Jake Harris on the 6 Things to Include in your Real Estate Stress Tests – EP 268

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No one can deny that we’re living in uncertain times. There’s political unrest all over the world, rampant inflation, and countless problems in our supply chains. As real estate investors, all these factors play a role in your deals, whether they influence your purchase price or if the appliances your tenants need are going to arrive now or in 6 months.

However, as you’ll learn today, even if you can’t predict the future, you can still build a portfolio of high-performing investments that keeps pace with an ever-changing world.

That’s why I’m thrilled to have Jake Harris join me today. Jake has over 18 years of experience in real estate, construction, and investment management. His fields of expertise include opportunity zones, infill development, cost control systems, and scaling distressed investments.

He’s also the author of Catching Knives, a book in which he shares not just the story of how he got involved in commercial real estate investing, but also some very specific strategies and tools you can use as you line up your first deal.

In our conversation, Jake and I discuss how to make good investments in high-stress environments–and the 6 things that you should include in your real estate stress tests. You’ll also learn why now is the time for the very best operators and investors to rise to the top of this industry, and the hard lessons he learned over the course of almost two decades in commercial real estate.

Key Takeaways with Jake Harris

  • How Jake got his start in commercial real estate.
  • Why investors and operators are never doing enough due diligence before construction.
  • Why Jake is sourcing domestic supply instead of buying from Korea, Ukraine, or elsewhere.
  • The six things you should include in your real estate stress tests.
  • Why goals are a great way to win one time, but success is built off of systems.

Jake Harris Tweetables

“Goals are great for those that want to win one time. Success is built off of systems and systems are for those that want predictable and repeated success.” – Jake Harris

“You can grind out grit to get that first million bucks but if you have no systems, you're going to default down to the level of your systems. If they don't exist, then it's going to go away into nothingness.” – Jake Harris

“I have tried to figure out like this magic secret sauce of where you find the deals and the reality is, sometimes it’s just hard work and building relationships.” – Jake Harris


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Connect with Josh Cantwell

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Josh Cantwell: So, hey, welcome back. This is Josh Cantwell. So, excited that you could be with me today. And, listen, today, I have a great interview for you. I’m interviewing a fella named Jake Harris. Jake has over 18 years of real estate experience, construction experience, investment management experience. He has been a featured national speaker on his expertise of opportunity zones, infill development, construction, cost control systems, and scaling distressed investments. He also has written a great book called Catching Knives, and you can find the book at CatchKnives.com. And he tells the story there of how he got involved and started with commercial real estate, but also some specifics that you can use when you get into real estate investing and specifically commercial real estate. One of the specific items that he talks about is why a recession is the best time to invest in commercial real estate and reasons your investing process should start with an exit strategy. So, I highly recommend the book, CatchKnives.com.


And today you’re also going to hear a little bit from Jake and I in this interview about, number one, pre-construction diligence and why investors and operators are not doing enough of it. Number two, about why Jake is sourcing domestic supply today, supply meaning they buy from the United States versus buying it from Korea or from the Ukraine, which is troublesome. Number three, like I said, Jake is the author of the book Catching Knives. Number four, you’re going to hear a lot about what Jake and I call a sensitivity analysis or a stress test in six specific items to include in that stress test. And finally, you’re going to hear one piece of advice that absolutely stood out to me when Jake said, “Goals are a great way for a person to win one time.” So, we’ll explain that in the interview as well. I hope you enjoy this interview on Accelerated Investor with me, Josh Cantwell and my guest, Jake Harris. Here we go.




Josh Cantwell: So, hey, Jake. Listen, thanks so much for joining us today on AI, Accelerated Investor. How are you?


Jake Harris: I am fantastic. Thank you for asking, Josh.


Josh Cantwell: Awesome, Jake. Listen, I would love to know with all your experience, 18 years in real estate construction, investment management, man, things just seem to keep getting weirder and weirder and weirder. So, tell me a little bit about what’s going on in your world today. Tell me a little bit about the market, what you’re doing in this market, and just kind of some things that you’re looking out for kind of penciling and what you’re seeing out there in today’s marketplace.


Jake Harris: Yeah. You kind of hit the nail on the head metaphorically and literally, what is going on in the world? Who knows? I mean, when we’re recording this, they got wars happening in Europe, political unrest in Canada. So, yeah, it’s a challenging time when you’re building stuff, developing, and trying to get materials and predict what your future prices are. So, we are reactionary right now in a lot of projects. The appliances that we ordered six months ago, the supplier just canceled and said, “Hey, we can’t get those. Here’s your money back.” It’s just like but now these things are up 50% like what do you do and how do you make that pencil into your pro forma? Same thing. We’re getting ready to kick off, break ground on a hotel on the Riverwalk down in San Antonio. You know, that’s an 18-month kind of development world. What our prices and materials are going to be in 18 months? And so, that’s what we’re having to deal with, go through is how do you carry the appropriate amount of contingency? You know, carry the risk with your lender or carry it also with your contractor. We have some subs that are upside down on previous things. So, like do we go sue them and put them out of business? Because we have a contract that says they’ll do it for half a million dollars.


Well, they’re going to lose $150,000 if they go do it for $150,000. And that’s one of other projects, several others that they have. And so, you have to like navigate these things to where it’s like, “I have a contract that says you should do it for $500,000.” But then they’re going to lose money. What is the quality that I’m going to get out of that? What is the long-term nature of the investment that we’re looking at and it’s a tough place to navigate. So, I mean, a lot more pre-construction diligence and I say diligence like, for instance, on the hotel, we eliminated some suppliers that were coming from Korea, from the East. We were like, “Let’s do domestic supplied manufacturers for HVAC equipment.” You know, they have a factory in Texas. We can at least drive there. I don’t think I can drive to Korea, trying to think of I was like, “That’s through Russia, through North Korea. I don’t think I can drive to Korea, but I can drive to Texas. I can drive from our job site there.” And so, those are some of the things that we’re having to evaluate and spend a lot more time with pre-construction than we’ve done previously in the past to understand or at least reduce the probability that those things aren’t available in six months or nine months or a year from now.


Josh Cantwell: Got it. Makes a lot of sense. Jake, how are you reconciling? Because we’re going to have to do it too, right? We own 4,000 units of apartments and we’re having to reconcile supply chain and things like that but we’re also reconciling the fact that with inflation, rents are going up faster than the pro formas that we put together. And there’s this idea of, “Okay. Well, cap rates, interest rates could go up, cap rates could go up, but rent rates are also going up because of inflation.” Really hard to predict so it’s something that you’ve got to look at on a regular basis. So, how are you guys reconciling that in your business and in your mind? Obviously, nobody has a crystal ball, but what are your thoughts on rising interest rates, rising cap rates, but also rising rent rates to offset that?


Jake Harris: You know, I think why I’m excited about the hotel right now, as it is an unbelievable inflation hedge, you’re setting the room rates every single night. And so, you can trend and ride that inflationary wave. Do you have an office building that has 10-year, 20-year leases with 2% increases into it that’s something that’s not tied to CPI or something? You’re a little bit more concerned about that. Multifamily, at least you’re resetting typically annually on your rents, and that is going to allow you to recap as those inflationary numbers. So, it kind of depends on what asset class, what space we’re in, how and what we’re effectively looking to. I wrote a book during COVID. I sat down. I was like, “What’s going to happen? Oh, obviously lots of distress.” And I wrote a book called Catching Knives: A Guide to Investing in Distressed Commercial Real Estate. And then all real estate tripled in value. You know, so like you said, that my crystal ball was very, very fuzzy. I was just like, “Wait a minute. The government just went and printed $20 trillion. Everything went the other direction.” There is still distress. There are still opportunities in every market. But the fundamentals still make sense. And so, when we look at things, it’s about which I did not predict an epidemic, I did not predict a pandemic, and a lot of our underwriting.


So, you can’t really predict a lot of things that are going to happen. However, when you put together your pro forma, there are caveats to looking at the most probable likely scenario, meaning I see people that are putting together the best-case scenario, dream scenario, interest rates stay low forever, rent rates keep going up at crazy numbers, and then all of these things happen and then they’ll hit their pref rate or their return level. So, what we do is we do a conservative approach and run sensitivity analysis on a lot of additional variables that give us a margin of safety into our deals. And so, the fact of the matter is, is that, no, we do not predict the pandemic or some of those things that happen but we weathered the storm relatively well given the fact that we had some margin of safety built into our underwriting and we missed in some areas, but other areas picked up. And so, I just think for somebody as having an appropriate level of conservative nature to your projections.


Josh Cantwell: Yeah. I’ve got two questions, peel back the onion on that. One is the sensitivity analysis that you mentioned. So, if you’re working with a limited partner and often limited partners have the best questions, right, things you never thought of that they think about. One of the questions a limited partner might ask you is, well, Jake, tell me about the sensitivity analysis. What are some of those numbers that you’re sensitizing moving up, moving down? What are all the different levers that could change that are being pulled where you’re stressing your deals? So, help me understand to help our audience understand, Jake, what are some of the things when you do the sensitivity analysis that you’re saying, “Let me push this lever as hard as we can,” does the deal still work? When we push this lever as hard as we can, does the deal still work? Tell us about that analysis.


Jake Harris: Yeah. So, I think similar to you is exactly what you just said. LP investors, one of our main, main criteria is don’t lose my money, rule number one. Rule number two is see rule number one, don’t lose my money. So, understanding through a sensitivity analysis of where that point is, is that you lose money. And again, if you can protect the downside, you can protect from losing money, then at least you know where the possibilities for future profit. So, one of the things we look at is, and I’ll give you a few scenarios that I typically put into a stress test. Before, and these are obviously maybe not as applicable in an inflationary environment, but like no rent growth. What happens if the rents that you’re receiving today don’t really grow? It’s just flat. And so, that could cause and change a massive amount, especially if you’re looking three, five, seven, eight, ten years into the future, depending on when you’re planning to exit out of that deal. If your rents and you’re baking in a 3% in income, but you’re only toggling 1% in expenses and so you have a compounding growth of that over a three, five-year period. So, we look at what if there’s no rent growth? What if there’s delay?


So, for instance, we do a lot of heavy value-add remodels or development deals so time sensitivity to that. What if something that was supposed to be 15 months turns into 30 months while we’re in construction? So, that delays, the interest cost, the carry cost of that, the property taxes, what do those delays in time also affect your deal? What if there’s just also cost overruns? So, maybe taking a 20% hard cost overrun on what we think is the cost. We think it’s going to be 30. And what if it turns into 36 million? And then what we look at is what if and now a declining situation, not that rents are staying the same, but what if they go down? What room rates are, per square foot price are, or whatever those things, those are declining. And then we look at, what if we have higher levels of vacancy? So, it was historically at 95. Now, what if it’s at 90? What if it’s at 90? What if it’s 85 or 80 or below? And then what we do is we put together a high-stress scenario where multiple of these things are happening at the same time. But with that is, you typically don’t have a recessionary thing like declining rents and increasing construction costs like those don’t do the same. So, that’s where we say a high-stress environment is we have relatively flat rents but we have cap rates going up and we have occupancy levels changing so higher vacancy, higher cap rates, and a flat kind of overall inflation number.


And then we look at those and put them together and then just toggle that and say, “At what point would we potentially lose money on this?” And so, when we look at it, it was like, “Okay. That does a 6% return to investors.” Okay. In a high-stress environment that has multiple things going wrong in the wrong direction, not understanding why they are doing those things because we’re not trying to predict those. But just do bad things sometimes happen? Yes, that is a possibility, and that’s how we approach it. And then we say, “Okay. Great. You’re still not losing money at that point.” We then say, “Wow. We think that represents a risk-adjusted return to the investors. And now if this does 20% or 23%, awesome. But at least we’ve done a stress test that says, “Hey this is going to be the potential.” And that does not a be-all end-all solve everything that says the deal is still not going to lose money but it’s taken a layer deeper.


Josh Cantwell: Sure. I mean, we’re all capitalists, right? So, at the end of the day, you’re taking an opportunity for the general partners and limited partners to make money, highly stressing it up and down. And ultimately, we’re all making bets, right? We’re all making bets. You’re making a bet that this is based on what I know, what I can control, what I can forecast. I don’t have a crystal ball. I can’t tell you exactly where we’re going to go. Nobody can. The best economists in the world, including the Federal Reserve, are often very wrong, as we know. And so, we’re making the best. And that’s really if I’m a limited partner and when I talk to my limited partners, like, that’s what I tell them, “Look, at the end of the day, something goes wrong, the operator, the guy, the sponsor is going to have to be getting creative. And ultimately, that’s what you’re investing in.” When you invest in Jake Harris or you invest in Josh Cantwell if all these projections go exactly as they should or better, we all look like golden boys, right? It’s great. We’re golden boys. “We’ve made all kinds of money. Let me reinvest with you.” Great.


What I think is going to happen, Jake, and I love to hear a comment on this is with this volatility, people that have bought properties in the last couple of years who are not as hands-on as you are or as hands-on as I am and they’ve bought because money was cheap and money was flowing and it was easy to get, I really feel like now is going to be, this next three to five years, is going to be the time when the best operators, the cream rises to the top and the best operators and the guys that really have their hands on the pulse and are really involved with their projects, they’re going to do the best. There are going to be people who lose money, people who got the wrong kind of financing that has all kinds of variables. And variable financing it’s going to go up and up and up. If inflation goes up or the Federal Reserve interest rate goes up, they’re going to get caught. They’re not going to be able to refi or sell or they had business partners that were supposed to be boots on the ground or they’re not boots on the ground, right? They’re not doing the right job. So, Jake, what are your thoughts on that as far as like, “I think I’m going to do really well in the next couple of years,” and other people are going to start to lose some assets because of rising possible interest rates?


How do you see the market? I do feel like there’s almost like a little bit of a fake environment with some people, especially people that I see on social media bragging about the properties they’ve bought. But they don’t make money when they buy, right? And it’s going to kind of flush, this is all going to flush out over the next couple of years where the best operators are going to win. What are your thoughts on that scenario?


Jake Harris: I’d say maybe 100% agree with exactly that statement, just because I’m seeing exactly what you’re seeing, people that are aping into deals with no due diligence, no proper underwriting. And actually, being the fact that I do commercial real estate, I’m part of some masterminds. I have people reach out to me and, “Jake, can you come take a look at my deal and run some analysis on it?” No, I’ll take a look at it. And I mean, as to friends or maybe they’ve been investors in other deals that we’ve done, absolutely, I’ll help people out. But that has limitations on my time period and exactly to that point, a lot of these people went into very high-risk deals, in my opinion. Like, if every scenario that we just talked about does not hit and they signed a personal guarantee on $6 million worth of debt on a net lease deal that if that tenant, the music doesn’t have to stop like it just slows down a little bit, you’re screwed. And so, I’m absolutely actively seeing this and so that means there’s going to be opportunities. And so, obviously, to the book investing in distressed real estate, what that big thing is, is like putting together the systems before those things actually happen. Understanding the mechanisms of what makes this good deal or what are the levers that you need to pull to execute your business plan is very important right now.


And so, I feel like, like you said, I’m looking around and saying, “Wow. I think there’s going to be some distressed deals.” Which ones do I want to buy? Which ones would I like to be preparing for in the near term future? Does that mean that we don’t have a wild, crazy run, and it still keeps going for three, five, seven, eight years? And like you said, this is my one opinion. Get six economists in a room and you’ll probably have 10 different predictions. It’ll be all over the board. And it’s like Josh and Jake agree that this is going to happen and then it can go the other direction. I don’t know. But to me, it feels like, man, this could be a really, really beneficial time to be able to navigate the volatility where other people start getting alligator arms because things are not working out the way that they thought it was going to work out to then pick up some really cherry-type of deals.


Josh Cantwell: I love it. I think a couple of things that we’ve done just to kind of piggyback on what Jake is saying about a stress test is, of course, the financing is so important, right? Making sure that there’s not balloon issues. I mean, you only lose money on a deal if you have a recap event that you’re forced into. So, I just signed an LOI this morning on a $16.3 million loan, but it’s seven-year money fixed at 4%, right? So, we know that we can work through any kind of volatility that happens over the next two or three or four years, especially when we’re in heavy CapEx and heavy value-add time within this deal that we’re about to buy. So, that’s a way to do it, right? Sign longer-term money. I could have gotten cheaper money and got more leverage, but it was going to have a floater interest rate. Now, I’m not interested in the uncertain. I told my lender, my broker yesterday, I said, “Look, I’m not concerned about my team executing the plan. What I want to do is remove the unknowns like I feel very confident we’re buying it at the right price. I feel very confident that we can execute the CapEx and the construction plan. I feel very confident in the rents going to where we want them to go because we already own other buildings in the sub-market. So, I want to eliminate the unknown and the unknown you’re telling me is I go with the floater rate, I can get more leverage. I’d rather have less leverage, recruit more capital from LPs, and have a fixed interest rate for the long haul.”


That’s other ways that you make sure that you get this deal at the right price and you don’t lose the deal. You don’t lose money for your partners, just like the role you said earlier. Jake, you wrote this book, CatchKnives.com is where you guys can get it. You can buy the book there, CatchKnives.com. You can also opt-in for some of Jake’s free bonuses, so make sure you guys go check that out. Jake, I’m curious, in the book, about your story, your start, right? You probably talk about it in the book. You’ve had a lot of success. You’ve been involved in over $200 million worth of deal flow and assets under management just in the last five years alone. And so, I’m curious, though, where did this all begin and some of the early challenges that you face to kind of getting off the ground and getting started?


Jake Harris: Yeah. So, I mean, 20 years I’ve been a professional investor. That is what I’ve been doing for 20 years. And so, it’s like, yeah, that’s a great experience. But it was actually I was at my mom’s house the other day and I was looking and she has up on her fridge, a photo of my brother and I carrying a sheet of plywood when we were little kids, and it reminded me that so we bought an old farmhouse built in 1888 that didn’t even have a foundation. It sat on rocks. And then we lived in the 16-foot camp trailer. A family of five. And I actually kind of calculated out, 16 feels like that’s not very much.


Josh Cantwell: I have three kids. I have a park model camper on the lake. That’s like one of the places we go to in the summer. That’s barely big enough for me and my family of five. Sixteen feet is tiny.


Jake Harris: Yeah. And so, that’s I was like a 16-foot camp trailer, three kids, and we fixed up this old house built in 1888. And so, I look and I see those photos and I was like, “That was me, the little kid.” I kind of grew up on a construction site and we have pictures of us taking a bath in the wheel barrel, probably getting chemicals on us from concrete or something, probably built extra immune system, whatever it was, but it was like my whole life has been really in this environment. And so, after the army, I was given the book, Rich Dad Poor Dad, as I was leaving the army, and it was like one of those first like mind-blown. I wanted to do real estate. I bartended at a golf course and a developer told me to get into construction and I was like, “Oh, that sounds not what I wanted to hear.” I wanted to just get straight into, you know? And he said, “There’s a contractor involved in everything real estate. I don’t care if you’re moving dirt, if you’re remodeling your kitchen, you’re building the high-rise, the contractor is involved in everything you do.” And so, he’s like, “Which is very interesting because you’re competing for the same dollars. You need each other but whatever the market rate is and what it’s going to cost, and then the in-between is what the contractor and the developer or the owner is creating and dancing with each other.”


The contractor wants to make as much money as possible. The developer or owner or sponsor wants to make as much money as possible. And so, you have to have this dance. And so, he said, “If you know what, the inner workings of construction, you know what something costs, how long it should take.”


Josh Cantwell: Right.


Jake Harris: The people that have come from the trades inherently have a higher level of success out of the gate than the guys that went and learned real estate from the books or from college. I subsequently went back to college and got a master’s degree in International Real Estate and Finance, but I started in construction. To your point, I became a millionaire before 30. That was my goal. Be a millionaire before 30. I achieved it and then I was sitting on a street corner down in Tucson, down from the university. I’d been fixing up an old Adobe house and I was praying, “Dear Lord, can I be worth no money?” Zero dollars. Actually, start over because I had over-levered. The subprime meltdown had seen and eviscerated the value of my portfolios. It’s gone and now I have a negative net worth. I’m worth no money, negative money. And so, like can I start over at zero? And that’s where I kind of dive into and that’s kind of the start of the book is this is my journey a little bit of getting into taking many decades of experience, putting that into a book and packaging at it and say, “Here are the mistakes that I made. Trial and error is a very, very effective teacher, but is also the dumbest and slowest way to build your education process.”


And so, to me, maybe I was dumb enough that I had to go slam my fingers in the drawer, go through, and experience that. And these are different skill sets becoming a millionaire, maintaining that status of a millionaire, managing things. And so, what it breaks down to is goals are great for those that want to win one time. Success has really been built off of systems and systems are those that want predictable and repeated success. Because you can grind out grit to get that one of that first million bucks but if you have no systems, you’re going to default down to the level of your systems. If they don’t exist, then it’s going to go away into nothingness. And it’s easy come, easy go. Now, if you have a system, you have KPIs, you have things that you’ve put together that allows you to have a predictable layer of repeated success, then that is what you can do. And that’s what I talked about in the book. These are things that I did not do and why I had to go give advice to young Jake or to others that are looking to get into the commercial real estate world is it’s a team sport. You don’t have to know everything. There’s a lot of information available in assembling your team. Putting together these systems is very, very critically important and you don’t have to do everything.


Yes, I’ve been doing this professionally for 20 years. I still don’t do everything. I hire attorneys. I hire capital markets brokers. I hire inspectors. I hire a whole lot of people that help me through this process because it’s so easy to miss things. Working off of a checklist, working off of just the same thing why does a surgeon have a checklist? Why does a pilot have a checklist? Well, because the downside risk is somebody dies. You can crash a plane on the side of a mountain. You know, I’m not saying you’re going to die investing in a commercial real estate deal. You may feel like it. But just going off of a checklist and using a team approach to this is very, very, very valuable if you want to create something that is repeatable and builds upon itself.


Josh Cantwell: Yeah. Jake, I love that. I was going to ask you some questions about advice and things but, man, you just covered it right there. That’s fantastic. I wrote down, guys, and write this down, “Goals are great for people who want to win one time.” I’ve never heard that before. That’s fabulous, fabulous advice. And also, Jake, I’m not sure if you subscribe to the book or read it, but the book, Who Not How.


Jake Harris: Yep.


Josh Cantwell: I’m sure you’ve probably heard of it. Like the whole idea of, okay, the old school mentality, the old school thought is, “I’ve got strengths and weaknesses. I need to improve my weaknesses.” That’s really old school. Then there’s, “I’ve got strengths and weaknesses. I’m only going to focus on my strengths and outsource my weaknesses.” That’s also sort of old school now. The new strategy and the new thought which comes from the book, Who Not How, and they get a really good job of kind of laying out Who Not How, which is take a look at what Jake said, the checklist, and find out who is the person to help me recruit the capital, find the capital. Who is the person to help me find new acquisitions and new strategies, new development opportunities, or new value-add deals to buy? Who is the person I can partner with to help me underwrite the deal property? Who’s the broker that can source me the right capital stack, right? Notice Jake didn’t say after 20 years of experience, “I do all this myself.” No. He did not say that, right? So, that’s fantastic advice and it’s really great. Jake, let’s wrap up with this. We’ve got a couple of quick questions for you, kind of fast-hitting quick questions. And of course, guys, don’t forget to check out the book, CatchKnives.com by Jake Harris. Make sure you get your copy today. Jake, let me ask you a couple of quick questions. So, you’ve done a lot of deals, acquired $200 million with the assets in the last five years. What’s your favorite way to find deals today?


Jake Harris: You know, I have tried to figure out like this magic secret sauce of where you find the deals and the reality is it’s sometimes just hard work and it is building relationships. And so, my best deals, I would not say the easiest, but the best deals have been being persistent in a market and engaging and communicating. And so, what I do is I will research who owns everything in the market that I want to invest into. And the reason that I invest in particular markets is because I’m investing in a market first and I’m trying to find a good deal as I’m going to go talk, “Josh, you own this building that I want. I’m going to go talk to you. And you know what, it might take me five years before you decide to sell it to me.” Most of my best deals have been the fact that I have been building a relationship with you for five years and telling you I’m interested in that deal and I’m looking at it, and here’s why, and here’s where, and it’s maybe grandpappy told you to never sell. All of a sudden you’re like, “Well, cap rates are pretty low. That’s a pretty good number. Like, alright, who am I going to sell to?” Well, the guy that was consistently communicating with you and pinging you and creating that. And so, I would say that consistently communicating and putting out there what you are looking, the more specific you can get, the more that the reality is the universe or God or however you want to think conveys that back to you because you have a very specific thing that you are looking for. Just like I randomly want a good deal. So, get very clear and very specific on that.


And now technologies are making it a lot easier. I can now text Josh. I can text you and say, “I want to buy your building.” I can email you and I can ping you and say, “Hope you’re having a great day. Still want to buy your building.” Go through that ten times over the next three years, you’d be shocked at how many of those deals and those communications actually turn into those fantastic opportunities.


Josh Cantwell: Yeah. And I think, Jake, to add to that, you’ve got to have that long-term approach. Jake’s been at this 20 years. I’ve been at this 20 years. We both went through the recession of 2008, but you’re also not hearing us talk about like immediate wins today. Everybody needs to make money today. But you’re talking about how do we make wins over and long-term success. Jake talked about systems for long-term success, not just how do I buy a building today, how do I make $50,000 today or $500,000 today or $5 million today but how do I build it long-term? Jake, you’ve had a lot of success over 20 years. What do you think has been the greatest or one of the greatest pieces of advice that you’ve been given that’s really stuck out to you? Like, what’s something that’s kind of become part of your core or part of your leadership philosophy or your business philosophy that’s really maybe something passed along to you that you could pass along to our audience?


Jake Harris: I think a little bit to the vein of what you just said, the Ben Hardys and book of the Who Not How, Tim Ferris mentioned this one time. It was, “What would this look like if it was easy?” And I think part of this is that I feel like sometimes I do things way harder than they have to be. And maybe that’s the slow nature of not losing money but like asking myself that question, what would this look like if it was easy? And oftentimes it comes to the fact of creating leverage. Creating leverage and that is, say, leverage, you and I, first thing we probably thought about was increased leverage on a mortgage. That’s part of it. Sure. Yeah. Increased leverage of other people’s money. What about also other people’s time? Other people’s knowledge? Other people’s skill sets? Guess what? You know, the integrators that work inside the organization, the guys that work in my accounting team, it bores me to tears to get through and go through the QuickBooks and the journaling of where those expenses. I’m lost. Not to say I can’t do it but it’s so painful for me. Guess what? And they love it like they do. So, what does this look like if this was easiest? Like, oftentimes it’s not what I can do but finding those whos, finding those people that it is easy for them. It does fill them up and makes them more energized to do that one thing. And so, then my goal becomes finding those whos that make this easier. And then you have to facilitate the vision and then the drive because most people do not have that. They’re good at punching the machine, working on their one thing. They need someone collectively to help corral and give that vision to something that’s bigger and better than themselves.


Josh Cantwell: Yeah, I love it. Fantastic stuff. Jake, last question. You wrote the book CatchKnives.com. What did you hope to get out of it and what message did you hope to kind of push out to the world from it?


Jake Harris: Yeah. So, I think it was part of, like you said, the part of me was younger Jake, the 20 years ago that I made some of these mistakes that I wanted to convey. Secondarily is, as I think people that are looking to get into commercial real estate, it is very, very valuable. I specifically wrote it for that person that’s wanting to get into commercial real estate. It is the same amount of effort to do a $10 million deal as it is to do a $250,000 house.


Josh Cantwell: No doubt.


Jake Harris: Same exact. But guess what, when you make a 10% return on that $250,000 house, you make $25,000. When you make 10% on that $10 million deal, you make $1 million. Which one would you rather? And that’s the other thing is time is by far and away our most scarce product. We can make more money. We can’t make more time. And so, that book was to convey, is to leverage, that leverage 20 years of my experience, my time from that book to go not have to make those mistakes. Take that wisdom, jump into it, and you can get into doing commercial deals. I’m not any smarter than anyone else. I’ve went and made those mistakes. People can go in there and can do this on their own.


Josh Cantwell: Yeah. Great stuff. Jake, listen, the website again is CatchKnives.com. There you can connect with Jake. You can obviously order the book. You can also opt-in for some free bonuses. Jake, anything else you’d like to leave our audience with today or any other resources?


Jake Harris: You know what, actually, I just put out a net lease course, due diligence course, because I feel like that is something that I wasn’t able to go into the details. I have a 72-point checklist that I go off of due diligence and I go through and I give those people that sign up for that course. I mean, if you’re open to it, I’d like to give your listeners a discount to that.


Josh Cantwell: Sure. Go ahead. Fire away.


Jake Harris: 50% off, I don’t know. Tell me what the code should be and we’ll put that out there to your audience and they’ll have the next 15 days after this airs as a 50% discount.


Josh Cantwell: Perfect. Let’s just use the code “Josh.” It’s easy. J-O-S-H. We’ll make it a four-letter word and we’ll put the website in the show notes. Jake, do you know the website right now that you can…?


Jake Harris: You can get it through that Catch Knives. In one of the tabs, it clicks to Courses. It’ll take you to the net lease course. It’s about six hours’ worth of content. We go through a due diligence checklist. We do questions and answers. We built out a pro forma for a net lease deal back of the envelope and then also some questions and answers. And so, then you’ll get some bonus episodes as well on there from some net lease brokers. People are aping into some of these deals. They’re signing personal guarantees for millions of dollars. And I actually had one guy come back and has a feedback. He was like, “I did maybe one-fifth of the things on your list,” and now he’s on the other. He owns it. He owned the real estate, and I’m like, “I sure hope it works out for you.”


Josh Cantwell: Right. It’s fantastic stuff. I’m actually on the website now. CatchKnives.com. Again, like Jake said, there’s a little button at the top, Courses. Click on that, the Net Lease Course. You can go ahead and order that checkout. Use the promo code “JOSH” for 50% off for 15 days after this podcast airs and we’ll go from there. Jake, listen, had a blast getting to know you a little bit more today. Thanks for sharing so many great pieces of wisdom with our audience.


Jake Harris: Cheers. Glad to be here. I really appreciate what you’re doing. I think your very, very valuable insights are helping a lot of people that are going to take them to financial freedom and really unlock the most precious commodity that we have and that’s time.


Josh Cantwell: No doubt. Jake, thanks so much for being here today on Accelerated Investor.




Josh Cantwell: Well, guys, there you have it. Man, I really enjoyed that interview with Jake, especially that one piece of advice, right? Goals are great for people who want to win one time and about success systems is what keeps the success going over the long haul. Do you want to become a millionaire or do you want to become a millionaire and keep it? That was really, really good. So, if you enjoyed the interview, listen, go into Spotify, go into iTunes, go to YouTube. Give us a thumbs up, a five-star rating, a review. Let us know how we’re doing. Leave us a comment. I would be so, so grateful to all of you for that. And also, guys, listen, don’t forget we host our Forever Passive Income Mastermind three times a year. One of those masterminds is coming up and you can go apply for that coaching and mastermind and partnering program at JoshCantwellCoaching.com. We’ll talk to you next time. Take care.

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