of us on this call. Can any of us say that the reality met the expectations we had before we started? I can't. Like, “Oh, it's going to be like mailbox money”.

Amanda: (33:51) Bill has one partnership that is like that. Very little work and it's mailbox money and there's no debt. It was the right place at the right time sort of venture. But that's very niche-y. Very unusual. But there's one.

Ryan: (34:10) That's not really real estate properties. It's more notes which is just different.

Amanda: (34:16) Yes, but I will say there's one that my expectations were low and they've exceeded expectations. But usually it's no.

Ryan: (34:10) So, the rest of us are disappointments, is that what I’m hearing?

Amanda: (34:29) No. The thing about that one though is that just wasn't very much work. That was just the right place - right time. The rest of the stuff works out, it's just when you're in the middle of making it work out, it doesn't feel like you're getting…

Ryan: (34:41) It’s just more work than it is initially planned for.

Amanda: (34:43) It's not overnight. You're not just like, “Oh wow, we're just firing on all cylinders and this is amazing and everything's working”. It's like 10 years later you look back and think, “Oh wow, we built something really great. That was amazing”.

Ryan: (34:57) We did it. I look at it, kind of like a race car, right? Like things are going to run great. Then something's going to explode and then you fix that piece, you rebuild that piece and you're going to get further down the track, you're going to get faster. Something else is going to break. I have two businesses that pull in seven figures a year in revenue and that has been my experience with both of them. I think it's going to be X and then, “Oh crap, we never saw that”. And then, “Okay, cool. We've got that fixed” and then something else comes up. So, no, I think it's one of my favorite quotes that I tell like my C level employees all the time when stuff comes up – “It's always harder and it always takes more work than we initially assume it's going to add the onset”.

Andrew: (35:42) It's just like rehab. Rehab always takes longer and costs more than you think. So, you need to build in those contingencies. So, it goes with business. All those more twists and turns all the way along. Yeah. But again, building a strategy is a process indeed. Even at the beginning, if you're stuck at square one, just getting yourself educated, which is your first step - Listening to podcasts, reading articles, reading books, going to seminars, going to networking events. Go to your local REIA, getting all that information. Getting yourself educated. I think a lot of people just endlessly get educated. But you want to see it like, don't count education as building a business. You want to do both and separate them out. Plan to be like, “I'm going to spend this much time getting educated reading, etc. and this much time building the business or approximately, you don't need to be that specific.

(36:44) And once you start building the business, you also want to start building your strategy. It's just like policies. Once you've done something and figured out this doesn't work, figuring out a policy that does and then stick to it. And then you just slowly but surely build your business. And then if you try to narrow down that funnel and then maybe once you've mastered that, you try to expand to the next thing. It’s a slow, steady process. It takes longer. It's harder than you think, but it is very important because if you get off the beaten path, then all of a sudden, you're just kind of doing stuff.

Ryan: (37:19) I do want to highlight that education piece. When you're setting up a business strategy, make sure you're learning from people that are doing it. I think one of the most frustrating things I see is people who don't have a single rental property giving advice on how to manage rentals, right? And I'll be super blunt. Like the biggest changes in advancements in my life have come from hiring people that are uniquely skilled in what they're good at. I just bought someone's course on YouTube stuff yesterday and I've realized, “Holy crap, I've been doing all this stuff wrong. I was right watching all this free content from people that weren't really making it happen”. And it totally changed the course of my career. I joined a mastermind, right? I think there's one thing to be said about, and this isn't paid education versus free. I forget what book it comes from, but it says, make sure that people you're learning from, he calls them blind regurgitates of other people's stories and facts.

(38:24) Like make sure you're learning from the person that's been through it. Not someone who hypothetically thinks they know how they would handle a 12-unit going to hell. I reached out and was like, “So, am I the only one that's done this?” I'm like, “Okay, cool”. And what I found out, every multifamily investor I know has done the exact same thing. They had a property they bought that they probably shouldn't have bought looking back at it that they had to fix. And it's just kind of part of the trajectory. But make sure as you're educating and learning that you're like, this podcast is a great example, totally free, but you literally have people that oversee over a hundred million dollars’ worth of assets and multiple markets around the country.

(39:11) I can't think of a better group to ask questions to, right? Student housing, we've done it. Development, we've done it. Single family, we've done it. Multifamily repositions in the hood in Texas. We've done it, right? You're not talking to somebody on a forum that's like a keyboard warrior who can't tell you how many times somebody has been like, “Well, I've been researching for the last 17 years”. And it's like, you know nothing, right? So, make sure as you're educating and learning, you're asking questions from and of people who have the actual track record, not just those who've thought about it. I'm going to hop off my soapbox.

Andrew: (39:50) And that soapbox is where we'll be where we end here today. Thank you again for joining us. Again, check out our podcast, thegoodstewards.com Check out our free eBook. Please share our content, and if you have any questions, please submit them to us. We'd be happy to answer them. Thank you again for joining us and have a wonderful day.