Sometimes The Best Deal Is The One You Don’t Do

Intro
Hi, my name is Rod Khleif, and I’m the host of “The Lifetime Cash Flow Through Real Estate Investing” podcast. And every week, I interview Multifamily Rock Stars and we talk about how they built incredible wealth for themselves and their families through multifamily properties. So hit the “Like” and “Subscribe” buttons to get notified every Monday when a new episode comes out. Let’s get to it.

Rod
Welcome back to Multifamily Rock Star. So, as you guys know, this is where we interview people that are literally crushing it in the business. And today is definitely that case. And, you know, we show you the inside scoop into how multifamily investors are just creating massive success in their businesses and in their lives. And as always, I’ve got my co-host, who is the director of our massive action team for our Warrior group, Mark Nagy on the call. Mark, what’s up, brother?

Mark
Man, I’m getting super excited right now for the real estate market. Just this past week, I talked to one of my property managers in Florida who was talking with some builders this past weekend for some small multifamily. And they told me the builder is getting a little bit more aggressive and a little bit more pushy and trying to sell some of these properties. So I think until June 20th, by the way, I don’t know when this is going to come out.

Rod
Yeah, it’s coming.

Mark
But I’m excited for stuff coming. Yeah.

Rod
Oh, it’s coming. Opportunity is coming. Well, today I have David Iglewicz, so we call Iggy because that last name is so hard to pronounce. And Iggy has been a Warrior since October of 2019. He’s in over 2000 doors. He’s actually a Pediatric Dentist who, you know, graduated from Rutgers back in ’97. But, you know, like I said, he joined us in 2019. He’s got assets in North Carolina, Kentucky, Ohio, and Georgia. Iggy, welcome to show brother, it’s so great to see you.

David
Oh, my God, thank you so much. This has made my day. I needed this today. I needed to feel the lift. I needed to feel the excitement, and I got it. I love [inaudible] . That’s the best part.

Rod
Good. Well, listen, you know, the thing you guys don’t know about Iggy is he’s just absolutely a ray of sunshine. You know his personality is infectious, and that’s why we love him in the Warrior program. But why don’t you just take a minute and do a little better job of telling your story than I just did? A little more you know, give us a little high-level overview of, you know, where you came from and how you got into this business, brother.

David
All right, so let’s go back. I was always into investing, and then I always wanted control of my finances and control of things and have control. But my dad was a Statistician, and I loved him so, so, so much and I respected him so, so, so much. And he was all into the stock market, so he taught me a lot of things, and that’s how I thought I was going to get involved. I was going to work hard, put money in the stock market and go from there. Well, we all know how that story is going to end up. I worked really, really hard trying to be a day trader while I was a Pediatric Dentist, and it didn’t work out so well. I made money, but it was a dollar an hour about. So that didn’t work out so well. Then, I was always on a path to find something and I was like, what am I looking for? What am I searching for? And it was–you know, even though I was a successful Pediatric Dentist, I was like, what is that magic thing? And I felt lost. And I didn’t realize I felt lost until it was the summer of 2015, my dad took me for a walk on the beach. He was all jaundiced. He put his arm around me and he said, I’m really proud of you. And he wasn’t a touchy-feely kind of person and he did that. And I said, thank you, daddy. And I didn’t feel proud of myself. I was not proud of myself. A couple of months later, he passed away and it shook up my world and it got me really thinking, one, life is really short, and two, I’ve got to change my life. Yeah, everyone sees me on this outside, I’m all–they think it’s successful. But I didn’t feel successful. I wanted freedom. I wanted to do what I wanted to do and help other people and go on that path. Well, it was shortly after that, I got courageous. I don’t know where it came from. And I started looking and it was like a perfect merging for multifamily, but it was small multifamily, and I thought it would be easy. I did everything else by myself. I could just do this by myself. How hard could this be? Well, I learned the hard way as it took me three long years to finally, I realized that I needed to invest with somebody else who was a master at it. And I invested passively. And that was when the magic happened. It was that first wire and getting over the fear. And I was like, I can’t believe I’m doing this. I can’t believe it. And bam. And then I did it. And then that was it. And then it was game on. So, that’s it. [inaudible]

Rod
Awesome. So, I know you joined us in October of 2019, and– why did you sign up for the Warrior program? Just curious because you started to invest passively. Were you thinking, it’s time to go active? What–just give me what you were thinking back then.

David
The truth was, you came up to me and you never remember these moments when you touch people’s lives and how appreciative I am. But I was talking to one of your partners and you came up and you said to me, you have too much energy to be passive. You have too much energy to be passive. Why are you passively investing? And it got me thinking. And I’m like, is it fear? Like, what is it? And it was the best decision I’ve ever made.

Rod
Wow.

David
It was that moment. That’s all that it takes, that magic moment. And it literally changed my life. It changed me into a better person. It’s not about the money. It changed me into a freaking better person. And I am utterly grateful for it.

Rod
Oh, that’s kind of you, buddy. Of course, I don’t remember that, but that’s really kind of you to give me that gift, you know. So let me ask you this. You know, I’m sure you’ve had some hard knocks to be in 2000 doors. Talk about one of those learning experiences, let’s call them. Okay, I won’t call it a failure or setback, but talk about a learning experience on the lesson that you got. If you will.

David
Without a doubt, it was literally the first deal. So I joined October, and I want gung-ho. It was like I had– like everything was lifted. I finally felt like this was real. I got this. And it was 2020, January 2020, and had three deals under contract. And I’m like, this is going to be a blessing. It’s like, look, I joined the program. And then bam. Well, I’m just going to talk about one of those deals because we all know what happened after January 2020.

Rod
Right.

David
That was our Los Angeles. It was Los Angeles, right?

Rod
Yeah. He’s talking about a boot camp. I had a boot camp in L.A. in January 2020. And yes, we all know what happened because I was scheduled to have 800 people in Orlando in May of 2020. Anyway, please continue.

David
I guess I’m bringing up bad memories.

Rod
Oh, it’s all good. It’s all good.

David
Yeah. So one of the deals was it looked like a surefire. Everything was lined up. It looked like everything was going to work out. All the numbers worked out. I underwrote it. You know, you’re the first one, you’re doing it by yourself. You underwrite it, you know, what, 20, 30, 40, 50 times, like you’re not supposed to.

Rod
Right.

David
And every way I underwrote it at work. And then the problem that I did is that I had brokers– because I was still doing a lot of dentistry at the time. So I was having a broker do the contract and with his real estate attorney who was supposed to be on my side, who I’m paying. But it was my broker who obviously wants to do the deal. So that was the number one mistake and number one lesson. Anyway, to make a long story short, there were a lot of sketchy details on the building. And this is 2020. Things are, you know, pretty hot. And it ended up– I had to walk away from the deal because the needs did not add up. And I lost 30,000 of hard money.

Rod
Wow.

David
And I was like– I told Sandy, my wife, and I was like, I messed up. And she’s like, did you learn something from it? And I’m like, yeah.

Rod
That’s a wife. That’s a wife right there, man. You got to find somebody like that. I love that. I love that, man.

David
An absolute blessing.

Rod
That’s beautiful. Well, listen, you know, I’m going to tell you, there are a lot of deals being retraded right now. In fact, it’s not something I tell people to do because you don’t want to get a reputation for it. But literally, interest rates have doubled, and so we’re actually doing one, tonight. I had my boardroom Mastermind last week, actually, in Houston. We had about, I don’t know, five billion represented by the members there. There’s a total of 14 billion in the group, but only, you know, about half of them– less than half showed up. But, you know, we’re talking about what’s going on right now, you know, with the 75-point rate increase, another 50 to 75 basis point rate increase in July, and, you know, this upcoming slowdown and the fact that we’re already in a recession. And what we found out was a lot of deals, almost all of them are being retraded, meaning renegotiated, if you know what that means, guys. And, you know, as much as 10% to 12% off the pricing to make these things happen. And so, you know, but I’m going to tell you– and I teach this in my boot camp sometimes– we’re ready to walk away from this deal we’re retrading tonight. If we can’t get it, we’re going to walk away. We’re going to lose 150 grand, okay? Which is super painful, but, you know, sometimes the best deal is the one you don’t do. So, you know, I just want to throw that out there because it’s absolutely the truth.

Mark
Let’s talk about that. I don’t want to use the word crash because I don’t think it’ll be a crash, but let’s say the market corrects, dips, flattens, however you want to define it in the upcoming months here. David, what do you think if anything is going to change about the way that you’re acquiring deals and assets? If that does happen.

David
It’s what Rod just said. There’s not going to be– as we’re already seeing, the hard money is starting to go away. I think we’re going to get those financing contingencies back into the PSA.

Rod
For sure. For sure.

David
And I don’t know. I started–I keep upping my–you know, instead of upping the cap rate, you know, ten basis points a year, I did 20. So I’m changing the underwriting. I don’t know where we’re headed. I wish– actually I don’t wish I had the magic answer because then it would make things boring. We need excitement in our lives. Like we need that. And it’s still the thrill of the hunt. It’s when sellers start to understand, hey, you know, we’ve going to– things are changing.

Rod
Yeah, I mean, the crazy ride is over. The crazy ride is over. By the way, what he’s talking about with the cap rate of 20 basis points, you have to calculate your exit cap rate, like five years from now. And of course, it’s going to be more than what it is now. And, you know, 20 basis points a year is not bad. We may even be doing a little more than that, actually, moving forward. Just because, like I said, the interest rate is going to jump up again another 75 to 50, 75 basis points in July. And so, you know, we’re looking at 7% interest at that point. So, you know, and that sounds really bad for everybody that’s paid three up to this point. But I can tell you, I remember when we were doing backflips when it got back down to seven in the early 80s. So, you know, it’s deja vu. But let me ask you this, Iggy. What are some hurdles that you had to personally deal with, you know, doing your dentistry, with your family, with, you know, and doing this business, can you talk about–you know, what popped up and how you overcame it, if anything?

David
A lot.

Rod
Okay.

David
And it depends on how much time, and we’re already running out of time. But a lot.

Rod
Yeah. We’re fine.

David
You know, one of the best–I know I look all happy, and most of the time I am really happy, but it’s really– and this goes back to the mindset, and a lot of stuff you taught me is feeling my emotions. I wouldn’t feel my emotions before. I was like this, and I wouldn’t look left or right or behind me, and I wouldn’t actually feel my emotions. I think that that’s one of the biggest changes. I’m not the same person that I was even when I met you in 2019. It’s crazy to say that. I’m a different person. I think for the better. I’m getting better texts from my daughter. You know so I think I’m making improvements, and she’s proud of me. When your daughter says she’s proud of you, that’s it. I mean, it gives me chills.

Rod
Wow. Love it. Love it.

David
And my wife tells me that. You know, so a lot of sacrifices, too many to list, but I quit. Let me tell you a little short one. I used to be a big bike racer and racing a bike is a very selfish work. It has to be[inaudible]

Rod
Could you repeat what you said? You broke up for just a moment, Iggy.

David
Sorry. Yeah. So being a bike racer is a very, very selfish sport. Very selfish. And you have to train a lot to be the best. And I was training for a World Championship, and I was at a caliber that I could win it. And it was actually when I was at the World Championships, right after I signed up for this stuff–

Rod
Oh, no kidding. Wow.

David
I lost my qualifying race, and you would think I’d be on the ground crying. I was actually smiling.

Rod
Really?

David
Because that was the different– I’m getting the chills. That was the flip of– I was in England, without my family, and I was like, what the heck am I doing with my life? I’m escaping. I am freaking–I’m no different than a drug addict.

Rod
Wow.

David
I am escaping, and I need to get back to reality and really go for it. And that was the difference. Then I started reading all the multifamily stuff, in England, on the plane back, and that was it.

Rod
Nice. Nice.

Mark
So if you were coaching somebody here, then, you know, whether it’s a family member or friend, whatever, that you really cared about with what’s going on right now, what do you think you would make sure that they learned in the first 30 days?

Rod
Or 90 days.

David
Yeah. The main thing is working on your mind, and then it’s learning all about the multifamily. I think that that’s secondary. There’s a lot of fear out there as I’m already seeing, and even with my friends, a lot of my dental colleagues are scared. You know, a lot of their money’s tied up in the stock market, and they’re scared. And so they’re coming to me now, and they’re like, I need a deal. I need a deal. I need a deal. I’m like, you need to learn. You need to learn. You need to learn. I was like, we could sit down. We got to talk about this. You can’t just jump right in from going, I don’t want to do this to now, you know, pick out the phone. But it’s really working on your mindset.

Rod
Yeah.

David
I think, Mark, that that’s the most important thing. And then you can learn the underwriting and figuring out all that stuff and figuring out the markets and stuff like that. I mean, what do you think?

Rod
Well, I know. I want to follow up with that. Did you get value around your mindset from our program?

David
We’re talking about life-changing value. This program is not about multifamily. It’s about mindset. And you’re surrounded by some of the best people I’ve ever met in all aspects of life. This is freaking life-changing. Like, if you need something, you need this now. Like it’s–you needed this yesterday, and you provide such a program that–I mean, it’s changed my life.

Rod
Oh, thank you, brother. By the way, guys, if you’re interested in applying to our Warrior program, text the word “crush” to “72345” so we can also help you crush it. And I’m going to tell you–so again, text “crush” to “72345”. When I tell you there’s an opportunity coming, if you’re up to speed, you can capitalize on it. And again, you know, if I didn’t do an ad for my boot camp in front of this episode, let me just tell you right now, get your butt to Denver, okay? Because if you’re trying to learn this in the thick of the recession, it’s going to be too late. You need to learn it now. You need to build the relationships now. You need to get up to speed now so you can capitalize on what’s coming because legacy wealth will be created. Some economists say it’s going to be the greatest transfer of wealth in our lifetime. Others are saying it’s the opportunity of a lifetime. Regardless, there’s going to be an incredible opportunity if you’re ready. So whatever you do, get your butt to our boot camp.

Mark
Real quick on that topic. Just touching on what you just said. When you feel it, it’s going to be too late because right now you’re feeling it a little bit, but the reason why is because the real estate market lags behind, you know, 60 days, 90 days, whatever, because people are closing on these deals that they got under contract for months ago. So if we’re sitting in Denver or six months from now, whatever it is and you’re starting to feel it, you’re already going to be too late because those are deals that have come from 60, 90 days ago. And I know you asked the question to me, I would agree with you, David, mindset is the number one thing because if you can’t overcome the fear, it doesn’t really matter what opportunities are going to come, you’re just going to be too fearful to do it. Above and beyond that skill set I would say, underwriting, just because, like what you said, if you’re in a strong rental market with job growth and all those different things and strong deals and you can overcome in everything that’s going on, but that would be my answer, I would say. What do you think, Rod?

Rod
Well, I’m going to tell you, you know.

Mark
[inaudible] biggest skillset.

Rod
Even in the really bad crash of ’08, and ’09, my multifamily did just fine and it was the houses that pulled me down. And so, you know, that’s why I started the podcast six years ago, was to tell people, if you’re going to buy and hold, for God’s sake, do multifamily. I never planned to teach or coach or anything like that. I would have laughed if you told me I was going to do it. In fact, I used to say early on in my podcast, I’ll never sell you anything. Now, of course, I’m a freaking liar because I have everything [inaudible] of coaching, but I never planned to. Right? Just really didn’t. I hit a million downloads. Like, you know what, knucklehead, you probably ought to do something with this. And then people kept begging me to put some material together and finally I did. So let me ask you this question. Let’s shift gears for a minute, Iggy because you’re a leader. No question, I know you’re a leader. What is one characteristic or more than one. What are some characteristics that you believe every leader should possess? Because right now the world needs leaders more than ever. We won’t get started on all the crap that’s on the media right now, but it’s so important to pay attention to what you’re focused on as a leader. But what’s your answer to that question, buddy?

David
This is going to sound ridiculous. I couldn’t even get it out. Is being able to laugh at yourself. I forgot that for a little bit, going through all this stress. Do you know what I did last night, I freaking– instead of– usually, I do my Qigong or meditation before I went to sleep, I put on a comedy show. It’s 7:30, 7:30 to 7:45, just watched 15 minutes and started laughing. And that clears your head. And then you can then–like my goal in life, I realized like when I’m the happiest that I can be is if I can make three people smile. Three people a day. Three people. That’s it. That’s my goal every single day.

Rod
Wow.

David
And by watching that comedy, that helps because then you laugh. And that’s being a leader. To me, that’s being a leader.

Rod
Love it. Love it. And guys, again, you don’t know, Iggy, you’re learning who he is now, but I can tell you he lives that motto. He’s always making people smile. And you know, so if you could give one piece of advice for a couple, whatever fits to our listeners, maybe the listeners that haven’t pulled the trigger on this. They work in a W-2 job. They’re not thrilled with that. Or maybe they own a business, you know, or maybe they have money to invest and they’re scared and they know they need to do something with it, like your cohorts that are in the dental business, and there’s a lot of that out there. You know, I guess I kind of made that question really broad. But what would you say to those people?

David
You need to take action. You need to listen to these podcasts. You need to, you know, join a mentorship group like this one. I mean, you need to do that yesterday, but do it today. I mean, you need to do it now, and you need to take action. It’s already going to be too late, and I already feel bad for them. So do it now.

Rod
Well, I can tell you this thing is going to go on for a while, and the Fed is supposed to raise the rates– excuse me, another five times. Okay. There’s one coming in July. I can’t imagine they’ll do another one, 30 days later because I think they’ll kill the economy. But, you know, so it’s going to take a while–

Mark
I think that’s what they are trying to do, though. To combat inflation is they’re going to kill the economy slightly and then pull back maybe.

Rod
They have to. But it’s a real tight rope. It’s a real tight rope. And I got to tell you, you know, the real defaults and properties and receivership and stuff like that, we’re a good year out from that six months to a year minimum. Okay. And so there is still an opportunity to absolutely learn this business. Come see me in Denver. You know, in fact, if you DM me, I’ll make sure you can come for $197. If you DM me on any social channel, just let me know you heard it on the show here, and I’ll do it. But, you know, the opportunity is definitely coming. So let me ask you this. You kind of alluded to this Iggy, but, you know, talk about a defining moment in your life, like an aha moment, like an epiphany moment, you know, ideally, as it related to this business, hopefully, but even if it’s personal, that’s fine, too. I shouldn’t pre-frame but however you want to answer.

David
I gave you two powerful ones, so now I got to think of another one.

Rod
Okay. All right. Well, I can change the question because you’re right, you did, and I was being lazy and looking at my list of fallback questions. But let me ask you this. Do you have any favorite quotes, you know, any famous people in history or even currently that, you know, they’ve said some things that have really moved you, that you look at or listen to or have on your wall or your desk or whatever. Does anything come to mind when I say that?

David
It’s Thomas Watson’s quote, and I got to look at it for a second because it’s usually at my desk. Do you want me to give you the formula for success?

Rod
Yeah.

David
“Double your rate of failure”. And that’s it. And you got to learn from that. There’s more to that quote. You can look it up, but Thomas Watson and that is a powerful, powerful quote.

Rod
Hey, listen.

David
Every time I make a mistake, there’s something to learn from.

Rod
We fail our way to success. That’s just how it works, okay? If you’re not failing and having setbacks, you’re literally not trying. And so you’re absolutely right. Don’t fear failure. Fear being in the same freaking place you are right now, a year from now unless you absolutely love where you are right now, okay? Don’t fear failure. Fear regret. Nothing worse than regret.

David
Yeah.

Mark
Yeah. I want to talk about one thing that we talked about at the beginning of the podcast, which is kind of how you got started. You talked about the passive investing that you did, and I know Rod told you about the energy and wanting to go more active, but in terms of like the actual logistics, how do you think your partners and team members have helped you kind of scale this thing a little bit quicker than rather if you would just continue to do it on your own passively? [inaudible]

David
I would not ever have been able to do this on my own because I get lifted from other people’s energy like I’m getting lifted right now from you guys, and I need that. I feed off of other people. I didn’t have to, but I did a deal at the end of the year by myself for some depreciation. It’s not nearly as much fun. It’s just a lot of work and a lot of time, and you don’t get to share the joy. Remember, this is not just about money. There’s a whole bunch of other stuff involved with this, and I need other people, and they need me, too.

Rod
I believe you. I totally believe you, buddy. If I heard that from someone else, I’m not sure I would, but I absolutely believe it from you. So let me ask you this. So you’re good at analysis, I mean, but you’re such an incredible communicator. What role do you play on your team or roles? What hats do you wear?

David
When the crap hits the fan.

Rod
That’s you? You step in and clean it up, okay. Okay. And it does in this business, guys, we’re dealing with it right now. Good Lord. With what’s happening in the debt markets. You know at my boardroom Mastermind, Thursday and Friday, last week in Houston, we had a lender there. He said it was the worst week of his life last week. Ever.

David
I know that lender.

Rod
What’s that?

David
I know that lender.

Rod
Yes, you do, Tyler. Yes, you do. Well, listen, it is such a treat to see you, my friend. And guys, come to Denver, for God’s sakes you need to be there. You know, or if you don’t want to wait till Denver and you want to look into our Warrior program, text “crush” to “72345”. You know, we check you out, you check us out. Not everybody gets in, but, you know, we’d love to chat with you about it. And you will leave the call better than when you took the call because we will get you aligned on what it is that you want. But do you have anything to add, Mark?

Mark
No. No, I totally agree with that. Again, especially right now, it’s super important that you know why you’re even doing this. Because again, if you’re just thinking about money or the market crashing or whatever and you don’t even know why you’re doing it, like David said, for the actual time, freedom, then it doesn’t matter how many opportunities are going to come, you’ll just never do it. And that’s one thing that we do. You know, it’s again, even if it’s not the right fit to work with us is we’ll help you figure that out because a lot of the time people don’t get those questions asked of them. You know, I don’t know about you, but nobody in my entire life until this had ever asked me, hey, what is your why? Why do you want to do this? What’s going to happen if you make X amount of dollars or whatever and you have to actually think about that?

Rod
Yeah. Iggy, good to see you, my friend.

David
Thank you. You made my day.

Rod
All right, brother, take care. Mark, take care, brother. Take care, guys.

Mark
Thanks, guys.

Outro
Rod, I know a lot of our listeners are wanting to take their multifamily investing business to the next level. Now, I know you’ve been hard at work helping our Warrior students do just that, using our “ACT’ methodology, which is Awareness, Close, and Transform. Can you explain to the listeners how they can get our help?

Rod
You bet. Guys, we’ve been going non-stop for three years building an amazing community of like-minded people and our coaching students which we call our Warriors, have had extraordinary results. They’ve purchased thousands and thousands of units, and last year we did over 1000 units with our students. And we’re looking to grow this group and take it to the next level. We’re looking for people who want to follow a proven framework that’s really step by step and then leverage our systems and network to raise equity, to find and close deals, and to build partnerships nationwide. Now, our Warrior community is finding success in any market cycle. So if you’re interested in finding out more about how you can become more of our incredible network and take advantage of the incredible opportunities that are coming very soon, apply to work with us at “MentorWithRod.com” or text the word “CRUSH” to “72345” and we’ll set up a call so you can check us out and we can check you out. Again, to apply, text “CRUSH” to “72345”.