This is Part III of a multi-part series where I try to answer the single question that I have been asked most often since I first went public about my new MultiFamily Housing Business, “Why?”Read Part I by clicking here
Read Part II by clicking here
One of the things that I had to get over about this industry is the number of “gurus” that are out there marketing themselves as some sort of expert on the hottest trend in Commercial Real Estate…MultiFamily Housing. Don’t get me wrong, there are some very smart people in the industry and some of them you will see and hear in these mediums. The problem is that for every one of them there are dozens of these so-called “gurus” who were simply at the right place at the right time. You may ask, “But isn’t that half the battle?” and I would say yes, that is half the battle of making a lot of money but you need to think down deep of what your definition of a “guru” really is. For example, what if I told you that I bought 10,000 Bitcoins in 2009 for $50 (yes, this is what they were selling for then). Then, what if I told you I kept them through 2017 and sold them for $197,830,600 (yes, this is what they were selling for then). Would you consider me a “guru” or just “lucky”?
See, the problem is that ANYONE can make money when the market is running in their favor. When you can buy an asset today, do a little light rehab, and sell it in 24 months for a Cash on Cash Return of 63% that doesn’t come from being an expert. That comes from taking advantage of an opportunity at the right time. But once you do that once or maybe twice and you see a market change coming down the line what do you do then? That’s when people who realize they were just “lucky” become gurus and teachers. It is way easier to make money from the sheep than it is to keep finding deals that will turn the same types of return as the market has provided over the past 10 years.
As a long-time entrepreneur and having operated multi-million-dollar-companies through the “Dot Bomb” in 2001 and “The Great Recession” of 2008, I can tell you that operating a business through a recession is totally different. The rules get changed on you, quickly. The banks stop being your friend and become your enemy. Vendors you have relied on for years find themselves needing you to keep them solvent. Your customers (or in this case, tenants) find themselves having to decide which bills get paid and which must wait. And the worst part….it all happens virtually overnight. To be able to survive you must be prepared both physically, mentally, and financially. I am thinking that some of these self-proclaimed “gurus” are going to be in for a rude awakening when they realize this to be true.
The good news, as I mentioned in Part I of this series, I don’t think it will be a repeat of 2008. I do think there will be a correction or slow down or whatever you want to call it, but for those of us who have lived through it and prospered through it, I am confident we will be able to do it again. For those that were still working their office jobs in 2008, I guess we will find out soon enough.
As this series continues, we will look at how I have decided to approach this industry. A little about my history of being able to plan and execute getting into an industry where my knowledge was limited. How to go about assembling a team and how to put that team in the best position to be ultra-successful. And more.