by | 28, Sep 2022

Avoid These 10 Mistakes When Investing In Real Estate | Ep. 280

If you’re just getting started in real estate investing… this is the episode for you! Our goal is to simplify multifamily real estate investing… and how much simpler can we make than a list of 10 things. 10 mistakes to AVOID. If you steer clear of these 10 mistakes, your investing journey will start smoothly!

How do you find the right partner that compliments both your strengths and weaknesses? How do you negotiate with your brain and not your ego? What should your cash-flow expectations look like? What is the cost of your learning curve?

Find out on this week’s episode of Multifamily Investing Made Simple.

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Tweetable Quotes:

“Go slow when it comes to partnerships… don’t be the town bicycle.” -Anthony Vicino

“You don’t know what you don’t know. The cost of your learning curve is often underestimated.” – Dan Krueger

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five rules of investing

The Five Rules of Investing

** Transcripts

10 Mistakes To Avoid

[00:00:00] Anthony: Hey, welcome to Multifamily Investing Made Simple. This is the podcast where we talk about multifamily investing and how, uh, it’s real cool. That’s my new intro. Is it, Is it good?

[00:00:24] Dan: It’s pretty good. I mean, we are a little tired, I dunno about you, but I, I was up late modeling last night, so I

[00:00:30] Anthony: see you. So there’s so much to unpack already.

Yeah, man. Okay, so one is we’re recording outside of our usual time, which is usually Friday’s afternoon. Mm-hmm. . So we bring a different, different energy cuz we’re tired from being the end of the week now we’re recording Friday morning, it’s before 10:00 AM and I usually don’t see humans before 10:00 AM.

I don’t, It shows, I don’t think you see the sun before 10:00 AM I like you’re pounding monster. Uh, well, I mean, I am too

[00:00:56] Dan: five, so it’s not like a Jesus just getting up, [00:01:00] but

[00:01:00] Anthony: No, no, no. Not that you’re just getting up. You don’t see the sun. Like you, you like hide your closet office at home, quote

[00:01:06] Dan: unquote office, which is a closet.

Hashtag joke. Renee, you oversold that room. . Um, . Just kidding. Or hashtag

[00:01:14] Anthony: I like working in a little hole. Actually. Hash hashtag hormo. He also works in a closet. I think his is technically like a

[00:01:19] Dan: hallway or something. It looks like it’s a fire escape. Yeah. It’s like a very skinny, like, crawl space. Yeah. Um, but yeah, no, I, I like working in that.

Let’s be focused. No windows. Don’t have to worry about the sunshine or birds.

[00:01:31] Anthony: But last night we were modeling and I, I do wanna give a shout out. If you’re local and you’re looking for a photographer to do like head shots and get photo work, like our boy Axel, awesome. So, Let me know if you’re local and some photos.

It’s on it. We’ll connect

[00:01:44] Dan: you. We should throw his, um, handles and all his

[00:01:47] Anthony: contact info and we’ll put his stuff out there. We’ll put him on blast in the notes. He’s awesome. Yeah. Um, okay. What do you think? Should we talk about real estate now? We usually do at some point. [00:02:00] We usually,

[00:02:00] Dan: we take a while to get to it,

[00:02:02] Anthony: so.

Okay. You got any bad advice?

[00:02:05] Dan: Yeah, of course you do. Yeah. Got numbers over there. What you, Yeah, that was spreadsheet. I mean, just in case Dan. . I don’t know if you guys were listening to the last episode, but we were talking ticks, so Oh, okay. In case we got into the weeds on

[00:02:17] Anthony: listeners are like ticks, like Lyes

[00:02:19] Dan: disease ticks.

Yeah, I, yeah, I went to the doctor. There’s some issues. No, we were talking about the secret way to defer taxes that nobody’s talking about, and uh, Well, we talked about it blew the roof off and, you know, it’s, it’s, it could be a convoluted structures. I, if we wanted to get in the weeds top numbers. That makes sense.

Ready? That makes, But we didn’t, we kept it simple for you.

[00:02:37] Anthony: I just, this man always has. Always has a spreadsheet on him. Always. Well, you never know. In his back pocket, he has got like, instead of business cards, he just has like miniature spreadsheets. He hands to people. Yeah. Here’s my underwriting. Well, you never

[00:02:50] Dan: know if you got a discount of cash flows on the, on the road.


[00:02:53] Anthony: which is actually, so today we’re gonna talk about mistakes that new, 10 mistakes that new real estate investors make. Mm-hmm. and, uh, Yeah, he wants some [00:03:00] bad advice for herself. I do. I don’t want, I do, but, but, but, but, but, but I think one really big one before we even talk about the 10 is business cards.

Um, Yeah. You

[00:03:09] Dan: hate him? I hate him. Yeah. I mean, you found some when we’re remodeling, Remodeling, keep dropping this. Yeah.

[00:03:14] Anthony: Last time. Well, , he, he just so everybody knows, like this man, he comes prepared when he, when it’s photo shoot time and he is like, he has these little clips so he can clip his shirt in the back to make a nice and tight and he, that frame, he’s like, I was like, What is this?

He came to me and he is like, Will you pin me? And I was like, That’s too much. You didn’t even know what I was talking about, like too much for a partnership. I can’t be done. I can’t be doing this. This is like your first. But yeah, business cards, nobody uses business cards. Don’t, don’t gimme business cards.

You’re, It’s pretty much just asking me to throw this away for

[00:03:40] Dan: you. Yeah. It’s something you have to like carry Yeah. And hold onto and it’s,

[00:03:44] Anthony: ugh. They’re like, Here, you throw this away.

[00:03:46] Dan: Okay. Yeah. Just connect on LinkedIn or whatever social you use and email each other like you more like a normal

[00:03:51] Anthony: person.

Give me your, gimme your phone information. Put you in my phone. Yeah. Don’t gimme a piece of paper. Come on guys. It’s a 2022 . [00:04:00] Anyway, bad investing advice.

[00:04:01] Dan: Let’s do this. What do you got? All right. Uh, bad investing tip of the week is, uh, you make your money on the buy. People say this all the time, so Right.

Kinda wanna punch you.

[00:04:11] Anthony: No, not you just, people

[00:04:12] Dan: say that. Yeah. I mean, it’s, it’s so cliche. It’s kind of annoying. It’s, and, and basically the logic is that if you buy something effectively, which means on the buyer side, if you get a really good price, That’s where all the money’s paid. Um, there’s a bunch of reasons why that bothers me.

Um, yeah, you do wanna, you don’t wanna overpay for a thing. Well, we were doing the, uh, uh, the book Deep Dive on What it Takes by Steve Schwartzman, uh, a couple weeks ago. Now I say that was probably, Oh, that was a while

[00:04:39] Anthony: ago. Was that a month? That was like a couple, That was like a month or so. At least maybe two feels like yesterday

[00:04:44] Dan: because, uh, there’s a lot of good stuff in there.

Check out the book. But one of the things that he said in there that I, that I really resonated with was, uh, the returns to successful ownership will often be much higher than the returns on winning a one off battle over price, meaning, [00:05:00] It’s not worth sacrificing an entire deal and all those future gains that could be made because you’re letting your ego negotiate on the purchase price of whatever asset you’re betting for.

So, Don’t get too caught up in the hype of this little sound bite that people use. Don’t let your ego do the talking. Take a look at the big picture, zoom out, and don’t get too caught up and emotionally attached on your purchase price. A lot of people do, and it’s a, it’s a tricky one. And that’s actually, you know, we could easily throw that in on, um, you know, the, the stuff we’re gonna talk about here, this isn’t one of my mistakes.

New investors make. it is one. Yeah. Maybe that’s number six. Yeah. This

[00:05:34] Anthony: is, this is a big one. I, I see people blow up deals. We, we talked about this where if you’re gonna buy a building for a million dollars and you are like driving to get a 10% reduction, right? That’s gonna, you’re gonna buy it for 900,000.


[00:05:46] Dan: By the way, 10% is a. Big

[00:05:47] Anthony: reduction. It’s big. I’m using a big number here just to like show how absurd like this can be where, okay, so you got a 10% reduction, so you bought it from 900,000 rather than a million. Well, if your business plan is to go in there and take it [00:06:00] from being a million dollars to $2 million in value or even, even more conservative, like to 500,000, right?

Like we’re just gonna increase it by 50%. Well, You’re putting at risk, uh, $500,000 of potential profit for a hundred thousand dollars of reduction. Yeah, it’s, it’s, it’s, it’s silly, but something, the reason I, I said I wanna punch people is I posted about this the other day, and this is not controversial and yet people argue it is, there was a guy on Instagram very, very famous.

Very, very famous. He was saying, these are the only two things that you need to become a millionaire or real estate millionaire. And he said, You need to learn how to source and find deals, and you need to learn how to source, uh, capital. That’s it. And I was like, It’s always okay. So we’re just gonna overlook the third part of the, the stool, which is you have to profitably operate the deal.

Like we’re just gonna look past that. That’s like

[00:06:54] Dan: 90% of it, honestly. And if you do those first two things and you screw up that third, you’re done.

[00:06:58] Anthony: It’s done. [00:07:00] So, yeah, who needs to operation? But people were arguing with me, so one guy was like, he’s like, Yeah, he’s like, I think acquisitions and funding are more important though, because without that you, you’ll never even get to operations.

I was like, Okay, well, just cuz it comes first doesn’t mean it’s most more important. Like, yeah, I don’t know any who you can’t, You’re not gonna make money unless you profitably operate. That’s my point. And I think that’s Steven Schwartzman’s point.

[00:07:22] Dan: Yeah. Yeah. And that theme’s gonna be probably echoed in a few of my

[00:07:25] Anthony: points for today.

So, yeah. So let’s do it. Let’s, let’s get in there, Kick it off. What do you got? All right. Number one is in, So here are the 10 mistakes that real estate investors make. I’m gonna give five. Dan’s gonna get five. My number one is getting into real estate, thinking it’s gonna be passive. And then finding that you’ve, uh, taken on a full-time job.

So, A lot of people think of real estate and like turnkey real estate or single family Airbnb, and it’s like, Oh, I’m gonna outsource the management to somebody else and it’s gonna be pretty low key. It’s not gonna take up much of my time and energy. In reality, there’s a big difference between [00:08:00] investing in real estate and building a real estate investing company, and most people I see that want to just simply invest in real.

They walk down the wrong path and they end up with a business that they have to manage and operate and then, and then down the road they’re like, I hate this. This sucks because I didn’t wanna be a real estate mobile. I just wanted to invest in real estate. So that’s number one mistake is we get really clear about what it is you’re trying to accomplish.

Do you wanna be passive? And if that’s the answer, there are, There are very few paths open to you. There are great path. We wrote a book on one of those paths. Passive investing made simple. We’ll give you a copy, just shoot me an email. But, um, most people don’t realize that and they don’t go down the right path and they end up with a very active portfolio.

[00:08:43] Dan: Yeah, there’s a lot of stuff out there, A lot of, um, gurus and way back in the day, I did a, a piece of content the other day where I, I. I used the word late night infomercial and I feel like I dated myself when I made that reference. When I said it was that because

[00:08:56] Anthony: like did re just blank, like, look at this.

[00:08:58] Dan: Yeah, Read just like, what is that [00:09:00] Chinese? But I don’t think they’ve actually made those since like the nineties. So I was like, anyways. But yeah, there’s a ton of people out there, a lot of gurus, a lot of people trying to sell courses and things like that usually that are gonna say, yeah, it’s totally passive.

Just start buying properties on the weekend and don’t worry about all that

[00:09:15] Anthony: work needs to be done. I, So on the infomercials, they still make. That’s not the issue. The thing is, our generation, us, these people read don’t have cable, right? Yeah. They’re

[00:09:27] Dan: not on Netflix. They’re on Netflix. Max.

[00:09:31] Anthony: Amazon hit me with a commercial the other day, midstream on an episode of something, and I was like this, like, no, we’re, we’re not bringing commercials back

[00:09:40] Dan: and we’re already giving you like 150 bucks a month

[00:09:42] Anthony: through Prime and you already own my soul.

Come on, man. Okay. What’s your, what’s your takeaway or, um,

[00:09:47] Dan: one of. , one of the biggest mistakes that new investors make is they overestimate what can be done initially. So in the first year, and I I’ve seen this in people’s underwriting, when a newer investor is looking at a [00:10:00] potential deal, um, they, they are way too optimistic about how effectively they can actually execute on their business model in the first year.

Um, It’s not gonna happen that that fast. There’s a lot of people who go out there and they’ll model their underwriting and their assumptions, uh, after these, these, uh, people that they see online who have 5, 10, 15 years of experience and say, Okay, this guy can do X, Y, and Z in in 12 months. That means I should be able to do that.

Not the case. If you’re a newbie, it’s gonna take at least twice as long to do the exact same thing as the pros are doing. So don’t overestimate what you can actually do in year. Assume everything is just gonna take forever cuz it’s. It’s a slow

[00:10:38] Anthony: business. It’s like the, the Tony Robbins quote, or, and maybe it wasn’t Tony Robbins, Maybe it’s Jim.

No, I’m so sorry. In the Jim room. Um, this says that we underestimate no, we overestimate what we can do in a year. Underestimate what we can do in 10. Yeah, yeah. It’s perfect. Um. . Yeah. I would even say not even when you have the asset, but even people who are just starting on the journey and [00:11:00] then thinking like, I’m gonna get into my first deal in the fir in the next six months, and it’s like, eh, it’s probably not gonna happen that fast.

Yeah. Like that even might be able


[00:11:07] Dan: get into a bad deal right away in six months when you first started out. But likelihood, if you finding a, a unicorn deal right off the bat when you’re brand new and done on a network.

[00:11:16] Anthony: Good luck. Yeah. Thank you. All right. My number two. Uh, my second mistake that new investors make is bad partnerships.

They get into partnerships really quickly with whoever, like has a beating heart and they’re like, Hey, you know, you, I met you at a, a real estate investing event that was free, and you seem like a person who wants to do this too, so let’s do this together. And, and, um, that’s a big mistake because most partnerships fail.

Most people are not, like, partnerships are really hard to get into and should be really hard to get out of. Like ideally, and I made this. I’m guilty of this. Um, I regret everything I’ve ever done with Dan. So like, take a page outta my book and just tell Now we’re stuck now actually. So my very align, this, my very first deal that I almost did.

Um, it wasn’t my very first deal, but the very first deal I ever tried [00:12:00] to partner with somebody was my best friend. I had to pull the plug literally the day before closing because I was like, This partnership is not gonna work. We had misaligned expectations. We didn’t communicate clearly, and that the skills that we both had were not complimentary.

They were the same. We had the same skill sets, and so, Don’t just go out there and hop into a partnership because it feels like you’re making progress and it feels safer. Like when, when in the beginning it feels really scary and lonely and you’re like, If I have a partner, it would just make it so much easier.

So like, this guy, like it feels good, but just go slow. When it comes to partnerships, don’t, don’t be the town bicycle and just like shopping every, every person around. I know people who have like 12, 15 partners. I just don’t see how that can be sustain.

[00:12:45] Dan: Yeah, it’s a, it’s a lot of personalities to deal with.

Um, yeah, I think I, I, not just real estate, I think in pretty much any business venture, any industry, uh, the likelihood of a partnership working well for long period of time is, [00:13:00] you know, it’s not that high. No, most of them don’t do well. Because I think most people do kind of what you did. They find someone that’s, that’s really close to what they’re like.

Yep. They relate a lot. They, they’re friends, they have a lot in common, but then they end up with, with lopsided skill set, there’s all these gaps over here that neither ’em are able to fill. Kind you. Number two for me is, uh, Before I said they overestimate what they can do in a year. Uh, this next one is very close, but they underestimate the cost of their learning curve.

And what I mean by this is you don’t know what you don’t know. And that is typically not factored in to someone’s underwriting or analysis on a deal. So they don’t have that long timeline factored in. They also don’t have the lack of, of, of vendors factored in. They don’t have the lack of, of appropriate legal counsel.

They don’t. Basically what they don’t know isn’t factored in, and it takes a while to get there, and they don’t, They don’t have that factored in. And so you can factor that in a few different ways. You can just really overdo the budget on everything and just assume [00:14:00] you’re probably gonna overpay for most things because you don’t know which vendors are good or bad, but there’s just so much extra cost to the learning curve that new investors don’t, don’t factor.

[00:14:10] Anthony: Yeah, I see this even with experienced investors like who’ve done multiple deals and it’s like the, the budget can still be very optimistic. It’s like mm-hmm. , we know every time, like these constructions costs overrun every time, and yet we are always caught with our pants down and always assume expenses are gonna be greater than what you think.

To my third point, then, this is kind of similar, um, and that I’d be curious as I say this, to hear your, uh, input on what somebody can do to. nullify this effect, which is new investors typically either overanalyze or overanalyze the deal. They’re almost never right in that sweet spot. So they’re either overanalyzing and going into like too much detail, too specific, and then they find, [00:15:00] they always end up finding reasons why the deal just does not work, right?

And they, they overanalyze themselves out of a deal and then, On the other side, you have a group of people who tend to under analyze, which is they just go, They just go in there and they’re like, This has a roof and some people in it, let’s buy it. Right? And so that sweet middle, and this is a hard place to find because when you’re new, you don’t have the ability to like ride the wave yet you don’t know where the middle is.

So what do they do? Like how do you, what would you recommend to navigate?

[00:15:27] Dan: Yeah, I’ve thought about that a lot and I think, um, one of the easiest things people can do to mitigate that almost inevitable risk of either, you know, just not knowing when to pull the trigger and run at something either into it or away from it.

It, it’s tricky when you’re new. And so that’s where I think having some. You know, objective third party, whether it be a mentor or a coach, or it could be a partner, assuming they have more experience, but you want somebody who knows what it is you’re trying to do and has experience able to kind of, uh, look over your shoulder and give you some guidance on when to cut and run or, or run really hard at the thing.

Mm-hmm. , uh, because it’s really tricky to figure out. It’s kind of. [00:16:00] A nuanced feeling that you start to develop over time after doing enough deals. Uh, but yeah, early on you’re, like you said, I think you’re either on one extreme or the other, so. Mm-hmm. .

[00:16:08] Anthony: Yeah. That was, that was gonna be my, my suggestion too.

Like you gotta have a mentor or somebody further down the road has that experience. Cuz I think it’s a perspective thing. Yeah. For us,

[00:16:17] Dan: especially when you look at in somebody else, even when you don’t have that much experience, if you’re able to look at somebody else and their deal and not have an emotional stake in.

It gets easier to make that call. Oh yeah. But when it’s you and your money and, and you’re taking the risk, it, it gets really foggy really quick to be able to tell, so. Mm-hmm. , get some more eyes on you. Um, are we on me? Yeah. Okay. Number three. Number three. Uh, they don’t have a solve network, so I was kind of alluding to this in the first few, but I think a lot of people underestimate how important the network of.

Uh, people is, and I’m not talking about investors or anything like that. I’m really talking about the vendors that you’re gonna need to rely on. And the council, um, that mentor that we just mentioned a [00:17:00] second ago, having all these people lined up before you start going and doing deals and, and putting money on the line, I think is important.

And, uh, I didn’t really do this. I did a little bit with a banker. And a lawyer. But outside of that, uh, I didn’t really develop any of the other parts of the network, and it would’ve been hugely valuable to do that before because this is part of that. Expense of the learning curve that I talked about in the last one.

If you can have a really solid network of, uh, either it’s, you know, a really good property management, uh, company already, which you know, is tough if you’re starting on the smaller side, if you could really have as much of the operations figured out from the vendor perspective and the legal and the banking and some sort of mentor, I think you’re gonna be.

Able to expedite your progress a lot quicker than somebody who just jumps in and and figures it out on the fly.

[00:17:51] Anthony: This is hard, I think, because a lot of those vendor positions are hard to fill, uh, beforehand, before you actually have the work for them. Um, cuz [00:18:00] you’re gonna learn a lot. You people are always great at sale selling themselves, but then when you get to like the actual like fulfillment side, that’s where you see like the true colors.

So this one’s tricky, which is why like when you think about what every deal needs, it needs three things. Somebody who has the time, somebody who has experience, somebody who has the capital, um, you don’t have to bring all those to the table. When you’re new, you probably have a lot of time, not a lot of experience or capital.

So again, go find somebody who has that experience. If you’re going to partner, that’d be a great person to bring onto the team who maybe knows. The players and kind of has a team you can kind of like draft off their team a bit. That that’s a nice way to fast track it. Well I think

[00:18:34] Dan: a good way to do that that, that I wish I would’ve known about is um, you know, if you’re investing locally like we are, this is gonna be a little bit easier cuz you’re dealing with local vendors, which is gonna help immensely.

But there are more than likely gonna be some groups, some sort of meet up or some sort of organization that you can get involved in that kind of aggregates together. Other people like you who are. Operators and owners of [00:19:00] whatever type of asset you’re in. So in our area there’s the, uh, multi Minnesota Multi-Housing Association and within that we have something called the Mid-size Owners group.

And, uh, that would’ve been like an amazing resource to get access to early on, uh, because. All it. It’s basically like a little mastermind of all the local owners. They get together, they talk shop, and they talk about best practices and they help each other out. So trying to insert yourself in that kind of group early on, it could be tough before you have anything.

But that’s the group you wanna be in. That’s the room you want to be in to, to really make that network robust. Mm-hmm. .

[00:19:36] Anthony: All right, so my number four, The fourth mistake that new investors. When they are just starting out is they don’t build systems from day one thinking, Oh, I’m in the beginning, I’m just doing everything.

Uh, and you’re kind of winging it. And so you don’t really have anything to document. You don’t really have a, a framework or a process that you follow, and that’s a mistake because while it does take a [00:20:00] long time to get that first deal and, and things move slowly, once you start getting into deals, things start moving quickly.

And so the more systematized you can be, the easier you can, you know, start to outsource it. Plug other people onto the team. You can start growing and there, there, you can never start too soon, I think in documenting what you do, because as your portfolio grows, the amount of work and things that you’re gonna be taking on yourself.

It’s gonna grow at an exponential rate. And so number one is figure out what are all the things that you do with your time and your energy. Um, and then figure out what are the easiest ones to outsource that are like the lowest dollar per hour tasks that you could find A va, you could find an intern to come in and take those off your plate so you can go back to focusing on the higher ROI activities.

And that’s a huge one. . If you don’t do this part, then you will have a very hard time ever bringing anybody on the team and, and onboarding them. And so you’ll always be kind of a one person show and that will [00:21:00] more likely than not burn you out. Agreed. Agreed. It’s

[00:21:03] Dan: tough. It’s tough to do all that and all the work at the same time, but it’s a necessary bandaid to rip off.

So, um, my next one, number four, uh, is they expect. Solid income too soon. I think a lot of people think that yes, the, you know, the cash flow that comes off of, of rental properties is, is good, but that, that takes a while to spool up. You know, it definitely starts as a trickle. I mean, unless you have a significant amount of capital line around to be able to take down a significant amount of doors relatively quickly, um, that initial cash flow that you’re getting.

Even if you have, um, uh, let’s see. I, I was putting together some numbers in my first year. I think I might have. 10 grand on the six unit and cash flow. Um, and even that I think, you know, was, was probably better than it could have been, but that’s not much to live on. Yeah.

[00:21:55] Anthony: My triplex made about 3,500 of the year.


[00:21:58] Dan: my, I mean, most [00:22:00] people you’re probably not gonna make anything that you can really live on from the cash flow for a couple of years. If you’re doing it on your own, if you’re partnering with people, that could speed it up a little bit, but it takes a while for that to be able to replace it. Income, which I think a lot of people are trying to do with this kind of thing, and definitely works.

Yeah. It’ll just take a good few years, I’d say three to five before you’re, you’re getting, uh, you know, a solid, you know, W2 equivalent type of paycheck almost. Yeah. Even that, it’s gonna be a little up and down I think. I

[00:22:28] Anthony: think it needs passive investors I think get sold on this, a false bowl of goods a lot, where they’re like, Oh, you can replace your W2 income.

And then like, But realistically, let’s say you’re earning a 10% cash on cash return every year, and let’s say you earn a hundred thousand dollars, that’s your W two income that you’re trying to replace. You would need to have a million dollars invested working for you to be able to replace that. That’s a sizable chunk of change for most people.

You can get there, you can get there, and you can get there quickly through these investments. But I’m just saying. Quick is like five years though, right? Five years, [00:23:00] yeah. So I, I think in decades. So when I’m like quick, I’m like, that’s only one decade away,

[00:23:04] Dan: which I think is pretty damn good. I mean if, yeah, it’s, I mean for people who don’t think it’s an option to replace their income, being able to do it in five years, I think it’s pretty damn good.

But I think, like you said, I think it’s, there’s a lot of people out there that put out content for whatever reason, and it kind of implies you can get there in like a year

[00:23:20] Anthony: or. Yeah. It’s not gonna, it’s not gonna happen. Yeah. I know people who are like, Oh, do one investment and then you’re gonna be like, cash flowing.

And, and I’m like, You can, That’s not possible. That’s not gonna happen. So, I mean, it can, it can happen, but don’t plan on it. That’s, that’s a bad, bad plan. . All right, here’s my fifth and final mistake that new investors make. Is they get shiny object syndrome. Full disclosure, this isn’t a mistake that only new investors make all, we make it, we all make this.

Um, this is a battle that you will continually wage because as, as you’re starting out, you are constantly looking over the fence and seeing the grass and how green it is, and you’re like, Oh, maybe I should be over in self storage or because things are gonna move really slowly. Takes a [00:24:00] really long time to get that first multi-family deal.

So at a certain point you’re like, Well, maybe I’ll try and get more deal flow and I’ll look at mobile home parks and I’ll look at industrial, I’ll look at Reed sale. Cuz you think more deal flow means you’re more likely to get to that first deal sooner, when in reality you’ve got to, you gotta stay focused and zeroed in on the thing that you’re doing.

That’s the only way to make meaningful progress at it. And then after you get that traction, , you’re gonna have more opportunities coming at you than you know what to do with. And so now the game is before you had no opportunities and you had to keep like trudging through the desert. Now you need to keep trudging through paradise and not get off the path because there’s gonna be so many different things that you could be like, Ooh, look at that melon and look at that apple and I wanna take that thing over there.

And you’re like, No, no, no, no. You stay on the path. Got you here, is gonna get you there. And you just keep going.

[00:24:46] Dan: I agree. It’s tricky. I was, I was almost wooed by, uh, someone bringing up, bringing up car washes in a conversation a couple weeks ago. I was like, Oh, wow. That’s, that’s really high. Cash on cash for car wash.

Nevermind. Moving on.

[00:24:57] Anthony: I , I battle this [00:25:00] literally daily. Yeah, literally daily. I have to, I have to pump my own breaks and be like, What? No, no, no, no. . This is not what you do. .

[00:25:08] Dan: Uh, alright. Uh, my final, uh, number five is, uh, they don’t stress test. This one should come as a surprise coming from me. It’s kind of an underwriting focused one, but the amount of people that just look at the, um, kind of, you know, base somewhat likely and like really good scenario versus like, how bad can this really go?

And like, where’s my break even occupancy? And, and you know, really looking at the downside to see how back can this really get so many people skip that step. It’s not that fun. It’s kind of depressing. Um, but you wanna make sure that. The risk reward ratio is ayme. You wanna have a lot more on the upside than you do on the downside, and unfortunately, a lot of deals these days aren’t gonna have that.

So you’ve gotta incorporate this step. You’ve gotta do it diligently. If you’re taking investor capital, then you’re [00:26:00] definitely gonna wanna do this. Um, but even if you’re not, don’t forget it. It’s easy to forget, but, uh, you gotta do it. And unfortunately, it probably means you’re not gonna be able to do quite as many deals as you want.

Well, that

[00:26:13] Anthony: sucks. Yeah. What I know, a downer note. Stress test ended on a spreadsheet note. That makes me sad. We could bring it back and talk about you run by Friday. Really good book. This is the worst. Okay, let’s talk about a book. Okay, those are all our mistakes. Those are all 10 mistakes. Oh, the only 10 mistakes that new investors make.

You Don’t you avoid these 10. You’re gonna be good. You’re gonna be good. Be golden. You gonna be uh, golden Pony Boy. . Anybody get that reference? If you get that reference over to iTunes, drop a review. Say, Yo, Anthony, I got your reference. Hmm. I know who POBOY is. Do you know poboy? No idea what we’re talking about.

Sad? No. The outsiders. Uh,

[00:26:56] Dan: I think I saw that once as a

[00:26:57] Anthony: child. Did you read the book? You probably had [00:27:00] to read the book in middle. . Come on man. I don’t think so, actually. Oh, man. What kind of you’re,

[00:27:05] Dan: You’re public education if it was assigned. I did not complete the assignment. I apologize. Whoever assigned it.

I don’t think I did though. Okay.

[00:27:12] Anthony: Well, one of them, anywho, our listeners, I’m sure, know what I’m talking about because they are I literate. They’re literate and are literate. They love their alliteration.

[00:27:24] Dan: Okay. It sounded like you brought ’em in literate.

[00:27:26] Anthony: I, I, I, I do not enunciate, Goodly. Anyway, , uh, what was the book that we did last week that we did the deep Dive on?


[00:27:34] Dan: don’t know. I feel like it’s your favorite book

[00:27:36] Anthony: ever. Yeah. Meditations by Marcus Aus. It’s so good. So good. So last week, um, on the deep dive episode, and for those that are not familiar, you can go and download. all of our sophisticated investor notes where each week we dip deep dive into a book, uh, that we found really valuable, and we break it down into 10 takeaways.

We put that into a little infographic, and you can download ’em at invictus [00:28:00] multifamily.com/notes. And then you can also go listen to the podcast episode mm-hmm. . Now, last week we talked about meditations by Marcus Reis, who was, um, I I, so at the same time, I’m listening to a bi. Of me, of Marcus releases.

I’m also listening to a biography of Genius Cod. We had the con, we had the conversation of like, okay, when were they around? I got this, I got clarity. Confirm. Marcus Arres was Roman Emperor of the known world, um, around 180. Okay? Whereas Genius Con, what do you think? Well,

[00:28:31] Dan: yesterday I was thinking they might have been close and now that you’re bringing it up again, I feel like they’re probably like way

[00:28:36] Anthony: far apart.

They’re really, really far apart. . Yeah, he’s 1200. Yeah. Okay. Yeah. 1200 ad so this is how, But he, So we are closer to Jing Kahn than Jing K was to Marcus. Or roughly. Oh yeah, no, that’s true. That’s a, that’s an accurate statement. Look, I just did math. Um, anyways, the book meditations, it’s my favorite book I recommended.

I gift it all the time because it is just a personal journal of the [00:29:00] emperor of the known world 2000 years ago. And he’s wrestling with all the same things that we wrestle with here today. It’s clear, it’s insightful. It will give you so much to chew on. Um, , I don’t think our podcast episode and the the sophisticated investor notes do it justice.

There’s just so much there. Um, so do your favor. So do yourself a favor, go get the book, but also do go listen to the podcast. Um, also do go download the notes. There’s also like, uh, 20 other investor notes in that folder. So if you just go to invictus multifamily.com/note so you can get ’em all for free.

[00:29:35] Dan: Also, Gregory Gregory Hayes. I believe that’s the translation that’s most you, that Gregory. Western, uh, modern western people, unless you like, really enjoy kind of old English sounding stuff, You don’t, you want the, Nobody does. And honestly, it’s not the most easy one to find. Like, it’s not, it’s not surprisingly.

Most ones that pop up are always like the ones that are a little bit more old school. Yeah. So you gotta kind

[00:29:56] Anthony: of search. Do yourself a favor. Get Gregory, get him. He,

[00:29:59] Dan: he’s [00:30:00] the best. Him in the trunk. And drive. Take him. Go .

[00:30:04] Anthony: All right. So Gregory Hayes goes missing here in the next couple of weeks. Um, uh, I’m, I’m, I’m doing, It’s on me.

I’m doing jazz hands right now. For some reason, , for the listeners that, that aren’t watching the video, they’re like, I can’t see jazz hands. This you washing

[00:30:20] Dan: your hands of any

[00:30:20] Anthony: responsibility here. That’s exactly what’s happening. So also, did you guys know we have a YouTube channel? Yeah, we do. Um, jazz Hands.

Go check it out at multifamily Investing Made Simple on YouTube. Make sure it’s just subscribed and like it, There’s a bell. I think he’s probably ding,

[00:30:33] Dan: ding, ding. Yeah. That’s fun a thing. Confetti goes p.

[00:30:37] Anthony: I actually think I never clicked the bell. I I don’t think it does anything. There’s no confetti. I never clicked a bell.

Um, anyway, that’s gonna do it for us guys, man. Geez, man. A too much monster. These, these lips. These lips, they, um, they stumble sometimes , if you’re still listening to this, that’s, we, you know how we, you know how we do, We. [00:31:00] We just kind of sp around awkwardly and it, it’s never good. It just kind of just gets

[00:31:05] Dan: weirder until Reid stops recording.

And then finally we’re done. So

[00:31:08] Anthony: maybe you will soon. Uh, we’ll see you guys in the next, later the end of misery.

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