Ep #437 – Steeve Breton – Warrior with 1300 Doors in 2.5 years
Here is some of what you will learn:
- The value of coaching
- Knowing what you don’t know
- Finding your team
- Becoming an asset and not a liability
- The power of high performance coaching
- Lifelong learning
- Crisis Management
- The importance of communication
- Time to help others
- With crisis comes opportunity
- Limiting beliefs
- The value of integrity
- Being conservative
- The value of investing in yourself
To find out more about our guest click here.
Full Transcript Below
Ep #437 – Steeve Breton – Warrior with 1300 Doors in 2.5 years
Hi, my name is Rod Khleif and I’m the host of “Lifetime Cashflow through Real Estate Investing” Podcast and every week I interview multifamily rockstars. We talk about how they built incredible wealth for themselves and their families through multifamily properties. So hit the like and subscribe button to get notified every Monday when a new episode comes out. Let’s get to it
Rod: Welcome to another edition of How to Build Lifetime Cashflow through Real Estate Investing. I’m Rod Khleif and I am thrilled that you’re here. and you are gonna get tremendous value from the gentlemen we’re interviewing today. Now he’s been on my show before. He’s actually one of our mentorship students and our warriors. His name is Steeve Breton. Super nice guy. He’s done nine deals as a General Partner, over thirteen hundred doors and just a super all-around guy. Welcome to the show my friend
Steeve: Thanks Rod. Excited to be here
Rod: Absolutely. So maybe you can take a minute. I know we talked about this we have you know we’ve had you on the show before but you know a lots happened since then. And you know big changes in your life which I want to dig into because it’s just so impressive but you know maybe a quick synopsis of how you got started in real estate and then you know maybe why you joined our program and kind of bring us to today if you don’t mind
Steeve: Sure yeah so the nickel tour is I was working in corporate IT, had a great job, you know doing well climbing the corporate ladder everything would seem fine and then ‘08 came and I got you know wiped out in the stock market. So I started to worry about retirement at that point and then a couple years later, I was working for a small biotech company at the time. We were taken over by a much larger pharma company. So that I started being concerned about my current job and being able to you see the family at this moment never mind you know 10, 15, 20 years down the road in retirement. So I had all these things going on my head and I thought you know I think right around that time I probably read Rich Dad Poor Dad and a few other books that led me down the path of thinking I oughta buy into some real estate just for some stability. And you know a little bit of hedge against inflation and that’s where thing cuz the government was printing money. So I bought a couple of duplexes with self-managing and realized that was really difficult because self-management takes a lot of time and effort. It wasn’t very efficient and I invested in a passive investment and the light bulb went off that this whole idea of syndication was the way to go because if I did syndication I can get larger properties. They’re more efficient. They don’t have to be in my backyard because Boston was also very expensive
Rod: Boston yeah that’s where you’re from Boston
Steeve: In Boston, yeah it was super expensive and difficult to make anything work. Even the duplexes I was buying were I felt overpriced at the time. And they’ve only gone up since then. So I started dabbling in syndication just trying to figure out how to do it on the cheap and spinning my wheels there for probably six months, nine months and then you know I learned enough to know that I didn’t know enough. And that if I was gonna go into this thing and have people invest with me, I better know exactly what I’m doing because there’s way too much at risk, friends, family, you know those are generally people’s first investors and I didn’t want to put their assets at risk and then have those awkward Thanksgiving if anything ever went wrong. So I started for coaching
Rod: Awesome awesome and here we are 1,300 doors later boom
Steeve: Yeah two and a half years later
Rod: Two and a half years Wow fast – yeah you were one of my first students then because I haven’t been at it that long. Well that’s fantastic. So let’s drill down on some stuff. Maybe we could talk about your first larger deal and what you know, what happened and you know drill down on a little bit and then I’d like to actually talk about what’s happening right now with the you know the elephant in the room COVID. But let’s talk about you know how you got going. I’m sure people want to know what you did and the steps you took and you know I know that you’re very very good at raising money. So you know maybe speak to that a little bit and yeah please take it away
Steeve: Sure yeah so you know at first I started to try to reach out to brokers in other markets Kansas City, San Antonio, Dallas, and it was it was a bit of a grind you know it’s not easy to get their attention and it takes a long time unless if I was impatient or I just recognized that maybe there’s another path to it. And so I started to then reach out to the people that were winning the multifamily bids right some people that were placing offers and actually getting those offers on the contract. And I said to them you know you’re a very strong operator in your market if there’s anything that you need, you know how can I be a value to you and just trying to figure out what would my value be what could I do for them to get a partnership going. And what I started to realize was when people are looking to go from 50 units to 100 units or 100 to 150, perhaps they don’t have enough net worth to guarantee the loan. Perhaps they can’t raise all of that capital because now they’re talking about raising two or three million instead of the 1 million that they’re used to raising and then in terms of underwriting, I’ve always been very good with a spreadsheet so I offered that I would you either do underwriting for them or look over all their underwriting and then of course I would be happy to come down and lead one of the teams and inspections and walking all the units and reading through all the leases, all the things we do is during due diligence. And eventually I had a couple people that were very interested in in what I was offering. We started talking, looking at properties and something clicked you know I think it was probably six or seven months into the coaching program. We had our first deal under contract, 130 units in San Antonio
Rod: Nice
Steeve: And the rest is history. That was a C-class asset we did lots of renovations and it’s gone really well
Rod: That’s fantastic. And guys, what I want to flag for you here is you’ve heard me talk about it time and time again. This business is absolutely a team sport and you know the way that he went at this is a fantastic way to go at it because you know I don’t know if you heard my interview just a couple of weeks ago where I had three guys in their 20s. There was I don’t know some were 65-70 million dollars worth of assets between them and all three of them were in partnerships. Now this happened to be the dynamic I see a lot where you get an analytical person with an outgoing person and that’s not, that may not be the case with Steeve here but the point is, it really is a team sport and you know everybody’s got a superpower and if you focus on and build that superpower and then align for other pieces that you may need, it’s an absolute recipe for success. And you know the fact that you went out to offer help and you know instead of trying to get something is also a recipe for a success. So you know by the way guys if you, I don’t I don’t know when you’re listening to this but if you can make it to our virtual bootcamp this next weekend this will go live on Monday and the bootcamp is this weekend, Steeve will be on one of the panels. We’ll have somewhere between 2-3 billion dollars in assets represented by the panelists that, we have three panels the day, me training for two full days. We’re not selling anything. So it’s multifamilyvirtualbootcamp.com or you can text “rodlive” to 41411. But that’s going to be a blast. I’ve been working on it and it’s gonna be awesome. So let’s now talk about Steeve, you know let’s talk about I know that you’ve been really good at building relationships and using those relationships, raising equity, bringing money to deals, obviously playing an active role in those deals as well. But talk a little bit about how you go about approaching potential investors and you know some of the ways you build those relationships cuz you’ve been I know you’ve been really good at it
Steeve: Yeah so you know I’m fairly introverted or I should say was. I think I was certainly you know on that side of the spectrum and so going out and talking to people about raising capital was not easy for me partly you know the idea of me joining some coaching was to have somebody encouraging me to do these things and tell me sort of what to say, how to say it, and until it became much more comfortable to the point where I remember you saying you have to tell everyone what you do
Rod: Anyone that hold still long enough needs to know what you do
Steeve: Right yeah and for sure you get the eye of the ball rolling every once in a while at a party or whatever it is and it’s okay but I won’t talk to this person about real estate right. We’ll talk about sports or something else. But every once in a while, there’s somebody who’s you know they didn’t just give you their air and pretend to be interested. They’re like deeply interested and you can tell that they’ve always wanted to do real estate and they probably want to diversify their assets and then they start talking and asking questions and generally what I’ll do at that point is I just say, sounds like you know you’re interested in this I’d love to talk to you more about it. Don’t want to bend your ear for the entire party here so let’s get together for coffee. And then you either exchange cards or if we know each other well it’s just simply email them on the following Monday or something and then it’s coffee with a sample package
Rod: Sample deal package yeah and by the way guys we give one of those out at the at the boot camp as well just FYI okay
Steeve: Yep so you know the very first time I did, it was just a sample it was literally I put together a deal package on a deal that I was trying to do on my own and the price went too high and the numbers didn’t work. But I still use that as my sample and I just simply said to friends and family if I found a deal that looks just like this, maybe the pictures we different cuz it’s a different property but the numbers will be the same the structure of how we put it together is the same, would you be interested? And surprisingly I had a lot of people shake their heads. I had a friend of mine who practically chased me out of the house with a check. This is not
Rod: That’s how you do it guys it really is it is, people overthink it. But if you’ve got an example deal and just say hey if I find something like this are you interested and wow. You did exactly what I coach you to do and it worked. So, I love it and so you know another thing I want to mention and again I’m not gonna plug the coaching too much here. If you guys are interested text “crush” to 41411 and you talk to one of my you know someone on my massive action team. But then that’s “crush” to 41411. But you talked about being introverted and part of and this the last thing I’ll talk about the coaching I promise, part of our coaching, our mentorship includes high performance coaching and I know you still participate in that to this day. Do you feel like that’s helped you with you know the looking in the mirror at yourself?
Steeve: Yeah I think it’s a tremendous asset that I have to be able to join those calls. Again two and a half years later, I don’t generally join the coaching calls in terms of learning about the real estate piece so much. And I still do on occasion actually probably every other every third call but these high performance calls, I don’t think I’ve ever missed one. I’m always on that call. I love to have that you know and it’s intimate. It’s you, five, six, seven people you know really dig in deep about what’s holding us back and you know what makes us happy and those are amazing. I always feel great leaving that
Rod: Yeah you know Socrates said, 5,000 or whoever mean thousands of years ago, “A life unexamined, is a life not worth living”. And guys, you’ve got to be looking in the mirror. You’ve got to be self-actualizing. You have to be growing and progressing because if you’re not, you’re dying. And so it’s so critical that you take the time to work on yourself. There’s a lot of free content out there on YouTube and the like that you can take in but it’s very very important that you work on yourself. And it’s a lifelong learning process. In fact, I’m just doing a clip on that right now, today actually and how we are you know learners are earners and we don’t stop learning until the day we die. Bottom line so love it. So Steeve let’s talk for a minute about, as we talked about how you raise equity talked about how you’ve approached operators and got you know got invited to partner on deals with them and that has really you know springboarded your success. Let’s talk a little bit, now do you self managed? You don’t self manage at all, it’s all third party property management correct?
Steeve: Correct yeah
Rod: Yes yeah and guys, that’s what I tell people you know if you listen to my early podcast episodes, you’ll maybe think that I’m a proponent for self management which I think at some point that I am you get enough scale, you bring it in-house if it geographically permits but you should not be dealing with residents when you’re an acquisition mode. And the incredible opportunities that are coming right around the corner and they are coming guys. You need to be focused on finding deals. In fact, I just told my team we need to get on all the you know really start watching the auction websites because those are gonna start getting filled up with deals. I’m telling you that’s coming and I know it’s sad what we’re going through this crisis right now and you know I heard Jay Abraham use the expression ethical opportunism. And I think that’s how you approach this. You keep your integrity intact and you look for deals and you capitalize them on them. And I don’t know if you guys have listened to my podcasts enough, you’ll start to see a trend and that is the guys with thousands of doors started in ’09, ‘10 and ’11. And so you know I call that a clue. So let’s talk about what you’re doing on your assets right now. How you’re managing, doing the asset management, and managing the third party property management partners and that’s what we call them coz they’re our partners in the property. How are you managing those through this crisis?
Steeve: Yeah so you know generally it’s a week or once a week call with each of the property management companies and you just go over kind of vacancies, marketing, rehab, you know the status on your sort of your basic metrics. And those are pretty ho-hum usually things are going pretty well and they’re humming along and you just kind of course correct as you go. When this thing hit, it was like let’s talk every day but every other day until we all got our heads around what does this thing actually mean? And I think it’s calmed down quite a bit now we’re back to pretty much on a weekly basis now doing our calls but it was very active before that. So you know of course it was you know let’s close down the pools, the clubhouse, how do we do everything virtual so we’d have to have people coming into the office you know sign up the stragglers who hadn’t gone to auto-pay the other bank accounts rather than coming in and handing us cash or a check.
Rod: You make it so that they can lease units virtually as well?
Steeve: Yeah yes now we have virtual tours, all is online. And then from a maintenance perspective, we said we’re gonna halt all maintenance requests like we received your request, we have it, we’re absolutely committed to getting this thing done but unless it’s an emergency, we don’t want to come in and put you at risk by coming into your apartment. And we also don’t want our staff to be put at risk either. If it’s an emergency, they’ll go in, you’ve got the floor
Rod: Sure. I mean if there’s water running and flooding or you know God forbid something worse than yeah okay yeah that’s the same thing we did good. What did you do proactively with your residents in anticipation of financial disruption?
Steeve: We almost immediately allowed them to pay via credit card and we waive the fees for credit cards right. So we figured if they don’t have the cash immediately at least they can pay and generally we don’t take credit card payments. So that helped. What else, we actually we called, I think we did this one every one of my properties, we called or contacted each of the residents to try to get a sense of you know they still employed at the same place that they said they were on their
Rod: right okay yeah you have to update that stuff and now would be the time
Steeve: Right yeah and so you know if that’s a restaurant, if they’re a waiter or bartender something that’s likely to be closed down, are they still gonna be able to pay rents and what’s you know what’s there they’re thinking and are they already applying for government assistance and if they haven’t done that, we’re providing all the links and whether it’s federal or state level
Rod: Yeah let me let me expand on that guys you know and we talked about this previously but you know a good asset manager and property management company will provide every possible resource available in that specific sub market to their residents, rental assistance, you know both governmental and private, anything that will help the residents get through this. So you did all that as well then good
Steeve: And even you know understanding where all the local food pantries are
Rod: Yeah food pantries
Steeve: So they can get
Rod: Yeah I will tell you. I just gave five grand to our local one here because they’re sucking wind right now because so many people need help and you know hopefully things you know this is being recorded on April 25th and hopefully things you know are gonna ease up in May and we’ll start seeing some relaxing on this and people I’m not fearful to go and have food at a restaurant so these restaurants can recover and in these other public facing businesses can recover
Steeve: Hey just one thing on that Rod, I’m on the board of directors for my local food bank.
Rod: Oh nice
Steeve: And there’s a lot of people kind of pouring money in right now which is fantastic as we need it but you know we fear that at some point that’s gonna slow down and then you know people are still gonna need this for a long time and we’re not gonna be able to have our usual events. We usually have an auction event like a gala
Rod: You mean fundraising events yeah
Steeve: Yeah so we’re not able to pull all these people together and show them a good time and that have them do my usual contributions. So that’s a massive part of our funding so anybody out there just please support your local organizations
Rod: Yes for sure guys. There are going to be so many people that need food you know and so know that’s a really good point because a lot of these organizations will have these galas. I know there’s one here locally a Florida Wine Fest and they usually donate a few thousand dollars to my charity and of course that’s not happening. So you know we’re getting impacted as well with my Tiny Hands Foundation right and so you know it’s gonna be tight for a while guys. And so it’s time to give. You give till it hurts because whatever you give, you receive back ten to a hundredfold. I’ve seen that dynamic time and time again in my own life and I’m sure you have as well Steeve yes?
Steeve: Yep absolutely. Yeah and I had a Facebook post out there I said, this was early on in this whole COVID thing, I said, now that you’ve hoarded all the toilet paper and completely filled your pantry, it’s time to help others
Rod: I like it. I like it yeah no kidding. It’s so important and yeah let’s not lose sight of you know there are some people that that even you know the ones that aren’t for example internet savvy that don’t know how to go in and apply for unemployment, you can’t get through on the phone. And these are people that have no money coming in. My wife had to help her, some of her family members get the unemployment gone because they had no idea how to do it. They can’t spell the word computer and there’s a lot of people like that out there. And so it’s you know a lot of people are gonna need help so think about how you can do that you know and while we’re on the topic you know those of you that are struggling, if any of you are struggling, be thinking about how you can pivot and innovate and you know maybe change what you’re doing or use this time to learn a skill. Multifamily for example if that’s what you want to do but again whatever it is, don’t squander this time if you’re not working. Don’t be stuck to Netflix. Use this time to learn and grow and become more. And because it is an opportunity in that regard and you know some of the most successful companies in the world were formed during crisis like this. But remember this guys, with crisis, always comes opportunity. And there are definitely opportunities coming in the real estate space. So Steeve, let’s talk about, now is it just you? Do you have a team? I mean I know you’re partnered on some deals but as it relates to your core nucleus, do you have anybody that you work with you know real tightly or is that these individual operators or tell me a little about your structure
Steeve: Yeah so you know what I was used to it was in the corporate world, I was a program manager and I had multiple project managers working for me and they each had many multi-million dollar projects. So I managed the milestone metrics level, I managed all the budgets and just ensure that that things were on track and I’ve kind of applied that the same way because I was working in my corporate job for so long while I was building this business on the side of it. It was literally my side hustle and the way I was able to do that was to leverage these other operators and leverage their operations. If they’ve got a CPA that they want to use that they’ve already feel comfortable with, great. If they have a property management company that they want to use, fantastic.
Rod: Fantastic strategy
Steeve: Yes and I just insert myself in there and I say okay what exactly can I do to help you? Can I write all of our addressed your communications for all of us? Can I you know look at properties? Could I do your underwriting for you? And so just leveraging their structure but at the same time, I was able to keep working full-time in my regular job. They had no idea I was doing this on the side and they were what I really wanted was for them to be shocked when I left and they were right. They were completely surprised because I had put all the value in that I was supposed to as a full-time
Rod: You mean at your core job?
Steeve: At my core job
Rod: Yeah and you retired when?
Steeve: Gave notice in June of 2019
Rod: Yeah 2019, because your income from your investments has eclipsed what was a high paying job before yes? So let’s talk about that a little bit actually. Let’s talk about what it’s like to build enough of an asset base that’s paying you enough so that you can retire you know the good and the bad I guess if there’s any bad
Steeve: Yeah so it’s interesting I always looked at it as I have to replace my W2 income so I can leave the job. And I haven’t really dug into it and for an analytical guy, surprisingly haven’t done dug into it very deeply when I first started in the coaching program. And I just knew I had to make a lot more in real estate in order to leave my job. That was enough for me to take the massive action necessary and to be coachable and to do all the things that I was supposed to do. I followed the plan and it all started to come. But at some point I think you know my goal was 2020, sometime in 2020, in the back of my head it was always like you know by the end of 2020 right. That’s what I told and then in was December of 2018, I was doing my goals for the year and I started looking at numbers a bit more and I said, well you know if I do this full-time, I’m now a real estate professional, that’s perspective, I take all the real estate benefits there from my
Rod: Tax benefits yeah
Steeve: Passive losses so you know if you’re taking a couple hundred thousand dollars in passive losses, that’s a lot of money that you don’t actually have to earn and then I looked at the just a couple of duplexes that I still owned, those were cash flowing. I’ve never even considered you the extra money I have already built in my side hustle before I even started the syndication piece. So I started to add these things together and realized that I was really close by the end of 2018. So it was really you know two years of or not even two years of coaching at that point in taking this action that I needed to take before I was staying in myself. I think I can do this in 2019 and then I did another deal maybe two deals in 2019 by June. And I finally just said, this is it like I’m done. You know I knew that I had ever at least enough to replace what I have already and by focusing on this business, I was going to be able to eclipse it
Rod: Love it love it love it love it. Awesome story. So now you’re working at full time and you know having a lot more time with the family. You’ve got a family, you’ve got kids. How many children do you have?
Steeve: So I have three boys, two at high school, one in college though
Rod: Nice. So let me ask you a question, you know why do you think people maybe think about doing this and don’t take action and what would you tell someone, let’s do that two separate questions let’s start with the first one what would you tell someone that’s listening that knows they want more out of life? They want to do what you did, create a side hustle, with a family, with kids, and get to where you are, where they can retire from the core job, what would you say to them?
Steeve: I mean the most important thing is to be an example. So you know just telling them what my journey was in you know I did have to think a lot of sacrifices and I can list them all off. I don’t want to bore people but made a lot of sacrifice. I stopped coaching my kids. I stopped playing hockey at night. I did nothing but this business, nights and weekends
Rod: for two years?
Steeve: A year and a half, two years before I was really you know able to leave my job. But then the other side of that the flipside is, now when I sit down to work, the day flies by, literally like a snap of the fingers and it’s already you know four o’clock and I’m thinking, well I better go down and start making dinner and just hang out with my wife right you know I don’t work when we say full time. I’m working 30 hours a week. Unless in the middle of a big deal or the middle of COVID or whatever, but those hours are whenever I want them to be. I don’t have to get them on the highway and drive into Boston and deal with the commute and you know so it’s so worth the sacrifice. I think that probably is the most important thing you let people know
Rod: And guys, there is gonna be some sacrifice. I mean you know to get anything you have to you know you have to get uncomfortable and you have to push yourself and you have to give up some you know maybe some Netflix and you know and things of that nature to make this happen. What roadblocks would you tell people they should watch out for?
Steeve: The one thing that comes up pretty much without fail at some point in coaching whether it’s the first day or a couple weeks in, a couple months in, it there’s gonna be some limiting beliefs where people just start talking about how they can’t do something or they don’t think it’s possible or whatever it is. And it’s just kind of holding the mirror up to them and saying here’s what you’re telling me, do you really believe this? Right, I mean look at me. I’m not special. I don’t have this crazy IQ. I just went out and did the hard work and got it done. Absolutely no reason why you can’t do the same thing but having the ability to kind of recognize what that limiting belief is and then dealing with it. If you don’t even know you have it, how are you gonna deal with it?
Rod: Many people don’t and you need to consciously think about it you know limiting beliefs can be you know I’m not smart enough, I’m too old, I’m too young, I’m not analytical enough, I’m not outgoing enough, you know I don’t have enough energy whatever it is and for most people their stories honestly they’re limiting beliefs yes and/or stories and if they’re a limiting belief, I would, let me give you some coaching on that really quick. If you know you have one of these, pull it out in the daylight you know mine was I’m not good enough or how can I show them I’m good enough, and when you pull it out in the daylight and you look at it with your adult rational mind, you recognize that it’s BS there’s a reason the acronym for belief systems is BS because 99% of them are and so you know but when you look at them rationally and you recognize that they’re BS, they start to diminish and if you do it consciously enough, they will go away. But the operative word is consciously. You have to have to pull them out. You don’t let them go by. You think about them consciously and they will diminish and go away. I used to be an introvert as well, big time. And now I’m in front of thousands of people a year, well I was before COVID, in front of thousands of people a year but the other thing is make sure that it’s not a story that you’re telling yourself either. People use stories as circuit breakers so they don’t get disgusted with themselves. And don’t let yourself off the hook. If you’re not happy with something don’t justify it with the story because you’re never gonna grow. You agree Steeve?
Steeve: Absolutely! my limiting belief before I join coaching, the number one thing was, I have a family to feed right. I can’t be doing this real estate thing on the side when I’ve got a family feed. I have to be able to keep my job. I was so sort of small-minded, fear-based about you know leaving the job, can I ever retire, can’t put any of that at risk, and it all changed as soon as I joined coaching and starting to realize that this is what was holding me back
Rod: Nice. Let me ask you a question, because we’re all leaders here and anyone that’s gonna go and do this and right now the world needs leaders more than ever with this crisis we’re going through. What’s one characteristic do you think that you think every leader should possess?
Steeve: I think you may have asked me this when I was on the podcast like a year and a half ago
Rod: Alright let’s hear it
Steeve: Answer hasn’t changed, it’s integrity.
Rod: Integrity, that’s our number one core value. I love it love it love it love it you know what do you think’s the best advice that you’ve gotten about this business or our overarching theme or quote or something that has just really impacted your success or impacted your drive. Take that any way you want
Steeve: Yeah I mean there was so much right. I’ve joined a mastermind group, actually two. So I get these things non-stop coming up. And surrounding myself with the right people
Rod: Positive stuff
Steeve: Positive things right yeah but really early on one person said, only do fat deals. And you know I was like of course I only want to do the deals that are gonna bring me the most money but it’s so hard to do that when the market you know as of January, February, this year was super hot really hard to get deals under contract that make any sense. So it’s easy to start making shortcuts in your underwriting and making assumptions that are more aggressive because you just want to get a deal done especially when you’re first starting off. And now with this whole crisis hitting, I really understand the value of that statement of only do fat deals because now I’m looking back we’re running breakeven analysis on all of our properties. We did it before we bought them but we’re doing it again now so you know here’s where we are in our execution of our business plan. Some of them are only a few months in some of the years in and at this moment, how are we cash flowing? What’s our breakeven? How bad can it get with COVID and job losses and everything before we have an issue? I’m feeling pretty darn good about all of our properties because I took that advice
Rod: Yeah same here you know it’s a big operating reserves and low loan-to-value and yeah lower breakevens than the norm. Most of ours we can go 60%-65% vacant still breakeven. And guys, especially right now, be ultra conservative. That’s the bottom line. If you write that word down, conservative especially right now because it’s likely to get worse before it gets better. Hopefully it’ll be short-term but I think these next few months, it’s gonna be more painful than this last month honestly until it you know gets until the ship gets righted. So you know before it was finding the deal, I think moving forward it’s gonna be more around finding the money, what do you think about that?
Steeve: I mean that’s certainly true right now because everyone’s fear of the economy and the impact of their own savings, their ability to you know the same feelings I had before I did this right, the ability to hold down a job and all that sort of thing. I think everyone’s feeling that crunch right now and just like a lot of us were feeling it shortly after you know ’08-’09 etc.
Rod: Sure
Steeve: But I think like 2008-2009 issues, we’re gonna see people flooding the private equity here in maybe a year or two. I’m not sure how long it’s gonna take but eventually you worry, I think it’s a five trillion dollar markets this private equity space where we deal with the private real estate assets that we’re taking down. So you know I can’t imagine a world where that doesn’t increase after all of this. People are gonna have a hard time getting any kind of yield in the stock market I think for a while because those companies are gonna be suffering you know this economic impact isn’t over in a year or two when the virus goes away
Rod: Agreed
Steeve: So I think that’s gonna be a long-term trend. I think just the disruption even you know with China they’re talking about potentially another Cold war but now it’s with China and it’s not just the U.S. it’s the whole world. It’s gonna be a lot of stuff happening where people are you the stock market’s going to fluctuate every time somebody sneezes. But in our real estate assets, nothing happens
Rod: Plug along I mean you guys know the reason I started this podcast if you didn’t listen to my early episodes was to share my experience losing 50 million dollars in 2008 and the discovery that my multifamily did just fine. It would have survived if I didn’t cross-collateralized it you know to save a few basis points on interest rate and so you know I still have those apartment complexes and so that, I wanted to get that message out there and that’s the main reason I started my podcast. So shift gears for a second because I know you’ve got boys in your life. If you could teach school children something that they’re not getting, what might you teach them?
Steeve: Anything to do with basic financial management. I mean I’m having a conversation with a friend of mine. She want to put together a course on this so I’ve been kind of feeding her some videos and some ideas that I’ve shared with my kids along the way. But yeah it’s just basic budgeting, understanding that you can’t spend more than you make, you know investing yourself which is massive lesson for people who learns. And I think you know a good piece of that is investing in how to manage your own finances. Don’t leave it up to somebody else. Everything how this stuff works
Rod: No, I couldn’t agree more. So is there anything I haven’t asked you? Anything you’d like to expand on. I mean you you’ve added a ton of value. Let me ask you this, what do you love the most about this business?
Steeve: I love the partnerships and the friendships actually it’s been really amazing to see. So in the corporate world it’s you know everybody is fighting to get the promotion, fighting to get a raise, and a lot of that is trying to make other people look bad so that you look better which is, it’s just a horrible place to be and I don’t think every job is that way
Rod: A lot, a lot are. I hate to say it especially in larger organizations
Steeve: But it is a competition and when you come into the multifamily space of course we’re competing for multifamily assets and there’s a lot of times we know the buyer that you got the deal that you were after but at the same time it’s a very small world.
Rod: Very small world
Steeve: Yes and your reputation matters a lot. So you know for the most part people know that and they try to do the right thing and they’re just really good people, always sharing and then the idea of partnerships if a deal is too big for one person or even for a small group, you might get a phone call because they know, like, and trust you. And they say, hey let’s work on this thing together. I start looking on those possibilities
Rod: Yeah in fact, even in the warrior group. I mean we bought a thousand doors with our students last year and I know you’ve raised money in there and partnered and aligned in there. So you know and that’s the kind of environment you want to look for and/or create where you can align with people and because like I said you know that with these larger deals, you have to have a net worth equal to the loan amount, you have to have liquidity equal to about ten percent of the loan amount. And so very very often you have to pull multiple people gather to satisfy that. And then you know there are different pieces of buying and asset managing one of these assets that you know require different personalities and different skill sets. And that’s why this business is so fun. So I’m really glad you brought that up. Well listen brother thank you
Steeve: Your ideas too Rod, that when you pull these people together, everyone has different ideas and perspectives and you know some people more aggressive or conservative in different areas of the business. So whenever there’s an issue or even just in your underwriting at first, should we think that we’re gonna raise rents this much and why? And just having those discussions, having some smart people to bounce those off, suit importance. So from that perspective, I love the partnership.
Rod: Yeah agreed. You need to have people to bounce things off of it’s so critical. And so you want to be around people that are doing this and you know I’ll actually announce it here right now. We’re pretty close to ramping a national meet up, online meetup organization. So that’s gonna be really cool and that’ll be an environment where people can meet digitally and build relationships. So kind of excited that that’s happening but anyway, thanks for being on the show my friend. I appreciate you coming on and thanks for all the value you added
Steeve: Yeah this was great. Hopefully I’ll see you in person again soon
Rod: Yeah when that be something. Well I’ll see you like this on our now live stream next weekend but anyway take care buddy!
Steeve: All right take care Rod.
